Maryland Regulatory Update Amidst the COVID-19 Crisis

Pessin Katz Law, P.A.
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Pessin Katz Law, P.A.

For the past couple of weeks we have provided information as to recent Bulletins and other information sent out by the Maryland Insurance Administration. (Please see updates below listed by date). We are today providing a summary of additional Bulletins that have been issued since our last newsletter.

May 8, 2020

Maryland Insurance Administration—A New Commissioner

The most significant news of the week is that Maryland has a new Insurance Commissioner.

Al Redmer, Jr. has served as the head of the Maryland Insurance Administration from June 2003 to June 2005 and most recently since January 2015. He has stepped down in order to take over the helm of the Maryland Auto Insurance Fund (MAIF), which is a state sponsored entity that provides automobile insurance to Maryland residents. His job as Executive Director will begin on May 18, 2020.

The Governor has appointed Attorney Kathleen Birrane as the new Insurance Commissioner. Many know Ms. Birrane as the former principal counsel to the Maryland Insurance Administration and feel that because of that, she will have no learning curb when she moves into the Maryland Insurance Administration’s top slot. She will, of course, require Senate confirmation to remain permanently at the helm.

Bulletins

Bulletin 20-22 (Audit of Pharmacies) was issued on April 30, 2020. This Bulletin indicated that the Commissioner was invoking his emergency powers to activate COMAR 31.01.02.06L. This regulation allows the Commissioner to require pharmacy benefits manager and health carriers to suspend random audits. The suspension of random audits shall remain in effect until Governor Hogan’s State of Emergency is lifted or a new bulletin is issued.

Insurance Scams

ON May 1, 2020, the Insurance Commissioner issued a Consumer Advisory as to insurance scams related to COVID-19. As noted in the Advisory, there are people posing as insurance agents or company representative that are offering COVID-19 related health insurance and life and travel insurance products. The Advisory warned: “Consumers should be aware that anyone claiming to offer COVID-19-specific coverage, telehealth-only coverage or guaranteed access to testing may be engaged in fraud.”

Office of Administrative Hearings

As noted in our past newsletter, the Office of Administrative Hearings (OAH) was closed to the public. Recently, the OAH has indicated that it will allow litigants and lawyers to opt in through the OAH’s website. However, at least until May 15, 2020, all in-persons proceedings have been temporarily suspended. Recently, the OAH has indicated that it will allow litigants and lawyers to opt in to a hearing through the OAH’s website.

May 1, 2020

Maryland Insurance Administration

The Maryland Insurance Administration has made it clear that it remains open during the COVID-19 crisis. Among other things, the processing of complaints has been robust. Since March 13, 2020, the Administration has opened or considered over 1,000 new investigations, complaints, or cases. Over 1,400 cases, complaints and investigations were closed.

In addition to these investigations, the Maryland Insurance Administration is attempting to hold hearings via a new pilot program. This Video Pilot allow parties to agree to participate in hearings, as scheduled, by video conference using the Google Hangout Meets video meeting platform. In addition, some motions are being heard by telephone conference.

With respect to hearings that have been referred to the Office of Administrative Hearings, that agency is closed to the public.

Worker’s Compensation Insurance

In Bulletin 20-20 issued on April 13, 2020, the Maryland Insurance Administration encouraged insurers to adjust workers’ compensation insurance premiums to reflect reductions in payroll and provide premium relief. In particular, there is a concern about the need to exclude payroll for premium calculations for employees that are being paid but are not working at all due to the COVID-19 crisis. There is a temporary rule change that will be in effect with respect to such issues; this rule change will be in effect through December 31, 2020.

Last week we provided information as to recent Bulletins and other information sent out by the Maryland Insurance Administration. (Please see updates below listed by date). We are today providing a summary of additional Bulletins that have been issued since our last newsletter.

April 15, 2020

Bulletin No. 20-18 deals with Motor Vehicle Registrations and Commercial Automobiles and Fleets. The Bulletin notes that owners of multiple vehicles, including commercial fleets, may want to put some vehicles out of service during the Covid-19 crisis, so as to discontinue coverage and thereby reduce premiums. The Maryland Insurance Administration encourages insurer to work with policyholders to make premium reductions without the return of tags. This reduction of premium issue has been the subject of a number of Bulletins and insurers should consider having a plan in place to deal with such issues. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-18-COVID-19-Motor-Vehicle-Registrations.pdf

Bulletin No. 20-19 deals with quarterly premium tax payments. The bottom line of this bulletin is that the Insurance Commissioner has the discretion to waive penalties and late payments of quarterly estimated premium taxes due on April 15, 2020. Importantly, an insurer should have documentation as to how the Covid-19 crisis has impacted the operation of the insurer’s premium tax administrative offices. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-19-COVID-19-Quarterly-Premium-Tax.pdf

Bulletin No. 20-20 deals with the financial challenges of Maryland’s business community and what insurers should do to assist. With respect to workers compensation policies, insurers are requested to work with producers to accommodate policyholder requests for mid-term revisions to premiums based upon Covid-19 furloughs and layoffs. This Bulletin also requests that insurers waive or reduce “to the greatest extent possible” short-rate cancellation penalties during the Covid-19 crisis. Insurers that use credit in underwriting are also urged to take into consideration the impact of the crisis; insurers are specifically urged to “rely heavily” on pre-Covid-19 information and to consider an insured’s or applicant’s history over a period “of several years”. Commercial insurers are also urged “to refrain from attaching any adverse underwriting or pricing outcomes for insureds who have made inquiries or file Business Interruption claims that have not resulted in a claim payment.” https://insurance.maryland.gov/Insurer/Documents/bulletins/20-20-Commercial-Insurance-COVID-19.pdf

Other Information: There is a Covid-19 resource page that has important information, including:

  • Contract information for key Maryland Insurance Administration personnel.
  • Responses to frequently asked questions, including questions relating to extended filing deadlines, the waiver of the requirement of “wet” signatures for filings, and the fact that there is no change in the service procedures for litigation filings against insurance companies. https://insurance.maryland.gov/COVID-19/Documents/EandA-COVID-FAQs.pdf

We expect additional bulletins and information to be issued during the upcoming weeks.

