Shown verbatim: the complete text as captured from the official PDF posted by the Maryland General Assembly, fetched 2026-09-25. Page and line markers are part of the official record; nothing is edited or removed. This is the chaptered version. The official bill page.
WES MOORE, Governor Ch. 638
Chapter 638
(Senate Bill 890)
AN ACT concerning
Insurance – Premium Receipts Tax – Exemption for Captive Insurance
Procured by Nonprofit Hospitals and Health Care Systems Captive Insurers –
Premium Receipts Tax Moratorium and Study
FOR the purpose of exempting premiums suspending for a certain period of time the charge
and collection of a certain premium receipts tax and related fees, penalties, and
interest on lawfully procured captive insurance by nonprofit hospitals and health
care systems entities located in the State from the State insurance premium receipts
tax imposed on unauthorized insurers and persons insured by unauthorized
insurers; prohibiting the Maryland Insurance Administration from charging or
collecting a certain tax otherwise payable before the effective date of this Act and
certain fees, penalties, or interest accrued for failure to pay a certain tax before the
effective date of this Act from certain unauthorized insurers and certain insureds;
requiring the Maryland Insurance Administration to conduct a study on the use,
regulation, and taxation of captive insurance companies by entities in the State; and
generally relating to the State insurance premium receipts tax captive insurers.
BY repealing and reenacting, with amendments,
Article – Insurance
Section 4–209 and 4–211
Annotated Code of Maryland
(2017 Replacement Volume and 2025 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – Insurance
4–209.
(a) This section does not apply to:
(1) premiums on lawfully procured surplus lines insurance;
(2) premiums on independently procured insurance on which a tax has
been paid under § 4–211 of this subtitle; [or]
(3) PREMIUMS ON LAWFULLY PROCURED CAPTIVE INSURANCE BY:
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Ch. 638 2026 LAWS OF MARYLAND
(I) A NONPROFIT HEALTH CARE SYSTEM LOCATED IN THE
STATE, INCLUDING PREMIUMS PAID BY THE SYSTEM’S PARENT ENTITY, ANY
SUBSIDIARY ENTITY, OR ANY CONSTITUENT HEALTH CARE PROVIDER; OR
(II) A NONPROFIT HOSPITAL LOCATED IN THE STATE; OR
(4) wet marine and transportation insurance.
(b) (1) If an unauthorized insurer effects, continues, or renews insurance on a
subject resident, located, or to be performed in the State, the unauthorized insurer shall
pay to the Commissioner, before March 1 of the next calendar year, a premium receipts tax
of 3% of gross premiums charged for the insurance.
(2) For policies effective before July 21, 2011:
(i) if the policy covers property, risks, or exposures located or to be
performed entirely in the State, the premium receipts tax shall be computed on the entire
premium at the rate specified in paragraph (1) of this subsection; and
(ii) if the policy covers property, risks, or exposures located or to be
performed both in and outside the State, the premium receipts tax shall be computed at the
rate specified in paragraph (1) of this subsection only on that portion of the premium that
is properly allocable to the risks located in the State.
(3) For policies effective on or after July 21, 2011, if the State is the
insured’s home state, the premium receipts tax shall be computed on the entire premium
at the rate specified in paragraph (1) of this subsection.
(4) Insurance that an unauthorized insurer effects, continues, or renews on
a subject resident, located, or to be performed in the State that is procured through
negotiations or an application wholly or partly occurring or made in or from within or
outside of the State, or for which premiums wholly or partly are remitted directly or
indirectly from in or outside of the State, is deemed to be insurance procured, continued, or
renewed in the State.
(c) The premium receipts tax under this section is instead of all other State taxes.
(d) If an unauthorized insurer defaults on the payment of the tax under this
section, the insured shall pay the tax.
(e) If the tax is not timely paid under subsection (b) of this section, the amount of
the tax due shall be increased by a penalty of:
(1) 25% of the tax due; and
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WES MOORE, Governor Ch. 638
(2) an amount computed at the rate of 1% per month or any part of a month
after the date the payment was due to the date the payment is made.
4–211.
