Florida Workers’ Compensation Joint Underwriting Association Committees Meet During Late November 2012

 

Several Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) committees met during late November 2012.  The meeting materials are attached.  Reports on each meeting follow:

The meeting materials are attached.

 

Rates and Forms Committee Authorizes Discussions on Subplan D Actuarial Deficit

The FWCJUA Rates and Forms Committee met on November 28, 2012, during which members unanimously agreed to recommend that the FWCJUA Board of Governors (“Board”) authorize FWCJUA Staff to begin discussing with the State of Florida the return of the excess portion of the State’s money pre-paid to eliminate the Subplan D actuarial deficit based upon financial information as of December 31, 2012. 

In addition, the Committee unanimously agreed to recommend that the Board adopt proposed revisions to the Employer Affidavit to be filed for approval by the Florida Office of Insurance Regulation as soon as possible.

 

Operations Committee Reviews 2013 FWCJUA Budget; Direct Written Premium Nearly Doubles

 The proposed 2013 FWCJUA budget includes nearly double the Direct Written Premium of 2012, largely due to the exponential growth of new business applications, FWCJUA Executive Director Laura Torrence said during the November 29  Operations Committee (“Committee”) meeting.

The proposed 2013 budget includes $30 million in Direct Written Premium, up 91 percent from $15.6 million in 2012, Ms. Torrence said.  Committee members voted to recommend Board approval of the budget, which also includes $18.3 million in operating expenses and $2.6 million in general and administrative expenses.

The big changes are ” . . . based on the growth we have seen and the exponential growth each quarter in the JUA,” Ms. Torrence explained.  “We’ve had this year a 66 percent increase in business applications coming in.  We’ve seen a significant increase in the premium.  We believe we will be over the projected premium at year-end.”

Another change is a 68 percent drop in amortization and depreciation in 2013, from $313,706 in 2012 to $98,399 in 2013, she noted.  She attributed the difference to certain items becoming fully depreciated and dropping off.

FWCJUA personnel costs increased only slightly, rising from $1,108,445 in 2012 to $1,109,352 in 2013.

Additionally, the 2013 budget includes a $10,000 increase for FWCJUA General Counsel services-up from $157,000 in 2012 to $167,000 in 2013.  The General Counsel had not received any increase in at least three years, Ms. Torrence stated.

The Committee also voted to pay an $89,200 expenditure for a 2012/2013 FWCJUA market conduct exam out of the 2012 budget.  The FWCJUA annually budgets $60,000 for litigation costs, and none of that sum was spent in 2012, thus leaving available funding, Ms. Torrence said.

In other business, the Committee recommended the following items for Board approval:

• Adoption of a cash management strategy for 2013
• Adoption of proposed revisions to the FWCJUA’s Telecommuting Policy
• Confirmation of the Disaster Recovery and Emergency Preparedness Plan issued November 19, 2012

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

 

Reinsurance Committee Recommends Approval of 2013 FWCJUA Reinsurance Program

 Also meeting on November 29, the FWCJUA Reinsurance Committee unanimously voted to recommend Board approval of the following framework for the FWCJUA’s 2013 Reinsurance program:

• Purchase the $10,000,000 xs $20,000,000 catastrophe layer on a per-occurrence basis, with onereinstatement at 100 percent and a $10,000,000 Maximum Any One Life (“MAOL”)
• Purchase the $10,000,000 xs $10,000,000 catastrophe layer on a per-occurrence basis, with onereinstatement at 100 percent and a $10,000,000 MAOL
• Purchase the $5,000,000 xs $5,000,000 layer on a per occurrence basis with one reinstatementat 100 percent
• Purchase the $4,000,000 xs $1,000,000 layer on a per-occurrence basis, with or without an Annual Aggregate Deductible (“AAD”) preferably with an AAD of $300,000, and a reinstatement pattern of “1 free, 1 @ 50 percent, 1 free”
• Terminate all existing reinsurance coverages on a cut-off basis effective December 31, 2012
• Provide FWCJUA Staff and the FWCJUA’s reinsurance broker with the flexibility to negotiate the best economic outcome with these directives

The Committee also unanimously agreed to present for Board consideration, without recommendation, an additional reinsurance option for a per-person coverage excess of $10,000,000, possibly recognizing a co-participation in the $4,000,000 xs $1,000,000 layer.

Additionally, the Committee agreed to authorize FWCJUA Staff to pursue a commutation with Excalibur Re.

Ms. Torrence noted that Excalibur Re continues to lag in overdue payments, with an approximate $15,000 now added to the already overdue $42,000.  Excalibur Re would like to consider a commutation before the end of the year, she added.  The FWCJUA Staff will begin the process immediately.

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

 

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

 

 

Click here to follow Colodny Fass& Webb on Twitter (@CFTLAWcom)

 

 

To unsubscribe from this newsletter, please send an email to Brooke Ellis at bellis@cftlaw.com.