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§ 25-405. Program of operation requirements

West's Annotated Code of MarylandInsurance

West's Annotated Code of Maryland
Insurance (Refs & Annos)
Title 25. Alternative Market Mechanisms
Subtitle 4. Maryland Property Insurance Availability Act (Refs & Annos)
MD Code, Insurance, § 25-405
§ 25-405. Program of operation requirements
In general
(a) The Governing Committee shall adopt a program of operation in accordance with this subtitle.
Scope of program of operation
(b) The program of operation shall provide for economical, fair, and nondiscriminatory administration and for the prompt and efficient delivery of essential property insurance and homeowner's insurance to promote orderly community development.
Amendments to program of operation
(c)(1) With the approval of the Commissioner, the Association may amend the program of operation.
(2) Association members shall vote on proposed amendments to the program of operation.
(3) Votes shall be cast and counted on a weighted basis in accordance with the premiums written by each Association member.
(4) An amendment to the program of operation is not effective until approved by a majority of the votes cast by Association members.
Service facilities, management of Association, and assessment of Association members
(d) The program of operation shall provide for:
(1) establishment of adequate service facilities and other necessary facilities;
(2) management of the Association;
(3) assessment of Association members to defray losses and expenses;
(4) commission arrangements;
(5) reasonable and objective underwriting standards;
(6) acceptance and cession of reinsurance;
(7) procedures to determine amounts of insurance to be provided;
(8) immediate binding of eligible risks;
(9) a premium installment plan; and
(10) notwithstanding Title 27, Subtitle 6 of this article, underwriting guidelines and procedures that allow the Association to shorten the cancellation period for policies of essential property insurance and homeowner's insurance for certain conditions that are determined to exist.
Transaction of business directly with applicants or licensed insurance producers
(e) The program of operation shall provide that the Association may not appoint insurance producers to act on its behalf and shall do business directly with applicants or with licensed insurance producers that represent applicants.
Limits of liability
(f) The program of operation shall establish:
(1) a maximum limit of liability of $1,500,000 on real or personal property composed of or contained in a single building; and
(2) appropriate sublimits of liability based on construction, protection, and class of occupancy.
Procedures making homeowner’s insurance coverage available through Association
(g)(1) The program of operation shall implement procedures to make homeowner's insurance coverage available through the Association.
(2) The homeowner's insurance policies that the Association issues may be limited to basic market value, repair cost, or actual cash value contracts for owner-occupants of one- to four-family dwellings, as approved by the Commissioner.
(3) The homeowner's insurance shall be implemented through a program that entitles eligible applicants to immediate binding of coverage through the Association for a reasonable period of time pending underwriting and inspection of the premises to determine whether the premises meet the eligibility standards of the program.
Recovery of losses and expenses assessed to Association members
(h)(1) The program of operation shall provide a method of recoupment by which Association members may recover losses and expenses that have been incurred by the Association and assessed to Association members.
(2) To recoup loss and expense assessments, the program of operation shall provide for:
(i) the calculation of the surcharge or rating factors to be added to direct premiums written for essential property insurance and homeowner's insurance covering property located in the State; and
(ii) an adjustment each year for over or under recoupment of assessment.
Participation credit for dwellings
(i)(1) The program of operation shall develop a participation credit for dwellings as an offset to Association member assessment for voluntary writings in those areas of the State with a significant proportion of essential property insurance policies or homeowner's insurance policies issued by or for the Association.
(2) After consultation with the Governing Committee, the Commissioner shall determine whether an area has a significant proportion of Association policies.


Added by Acts 1996, c. 11, § 1, eff. Oct. 1, 1997. Amended by Acts 1997, c. 70, §§ 1, 7, eff. Oct. 1, 1997; Acts 2001, c. 731, § 1, eff. July 2, 2001; Acts 2003, c. 355, § 1, eff. Oct. 1, 2003; Acts 2004, c. 25, § 1, eff. April 13, 2004.
Formerly Art. 48A, § 478C.
MD Code, Insurance, § 25-405, MD INSURANCE § 25-405
Current with all legislation from the 2023 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
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