Florida Workers’ Compensation Joint Underwriting Association Operations Committee Recommends Approval of Policy Administrator, Reviews Market Conduct Exam Draft Report

 

During a brief meeting today, May 23, 2013, the Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Operations Committee (“Committee”) voted to recommend that the FWCJUA Board of Governors (“Board”) hire Travelers Property and Casualty Insurance Company (“Travelers”)  to provide policy administration and managed care services for the next three years.  The Committee also heard updates on the status of the FWCJUA’s Market Conduct Exam and General Operations.

The meeting materials are attached.

Travelers received the Committee’s unanimous approval to service FWCJUA policies effective January 1, 2014 through December 31, 2017, with the option of two one-year extensions by mutual agreement.

It was noted that Travelers offered a better price for its services and provided more thorough answers to all of the FWCJUA’s competitive solicitation questions.

The Committee made the choice after comparing proposals submitted by Travelers and AmTrust/Technology Insurance Company (“AmTrust”).  Scoring evaluated policy issuance, premium collection and audit; and scope of services, which included loss control services, claims administration and managed care.  Travelers received a 93.4 score and AmTrust received a 72.92 score.

Out of an estimated collected $52 million in premium, Travelers quoted a 19.41 percent fee and AmTrust quoted a 29 percent fee, said FWCJUA Executive Director Laura Torrence.

Committee members unanimously voted to retain Travelers for the job.

In other business, the Committee noted that the 2012 FWCJUA Operations review showed no recommendations for improving standards. 

Highlights of 2011 FWCJUA Operations:

• Total Policy Count in 2012 is 1,323-up 33.6 percent from 990 in 2011
• Total Policy Premium in 2012 is $17,934,393-up 98.9 percent from $9,012,913 in 2011
• Total number of claims in 2012 is 306-up 164 percent from 116 in 2011
• Percentage of losses in the construction industry rose, with 25 percent reported in 2012 compared with 13 percent in 2011

FWCJUA Operations Manager Michael Cleary then read a list of recommendations and enhancements proposed for 2013.  The recommendations follow:

• Conducting a mass mailing to all FWCJUA policyholders and producers on the availability of safety and drug-free workplace credits
• Producing a mid-year report on the composition of the FWCJUA book of business to identify any developing trends
• Offering FWCJUA policyholders an online express pay option through Travelers’ Website
• Conducting quarterly meetings between Travelers’ Underwriting staff and Claims staff to evaluate claims trends and multi-claimant injuries

In 2012, the FWCJUA instituted policyholder communication on how to verify subcontractor coverage or exemption status via the Florida Department of Financial Services Website to new and renewal business policy packets during the First Quarter of 2012.  Travelers will include that information in standard policy packets sent to new and renewal policyholders beginning June 30, 2013.

In those same packets, Travelers detailed how the FWCJUA will address out-of-state contractors working in Florida without the required Florida 3A coverage and the additional premium that will be charged.

Also in 2012, the FWCJUA and Travelers initiated quarterly “touchpoint” meetings to discuss common issues relevant to the effective management of the FWCJUA’s book of business, it was noted.

With no discussion, the Committee confirmed some minor administrative revisions to the FWCJUA’s Disaster Recovery and Emergency Preparedness Plan.

The Committee then heard an update on the progress of the FWCJUA’s Market Conduct Exam, a draft report of which was issued on April 23, 2013.  The final version is being assembled.

Cost of the Market Conduct Exam totaled $83,576, which was somewhat less expensive than the estimated $89,200, Ms. Torrence said.  No additional invoices are expected. 

Notable recommendations in the Market Conduct Exam included the recommendation of adding a financial expert to the FWCJUA Audit Committee, possibly to serve as Chairman.  Addition of the “Entire Agreements Clause” to the FWCJUA reinsurance contracts pursuant to the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual, SSAP No. 62R was also suggested.

Other Operations-related developments since February 2013:

• The FWCJUA’s 2012 Annual Financial Statement was filed on February 26, 2013.
• The Management Discussion and Analysis was filed with the Florida Office of Insurance Regulation on March 29, 2013.
• On April 23, 2013, the FWCJUA received a copy of the Target Market Conduct Draft Examination Report covering the time span from January 1, 2009 to September 30, 2012 with five minor recommendations.
• On the same day, the FWCJUA received Travelers’ First Quarter Self-Audit Performance Report, resulting in a cumulative score of 99.7 percent.
• On May 9, 2013, the FWCJUA’s 2013 First Quarter Financial Statement was filed in which the organization recognized a $63,088,381 surplus, with a Sub Plan D deficit of $271,961.

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

 

 

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