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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
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*sb0890*
SENATE BILL 890
C4, Q7 (6lr2782)
ENROLLED BILL
— Finance/Ways and Means and Health —
Introduced by Senator Gile
Read and Examined by Proofreaders:
_______________________________________________
Proofreader.
_______________________________________________
Proofreader.
Sealed with the Great Seal and presented to the Governor, for his approval this
_______ day of _______________ at _________________ _______ o’clock, ________M.
______________________________________________
President.
CHAPTER ______
AN ACT concerning 1
Insurance – Premium Receipts Tax – Exemption for Captive Insurance 2
Procured by Nonprofit Hospitals and Health Care Systems Captive Insurers – 3
Premium Receipts Tax Moratorium and Study 4
FOR the purpose of exempting premiums suspending for a certain period of time the charge 5
and collection of a certain premium receipts tax and related fees, penalties, and 6
interest on lawfully procured captive insurance by nonprofit hospitals and health 7
care systems entities located in the State from the State insurance premium receipts 8
tax imposed on unauthorized insurers and persons insured by unauthorized 9
insurers; prohibiting th e Maryland Insurance Administration from charging or 10
collecting a certain tax otherwise payable before the effective date of this Act and 11
certain fees, penalties, or interest accrued for failure to pay a certain tax before the 12
effective date of this Act fr om certain unauthorized insurers and certain insureds ; 13
requiring the Maryland Insurance Administration to conduct a study on the use, 14
2 SENATE BILL 890
regulation, and taxation of captive insurance companies by entities in the State; and 1
generally relating to the State insurance premium receipts tax captive insurers. 2
BY repealing and reenacting, with amendments, 3
Article – Insurance 4
Section 4–209 and 4–211 5
Annotated Code of Maryland 6
(2017 Replacement Volume and 2025 Supplement) 7
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 8
That the Laws of Maryland read as follows: 9
Article – Insurance 10
4–209. 11
(a) This section does not apply to: 12
(1) premiums on lawfully procured surplus lines insurance; 13
(2) premiums on independently procured insurance on which a tax has 14
been paid under § 4–211 of this subtitle; [or] 15
(3) PREMIUMS ON LAWFULLY PROCURED CAPTIVE INSURANCE BY: 16
(I) A NONPROFIT HEALTH C ARE SYSTEM LOCATED I N THE 17
STATE, INCLUDING PREMIUMS P AID B Y THE SYSTEM ’S PARENT ENTITY , ANY 18
SUBSIDIARY ENTITY, OR ANY CONSTITUENT HEALTH CARE PROVIDER; OR 19
(II) A NONPROFIT HOSPITAL LOCATED IN THE STATE; OR 20
(4) wet marine and transportation insurance. 21
(b) (1) If an unauthorized insurer effects, continues, or renews insurance on a 22
subject resident, located, or to be performed in the State, the unauthorized insurer shall 23
pay to the Commissioner, before March 1 of the next calendar year, a premium receipts tax 24
of 3% of gross premiums charged for the insurance. 25
(2) For policies effective before July 21, 2011: 26
(i) if the policy covers property, risks, or exposures located or to be 27
performed entirely in the State, the premium receipts tax shall be computed on the entire 28
premium at the rate specified in paragraph (1) of this subsection; and 29
(ii) if the policy covers property, risks, or exposures located or to be 30
performed both in and outside the State, the premium receipts tax shall be computed at the 31
SENATE BILL 890 3
rate specified in paragraph (1) of this subsection only on that portion of the premium that 1
is properly allocable to the risks located in the State. 2
(3) For policies effective on or after July 21, 2011, if the State is the 3
insured’s home state, the premium receipts tax shall be computed on the entire p remium 4
at the rate specified in paragraph (1) of this subsection. 5
(4) Insurance that an unauthorized insurer effects, continues, or renews on 6
a subject resident, located, or to be performed in the State that is procured through 7
negotiations or an applic ation wholly or partly occurring or made in or from within or 8
outside of the State, or for which premiums wholly or partly are remitted directly or 9
indirectly from in or outside of the State, is deemed to be insurance procured, continued, or 10
renewed in the State. 11
(c) The premium receipts tax under this section is instead of all other State taxes. 12
(d) If an unauthorized insurer defaults on the payment of the tax under this 13
section, the insured shall pay the tax. 14
(e) If the tax is not timely paid under subsection (b) of this section, the amount of 15
the tax due shall be increased by a penalty of: 16
(1) 25% of the tax due; and 17
(2) an amount computed at the rate of 1% per month or any part of a month 18
after the date the payment was due to the date the payment is made. 19
4–211. 20
(a) This section does not apply to: 21
