It also would be regulated by the state Department of Insurance like private workers' compensation insurers and be required to pay insurance-premium taxes.

However, the new law will allow the company to retain its federal tax exemption.

It would begin operations as a mutual insurer owned by policyholders on Jan. 1, 2015, if Fallin signs the bill as expected.

The American Insurance Association "does not view this as a true mutualization of CompSource," says Steven Bennett, AIA associate general counsel.

He says the law enabling CompSource still exists under the new legislation; "if it is true mutualization it would not have a separate-enabling statute."

Bennett adds, "In itself, that shows it is a state-created entity, rather than a private business."

Bennett also says, "One of the main problems with the latest legislation is that the majority of the mutual's board will be appointed by the government. Again, you would never have that for a private business."

Bennett says another concern is that, under the bill, CompSource Mutual will still be retaining the residual market, which serves higher-risk employers who cannot get insurance in the private market.

 "The fact that the residual market is being carved out for CompSource proves that this is not a true privatization," Bennett contends.

He points to other states he says have truly privatized their state funds—Arizona and Texas—and says Oklahoma's plan should mirror those states.

On Monday, Fallin signed legislation broadly reforming the state workers' compensation system.