The Maryland Insurance Administration said it has come to regulators’ attention that some insurers and premium ﬁnance companies may not be providing the minimum days’ notice as prescribed by the Maryland statutes before companies cancel, non-renew, increase the premium, or reduce coverage on a property and casualty insurance policy.
In Bulletin No. 16-08 (“Re: Notice Requirements — Minimum Number of Days”) issued on Feb. 16, the Maryland Insurance Administration reminded insurers and premium ﬁnance companies that when a statute speciﬁes that an action may not be taken unless a minimum number of days’ notice is ﬁrst provided, the companies must provide at least the full number of days speciﬁed in the statute for the notice to be compliant.
The Maryland Insurance Administration said a cancellation for non-payment of premium and a notice of intent to cancel for non-payment of premium issued by a premium finance company require at least 10 days notice. Most other actions require at least 45 days notice.
The bulletin explained that the date that a notice is sent, via either electronic delivery or mail, should not be included in the calculation used to determine when a notice needs to be delivered or mailed in order to comply with the statutory requirements.
As an example of non-compliance, the bulletin said that if a premium ﬁnance company issues on June 1, via either electronic delivery or mail, a notice of intent to cancel pursuant to §23-402(a) of the Insurance Article, indicating the policy would be cancelled effective June 11 at 12:01 am, the company is not in compliance. That’s because it has only provided nine days’ notice of the policy’s cancellation and not the minimum of 10 days required by the statute.
To be compliant with the statute, cancellation should not occur until June 12, at 12:01 am, in order for the policyholder to be given the full 10 days to correct the non-payment deﬁciency.
Commenting on the bulletin, Maryland Insurance Administration spokesman Joseph A. Sviatko said regulators have found specific cases where companies didn’t follow the statute.
“During the course of conducting complaint investigations and market conduct investigation and/or exams, there were instances discovered in which the minimum number of days notice was not provided,” Sviatko said.
“Investigators discovered that a premium finance company didn’t give 10 days notice for their notice of intent to cancel as required by §23-402, as the notice indicated the policy would be cancelled 12:01 am of the 10th day after the notice was sent,” he said.
Sviatko said the Maryland Insurance Administration believed it would be prudent to issue a bulletin reminding insurers and premium finance companies of how days should be counted so they could review their practices and make any needed corrections to come into compliance.