Florida Workers’ Compensation Joint Underwriting Association May 2012 Meeting Reports: Rates and Forms Committee, Operations Committee
Jun 4, 2012
The Florida Workers’ Compensation Joint Underwriting Association Rates and Forms Committee, as well as its Operations Committee, met last week. The following are summaries of each meeting:
Florida Workers’ Compensation Joint Underwriting Association Rates and Forms Committee Approves Revisions to Policyholder Dividend Policy
At its May 29, 2012 meeting, the Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Rates and Forms Committee (“Committee”) agreed to recommend that the FWCJUA Board of Governors (“Board”) approve a $10 fee per policy to cover expenses associated with the distribution of dividends.
This was one of several revisions to the FWCJUA Policyholder Dividend Policy approved by the Committee. Another change involved revising language referring to policy profitability as “positive” after one Committee member wondered what that term meant. The clarification reads as follows:
“If the policy year result is deemed to have a positive underwriting gain after this review, each individual rating tier will then be considered on its own merit.”
FWCJUA Executive Director Laura Torrence said the per policy fee makes more sense than using a percentage because a flat fee takes into consideration policy count instead of premium amount.
“We agreed after looking at the numbers that … it might be better for us to consider a flat fee per policy in the policy period being looked at for the dividend,” Ms. Torrence said. “It would be more reasonable because we might have 1,000 policies with $12 million in premium or 6,000 policies with $12 million in premium. It is really about policy count and not about the actual dollars being contemplated for a dividend.”
The initial proposal called for the net amount of the policyholder dividend to be calculated by deducting 0.5 percent of the gross amount of the policyholder dividend declaration to cover expenses.
Another revision establishes that once policy year results are reviewed, any dividend declaration for a policy year shall be distributed among the tiers based upon each tier’s underwriting results. The revisions also establish that a policy that qualifies to receive a share of any net declared policyholder dividend will receive its share based upon its proportionate share of its assigned rating tier’s positive underwriting results.
The Committee unanimously agreed to recommend that the Board authorize a gross policyholder dividend of $12,254,369 with a 10 percent underwriting gain retention for the July 1, 2004 to December 31, 2005 policy year allocated among the three Tiers as follows:
- Tier 1: $1,689,869
- Tier 2: $2,195,435
- Tier 3: $8,369,065.
In other business, the Committee unanimously voted to recommend that the Board:
- Authorize staff to finalize a draft letter to the Florida Office of Insurance Regulation outlining a program to eliminate the FWCJUA’s 2011 Sub Plan D deficit through May actuals and submit no later than August 7, 2012.
- Confirm booking the 2012 losses utilizing the latest 2012 filed rate changes along with the loss ratios indicated from the loss experience evaluated as of the prior year-end.
With no other business before the Committee, the meeting was adjourned.
Florida Workers’ Compensation Joint Underwriting Association Operations Committee Hears 2011 Operations Report Highlights
The Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) Operations Committee (“Committee”) met May 30, 2012, during which it heard a summary of highlights from the 2011 Operations Report and confirmed modifications to the Disaster Recovery and Emergency Preparedness Plan.
The 2011 Operations Report was compiled by Travelers Insurance (“Travelers”) in order to provide an in-depth operational review of the FWCJUA’s 2011 book of business, it was noted. The purpose of the report was to flag changes in the book of business from previous years, cite trends, and make recommendations to enhance standards and improve overall performance to benefit policyholders.
Highlights of the report follow:
- Total policy count increased by 19.7 percent, from 810 policies in 2010 to 970 policies in 2011
- Total policy premium increased by 79.5 percent, from $5.9 million in 2010 to $10.6 million in 2011
- Tier 1 average policy premium increased by 41.3 percent, from $3,730 in 2010 to $4,295 in 2011
- Tier 3 average policy premium increased by 55.7 percent, from $15,749 in 2010 to $24,519 in 2011
- Total incurred claim amount increased by 155 percent, from $1.8 million in 2010 to $4.7 million in 2011
- Percent of loss in the service industry increased by 355 percent, from 18 percent in 2010 to 82 percent in 2011
The 2011 Operations Report included the following enhancements and recommendations for 2012:
1. Adding a communication regarding the verification of subcontractor coverage or exemption status to policy packets for new and renewal business. The information will become part of the standard policy package sent to new and renewal policyholders by July 15, 2012.
2. Creating a communication to all FWCJUA policyholders regarding the handling of out-of-state contractors. The information will eventually be included in the standard policy packages sent to new and renewal policyholders.
3. Adding Travelers’ business unit phone numbers to the FWCJUA website. Contact information for audit, claims, risk control, and underwriting has been added to the FWCJUA’s website.
4. Scheduling quarterly meetings between Travelers and the FWCJUA to discuss common issues relevant to the management of the FWCJUA’s book of business. The first meeting is scheduled for June 26, 2012.
The Committee then approved several technical modifications to the Disaster Recovery and Emergency Preparedness Plan, including the updating of several appendices.
FWCJUA staff conducted a disaster recovery drill on May 9, 2012, to cover procedures for dismantling workstation equipment and generally preparing facilities for a hurricane, it was noted. The drill was successful and execution went smoothly and quicker than the last drill.
Committee members also received a detailed timeline of all operational objectives that have been addressed from March 2012 to present.
In other business, FWCJUA Executive Director Laura Torrence advised Committee members that an out-of-budget capital expenditure of $5,600 was spent to replace the primary battery backup supply for the network equipment, servers and phone system. Committee members confirmed the expenditure but were not required to approve it.
With no further business before the Committee, the meeting was adjourned.
Should you have any questions or comments, please contact Colodny Fass.
To unsubscribe from this newsletter, please send an email to Brooke Ellis at firstname.lastname@example.org