EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*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
Committee Report: Favorable with amendments
Senate action: Adopted
Read second time: March 3, 2023
CHAPTER ______
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
2 SENATE BILL 725
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Insurance 3
27–209. 4
(a) Except as otherwise expressly provided by law, a person, including a health 5
maintenance organization, may not knowingly: 6
(1) allow, make, or offer to make a contract of life insurance or health 7
insurance or an annuity contract or an agreement as to the contract other than as plainly 8
expressed in the contract; 9
(2) pay, allow, give, or offer to pay, allow, or give directly or indirectly as 10
an inducement to the insurance or annuity: 11
(i) a rebate of premiums payable on the contract; 12
(ii) a special favor or advantage in the dividends or other benefits 13
under the contract; 14
(iii) paid employment or a contract for services of any kind; or 15
(iv) any valuable consideration or other inducement not specified in 16
the contract; 17
(3) directly or indirectly give, sell, purchase, offer or agree to give, sell, or 18
purchase, or allow as inducement to the insurance or annuity or in connection with the 19
insurance or annuity, regardless of whether specified in the policy or contract, an 20
agreement that promises returns and profits, or stocks, bonds, or other securities, or a 21
present or contingent interest in or measured by stocks, bonds, or other securities, of an 22
insurer or other corporation, association, or partnership, or dividends or profits accrued or 23
to accrue on stocks, bonds, or other securities; or 24
(4) offer, promise, or give any valuable consideration not specified in the 25
contract, except for educational materials, promotional materials, or articles of 26
merchandise that cost no more than $50. 27
(b) A person may not make receipt of any educational materials, promotional 28
materials, or articles of merchandise under subsection (a)(4) of this section contingent on 29
the sale or purchase of insurance. 30
(C) (1) THIS SECTION DOES NOT PROHIBIT AN INSURER , A NONPROFIT 31
HEALTH SERVICE PLAN , OR A HEALTH MAINTENA NCE ORGANIZATION FRO M 32
OFFERING OR PROVIDIN G PRODUCTS OR SERVIC ES IN CONJUNCTION WI TH A POLICY 33
AT NO CHARGE OR AT A DISCOUNTED PRICE IF : 34 SENATE BILL 725 3
(I) 1. A. THE PRODUCTS OR SERV ICES ARE OFFERED OR 1
PROVIDED TO EDUCATE PERSONS REGARDING , OR TO ASSESS, MONITOR, CONTROL, 2
OR PREVENT, RISK OF LOSS TO PERS ONS; AND 3
B. THE RISK OF LOSS TO PERSONS IS ASSOCIATE D WITH 4
RISKS INSURED AGAINS T BY THE POLICY OR I NSURANCE OR ANNUITY CONTRACT ; OR 5
2. THE PRODUCTS OR SERV ICES ARE: 6
A. SUBSTANTIALLY RELATE D TO THE INSURANCE 7
PROVIDED UNDER THE P OLICY OR CONTRACT ; OR 8
B. OFFERED OR PROVIDED TO ENHANCE THE HEALT H OF 9
THE INSURED OR BENEF ICIARY; AND 10
(II) THE OFFER OR PROVISI ON OF PRODUCTS OR SE RVICES IS 11
AVAILABLE TO ALL POL ICYHOLDERS THAT HAVE PURCHASED THE POLICY OR 12
CONTRACT ASSOCIATED WITH THE OFFER OR PR OVISION. 13
(2) AN INSURER, A NONPROFIT HEALTH S ERVICE PLAN, OR A HEALTH 14
MAINTENANCE ORGANIZA TION MAY INCLUDE AN OFFER O R A PROVISION OF 15
PRODUCTS OR SERVICES UNDER THIS SUBSECTIO N IN AN APPLICABLE C ONTRACT 16
OR FORM OR RATE FILI NG. 17
(3) (I) IF THE OFFER OR PROVI SION OF SPECIFIC PRO DUCTS OR 18
SERVICES UNDER THIS SUBSECTION IS INCLUD ED IN ANY POLICY OF INSURANCE, 19
HEALTH MAINTENANCE O RGANIZATION CONTRACT , NONPROFIT HEALTH SER VICE 20
PLAN, OR ANNUITY CONTRACT , THE PRODUCTS OR SERV ICES MAY NOT BE 21
DISCONTINUED DURING THE TERM OF THE POLI CY OR CONTRACT UNLES S 22
DISCONTINUATION OF T HE PRODUCT OR SERVIC ES IS: 23
1. CONSENTED TO IN WRITIN G BY THE POLICYHOLDE R; 24
OR 25
2. THE RESULT OF A UNIF ORM MODIFICATION UND ER § 26
15–1212, § 15–1309, OR § 15–1409 OF THIS ARTICLE. 27
(II) THIS PARAGRAPH DOES N OT PROHIBIT A CARRIE R FROM 28
TERMINATING A CONTRA CT AS OTHERWISE AUTH ORIZED UND ER THIS ARTICLE. 29
(4) AN INSURER, A NONPROFIT HEALTH S ERVICE PLAN, OR A HEALTH 30
MAINTENANCE ORGANIZA TION MAY NOT INCREAS E THE PREMIUM OR DEN Y A CLAIM 31 4 SENATE BILL 725
OF A POLICYHOLDER IF THE POLICYHOLDER ACC EPTS, REJECTS, USES, OR FAILS TO 1
USE A PRODUCT OR SER VICE UNDER THIS SUBSECTION . 2
(5) THE (I) SUBJECT TO SUBPARAGRA PH (II) OF THIS 3
PARAGRAPH , THE COMMISSIONER MAY DETE RMINE BY REGULATION THE TYPES OF 4
