Florida Workers’ Compensation Joint Underwriting Association Reinsurance Committee Meeting Report: August 31, 2011

 

The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Reinsurance Committee (“Committee”) met today, August 31, 2011, to consider the FWCJUA’s 2012 reinsurance program goals and market strategy, among other agenda items.

FWCJUA Executive Director Laura Torrence told the Committee that the FWCJUA experienced a depopulation trend from 2004 to 2010, but began repopulating in 2011.  Given the growth rate through July 2011, Ms. Torrence said it is likely that its 2011 written premium will total about $10 million, instead of the originally projected $8 million.  The repopulation trend is expected to continue into 2012, given depressed interest rates and “perceived deteriorating results” in the voluntary market, she said.

It is anticipated that the 2012 written premium will range between $12 million and $27 million, with the best estimate being approximately $18 million, Ms. Torrence added, explaining that the repopulation trend is illustrated by in-force policy count having risen four percent in 2011, increasing from 759 in 2010 to 790 in 2011.  In-force written premium jumped 28 percent in 2011, rising from $5,429,229 in 2010 to $6,949,834 in 2011.

Ms. Torrence further reported that the repopulation occurring in 2011 shows a shift in the mix of business from “contracting” to the “goods and services” industry group, attributable to Florida’s current economic environment.

Goods and services comprise 37.24 percent of the new accounts being written in 2011 and 47.5 percent of the written premium, Ms. Torrence pointed out.  Comparatively, in 2010 goods and services accounted for only 25.7 of the new accounts being written and 25.9 percent of the written premium.

“This is the first year we are seeing it,” Ms. Torrence said of the change.

She then summarized the FWCJUA reinsurance program’s 2012 objectives and goals:

• 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-year experience and performance in the marketplace
• Obtain flexibility to accommodate extraordinary premium fluctuations

After some discussion, the Committee unanimously accepted the reinsurance goals and market strategy.

The Committee also heard an update on a commutation matter involving Excalibur Re.  It was reported that Aon Benfield continues to monitor the payment patterns of Excalibur Re’s application of its reinsurance obligations to FCWJUA and other Aon Benfield clients.  Ms. Torrence told the Committee that Excalibur Re has maintained a consistent pattern of delay in payment, with no significant change in the past year, while waiting approximately 90 days to pay its bills.  She said Excalibur Re owes $19,916 to the FWCJUA, with $10,972 outstanding for over 90 days and $8,944 recently billed. 

“At this point unless we see significant delays, it is a hold for us,” Ms. Torrence stated.  She said Aon Benfield will continue to monitor the reinsurers.

It was noted that the next FWCJUA Board of Governors meeting will be on September 27, 2011 in Sarasota.

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

 

 

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