PARRIS N. GLENDENING, Governor

Ch. 36

In subsection (c) of this section, the defined term "insurance business" is
substituted for the former reference to "business" for consistency and clarity.

Defined terms: "Control" § 1-101
"Insurance business" § 1-101
"Insurer" § 1-101
"Person" § 1-101
"Reinsurance" § 1-101

8-107. CONTROLLED INSURERS.

(A)     CHARGING UNJUSTIFIABLY LOWER PREMIUMS PROHIBITED.

(1)      WITH RESPECT TO INSURANCE BUSINESS PLACED BY ITS
CONTROLLING BROKER, THE CONTROLLED INSURER MAY NOT ENGAGE IN A
PATTERN OF CHARGING PREMIUMS THAT ARE UNJUSTIFIABLY LOWER THAN THOSE
BEING CHARGED BY THE CONTROLLED INSURER OR OTHER INSURERS FOR
SIMILAR RISKS WRITTEN DURING THE SAME PERIOD AND PLACED BY
NONCONTROLLING BROKERS.

(2)      WHEN DETERMINING WHETHER PREMIUMS ARE UNJUSTIFIABLY
LOWER THAN THOSE PREVAILING IN THE MARKET, THE COMMISSIONER SHALL
TAKE INTO CONSIDERATION APPLICABLE INDUSTRY OR ACTUARIAL STANDARDS
AT THE TIME THE INSURANCE BUSINESS WAS WRITTEN.

(B)     FAILURE TO ESTABLISH OR DEVIATION FROM UNDERWRITING
PROCEDURES PROHIBITED.

WITH RESPECT TO INSURANCE BUSINESS PLACED BY ITS CONTROLLING
BROKER, THE CONTROLLED INSURER SHALL ESTABLISH UNDERWRITING
PROCEDURES AND MAY NOT DEVIATE FROM THEM.

(C)     CAPITALIZATION.

A CONTROLLED INSURER'S CAPITALIZATION AT THE TIME INSURANCE
BUSINESS IS PLACED BY THE CONTROLLING BROKER AND WITH RESPECT TO THAT
INSURANCE BUSINESS SHALL COMPLY WITH:

(1)      CRITERIA SET BY THE COMMISSIONER; AND

(2)      ALL APPLICABLE INSURANCE LAWS.

REVISOR'S NOTE: This section is new language derived without substantive
change from former Art. 48A, § 662(a) and (c).

Throughout this section, the defined term "insurance business" is substituted
for the former reference to "business" for consistency and clarity.

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