Sec. 31.04.22.04. Conducting an On-Site Review

A. A title insurer:

(1) Shall, except as provided in §A(4) of this regulation, conduct an on-site review during each calendar year of the underwriting, claims, and escrow practices of each principal agent;

(2) Shall conduct an on-site review during normal business hours;

(3) May not be required to provide advance notice to the principal agent of the beginning of an on-site review; and

(4) May not be required to conduct an on-site review of a principal agent for the calendar year during which the principal agent is initially appointed, if the appointment is made on or after June 30 of that calendar year.

B. The on-site review required under §A of this regulation shall, at a minimum, include:

(1) A determination of whether:

(a) The principal agent is in compliance with the title insurer’s underwriting standards in the State; and

(b) The principal agent’s escrow accounts have been properly reconciled as of the date of the completed on-site review and contain sufficient funds to disburse the trust money from all settlement files necessary to establish the lien, title or interests insured in accordance with title insurance policies issued by the title insurer conducting the on-site review;

(2) A review of the principal agent’s operations to evaluate compliance with the notice requirements under Insurance Article, §22-103, Annotated Code of Maryland, including whether the principal agent:

(a) Inserted the name of each proposed insured as required under Insurance Article, §22-103(a)(1), Annotated Code of Maryland;

(b) Delivered to the buyer or agent or attorney of the buyer immediately upon receipt of the premium, written notice of the name of each insured under the title insurance policy, the face amount of the title insurance policy, the buyer’s right and opportunity to obtain simultaneous title insurance in the buyer’s favor, written notice of the additional premium that will be required for the purchase of simultaneous title insurance in the buyer’s favor; and

(c) Obtained from the buyer a written statement that he or she received the notice referenced in §B(2)(b) of this regulation and a statement that the buyer wants or does not want owner’s title insurance;

(3) A review and reconciliation of a principal agent’s policy blank inventory;

(4) To the extent that a title insurer delegates the responsibility to the principal agent to handle any aspect of a claim, a review of whether the principal agent is in compliance with the title insurer’s policies and procedures for handling a claim;

(5) Verification that:

(a) The principal agent has filed the annual report required under COMAR 31.16.03.06;

(b) Only a licensed title insurance producer exercises control over trust money;

(c) Premium monies are held separate from other funds or confirmation that the principal agent has received express written consent from the title insurer in the form required by COMAR 31.03.03 to comingle premium monies with the principal agent’s personal fund; and

(d) Funds received by the principal agent are accurately accounted for in the books and records of the principal agent;

(6) A review of the escrow practices of the principal agent; and

(7) Receipt of the written certification of the principal agent which shall contain:

(a) The printed name and signature of a designated responsible licensed producer or an attorney of the law firm who is a licensed title insurance producer, if the principal agent is a law firm as defined by Insurance Article, §10-125(a)(3), Annotated Code of Maryland;

(b) The date the certification was signed; and

(c) The following statement in at least 12 point font: I hereby certify that the information provided to the title insurer or its designee during the on-site review is, to the best of my knowledge, information, and belief, full, complete, and truthful and that I have undertaken an adequate inquiry to make this certification.

C. If the principal agent does not maintain separate bank or trust accounts for each title insurer it represents, the title insurer shall verify that the trust deposits held on its behalf are reasonably ascertainable from the books of account and records of the principal agent.

D. A title insurer may enter into a written contract with a third party to perform an on-site review.

E. A title insurer that enters into a written contract with a third party to perform an on-site review is:

(1) Bound by the findings of the third party; and

(2) Responsible for any violation of §A, B or C of this regulation, regardless of any delegation.