By: Patricia McHugh Lambert, Esquire and Robert Campbell, Esquire
We have been providing information as to recent Bulletins and other information sent out by the Maryland Insurance Administration. (Please see updates below listed by date). We are today providing a summary of additional Bulletins that have been issued since our last newsletter.
On May 20, 2020, the Maryland Insurance Administration announced that property and casualty insurance customers were to receive more than $250 million in premium relief during the current COVID-19 crisis. This number is based upon filings (102 in number) relating to refunds, credits, payments and dividends.
In Bulletin No. 20-23, the Maryland Insurance Administration advised both insurers and public adjusters of various Maryland laws relating to public adjusters, including that:
- Public adjusters solicit business as adjusters of “first party claims for a loss or damage covered by insurance”;
- Public adjusters must maintain “a compete record” of transactions for five years and that these records “must always be open to examination by the Commissioner”;
- Public adjusters are “obligated to serve the interest of the client with objectivity and complete loyalty”, an emphasis which appears to emphasize apparent concerns that the Commissioner has had with some adjusters engaging in self-dealing;
- Public adjusters are forbidden to enter into a contract or to accept a power of attorney “that vests in the public adjuster the authority to choose who shall perform any repair work”; and
- Effective October 1, 2020, a public adjuster that receives funds must disburse the applicable funds (which would be he funds received minus the adjuster’s applicable fee) to the insured within 15 business days.
In the past, insurers were sometimes caught in the middle of disputes between public adjusters and insureds. Now, when such disputes arise, the provisions of this Bulletin should be considered in determining how to deal with the situation.
In Bulletin 20-24, the Maryland Insurance Administration issued its yearly Bulletin as to the new laws enacted in 2020 by the Maryland General Assembly. This Bulletin can be reviewed at https://insurance.maryland.gov/Insurer/Documents/bulletins/20-24-Summary-of-Insurance-Enacted-in-2020.pdf. Among the legislation mentioned in the Bulletin that relate to property and casualty insurance are the following:
- Senate Bill 97 (Chapter 523) authorized insureds protesting the cancellation, nonrenewal, or reduction in coverage by filing protests electronically through the consumer complaint portal within 30 days after the mailing date on the notice of proposed action. (Effective October 1, 2020);
- Senate Bill 125/ House Bill 118 (Chapter 63/Chapter 62) prohibits an insurer from cancelling, refusing to renew, or terminating coverage for private passenger motor vehicle insurance based on claims for coverage made for towing or emergency roadside service. Provisions relating to the removal of such coverage at the time of renewal or to increase premiums under certain circumstances are also included. (Effective October 1, 2020);
- Senate Bill 195/House Bill 270 (Chapter 145/Chapter 144) is new legislation that specifically permits and regulates programs that measure the operation of insured motor vehicles. Any insurer that has such program should review this legislation in detail. (Effective October 1, 2020);
- House Bill 144 (Chapter 77) clarifies that required uninsured or enhanced underinsured motorist coverage must contain coverage for property damages, including coverage for the loss of the insured vehicle. (Effective October 1, 2020);
- Senate Bill 470 (Chapter 558) prohibits an insurer from: (1) increasing the renewal premium for a policy of private passenger motor vehicle insurance based on a homeowner’s insurance claim; and (2) increasing the renewal premium for a policy of homeowner’s insurance based on a private passenger motor vehicle insurance claim. The law also deals with how such claims may be considered for rating classification purposes. (Effective July 1, 2021);
- Senate Bill 93(Chapter 520) requires that a nonresident insurance producer must be currently licensed as a resident insurance producer in a person’s home state. Insurers and agencies may want to update practices to ensure appropriate licensing. (Effective October 1, 2020); and
- Senate Bill 95 (Chapter 521) requires public adjusters to disburse in a timely manner settlement payments, namely within 15 business days of the payment from an insurer. (Effective October 1, 2020).
May 8, 2020
Maryland Insurance Administration—A New Commissioner
The most significant news of the week is that Maryland has a new Insurance Commissioner.
