Maryland Insurance Section 27-605

      (a)      In this section, "increase in premium" and "premium increase" include an increase in the premium for any coverage on a policy due to:

            (1)      a surcharge;

            (2)      retiering or other reclassification of an insured; or

            (3)      removal or reduction of a discount.

      (b)      (1)      Except in accordance with this article, with respect to a policy of motor vehicle liability insurance or a binder of motor vehicle liability insurance, if the binder has been in effect for at least 45 days, issued in the State to any resident of the household of the named insured, an insurer other than the Maryland Automobile Insurance Fund may not:

                  (i)      cancel or fail to renew the policy or binder for a reason other than nonpayment of premium;

                  (ii)      increase a premium for any coverage on the policy; or

                  (iii)      reduce coverage under the policy.

            (2)      Notwithstanding paragraph (1) of this subsection, the requirements of this section do not apply if:

                  (i)      the premium increase described in paragraph (1)(ii) of this subsection is part of a general increase in premiums approved by the Commissioner and does not result from a reclassification of the insured;

                  (ii)      the reduction in coverage described in paragraph (1)(iii) of this subsection is part of a general reduction in coverage approved by the Commissioner or satisfies the requirements of Title 19, Subtitle 5 of this article; or

                  (iii)      the failure to renew the policy takes place under a plan of withdrawal that:

                        1.      is approved by the Commissioner under § 27-603 of this subtitle; and

                        2.      provides that each insured affected by the plan of withdrawal shall be sent by certificate of mailing at least 45 days before the nonrenewal of the policy a written notice that states the date that the policy will be nonrenewed and that the nonrenewal is the result of the withdrawal of the insurer from the market.

      (c)      (1)      At least 45 days before the proposed effective date of the action, an insurer that intends to take an action subject to this section must send written notice of its proposed action to the insured at the last known address of the insured:

                  (i)      for notice of cancellation or nonrenewal, by certified mail; and

                  (ii)      for all other notices of actions subject to this section, by certificate of mailing.

            (2)      The notice must be in triplicate and on a form approved by the Commissioner.

            (3)      The notice must state in clear and specific terms:

                  (i)      the proposed action to be taken, including:

                        1.      for a premium increase, the amount of the increase and the type of coverage to which it is applicable; and

                        2.      for a reduction in coverage, the type of coverage reduced and the extent of the reduction;

                  (ii)      the proposed effective date of the action;

                  (iii)      subject to paragraph (4) of this subsection, the actual reason of the insurer for proposing to take the action;

                  (iv)      if there is coupled with the notice an offer to continue or renew the policy in accordance with § 27-606 of this subtitle:

                        1.      the name of the individual or individuals to be excluded from coverage; and

                        2.      the premium amount if the policy is continued or renewed with the named individual or individuals excluded from coverage;

                  (v)      the right of the insured to replace the insurance through the Maryland Automobile Insurance Fund and the current address and telephone number of the Fund;

                  (vi)      the right of the insured to protest the proposed action of the insurer and, except in the case of a premium increase of 15% or less for the entire policy, request a hearing before the Commissioner on the proposed action by signing two copies of the notice and sending them to the Commissioner within 30 days after the mailing date of the notice;

                  (vii)      except for a premium increase of 15% or less for the entire policy, that if a protest is filed by the insured, the insurer must maintain the current insurance in effect until a final determination is made by the Commissioner, subject to the payment of any authorized premium due or becoming due before the determination;

                  (viii)      that the Commissioner shall order the insurer to pay reasonable attorney fees incurred by the insured for representation at the hearing if the Commissioner finds that:

                        1.      the actual reason for the proposed action is not stated in the notice or the proposed action is not in accordance with § 27-501 of this article, the insurer's filed rating plan, its underwriting standards, or the lawful terms and conditions of the policy related to a cancellation, nonrenewal, premium increase, or reduction in coverage; and

                        2.      the insurer's conduct in maintaining or defending the proceeding was in bad faith or the insurer acted willfully in the absence of a bona fide dispute; and

                  (ix)      if the proposed action is based wholly or partly on a credit score or information from a credit report:

                        1.      the name, address, and telephone number of the consumer reporting agency that furnished the credit report to the insurer, including the toll-free telephone number established by the agency if the agency compiles and maintains files on consumers on a nationwide basis;

                        2.      that the consumer reporting agency did not make the decision to take the proposed action and is unable to provide the insured the specific reasons why the action is proposed to be taken;

                        3.      that the insured may obtain, under § 1681 of the federal Fair Credit Reporting Act, a free copy of the credit report of the insured from the consumer reporting agency within 60 days after receipt of the notice; and

                        4.      that the insured may dispute, under § 1681i of the federal Fair Credit Reporting Act, with the consumer reporting agency the accuracy or completeness of any information in the credit report furnished by the agency.

            (4)      (i)      The insurer's statement of actual reason for proposing to take an action subject to this section must be sufficiently clear and specific so that an individual of average intelligence can identify the basis for the insurer's decision without making further inquiry.

                  (ii)      The use of generalized terms such as "personal habits", "living conditions", "poor morals", or "violation or accident record" does not meet the requirements of this paragraph.