Please feel free to contact us regarding these Bulletins or their implementation.

April 6, 2020

There is so much being written about the legal issues surrounding the pandemic that it is hard to know where to begin reading. We have decided to help by giving our clients and colleagues a guideline of some of the articles and resources we have been reviewing. We are providing information related to Bulletins issued by the Maryland Insurance Administration (“MIA”) concerning the Covid-19 Pandemic.

Check in frequently for an update on these resources. Please contact us (plambert@pklaw.com or bcampbell@pklaw.com) and let us know if this list is helpful or if you have other resources that we should add to our aggregated list.

Bulletin No. 20-17 deals with contractual deadlines within insurance policies. The MIA has specifically requested insurers to “be lenient” in the application of the policy language requiring “notice of a claim promptly.” Insurers are specifically requested to consider “whether or not late notice of a claim was preventable and if the late-notice actually prejudiced the insurer’s ability to adjust the claim.” Similarly, insurers are requested to consider limiting the use of “Sworn Statement in Proof of Loss” and to consider the use of electronic signatures. The MIA has further reminded insurers that policyholders should not be penalized for delays that might be caused by the Covid-19 crisis, particularly in considering the policy benefits for additional living expenses, loss of use, rental reimbursement, and business interruption claim. For EUOs, insurers are forbidden to take in person examinations without the agreement of all parties; even with the agreement of all parties, there must be strict adherence to all social distancing protocols. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-17-COVID-19-Contractual-Deadlines-within-Propery-and-Casualty-Insurance-Policies.pdf.

Bulletin No. 20-16 deals with title insurance producers. This bulletin specifically allows title insurance producers to conduct remote settlements during the Covid-19 crisis, provided that certain protocols are followed. The protocols are specified in the bulletin. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-16-Conducting-Mobile-Settlements.pdf.

Bulletin No. 20-15 deals with certain private passenger automobile insurers suspending the commercial use exclusionary language in their contracts during the Covid-19 crisis. The bulletin explains how insurers may make an endorsement form filling that temporarily suspends the commercial use exclusionary language in their contracts. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-15-Commercial-Use-Exclusion-in-PPA-policies.pdf.

Bulletin Nos. 20-10 and 20-14 deals with premiums. In Bulletin No. 20-10, the MIA strongly encouraged insurers to make reasonable accommodations so that individuals and businesses do not lose coverage due to non-payment of premium during the Covid-19 emergency. The MIA specifically noted that reasonable accommodations may include suspensions of premiums due, extension of billing due dates and premiums grace periods, and waiver of installment and late payment fees. Bulletin No. 20-14 applies to Maryland-domiciled insurers and deals with waiver of the Statutory Accounting Principle that requires an insurer to non-admit premium receivable assets over 90 days past due. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-10-Cancellation-of-insurance-policies-during-covid-19-SOE.pdf; https://insurance.maryland.gov/Insurer/Documents/bulletins/20-14-Premium-Receivables-over-90-days-during-COVID-19-SOE.pdf

Bulletin No. 20-13 concerns the temporary suspension of the 45-day advance mailing notice of cancellation, non-renewal or premium increase for private passenger automobile liability insurance for the duration of the state of emergency. Specific information is provided as to what efforts insurers should make and the extended timing for protests. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-13-Temporary-Suspension-of-45-day-Advance-Mailing-Notice-PPA.pdf

Bulletin No 20-09 concerns what insurers offering travel insurance policies offer during the Covid-19 crisis. https://insurance.maryland.gov/Insurer/Documents/bulletins/20-09-Travel-Insurance-sales-during-COVID-19-SOE.pdf

Information regarding Covid-19 provider frequently asked questions can be found at https://insurance.maryland.gov/Providers/Documents/COVID-19-Providers-FAQs.pdf. Information regarding frequently asked question on producer licensing can be found at https://insurance.maryland.gov/Documents/newscenter/MIA-Producer-Licensing-COVID-FAQ.pdf.

The MIA has also issued an advisory on business interruption insurance. As stated in this advisory, “Some commercial policies provide Business Interruption coverage when a business is shut down due to an Order by a civil authority. However, the policy still typically requires a physical loss from a covered peril as the underlying cause of the business shut down to apply. All insurance policies have exclusions of coverage for risks that are too great to be underwritten at an affordable price. For example, commercial and personal property insurance policies typically contain specific exclusions for loss or damage caused by war, nuclear action and radiation. The potential loss costs from such perils are so extreme that providing coverage would jeopardize the financial solvency of property insurers. Global pandemics like COVID-19 usually fall into this category. However, policies can be different. We recommend that businesses review their policies and reach out to their insurance professionals with any questions.” https://insurance.maryland.gov/Pages/newscenter/NewsDetails.aspx?NR=2020256

We expect additional bulletins and information to be issued during the upcoming weeks.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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