Maryland to Privatize State-Run Workers’ Comp Insurer IWIF
The Injured Workers’ Insurance Fund (IWIF), Maryland’s state-run workers’ comp insurance carrier, will become a private, nonprofit company under a new name Chesapeake Employers’ Insurance, effective Oct. 1, 2013.
The conversion is mandated by legislation (SB 745, the IWIF Conversion Act) passed by Maryland’s General Assembly and signed into law on May 22, by Maryland Gov. Martin O’Malley. When the insurer becomes a private company, the conversion would protect the IWIF’s surplus from any further claims by the state to help balance the state budget.
Over the prior legislative sessions, the state introduced legislation to transfer funds from IWIF’s surplus to the state’s general fund. On May 22, Gov. O’Malley also signed into law SB 1301, the Budget Reconciliation and Financing Act, which requires a $50 million mandatory transfer from IWIF to the State General Fund.
“This ($50 million transfer) is to occur before July 1, 2013. Under SB 745, Chesapeake Employers’ Insurance Company comes into existence on Oct. 1, 2013. Therefore, the $50 million will be transferred to the state before IWIF is converted into Chesapeake Employers’ Insurance Company,” IWIF General Counsel Dennis Carroll told Insurance Journal. The current surplus at the IWIF is $335 million.
The Towson, Md.-based IWIF has been serving as the state’s largest writer of workers’ comp insurance and the insurer of last resort. It will continue its role as the workers’ comp insurer of last resort after the conversion.
“This action will position us for continued success in serving the workers’ compensation insurance needs of Maryland employers,” said Thomas Phelan, president of IWIF. “The legislation will protect IWIF’s surplus and will allow us to remain financially strong.”
Phelan said there will be no change for policyholders and for the insurance agents with whom the IWIF works with. “For them, it will be business as usual,” he said. IWIF markets workers’ comp insurance through independent agents and also directly to business owners. IWIF’s assets total $1.7 billion.
The conversion establishes Chesapeake Employers’ Insurance Company as a private, non-profit workers’ comp insurer with the same mandate to serve Maryland employers only. IWIF’s existing nine-member board of directors will become directors of Chesapeake Employers’ Insurance Company. The Governor of Maryland will continue to make appointments to Chesapeake’s Board.
‘Protecting Our Surplus’
When IWIF becomes a private company, the state will no longer have any claim to IWIF’s surplus, the insurer said. “Protecting and stewarding our surplus for the exclusive benefit of our policyholders is an important priority accomplished with the passage of this legislation,” Phelan noted.
“Otherwise, our surplus would remain vulnerable to future transfers by the state, rather than be available for their original purpose, which is financial stability to ensure payment of injured worker claims. I am confident IWIF will remain financially strong and will continue to provide exceptional service and rates.”
- Lyft is a Motor Carrier and State Farm Can Be Sued Directly, Georgia Court Says
- New York City’s Biggest Taxi Insurer Is Insolvent, Risking Transit Meltdown
- How One Florida Engineer Charged Others With Fraudulent Insurance Reports, Testimony
- University Student Sues Sorority and Landlord Over Fall From Window