                  (iii)      The Commissioner may not disallow a proposed action of an insurer because the statement of actual reason contains:

                        1.      grammatical errors, typographical errors, or other errors provided that the errors are nonmaterial and not misleading; or

                        2.      surplus information, provided that the surplus information is nonmaterial and not misleading.

      (d)      At least 10 days before the date an insurer proposes to cancel a policy for nonpayment of premium, the insurer shall cause to be sent to the insured, by certificate of mailing, a written notice of intention to cancel for nonpayment of premium.

      (e)      A statement of actual reason contained in the notice given under subsection (c) of this section is privileged and does not constitute grounds for an action against the insurer, its representatives, or another person that in good faith provides to the insurer information on which the statement is based.

      (f)      (1)      This subsection does not apply to an action of an insurer taken under subsection (d) of this section.

            (2)      An insured may protest a proposed action of the insurer under this section by signing two copies of the notice and sending them to the Commissioner within 30 days after the mailing date of the notice.

            (3)      On receipt of a protest, the Commissioner shall notify the insurer of the filing of the protest.

            (4)      Except for a premium increase of 15% or less for the entire policy, a protest filed with the Commissioner stays the proposed action of the insurer pending a final determination by the Commissioner.

            (5)      (i)      Except for a premium increase of 15% or less for the entire policy, the insurer shall maintain in effect the same coverage and premium that were in effect on the day the notice of proposed action was sent to the insured until a final determination is made, subject to the payment of any authorized premium due or becoming due before the determination.

                  (ii)      In the case of a premium increase, a dismissal of the protest or disallowance of the premium increase is deemed to be a final determination of the Commissioner 20 days after the mailing date of the Commissioner's notice of action.

      (g)      (1)      Based on the information contained in the notice, the Commissioner:

                  (i)      shall determine whether the protest by the insured has merit; and

                  (ii)      either shall dismiss the protest or disallow the proposed action of the insurer.

            (2)      The Commissioner shall notify the insurer and the insured of the action of the Commissioner promptly in writing.

            (3)      Subject to paragraph (4) of this subsection, within 30 days after the mailing date of the Commissioner's notice of action, the aggrieved party may request a hearing.

            (4)      Except in the case of a premium increase of 15% or less for the entire policy the Commissioner shall:

                  (i)      hold a hearing within a reasonable time after the request for a hearing; and

                  (ii)      give written notice of the time and place of the hearing at least 10 days before the hearing.

            (5)      A hearing held under this subsection shall be conducted in accordance with Title 10, Subtitle 2 of the State Government Article.

            (6)      At the hearing the insurer has the burden of proving its proposed action to be justified and, in doing so, may rely only on the reasons set forth in its notice to the insured.

      (h)      (1)      The Commissioner shall issue an order within 30 days after the conclusion of the hearing.

            (2)      If the Commissioner finds the proposed action of the insurer to be in accordance with the insurer's filed rating plan, its underwriting standards, or the lawful terms and conditions of the policy related to a cancellation, nonrenewal, premium increase, or reduction in coverage, as applicable, and not in violation of § 27-501 of this article, the Commissioner shall:

                  (i)      dismiss the protest; and

                  (ii)      allow the proposed action to be taken on the later of:

                        1.      its proposed effective date; and

                        2.      30 days after the date of the determination.

            (3)      If the Commissioner finds that the actual reason for the proposed action is not stated in the notice or the proposed action is not in accordance with § 27-501 of this article, the insurer's filed rating plan, its underwriting standards, or the lawful terms and conditions of the policy related to a cancellation, nonrenewal, premium increase, or reduction in coverage, the Commissioner shall:

                  (i)      disallow the action; and

                  (ii)      order the insurer to pay reasonable attorney fees incurred by the insured for representation at the hearing if the Commissioner finds that the insurer's conduct in maintaining or defending the proceeding was in bad faith or the insurer acted willfully in the absence of a bona fide dispute.

      (i)      The Commissioner may delegate the powers and duties of the Commissioner under this section to one or more employees or hearing examiners.

      (j)      (1)      If the Commissioner disallows a premium increase of 15% or less for the entire policy, the insurer, within 30 days after the disallowance, shall:

                  (i)      return to the insured all disallowed premium received from the insured; and

                  (ii)      pay to the insured interest on the disallowed premium received from the insured calculated at 10% per annum from the date the disallowed premium was received to the date the disallowed premium was returned.

            (2)      If an insurer fails to return any disallowed premium or fails to pay interest to an insured in violation of paragraph (1) of this subsection, the insurer is in violation of this article and subject to the penalties under § 4-113(d) of this article.

      (k)      A party to a proceeding under this section may appeal the decision of the Commissioner in accordance with § 2-215 of this article.

      (l)      The Commissioner may adopt regulations that exclude from the requirements of this section certain types of premium increases, except for premium increases due to:

            (1)      an accident;

            (2)      a violation of the Maryland vehicle law or the vehicle law of another state;

            (3)      the claims history of the insured;

            (4)      the credit history or the credit score of the insured;

            (5)      a retiering of the insured; or

            (6)      a surcharge.