(a) This section does not apply to:
(1) PREMIUMS ON LAWFULLY PROCURED CAPTIVE INSURANCE BY:
(I) A NONPROFIT HEALTH CARE SYSTEM LOCATED IN THE
STATE, INCLUDING PREMIUMS PAID BY THE SYSTEM’S PARENT ENTITY, ANY
SUBSIDIARY ENTITY, OR ANY CONSTITUENT HEALTH CARE PROVIDER; OR
(II) A NONPROFIT HOSPITAL LOCATED IN THE STATE; OR
(2) wet marine and transportation insurance.
(b) (1) If an insured procures, continues, or renews insurance from an
unauthorized insurer that is subject to a report under § 4–210 of this subtitle, a premium
receipts tax of 3% of the gross premiums charged for the insurance is levied on the
obligation, chose in action, or right represented by the premium charged for the insurance.
(2) If an insurance contract subject to the tax is canceled and rewritten, the
additional premium, for purposes of the premium receipts tax, is the premium in excess of
the unearned premium of the canceled insurance contract.
(c) If the insured fails to withhold from the premium the amount of the tax levied
under this section, the insured is liable for the amount of the tax imposed under subsection
(b) of this section and shall pay the tax to the Commissioner.
(d) If the tax imposed under subsection (b) of this section is not timely paid, the
amount of the tax due shall be increased by a penalty of:
(1) 25% of the tax due; and
(2) an amount computed at the rate of 1% per month or part of a month
after the date the payment is due until the date the payment is made.
(e) If the tax is not timely paid under this section, on request of the Commissioner,
the Attorney General shall proceed in a court of this State or another state or in a federal
court or agency to recover the tax:
(a) The Maryland Insurance Administration, in consultation with relevant
stakeholders, shall study the use, regulation, and taxation of captive insurance companies
by entities in the State.
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Ch. 638 2026 LAWS OF MARYLAND
(b) The study conducted under subsection (a) of this section shall examine:
(1) utilization of captive insurance by nonprofit and for–profit entities;
(2) existing federal and state regulatory and taxation frameworks that
apply to captive insurance, including states with and without established captive insurance
frameworks, focusing on:
(i) mechanisms used for funding regulatory oversight; and
(ii) how other states tax capital contributions and internal reserves,
including whether different tax treatments are applied based on the nonprofit or for–profit
status of the captive owner;
(3) the feasibility, utility, and potential structure of establishing a State
registry for captive insurance companies domiciled in other jurisdictions but used by
entities in the State, including an analysis of how a registry framework could provide
regulatory transparency and fund oversight operations as an alternative to a premium tax
framework; and
(4) the aggregate results of any completed investigations regarding the use
of captive insurance by nonprofit and for–profit entities in the State.
(c) Any data, documents, or other information provided by a nonprofit health
system or hospital to the Administration for the purpose of the evaluation and assessment
required under this section:
(1) shall be considered confidential commercial and financial information;
(2) may not be disclosed by the Administration to any third party; and
(3) is not a public record and is not subject to inspection under the Public
Information Act.
(d) On or before December January 1, 2027, the Administration shall report its
findings and recommendations to the Governor and, in accordance with § 2–1257 of the
State Government Article, the Senate Finance Committee and the House Health
Committee.
SECTION 2. AND BE IT FURTHER ENACTED, That the:
(a) The Maryland Insurance Administration may not charge or collect the
premium receipts tax under § 4–209 or § 4–211 of the Insurance Article otherwise payable
before the effective date of this Act or a fee, penalty, or interest accrued for failure to pay
that tax before the effective date of this Act from an unauthorized insurer exempt from the
tax under § 4–209(a)(3) of the Insurance Article, as enacted by Section 1 of this Act, or an
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WES MOORE, Governor Ch. 638
insured exempt from the tax under § 4–211(a)(1) of the Insurance Article, as enacted by
Section 1 of this Act from captive insurance lawfully procured by a nonprofit entity.
(b) The prohibition established under subsection (a) of this section shall apply to
any existing and retroactive tax liabilities under § 4–209 or § 4–211 of the Insurance
Article.
SECTION 3. 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
July 1, 2026. Section 2 of this Act shall remain effective for a period of 2 years and, at the
end of June 30, 2028, Section 2 of this Act, with no further action required by the General
Assembly, shall be abrogated and of no further force and effect.
Approved by the Governor, May 26, 2026.
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