According to Mike Seney, senior vice president of policy analysis and strategic planning for the Chamber of Commerce of Oklahoma, employers in Texas can opt out and “go bare” with no coverage for their workers.

But, he said, the proposal being debated by the Oklahoma legislature requires that any employer choosing to remove themselves from the Oklahoma workers compensation system, must still provide equivalent benefits to their workers.

The proposal is being pushed by PartnerSource, a Dallas brokerage that is a unit of Arthur J. Gallagher Risk Services, Inc.

William J. Minick, III, a principal at PartnerSource, says from the Risk and Insurance Management Society conference in Los Angeles that PartnerSource is not the broker for West Fertilizer, but the plant does have alternative workers compensation coverage.

Minick and PartnerSource are lobbying the Oklahoma legislature for an overhaul of the Oklahoma workers compensation system that would allow “free-market competition for the benefit of injured workers and employers” in Oklahoma.

According to a report by the Texas Department of Insurance last year, one-third of Texas employers opt out of the Workers Compensation system.

State-linked Texas Mutual Insurance Co. serves 35 percent of the Texas market, and there are practical advantages for being in the system.

For example, Terry Frakes, a spokesman for TMIC, says employers can't do business with federal, state and local governments unless they are members of the workers' compensation system.

Willem Rijksen, a spokesman for the American Insurance Association in Washington, said the trade group opposes opt-out even if alternative coverage is mandated.

“AIA opposes legislation that will allow for an opt-out system in Oklahoma and we will continue to work against its passage for the remainder of the session,” he says.

Earlier, Bruce Wood, AIA associate general counsel and director of workers' compensation programs, said the opt-out proposal in Oklahoma is being promoted by “non-subscriber interests in Texas” and certain employers, particularly in the oil and gas and retail industries.”

Wood said. “There is no substitute plan, no opt-out plan that can provide that protection that Workers Compensation does.”

He said that Workers Compensation benefits provided by insurance are backed by a state guaranty funds, so that, if an insurer goes insolvent, the guaranty fund, which is financed by all carriers participating in that state, will ensure the payment of claims.