EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*sb0725*
SENATE BILL 725
J5, C4 3lr0111
SB 556/20 – FIN
By: Chair, Finance Committee (By Request – Departmental – Maryland Insurance
Administration)
Introduced and read first time: February 6, 2023
Assigned to: Finance
A BILL ENTITLED
AN ACT concerning 1
Insurance – Product and Service Offerings 2
FOR the purpose of authorizing certain insurers, nonprofit health service plans, and health 3
maintenance organizations to offer and provide certain products or services in 4
conjunction with a policy at no charge or at a discounted price under certain 5
circumstances; prohibiting certain insurers, nonprofit health service plans, and 6
health maintenance organizations from increasing a premium or denying a claim 7
based on a certain action by a policyholder; and generally relating to programs and 8
services offered by insurers, nonprofit health service plans, and health maintenance 9
organizations. 10
BY repealing and reenacting, with amendments, 11
Article – Insurance 12
Section 27–209 and 27–212 13
Annotated Code of Maryland 14
(2017 Replacement Volume and 2022 Supplement) 15
BY repealing and reenacting, without amendments, 16
Article – Insurance 17
Section 27–210 and 27–211 18
Annotated Code of Maryland 19
(2017 Replacement Volume and 2022 Supplement) 20
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 21
That the Laws of Maryland read as follows: 22
Article – Insurance 23
27–209. 24
2 SENATE BILL 725
(a) Except as otherwise expressly provided by law, a person, including a health 1
maintenance organization, may not knowingly: 2
(1) allow, make, or offer to make a contract of life insurance or health 3
insurance or an annuity contract or an agreement as to the contract other than as plainly 4
expressed in the contract; 5
(2) pay, allow, give, or offer to pay, allow, or give directly or indirectly as 6
an inducement to the insurance or annuity: 7
(i) a rebate of premiums payable on the contract; 8
(ii) a special favor or advantage in the dividends or other benefits 9
under the contract; 10
(iii) paid employment or a contract for services of any kind; or 11
(iv) any valuable consideration or other inducement not specified in 12
the contract; 13
(3) directly or indirectly give, sell, purchase, offer or agree to give, sell, or 14
purchase, or allow as inducement to the insurance or annuity or in connection with the 15
insurance or annuity, regardless of whether specified in the policy or contract, an 16
agreement that promises returns and profits, or stocks, bonds, or other securities, or a 17
present or contingent interest in or measured by stocks, bonds, or other securities, of an 18
insurer or other corporation, association, or partnership, or dividends or profits accrued or 19
to accrue on stocks, bonds, or other securities; or 20
(4) offer, promise, or give any valuable consideration not specified in the 21
contract, except for educational materials, promotional materials, or articles of 22
merchandise that cost no more than $50. 23
(b) A person may not make receipt of any educational materials, promotional 24
materials, or articles of merchandise under subsection (a)(4) of this section contingent on 25
the sale or purchase of insurance. 26
(C) (1) THIS SECTION DOES NOT PROHIBIT AN INSURER , A NONPROFIT 27
HEALTH SERVICE PLAN , OR A HEALTH MAINTENA NCE ORGANIZATION FRO M 28
OFFERING OR PROVIDIN G PRODUCTS OR SERVIC ES IN CONJUNCTION WI TH A POLICY 29
AT NO CHARGE OR AT A DISCOUNTED PRICE IF : 30
(I) 1. A. THE PRODUCTS OR SERV ICES ARE OFFERED OR 31
PROVIDED TO EDUCATE PERSONS REGARDING , OR TO ASSESS, MONITOR, CONTROL, 32
OR PREVENT, RISK OF LOSS TO PERS ONS; AND 33
SENATE BILL 725 3
B. THE RISK OF LOSS TO PERSONS IS ASSOCIATE D WITH 1
RISKS INSURED AGAINS T BY THE POLICY OR I NSURANCE OR ANNUITY CONTRACT; OR 2
2. THE PRODUCTS OR SERV ICES ARE: 3
A. SUBSTANTIALLY RELATE D TO THE INSURANCE 4
PROVIDED UNDER THE P OLICY OR CONTRACT ; OR 5
B. OFFERED OR PROVIDED TO ENHANCE THE HEALT H OF 6
THE INSURED OR BENEF ICIARY; AND 7
(II) THE OFFER OR PROVISI ON OF PRODUCTS OR SE RVICES IS 8
AVAILABLE TO ALL POL ICYHOLDERS THAT HAVE PURCHASED THE POLICY OR 9
CONTRACT ASSOCIATED WITH THE OFFER OR PR OVISION. 10
(2) AN INSURER, A NONPROFIT HEALTH SER VICE PLAN, OR A HEALTH 11
MAINTENANCE ORGANIZA TION MAY INCLUDE AN OFFER OR A PROVISION OF 12
PRODUCTS OR SERVICES UNDER THIS SUBSECTIO N IN AN APPLICABLE C ONTRACT 13
OR FORM OR RATE FILI NG. 14
(3) (I) IF THE OFFER OR PROVI SION OF SPECIFIC PRO DUCTS OR 15
SERVICES UNDER THIS SUBSECTION IS INCLUD ED IN ANY POLICY OF INSURANCE, 16
HEALTH MAINTENANC E ORGANIZATION CONTR ACT, NONPROFIT HEALTH SER VICE 17
