Maryland Issues Clarification on Commission Sharing for Producers

The Maryland Insurance Administration (MIA) recently issued a bulletin explaining that, in exchange for a referral of an insurance applicant, an insurer or its appointed producer may provide a referral fee, commission split, or other valuable considerations to a licensed producer who is not appointed by the insurer.

MIA said the purpose of Bulletin 15-22, issued on July 16, is to clarify the circumstances under which a licensed and appointed producer may pay a referral fee, split a commission, or offer other valuable consideration to a licensed but non-appointed producer in exchange for an applicant referral.

The bulletin states that Section 10-103(c)(2) of the Maryland Insurance Code provides that before a person acts as an insurance producer in Maryland, the person must obtain: (1) the relevant license; and (2) “if acting for an insurer, an appointment from the insurer.” Section 10-103(c)(2) provides that “a commission, fee, reward, rebate, or other consideration for selling, soliciting or negotiating insurance may not be paid, directly or indirectly to a person other than a licensed insurance producer.”

The bulletin clarifies that a licensed insurance producer is not required to be appointed by an insurer in order to receive a referral fee, commission split, or other valuable considerations in exchange for an referral of an applicant to an insurer or its appointed producer.

Source: The Maryland Insurance Administration