On August 3, 2012, the Maryland Insurance Administration issued Bulletin 12-14, asserting that Property and Casualty carriers have recently been developing a habit of violating various regulations concerning claims-handling. The Bulletin is primarily targeted at auto insurers, and highlights a number of supposed patterns of violation. In particular, the Bulletin takes issues with what the Administration views as a lack of sufficient investigation into claims, resulting in non-renewals or increased premiums.
Of particular import to Surplus Lines carriers, however, is that the Administration states in the Bulletin that its purpose is to “remind all Property and Casualty insurers” of “applicable” laws and regulations. The Administration asserts that failure to comply may result in “administrative action.” Based on these assertions, as well as the Administration’s ongoing treatment of Surplus Lines carriers, it appears that this Bulletin is also targeted at such insurers. Of course, under current Maryland law, the Administration would appear to have no jurisdiction over such insurers. We will continue to monitor the situation, as any attempt to take “administrative action” against a Surplus Lines carrier would appear to be outside the scope of the Administration’s authority.