FWCJUA Rates and Forms Committee Meeting Report: August 26

On Tuesday, August 26, 2008, the Florida Workers Compensation Joint Underwriting Association (“FWCJUA”) held a Rates and Forms Committee (“Committee”) meeting to review the 2009 workers’ compensation rates, agency authorization form, revisions to the FWCJUA Operations Manual, the National Council on Compensation Insurance, Inc. (“NCCI”) Affiliation Agreement, and the Return of Premium Dividend program currently in development. To view the complete meeting agenda and materials packet, click here.

The meeting was called to order by Committee Chairman Rick Hodges with a quorum of members in attendance. Also in attendance were Executive Director Laura Torrence, Mark Mulvaney, Bonnie Shek and Laura Lopez from the FWCJUA.

Mr. Mulvaney gave a detailed review of the 2009 rates, rating plan, and associated policy forms.

According to Mr. Mulvaney, Exhibit A (listed on page 4 of the meeting packet) is the most attractive 2009 rate model to the FWCJUA, because it represents the smallest rate increase. This model utilizes funding requested from the State of Florida by the FWCJUA if its premium level dips below the $30 million threshold. The projected premium amount for 2009 is $12 million, which is substantially below this threshold. If the FWCJUA bases its 2009 rates on the Exhibit A model, it is expected that $750,000 will be requested from the State to cover FWCJUA overhead costs, and that the total rate increase for policyholders would be only 0.9 percent.

If the FWCJUA bases its rates on a model not utilizing State funding, premium rate increases would average 13.5 percent.

Ms. Torrence raised the point that even if a request for State funding is denied, current FWCJUA surplus levels can cover operating costs if the Exhibit A option with the lower rate increase is approved.

The Committee approved for recommendation to the Board of Governors (“Board”) that the Exhibit A premium level change effective January 1, 2009 for all new and renewal business be accepted, and that the change subsequently be adjusted as needed to reflect any approved voluntary market rate level and class relativity changes that also may become effective at that time.

The Committee also approved a recommendation to the Board that revisions to the FWCJUA Quarterly Reporting Form be accepted. The revisions are necessary to secure the Florida Office of Insurance Regulation’s (“OIR”) approval of the form together with the introduction of the FWCJUA Employer Self-Audit Program, which will become effective October 1, 2008, and apply to all new and renewal business.

Agency Producer Agreement and Operations Manual revisions recommended for Board approval by the Producer Committee were approved by the Committee with no discussion. To view a summary of the Producer Committee’s August 20, 2008 meeting detailing the proposed revisions, click here.

The Committee approved a recommendation to the Board that the July 31, 2008 reprint/revision of the Operations Manual, including proposed changes, be submitted to the OIR for approval.

Ms. Torrence gave an overview of changes recommended by the NCCI to its Affiliation Agreement (“Agreement”) that would require cancellation of the current Agreement prior to its expiration in order for the FWCJUA to enter into an amended version. This amended version would address the reporting and use of information consistent with a new NCCI Medical Data Call to begin during the third quarter of 2010. The Committee approved recommending to the Board that the current Agreement be terminated in order for the FWCJUA to enter into an amended version of the same.

Ms. Lopez detailed the philosophy and methodology used in preparing a possible FWCJUA policyholder dividend program. Eligible policy years would include those closed for five years, excluding 1994-1999, which were part of a separate reinsurance agreement. Eligible policyholders would have an equal to, or better-than-average expense record, and a proportionate share of the dividend and would exclude those with minimum premium policies and those that are uncooperative or have uncollectible premiums.

Although no decision was required from the Committee at this time, after discussion about the definition of the terms “uncollectible” and “uncooperative” and who would be eligible for reimbursement, the Committee came to the consensus that the program is appropriate and should be brought before the Board for approval after further editing.

The meeting was then adjourned.

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

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