Al Redmer, Jr. has served as the head of the Maryland Insurance Administration from June 2003 to June 2005 and most recently since January 2015. He has stepped down in order to take over the helm of the Maryland Auto Insurance Fund (MAIF), which is a state sponsored entity that provides automobile insurance to Maryland residents. His job as Executive Director will begin on May 18, 2020.
The Governor has appointed Attorney Kathleen Birrane as the new Insurance Commissioner. Many know Ms. Birrane as the former principal counsel to the Maryland Insurance Administration and feel that because of that, she will have no learning curb when she moves into the Maryland Insurance Administration’s top slot. She will, of course, require Senate confirmation to remain permanently at the helm.
Bulletin 20-22 (Audit of Pharmacies) was issued on April 30, 2020. This Bulletin indicated that the Commissioner was invoking his emergency powers to activate COMAR 31.01.02.06L. This regulation allows the Commissioner to require pharmacy benefits manager and health carriers to suspend random audits. The suspension of random audits shall remain in effect until Governor Hogan’s State of Emergency is lifted or a new bulletin is issued.
On May 1, 2020, the Insurance Commissioner issued a Consumer Advisory as to insurance scams related to COVID-19. As noted in the Advisory, there are people posing as insurance agents or company representative that are offering COVID-19 related health insurance and life and travel insurance products. The Advisory warned: “Consumers should be aware that anyone claiming to offer COVID-19-specific coverage, telehealth-only coverage or guaranteed access to testing may be engaged in fraud.”
Office of Administrative Hearings
As noted in our past newsletter, the Office of Administrative Hearings (OAH) was closed to the public. Recently, the OAH has indicated that it will allow litigants and lawyers to opt in through the OAH’s website. However, at least until May 15, 2020, all in-persons proceedings have been temporarily suspended. Recently, the OAH has indicated that it will allow litigants and lawyers to opt in to a hearing through the OAH’s website.
May 1, 2020
Maryland Insurance Administration
The Maryland Insurance Administration has made it clear that it remains open during the COVID-19 crisis. Among other things, the processing of complaints has been robust. Since March 13, 2020, the Administration has opened or considered over 1,000 new investigations, complaints, or cases. Over 1,400 cases, complaints and investigations were closed.
In addition to these investigations, the Maryland Insurance Administration is attempting to hold hearings via a new pilot program. This Video Pilot allow parties to agree to participate in hearings, as scheduled, by video conference using the Google Hangout Meets video meeting platform. In addition, some motions are being heard by telephone conference.
With respect to hearings that have been referred to the Office of Administrative Hearings, that agency is closed to the public.
Worker’s Compensation Insurance
In Bulletin 20-20 issued on April 13, 2020, the Maryland Insurance Administration encouraged insurers to adjust workers’ compensation insurance premiums to reflect reductions in payroll and provide premium relief. In particular, there is a concern about the need to exclude payroll for premium calculations for employees that are being paid but are not working at all due to the COVID-19 crisis. There is a temporary rule change that will be in effect with respect to such issues; this rule change will be in effect through December 31, 2020.
