§ 20-507. Determination, collection, and financing of premiums; installment payment plans.

   (a) Determination of premiums. -- Subject to the approval of the Commissioner, the Executive Director shall determine the premiums to be charged on policies issued by the Fund.

(b) Basis of determination. --

   (1) Except as provided in subsection (c) of this section, the provisions of Title 11, Subtitle 2 of this article apply to the determination of premiums by the Executive Director.

   (2) Notwithstanding Title 11, Subtitle 2 of this article or any other provision of this title, the Executive Director may base premiums on one or both of the following items:

      (i) the number of points accumulated by an insured or applicant for insurance under the point system provided for in Title 16, Subtitle 4 of the Transportation Article; or

      (ii) the prior claims experience of an insured or applicant for insurance.

(c) Commercial premiums. --

   (1) Premiums for all commercial coverage shall be determined in accordance with this section and § 20-508 of this subtitle.

   (2) Notwithstanding paragraph (1) of this subsection, the rating principles under subsection (d) of this section may not be used to determine the premium for commercial coverage.

(d) Consideration of statutory purpose. -- In reviewing rates filed by the Fund, the Commissioner shall consider not only the rating principles under Title 11, Subtitle 2 of this article but also the statutory purpose of the Fund under § 20-301 of this title.

(e) Collection of premiums by Motor Vehicle Administration. --

   (1) The Motor Vehicle Administration and Executive Director may arrange for the Motor Vehicle Administration to collect premiums on policies issued by the Fund when the Motor Vehicle Administration issues a driver's license or certificate of registration.

   (2) A premium collected under this subsection shall be paid to the State Treasurer for the account of the Fund.

(f) Financing of premiums. --

   (1) The Fund may not:

      (i) provide directly or indirectly for the financing of premiums; or

      (ii) except as provided in subsection (g) of this section, accept premiums on an installment basis.

   (2) A premium may be financed only by a premium finance company registered with the Commissioner in accordance with § 23-201 of this article.

   (3) If a prospective insured's initial payment to the Fund, a fund producer, or premium finance company is not honored, a policy or endorsement issued in reliance on that payment is void.

(g) Accepting premiums on installment payment basis. --

   (1) (i) Subject to the approval of the Commissioner and in accordance with this subsection, the Fund may accept premiums on an installment payment basis only on 12-month personal lines policies.

      (ii) In approving the Fund's plan for accepting premiums on an installment payment basis, the Commissioner shall ensure that the Fund's installment payment plan:

         1. requires an insured's initial premium payment to be no less than:

            A. for a total annual premium of less than $ 3,000, 25% of the total annual premium; and

            B. for a total annual premium of $ 3,000 or more, 20% of the total annual premium;

         2. adjusts the amount of the total annual premium used to determine the initial premium payment under item 1 of this subparagraph on October 1 of each year using data from the U.S. Government Bureau of Labor Statistics motor vehicle insurance expenditure category of the Consumer Price Index for all urban consumers;

         3. is structured and administered to ensure that the Fund at no time provides insurance coverage to an insured for a period during which the Fund has not received the actuarially justified premium payment;

         4. offers no more than:

            A. for a policy under item 1A of this subparagraph, six installment payments on the 12-month policy; and

            B. for a policy under item 1B of this subparagraph, eight installment payments on the 12-month policy;

         5. allows insureds to make an initial premium payment and installment payments in any commercially acceptable form; and

         6. allows the Fund to impose an administrative processing fee on insureds participating in the installment plan of no more than $ 8 per installment payment.

   (2) The Fund may not discriminate among insureds by charging different premiums based on the payment option selected by an insured.

   (3) In determining commissions paid to a fund producer, the Fund may not consider whether the fund producer placed an insured in an installment payment plan.

   (4) (i) In accordance with this paragraph, written and electronic communications, including the Fund's Web site, affecting the placement of coverage by the Fund or a fund producer shall include a statement, on a form approved by the Commissioner, advising an applicant or an insured of the payment options available to the applicant or insured.

      (ii) The statement shall state that the applicant or insured has the following payment options:

         1. the Fund's installment payment plan;

         2. a premium finance agreement; or

         3. payment of the policy in full.

      (iii) The statement shall be included on written or electronic communications at the time the applicant or insured:

         1. is issued a new policy; or

         2. is issued a reissuance, rewrite, or renewal of an existing policy.

      (iv) The statement shall state that the applicant or insured should consult a fund producer who will fully describe the terms of each payment option.

HISTORY: An. Code 1957, art. 48A, § 243B, 243C; 1996, ch. 11; 1997, ch. 70, § 1; 2001, ch. 731, § 1; 2013, ch. 43, § 5; ch. 334, § 1.