On August 9, 2012, the Maryland Insurance Administration issued Bulletin 12-15, wherein it presented proposed regulations impacting insurers who apply percentage deductibles to hurricane or storm claims. The regulations are designed to “define homeowners insurance; establish when an insurer can apply a percentage deductible; detail the information that must accompany the insurer’s filing of an underwriting standard requiring the application of a percentage deductible…; and set out the minimum requirements for the annual statements that must be provided to insureds.”
The Administration has made clear that it intends for these proposed regulations to apply in full force to Surplus Lines carriers. Various carriers have expressed concerns that the Administration appears to be, for the first time, directly applying both rate and form law to the surplus lines market. Of particular concern is that the proposed regulations would compel carriers to file with and obtain approval from the Commissioner of any underwriting standard that requires a percentage deductible exceeding 5%.
All Surplus Lines carriers doing business in Maryland should review the proposed regulations in the context of the forms they currently use, as well as their business model. We will continue to monitor the progress of the proposed regulations, as well as the comments made concerning impact from pending changes.
Any questions concerning this matter should be directed to Jason E. Fetterman, Esq. at Niles, Barton & Wilmer, LLP, at 410-783-6390 or firstname.lastname@example.org.
The Surplus Lines Law Group will hold its bi-annual meeting on April 26-27, 2012 in Las Vegas, Nevada. This group provides a forum for national discussion of issues impacting the surplus lines industry. Among the topics on the group’s agenda will be the MIA’s recent assertion that it may exercise jurisdiction over surplus lines carriers with respect to windstorm deductibles, and the industry’s concerns relating to that decision. Jason Fetterman is scheduled to speak on this topic on April 27th.
On December 13-14, 2011, the Maryland Insurance Administration held hearings concerning the availability and affordability of coverage in Maryland’s coastal regions. The Administration invited any interested groups or individuals to provide testimony. Accordingly, the hearings attracted a great deal of interest from industry groups and carriers. Those who testified were nearly unanimous in the belief that there is no coverage availability crisis in Maryland’s coastal region. Indeed, the vast majority of witnesses testified that there is a vibrant and strong free market, in which numerous admitted and surplus lines carriers compete for business. The general consensus was that, while rates tended to be a bit higher in coastal regions than elsewhere, this is due to the enhanced risk associated with coastal properties and businesses, and is not out of line with other similarly situated states. Read more
The Maryland Insurance Administration will be holding public hearings regarding the availability and affordability of personal and commecial property and casulaty insurance in costal areas on December 13th and 14th 2011, starting at 10:00 a.m. As surplus lines insurers tend to be heavily involved in providing such coverage in Maryland, these hearing are of significant import to the surplus lines market. Niles Barton Partner Jason Fetterman will attend the hearings to monitor the MIA’s position regarding these issues. Craig Roswell, Niles Barton Partner and counsel to the Joint Insurance Association [JIA], will be testifying on December 14th on behalf of the JIA.
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. Read more