WILLIAM DONALD SCHAEFER, Governor                        Ch. 4

(2) (I) ALL COMMISSIONS PAID BY THE FUND SHALL BE
EARNED BY THE PRODUCER ON A PRO-RATA BASIS.

(II) THE FUND MAY NOT PAY ANY COMMISSION ON A
FULLY EARNED BASIS.

(3)  A COMMISSION MAY NOT BE PAID BY THE FUND TO A
PRODUCER WHERE:

[(1)] (I) A prospective insured fails to qualify
under subsection (a) of this section, in which event any policy
issued shall be void ab initio[,]; or

[(2)] (II) A prospective insured's initial payment to
the Fund, or TO a broker, agent, or premium finance company, is
not honored, in which event any policy or endorsement issued in
reliance on [such] THAT payment shall be void ab initio.

(4)  IN THE EVENT A POLICY ISSUED BY THE FUND IS
CANCELED, THE FUND SHALL REFUND ON A PRO-RATA BASIS ANY UNEARNED
COMMISSIONS TO THE POLICYHOLDER.

(d)  (1) Any producer qualified in Maryland may, subject to
the provisions of this section and the binding rules of the Fund,
bind the minimum required coverage for an applicant in the Fund
upon application to the producer and payment of the appropriate
premium.

(2)  The board shall adopt and make available to each
producer reasonable rules and regulations relating to the binding
authority of producers, including but not limited to the amount
of premium to be collected, the evidence necessary to establish
the applicant's qualification to be insured by the Fund, the time
within which the producer shall notify the Fund of binding, and
procedures for notifying the Fund of the binding of coverage.

(3)  The Fund shall become liable under the coverage
bound from the date of binding by the producer; provided,
however, that the Fund, upon review of the application, may not
later than sixty days after the coverage is effective, cancel the
coverage and refuse to issue a policy upon a finding that (i) the
applicant is not qualified for insurance by the Fund, (ii) the
appropriate premium has not been paid, or (iii) the Fund is
authorized to reject the application under § 243D; provided,
however, that if the cancellation is due to nonpayment of the
appropriate premium, the Fund shall afford the applicant a
reasonable opportunity to pay the proper premium. The Fund shall
promptly notify the applicant, the producer and the Motor Vehicle
Administration of a cancellation, and the applicant shall
thereafter have the right of appeal provided for in § 243D.

(e)  If the board finds that any producer has engaged in
the practice of binding coverage through the Fund in violation of

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