Florida Workers’ Compensation Joint Underwriting Association Joint Rates & Forms/Operations Committee Report: May 27, 2011

 

The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Rates and Forms Committee and Operations Committee (“Committee”) met jointly on May 27, 2011 via teleconference to hear several FWCJUA operational updates and address some policy-related matters.  The agenda and meeting materials are attached.

The meeting opened with a brief legislative update, in which the following bills were highlighted:

HB 4095 – This bill would have deleted a provision prohibiting insurers from providing workers’ compensation benefits to any person or their affiliates if certain payments to the FWCJUA are delinquent.  However, the legislation died in the House Insurance and Banking Subcommittee.  The bill may be revived next year.

CS/HB 1087 – The bill, which is awaiting action by Florida Governor Rick Scott, authorizes payment of workers’ compensation benefits on a prepaid card under certain circumstances. 

CS/HB 723 – Also awaiting action by Governor Scott, this bill exempts certain employees working in Florida and their employers from Florida’s Workers’ Compensation law under certain conditions.

After hearing the legislative update, Committee members first convened as the Rates and Forms Committee.  After a brief discussion, an agenda item was tabled that would have authorized the FWCJUA Board of Governors (“Board”) to return a premium dividend for the policy year July 26, 2003 through June 30, 2004 to  “new” Subplans A and C policyholders, while retaining an underwriting gain.  The Committee members were not ready to decide whether to return some of the State’s money that was pre-paid for the purpose of eliminating the Subplan D deficit.

Although FWCJUA staff made no recommendation regarding the Subplan D deficit, a return of premium dividend declaration for the “new” Subplans A and C policyholders with a five percent underwriting gain retention was suggested.

 “My only thought was if you wait until December, you have a little more information, another six months of data, and potentially you could do it then,” said one Committee member.

The Committee did authorize the finalization of a draft letter to the Florida Office of Insurance Regulation (“OIR”), in which a plan to eliminate the FWCJUA’s 2010 Subplan D deficit through May actuals was outlined.  The final letter is to be submitted no later than August 11, 2011.

In other business, the Committee confirmed booking the 2011 FWCJUA losses using the latest 2011 filed rate changes, along with loss ratios indicated from loss experience evaluated as part of the prior year-end.

The 2011 loss projections are listed below:

• Tier 1 projected 2011 net loss ratios are 20.5 percent; gross loss ratios are 23.1 percent
• Tier 2 projected 2011 net loss ratios are 27.2 percent; gross loss ratios are 30.6 percent
• Tier 3 projected 2011 net loss ratios are 29.7 percent; gross loss ratios are 33.4 percent

Finally, the Committee recommended Board confirmation of some minor revisions to the FWCJUA Contractor Supplemental Application as filed with the OIR on March 30, 2011.  The Committee also recommended Board authorization of the filing of all Operations Manual revisions for OIR approval.

The key change to the Contractor Supplemental Application was the addition of a request for information from applicants that have no employees and do not use subcontractors.   Specifically, such applicants will be asked how is the work performed, who performs it and why workers’ compensation is needed.  Language stating that an applicant should enter the word “none” if the questions do not apply also will be included.

Other proposed changes eliminate approximately 40 class codes that are seldom used, it was noted.

With no further business for the Rates and Forms Committee, the group then convened as the Operations Committee.

The Committee heard a report by RSM McGladrey, Inc. on the 2011 FWCJUA security audit, which included tests of both the FWCJUA’s internal and external network security and resulted in a “satisfactory” rating.  No Committee action was required.

Next, the Committee heard a summary of the 2010 FWCJUA Operations Report, which included the following highlights:

• A 15.7 percent reduction in FWCJUA policy count between 2009 and 2010, compared with a 40.3 percent reduction from 2008 to 2009, indicates that the rate of FWCJUA depopulation is slowing down.
• The number of FWCJUA policies with premiums over $25,000 has increased by 38 percent.
• Fifty percent of FWCJUA policies issued in 2010 were for the construction industry.
• The service industry accounted for 33 percent of FWCJUA policies issued in 2010. Of these, 20 percent consisted of domestic per capita codes
• FWCJUA policy retention increased by 10 percent from 2009 to 2010.
• Mid-term cancellations decreased by 37 percent from 2009 to 2010.

With little discussion, Committee members then confirmed numerous technical revisions to the FWCJUA’s Disaster Recovery and Emergency Preparedness Plan. 

A report on Operations also was heard that includes listings of significant  FWCJUA-related cases, budget updates, legislative updates and information on audits. 

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

 

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

 

 

 

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