Staff report to the Sunset Advisory Commission on the Texas Workers' Compensation Commission, Texas Workers' Compensation Insurance Fund, Texas Workers' Compensation Research Center

Abstract

One of the major results of the 1989 reforms was the creation of the Texas Workers' Compensation Commission to administer the Texas workers' compensation system. Compared to workers' compensation agencies in other states, TWCC has a great deal of administrative power and authority. TWCC is charged with processing claims, settling disputes, controlling medical costs, increasing workplace safety, and enforcing the statute and rules. For the Texas workers' compensation system to work, TWCC must carry out those functions in a way that is fair and cost-effective. The primary focus of the Sunset review of TWCC was how to improve the ability of the agency to process claims and assist injure workers, settle disputes, and increase safety in both public and private workplaces. The Texas Workers' Compensation Insurance Fund was created by the Legislature in 1991 to both stabilize the workers' compensation insurance market and serve a insurer of last resort. The initial capitalization came from $300 million in state revenue bonds. The Fund was given two years to start operations and write policies in the voluntary market before being required to assume the role of insurer of last resort in January 1994. The dual requirement to stabilize the market and serve as insurer of last resort is a challenge that, to date, the Fund has met. Our examination of public insurance funds in other states indicate that early performance often declines in later years as markets change and liabilities accumulate. The Sunset review focused on ways to improve the Legislature's oversight of the Fund to ensure its ongoing ability to meet its dual responsibilities. A consistent complaint during the Legislature's review of the system in 1989 was the lack of timely, objective information on the workers' compensation system. I 1991, the Texas Workers' Compensation Research Center was created to provide such information to policymakers. Since then, the availability of information and the need for oversight of the workers' compensation system have increased. Several other entities involved with workers' compensation now produce reliable system information. The Legislative Oversight Committee on Workers' Compensation Insurance, charged with oversight of the entire system, is scheduled to expire in 1995. The Sunset review focused on the role of the Research Center in a changing system and recommends several approaches to address the evolving situation.