FWCJUA Investment and Operations Committee Reports: May 30

On Friday, May 30, 2008, the Florida Workers Compensation Joint Underwriting Association (“FWCJUA”) held an Operations Committee (“Committee”) meeting to discuss various items, including:

• Legislative matters
• The FWCJUA fixed administrative expense reimbursement policy
• Disaster recovery matters
• The telecommuting policy
• Budget expense considerations
• An update on the Policy Administration Services Request for Proposal (“RFP”)

The meeting was called to order with a quorum of members in attendance. Also in attendance were FWCJUA Executive Director Laura Torrence, FWCJUA staff legal counsel and other staff members.

Regarding legislative matters, it was reported that while no bills were passed during the 2008 Regular Legislative Session that would directly impact the FWCJUA, there were several bills that passed which could have some limited effect:

• SB 2462 Relating to Group Self-Insurance Funds
• HB 5045 Relating to Workers’ Compensation Medical Services and Supplies that would transfer healthcare insurance responsibilities to the Florida Department of Financial Services (“DFS”)
• SB 2860, also known as the ‘Homeowners Bill of Rights,’ that affects the industry as a whole

Early concern had been expressed during the Legislative Session regarding a Senate bill that would have undone the workers’ compensation reforms enacted during the 2003 Legislature, but that bill was never heard. Concern also was expressed about the possibility of $740 million being taken from workers compensation-related trust funds to fill the gaps in this year’s budget. This also did not occur.

Ms. Torrence reported on the FWCJUA’s fixed administrative expense reimbursement policy. The FWCJUA is required to outline its fixed administrative expenses on a yearly basis and submit them to DFS for possible reimbursement. The Committee discussed the likelihood of receiving reimbursement for 2007 expenses and voted to submit the outline to the Board of Governors (“Board”) for final approval.

Ms. Torrence updated the Committee on the FWCJUA Policy Administration Services RFP and Evaluation Committee. Responses to the RFP from Travelers Indemnity Company (“Travelers”) and Riverpoint Insurance Company (Berkley Risk Administrators Company, LLC) were received on May 28, 2008. The Evaluation Committee will present its recommendation to the Board for final approval after its June 11, 2008 meeting.

Ms. Torrence gave the 2007 Operations Report, which was completed in March, 2008 by Travelers and FWCJUA staff members. The report identified the following statistics:

• Reductions in policy counts, mid-term cancellations and claim counts from 2006 to 2007
• Over half of all policies issued in 2007 related to the construction industry
• Over half of all 2007 claim reports were made within two days from the date of the loss
• The types of injuries have remained constant from year-to-year and reflect the types of businesses for which the FWCJUA writes policies

Other matters approved by the Committee for submission to the Board included:

• An update to the current disaster recovery plan to include a new vaulting service and current technology methods
• A recommendation for the hire of an Information Technology Systems Disaster Recovery Auditor
• Engagement of the Hay Group to perform a review of FWCJUA executive compensation and benefits

These matters will be brought before the Board for final approval.

The meeting was then adjourned.

 

FWCJUA Investment Committee Report

Also on Friday, May 30, 2008, the FWCJUA held an Investment Committee (“Committee”) meeting to review the current FWCJUA investment portfolio and discuss its compliance with the FWCJUA Investment Policy (“Policy”).

The meeting was called to order with a quorum of members in attendance. Also in attendance were FWCJUA Executive Director Laura Torrence, Laura Lopez, and investment team members.

Ms. Lopez gave an update on the current FWCJUA investment portfolio. Currently, the portfolio is noncompliant with the Policy due to three bonds that hold a below-acceptable (“A”) rating. These bonds previously were authorized by the Committee as exceptions to the Policy. Subsequent to that authorization during April, 2008, the Countrywide Home Loans bonds–one of the exceptions–have been further downgraded.

The Committee approved holding onto the Countrywide bonds, rather than selling it as a loss. The Committee also approved keeping the other downgraded bonds that had been previously accepted.

The meeting was then adjourned.

Should you have any questions or comments, please do not hesitate to contact Colodny, Fass, Talenfeld, Karlinsky, & Abate.

 

To unsubscribe from this newsletter, please send an e-mail to ccochran@cftlaw.com