In 1991, Texas employers sought policy writers to create polices covering employees injured on the job. To fuel this need, the Texas legislature created the Texas Workers’ Compensation Insurance Fund, the largest writer of workers’ compensation insurance. In 2001, the state changed the fund’s name to Texas Mutual Insurance Company (TMIC) but maintained the same goal: to stabilize the state’s workers’ compensation system. Since its creation, TMIC has accomplished just that, consuming 40% of Texas’s workers’ compensation insurance market. Today, TMIC insures over 60,000 employers and their 1.4 million employees. Despite its success, TMIC recently announced its desire to cut ties with the state. The purpose of this blog is to explain some of the pros and cons associated with converting the state fund into a private company.


Pros of Ending State Involvement

  • TMIC policyholders would have the authority to appoint all board directors
  • State officials would no longer covet the company’s $2 billion net wort
  • If Texas sold TMIC to a private company, the state could use the sale proceeds to create a Rainy Day Fund
  • Legislators would be estopped from spending TMIC’s future earnings on the state


Cons of Ending State Involvement

  • Separation would eliminate oversight by the attorney general, legislative review, and state audits, giving TMIC increased control
  • Texas would force TMIC to pay federal income taxes, making insurance more expensive and less attractive to employers
  • This conversion could drive up rates, potentially disrupting the workers’ compensation market and making Texas less competitive


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