FWCJUA Board of Governors Meeting Report: March 10

The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Board of Governors (“Board”) held a meeting on Tuesday, March 10, 2009.

The Board approved the minutes from the following meetings:

• December 9, 2008, Annual Membership Meeting
• December 9, 2008, Board of Governors Meeting
• February 20, 2009, Board of Governors Meeting

Board members who serve on the respective committees approved the minutes from the following:

• December 1, 2008, Reinsurance Committee Meeting
• February 3, 2009, Producer Committee Meeting
• February 19, 2009, Rates & Forms Committee Meeting

No action was taken on the February 27, 2009 Investment Committee meeting minutes, since there was no quorum of the Committee present at the Board meeting.

 

Pending Legislation

FWCJUA’s General Counsel reported on legislation pending in the 2009 Florida Legislative Session.

House Bill 903 relating to workers’ compensation attorney fees by State Representative Anitere Flores (R-Miami) was introduced on February 16.  Subsequently, Senate Bill 2072, also relating to workers’ compensation attorney fees, was introduced on February 24 by Senator Garrett Richter (R-Naples) with very similar language to HB 903.  Both are intended to address the October, 2008 Florida Supreme Court decision in the Emma Murray v. Mariner Health case, which eliminated statutory caps on claimant attorney fees, and thus effected a return to hourly fees. 

The National Council on Compensation Insurance (“NCCI”) estimated that the Emma Murray decision would increase overall workers’ compensation costs in Florida by 18.6 percent over a two-year period.  If either HB 903 or SB 2072 is passed, the increase would not be fully realized and NCCI will propose that the first rate increase installment of 6.4 percent, approved by the Florida Office of Insurance Regulation (“OIR”) and effective April 1, 2009, should be rolled back as of that date.

It was reported that a strike-all amendment to HB 903 was scheduled to be heard by the Insurance, Business & Financial Affairs Policy Committee on March 10, 2009.

Other bills of note include:

• SB 1138 relating to Self-Insurance Funds/Electric Cooperatives.  The bill, also scheduled to be heard by the House Insurance, Business & Financial Affairs Policy Committee on March 10, 2009, would exempt certain self-insured funds from oversight by the OIR, but would still make such funds subject to insurance premium taxes.
• SB 1820, an “omnibus” insurance regulatory bill, which has not yet been calendared.

 

401K Plan Modification

The Board considered adoption of a corporate resolution to permit FWCJUA staff to restate FWCJUA, Inc. Savings Plan documents, effective January 1, 2009.  These documents are being modified to include federally-required amendments that incorporate the regulations of the Economic Growth and Tax Relief and Reconciliation Act and an additional amendment regarding the Pension Protection Act.

A motion to adopt the corporate resolution was approved.

FWCJUA Executive Director Laura Torrence said that, although they took a big loss in 2008, the Plan’s mutual funds are very good, and that the FWCJUA is in a good position to be buying now.

 

OIR Budget Review Request

The Board was asked to consider a request from Florida Insurance Commissioner Kevin McCarty for the FWCJUA to review its budget and study means of reducing or eliminating expenses.  To meet the request, the Board discussed the possibility of limiting meetings, or holding them via teleconference more frequently in order to decrease travel expenses.

It was noted that FWCJUA bylaws require an annual meeting of members, but do not specify whether the meeting must be in-person or by teleconference.  The FWCJUA General Counsel will research the issue.

A Board member questioned the staffing to premium writing ratio, and whether the FWCJUA was overstaffed.  Ms. Torrence responded that the FWCJUA had studied the issue and determined that it is not overstaffed.  Further, the FWCJUA is reluctant to lay off trained underwriters, pending a market turn-around in the near future.  Ms. Torrence added that these underwriters were taking on other projects in the interim.

The Board directed FWCJUA Staff to prepare a response outlining the FWCJUA’s initiatives to Commissioner McCarty regarding his budget review request and send a draft to Board members to review prior to sending.

 

Investment Committee Report

The Board discussed the February 27 Investment Committee resolution on the FWCJUA’s investment holdings.

Because the Investment Committee has continued to support the holding of six bonds downgraded below an “A” rating within the FWCJUA’s portfolio, a motion was passed to reconfirm the decision to continue to retain them.

 

Producer Committee Report

Online Application Process: The FWCJUA online application process is being redesigned in order to allow agencies to submit application information electronically for FWCJUA eligibility review prior to submission of hard copies and premium payments, which would streamline the submission process and improve cost efficiency.  Transitioning to a fully interactive online application process, from the current mail-in process, would provide some automated application capability and an independent pricing tool.

Three companies are being interviewed to develop an operating system, and a budget proposal will be submitted to the FWCJUA Operations Committee meeting in May, although a special meeting may be called earlier to expedite the process.

Certificate of Insurance Issuance:  The FWCJUA is also developing an online process that will provide authorized agencies and designated producers with the benefit of issuing certificates of insurance for employers they have placed with the FWCJUA.   This project is being reviewed over the next 60 to 90 days.

No Board action was required on Producer Committee Report items.

 

2009 Business Plan Status Report

The FWCJUA had a surplus of $79,571,324 in 2008.  Only one of the individual rating plans posted a 2008 year-end deficit of $2,818,667.  Because the FWCJUA is in an overall surplus position, it is not required to submit a deficit elimination plan to the OIR.  The FWCJUA, however, will update its plan to eliminate this individual rating plan deficit and submit an updated plan to the OIR within 90 days of filing the audited 2008 financial statements, which it anticipates accomplishing in May.

The 2008 financial audit is expected to be completed by May 1, 2009.  Cash flow and projection models are being monitored and show no new trends or solvency problems.

 

The Board’s next meeting is scheduled for 8:30 a.m. on June 9, 2009.  It was recommended that the meeting be conducted via teleconference.

As there was no other business, the meeting was adjourned.

 

Should you have any questions or comments, please contact Colodny Fass.

 

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