Maryland Commercial Deregulation Bill Clears Another Legislative Hurdle

Legislation in Maryland to reduce government regulation of commercial insurance has cleared another legislative hurdle. The House passed House Bill 818 this week by a vote of 137-2. Its companion measure, Senate Bill 598, was approved by a unanimous vote in the Senate on March 22nd.

"Both bills would exempt certain large commercial policyholders from the requirement to obtain prior approval from the Maryland Insurance Administration for policy forms," said John Andryszak, of the American Insurance Association. "Large risks will be able to design insurance programs tailor-made for their operations, rather than buying standardized coverage that may or may not suit all of their needs."

Under HB 818, a company must pay at least $75,000 in annual premium and meet two of five other optional criteria to qualify for the exemption. The optional criteria include: annual revenue or sales of $10 million; net worth of $5 million; at least 25 full time employees; be a nonprofit with an annual budget of at least $10 million; or be a municipality with a population of at least 15,000.

SB 598 contains sixth optional criteria that allows companies to qualify for the exemption by retaining an independent insurance advisor that meets certain qualifications. Another difference in the Senate bill is that the mandatory annual premium threshold is $50,000.

Under both bills the policyholder must certify to its insurer and the MIA which of the criteria it meets. SB 598 also requires policyholders to provide the name and address of the insurance advisor if that is one of the optional criteria selected. Under both bills, the MIA can, at its discretion, request that the form be filed after the fact.

"We believe that deregulating the policy form approval process will provide insurers with the flexibility necessary to design new and innovative products. This increased flexibility also will serve to increase competition as insurers will be able to respond quickly to changes in the marketplace, as well as to the changing needs of their customers," said Andryszak.

The two bills must now be reconciled, which will happen either in a conference committee after each bill achieves final passage, or one bill will be modified to conform to the other. The Maryland General Assembly is scheduled to adjourn for the year on April 10th.