Florida Workers’ Compensation Joint Underwriting Association Committee Reports: Week of November 28 – December 2, 2011

 

The Florida Workers’ Compensation Joint Underwriting Association’s (“FWCJUA”) Operations, Rates and Forms, Executive, and Reinsurance Committees met last week to review numerous procedural matters, hear updates, and consider annual pay increases for staffers.

 

Operations Committee

During the Operations Committee’s November 29, 2011 meeting, FWCJUA Executive Director Laura Torrence reviewed the 2012 FWCJUA Business Plan and Forecast (“Plan”), pointing out that there have been no additions to the list of key activities for 2012.  One of the biggest changes to the list was the amount of money that was spent on Tropics Web enhancements.  The original cost was estimated at $100,000, but FWCJUA Staff was able to reduce the cost to $28,219 through the procurement process, she stated. 

Ms. Torrence said estimates for producer authorization income and investment income had been revised to be less optimistic, based on current trends.  There have been no other substantial revisions since the Plan was distributed in September. 

The Committee then recommended that the revised Plan should be sent to the Board of Governors (“Board”) for approval.

With little discussion, the Committee also voted to recommend that the Board approve a revised telecommuting policy.  This would provide the Executive Director with greater flexibility in allowing an employee to use remote supplemental computer access.

The Committee also confirmed recent modifications to the FWCJUA’s Disaster Recovery and Emergency Preparedness Plan with no discussion.

With no further business before the Committee, the meeting was adjourned.

 

Rates and Forms Committee

The FWCJUA Rates and Forms Committee met on November 29, 2011, during which it heard a report on the FWCJUA Operations Manual Revisions by Ms. Torrence, who explained that the FWCJUA is working with the Florida Office of Insurance Regulation (“OIR”) on the language related to the FWCJUA’s Complaint Resolution Procedure.  She said she will be putting together a chronology on the last several dispute appeals to clear up a possible misperception regarding some delayed rulings.  No action was required on this item.

The Committee next considered extending Milliman’s engagement to provide actuarial services to the FWCJUA.  Milliman won the engagement most recently in 2008 for a three-year term, with two one-year extensions.  Ms. Torrence said Milliman offered to extend its engagement for the second year with no increase in fee for the 2012 reserve analysis and rate review for January 2014.  The Committee unanimously voted to extend Milliman’s engagement another year.

Ms. Torrence told the Committee that FWCJUA Staff had filed revised rates with the OIR on November 14, thus effectuating the overall average premium level decrease of 9.7 percent effective January 1, 2012 applicable to new and renewal business.

With no further business before the Committee, the meeting was adjourned.

 

Executive Committee

The FWCJUA Executive Committee met on November 30, 2011 to consider annual compensation to be paid to the Executive Staff.

The Committee voted to:

• Remove the Program Manager position from the list of Executive Staff members, since the role has been vacant since January 2007;
• Update Executive Staff job descriptions, and also revise the Executive Staff compensation plan to specifically identify the Executive Staff positions to which it applies;
• Increase the fixed compensation paid to the Operations Manager by 5.25 percent, effective January 1, 2012; and
• Increase the amount of fixed compensation to be paid to the Executive Director by six percent, effective January 1, 2012.

With no further business before the Committee, the meeting was adjourned.

 

Reinsurance Committee

The Reinsurance Committee also convened on November 30, 2011 to review the structure of the FWCJUA’s 2011 reinsurance program, its prices, the reinsurers on each portion of the program, and their ratings.  The discussion was highly technical.

The Committee focused on 2012 program recommendations, items that might have a considerable impact on the FWCJUA’s pricing, and large losses in 2011.  FWCJUA Staff members summarized the catastrophe layer quotations, noting that the premium level is actually decreasing, so the FWCJUA will likely receive a rate decrease in the layers based on a firm order projection of 1.84 percent on the $10,000,000 excess of $10,000,000 layer and a projected firm order of 1.40 percent rate for the $10 million excess of $20 million layer.

Different reinsurance structure options were discussed, and their advantages and disadvantages were highlighted.  The Committee heard reports on various layer options and associated structures and prices, ultimately choosing Option 1 as the 2012 reinsurance program to recommend for Board approval.

Ultimately, the Committee approved the following:

• Reinstatement at 100 percent, and a $10,000,000 Maximum Any One Life (“MAOL”);
• Purchase the $10,000,000 excess of $10,000,000 catastrophe layer on a per occurrence basis with one reinstatement at 100 percent, and a $10,000,000 MAOL;
• Purchase the $5,000,000 excess of $5,000,000 layer on a per occurrence basis with one reinstatement at 100 percent;
• Purchase the $4,000,000 excess of $1,000,000 layer on a per occurrence basis with a reinstatement pattern of “1 free, 1 @ 50 percent, 1 free;” and
• Terminate all existing reinsurance coverages on a cut-off basis effective December 31, 2011.

With no further business before the Committee, the meeting was adjourned.

 

Should you have any questions or comments, please contact Colodny Fass.

 

 

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