Code of Maryland Regulations
Title 31 - MARYLAND INSURANCE ADMINISTRATION
Subtitle 15 - UNFAIR TRADE PRACTICES
Chapter 31.15.11 - Use of Credit History in Underwriting and Rate Making
Section 31.15.11.03 - Definitions
Universal Citation: MD Code Reg 31.15.11.03
Current through Register Vol. 51, No. 19, September 20, 2024
A. In this chapter, the following items have the meanings indicated.
B. Terms Defined.
(1) "Affiliated insurer" means an insurer that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another insurer.
(2) "Consumer reporting agency" includes an insurer and any affiliate of an insurer that collects information that:
(a) Bears on a consumer's credit worthiness, credit standing, or credit capacity; and
(b) Is used or expected to be used wholly or partly to serve as a factor in establishing the consumer's eligibility or pricing for personal lines of property and casualty insurance to be used primarily for personal, family, or household purposes.
(3) "Control" means the direct or indirect possession of the power to direct, or cause the direction of, the management and policies of an insurer, regardless of whether the power is exercised, by:
(a) Ownership of voting securities or of securities convertible into voting securities;
(b) Contract, other than a commercial contract for goods or nonmanagement services; or
(c) Any other means.
(4) "Credit-based discount" means the application of a rate modification factor that is:
(a) Based on an applicant's credit history; and
(b) Less than 1.0 but greater than or equal to 0.6.
(5) "Credit-based surcharge" means the application of a rate modification factor that is:
(a) Based on an applicant's credit history; and
(b) Greater than 1.0 but less than or equal to 1.4.
(6) "Credit criterion" means information bearing on a particular aspect of an individual's credit history.
(7) Credit History.
(a) "Credit history" means a written, oral, or other communication of any information by a consumer reporting agency that:
(i) Bears on a consumer's credit worthiness, credit standing, or credit capacity; and
(ii) Is used or collected, or expected to be used or collected, wholly or partly to serve as a factor in establishing the consumer's eligibility or pricing for personal lines of property and casualty insurance to be used primarily for personal, family, or household purposes.
(b) "Credit history" includes:
(i) A credit criterion;
(ii) A credit report; and
(iii) A credit score.
(c) "Credit history" does not include:
(i) An accident history report as defined in Insurance Article, §
27-216(e), Annotated Code of Maryland;
(ii) An accident history report or record of motor vehicle violations kept by the Motor Vehicle Administration pursuant to Transportation Article, §
16-117, Annotated Code of Maryland;
(iii) A property loss report or claims history that does not include information that bears on a consumer's credit worthiness, credit standing, or credit capacity; or
(iv) Any report containing information solely as to transactions or experiences between the consumer and the person making the report.
(8) "Credit report" means credit history obtained from a consumer reporting agency other than an insurer or affiliate of an insurer described in §B(2) of this regulation.
(9) "Credit score" means a score that is derived by utilizing data from an individual's credit history in an algorithm, computer program, model, or other process that reduces the data to a number or rating.
(10) "Firm offer of insurance" has the meaning stated in §C of this regulation.
(11) Homeowner's Insurance.
(a) "Homeowner's insurance" means insurance for residential property that provides one or more of the following coverages:
(i) Fire;
(ii) Extended coverage;
(iii) Vandalism and malicious mischief;
(iv) Burglary;
(v) Theft; or
(vi) Personal liability.
(b) "Homeowner's insurance" does not include an umbrella policy.
(12) Motor Vehicle.
(a) "Motor vehicle" means a vehicle that is operated or designed for operation on a public road by a power other than animal or muscular power.
(b) "Motor vehicle" includes:
(i) A motorcycle;
(ii) A motor home; and
(iii) A trailer.
(c) "Motor vehicle" does not include:
(i) A bus as defined by Transportation Article, §
11-105, Annotated Code of Maryland; or
(ii) A taxicab as defined by Transportation Article, §
11-165, Annotated Code of Maryland.
(13) "Private passenger motor vehicle" means a motor vehicle that is used primarily for personal, family, or household purposes.
(14) "Rate" includes:
(a) To provide or remove a discount or impose or remove a surcharge;
(b) To assign an applicant to a tier; or
(c) To place an applicant with an affiliated insurer.
(15) Residential Property.
(a) "Residential property" means property that is used primarily as a residence.
(b) "Residential property" includes:
(i) An apartment unit;
(ii) A condominium unit;
(iii) A mobile home; and
(iv) A multiunit building if one of the units is occupied by the owner of the building and not more than three units are occupied by tenants.
(c) "Residential property" does not include a boat.
(16) "Tier" means a category within a single insurer into which insureds with similar risk characteristics are placed for purposes of determining a premium rate.
C. "Firm offer of insurance" means an offer of insurance to a consumer that:
(1) Will be honored if the consumer is determined, based on information in a credit report on the consumer, to meet the specific criteria used to select the consumer for the offer; and
(2) May be further conditioned on one or more of the following:
(a) A determination, based on information in the consumer's application for insurance, that the consumer meets specific criteria that:
(i) Bear on insurability, and
(ii) Were established before selection of the consumer for the offer and for the purpose of determining whether to extend insurance pursuant to the offer;
(b) Verification:
(i) That the consumer continues to meet the specific criteria used to select the consumer for the offer, by using information in a credit report on the consumer, information in the consumer's application for the insurance, or other information bearing on the insurability of the consumer, or
(ii) Of the information in the consumer's application for insurance, to determine that the consumer meets the specific criteria bearing on credit worthiness or insurability; or
(c) Provision by the consumer of any collateral that is a requirement for the extension of the insurance that was:
(i) Established before selection of the consumer for the offer of insurance, and
(ii) Disclosed to the consumer in the offer of insurance.
Disclaimer: These regulations may not be the most recent version. Maryland may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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