Florida Workers’ Compensation Joint Underwriting Association Operations and Reinsurance Committees Hear Status Reports, Recommend Board Approval for Routine Items

 

The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Operations Committee and Reinsurance Committee met briefly yesterday, August 29, 2012, to hear status reports and recommend FWCJUA Board of Governors (“Board”) approval for several routine, annually reviewed items.

The meeting materials are attached.  The Committee reports follow: 

 

Operations Committee

After a brief discussion regarding the amount of funds needed for general and administrative expenses, the Operations Committee agreed to recommend retaining a minimum of $3.2 million to support the FWCJUA’s cash outflow needs and reinsurance premiums.  Of that amount, $1.8 million would be maintained as an average balance in the operations checking account, while the remaining balance would be held in savings accounts.

In other business, the Committee also confirmed several revisions to the FWCJUA’s Disaster Recovery and Emergency Preparedness Plan.  Appendices “A” and “C” were updated to identify current employees on the Employee Contact List.  Appendix “F” was updated to identify current vendors and contract dates.  Appendix “G” was updated to identify current passwords and network configuration.

Additionally, the Committee tentatively agreed to recommend adding a section on internal information technology auditing procedures into the 2013 Business Plan.  The procedures would be performed internally at last twice a year instead of outsourcing the audit.  The Committee will seek additional input from the Florida Office of Insurance Regulation on the matter.

The Committee agreed to present the proposed 2013 Business Plan and Forecast to the Board for discussion on September 12, 2012.  It also agreed to move forward with the proposed service provider selection process and timeline for securing policy administration and managed care services beyond December 13, 2012, with four years as the initial term of engagement.

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

 

Reinsurance Committee

After a brief review, Reinsurance Committee members agreed to recommend Board approval of the FWCJUA’s 2013 reinsurance program goals and marketing strategies.  The goals were described as “appropriate.”

FWCJUA Executive Director Laura Torrence told the Committee that the number of new business accounts and amount of new premium grew in 2011 for the first time in six years.  Growth is expected to continue into 2012.  New business accounts seeking coverage in the FWCJUA grew 65 percent over the same period and new premium increased 195 percent, she noted, adding that this growth is also expected to continue through 2013.

The FWCJUA’s estimated written premium for 2013 is $30 million with a new and renewal policy count of 1,555 and an associated earned premium of $28.6 million, it was noted.

The FWCJUA’s objectives and goals for 2013 were summarized in four key points:

• Minimize policyholder resources devoted to maintaining reasonable reinsurance coverage
• Create a program that reflects the proper balance between price and coverage by determining the optimum attachment points
• Fairly present the FWCJUA’s 18-years of experience and performance in the marketplace
• Maintain flexibility to accommodate extraordinary premium fluctuations

The Committee then discussed commutation matters, noting that the A.M. Best financial strength rating of ReliaStar Life Insurance, one of its reinsurers, has been upgraded from Negative to Stable.

A representative from Aon Benfield then told the Committee it continues to monitor the payment patterns Excalibur Re is applying to its reinsurance obligations to the FWCJUA and other Aon Benfield clients.

It was noted that Excalibur Re is consistently late in paying its claims by 90 days or more.  Aon Benfield representatives met with Excalibur Re representatives on July 31, 2012 and learned that the company does not anticipate any changes in its lagging payment process.

Excalibur Re officials requested that the FWCJUA consider providing a commutation offer to Excalibur.  The reserves held by Excalibur Re as it relates to the FWCJUA were approximately $698,000 as of June 30, 2012, it was noted.

In other business, the Committee recommended Board approval of a timeline for the FWCJUA reinsurance intermediary services Request for Qualifications (“RFQ”).  The draft RFQ requires respondents to be authorized to provide reinsurance intermediary services in accordance with Florida law, have a minimum of seven years experience providing general reinsurance intermediary services, and have a minimum five years experience in providing general reinsurance intermediary services for workers’ compensation residual markets.

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

 

 

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