FSIGA Board of Directors Meeting Report: June 25
Jun 25, 2009
The Florida Self-Insurers Guaranty Association (“FSIGA”) Board of Directors (“Board”) met via teleconference on Thursday, June 25 2009.
The Board discussed House Bill 903, the controversial bill on claimant’s attorney fees in workers’ compensation cases, which was signed into law in late May. The law restored caps on claimant’s attorney fees in cases of injured workers, following the Florida Supreme Court ruling Murray v. Mariner that temporarily negated statutory caps which had been in place since 2003. Board members praised the efforts of Florida Representative Pat Patterson (R-Deland), Chairman of the House Insurance, Business and Financial Affairs Policy Committee, who championed the bill and led the State Legislature’s effort to clarify the intent of the 2003 law in response to Murray v. Mariner. A Board member noted that Representative Patterson is running against fellow Republican Senate President Jeff Atwater in 2010 for Chief Financial Officer.
FSIGA’s public records exemptions are scheduled for sunset review this year. FSIGA Staff will draft a letter to the State Senate Committee on Banking and Insurance regarding FSIGA’s need for those exemptions to remain in place.
The Board discussed FSIGA’s first quarter investment performance and financial statements. As expected, investments did very poorly. Most notably, Vanguard Index Fund lost 42 percent of its value. However, there has been dramatic recovery in equities since March 9, 2009, and second quarter results are expected to reflect that improvement.
FSIGA’s assets are $427,000 higher as compared to the end of 2008, with net claims reserves up $151,000, despite the fact that legal fees rose $3,400 from 2008. The higher fees were a result of FSIGA’s litigation against American International Group, a suit against FSIGA by Comcar Industries and nine bankruptcies.
The Board passed a motion to renew FSIGA’s contract for services with the Florida Department of Financial Services, Division of Workers’ Compensation, in force from July 1, 2009, until June 30, 2010. FSIGA will be paid $237,700, a $26,500 increase from 2008.
Staff investigated whether FSIGA had grounds for claims service litigation regarding an excess insurance matter. FSIGA legal counsel recommended moving forward with a breach of contract claim and said the law allows a complaint to be filed until mid-September.
Board members discussed moving forward on the complaint concurrently with negotiations with the opposing party but decided to wait.
The Board passed a motion that authorizes FSIGA Staff “to file a complaint that has been presented to the Board subject to communications … for possible settlement purposes prior to filing of the complaint.” This would prevent the Board from having to reconvene in order to approve the filing of the complaint. This motion allows FSIGA counsel to proceed with the complaint if negotiations do not yield a settlement.
In a review of insolvencies, Board members noted that they are increasing as expected in the 19th official month of recession. Nine bankruptcies have been filed in the past seven months. In the March 2009 bankruptcy of Fleetwood, which is under investigation, potential losses will be $700,000 or more. Record numbers of bankruptcies are anticipated this year, but FSIGA has an adequate amount of security in place. As a benchmark, it was noted that security deposlts covered 86 percent of the potential losses from 1998 through 2009.
In other matters:
- A Board member attended the Department of Financial Services, Division of Workers’ Compensation hearing on Wednesday, June 24, regarding Rule Chapter 69L-5: Rules for Self-Insurers Under the Workers’ Compensation Act. The Rule Chapter was amended to replace the existing Rules with new Rules that have been restructured and renumbered to clarify the workers’ compensation statutory compliance process used by self-insured employers. The Board member said the meeting was brief, and the only testimony given related to the proposed increase in book equity requirement from $1 million to $10 million.
- The FSIGA Board is currently down three members, and Staff has requested that Chief Financial Officer Alex Sink assist in bringing the Board up to full contingency.
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