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Opt-out figures in Texas comp system remain flat


The number of Texas employers that do not purchase workers compensation insurance remained essentially flat from 2018 to 2020, from 28% to 29% of private-sector employers, according to a report released Tuesday by the Texas Department of Insurance, Division of Workers’ Compensation.


The biennial report on the impact of the 2005 state workers comp reforms is required by law and gives lawmakers the state of the industry, including medical costs, quality of care issues, and medical dispute resolution. As Texas is the only state that does not require employers to provider workers compensation benefits, the report is also a yardstick for how many employers opt into the system.


According to the report, employer non-subscription rates are highest for small employers, such as those with fewer than four employees, 40% of which do not carry comp coverage. The report also showed that 22% of large employers with more than 500 employees did not carry the coverage — the next highest group. That figure has grown steadily since 2010, when 15% of large employers did not purchase comp coverage.


The most frequently cited reasons by nonsubscribing employers for not purchasing workers compensation coverage included having too few employees (63%), too few on-the-job injuries (56%), that workers compensation wasn’t required by law (59%), and that insurance premiums are too high (48%). About one in five nonsubscribing employers said that cutting costs because of the pandemic was an extremely important reason why they were nonsubscribers, according to the report.


Meanwhile, the most frequently cited reasons employers gave for purchasing workers compensation coverage was the ability to participate in a network (49%), they thought workers compensation was required by law (43%), they were concerned with lawsuits (41%), and there were lower workers compensation insurance rates (27%).


About 16% of subscribing employers said that the ability to provide coverage to employees during the pandemic was an extremely important reason why they purchase coverage, according to the report.






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