On August 9, 2012, the Maryland Insurance Administration issued Bulletin 12-15, wherein it presented proposed regulations impacting insurers who apply percentage deductibles to hurricane or storm claims. The regulations are designed to “define homeowners insurance; establish when an insurer can apply a percentage deductible; detail the information that must accompany the insurer’s filing of an underwriting standard requiring the application of a percentage deductible…; and set out the minimum requirements for the annual statements that must be provided to insureds.”
The Administration has made clear that it intends for these proposed regulations to apply in full force to Surplus Lines carriers. Various carriers have expressed concerns that the Administration appears to be, for the first time, directly applying both rate and form law to the surplus lines market. Of particular concern is that the proposed regulations would compel carriers to file with and obtain approval from the Commissioner of any underwriting standard that requires a percentage deductible exceeding 5%.
All Surplus Lines carriers doing business in Maryland should review the proposed regulations in the context of the forms they currently use, as well as their business model. We will continue to monitor the progress of the proposed regulations, as well as the comments made concerning impact from pending changes.