Maryland Hikes Penalties for Violations of Insurance Laws

The Maryland Insurance Administration (MIA) is notifying the insurance industry that the maximum penalties that may be imposed for certain violations of the state’s insurance laws will be going up substantially starting October 1.

The legislature (House Bill 67 and Senate Bill 229) upped the existing penalty amounts in the most recent session at the request of Governor Wes Moore and MIA.

The changes are as follows:

• The new maximum civil penalty for each violation that MIA may impose upon an unauthorized insurer or person who engages in the insurance business will increase from $50,000 to $125,000.
• The maximum monetary penalty that MIA may impose upon a licensed insurance producer for each violation will increase from $500 to $5,000.
• The maximum monetary penalty that MIA may impose upon a licensed public adjuster for each violation will increase from $500 to $5,000.

The current maximum penalties assessable against insurance producers or public adjusters have not been increased since 1963; the penalties for an unlicensed person engaging in the business of insurance have not changed since 1987.

MIA advised lawmakers that the maximum penalty of $50,000 for an unauthorized insurer or person is no longer a meaningful deterrent and limits its ability to penalize fraudulent actors. The new law increases the maximum penalty consistent with MIA’s current maximum penalty for licensed insurers.

The new law also more closely aligns the penalties for an insurance producer or public adjuster to those in surrounding states. For example, the maximum penalty for an insurance producer or public adjuster is $5,000 in Virginia, Washington D.C., and West Virginia; $10,000 in Pennsylvania; and $20,000 in Delaware.

Topics Maryland