HARRY HUGHES, Governor                                    3423

matters generally relating to the regulation of insurance
rate-making processes.

BY repealing and reenacting, with amendments,

Article 48A - Insurance Code

Section 242(c)(4)

Annotated Code of Maryland

(1979 Replacement Volume and 1983 Supplement)

BY repealing

Article 48A - Insurance Code

Section 242(c)(7), (c)(8), and (c-1)

Annotated Code of Maryland

(1979 Replacement Volume and 1983 Supplement)

BY adding to

Article 48A - Insurance Code

Section 244 and 244A through 244V to be under the new

subtitle "16B. Regulation of Competitive Rating"
Annotated Code of Maryland
(1979 Replacement Volume and 1983 Supplement)

SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF
MARYLAND, That the Laws of Maryland read as follows:

Article 48A - Insurance Code

242.

(c) All rates shall be made in accordance with the
following principles:

(4) Risks may be grouped by classifications for the
establishment of rates and minimum premiums. Classification
rates may be modified to produce rates for individual risks in
accordance with rating plans which establish standards for
measuring variations in hazards or expense provisions, or both.
The standards may measure any difference among risks that are
demonstrated objectively to the Commissioner to have had a direct
and substantial effect upon losses or expenses. However, no rate
may be based partially or entirely on geographic area itself, as
opposed to underlying risk considerations, even though expressed
in geographic terms.

[Any insurer providing a private passenger automobile
insurance policy shall provide the policyholder at the time of
issuance or renewal with a statement defining his rate
classifications. The statement shall be sufficiently clear and
specific so that a person of average intelligence can identify
the classifications without making further inquiry.]