September 15, 2014 5:02 PM

Fight brews over state control of workers comp carrier of last resort

Sen. Fraser is angry: “I think this is a runaway train. What you’re doing is bad, bad policy. You were created by the state of Texas for a specific reason.”

Sen. Troy Fraser is so angry Texas Mutual Insurance wants to cut the cord of state control that he threatened to file legislation next session to bring the workers’ compensation carrier back under state control at a Monday Senate hearing.

This is not the first time Texas Mutual has asked to be freed from state strings in order to pursue outlying markets. The topic was raised last session, too. But Fraser created Texas Mutual and he remembers history. When the company was created by the state in 1991, no carrier would write policies in the Texas market.

Richard Gergasko, president of Texas Mutual, has proposed an apportioned risk pool where Texas Mutual would remain a provider, but the risk of the marketplace would be spread proportionately among workers’ compensation carriers. Gergasko said spreading business beyond Texas borders posed no risk to the state, was supported by Texas Mutual competitors and would benefit shareholders.

“That’s a very interesting statement. You said it’s supported by your board of directors and it’s in the best interest of the company,” Fraser challenged from the dais. “Give me the good public policy reason why this should happen.”

By Kimberly Reeves