Texas Mutual Pays $100M in Policyholder Dividends

On July 28, 2010, Texas Mutual Insurance Company began distributing $100 million in workers’ compensation dividends among approximately 38,000 policyholders. Dividends reward loyal policyholders who share Texas Mutual’s commitment to workplace safety....MORE.

Dividend marketing tool
In reponse to agents' requests, we designed this tool to help you explain your clients' dividend earning potential to them.

What is a dividend?
Texas Mutual Insurance Company pays benefits to workers who suffer compensable injuries. The costs of those benefits affect the overall cost of workers' compensation. A dividend is essentially a monetary reward for policyholders who help us provide affordable workers' compensation coverage by controlling their claim costs. Texas Mutual Insurance Company pays two types of dividends: individual dividends and group dividends.

How are Texas Mutual dividends different?
When publicly owned corporations pay dividends, they distribute a portion of company earnings to their stockholders. All stockholders receive a dividend based on the number of shares they own. When Texas Mutual Insurance Company returns dividends, we reward specific policyholders based on customer loyalty and claim loss history.

How can employers improve their chances of qualifying for a dividend?
Dividends reward policyholders who control their claim costs. The best way to control claim costs is by preventing accidents. Many policyholders also launch a return-to-work process, join our fight against workers' comp fraud and manage their claims with Texas Mutual^® online services.

Are dividends taxable?
They could be, depending on the employer's situation. Employers should consult their tax professional.

Are dividends guaranteed?
No. Dividends are based on performance and are not guaranteed. The Texas Department of Insurance must approve all dividend plans.

Can I access my company's dividend history?
Registered Texas Mutual^® online users can review their dividend history on our website. To become a registered website user, click here, and complete the online application.

Key term: loss ratio. An estimate of expected payments for reported and unreported claims, expressed as a ratio to earned premiums

Individual dividends: beyond the basics
The dividend plan includes an annual component and a retention component:

Annual component. The annual component rewards current policyholders who had acceptable loss ratios for the policy that expired in 2009.
Retention component. The retention component rewards current policyholders for up to five consecutive years of acceptable loss ratios with us, ending with the policy that expired in 2009. Longtime policyholders may have received increasing individual dividends because of the retention component.

Early qualifier dividend
The early qualifier dividend is our response to agents who asked us to shorten the dividend cycle for first-year policyholders. We plan to distribute early qualifier dividends in November. We will send agents more details, including a list of their qualifying clients, in advance. To qualify:

The employer must have a policy that expired between January 1, 2010 and June 30, 2010.
The policyholder must have an in-force policy on October 15, 2010.
The loss ratio on the policy must be in the acceptable range.

Group dividends
Texas Mutual has paid about $80 million in dividends to members of its group discount programs since 1999. Group dividends are based largely on each group's overall loss ratio. Policyholders who earn group dividends can also participate in the individual dividend program.

Dividend rules
Click here for more information about qualifying for dividends.

NOTE: Past dividends are not a guarantee of future dividends, and the Texas Department of Insurance must approve all dividend plans.