HB 845 To Authorize Unregulated Electric Cooperatives’ Workers Comp Self-Insurance Funds

Apr 30, 2009


After substituting its own version for that of the House of Representatives’, the Florida Senate unanimously passed House Bill 845 relating to Self-Insurance on April 29, 2009.

HB 845, which was revised twice during the committee hearing process and later amended several times on the House Floor, was originally sponsored by State Representative Brad Drake (R-DeFuniak Springs) and, with the signature of Florida Governor Charlie Crist, will become law on July 1, 2009.

The bill clarifies that independent educational institution self-insurance funds, a type of self-insurance authorized under current law, are exempt from the Florida Workers’ Compensation Insurance Guaranty Association (“FWCIGA”).  Because these funds have never participated in FWCIGA, nor will an electric cooperative self-insurance fund authorized by HB 845, future fund members will not be able to have any workers’ compensation claims against the fund paid by FWCIGA if the fund becomes insolvent.

Further, if the aforementioned electric cooperatives form the type of self-insurance fund authorized in HB 845, the Florida Office of Insurance Regulation (“OIR”) no longer will have regulatory responsibility for it.  Thus, any expenses incurred by the OIR relating to regulation of the existing electric cooperative self-insurance fund will be avoided.  

These electric cooperatives may have decreased costs if they choose to form the self-insurance fund authorized by the bill.  Any savings to the cooperatives then can be passed on to the cooperative’s consumer members. 

HB 845 bears no fiscal impact on Florida’s Workers’ Compensation Administration Trust Fund and the Special Disability Trust Funds, because the electric cooperative self-insurance fund authorized by the bill must pay assessments to these trust funds, just as the currently-operating electric cooperative self-insurance fund does.


Analysis of HB 845 by Section


Section 1

  • Amends s. 624.4621(11), F.S., governing group self-insurance funds, to provide that each application for workers’ compensation coverage issued by a group self-insurance fund must notify applicants that policyholders must make additional contributions to the fund if it is unable to pay its obligations, and that, if the application is signed by the applicant, then the applicant is deemed to have made an informed, knowing acceptance of the assessment liability that exists as a result of participation in the fund.


Section 2

  • Creates s. 624.4626, F.S., authorizing certain electric cooperatives to operate a self-insurance fund for the purpose of pooling and spreading liabilities of its group members in securing the payment of benefits under Chapter 440, F.S.  A self-insurance fund established under this section must:  
    • Require that every member of the fund is jointly and severally liable for the fund’s obligations
    • Maintain a continuing program of excess insurance coverage and reserve evaluation to protect the financial stability of the fund in an amount and manner determined by a qualified and independent actuary
    • Subscribe to, or be a member of, a rating organization as prescribed in s. 627.231.
    • Employ an independent certified public accountant to complete an audit of its fiscal year-end financial statement within six months after the end of the fiscal year
    • Have a governing body comprised of a representative from each member of the fund
    • Limit membership in the fund to electric cooperatives that operate in this state, their subsidiaries, and the current members of the Florida Rural Electric Self-Insurer’s Fund
    • At renewal, provide the members of the fund with a disclosure statement that notifies the members that the fund is not regulated by the OIR
  • A self-insurance fund that meets the requirements of this section is subject to the assessments set forth in ss. 440.49(9), 440.51(1), and 624.4621(7), but is not subject to any other provision of s. 624.4621, and is not required to file any report with the OIR under s. 440.38(2)(b), which is uniquely required of group self-insurer funds that are qualified under s. 74 624.4621.


Section 3

  • Amends s. 626.89, F.S., which governs annual financial statements, filing fees and notices of ownership change by requiring certain administrators to submit fiscal year statements within a specific time
  • Specifies that an administrator whose sole stockholder is an association representing non-insurer affiliate health care providers, an administrator of a pooled governmental self-insurance program, or an administrator that is a university, may submit the preceding fiscal year’s statement within three months of its fiscal year-end
  • Permits an administrator whose sole stockholder is a non-insurer affiliate association representing health care providers, an administrator of a pooled governmental self-insurance program, or an administrator that is a university to submit the preceding fiscal year’s audited financial statement within six months after the end of its fiscal year


Section 4

  • Amends section 631.904, F.S., by revising the definition of “self-insurance fund” under the FWCIGA Act to exclude certain types of entities, including an independent educational institution self-insurance fund as defined in s. 624.4623 and an electric cooperative self-insurance fund as described in s. 624.4626.


Section 5

  • The effective date of HB 845 is July 1, 2009.



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