April 18, 2020
Bulletin No. 20-18 deals with Motor Vehicle Registrations and Commercial Automobiles and Fleets. The Bulletin notes that owners of multiple vehicles, including commercial fleets, may want to put some vehicles out of service during the Covid-19 crisis, so as to discontinue coverage and thereby reduce premiums. The Maryland Insurance Administration encourages insurer to work with policyholders to make premium reductions without the return of tags. This reduction of premium issue has been the subject of a number of Bulletins and insurers should consider having a plan in place to deal with such issues. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-18-COVID-19-Motor-Vehicle-Registrations.pdf
Bulletin No. 20-19 deals with quarterly premium tax payments. The bottom line of this bulletin is that the Insurance Commissioner has the discretion to waive penalties and late payments of quarterly estimated premium taxes due on April 15, 2020. Importantly, an insurer should have documentation as to how the Covid-19 crisis has impacted the operation of the insurer’s premium tax administrative offices. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-19-COVID-19-Quarterly-Premium-Tax.pdf
Bulletin No. 20-20 deals with the financial challenges of Maryland’s business community and what insurers should do to assist. With respect to workers compensation policies, insurers are requested to work with producers to accommodate policyholder requests for mid-term revisions to premiums based upon Covid-19 furloughs and layoffs. This Bulletin also requests that insurers waive or reduce “to the greatest extent possible” short-rate cancellation penalties during the Covid-19 crisis. Insurers that use credit in underwriting are also urged to take into consideration the impact of the crisis; insurers are specifically urged to “rely heavily” on pre-Covid-19 information and to consider an insured’s or applicant’s history over a period “of several years”. Commercial insurers are also urged “to refrain from attaching any adverse underwriting or pricing outcomes for insureds who have made inquiries or file Business Interruption claims that have not resulted in a claim payment.” https://insurance.maryland.gov/Insurer/Documents/bulletins/20-20-Commercial-Insurance-COVID-19.pdf
Other Information: There is a Covid-19 resource page that has important information, including:
- Contract information for key Maryland Insurance Administration personnel.
- Responses to frequently asked questions, including questions relating to extended filing deadlines, the waiver of the requirement of “wet” signatures for filings, and the fact that there is no change in the service procedures for litigation filings against insurance companies. https://insurance.maryland.gov/COVID-19/Documents/EandA-COVID-FAQs.pdf
April 6, 2020
There is so much being written about the legal issues surrounding the pandemic that it is hard to know where to begin reading. We have decided to help by giving our clients and colleagues a guideline of some of the articles and resources we have been reviewing. Today, we are providing information related to Bulletins issued by the Maryland Insurance Administration (“MIA”) concerning the Covid-19 Pandemic.
It is our hope to periodically update these resources. Please contact us (firstname.lastname@example.org or email@example.com) and let us know if this list is helpful or if you have other resources that we should add to our aggregated list.
Bulletin No. 20-17 deals with contractual deadlines within insurance policies. The MIA has specifically requested insurers to “be lenient” in the application of the policy language requiring “notice of a claim promptly.” Insurers are specifically requested to consider “whether or not late notice of a claim was preventable and if the late-notice actually prejudiced the insurer’s ability to adjust the claim.” Similarly, insurers are requested to consider limiting the use of “Sworn Statement in Proof of Loss” and to consider the use of electronic signatures. The MIA has further reminded insurers that policyholders should not be penalized for delays that might be caused by the Covid-19 crisis, particularly in considering the policy benefits for additional living expenses, loss of use, rental reimbursement, and business interruption claim. For EUOs, insurers are forbidden to take in person examinations without the agreement of all parties; even with the agreement of all parties, there must be strict adherence to all social distancing protocols. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-17-COVID-19-Contractual-Deadlines-within-Propery-and-Casualty-Insurance-Policies.pdf.
Bulletin No. 20-16 deals with title insurance producers. This bulletin specifically allows title insurance producers to conduct remote settlements during the Covid-19 crisis, provided that certain protocols are followed. The protocols are specified in the bulletin. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-16-Conducting-Mobile-Settlements.pdf.
Bulletin No. 20-15 deals with certain private passenger automobile insurers suspending the commercial use exclusionary language in their contracts during the Covid-19 crisis. The bulletin explains how insurers may make an endorsement form filling that temporarily suspends the commercial use exclusionary language in their contracts. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-15-Commercial-Use-Exclusion-in-PPA-policies.pdf.
