Rules for Self-Insurers Under Florida’s Workers’ Compensation Act Revised, Effective May 13, 2014

 

Recent amendments to the following Rules for self-insurers under Florida’s Workers’ Compensation Act became effective on May 13, 2014.

• 69L-5.209:  Financial Statements Reporting
• 69L-5.215:  Parental Guaranty
• 69L-5.219:  Excess Insurance
• 69L-5.225:  Requirements

The revised regulations are intended to provide guidance to current, former and prospective self-insurers regarding allowable, purpose-specific methods for use when determining a self-insured’s net worth.  The Rules also provide for an increase in the maximum dollar-amount (and, in the alternative an increase in the percentage-amount of a self-insured’s net worth) of a self-insured’s per-occurrence retention rate.  The proposed increase in the maximum amount of the per-occurrence retention rate is expected to provide self-insurers with a measure of flexibility in controlling the costs of excess insurance.

Amendments to Rule 69L-5.209, F.A.C. deleted references to a Current or Former Self-Insurer’s Net Worth requirements, with regard to Financial Statements Reporting requirements.  The Rule is renumbered accordingly.

Rule 69L-5.225, F.A.C. was amended to provide guidance to Current and Former Self-Insured entities on purpose-specific distinctions in methodologies used when determining a self-insured’s Net Worth.

Rule 69L-5.219, F.A.C. was revised to increase a self-insurer’s maximum per-occurrence retention from the greater of $500,000 or one percent of the self-insurer’s net worth, to the greater of $600,000 or 1.5 percent of the self-insurer’s Net Worth, and to clarify factors that the Florida Department of Financial Services must consider when reviewing a Current Self-Insurer’s request for a higher self-insured retention.  

Rule 69L-5.215, F.A.C. was amended to delete erroneous references to Rule 69L-5.209, F.A.C. and to make certain technical changes.

The markup Rule texts are provided below:

 

69L-5.209 Financial Statements Reporting

Current Self-Insurers and Former Self-Insurers, other than Governmental Entities, shall submit their Financial Statements no later than 120 days after the end of their fiscal year.  Failure to submit the required Financial Statements shall constitute good cause for revocation of the self-insurance authorization in addition to civil penalties specified in Rule 69L-5.217, F.A.C.

(1) The Financial Statements shall meet the following requirements:

(a) through (b) No change.

(c) The Financial Statements shall show a Net Worth of the greater of $10,000,000 U.S. or three (3) times Standard Premium, and;

(c)(d) The Financial Statements shall be audited in accordance with Generally Accepted Auditing Standards.

(d)(e) Financial statements submitted for Current Self Insurers and Former Self Insurers under an authorization granted prior to January 1, 1997, are not required to be audited in accordance with Generally Accepted Auditing Standards.

(2) All legal entities included under the self-insurance authorization shall submit Financial Statements in accordance with this rule. S eparate Financial Statements shall be submitted for each entity unless consolidated or combined Financial Statements are submitted.  All Financial Statements submitted must comply with the provisions of this rule.  However, for purposes of meeting the Net Worth requirement, the Net Worths of the companies comprising an Affiliated Self-Insurer may be combined.

(3) through (6) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.525(2), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6), 440.525 FS. History-New 3-9-10, Amended________.

 

69L-5.215 Parental Guaranty

Notwithstanding any other provisions of these Rules to the contrary, if a parent company that directly or indirectly owns 100% of a Current Self-Insurer, Former Self-Insurer or applicant for self-insurance elects to execute Form DFS-F2-SI-10 (Parental Guaranty and Corporate Resolution for Self-Insured Subsidiary Entity), effective 08/09, as incorporated by reference, then:

(1) through (3) No change.

(4) The Net Worth of the parent company shall be used to apply the Net Worth requirements in subsection  subparagraph 69L-5.209(1)(a)3. and paragraph 69L-5.225(1)(a), F.A.C., and

(5) through (6) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6) FS. History-New 3-9-10, Amended_________.

 

69L-5.219 Excess Insurance

(1) Current Self-Insurers, other than Governmental Entities, shall maintain a Specific Excess Insurance Policy. Such policy shall have a workers’ compensation limit of not less than $50,000,000.

(a) The self-insured retention of Specific Excess Insurance Policies shall be as follows:

1. The self-insurer’s per occurrence retention shall be no more than $600,000 500,000 or 1.5 1% of the self-insurer’s Net Worth as shown on the self-insurer’s latest audited Financial Statements, whichever is greater. The self-insured retention shall be rounded to the nearest $50,000.

2. A higher self-insured retention shall be allowed, if approved by the Department. The Department shall consider the Current Self-Insurer’s financial strength, including but not limited to its Net Worth, and its Net Worth in relation to the requested self-insured retention, in its review of the requested self-insured retention.

(b) through (k) No change.

(2) through (4) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6) FS. History-New 3-9-10, Amended_________.

 

69L-5.225 Requirements

An entity applying for a self-insurance authorization pursuant to paragraph Section 440.38(1)(b), F.S., shall meet the following requirements and shall submit a completed application package at least ninety (90) days prior to the desired effective date of the self-insurance authorization:

(1) Net Worth – The applicant’s most recent audited Financial Statements shall show a Net Worth of the greater of $10,000,000 U.S. or three (3) times Standard Premium.  For purposes of meeting the Net Worth requirement, the Net Worths of the companies comprising an Affiliated Self-Insurer may be combined.

(2) through (8) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6) FS. History-New 3-9-10, Amended_________.

 

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