(1) PREMIUMS ON LAWFULLY PROCURED CAPTIVE INSURANCE BY: 22
(I) A NONPROFIT HEALTH C ARE SYSTEM LOCATED I N THE 23
STATE, INCLUDING PREMIUMS P AID BY THE SYSTEM ’S PARENT ENTITY , ANY 24
SUBSIDIARY ENTITY, OR ANY CONSTITUENT HEALTH CARE PROVIDER; OR 25
(II) A NONPROFIT HOSPITAL LOCATED IN THE STATE; OR 26
(2) wet marine and transportation insurance. 27
(b) (1) If an insured procures, continues, or renews insurance from an 28
unauthorized insurer that is subject to a report under § 4 –210 of this subtitle, a premium 29
receipts tax of 3% of the gross premiums charged for the insurance is levied on the 30
obligation, chose in action, or right represented by the premium charged for the insurance. 31
4 SENATE BILL 890
(2) If an insurance contract subject to the tax is canceled and rewritten, the 1
additional premium, for purposes of the premium receipts tax, is the premium in excess of 2
the unearned premium of the canceled insurance contract. 3
(c) If the insured fails to withhold from the premium the amount of the tax levied 4
under this section, the insured is liable for the amount of the tax imposed under subsection 5
(b) of this section and shall pay the tax to the Commissioner. 6
(d) If the tax imposed under subsection (b) of this secti on is not timely paid, the 7
amount of the tax due shall be increased by a penalty of: 8
(1) 25% of the tax due; and 9
(2) an amount computed at the rate of 1% per month or part of a month 10
after the date the payment is due until the date the payment is made. 11
(e) If the tax is not timely paid under this section, on request of the Commissioner, 12
the Attorney General shall proceed in a court of this State or another state or in a federal 13
court or agency to recover the tax: 14
(a) The Maryland Insurance Administration, in consultation with relevant 15
stakeholders, shall study the use, regulation, and taxation of captive insurance companies 16
by entities in the State. 17
(b) The study conducted under subsection (a) of this section shall examine: 18
(1) utilization of captive insurance by nonprofit and for–profit entities; 19
(2) existing federal and state regulatory and taxation frameworks that 20
apply to captive insurance, including states with and without established captive insurance 21
frameworks, focusing on: 22
(i) mechanisms used for funding regulatory oversight; and 23
(ii) how other states tax capital contributions and internal reserves, 24
including whether different tax treatments are applied based on the nonprofit or for–profit 25
status of the captive owner; 26
(3) the feasibility, utility, and potential structure of establishing a State 27
registry for captive insurance companies domiciled in other jurisdictions but used by 28
entities in the State, including an analysis of how a registry framework could provide 29
regulatory transparency and fund oversight operations as an alternative to a premium tax 30
framework; and 31
(4) the aggregate results of any completed investigations regarding the use 32
of captive insurance by nonprofit and for–profit entities in the State. 33
SENATE BILL 890 5
(c) Any data, documents, or other information provided by a nonprofit health 1
system or hospital to the Administration for the purpose of the evaluation and assessment 2
required under this section: 3
(1) shall be considered confidential commercial and financial information; 4
(2) may not be disclosed by the Administration to any third party; and 5
(3) is not a public record and is not subject to inspection under the Public 6
Information Act. 7
(d) On or before December January 1, 2027, the Administration shall report its 8
findings and recommendations to the Governor and, in accordance with § 2 –1257 of the 9
State Government Article, the Senate Finance Committee and the House Health 10
Committee. 11
SECTION 2. AND BE IT FURTHER ENACTED, That the: 12
(a) The Maryland Insurance Administration may not charge or collect the 13
premium receipts tax under § 4–209 or § 4–211 of the Insurance Article otherwise payable 14
before the effective date of this Act or a fee, penalty, or interest accrued for failure to pay 15
that tax before the effective date of this Act from an unauthorized insurer exempt from the 16
tax under § 4–209(a)(3) of the Insurance Article, as enacted by Section 1 of this Act, or an 17
insured exempt from the tax under § 4 –211(a)(1) of the I nsurance Article, as enacted by 18
Section 1 of this Act from captive insurance lawfully procured by a nonprofit entity. 19
(b) The prohibition established under subsection (a) of this section shall apply to 20
any existing and retroactive tax liabilities under § 4–209 or § 4 –211 of the Insurance 21
Article. 22
SECTION 3. 2. AND BE IT FURTHER ENACTED, That this Act shall take effect 23
July 1, 2026. Section 2 of this Act shall remain effective for a period of 2 years and, at the 24
end of June 30, 2028, Section 2 of this Ac t, with no further action required by the General 25
Assembly, shall be abrogated and of no further force and effect. 26
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.