Florida Self-Insurers Guaranty Association Board of Directors Reviews Actuarial Report, Audited Financial Statements

 

During a teleconference today, March 29, 2012, the Florida Self-Insurers Guaranty Association (“FSIGA”) Board of Directors (“Board”) heard a summary of FSIGA’s 2012 Actuarial Report and unanimously voted to approve the organization’s 2012 Audited Financial Statements.  Decisions were also made to award service contracts for integrated managed care services and pharmacy services.

The meeting materials are attached for review.

2012 Actuarial Report

Terry Godbold, principal and consulting actuary with Pinnacle Actuarial Resources, Inc., told the Board that FSIGA had no new insolvencies in 2012.  He explained that FSIGA is only dealing with those insolvencies from 2011 and earlier.

During a brief summary of the 2012 Actuarial Report, Mr. Godbold noted that the estimate of the gross ultimate loss and loss expenses from known insolvencies as of December 31, 2012 has increased by approximately $2.2 million.

He said FSIGA closed 11 claims during the year, noting that while the gross estimate of ultimate liabilities of all insolvencies rose, FSIGA’s net liability actually dropped by $184,116 from the December 31, 2011 analysis as a result of favorable net development from a majority of the active insolvencies.   He further noted that 18 of the 27 active insolvencies have two or fewer open claims, with 14 insolvencies having only one claim.

FSIGA’s estimated liability as of December 31, 2012 is $10,370,248, and it ended 2012 with 59 open claims.  Of those, the top five insolvencies represent more than 90 percent of the liabilities, Mr. Godbold told the Board.

On an undiscounted basis, FSIGA’s ultimate net liability as of December 31, 2012 should fall within a reasonable judgmental range from $8.8 million to $11.9 million, according to his report.

Mr. Godbold further noted that FSIGA’s reserves are at a “reasonable level,” and have been “behaving quite nicely.”

“There are your tougher claims, the ones that are going to be around for a while,” Mr. Godbold added.

 

2012 Audited Financial Statements

During a brief review of the 2012 Audited Financials, it was noted in a report that FSIGA’s current financial statements “present fairly, in all material respects, the financial position of Florida Self-Insurers Guaranty Association, Incorporated, as of December 31, 2012 and 2011” and were in accordance with Generally Accepted Accounting Principles.

According to the report, FSIGA’s total liabilities and net assets as of December 31, 2012 are $75,984,162; investments are $17,798,962 and total unrestricted net assets are $44,969,963.

It was further noted that the portion of the report dealing with internal controls did not identify any deficiencies that would be considered material weaknesses.

After hearing the brief summary, the Board voted unanimously to approve the 2012 Audited Financials.

In other business, the Board:

• Unanimously voted to renew FSIGA’s contract with Genex, a provider of integrated managed care services. Under the contract, Genex will provide telephonic case management, utilization review, medical case management, vocational services; Quest/medical review services and medical peer review.
• Unanimously voted to approve a pharmacy benefit management contract with Cypress Care, Inc. Under the contract, total fee schedule drug charges for 2012 are $241,216.91. The proposal includes a $52,432 total discount based on 2012 purchases, according to a summary of the pharmacy benefit management pricing proposals.

It was noted that FSIGA experienced some service problems with the Cypress Care contract a few months ago, but the problems were remedied after Cypress Care was contacted about the issue.  Other past concerns with Cypress Care included inaccuracies on reports and failure to follow up on prescription denials.

“They assured us this was a systems transitions issue,” said a representative from commercial risk management about past problems.

It was noted that the new contract contains a 45-day “without cause” cancellation clause.

“I believe they have addressed the issues, they have been cleared up and they have given us some very attractive pricing,” said one Board member. 

It was agreed that Cypress Care would remain under close scrutiny.

• Heard a report on pending Legislative issues of interest to FSIGA, in which it was noted that two House bills and one Senate bill address the drug repackaging issue.  Both have received little resistance to date and are moving fairly quickly.

A Workers’ Compensation glitch bill has been scheduled for presentation in the Legislature but not yet heard.

With no other business before the Board, the meeting was adjourned.

 

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