AIA Praises MD Legislature For Not Raiding IWIF Surplus

Washington, DC - The American Insurance Association (AIA) praised the Maryland Legislature today for dropping provisions in the Budget Financing Reconciliation ACT (SB 141/HB 151 or BRFA) that called for raiding $20 million in surplus from the Injured Workers' Compensation Fund's (IWIF).  The state had been considering the money grab to help balance the state's budget. 

“IWIF's surplus must remain beyond the reach of politicians seeking to narrow the state's budget gap,” said Tammy Velasquez, AIA vice president and director of state affairs.  “The legislature correctly recognized that IWIF's surplus belongs to its policyholders and not the state.” 

Proponents of taking $20 million from IWIF's surplus funds contended that it would serve as a pre-payment of premium tax by IWIF in exchange for the Fund's so-called “privatization.” 

“The proposal to take $20 million from IWIF's surplus was misguided.  A raid on IWIF's surplus, inappropriate under any circumstances, would not have contributed to the privatization of IWIF and would merely serve as evidence of ongoing state control," said Velasquez.  “True privatization would require that IWIF operate on a level playing field with private insurers.”

According to AIA, a bona fide privatization would require IWIF's statutory authority to be repealed, resulting in either an assets sale, or restructuring; segregating and securing pre-privatization liabilities; imposition of the same premium tax to which the private market is subject; and conversion of the board from one designated by the governor to one designated by policyholders.

The Maryland Senate removed the provision in BRFA to transfer $20 million over to the state due to strong concerns regarding its constitutionality.  The House Appropriations committee put the $20 million back in the budget and attempts to remove it by amendment on the floor failed.  The budget went to conference committee. The Senate prevailed in conference and the $20 million was removed from the final budget bill that passed earlier today.   

The American Insurance Association (AIA) is the leading property-casualty insurance trade organization, representing approximately 300 insurers that write more than $117 billion in premiums each year. AIA member companies offer all types of property - casualty insurance, including personal and commercial auto insurance, commercial property and liability coverage for small businesses, workers' compensation, homeowners' insurance, medical malpractice coverage, and product liability insurance.

Source:  American Insurance Association

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