State Regulations Flashcards
General Powers of the Commissioner
Appointed by the governor, serves a four year term, and is responsible for the administration and enforcement of the Maryland Code and COMAR through licensing process
Commissioners powers
approve licensing applications, certificates of qualifications and certificates of authority
renew, non-renew, suspend and revoke licenses
investigate complaints related to violation of the Code or COMAR conducting hearings and making requests to the Attorney Generals Office for prosecution
assess fines against violators of the insurance code and regulations
regulate and monitor rates, rating plans and forms to ensure fairness
collect fees
The Commissioner of Insurance enforces regulations to protect consumers in the following ways
regulating title insurance companies, insurers and producers
investigating consumer complaints related to insurance
conducting audits of insurance companies to ensure solvency
conducting examinations to ensure compliance with Maryland’s insurance laws
investigating acts of insurance fraud
reviewing and approving rates and contracts forms
An insurer may not
appoint, employ or receive business from an individual unless that person is licensed
To appoint a producer as an agent
the appointing insured must notify the Commission of the appointment
All insurers authorized to transact insurance must maintain
a producer register of appointed producers
A licensed insurance producer who has been appointed by an insurer must
maintain documentation of the insurers that have been appointed to the producer
The producer registry must be
updated within 30 dats of an appointment
Law firms that have been appointed as a principal agent must
be included in the producer registered maintained by the insurers
Title insurance producers must report
any final adverse administrative action or felony convictions within 30 days of final disposition to the Commissioner
Insurers are required every 31 days to check on
whether any disciplinary actions has been taken against their agents
How many days of notice is required to the producer of an anticipated termination
15 day notice
The regulation of trade practices in insurance in Maryland are
in accordance with McCarran-Ferguson Act
What is misrepresentation
leading someone to believe that there is a benefit to an insurance contract that doesn’t exist
Misrepresentation - false advertising
a deceptive practice to publish false information when advertising insurance services
Misrepresentation - twisting
when an insured misrepresents the benefits, terms, and conditions of one policy to induce the consumer to forfeit, surrender, drop or allow existing coverage to lapse in order to purchase new coverage
Misrepresentation - Premium Rebating
when an insurer producer pays or gives something of value as an inducement to enter into an insurance contract or after the insurance has become effective
An insurance producer may not knowingly pay or give as an inducement:
a premium rebate
a special favor or advantage in benefits of a policy
paid employment or a contract for services
anything of value
Promotional items and marketing materials valued at less than
$50 may be offered
Gift cards, prizes, raffle tickets and any other items of value
may not be offered as an incentive to entice consumers to enroll in an insurance plan
What are kickbacks
an unauthorized payment or fee given to someone for a favor for the referral of settlement business
Examples of kickbacks
payments, commissions, gifts, tangible item, special privileges
Defamation
when an insurance producer makes an oral or written statement that is false and malicious about a person engaged in the insurance business
Unfair discrimination occurs when
an insurer limits coverage to an insurance applicant because of race, sex, color, creed or national origin, age, handicap, residence or occupation
Unfair discrimination may include:
failure to issue a policy
failure to set a rate
failure to charge a fair fee, rate or premium
Unfair Claims Settlement Practices Statute
provides assurance that consumers are treated fairly when making insurance claims
Rate must be
be adequate, not excessive and not unfairly discriminatory
Rate filings must be
filed with the Commissioner for approval
Escrow
a system of document transfer in which a deed, funds, or other property is delivered to a third person to hold until all conditions to a contract are fulfilled
Escrow agent or title agent are charged with
the obligation of safeguarding funds and documents received from a lender
Escrow agent duties
follow instructions given by the lender, contract or parties to the transaction in a timely manner
handling funds and/or documents in accordance with the instructions
paying bills as instructed and authorized
responding to requests from the principals
preparing the closing or settlement statement
disbursing funds when all terms are satisfied in accordance with instructions and providing accounting for same
conduct settlements in according with lenders instructions and underwriter’s guidelines
should not disburse funds until all escrow conditions are met
What is a trust account
an escrow account is a trust account
Each controlling person and each trust money controller shall
hold a license to act as a title insurance producer
Penalty for misappropriating trust money is
$50k penalty, imprisonment for up to one year or both
A title insurance producer that willfully or knowingly misappropriates trust money is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $50k or imprisonment, not exceeding one year or both
Attorneys are required to
maintain an attorney trust account for all trust money deposits. trust money may be deposited into an IOLTA account
When an escrow agent agrees to hold trust money in escrow for a residential real estate transaction the escrow agent must
enter into a written agreement with the purchaser and seller of the residential real estate. This requirement applies to:
real property improved by four or fewer single-family dwelling units that are intended for human habitation and unimproved real property zoned for residential use by local zoning authority
Escrow agreement must contain
amount of the trust money entrusted to the escrow agent
the date the trust money was entrusted to the escrow agent
the responsibility of the escrow agent to notify the purchaser and seller of trust money returned due to dishonored funds
the conditions under which the escrow agent may release the trust money
the process to address disputes over the release of the trust money
Settlement Requirements/ Wet Settlement Act
Maryland law requires lenders to provide funding/proceeds for purchase money loans on or before the closing date and in accordance with the loan documents, to the agent responsible for settlement
An insurer or insurance producer is prohibited from
paying a commission or other valuable consideration to a person for selling, soliciting or negotiating insurance if that person is not licensed
Individuals are prohibited from accepting a commission, fee or other valuable consideration for selling, soliciting or negotiating insurance if that person is not licensed.
