Maryland Marketing Rules, Ethics & Unfair Practices
The final state topic covers how a Maryland producer must behave in the market: the prohibited unfair trade practices, the duty to handle client money properly, and the advertising and disclosure standards that keep sales honest. Most of these rules come from Maryland's adoption of the unfair trade practices provisions of the insurance code and the Maryland Insurance Administration's rules.
Prohibited Unfair Trade Practices
Maryland's insurance code prohibits unfair methods of competition and unfair or deceptive acts in the business of insurance. Prohibited conduct includes misrepresenting policy terms, false or misleading advertising, unfair discrimination between similar risks, and deceptive claim practices. Violations can lead to fines and license suspension or revocation by the Maryland Insurance Administration.
Rebating, Twisting, and Churning
Rebating, offering any part of the premium or commission or other valuable consideration as an inducement to buy, is prohibited in Maryland. Twisting is using misrepresentation to induce a policyholder to drop an existing policy for a new one; churning is a similar replacement abuse involving the same insurer's policies. All are prohibited because they harm consumers and create unfair discrimination among policyholders.
Fair Advertising and Handling Client Funds
A producer must present products accurately and never misrepresent benefits, dividends, policy terms, or an insurer's financial condition, and must not use the guaranty association as a sales inducement. Premiums a producer collects belong to the insurer or client, not the producer; Maryland treats this as a fiduciary duty, so funds must be remitted properly and never commingled or converted for personal use.