Senate OKs restructuring Md. Insurance Division

March 28, 1992|By David Conn | David Conn,Annapolis Bureau

ANNAPOLIS -- The Senate passed its own version of a bill yesterday to reorganize the state Insurance Division and impose a surtax on the insurance companies of Maryland to help pay for increased regulation.

But the amended bill that passed the Senate is vastly different from the version the House passed, and lawmakers on both sides seemed unwilling to compromise yesterday.

The House version calls for making the Maryland Insurance Division an independent department, stripping it from the Department of Licensing and Regulation.

The Senate version, however, leaves the Insurance Division in the department, while prohibiting the department's secretary from using insurance funding for any other purpose -- one of the reasons the governor wanted to make the regulator independent.

The Senate bill also differs from the House version by granting less power to an anti-fraud bureau within the division, and sets up a complicated system of industry-provided fees and taxes to be used for various dedicated purposes.

The House bill allows the commissioner more flexibility in using the industry's funding.

"I don't believe that this is the year to be moving [the division] out of the department," said Sen. Thomas P. O'Reilly, D-Prince George's, chairman of the Senate Finance Committee, which approved the bill.

His counterpart in the House, Del. Casper R. Taylor Jr., D-Allegany, chairman of the House Economic Matters Committee, called the independence of the division "paramount."

The issue takes on added importance in the wake of a House committee's decision two weeks ago to kill a bill to keep the Insurance Division alive beyond its July 1 "sunset" date.

Most state agencies are created with the provision that they will cease to exist on a certain date unless the legislature votes otherwise. Normally, voting to maintain an agency as important as the insurance division is merely a technical matter.

But without a separate action now by the legislature, the continued existence of the Insurance Division could be tied to the fate of the reorganization bill.

The bill's supporters say its passage is needed to provide better regulation of an industry that some regulators say could become the next national financial scandal without adequate oversight.

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