Bulletin Nos. 20-10 and 20-14 deals with premiums. In Bulletin No. 20-10, the MIA strongly encouraged insurers to make reasonable accommodations so that individuals and businesses do not lose coverage due to non-payment of premium during the Covid-19 emergency. The MIA specifically noted that reasonable accommodations may include suspensions of premiums due, extension of billing due dates and premiums grace periods, and waiver of installment and late payment fees. Bulletin No. 20-14 applies to Maryland-domiciled insurers and deals with waiver of the Statutory Accounting Principle that requires an insurer to non-admit premium receivable assets over 90 days past due. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-10-Cancellation-of-insurance-policies-during-covid-19-SOE.pdf; https://insurance.maryland.gov/Insurer/Documents/bulletins/20-14-Premium-Receivables-over-90-days-during-COVID-19-SOE.pdf
Bulletin No. 20-13 concerns the temporary suspension of the 45-day advance mailing notice of cancellation, non-renewal or premium increase for private passenger automobile liability insurance for the duration of the state of emergency. Specific information is provided as to what efforts insurers should make and the extended timing for protests. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-13-Temporary-Suspension-of-45-day-Advance-Mailing-Notice-PPA.pdf
Bulletin No 20-09 concerns what insurers offering travel insurance policies offer during the Covid-19 crisis. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-09-Travel-Insurance-sales-during-COVID-19-SOE.pdf
Information regarding Covid-19 provider frequently asked questions can be found at https://insurance.maryland.gov/Providers/Documents/COVID-19-Providers-FAQs.pdf. Information regarding frequently asked question on producer licensing can be found at https://insurance.maryland.gov/Documents/newscenter/MIA-Producer-Licensing-COVID-FAQ.pdf.
The MIA has also issued an advisory on business interruption insurance. As stated in this advisory, “Some commercial policies provide Business Interruption coverage when a business is shut down due to an Order by a civil authority. However, the policy still typically requires a physical loss from a covered peril as the underlying cause of the business shut down to apply. All insurance policies have exclusions of coverage for risks that are too great to be underwritten at an affordable price. For example, commercial and personal property insurance policies typically contain specific exclusions for loss or damage caused by war, nuclear action and radiation. The potential loss costs from such perils are so extreme that providing coverage would jeopardize the financial solvency of property insurers. Global pandemics like COVID-19 usually fall into this category. However, policies can be different. We recommend that businesses review their policies and reach out to their insurance professionals with any questions.” https://insurance.maryland.gov/Pages/newscenter/NewsDetails.aspx?NR=2020256
We expect additional bulletins and information to be issued during the upcoming weeks.
Please feel free to contact us regarding these Bulletins or their implementation.
Ms. Lambert has over 35 years of experience in handling complex commercial litigation and insurance matters. Ms. Lambert has worked on national class actions, significant litigation and regulatory matters for Fortune 500 companies. She has also assisted small and mid-sized companies and business executives with contract, real estate, liability assessment and commercial disputes that needed to be resolved quickly and efficiently. Ms. Lambert is best known as an attorney who knows the field of insurance. She has represented insurers, policyholders, and insurance producers in disputes both in court and before the Maryland Insurance Administration.
Ms. Lambert is the firm’s Co-Liaison for Harmonie, a national network of high quality law firms that serve the special needs of the risk industry, and was recently appointed to Harmonie’s Board. She can be reached by phone at 410-339-6759 or email firstname.lastname@example.org.
Mr. Campbell has close to 20 years of experience as a general litigator. He has an active litigation practice primarily in complex commercial and general litigation matters in Maryland state and federal courts as well as other jurisdictions in which he is admitted pro hac vice. He has extensive appellate, arbitration and trial experience and notably has a long and successful motions track record including successful motions for summary judgment and dismissal for his clients. As part of his practice, Mr. Campbell is assigned to represent insureds by national insurance carriers in premises liability, tort defense, automobile and trucking cases, and government liability matters. He has participated in the prosecution and defense of claims against Maryland insurance producers. Mr. Campbell can be reached at 410-769-6140 and email@example.com.
The information presented in this article has been prepared by Pessin Katz Law, P.A., is intended for informational purposes only, and is not legal advice. Transmission of this information is not intended to create, and receipt of this information does not constitute an attorney-client relationship. While we have attempted to provide information in this article as accurately as possible, the information in this article may contain errors or omissions for which we disclaim liability. This article contains information on legal issues and is not a substitute for legal advice from a qualified attorney licensed in an appropriate jurisdiction. Pessin Katz Law, P.A. expressly disclaims all liability with respect to actions taken or not taken based on any or all of the contents of this article.