Md. insurance agency asks 4 more years to qualify

IWIF must meet standards to join guaranty fund

November 08, 2001|By Walter F. Roche Jr. | Walter F. Roche Jr.,SUN STAFF

Officials of the state Injured Workers Insurance Fund want four more years to meet the minimum requirements to qualify for an insurance guaranty fund.

Preston Williams, IWIF's chief executive officer, told the Senate Budget and Finance Committee yesterday that the insurance agency needs more time to qualify for the guaranty fund, which protects policyholders in the event of a failure. He said a bill to authorize the delay is expected to be introduced when the General Assembly convenes for a new session.

Williams also said that a series of rate increases, in addition to one already announced, will be needed to meet minimum funding requirements that were set in a recent review of IWIF by the Maryland Insurance Administration. A rate increase of 8.4 percent, which would boost the average annual premium by $453, goes into effect Jan. 1.

Williams told legislators that additional increases of about 4 percent per year will be needed to meet the funding requirements.

IWIF, operated by a board appointed by the governor, provides workers compensation insurance coverage to 23,000 Maryland companies. Under a law enacted last year, IWIF was, for the first time, made subject to periodic financial reviews by state insurance regulators. The law also requires IWIF to join the guaranty fund as soon as it meets the same standards required of commercial insurance companies.

Williams, who met recently with House and Senate leaders, said he got a favorable reaction to the proposed delay.

Were he given a choice, Williams said, he would prefer not to be in the guaranty fund. He said IWIF was taking steps to control costs and was bolstering its fraud-detection efforts.

"Fraud is more rampant in Maryland than I ever would have dreamed," Williams said.

Insurance Commissioner Steven B. Larsen told the committee the financial review of IWIF showed that the agency was solvent, but that annual costs were still exceeding annual premiums. He said IWIF has been able to make up the shortfall through investments.

The commissioner said his agency is reviewing a corrective-action plan filed by IWIF as a result of the financial review.

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