LAWRENCE J. HOGAN, JR., Governor Ch. 453
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Chapter 453
(Senate Bill 278)
AN ACT concerning
Maryland Automobile Insurance Fund – Installment Payment Plans
FOR the purpose of altering certain restrictions and requirements related to the authority
of the Maryland Automobile Insurance Fund to accept premiums on an installment
payment basis for motor vehicle liability insurance policies; authorizing the Fund to
charge and collect, if approved by the Maryland Insurance Commissioner, reasonable
installment fees or reasonable fees for late payment of premiums by policyholders;
and generally relating to the Maryland Automobile Insurance Fund and installment
payment plans.
BY repealing and reenacting, with amendments,
Article – Insurance
Section 20–507 and 27–216(b)
Annotated Code of Maryland
(2017 Replacement Volume and 2021 Supplement)
BY repealing and reenacting, without amendments,
Article – Insurance
Section 27–216(a) and (c)
Annotated Code of Maryland
(2017 Replacement Volume and 2021 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – Insurance
20–507.
(a) Subject to the authority of the Commissioner to determine whether rates are
excessive, inadequate, or unfairly discriminatory, as provided in Title 11, Subtitle 3 of this
article, the Executive Director shall determine the premiums to be charged on policies
issued by the Fund.
(b) (1) Except as provided in subsection (c) of this section, the provisions of
Title 11, Subtitle 3 of this article apply to the determination of premiums by the Executive
Director and the filing of rates with the Commissioner.
(2) Notwithstanding Title 11, Subtitle 3 of this article or any other
provision of this title, the Executive Director may base premiums on one or both of the
following items: Ch. 453 2022 LAWS OF MARYLAND
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(i) the number of points accumulated by an insured or applicant for
insurance under the point system provided for in Title 16, Subtitle 4 of the Transportation
Article; or
(ii) the prior claims experience of an insured or applicant for
insurance.
(c) (1) Premiums for all commercial coverage shall be determined in
accordance with this section and § 20–508 of this subtitle.
(2) Notwithstanding paragraph (1) of this subsection, the rating principles
under subsection (d) of this section may not be used to determine the premium for
commercial coverage.
(d) In reviewing rates filed by the Fund, the Commissioner shall consider not only
the rating principles under Title 11, Subtitle 3 of this article but also the statutory purpose
of the Fund under § 20–301 of this title.
(e) (1) The Motor Vehicle Administration and Executive Director may arrange
for the Motor Vehicle Administration to collect premiums on policies issued by the Fund
when the Motor Vehicle Administration issues a driver’s license or certificate of
registration.
(2) A premium collected under this subsection shall be paid to the State
Treasurer for the account of the Fund.
(f) (1) The Fund may not[:
(i)] provide directly or indirectly for the financing of premiums[; or
(ii) except as provided in subsection (g) of this section, accept
premiums on an installment basis].
(2) A premium may be financed only by a premium finance company
registered with the Commissioner in accordance with § 23–201 of this article.
(3) If a prospective insured’s initial payment to the Fund, a fund producer,
or premium finance company is not honored, a policy or endorsement issued in reliance on
that payment is void.
(g) (1) (i) Subject to the approval of the Commissioner and in accordance
with this subsection, the Fund may accept premiums on an installment payment basis [only
on 12–month personal lines policies].
