Florida Surplus Lines Service Office Board of Governors approves 2012 budget, including nearly $2 million for anticipated NIMA Clearinghouse operations
Sep 29, 2011
With little discussion at its meeting today, September 29, 2011, the Florida Surplus Lines Service Office (“FSLSO”) Board of Governors (“Board”) approved an $8.2 million 2012 budget, which includes nearly $2 million for anticipated costs associated with Non-Admitted Insurance Multi-State Agreement (“NIMA”) Clearinghouse operations.
The Board chose to use reserve funds to cover a projected $2.6 million budget deficit instead of raising Florida’s current surplus lines service fee of .1 percent to fund the gap.
The Board also approved an amendment to the FSLSO’s 2011 budget that allocates $750,000 to cover start-up costs associated with the NIMA Clearinghouse.
The final 2012 budget includes $6,029,716 for FSLSO Operations; $272,621 for Building Operations; and $1,915,775 for Clearinghouse Operations. The Board allocated funds for the Clearinghouse even though a contract has not yet been negotiated for the FSLSO to provide Clearinghouse services. The 2012 budget must still be submitted to the Florida Office of Insurance Regulation (“OIR”) by October 1, 2011, explained FSLSO Executive Director Gary Pullen.
“There is no certainty as this point that we will even be the Clearinghouse. We are obviously moving in that direction,” Mr. Pullen stated. “We have contracts to be negotiated.”
If a contract is successfully negotiated, a detailed business plan would be submitted to the Board for consideration that would address specific revenue projections, staffing, operations issues and other items, he said.
“Unfortunately, we are in a position where we have to develop the business plan during the middle of the game. This process is so fluid it is literally changing by the day,” Mr. Pullen added. He said the FSLSO National Clearinghouse Committee next week will likely review documents that are being drafted by legal counsel and tax counsel so formal negotiations regarding Clearinghouse operations can begin.
Highlights of the 2012 Operations budget include:
- No changes in salaries
- No changes in employee benefits
- A 550 percent increase in spending on software and computer network maintenance
- A four percent increase in education costs
- A 163 percent increase in the equipment replacement fund.
Although additional funds were not allocated for salaries, money is still available to adjust salaries due to a built-in cushion amount to cover temporary and part-time workers. Two full-time positions are currently not filled, Mr. Pullen explained.
The budget includes $165,000 in revenue income, which is down 25 percent or $55,000 from what was previously estimated.
It was noted that the nearly $2 million budget for Clearinghouse Operations includes $400,000 to fund five new positions, including two in accounting, two insurance analysts and an assistant data base administrator. An additional $825,000 is allocated for programming and $75,000 for education, to name some highlights.
With no further business before the Board, the meeting was adjourned.
Should you have any questions or comments, please contact Colodny Fass.
To unsubscribe from this newsletter, please send an email to Brooke Ellis at bellis@cftlaw.com.