insurance 9

rebating

It is illegal to offer a premium rebate or a special advantage of any kind to consumers as an inducement to purchase a contract of insurance.

certificate of authority

The Commissioner will examine the financial affairs of all insurers before issuing a certificate of authority to transact business in Maryland

solvency

The Commissioner will suspend the certificate of authority of any insurer that becomes insolvent, is threatened with insolvency, or is delinquent in claims payment.

policy loan interest rate

maximum fixed interest rate for policy loans charged by insurers is 8% in Maryland.

defamation

: It is an illegal practice to make any public statement or advertisement that contains false or malicious information or unsubstantiated criticisms about an insurance company.

Misrepresentation

: It is an illegal practice to misrepresent any fact about an insurance policy, such as policy terms, benefits, value, cost, effective date, or existence of a contract of insurance.

reporting of actions

: Producers must report any bankruptcy, felony conviction, or any other administrative action that occurs in Maryland or another jurisdiction to the Commissioner within 30 days

reinstatement

A lapsed policy may be reinstated within 3 years from the due date upon evidence of insurability and all back premiums are paid with interest.

shared commissions

A producer may share a commission with another producer when the other producer is licensed in the same line of business.

advertisements

All advertisements for health insurance shall make clear the identity of the insurer.

producer records

All producers shall maintain full and correct transaction records of the business done by them for a period of 5 years.

false advertising

It is an illegal practice to falsely advertise insurance products or services in any way. This includes circulating statements, letters, or statements in newspapers, magazines or other solicitation materials.

home health care

Long-term care policies must pay for "at-home" care at the same daily amount as paid for a nursing home if the insured meets the qualifications for nursing home care.

Records Maintenance

Producers and insurers must keep full and accurate records of all insurance business in which they are involved. Records must be kept for at least five years.

Fiduciary Responsibility

Producers have a fiduciary responsibility for all funds collected from clients. Producers must not mingle these funds with their own personal funds. However, producers are not required by law to open a separate bank account for such funds

solicitation and sales presentation

Producers must provide applicants and prospects with the approved NAIC Buyer's Guide. Producers must also provide a Policy Summary to applicants.

Continuing Education

Resident producers must complete 24 hours of continuing education every 2 years to keep their license active.

rates

The Commissioner has the authority to set reasonable standards for rate-making (setting premiums).

notice and hearing

The Commissioner may call and hold hearings for any purpose deemed necessary. The hearing must be held within 30 days after written demand of the Commissioner. The notice of the hearing must be given to the person cited at least 10 days prior to the designated date.

cease and desist order

The Commissioner may issue a cease-and-desist order to any person found to have committed an unfair or deceptive act or has violated a state insurance law.

examination of records

The Commissioner must examine the financial affairs of each insurer operating in Maryland prior to issuing a certificate of authority.

producer

any person who sells, solicits, or negotiates insurance contracts for compensation on behalf of an insurer. This includes submitting applications to the insurer, collecting premiums, and delivering policies to policyowners. Each agency that transacts insurance must be licensed by the insurance department. An insurance producer CANNOT act as an agent of an insurer until the insurance producer becomes appointed by the insurer.

policy summary

contains specific information on the provisions, benefits, and coverage of the policy applied for.

cash surrender

e maximum length of time an insurer can defer payment of a cash surrender value of a life insurance policy or annuity is 6 months.

twisting

involves making a false written or oral statement made by a producer for the purpose of replacing an existing policy to the detriment of the insured.

incontestability period

policy terms shall be incontestable after it has been in force for a period of 2 years from its date of issue (unless the purpose for taking out the coverage was fraud).

outline of coverage

required and provides a very brief description of the important features of the policy. It is considered a summary of coverage.

Insurance Fraud Act

s any intentional act occurring in the course of insurance business that attempts to deceive or misrepresent a material fact. Any person who, in the absence of fraud or bad faith, reports information regarding an act of insurance fraud will be given immunity.

adviser

s any person who, for a fee, offers to examine any policy for the purpose of giving advice or recommendations with respect to the benefits provided by the contract

replacement

under Maryland law the replacement of life insurance contracts with a new contract requires the producer to give the applicant a written comparison and summary statement at the request of the policyholder and to follow instructions regarding replacement as obtained from the appointing insurer.