PLAN, OR ANNUITY CONTRACT , THE PRODUCTS OR SERV ICES MAY NOT BE 18
DISCONTINUED DURING THE TERM OF THE POLI CY OR CONTRACT UNLES S 19
DISCONTINUATION OF T HE PRODUCT OR SERVIC ES IS: 20
1. CONSENTED TO IN WRIT ING BY THE POLICYHOLDER ; 21
OR 22
2. THE RESULT OF A UNIF ORM MODIFICATION UND ER § 23
15–1212, § 15–1309, OR § 15–1409 OF THIS ARTICLE. 24
(II) THIS PARAGRAPH DOES N OT PROHIBIT A CARRIE R FROM 25
TERMINATING A CONTRA CT AS OTHERWISE AUTH ORIZED UNDER THIS ARTICLE. 26
(4) AN INSURER, A NONPROFIT HEALTH SER VICE PLAN, OR A HEALTH 27
MAINTENANCE ORGANIZA TION MAY NOT INCREAS E THE PREMIUM OR DEN Y A CLAIM 28
OF A POLICYHOLDER IF THE POLICYHOLDER ACC EPTS, REJECTS, USES, OR FAILS TO 29
USE A PRODUCT OR SER VICE UNDER THIS SUBS ECTION. 30
4 SENATE BILL 725
(5) THE COMMISSIONER MAY DETE RMINE BY REGULATION THE 1
TYPES OF PRODUCTS OR SERVICES THAT MEET T HE CRITERIA IN PARAG RAPH (1) OF 2
THIS SUBSECTION . 3
27–210. 4
(a) Sections 27–208 and 27–209 of this subtitle may not be construed to include 5
within the definition of discrimination or rebates any of the practices set forth in this 6
section. 7
(b) For a contract of life insurance or an annuity contract, it is not discrimination 8
or a rebate to pay bonuses to policyholders or otherwise abate their premiums wholly or 9
partly out of the surplus accumulated from nonparticipating insurance, if the bonuses or 10
abatement of premiums is fair, equitable to, and in the best interest of policyholders. 11
(c) For policies of life insurance or health insurance issued on the industrial debit, 12
preauthorized check, bank draft, or similar plans, it is not discrimination or a rebate to 13
make an allowance to policyholders who have continuously for a specified period made 14
premium payments directly to an office of the insurer or by preauthorized check, bank draft, 15
or similar plans in an amount that fairly represents the savings in collection expense. 16
(d) It is not discrimination or a rebate to readjust the rate of premium for a group 17
policy based on the loss or expense experience under the policy, at the end of any policy 18
year, retroactive only for that policy year. 19
(e) It is not discrimination or a rebate to reduce the premium rate for policies of 20
large amount, if the reduction does not exceed savings in issuance and administrative 21
expenses reasonably attributable to policies of large amount as compared with policies of 22
similar plan issued in smaller amounts. 23
(f) It is not discrimination or a rebate to issue policies of life insurance or health 24
insurance or annuity contracts on a salary savings or payroll deduction plan or other 25
distribution plan at a reduced rate reasonably commensurate with the savings made by use 26
of the plan. 27
(g) It is not discrimination or a rebate to issue policies of health insurance that 28
provide for increases in benefits to policyholders who maintain their policies continuously 29
in force without lapse for specified periods. 30
(h) (1) In this subsection, “wellness program” means a program that: 31
(i) meets the requirements of a participatory wellness program or a 32
health–contingent wellness program under § 15–509 of this article; and 33
(ii) is provided as a benefit outside of the health insurance or health 34
maintenance organization contract. 35
SENATE BILL 725 5
(2) It is not discrimination or a rebate for a carrier to provide reasonable 1
incentives to an individual who is an insured, a subscriber, or a member for participation 2
in a wellness program offered by the carrier. 3
(3) Any incentive offered for participation in a wellness program: 4
(i) shall be reasonably related to the wellness program; and 5
(ii) may not have a value that exceeds any limit established in 6
regulations adopted by the Commissioner. 7
(4) The Commissioner shall adopt regulations to implement the provisions 8
of this subsection. 9
27–211. 10
(a) This section does not apply to: 11
(1) insurance on the life of a debtor in connection with a specific loan or 12
other credit transaction; 13
(2) insurance on a debtor that provides indemnity for payments that are 14
due on a specific loan or other credit transaction while the debtor is disabled as defined in 15
the policy; or 16
(3) life insurance or an annuity used to fund a pre–need contract as defined 17
in § 7–101 of the Health Occupations Article or a preneed burial contract as defined in § 18
5–701 of the Business Regulation Article. 19
(b) An insurer may not directly or indirectly, or by an insurance producer or 20
representative of the insurer, participate in a plan to offer or effect a kind or kinds of life 21
