Maryland Insurance Administration Asserts Jurisdiction Over Surplus Lines Carriers
On September 8, 2011, the Maryland Insurance Administration (“MIA”) issued Bulletin 11-27, in which it advised that surplus lines carriers are “expected to comply” with the Insurance Article’s Percentage Deductable Requirements for homeowner’s policies.
Section 19-209 of the Insurance Article prohibits “insurers” from adopting a deductable that exceeds 5% of the “Coverage A – Dwelling Limit” in cases involving storm or hurricane damage unless the insurer obtained approval from the Insurance Commissioner. The MIA has now taken the position that this provision applies to surplus lines carriers as well as admitted carriers.
This Bulletin is the latest in a series of attempts by the MIA to subject surplus lines carriers to its jurisdiction, despite its prior position that no such jurisdiction exists. Previously, the MIA reversed its long-stated position and asserted that it may compel surplus lines carriers to comply with the Maryland Unfair Claims Settlement Practices Act. This appears to be the first attempt to subject surplus lines carriers to the Insurance Article’s rate and form provisions.
As with the MIA’s prior assertions of jurisdiction, the Administration has not provided any specific basis for its supposed new-found jurisdiction. Moreover, it has not advised as to what if any penalties it believes it may impose on surplus lines carriers who do not comply.
We are currently working with our clients, various industry groups, and contacts within the Maryland State Government to determine the basis and scope of the MIA’s position, and to challenge any attempt by the Administration to exceed its statutory authority.