Commissions must be
paid to insurance producers for procuring business
MAHT (Maryland Affordable Housing Trust)
promotes affordable housing for households with income less than 50% of the median income
In cases of MAHT, Maryland law authorizes
a title insurer or its agent must pool and commingle trust money received from clients or beneficial owners in connection with escrows, settlements, closings, or title indemnifications if interest received on deposits is not greater than $50
Escheatment
When title companies attempt to locate the owner of a property, including funds held in escrow, and the owner cannot be found during a three period (dormancy period), the funds will be considered abandoned and must be transferred to the state an unclaimed property
What is the dormancy period for escheatment
three years
Retained premiums are negotiated between
title insurance underwriters and settlement agents
Premium calculations are
tiered basis. calculations are based on purchase price and/or loan amount
title insurance premium is
the compensation collected by the title agent on behalf of the underwriter
A simultaneous issue rate is
a discount given when an owner’s policy and lender’s policy are purchased at the same time and issued from the same title commitment. This allows a borrower to pay a reduced premium on the second policy
Re-issue rate is
a discount or credit given to a purchaser of a policy. It occurs mostly in refinance transactions as opposed to purchase transactions. If an owner’s policy or prior owner’s policy is presented to the title company, a discount is given because of the prior coverage
In Maryland, the discount rate for a reissue rate is
usually 40%
Title companies must retain copies of
the statutory notice regarding title insurance executed by buyers for at least three years
Title agents are required to
notify buyers of their right to obtain simultaneously with a loan a title insurance policy designed to insure the status of title. The notice provides the mortgagor with the amount of the policy, the premium amount and the name of the title insurance company issuing the coverage. The mortgagor has the option to purchase or decline the title insurance. The person receiving the premium (title insurer or agent) must retain the original signed statement of receipt of the notice and copy of the notice for three years
Delivery of insurance policy
a title insure is required to deliver a policy to a consumer once the premium is paid
On annual basis a title insurer must
conduct an on-site or remote review of the underwriting , claims and escrow practices of each agent
If an examination of books and records reveals that
the title agent has not been maintaining separate bank or trust accounts for each insurer that it represents, it is responsibility of the insurer to verify that the funds held on its behalf are reasonably ascertainable from the books of account and records of the agent
A title insurer shall
notify the Commissioner in writing within 2 calendar days if a title insurer has reason to believe that a principal agent has converted or misappropriated money received or held in trust in addition to filing any required report
Notification of Prohibited Conduct
a title insurer has reason to believe that the principal agent has engaged in or is engaging in conduct that is prohibited by insurance article insurer shall notify the Commissioner in writing within 10 calendar days after obtaining such knowledge or belief
If a title insurer has reasonable cause to believe that the title insurance producer or agency engaged in activities prohibited by Section 10-126 of insurance article the
title insurer must file the report with the Commissioner within 45 days after the completion of the reivew
Commissioner or their designee may
examine the accounts, records, documents and transactions that relate to the insurer or producer to verify financial status and ensure compliance with the law
Title insurance agents are required to
maintain sufficient records of its affairs including escrow operations and escrow trust accounts so that the Commissioner may ensure that the title insurance agent is complying with the law
Underwriters may impose
file retention requirements, especially when the agent is acting in the capacity of a closer
Privacy policy must be disclosed to
consumers at least once a year