insurance, health insurance, or annuities in the State as an inducement to, or in 22
combination with, the purchase by the public of goods, securities, commodities, services or 23
subscriptions to periodicals. 24
27–212. 25
(a) This section does not apply to life insurance, health insurance, and annuities. 26
(b) Except to the extent provided for in an applicable filing with the 27
Commissioner as provided by law, an insurer, employee or representative of an insurer or 28
insurance producer may not pay, allow, give, or offer to pay, allow, or give directly or 29
indirectly as an inducement to insurance or after insurance has become effective: 30
(1) a rebate, discount, abatement, credit, or reduction of the premium 31
stated in the policy; 32
6 SENATE BILL 725
(2) a special favor or advantage in the dividends or other benefits to accrue 1
on the policy; or 2
(3) any valuable consideration or other inducement not specified in the 3
policy. 4
(c) An insured named in a policy or an employee of the insured may not knowingly 5
receive or accept directly or indirectly a rebate, discount, abatement, credit, reduction of 6
premium, special favor, advantage, valuable consideration, or inducement described in 7
subsection (b) of this section. 8
(d) (1) Except as otherwise provided by law, a person may not knowingly offer, 9
promise, or give any valuable consideration not specified in the policy, except for 10
educational materials, promotional materials, or articles of merchandise that cost no more 11
than $50. 12
(2) A person may not make receipt of any educational materials, 13
promotional materials, or articles of merchandise under this subsection contingent on the 14
sale or purchase of insurance. 15
(e) (1) An insurer may not make or allow unfair discrimination between 16
insureds or properties having like insuring or risk characteristics in: 17
(i) the premium or rates charged for insurance; 18
(ii) the dividends or other benefits payable on the insurance; or 19
(iii) any of the other terms or conditions of the insurance. 20
(2) Notwithstanding any other provision of this section, an insurer may not 21
make or allow a differential in ratings, premium payments, or dividends for a reason based 22
on the sex, physical handicap, or disability of an applicant or policyholder unless there is 23
actuarial justification for the differential. 24
(f) (1) This section does not prohibit an insurer from: 25
[(1)] (I) paying commissions or other compensation to licensed insurance 26
producers; 27
[(2)] (II) paying commissions to licensed insurance producers on a 28
variable basis on policies issued to qualified exempt commercial policyholders, as defined 29
in § 11–206 of this article, if: 30
[(i)] 1. the payment of the commission to the insurance producer 31
on a variable basis results in a lower total cost of the policy to the qualified exempt 32
commercial policyholder; and 33 SENATE BILL 725 7
[(ii)] 2. the insurance producer receiving the commission has 1
agreed to the specific level of commission to be paid on the policy; [or] 2
[(3)] (III) allowing or returning to its participating policyholders, 3
members, or subscribers lawful dividends, savings, or unabsorbed premium deposits[.]; OR 4
(IV) OFFERING OR PROVIDIN G PRODUCTS OR SERVIC ES IN 5
CONJUNCTION WITH A P OLICY AT NO CHARGE O R AT A DISCOUNTED PR ICE TO 6
EDUCATE A PERSON REG ARDING, OR TO ASSESS, MONITOR, CONTROL, OR PREVENT, 7
RISK OF LOSS TO PERS ONS OR PROPERTY IF : 8
1. THE RISK OF LOSS T O PERSONS OR PROPERT Y IS 9
ASSOCIATED WITH THE RISKS INSURED AGAINS T BY THE POLICY; AND 10
2. THE OFFER OR PROVISI ON OF PRODUCTS OR 11
SERVICES IS AVAILABL E TO ALL POLICYHOLDE RS THAT HAVE PURCHAS ED THE 12
POLICY ASSOCIATED WI TH THE OFFER OR PROV ISION. 13
(2) AN INSURER MAY INCLUD E IN AN APPLICABLE C ONTRACT OR 14
FORM OR RATE FILING AN OFFER OR A PROVISION OF PRODUCT S OR SERVICES 15
UNDER THIS SUBSECTIO N. 16
(3) AN INSURER MAY NOT IN CREASE THE PREMIUM O R DENY A CLAIM 17
OF A POLICYHOLDER IF THE POLICYHOLDER ACC EPTS, REJECTS, USES, OR FAILS TO 18
USE A PRODUCT OR SER VICE UNDER THIS SUBS ECTION. 19
(4) THE COMMISSIONER MAY DETE RMINE BY REGULATION THE 20
TYPES OF PRODUCTS OR SERVICES THAT MEET T HE CRITERIA IN PARAG RAPH (1)(IV) 21
OF THIS SUBSECTION . 22
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to 23
apply only prospectively and may not be applied or interpreted to have any effect on or 24
application to any policies, contracts, and health benefit plans issued, delivered, or renewed 25
in the State before the effective date of this Act. 26
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 27
1, 2023. 28