PARRIS N. GLENDENING, Governor

Ch. 36

THE CONTROLLED INSURER SHALL REPORT ANNUALLY TO THE
COMMISSIONER:

(1)      THE AMOUNT OF COMMISSION IT PAID TO THE CONTROLLING
BROKER;

(2)      THE PERCENTAGE THAT AMOUNT REPRESENTS OF THE NET
PREMIUMS WRITTEN; AND

(3)      COMPARABLE AMOUNTS AND PERCENTAGES PAID TO
NONCONTROLLING BROKERS FOR PLACEMENT OF THE SAME KINDS OF INSURANCE
BUSINESS.

(H) SAME — AUDIT COMMITTEE.

(1)      THE CONTROLLED INSURER SHALL HAVE AN AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS COMPOSED OF INDEPENDENT DIRECTORS.

(2)     BEFORE APPROVAL OF THE ANNUAL FINANCIAL STATEMENT, THE
AUDIT COMMITTEE SHALL MEET TO REVIEW THE ADEQUACY OF THE CONTROLLED
INSURER'S LOSS RESERVES WITH:

(I)       MANAGEMENT;

(II)     THE CONTROLLED INSURER'S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS; AND

(III)    ANOTHER INDEPENDENT LOSS RESERVE SPECIALIST
ACCEPTABLE TO THE COMMISSIONER OR AN INDEPENDENT CASUALTY ACTUARY.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, §§ 661(e) and 663(a).

In subsections (a)(2), (b), (c), (d)(3)(i), (e), and (h)(2) of this section, the
defined term "controlled insurer" is substituted for the former references to
an "insurer" for consistency throughout this section and to use the defined
term. Similarly, in subsections (a)(2), (b), (d)(1) and (3)(i), (f)(2)(ii), and
(g)(1) of this section, the defined term "controlling broker" is substituted for
the former references to a "broker".

In subsections (b), (d)(3), and (f)(2)(i) and (ii) of this section, the defined
term "insurance business" is substituted for the former reference to
"business" for clarity. Similarly, in subsection (g)(3) of this section, the
defined term "insurance business" is substituted for the former reference to
"insurance" for consistency and clarity.

In subsection (d)(1) of this section, the phrase "[i]f insurance business is
placed through a controlling broker" is added for clarity.

In subsection (d)(2) of this section, the reference to the "prospective" insured
is added to conform to subsection (d)(1) of this section.

- 1075 -