The leadership of the Injured Workers Insurance Fund has indicated its support for a proposal to convert the insurer from a quasi-state agency to a nonprofit mutual insurance company.
The board of directors and executives at IWIF voted in favor of a Maryland General Assembly plan to rename it the Chesapeake Employers’ Mutual Insurance Co. (SB 507/HB 1008).
The new mutual company would be similar to the operational structure of the Medical Mutual Liability Insurance Society of Maryland, another mutual fund, created by law, to handle medical malpractice insurance.
Thomas Phelan
The bill, sponsored by Sen. Thomas “Mac” Middleton (D-Charles), is scheduled for a hearing before the Senate Finance Committee Feb. 23 at 1 p.m. The House Economic Matters Committee was to hear testimony on the companion bill, sponsored by Del. Derek E. Davis (D-Prince George’s), at a hearing March 17, but moved the date up to Feb. 23.
“This is the final step in the evolution of IWIF from a state agency to a fully competitive mutual company,” said Thomas Phelan, IWIF’s president and CEO, in a statement.
If approved, the new company would operate separate from government control, an approach taken for state workers’ compensation funds in Colorado, Hawaii, Kentucky, Louisiana, Missouri, New Mexico, Rhode Island and Texas.
The change would recognize the vitality of the state’s workers’ compensation insurer of last resort, which has become the state’s largest writer of workers’ compensation coverage. IWIF, based in Towson, Md., now claims about 25% of the state’s workers’ compensation market share.
The insurer has worked in recent years to promote itself as far more than an insurer only of last resort, saying in a statement that it is “a self-supporting insurance company that operates solely from premium and investment income.” Established in 1914, IWIF has assets totaling more than $1.6 billion.
IWIF officials said in a statement that the move would enable it “to better serve the needs of its policyholders.”
The conversion would include a one-time transfer of $20 million to the State of Maryland to clarify and resolve issues relating to ownership of certain of IWIF’s assets and repayments of any monies to the state, according to IWIF.
“The conversion will help IWIF continue to provide quality insurance products and customer service and remain Maryland’s leading workers’ compensation carrier,” Phelan said. “The conversion also continues to keep IWIF in a very strong financial position.”
If the conversion is approved, IWIF would remain the state’s workers’ compensation insurer of last resort, ensuring that every employer has guaranteed access to purchase a policy, and it would continue to compete with private insurance companies.
The bill’s language also prohibits the insurer from branching out past Maryland or into other lines of insurance. The new company would be prohibited from further changing its structure, and would remain a mutual company. The governor would remain the one to appoint the company’s board, which IWIF officials say is “intended to ensure the continuance of a strong oversight role by the state.”
IWIF board, executives back conversion to nonprofit mutual company via IFAwebnews .