Capitol to Courthouse Florida Insurance Week In Review: March 29-April 2, 2010
Apr 2, 2010
Above: House Speaker Larry Cretul, R-Ocala, and Speaker pro tempore Ron Reagan, R-Sarasota, right, are dwarfed by the debate clock screen above their heads on the House floor. The new timer clock shows members the remaining time for each side of the budget debate, for and against, as amendments to the House budget proposal were debated and the final House version of the budget approved Thursday, April 1, 2010.
Following is a recap of insurance-related legislative and regulatory events during the week of March 29-April 2:
Lack of Attendance Cancels Workshop on Post-Stop-Work Order Periodic Reporting Rule Development
A Florida Division of Workers’ Compensation (“Division”) Rule Development Workshop relating to proposed Rule 69L-6.026 was not held on March 30, 2010, because no attendees were present.
The proposed Rule, entitled “Periodic Reports,” would establish required reporting procedures for employers released from Stop-Work Orders for which assessed penalties exceed $50,000 for violation of the coverage requirements of Chapter 440, F.S.
As a condition of their release from a Stop-Work Order, subject employers must submit quarterly reports to the Division using a new form, DFS-F4-2018, “Bureau of Compliance Quarterly Report Form,” to demonstrate their continuing compliance with the coverage requirements of Chapter 440, F.S.
Proposed Rule 69L-6.026, which now will be scheduled for a hearing, applies to employers only, not carriers.
Florida Lawmakers Consider Funding for New Insurance Fraud Prosecutors
The 2010 State budget that was being debated in the Florida Legislature on March 31, 2010 currently includes the following appropriations for insurance fraud prosecutors:
(Note: The House and Senate budgets include equal funding for state attorneys in courts as noted below)
State Attorneys-Fourth, Thirteenth, Fifteenth and Seventeenth Judicial Circuits: Two full-time equivalent positions with an associated rate of $94,274 and $136,686 from the Grants and Donations Trust Fund are provided for the prosecution of insurance fraud.
State Attorneys-Ninth and Eleventh Judicial Circuits: Two full-time equivalent positions with an associated salary rate of $94,000 and $136,000 from the Grants and Donations Trust Fund are provided for the prosecution of insurance fraud.
Additionally, two full-time equivalent positions with associated salary rate of $94,274 and $136,686 from the Grants and Donations Trust Fund are provided solely for prosecution of workers’ compensation insurance fraud. This transfer authority may not be used to fund attorneys and paralegals who prosecute crimes other than workers’ compensation insurance fraud.
To prosecute Personal Injury Protection (“PIP”) fraud-related cases in Duval, Orange, Miami-Dade, Hillsborough, Palm Beach and Broward counties, an additional appropriation of $9,385,507 has been placed in the Senate budget, while $9,169,913 is in the House version. This includes $1,251,257 in the Senate and $1,021,257 in the House for the specific purpose of funding attorneys and paralegals dedicated solely to the prosecution of PIP-related fraud cases. These funds may not be used for any purpose other than the funding of positions and activities that prosecute crimes of insurance fraud.
The total Senate and House budget appropriations for insurance fraud are $17,119,813 and $16,569,173, respectively.
These items may be amended through the budgetary process. The Florida Senate passed its budget on March 31. The House passed its budget on April 1. Differences between the two budgets will be reconciled during the budget conference process.
Alternate MGA Regulation Legislation Anticipated by April 6
Certain insurance industry interest groups have been involved with negotiating a proposal with the Florida Office of Insurance Regulation (“OIR”) relating to managing general agencies (“MGAs”) and affiliates. The language contained within this proposal is expected to be seen as an amendment on a property insurance bill next week.
The bill draft (a copy of which is attached):
- Amends Florida statutes 626.7451 relating to MGAs to require an MGA to maintain separate business records unless it is a controlling person at an insurance company and also writes business for only one insurer;
- Provides that an insurer cannot pay an MGA anything outside of the terms of a written agreement unless the insurer notifies the OIR at least 30 days prior to the payment and the OIR does not object;
- Provides that an insurer cannot engage a third party to perform duties required of an MGA unless the insurer has notified the OIR 30 days prior and the OIR does not object. In the case of a catastrophe, the insurer may engage a third party to perform these duties, but must notify the OIR within 30 days of any engagement;
- Amends Florida statutes 628.801 relating to insurance holding companies to state that an insurer is required to file certain specific financial information with the OIR if the insurer files an annual statement indicating a loss in surplus of 20 percent for the prior year, or a loss of more than 35 percent in statutory surplus for the prior two years.
Florida Workers’ Compensation Joint Underwriting Association Investment Committee Meeting Report: April 2, 2010
The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Investment Committee (“Committee”) met on Friday, April 2, during which it initiated plans to solicit bids from software companies offering computer programs to help the FWCJUA manage its investment portfolio.
The Committee set the guidelines it will use to evaluate bidders. Among other criteria, the Committee is seeking a firm with at least five years of experience developing software solutions and which offers a product that has been serving insurance clients for at least three years, “so we know the kinks are out of the system,” said Laura Torrence, the Committee’s executive director.
The Committee expects to place advertisements soliciting bids by April 16, and set May 7 as the deadline for submission of bids. Final approval by the FWCJUA Board of Governors is anticipated on June 8, if an acceptable bid is identified.
FWCJUA staff members suggested the price for new software could range as high as $100,000, but expects the bidding process will bring the cost down substantially.
Also during the meeting, the Committee chose to retain the five bonds in the FWCJUA’s portfolio that presently carry ratings below “A,” concluding there was no undue risk in doing so. SunTrust Inc., the largest of the outstanding bonds, has a par value of $1.6 million and matures on May 1, 2010.
The sub-“A” rated Anheuser Busch Companies bond, also in the FWCJUA’s portfolio, matured as scheduled on April 1 with a par value of $328,000.
The total value of the FWCJUA’s cash and investment portfolio was stated as $106,311,103, with an average portfolio rating of AA.
Among other agenda items at its next meeting, which is scheduled for May 28, the Committee will consider whether the current state of the investment market and the FWCJUA’s overall portfolio performance warrant any changes in investment policy, investment strategy or cash management decisions. Seeking bonds with shorter maturities, and lowering the current targets of 4 percent and 4.5 percent return on bonds with a maturity beyond two years and five years, respectively, are among the ideas the Committee will consider next month.
Should you have any questions or comments, please contact Colodny Fass.
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