Florida Workers’ Compensation Joint Underwriting Association Audit Committee Approves 2013 Meeting Schedule, Hears Market Exam Update
Nov 15, 2012
At its meeting today, November 15, 2012, the Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Audit Committee (“Committee”) approved the 2013 meeting schedule, reviewed the Charter Committee procedures checklist, and heard a report on an upcoming market exam.
With little discussion, the Committee unanimously approved the following teleconference meeting schedule for 2013:
- May 16, 2013: 10:00 a.m.
- August 15, 2013: 10:00 a.m.
- November 15, 2013: 10:00 a.m.
After approving the meeting schedule, the Committee reviewed the Audit Committee Charter Procedures checklist. The checklist included 26 separate items, which were reviewed one-by-one and briefly discussed.
Checklist items included responsibilities such as discussing the Committee’s communication and performance expectations with management and independent auditors; communicating the types of significant risks faced by the FWCJUA in the current environment including competitive trends, significant customers and suppliers, and regulatory requirements; and determining how management is assessing the adequacy and effectiveness of internal controls.
Most discussion during the brief meeting centered on a market conduct exam to be conducted by Examination Resources Inc. for the Florida Office of Insurance Regulation (“OIR”). The FWCJUA’s last market conduct exam was conducted in 2006/2007.
Estimated cost for the market conduct exam is $89,200, and includes $77,500 for examination fees and $11,700 for travel expenses. The FWCJUA paid $74,212 in 2006/2007 for its last market conduct exam.
FWCJUA Executive Director Laura Torrence said examiners will be in the FWCJUA offices beginning December 3, 2012, and may be there for up to six weeks. Ms. Torrence said the expense for the market conduct exam is an unbudgeted item. It had not yet been determined if the cost would be expensed entirely in 2012 or divided between 2012 and 2013.
Although market conduct examinations were historically conducted every five years, the 5-year requirement is no longer in place. However, periodic examinations are still required, a spokesman for the OIR explained.
Florida Insurance Consumer Advocate Robin Westcott wondered if something had triggered the audit. The OIR spokesman said there was no trigger, that it was being conducted because one had not been done for several years. He said the OIR was working with several Joint Underwriting Associations simultaneously.
Some Committee members voiced concerns over the cost of the market conduct examination, noting that the FWCJUA is a quasi-governmental entity and costs are passed on to policyholders.
In the spirit of cost-cutting, specific elements of the review will be fine-tuned so the cost may ultimately be reduced, it was explained.
Ms. Torrence said it would be helpful if the FWCJUA could get a more precise definition of what “periodic” means when it comes to the timing of market conduct examinations for the purposes of budgeting.
In other business, Committee members noted the next FWCJUA Board of Governors meeting will be at 10 a.m. on December 12, 2012 via teleconference.
With no other business before the Committee, the meeting was adjourned.
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