FWCJUA Operations Committee Meeting Report

Feb 13, 2008

On Friday, February 8, 2008, the Florida Workers’ Compensation Joint Underwriting Association (“FWCJUA”) held a meeting of its Operations Committee (“Committee”) to discuss service provider fee adjustments and selection process, disaster data recovery, document management and retention, and general business operations. To view a copy of the meeting packet, click here.

The meeting was called to order by Chairman Brett Stiegel, with the following Committee members in attendance: Fred Bennett, Rick Hodges, Dan Dannenhauer and Arleen Desmond. Leonard Schultz attended on behalf of Tom Maida and Teresa Eaton attended on behalf of Jim Watford. FWCJUA Executive Director Laura Torrence was also in attendance.

Ms. Torrence gave the Committee a presentation on a proposed adjustment to the service provider fee. In 2005, the FWCJUA contracted with Travelers to administer managed care services for policies with effective dates from January 1, 2006 through December 31, 2008.

At the time the contract was written, the FWCJUA had a rate cap under the Travelers agreement based on total premium levels. The FWCJUA set the rate cap based on premium levels because–according to actuarial projections made in 2005–premiums were potentially set to rise significantly during the contract period. This gross premium increase did not occur; rather premiums have lowered.

FWCJUA’s service provider agreement with Travelers states that the service provider fee shall be renegotiated if a change to rates and rating plans results in a plus or minus 25 percent premium impact to FWCJUA policyholders. If this type of change occurs, the fee restructure would result in a “revenue neutral” shift, so policyholders would not be affected.

Since this renegotiation trigger threshold has taken place, Travelers has submitted a proposal to the FWCJUA for an increase in service fee rates that would apply to policies with effective dates from January 1, 2008 through December 31, 2008. Travelers also has proposed a minimum annual service fee of $1,250,000, which would only impact the FWCJUA if total premiums drop below $4,864,000.

Ms. Torrence recommended the Travelers’ service provider fee structure be adjusted as proposed to include the minimum annual service fee without any adjustment to the 2008 rates at this time. Ms. Torrence also recommended that the Operations Committee forward this proposal to the Rates and Forms Committee for consideration, and bring the proposal before the Board of Governors (“Board”).

With Mr. Hodges voting against the structure because he felt the increase in fees was too high, the Committee voted to present the proposed fee structure to the Board for approval. The $1,250,000 minimum annual service fee was unanimously approved.

Ms. Torrence then reviewed the managed care service provider selection process, saying that a new Request for Proposal (“RFP”) will be released in March, 2008 and a service provider contract awarded in June, 2008. The contract effective date would be January 1, 2009 and terminate three years thereafter, subject to two one-year extensions.

If the Board does not agree to increase service provider rates at this time, Travelers can terminate its contract with 180 days notice. If the Board decides to proceed in this manner, the RFP timeline may be shortened so the FWCJUA can have a contract in place with another company by August, 2008.

Ms. Torrence gave a presentation to the Committee about post-disaster data recovery and asked the Committee to recommend to the Board a contract with SunGard that would provide vaulting services for all of FWCJUA’s critical data, including databases, document management for public records and working documents. The Committee will recommend to the Board a contract with SunGard and authorize a $22,850 out-of-budget expenditure for 2008.

An update on document management was given by Ms. Torrence. At its December, 2007 meeting, the Board adopted an FWCJUA records management and retention policy recommended by the Operations Committee for filing with the Department of State, Division of Library and Information Services (“Division”). Since that meeting, the FWCJUA has worked with the Division to streamline and clarify the FWCJUA document retention schedules. Ms. Torrence asked the Committee to recommend that the Board adopt the new streamlined schedule revisions and the Committee agreed to do so.

Prior to adjourning, the Committee agreed to combine the March Operations Committee meeting with the Rates and Forms Committee meeting.

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