HBA-BSM, CCH H.B. 3458 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 3458 By: Brimer Business & Industry 3/26/2001 Introduced BACKGROUND AND PURPOSE 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 company. RULEMAKING AUTHORITY 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. ANALYSIS 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). EFFECTIVE DATE September 1, 2001.