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The president of the company that would take over if the Injured Workers Insurance Fund ever became insolvent is questioning a plan to tap $20 million from the fund for Gov. Martin O'Malley's fiscal 2011 budget.

"Our main concern is about this money. Has there ever been a complete analysis on how it affects their financial stability? And if it affects it negatively, we have a problem," said Joseph R. Petr, president of the Property and Casualty Insurance Guaranty Corp.

The PCIGC's members are insurance carriers doing business in Maryland. If an insurer becomes insolvent, the PCIGC would assess its members to cover claims.

"Right now we're in good shape, nothing's happening," Petr said. "In the '80s and '90s we had many go down. We've had 150 go insolvent since the '70s."

The $20 million is contained in the Budget Reconciliation and Financing Act, legislation that supports the $13.2 billion budget O'Malley (D) proposed last month.

IWIF, created by the General Assembly in 1914, pays workers compensation claims.

The 2011 spending plan is before the General Assembly's budget committees. The legislature must pass a balanced budget before ending the 2010 session.

Sen. Thomas McLain Middleton, who chairs the Finance Committee, said he believes the state will repay the $20 million. The Budget Reconciliation and Financing Act makes no mention of that.

"Before we finish up with the BRFA, this whole thing, there will be some resolution in how the state is going to pay IWIF back," said Middleton (D-Dist. 28) of Waldorf.

Middleton also is sponsoring legislation that would alter IWIF, making it a not-for-profit corporation with a new name: Chesapeake Employers' Mutual Insurance Co.

IWIF recently has taken a greater percentage of the commercial market, but operates under a different regulatory scheme. Middleton called the bill part of IWIF's "modernization," which would have the fund regulated as other insurance carriers.

Although Middleton is the sponsor, the bill comes by request of the IWIF board of trustees, he said.