Combined Independent Agencies

Alan Hardin, Jr.

I realize John Allen is President of a PEO that provides workers’ compensation and that his view of non-subscription is the view of a competitor. That in no way, however, gives license to overlooking many material facts in his comparison. In fact, his description of Occupational Accident Insurance is both simplistic and misleading.

In 2004, the Texas Department of In-surance Workers’ Compensation Research Group studied the non-subscriber marketplace. It found that 38 percent of all Texas employers were non-subscribers and that well over half (58 percent) said they “would never consider purchasing WC insurance” or would require WC prices to decline “more than 50 percent” in order for them to reenter the “subscriber” marketplace.

Cost is certainly a reason to non-subscribe, especially when costs savings routinely average 25-40 percent less than WC, but the more important question is “Why are non-subscribers able to save 25-40 percent off WC” and, as importantly, “Why would certain non-subscribers not go to WC at any price?”

Mr. Allen seems to imply that the savings are maintained merely by reducing the benefits paid to employees of non-subscribers. Reality seems to beg otherwise. Occupational accident coverages provide weekly benefits up to $1,000 per week. Workers’ Comp pays less than $600 at its maximum. Occupational accident coverages pay lump sum death benefits of $100,000 to $500,000. Few widows or widowers would prefer the WC benefit of approx $550 a week until remarriage.

No, the savings are found by wringing fraud and overutilization out of the system. As a non-subscriber, the employer is empowered to direct the care of his injured employee, a practical solution but one that is illegal within the WC system. The employer is able to utilize effective rehabilitation and to deny obviously false claims. …

Non-subscription is not for everyone. If you are a governmental entity or contractor, you cannot non-subscribe. If you are employer not interested in workplace safety, you should not non-subscribe. To all others, I invite you to the best system available anywhere in the United States: Non-Subscription-No Place But Texas.
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