ANNAPOLIS -- A bill to require insurance companies to increase dramatically the amount of capital they must hold, part of a package of insurance legislation submitted by the Schaefer administration, passed the House Economic Matters Committee yesterday.
If past experience holds, the committee's favorable vote means the bill is almost certain to pass the House.
The same package of bills was introduced in the Senate, where the Finance Committee held a hearing on the legislation this week.
The House committee debated but decided not to vote yesterday on the rest of the governor's bills, which would target fraud committed against insurers and would strengthen the insurance commissioner's hand to go after insurance companies flirting with insolvency.
The panel also voted against a bill that would make auto repair facilities liable for any damages that occurred on a car while in their possession.
The capital requirements legislation, House Bill 205, would increase by as much as three times the amount of capital some types of insurers would have to hold. A low level of capital could threaten an insurer's solvency if unexpected losses occur.
The bill would give some insurance companies up to 10 years to comply with the higher capital requirements.
And it would change from five to three years the frequency of state examinations of insurers.
In testimony on the bill this week, Bruce Martin, a legislative aide to Gov. William Donald Schaefer, said, "It's been in excess of 25 years since Maryland increased its capital and surplus requirements."
He said yesterday that Maryland is among the lowest states in the nation for capital requirements, and that the bill would raise the state to within the top one-third.
A similar bill failed last year, but Mr. Martin noted that the bill has been changed to address the concerns of smaller insurers.
Committee chairman Casper R. Taylor Jr., D-Allegany, who noted that the nation and the state have yet to see a raft of insurer insolvencies that would indicate a crisis, said, "I guess I get a little bit worried that we're going to talk ourselves into a crisis." But he and the rest of the committee ultimately voted for the bill.