Meeting Recap – FWCJUA Joint & Concurrent Meeting of the Board and Committees

On October 15, 2007, the Board of Governors (“Board”), along with the Rates and Forms, Reinsurance and Producer Appeals Committees (collectively, “Committees”) of the Florida Workers Compensation Joint Underwriting Association (“FWCJUA”) held a teleconference.  The highlights of the meeting are as follows:

 

Board Appointment Process

The FWCJUA’s Board appointments are expected to be made at the Cabinet Meeting scheduled for tomorrow at 9:00 a.m.  The Financial Services Commission has not yet released any names.

 

Seventh-Amended Bylaws

On July 30, 2007 the Office of Insurance Regulation (“OIR”) issued an Order approving the Seventh Amended Bylaws of the FWCJUA, with the exception of Section 9, Subsection P.  The disapproved portion, as filed with the OIR, read as follows:

P.  If a Board or committee meeting is recessed and reconvened, the FWCJUA shall promptly publish notice of the time, date, and place of the reconvened meeting on its website and by distributing the notice via e-mail to the persons on the FWCJUA’s list of interested parties.

 

Reinsurance Committee

The Board adopted the Reinsurance Committee’s 2008 reinsurance goals.  The reinsurance goals are as follows:

1. Design the program based on projected 2008 written premium levels of $21 million and a policy count of 2,275;

2. Approach the 2008 program design by questioning the current structure and asking “is there an effective alternative structure or mechanism – e.g., combination risk transfer product/reinsurance program – that fits the FWCJUA from 2005 – 2007?” Step “out of the box” and place a risk assessment on various “creations” from dollar one to cat only programs;

3. Conduct a risk assumption analysis in conjunction with either the intermediary’s actuary or the FWCJUA’s consulting actuary that describes how much risk the FWCJUA could assume at various attachment points and the implications of that risk assumption;

4. Determine if a “new” profit share valuation/computation feature is advisable or available;

5. Obtain, where possible, collateral arrangements to be implemented in the event of reinsurers’ financial problems (e.g., as in Converium and Quanta);

6. Attempt to get NBCR coverage in the regular program by removing the exclusion from the contract in 2008;

7. Evaluate the financial conditions of all current reinsurers and advise what actions, if any, are required;

8. Take whatever steps are appropriate to ensure that both current and potential markets are fully accessed;

9. Specifically, the 2008 program should:

• Retain the “unanticipated premium growth” language in all contracts, although the circumstances that would trigger this provision seem rather unlikely at this time (such language has been included in the contracts since 2004);

• Include a “one way” cancellation clause to permit the FWCJUA to deal with dramatic reductions in premium at a minimal cost;

• Protect the FWCJUA in the event of reinsurers financial difficulties;

• Determine the optimum levels of reinsurance coverage given risk tolerance (review coverage exclusions, AAD’s, cost effective layering, and attachment levels of up to $2M);

• Provide any reasonable alternative approaches to obtain appropriate coverage given risk tolerance;

• Obtain more favorable minimum premiums or, at the minimum, retain 2007 levels; and

• Obtain statutory limits if such a program is available and cost effective/efficient.

 

Rates and Forms Committee

The Board reviewed the reports prepared by Milliman and voted to effectuate an overall average premium level change of 7.1% effective January 1, 2008 for new and renewal business, to be adjusted to reflect any approved voluntary market rate level and class relativity changes that may become effective January 1, 2008. 

 

Producer Appeals Committee

A meeting will be scheduled at a later date for the Producer Appeals Committee to consider an Agency/Producer request for reinstatement of privileges to submit business to the FWCJUA.

 

General Announcements

There will be a meeting scheduled in November for new Board members, and the next full Board meeting will be on December 11, 2007.

 

 

The above information is intended to be a general summary of the discussion during the Joint & Concurrent Meeting of the Board and Committees.  It is neither intended to provide regulatory or legal advice, nor specific analysis. 

Should you have any questions or comments regarding this information, please feel free to contact this office.