Florida Workers’ Compensation Joint Underwriting Association Audit Committee Meeting Report: November 18
Nov 18, 2009
The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Audit Committee (“Committee”) held a meeting via teleconference on November 18, 2009 to review its responsibilities for the quarter ending December 31, 2009.
The Committee reviewed its Charter Procedures Checklist for points to be presented as part of its annual report at the next FWCJUA Board of Governors meeting scheduled for December 8, 2009.
The Committee’s communication with management and independent auditors was deemed to be good and performance expectations are being met. A new audit is underway and appears to be progressing smoothly.
Discussion took place regarding what significant risks are faced by the FWCJUA in the current environment. It was determined that several different risk factors inherent in the FWCJUA policies expose the organization’s reserve estimates to significant variability. Those factors include: long settlement patterns, residual market function, potential for large claims, regulatory and legislative changes, judicial interpretations, as well as other economic and social factors affecting workers’ compensation costs. Fluctuations in premium volume are considered to reflect the variability of the risk mix.
It was stated that, because some workers’ compensation benefits are payable over relatively long time periods, both the medical and allocated loss adjustment expense components of the FWCJUA’s reserve will be sensitive to future inflation rates and medical fee schedules.
Committee members discussed legislation that is expected to be proposed by the Florida Insurance Consumer Advocate during the state’s 2010 Regular Legislative Session. The anticipated bill would seek to change how the FWCJUA determines its rates. The Committee decided to evaluate the legislation when, or if, it is filed.
In regard to the FWCJUA’s financial structure, controls and types of transactions, the Committee agreed that there were no changes to make or report. It also was agreed that the FWCJUA’s management continues to strive toward high-quality financial reporting, monitor the effectiveness of internal controls and effectively oversee complex transactions.
It was noted that during 2009, the most significant change impacting the FWCJUA’s financial reporting has been a dramatic decline in premium.
A standard review of the FWCJUA’s accounting principles yielded no further suggestions for changes.
The Committee also discussed transparency and ethics issues related to its Charter Procedures Checklist. Standard documents, such as the Code of Conduct and Conflict of Interest Statement, will be distributed for signature at the December 8 meeting.
The meeting materials packet is attached.
Should you have any questions or comments, please contact Colodny Fass.
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