PRODUCTS OR SERVICES THAT MEET THE CRITER IA IN PARAGRAPH (1) OF THIS 5
SUBSECTION. 6
(II) A PRODUCT OR SERVICE OFFERED OR PROVIDED IN 7
CONJUNCTION WITH AN INSURANCE POLICY OR ANNUITY CONTRACT THA T IS 8
PRIMARILY DESIGNED T O ENHANCE FINANCIAL WELLNESS SHALL BE AL LOWED IF 9
THE COMMISSIONER DETERMIN ES THAT THE PRODUCT OR SERVICE INCLUDES AN 10
ENHANCEMENT TO THE F INANCIAL PROTECTION COMPONENT O F THE INSURANCE 11
POLICY OR ANNUITY CO NTRACT. 12
27–210. 13
(a) Sections 27–208 and 27–209 of this subtitle may not be construed to include 14
within the definition of discrimination or rebates any of the practices set forth in this 15
section. 16
(b) For a contract of life insurance or an annuity contract, it is not discrimination 17
or a rebate to pay bonuses to policyholders or otherwise abate their premiums wholly or 18
partly out of the surplus accumulated from nonparticipating insurance, if the bonuses or 19
abatement of premiums is fair, equitable to, and in the best interest of policyholders. 20
(c) For policies of life insurance or health insurance issued on the industrial debit, 21
preauthorized check, bank draft, or similar plans, it is not discrimination or a rebate to 22
make an allowance to policyholders who have continuously for a specified period made 23
premium payments directly to an office of the insurer or by preauthorized check, bank draft, 24
or similar plans in an amount that fairly represents the savings in collection expense. 25
(d) It is not discrimination or a rebate to readjust the rate of premium for a group 26
policy based on the loss or expense experience under the policy, at the end of any policy 27
year, retroactive only for that policy year. 28
(e) It is not discrimination or a rebate to reduce the premium rate for policies of 29
large amount, if the reduction does not exceed savings in issuance and administrative 30
expenses reasonably attributable to policies of large amount as compared with policies of 31
similar plan issued in smaller amounts. 32
(f) It is not discrimination or a rebate to issue policies of life insurance or health 33
insurance or annuity contracts on a salary savings or payroll deduction plan or other 34
distribution plan at a reduced rate reasonably commensurate with the savings made by use 35
of the plan. 36
SENATE BILL 725 5
(g) It is not discrimination or a rebate to issue policies of health insurance that 1
provide for increases in benefits to policyholders who maintain their policies continuously 2
in force without lapse for specified periods. 3
(h) (1) In this subsection, “wellness program” means a program that: 4
(i) meets the requirements of a participatory wellness program or a 5
health–contingent wellness program under § 15–509 of this article; and 6
(ii) is provided as a benefit outside of the health insurance or health 7
maintenance organization contract. 8
(2) It is not discrimination or a rebate for a carrier to provide reasonable 9
incentives to an individual who is an insured, a subscriber, or a member for participation 10
in a wellness program offered by the carrier. 11
(3) Any incentive offered for participation in a wellness program: 12
(i) shall be reasonably related to the wellness program; and 13
(ii) may not have a value that exceeds any limit established in 14
regulations adopted by the Commissioner. 15
(4) The Commissioner shall adopt regulations to implement the provisions 16
of this subsection. 17
27–211. 18
(a) This section does not apply to: 19
(1) insurance on the life of a debtor in connection with a specific loan or 20
other credit transaction; 21
(2) insurance on a debtor that provides indemnity for payments that are 22
due on a specific loan or other credit transaction while the debtor is disabled as defined in 23
the policy; or 24
(3) life insurance or an annuity used to fund a pre–need contract as defined 25
in § 7–101 of the Health Occupations Article or a preneed burial contract as defined in § 26
5–701 of the Business Regulation Article. 27
(b) An insurer may not directly or indirectly, or by an insurance producer or 28
representative of the insurer, participate in a plan to offer or effect a kind or kinds of life 29
insurance, health insurance, or annuities in the State as an inducement to, or in 30
combination with, the purchase by the public of goods, securities, commodities, services or 31
subscriptions to periodicals. 32
6 SENATE BILL 725
27–212. 1
