Florida Workers’ Compensation Joint Underwriting Association Producer Committee Approves Producer-Related Agreements and Penalty Process; Questionable Agreement Signatures Discussed

 

During a brief teleconference on May 1, 2013, the Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Producers Committee (“Committee”) unanimously re-approved several existing producer-related agreements and procedures, then turned to the issue of contracts bearing questionable signatures.

With little discussion, the Committee heard a brief summary of the process to become an FWCJUA-authorized agency with designated producers and acknowledged the various requirements.  Minimum FWCJUA standards require an agency to maintain errors and omissions insurance, or professional liability insurance of $500,000 per incident, and to be duly licensed with the Florida Department of Financial Services’ Division of Agent and Agency Services.  Details of the authorization process include a specific application process via the FWCJUA’s secure Website at www.fwcjua.com.

It was noted that the FWCJUA’s newly-designed Website became operational on January 1, 2013.  It is more streamlined and modernized, with added content for users, it was explained.

“We geared it to the agency users.  We added a preparedness list to help agency users complete and submit authorization requests more timely – and we describe our own process for the authorization,” said one Committee member. 

The redesigned Website also offers more specifics on how to update agency information online, the Committee member pointed out.  A user can log on to the online application process, the Market Assistance Plan (MAP) portal, and the certificate of insurance using one sign-in.

Agency Producer Agreement

FWCJUA Executive Director Laura Torrence explained that the existing FWCJUA agency producer agreement, which requires Committee confirmation, has not been modified in any way. 

“Everyone is still very happy that it’s considered a perpetual agreement and that they pay one fee to bring everyone on,” Ms. Torrence noted.

Committee members unanimously voted to re-confirm the agreement without discussion.

Agency Penalty Schedule and Operations Manual Rule

Although no changes were made to the existing Agency and Designated Producer Penalty Schedule or the Agency and/or Designated Producer Termination, Suspension or Revocation Operations Manual rule, Ms. Torrence said there are some issues with the application process related to the notarization of potentially questionable signatures that merit discussion.

In some instances, the FWCJUA is receiving these contracts with notarized signatures that do not match the signatures on file, thus raising concerns of potential fraud, she said.

After new applications are evaluated and it is determined that the employer is eligible for coverage, a “ready to bind” letter is sent to the producer, she explained.  The producer is then supposed to print the application, have the employer sign it, sign it him or herself, have the signatures notarized, and send the forms back to the FWCJUA to bind the coverage.  The effective date of binding is typically the day after receipt of the forms and payment, Ms. Torrence said.

“We are seeing notarized signatures that don’t seem to match the signature we have on file for the producer.  We don’t typically check that because if there is a notary stamp we should be able to trust the notary,” Ms. Torrence said.  “But when we get a red flag where our underwriter is told the producer is out of the country, and then the next day the form comes in signed by him, we’re suspicious.”

It is a violation of the agency agreement for a notary to sign and seal an application for coverage with a forged applicant and/or producer signature on the application.  The existing penalty for such is a 90-day suspension with notification of revocation if the FWCJUA determines that the agency or its designated producer failed to comply with other FWCJUA guidelines and procedures, Ms. Torrence said.

“I do believe there has got to be some type of punishment or penalty but that penalty needs to be appropriate to what the investigation finds,” Ms. Torrence stated.  “If the agency is being defrauded versus if the agent is doing the defrauding, there might be separate types of penalties that might be appropriate.

“We feel sufficiently convinced that there might be fraud – we ought to be doing something,” she added.

Ms. Torrence said she has asked the FWCJUA’s General Counsel to explore ways to approach the issue.  One possibility might be to have someone else have Power of Attorney so he or she could legally sign on the producer’s behalf, she said.

She also acknowledged that the issue could be related to lax policies and procedures.

“The effective date of coverage is impacted when people aren’t available to sign,” Ms. Torrence noted.

Ms. Torrence said she plans to send out a bulletin of some sort to explain the issue.

“We want to make sure everyone completely understands how we will be looking at this,” she said.

With no further discussion, the Committee unanimously approved the Agency and Designated Producer Penalty Schedule as well as the Agency and/or Designated Producer Termination, Suspension or Revocation Operations Manual rule. 

Agency Producer Fees 

With no discussion, the Committee unanimously approved the existing schedule of agency producer fees.

The agency producer fee is determined by a graduated agency producer fee scale as follows:

• Eight percent on the first $1,000 of premium
• Five percent on the next $4,000 of premium
• Three percent on the next $95,000 of premium
• Two percent on premium in excess of $100,000 

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

 

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