Workers’ Comp on the Line

It looks like workers’ compensation will be the big insurance issue when the Texas Legislature meets again in 2005.

The Texas Workers’ Compensation Commission recently came under fire at the Insurance Council of Texas’ 2004 Workers’ Compensation Symposium, as various speakers lobbed explosives at both the agency and the system.

The TWCC is up for review by the Sunset Advisory Commission in 2005 and that commission’s staff recently came out with suggestions for reforming the agency. The staff report didn’t recommend doing away with TWCC but it offered ideas for changing the Texas workers’ comp system. The report can be accessed via the Advisory Commission Web site at www.sunset.state.tx.us. (And you can read about ICT’s workers’ comp symposium beginning on page 8 of this edition of Insurance Journal.)

Last year personal lines, especially homeowners insurance, hogged the legislative spotlight. Then, medical liability insurance was addressed in Proposition 12, which placed caps on noneconomic damages in medical liability cases. We’re still trying to see how those legislative initiatives are going to pan out.

Insurance Commissioner José Montemayor has said that year-end 2003 carrier reports filed with the Texas Department of Insurance show promising signs for the homeowners market. Carriers reported a loss ratio of 58 percent for 2003, compared to loss ratios of 108.6 percent in 2002 and 118 percent in 2001.

Med-mal is another story. The rate cuts promised by Prop. 12 have not come to pass. Only one of five major medical liability insurers in Texas has so far agreed to reduce its rates. Montemayor has said the market hasn’t had time to absorb the full effect of the reforms. He noted that least 10 insurers have approached the department about writing new medical malpractice business. And the Texas Medical Association, which pushed for passage of Prop. 12, maintains that a backlog of malpractice lawsuits making their way through the courts will likely keep rates high for a while.

Texas’ neighboring states are dealing with reforms of their own. Oklahoma, which apparently also has problems with its workers’ comp system, is trying to find solutions to some of its woes. One reform bill was shuttled early on in this year’s session, but Gov. Brad Henry recently assembled a group of legislators, business owners, industry representatives, attorneys and others to examine pending workers’ comp legislation in an effort create a reform package. In Louisiana, legislators are grappling with whether to further reform the function of the powerful Louisiana Insurance Rating Commission—which has approval authority for rate changes of ten percent or more—by turning into an appellate body.

You may want to contact your elected representatives with your thoughts on these issues. In the meantime, happy reading!