Office of House Bill AnalysisH.B. 3458
By: Brimer
Business & Industry


In 1991, the legislature created the Texas Workers' Compensation Insurance
Fund (fund) to serve as a competitive force in the marketplace, guarantee
the availability of workers' compensation insurance in Texas, and serve as
the insurer of last resort.  In 1999, the fund's statute was amended to
make the fund a member of the Texas Property and Casualty Insurance
Guaranty Fund.  The assets of the fund could be better protected by
converting the fund to a mutual company where the assets are owned by the
policyholders.  House Bill 3458 converts the fund to the Texas Mutual
Insurance Company (company) to be operated as a domestic mutual insurance


It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 


House Bill 3458 amends the Insurance Code to provide that on September 1,
2001, the Texas Workers' Compensation Insurance Fund (fund) is converted to
the Texas Mutual Insurance Company (company) that is organized and operated
as a domestic mutual insurance company and is not a state agency, but
retains current state government oversight.  The bill requires the
commissioner of insurance to issue a certificate of authority to the
company to write workers' compensation insurance (Sec. 2).  The bill
authorizes the company to exercise all the rights, privileges, powers, and
authority of any other mutual corporation organized to transact workers'
compensation insurance business in Texas and transfers the powers and
duties of the fund to the company (Sec. 2 and SECTION 3).  The bill
provides that the company cannot be dissolved except by statutory action of
the legislature (Sec. 2). 

H.B. 3458 provides that the company is governed by a board of nine
directors (board) that serve staggered six-year terms, and requires that
five of the members approved by the governor.  The bill authorizes the
board to perform all necessary or convenient administrative and business
functions of the company.  The bill sets forth the qualifications for board
members and requires the board to annually  elect a chairman and any other
officers necessary for the performance of its duties.  The bill requires
the board to hire a president and provides for the president's
qualifications and authorizes the board to form committees and
subcommittees.  Board members shall receive board fees commensurate with
industry standards.  The bill requires the board to maintain its principal
office in Travis County.  The members of the fund's board will serve as
directors until the company's board is established (Secs. 3 and 4).   

The bill requires the company to pay premium taxes, maintenance taxes, and
the maintenance tax surcharge in the same manner as a domestic mutual
insurance company (Sec. 12).  The bill provides that all revenues, monies
and assets are governed by the laws applicable to domestic mutual insurance
companies, and that the state of Texas has no claim to any of the revenues,
monies, and assets and may not borrow, appropriate or direct payments from
the company for any purpose (Sec. 13). 

The bill requires the company to establish a trust to ensure sufficient
monies are available to deal with all  possible market conditions.  The
bill provides that appropriate guidelines will be developed to determine
the amount of monies in the trust and the procedures for withdrawal of such
monies.  The bill requires the company to report statistical and other
information upon request to the Research and Oversight Council on Workers'
Compensation (Sec. 21). 


September 1, 2001.