Texas Approves Workers' Comp Reforms

By Gary Mogel

NU Online News Service, June 3, 3:25 p.m.EDT?Insurance trade group representatives said Texas Gov.Jim Perry is expected to sign recently approved measures designedto aid the state's troubled workers' compensation and homeownersinsurance markets.

Gene Acuna, a spokesperson for Gov. Perry, said today that thebills will "be undergoing review as soon as they are received." Thegovernor has until June 22 to sign them, he noted.

According to the Alliance of American Insurers and the NationalAssociation of Independent Insurers, which have tracked the bills'progress through the Texas House and Senate, the governor isexpected to sign the reforms.

The workers' comp measures would give insurers 15 days todetermine the legitimacy of a claim. Current law provides 7 daysfor deciding legitimacy. Insurers that fail to contest a claimwithin the number of days allotted waive their right to denybenefits.

"The seven-day period was too short a time for an insurer toadequately look into a claim," noted David Anderson, vice presidentand assistant director of workers' compensation for the DownersGrove, Ill.-based Alliance of American Insurers. Mr. Andersonpointed out that the longer time period would help in the fightagainst fraud.

Another part of the workers' comp reform package would make thefirst valid certification of Maximum Medical Improvement andassignment of an impairment rating final if they are not disputedwithin 90 days.

"Currently, no time limit is placed on the finalization of MMIcertification, resulting in numerous requests for 'designateddoctors' and having a negative impact on insurers' attempts tocontain claim adjustment expenses," Mr. Anderson said.

Joe Woods, an Alliance lobbyist who has been tracking thereforms, said he expects the governor, who helped get the reformspassed by the legislature, will sign the bills into law.

On the homeowners front, a bill that would establish a "priorapproval" system to regulate homeowners rates has been passed byTexas legislators. Donald Hanson, southwest regional manager forthe Des Plaines, Ill-based NAII, expects the governor to sign.

Jeffrey Brewer, an NAII spokesperson, said that the bill isdesigned to bring regulation to the previously under-regulated"Texas Lloyds" companies, which had garnered about 95 percent ofthe homeowners insurance market in the state.

The NAII's Mr. Hanson explained that many large carriers,including State Farm and Allstate, had set up these Lloydscompanies, which were not subject to the same rate regulation asother insurers, to write homeowners business in Texas. Thehomeowners line in Texas has experienced some turbulent times dueto mold damage claims and high jury awards, Mr. Hanson pointedout.