FWCJUA Audit Committee Meeting Report: November 19
Nov 21, 2008
The Florida Workers Compensation Joint Underwriting Association (“FWCJUA”) held an Audit Committee (“Committee”) meeting on November 19, 2008 to review the Audit Committee Charter Procedures Checklist (“Checklist”).
Checklist items presented by FWCJUA Executive Director Laura Torrence and reviewed by the Committee included:
Any significant risks faced by the FWCJUA due to the current financial environment
Due to recent bank failures, the FWCJUA is concerned about holding its cash deposits at a single bank, and is exploring diversification options that would allow for full FDIC deposit coverage. FWCJUA staff members will meet with a small community bank offering a Certificate of Deposit Account Registry Service (“CDARS”) program that would allow the FWCJUA to spread its deposits among multiple banks in order to ensure FDIC insurance coverage.
Update on legal and regulatory matters that may have a material effect on FWCJUA financial statements
On October 23, 2008, the Florida Supreme Court overturned the First District Court of Appeal decision in the case of Emma Murray v. Mariner Health/Ace USA, ruling that claimant attorneys are entitled to “reasonable fees” in workers’ compensation insurance cases. The Court ruled that the time and labor involved, complexity of the case, and skill required to perform the necessary legal services should be used in determining attorney compensation.
The National Council on Compensation Insurance (“NCCI”) issued an amended rate filing in response to the decision, requesting an 18.6 percent rate increase that would apply to all open claims from October 2003 until present. At this time, the FWCJUA has less than 200 open claims, and staff members are reviewing them in order to determine the total exposure amount.
Evaluation of FWCJUA management’s efforts to promote high-quality financial reporting
The Investment Committee is meeting more frequently in order to monitor FWCJUA investments closely in the rapidly changing financial climate.
Discussion regarding changes to the FWCJUA balance sheet or important financial relationships
The FWCJUA continues to shrink its book of business, and as such, its balance sheet is also shrinking. The financial relationship with Lehman Brothers has changed recently, due to the company’s collapse. It is unknown at this time what the recovery value for bonds held through Lehman Brothers may be; however, it is anticipated that some value may be recovered.
The meeting was then adjourned.
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