The Maryland Insurance Administration will consider reform that could clear the way for captive insurers in the state.

Maryland does not currently have any captives ? an insurance company whose sole business is to insure risk for its parent company ? but the interest in captives, particularly because of the income, taxes and fees they can generate, is a growing trend in the United States.

Vermont became a captive domicile in 1981 and today has about 700 captives. Washington, D.C. became a captive domicile in 2001 and now has more than 30 captives. States including South Carolina, Montana, Arizona and others have also followed suit.

According to an article in yesterday?s Baltimore Business Journal, Alfred W. Redmer, commissioner for the Maryland Insurance Administration, is forming a work group that will study the possibility of creating captive insurance units in Maryland, largely as a way to address concerns over rising medical malpractice insurance costs in the state. Redmer told the Journal that he hopes to have recommendations for establishing captives in Maryland to the General Assembly by the end of this year.

Companies or groups such as doctors and lawyers who have difficulty getting insurance or difficulty finding affordable insurance often form their own captives.

?There is interest, and the interest is growing, and it?s growing because of the medical liability crisis we?re currently in,? Redmer told the Journal.

His office recently approved a 33 percent rate increase for Medical Mutual Liability Insurance Society, the state?s largest insurer of doctors. The insurer had sought a 41 percent increase.

?Large provider groups could potentially lower premiums by forming captives,? Redmer said in the article adding that he thinks politicians will be receptive due to the level of political activity around medical malpractice. A change of law would be needed in Maryland to make it easier to form a captive.

The Journal reports: ?Whether Maryland follows the District?s lead will depend on the reception the idea gets in the General Assembly and from Governor Robert Ehrlich. This summer, Ehrlich created a task force to look at medical malpractice issues.?