ANNAPOLIS -- A Senate committee yesterday passed its own version of Gov. William Donald Schaefer's proposed reorganization of the insurance division, setting up a possible confrontation with the House committee that has approved a vastly different bill.
The House version would create an Insurance Administration, independent of the Department of Licensing and Regulation and funded partly by a new surtax on all Maryland insurers.
Part of that surtax would go to finance a new anti-fraud bureau within the administration. The entire plan came with the blessing of the insurance industry, which says it wants a beefed-up regulator that can gain accreditation from a national association of regulators. Without that accreditation, Maryland insurers could face hurdles doing business in other states.
The amendments approved by the Senate Finance Committee yesterday make changes in two major areas:
* The division would remain part of the Department of Licensing and Regulation, but its funds would be restricted for use in the division and not subject to the discretion of the department's secretary, William A. Fogle Jr.
* Surtaxes from insurers would be dedicated to different purposes. Insurers who generate more customer complaints would help pay for the division's consumer bureau and money garnered from filing fees would help fund the division's general operations. Insurers would be able to pay as much as they choose to help fund the anti-fraud bureau.
Committee chairman Thomas P.O'Reilly, D-Prince George's, has acknowledged concerns voiced in the House Economic Matters Committee, which has passed the original bill, and by the insurance commissioner, John A. Donaho, that some of the insurance division's funding has been used by Mr. Fogle for purposes outside the division.
The changes in the Senate version would "ensure that all of the funding that is in the insurance division remains in the insurance division," Mr. O'Reilly said, "and Secretary Fogle can't draw that money down and use it for different purposes."
Some of the changes, though, are expected to cause trouble with the governor's office and the House committee.
Steven Larsen, a legislative assistant to the governor, said that the new funding mechanisms leave the commissioner with little flexibility. He also said the division should be independent of its department, but he declined to say whether that warranted rejection of the bill.
Del. Casper R. Taylor Jr., D-Allegany, the chairman of the House panel, said he worries that the Senate committee's changes could throw the funding out of balance with this year's budget.
If approved by the full Senate, the amended bill would return to the House Economic Matters Committee.