The Maryland Insurance Administration issued Bulletin No. 20-25 to clarify when title insurance producers are required to maintain a premium account.
The bulletin notes that Section 31.03.03.02 of the Code of Maryland Regulations (COMAR) prohibits any insurance producer from comingling insurance premiums they may collect on behalf of insurers with the operating funds of the agency. It also requires them to maintain any premiums that aren’t properly remitted to the insurer in a premium account separate from their operating account.
Prompt remittance is defined as “no later than the close of the fifth business day following the receipt of the funds.”
It then pointed out that Section 22-105(b) of the Insurance Article, Annotated Code of Maryland, requires title insurers and producers to pool and comingle trust money received from clients or beneficial owners in connection with escrows, settlements, closings or title indemnifications if a separate deposit of the trust money would generate interest in an amount not greater than $50 or the cost of administering a separate account.
Section 22-105(f) permits title insurers or their agents to deposit trust money that may earn more than $50 in interest in any other deposit or investment vehicle specified by the client or beneficial owner or as agreed on by the client or beneficial owner and the title insurer or its agent.
“In summary, title insurance producers who collect title insurance premiums are required to either promptly remit those premiums to the appropriate carrier, as required by COMAR 31.03.03.02.A, or to deposit those premiums in a premium account,” the bulletin stated. “Premium accounts may be MAHT accounts as defined by § 22-105 of the Insurance Article. This applies to all producers and/or agencies whether or not they conduct settlements.
“The Insurance Administration does acknowledge the industry practice of retaining title insurance premium until final policies are issued, which is typically after the documents transferring title and/or securing the loan have been recorded,” the bulletin continued. “In these instances, which may take more than five business days, agents who retain the premium in accordance with Section 22-105(b) and (f), are deemed to be in compliance with COMAR 31.03.03. Agents who only issue policies, and do not maintain trust accounts, must nonetheless fully comply with COMAR 31.03.03 with regard to any title insurance premium received and deposited.”