(ii) In approving the Fund’s plan for accepting premiums on an LAWRENCE J. HOGAN, JR., Governor Ch. 453
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installment payment basis, the Commissioner shall:
1. CONSIDER AS FACTORS :
A. THE PERCENTAGE OF TH E INITIAL PREMIUM
PAYMENT IN COMPARISO N TO THE TOTAL PREMI UM UNDER THE POLICY ;
B. THE NUMBER OF INSTALLMEN T PREMIUM PAYMENTS
ACCEPTED ON A POLICY UNDER THE INSTALLMEN T PAYMENT PLAN ; AND
C. THE OVERALL AFFORDAB ILITY OF THE INSTALL MENT
PAYMENT PLAN IN COMPARISON T O OTHER PAYMENT OPTI ONS AVAILABLE TO THE
POLICYHOLDER ; AND
2. ensure that the Fund’s installment payment plan[:
1. requires an insured’s initial premium payment to be no
less than:
A. for a total annual premium of less than $3,000, 25% of the
total annual premium; and
B. for a total annual premium of $3,000 or more, 20% of the
total annual premium;
2. adjusts the amount of the total annual premium used to
determine the initial premium payment under item 1 of this subparagraph on October 1 of
each year using data from the U.S. Government Bureau of Labor Statistics motor vehicle
insurance expenditure category of the Consumer Price Index for all urban consumers;
3. is structured and administered to ensure that the Fund at
no time provides insurance coverage to an insured for a period during which the Fund has
not received the actuarially justified premium payment;
4. offers no more than:
A. for a policy under item 1A of this subparagraph, six
installment payments on the 12–month policy; and
B. for a policy under item 1B of this subparagraph, eight
installment payments on the 12–month policy;
5. allows insureds to make an initial premium payment and
installment payments in any commercially acceptable form; and
Ch. 453 2022 LAWS OF MARYLAND
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6. allows the Fund to impose an administrative processing
fee on insureds participating in the installment plan of no more than $8 per installment
payment] MEETS THE REQUIREMEN TS OF § 27–216 OF THIS ARTICLE .
(2) The Fund may not discriminate among insureds by charging different
premiums to insureds who select, as a payment option, the Fund’s installment payment
plan instead of a premium finance agreement.
(3) In determining commissions paid to a fund producer, the Fund may not
consider whether the fund producer placed an insured in an installment payment plan.
(4) (i) In accordance with this paragraph, written and electronic
communications, including the Fund’s Web site, affecting the placement of coverage by the
Fund or a fund producer shall include a statement, on a form approved by the
Commissioner, advising an applicant or an insured of the payment options available to the
applicant or insured.
(ii) The statement shall state that the applicant or insured has the
following payment options:
1. the Fund’s installment payment plan;
2. a premium finance agreement; or
3. payment of the policy in full.
(iii) The statement shall be included on written or electronic
communications at the time the applicant or insured:
1. is issued a new policy; or
2. is issued a reissuance, rewrite, or renewal of an existing
policy.
(iv) The statement shall state that the applicant or insured should
consult a fund producer who will fully describe the terms of each payment option.
(H) (1) IF THE FUND MAKES A CHANGE TO IT S PLAN FOR ACCEPTING
PREMIUMS ON AN INSTA LLMENT PAYMENT BASIS , WITHIN 90 DAYS AFTER THE
CHANGE, THE COMMISSIONER SHALL SUBMIT A REPORT TO THE GENERAL
ASSEMBLY PROVIDING THE REASON FOR THE C HANGE.
(2) THE REPORT REQUIRED UNDER PARAG RAPH (1) OF THIS
SUBSECTION SHALL:
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(I) INCLUDE THE EFFECT T HE CHANGE WILL HAVE ON THE
REQUIRED FACTORS FOR CONSIDERATION UNDER (G)(1)(II)1 OF THIS SECTION; AND
(II) BE SUBMITTED IN ACCO RDANCE WITH § 2–1257 OF THE
STATE GOVERNMENT ARTICLE.
27–216.
(a) A person may not willfully collect a premium or charge for insurance if the
insurance is not then provided, or is not in due course to be provided subject to acceptance
of the risk by the insurer, in a policy issued by an insurer as authorized by this article.
(b) (1) A person may not willfully collect a premium or charge for insurance
that:
(i) exceeds or is less than the premium or charge applicable to that
insurance under the applicable classifications and rates as filed with and approved by the
Commissioner; or
(ii) if classifications, premiums, or rates are not required by this
article to be filed with and approved by the Commissioner, exceeds or is less than the
premium or charge specified in the policy and set by the insurer.
