Texas Senate Bill SB850

Texas 2013 - 83rd Regular

Caption

Relating to the residual market for workers' compensation insurance in this state and to the operation, governance, and organization of the Texas Mutual Insurance Company.

Impact

The bill introduces significant changes to existing workers' compensation laws in Texas by codifying the assigned risk program into the Insurance Code. This restructuring is expected to make the process of obtaining insurance more streamlined for residual market employers. It mandates participation by insurers in proportion to their market share, thereby distributing the risk more evenly across the industry. Such reforms could decrease operational difficulties for affected businesses and enhance overall workplace safety, as employers are more likely to secure necessary coverage.

Summary

Senate Bill 850 relates to the residual market for workers' compensation insurance in Texas and specifically addresses the governance and organization of the Texas Mutual Insurance Company. The bill establishes a framework for an assigned risk program intended to provide coverage for employers who cannot obtain workers' compensation insurance through traditional means. This program aims to ensure that residual market employers, often smaller businesses or those considered high-risk, can acquire necessary insurance to comply with state law regarding employee coverage.

Sentiment

Generally, sentiment surrounding SB 850 has been supportive, especially among business groups and employers lacking access to standard insurance products. Advocates argue it addresses a substantial gap in coverage options for at-risk businesses, fostering a more inclusive insurance environment. However, some concerns were raised about the adequacy of coverage provided under the assigned risk program, particularly regarding the potential for higher premiums due to the inherent risks of insuring high-risk employers.

Contention

Notable points of contention include the potential financial implications for insurers and the long-term sustainability of the assigned risk program. Opponents of the bill may argue that relying on a state-governed program could lead to inefficiencies and financial burdens that might ultimately be passed down to businesses in the form of increased premiums. Furthermore, the bill's amendments impose specific requirements on the Texas Mutual Insurance Company, which may be seen as too restrictive by some in the industry. The debate reflects broader concerns about state interventions in insurance markets and their impact on competition.