Maryland Bulletin Clarifies Commission Sharing

The Maryland Insurance Administration (MIA) recently issued a bulletin clarifying that an insurer or its appointed producer would be permitted to offer, in exchange for a referral of an insurance applicant, a referral fee or share the commission with a licensed producer who is not appointed by the applicable insurer.

MIA said the purpose of the Bulletin 15-22, issued on July 16, is to explain under which circumstances 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.

The bulletin states that Section 10-103(c)(2) of the Maryland Insurance Code provides that before a person acts as an insurance producer in Maryland, the person must obtain: (1) the relevant license; and (2) “if acting for an insurer, an appointment from the insurer.” It also provides 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.”

The bulletin clarifies that according to the Insurance Code, a licensed producer is “not required to be appointed by an insurer in order to receive a referral fee, commission split, or other valuable considerations in exchange for a referral of an applicant to an insurer or its appointed producer.”