Clarification on Commission Sharing - Insurance Producers

LARRY HOGAN Governor BOYD K. RUTHERFORD Lt. Governor MARYLAND INSURANCE ADMINISTRATION AL REDMER, JR. Commissioner NANCY GRODIN Deputy Commissioner VICTORIA AUGUST Associate Commissioner Compliance & Enforcement 200 St. Paul Place, Suite 2700, Baltimore, Maryland 21202 Direct Dial: 410-468-2217 Fax: 410-468-2245 Email: victoria.august@maryland.gov 1-800-492-6116 TTY: 1-800-735-2258 Bulletin 15-22 Date: July 16, 2015 To: All Insurers and Insurance Producers Re: Clarification on Commission Sharing- Insurance Producers The purpose of this Bulletin 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 a referral of an insurance applicant. Section 10-103(c)(2) of the Maryland Insurance Code provides that before a person acts as an insurance producer in the State, the person must obtain: (1) the relevant license; and (2) "if acting for an insurer, an appointment from the insurer." Section 10-130(a) provides, in relevant part, 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." 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 consideration in exchange for a referral of an applicant to an insurer or its appointed producer. Any questions regarding this Bulletin should be addressed to Victoria August, Associate Commissioner, Compliance and Enforcement at: victoria.august@maryland.gov or 410-468-2217. Alfred W. Redmer, Jr. Commissioner signature on original By: Victoria August, Associate Commissioner Compliance and Enforcement 9