- Maryland does maintain a list of eligible surplus lines insurers.
- Maryland does have a Surplus Lines Association (see Other Comments Section #3).
- Maryland does have an Export List (see Md. Regulations §31.03. 06.10).
- Maryland does have an industrial insured exemption (see Appendix C) and also recognizes the NRRA exempt commercial purchaser exemption. However, the industrial insured exemption only alleviates the burden of the unauthorized insurer from submitting to the service of process procedures in the insured’s home state and does not otherwise allow for such insurer to conduct insurance business in the state unless licensed as an admitted insurer or eligible to write insurance coverage on a surplus lines basis.
- Surplus lines tax: 3%, payable by broker. Premium includes a membership fee, survey fee, inspection fee, service fee, or other similar fee in consideration for an insurance contract.
- Maryland has not affiliated with any existing compact (HB 959).
- Maryland does not allow domestic surplus lines insurers in the state.
Eligibility and Filing Requirements (Alien Insurers Only):
With the exception of unsafe financial conditions as per MD. Code Ann. Ins. § 3-319, if company is on the NAIC List then nothing need be filed as eligibility is automatic.
Eligibility and Filing Requirements (Foreign Insurers Only):
Surplus lines brokers may not place coverage with a nonadmitted insurer domiciled outside the U.S. unless, at the time of placement, the nonadmitted insurer:
- Is authorized to write such insurance in its domiciliary jurisdiction; and
- Possesses capital and surplus, or its equivalent under the laws of its domiciliary jurisdiction, that equals the greater of the minimum capital and surplus requirements under the laws of the domiciliary jurisdiction, or $15 million. § 3-318(a) — (b)
The commissioner may waive the minimum capital and surplus requirement for a nonadmitted insurer if the commissioner makes an affirmative finding of acceptability after considering: quality of management, capital and surplus of a parent company, company underwriting profit and investment trends, market availability, and company record and reputation within the industry. The director may not make a finding of acceptability if the insurer’s capital and surplus is under $4.5 million. § 318(b)(1)-(3).
Types of Insurance Exempted from Surplus Lines Regulation:
- Wet marine and transportation insurance except: (i) any pleasure craft that is under 60 feet in length and is owned and used for pleasure and not for business, hire, or other commercial use; (ii) fishing vessels under 50 gross tons weight that are not part of a fleet of 3 or more vessels; and (iii) charter or head boats under 50 gross tons and that are not part of a fleet of 3 or more vessels.
- Insurance on subjects located, resident, or to be performed wholly outside of Maryland or on vehicles or aircraft owned and principally garaged outside Maryland.
- Insurance on property or operation of railroads engaged in interstate commerce.
- Insurance of aircraft owned or operated by manufacturers of aircraft, or aircraft operated in scheduled interstate flight, or cargo of the aircraft, or against liability, other than workers’ compensation and employers’ liability, arising out of the ownership, maintenance, or use of the aircraft.
- Transactions subsequent to issuance of or relative to a policy covering only subjects of insurance not resident, located, or expressly to be performed in Maryland as of time of issuance covering property in course of transportation by land, air, or water to, from, or through Maryland and including any preparation or storage incidental thereto, and lawfully solicited, written or delivered outside Maryland.
- Industrial Life Insurance.
Other Comments or Requirements:
- When a policy is procured through a surplus lines broker which is licensed in the state and payment is not made directly to the surplus lines broker or insurer, a copy of any applicable premium finance agreement or other notice of premium finance agreement must be sent to the surplus lines broker.
- A surplus lines broker is required to return any gross unearned commissions to the insurer within a reasonable time but not longer than 45 days after a written request by the insurer.
- Contact information for Maryland Excess & Specialty Lines Brokers Association:
David Riffert, Treasurer
Tel.: (301) 439-4700.
- The same requirements apply to non-resident brokers as resident brokers. Licenses are processed by the Maryland Insurance Administration.
- Maryland surplus lines brokers are permitted to recover the cost of inspection for the placement of surplus lines insurance if the brokers do not have a financial interest in and do not receive compensation from the person that performs the inspection. Brokers are required to make clear and conspicuous written disclosure of any financial interest in the person performing such an inspection.
- Maryland prohibits the procurement of surplus lines insurance for coverage of condominium associations.
- Reports, affidavits and returns that are required to be filed in regard to surplus lines insurance are deemed to be in compliance with the state’s filing requirement if the information is transmitted electronically on or before the filing date in a manner approved by the Insurance Commissioner.
- An affidavit must be filed with the Maryland Insurance Commissioner on or before the 45th day after the last day of the calendar quarter in which the surplus lines insurance was placed.
- Each insurance contract or confirmation procured must be:(a) endorsed or stamped conspicuously in boldface type on the first page of the insurance contract or confirmation as follows:“This insurance is issued by a nonadmitted insurer not under the jurisdiction of the Maryland Insurance Commissioner”; and(b) accompanied by a written disclosure, as prescribed by the commissioner of insurance, that:(I) is written in clear, plain English; and(II) explains that the insurer does not possess a certificate of authority from the commissioner of insurance to engage in the insurance business in the State.