(2) Paragraph (1) of this subsection does not prohibit:
(i) a surplus lines broker that holds a certificate of qualification
under Title 3, Subtitle 3 of this article from charging and collecting applicable State and
federal taxes in addition to the required premium;
(ii) a life insurer from charging and collecting the amount actually
expended for a medical examination of an applicant for life insurance or reinstatement of a
policy of life insurance;
(iii) an insurance producer from charging a fee, not exceeding 15% of
the premium, for services rendered in placing insurance in an insurer if commissions are
not payable by the insurer;
(iv) an insurer from paying commissions to licensed insurance
producers on a variable basis on policies issued to qualified exempt commerci al
policyholders, as defined in § 11–206 of this article, if:
1. the payment of the commission to the insurance producer
on a variable basis results in a lower total cost of the policy to the qualified exempt
policyholder; and
2. the insurance producer receiving the commission has Ch. 453 2022 LAWS OF MARYLAND
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agreed to the specific level of commission to be paid on the policy; or
(v) a fund producer from charging and collecting, as actual expenses
incurred in placing automobile insurance with the Maryland Automobile Insurance Fund:
1. a maximum charge of $25 plus $1 more than the actual
charge by the Motor Vehicle Administration for a driving record required to be presented
with the application, unless otherwise provided by the Fund; or
2. the amount provided in subsection (e) of this section.
(3) (i) Subject to subparagraphs (ii), (iii), (iv), and (v) of this paragraph,
paragraph (1) of this subsection does not prohibit an authorized insurer OR THE
MARYLAND AUTOMOBILE INSURANCE FUND from charging and collecting, if approved
by the Commissioner, reasonable installment fees or reasonable fees for late payment of
premiums by policyholders or both.
(ii) The Commissioner:
1. shall review administrative expenses submitted by an
authorized insurer OR THE MARYLAND AUTOMOBILE INSURANCE FUND that are
associated with late payments or installment payments, including the cost incurred by an
authorized insurer or a vendor of the authorized insurer to accept late payments or
installment payments by credit card, debit card, electronic funds transfer, or electronic
check payment; and
2. may approve a late fee or installment fee not to exceed $10.
(iii) A late fee may not be imposed:
1. during any grace period required by law or regulation on
a policy of insurance; or
2. if no grace period is required by law or regulation on a
policy of insurance, until 2 business days after the date the payment amount becomes due.
(iv) An authorized insurer OR THE MARYLAND AUTOMOBILE
INSURANCE FUND shall credit each payment received from an insured to the premium
owed by the insured before crediting the payment to a late fee or installment fee owed by
the insured.
(v) A policy of insurance may not be canceled for the failure to pay a
single late fee or single installment fee.
(4) (i) Subject to subparagraphs (ii) and (iii) of this paragraph,
paragraph (1) of this subsection does not prohibit an insurance producer from charging and LAWRENCE J. HOGAN, JR., Governor Ch. 453
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collecting from an insured actual expenses incurred by the insurance producer for payment
of the premium for a policy by use of a credit card.
(ii) Any point of service credit card expenses may not be considered
premium for any purpose under this paragraph.
(iii) An insurance producer that accepts alternative payment
methods for premiums shall disclose fully to the insured or prospective insured:
1. the availability of all payment methods accepted by the
insurer or insurance producer; and
2. any charge for actual expenses incurred by the insurance
producer for payment of a premium by use of a credit card.
(5) (i) Paragraph (1) of this subsection does not prohibit an authorized
motor vehicle insurer or the Maryland Automobile Insurance Fund from charging and
collecting a reasonable fee approved by the Commissioner under subparagraph (iii) of this
paragraph for the reinstatement of a private passenger motor vehicle liability insurance
policy in accordance with § 19–519 of this article.
(ii) Paragraph (1) of this subsection does not prohibit a licensed
insurance producer or a fund producer from charging and collecting a reasonable fee
approved by the Commissioner under subparagraph (iii) of this paragraph for the
reinstatement of a private passenger motor vehicle liability insurance policy in accordance
with § 19–519 of this article.
(iii) The Commissioner:
1. shall review the administrative expenses submitted by an
authorized motor vehicle insurer or the Maryland Automobile Insurance Fund that are
associated with reinstatements under § 19–519 of this article; and
2. may approve a reinstatement fee not to exceed:
A. $10 to be charged and collected by the insurer or the Fund;
and
B. $15 to be charged and collected by the insurance producer
or the fund producer.
(c) An insurer may not raise the policy limits of coverage, if the effect could be an
increase in the premium without the prior consent of the insured.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
October 1, 2022. Ch. 453 2022 LAWS OF MARYLAND
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Approved by the Governor, May 16, 2022.