(a) This section does not apply to life insurance, health insurance, and annuities. 2
(b) Except to the extent provided for in an applicable filing with the 3
Commissioner as provided by law, an insurer, employee or representative of an insurer or 4
insurance producer may not pay, allow, give, or offer to pay, allow, or give directly or 5
indirectly as an inducement to insurance or after insurance has become effective: 6
(1) a rebate, discount, abatement, credit, or reduction of the premium 7
stated in the policy; 8
(2) a special favor or advantage in the dividends or other benefits to accrue 9
on the policy; or 10
(3) any valuable consideration or other inducement not specified in the 11
policy. 12
(c) An insured named in a policy or an employee of the insured may not knowingly 13
receive or accept directly or indirectly a rebate, discount, abatement, credit, reduction of 14
premium, special favor, advantage, valuable consideration, or inducement described in 15
subsection (b) of this section. 16
(d) (1) Except as otherwise provided by law, a person may not knowingly offer, 17
promise, or give any valuable consideration not specified in the policy, except for 18
educational materials, promotional materials, or articles of merchandise that cost no more 19
than $50. 20
(2) A person may not make receipt of any educational materials, 21
promotional materials, or articles of merchandise under this subsection contingent on the 22
sale or purchase of insurance. 23
(e) (1) An insurer may not make or allow unfair discrimination between 24
insureds or properties having like insuring or risk characteristics in: 25
(i) the premium or rates charged for insurance; 26
(ii) the dividends or other benefits payable on the insurance; or 27
(iii) any of the other terms or conditions of the insurance. 28
(2) Notwithstanding any other provision of this section, an insurer may not 29
make or allow a differential in ratings, premium payments, or dividends for a reason based 30
on the sex, physical handicap, or disability of an applicant or policyholder unless there is 31
actuarial justification for the differential. 32
(f) (1) This section does not prohibit an insurer from: 33 SENATE BILL 725 7
[(1)] (I) paying commissions or other compensation to licensed insurance 1
producers; 2
[(2)] (II) paying commissions to licensed insurance producers on a 3
variable basis on policies issued to qualified exempt commercial policyholders, as defined 4
in § 11–206 of this article, if: 5
[(i)] 1. the payment of the commission to the insurance producer 6
on a variable basis results in a lower total cost of the policy to the qualified exempt 7
commercial policyholder; and 8
[(ii)] 2. the insurance producer receiving the commission has 9
agreed to the specific level of commission to be paid on the policy; [or] 10
[(3)] (III) allowing or returning to its participating policyholders, 11
members, or subscribers lawful dividends, savings, or unabsorbed premium deposits[.]; OR 12
(IV) OFFERING OR PROVIDIN G PRODUCTS OR SERVIC ES IN 13
CONJUNCTION WITH A P OLICY AT NO CHARGE OR AT A DISCOUNTED P RICE TO 14
EDUCATE A PERSON REG ARDING, OR TO ASSESS, MONITOR, CONTROL, OR PREVENT, 15
RISK OF LOSS TO PERS ONS OR PROPERTY IF : 16
1. THE RISK OF LOSS TO PERSONS OR PROPERTY IS 17
ASSOCIATED WITH THE RISKS INSURED AGAINS T BY THE POLICY; AND 18
2. THE OFFER OR PROVISI ON OF PRODUCTS OR 19
SERVICES IS AVAILABL E TO ALL POLICYHOLDE RS THAT HAVE PURCHAS ED THE 20
POLICY ASSOCIATED WI TH THE OFFER OR PROV ISION. 21
(2) AN INSURER MAY INCLUD E IN AN APPLICABLE C ONTRACT OR 22
FORM OR RATE FILING AN OFFER OR A PROVIS ION OF PRODUCTS OR S ERVICES 23
UNDER THIS SUBSECTIO N. 24
(3) AN INSURER MAY NOT IN CREASE THE PREMIUM O R DENY A CLAIM 25
OF A POLICYHOLDER IF THE POLICYHOLDER ACC EPTS, REJECTS, USES, OR FAILS TO 26
USE A PRODUCT OR SER VICE UNDER THIS SUBS ECTION. 27
(4) THE COMMISSIONER MAY DETE RMINE BY REGULATION THE 28
TYPES OF PRODUCTS OR SERVICES THAT MEET T HE CRITERIA IN PARAG RAPH (1)(IV) 29
OF THIS SUBSECTION . 30
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall be construed to 31
apply only prospectively and may not be applied or interpreted to have any effect on or 32 8 SENATE BILL 725
application to any policies, contracts, and health benefit plans issued, delivered, or renewed 1
in the State before the effective date of this Act. 2
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect July 3
1, 2023. 4
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.