BILL ANALYSIS
| Senate Research Center | S.B. 264 |
| 89R784 KKR-F | By: Perry |
| | Business & Commerce |
| | 3/13/2025 |
| | As Filed |
AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
In 2003, the 78th Texas Legislature passed H.B. 2095, which authorized groups of small and mid-size employers in the same or similar industries to self-insure their workers' compensation liabilities as a "group" if approved by the Texas Department of Insurance (TDI). Workers' compensation insurance rates were high at the time, and offering this option helped small and mid-sized employers to continue to provide affordable workers' compensation insurance coverage to their employees. TDI certified these groups and monitored their financial solvency.
Over the next few years, TDI issued certificates of authority to groups (only about 9 or 10 groups), and at the same time workers' compensation insurance rates began a steady decline (77 percent decline since 2003). Employers could now afford workers' compensation insurance coverage outside of these groups, and as a result, almost all of these groups shut down. One group (Logistics Trust) became insolvent, and the Guaranty Fund took over the payment of their claims, leaving only one group (the Cotton Ginners' Trust) left to run their group and provide any additional funding to the Guaranty Fund Trust (the Trust) to pay claims. The Guaranty Fund Board is incomplete because there are no longer enough groups to have board members, and no new groups have formed in years. All of the Guaranty Fund's claim liabilities have been transferred to another workers' compensation insurance company with TDI's approval, and it is time to wind down the operations of the Guaranty Fund and dissolve both the Guaranty Fund and the Trust Fund.
Bill Summary
S.B. 264 would do three things:
1. Stop the certification of new group self-insureds by TDI after September 1, 2025 (the effective date of the bill). The one remaining solvent group, the Cotton Ginners' Trust, would retain its current certificate of authority.
2. Require the Guaranty Fund board to submit a revised plan of operation to the commissioner of insurance by December 1, 2025.
3. Require the commissioner of insurance to approve the wind down plan developed by the Guaranty Fund board, and to order the dissolution of the Guaranty Fund and disbursement of remaining funds in the Trust once the wind down has been completed.
As proposed, S.B. 264 amends current law relating to discontinuing group self-insurance coverage and dissolving the Texas self-insurance group guaranty fund and trust fund under the Texas Workers' Compensation Act.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Subchapter B, Chapter 407A, Labor Code, by adding Section 407A.0521, as follows:
Sec. 407A.0521. NEW CERTIFICATES OF APPROVAL PROHIBITED. (a) Prohibits the commissioner of insurance (commissioner), notwithstanding Section 407A.052 (Issuance of Certificate of Approval; Refusal), from issuing a certificate of approval to a proposed group on or after September 1, 2025.
(b) Authorizes the commissioner to amend a certificate of approval issued to a group before September 1, 2025.
SECTION 2. Amends Subchapter J, Chapter 407A, Labor Code, by adding Section 407A.4561, as follows:
Sec. 407A.4561. REVISED PLAN OF OPERATION: WIND DOWN. (a) Defines "qualified group."
(b) Requires the board of directors of the Texas self-insurance group guaranty fund (board) to submit to the commissioner for approval a revised plan of operation to wind down and dissolve the guaranty fund and trust fund. Requires that the plan include:
(1) steps for distributing any remaining money in the guaranty fund and trust fund to qualified groups and notifying interested parties; and
(2) an estimated timeline for the wind down.
(c) Requires the commissioner to approve the board's revised plan of operation if the commissioner determines that the plan sufficiently describes the actions the board will take to wind down and dissolve the guaranty fund and trust fund.
(d) Requires the board to implement the revised plan of operation approved under Subsection (b) and provide written notice to the commissioner of the completion of the wind down not later than the 30th day after the date of completion.
(e) Requires the commissioner, not later than the 30th day after the date the commissioner receives the board's notice under Subsection (d), to determine whether the guaranty fund has met its obligations under the approved revised plan of operation. Requires the commissioner, if the commissioner determines that the guaranty fund met the fund's obligations, to issue an order requiring the distribution of any remaining money in the guaranty fund and trust fund to qualified groups.
(f) Provides that, on the 30th day after the date the commissioner issues the order under Subsection (e), the guaranty fund and the trust fund are dissolved and the board is abolished.
SECTION 3. Requires the board, not later than December 1, 2025, to submit the revised plan of operation to the commissioner of insurance required by Section 407A.4561, Labor Code, as added by this Act.
SECTION 4. Effective date: September 1, 2025.
