Ch. 12

1996 LAWS OF MARYLAND

(4)     Dividends, savings, or unabsorbed premium deposits allowed or
returned by insurers to their policyholders or members or subscribers;

(5)     Past and prospective expenses, both countrywide and those specially
applicable to this State;

(6)     Investment income earned or realized by insurers both from their
unearned premium and from their loss reserve funds; and

(7)     All relevant factors within and outside this State.

(c)     As to the kinds of insurance to which this subtitle applies:

(1)     The systems of expense provisions included in the rates for use by an
insurer or group of insurers may differ from those of any other insurers or groups of
insurers to reflect the requirements of the operating methods of the insurer or group of
insurers with respect to any kind of insurance, or with respect to any subdivision or
combination of insurance for which separate expense provisions are applicable; and

(2)     (i) Risks may be grouped by classifications for the establishment of
rates and minimum premiums.

(ii) 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.

(iii) The standards may measure any difference among risks that have
had a direct and substantial effect upon losses or expenses.

(iv) Notwithstanding any other provision of this paragraph, no rate may
be based partially or entirely on geographic area itself, as opposed to underlying risk
considerations, even though expressed in geographic terms.

(d)     (1) Any insurer providing a private passenger automobile insurance policy
shall provide the policyholder at the time of issuance or renewal with a statement that:

(i) . Defines the policyholder's rate classifications; and

(ii) In the case of a licensed insurer, includes a summary, in a format
approved by the Commissioner, of the licensed insurer's approved surcharge plan or
driver record point plan for that policy.

(2) The statement shall be sufficiently clear and specific so that a person of
average intelligence can identify the classifications without making further inquiry.

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

(1) (i) An insurer under an automobile liability insurance policy may not
classify or maintain an insured in a classification entailing a higher premium because of a
specific claim for a period longer than 3 years, and an insurer may not classify or maintain
an insured in a classification entailing a higher premium because of the insured's driving
record for a period longer than 3 years.

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