Insurance companies can conduct remote rather than on-site reviews of their managing general agents in Maryland beginning in October.
Gov. Larry Hogan has signed legislation recommended by the state’s insurance regulator and passed by lawmakers. The law repeals the requirement that an insurer at least twice-a-year review the underwriting and claims processing operations of its managing general agents on-site and in-person at the MGA’s principal place of business.
According to the Maryland Insurance Administration, the on-site, in-person requirement “is outdated and is not necessary to assure thorough, complete, compliant reviews.” The requirement was established at a time when records were maintained in paper form at corporate offices.
In fact, MIA told lawmakers in testimony during hearings, it believes that virtual and remote reviews are “superior” to on-site reviews, which themselves necessarily include virtual and remote aspects.
“What is important for the review to be complete and thorough is access to systems and information. This access is not achieved by visiting a particular physical space, but requires access to electronically stored data and individuals who are typically in more than one location,” MIA testified.
The state regulator said its support for the change is based on the success of suspending the on-site rule for insurers during the pandemic.
The MIA also said the remote approach “improves logistics, reduces waste, protects public health via social distancing, and eliminates unnecessary travel requirements.”
The new law goes into effect Oct. 1, 2022.
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