The Maryland Insurance Administration is going to investigate if the Injured Workers Insurance Fund should pay premium taxes after the Towson, Md.-based workers’ compensation insurer’s attempt to convert to a nonprofit mutual insurance company failed.
Beth Sammis
The Maryland General Assembly denied the quasi-state agency’s request to become Chesapeake Employers’ Mutual Insurance Co., which would be run similar to the Medical Liability Insurance Society of Maryland, created by law to handle medical malpractice insurance.
One key issue regarding IWIF’s change was whether it should pay premium tax.
“It’s the ongoing issue between us and the industry,” said Thomas Phelan, IWIF’s president and CEO, speaking at Maryland I Day.
Because IWIF serves as the state’s workers’ compensation insurer of last resort, taking anyone who applies, it has argued historically that it should not pay premium taxes. Private companies who compete with IWIF argue that the 2% it is not charged puts IWIF at a competitive advantage.
Beth Sammis, acting Maryland insurance commissioner, said her office would investigate this summer whether IWIF should pay the tax.
“We plan to look at how IWIF sets rates and determine for myself if that should translate to a lower premium tax rate for IWIF,” Sammis said at Maryland I Day in Linthicum, Md., one day after the General Assembly session ended.
Sammis, who came to the MIA after more than 20 years in health insurance, said she believes that “an incentive to help those who cannot pay” may be appropriate for IWIF, comparing the situation to how nonprofit health insurance companies like CareFirst are freed of premium taxes.
Sammis offered no details about who or how the investigation would evolve.
Phelan said he asked the General Assembly to “call off” discussions about the conversion on the last day of the 2010 session, because too many amendments stood in its way.
This story originally appeared in the June 2010 print edition of Insurance & Financial Advisor.
Maryland regulators to join IWIF premium taxation debate via IFAwebnews.com .
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