Move comes to protect the insurer’s surplus funds
Maryland’s Injured Workers Insurance Fund (IWIF), a worker’s compensation insurance carrier run by the state, is to become a private, non-profit company by October 2013. The move comes from legislation, called the IWIF Conversion Act, which was passed this week by lawmakers. Governor Martin O’Malley signed the bill into law, ensuring that the state’s worker’s compensation insurance system will undergo the changes outlined by the legislation. Legislators believe that the change will provide some stability to the state’s insurance industry and help protect the worker’s compensation system.
IWIF to become Chesapeake Employer’s Insurance next year
When the IWIF is officially privatized next year, it will be known as Chesapeake Employers’ Insurance. After the move, legislators expect that the change will help protect that insurer’s surplus from claims issued by the state itself as a way to balance the official budget. This issue entered into the limelight during the previous legislative session. During this session, state legislators approved moving the IWIF’s surplus into Maryland’s general fund. Currently, $50 million is scheduled to transfer from the IWIF to the state’s general fund before July of 2013.
Insurers to continue providing affordable worker’s comp policies in the state
When the IWIF is converted into Chesapeake Employer’s Insurance Company, it will continue to serve as the last resort source of worker’s compensation insurance in the state. Rates for coverage are expected to see a slight rise due to privatization, but the insurer is likely to maintain policies that are more affordable than those offered by other companies. Though it will be a private company, the insurer will maintain a non-profit status.
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Company expected to be a strong presence in the insurance industry
After the IWIF is successfully privatized, the state will no longer be able to draw upon its surplus. Currently, this surplus stands at approximately $335 million. As a private insurance company, Chesapeake Employer’s Insurance is expected to hold a strong position in Maryland’s worker’s compensation insurance industry.