69O-190.056. Application for Self-Insurers Fund

(1) Licensing procedures pursuant to section 120.60, F.S., and in accordance with the model rules of procedure shall apply to this application.

(2) All applications for a self-insurers fund shall be made in writing on OIR Form BSI-2.

(3) All applications shall be accompanied by:

(a) A properly completed indemnity agreement in accordance with rule 69O-190.068, F.A.C.

(b) A properly executed Self-Insurer’s Surety Bond on OIR Form BSI-4, pursuant to rule 69O-190.032 and subsection 69O-190.060(4), F.A.C., or proof of cash securities pursuant to rule 69O-190.033, F.A.C., and in amounts pursuant to subsection 69O-190.060, F.A.C.

(c) Copies of acceptable excess insurance policies pursuant to rule 69O-190.035, F.A.C., with limits and retentions pursuant to rule 69O-190.061, F.A.C., and endorsements pursuant to rule 69O-190.036, F.A.C.

(d) A fidelity bond or insurance policy pursuant to subsection 69O-190.064(5), F.A.C.

(e) A fidelity bond or insurance policy covering the service company pursuant to subsection 69O-190.064(7), F.A.C.

(f) A certification from a designated depository attesting to sufficient monies on hand in order for the fund to meet initial obligations pursuant to paragraph 69O-190.056(5)(c), F.A.C.

(g) Proof of servicing pursuant to rule 69O-190.031, F.A.C.

(h) Copies of the fund by-laws or trust agreement and written policies pursuant to subsections 69O-190.064(2), (3) and (4), F.A.C.

(i) Membership applications executed on OIR Form BSI-3 or its equivalent complete with declarations and financial statements pursuant to rule 69O-190.059, F.A.C. Funds must use the BSI-3 unless prior approval of the Office has been granted for use of an alternate form. Such alternate form must contain all information contained on the BSI-3, but may ask for additional information or use a different format. Approval will be granted if the alternate form contains all required information. OIR Form BSI-3, or its equivalent, shall be used for all new business. OIR Form BSI-3, or its equivalent, shall be used for all renewal business for twelve consecutive months. The use of this form for new and renewal business must commence within sixty (60) days of the date of this rule. A copy of this form may be obtained from the Bureau of P & L Insurer Solvency, Tallahassee, Florida.

(j) Proof that the initial membership of the fund have the combined financial conditions and combined premiums as specified in paragraph (m) of this section.

(k) The name of the attorney, certified public accountant, and actuary representing the fund.

(l) A completed Estimated Breakdown of Policy Year Expenses on OIR Form BSI-21.

(m) Each self-insurers fund shall submit a current financial statement on each member at the inception of the self-insurers fund showing the combined net worth of all members applying for coverage to be not less than $1,000,000, each member shall have a current ratio which is the median for the self-insureds standard industry code as published in the 1992 edition of the Robert Morris Associates Annual Statement Studies. An audited financial statement or a financial statement properly certified by an officer, owner or partner for all members joining the self-insurers fund after the inception date shall be submitted to the Office with the application for membership until such time as an audited financial statement is available for the self-insurers fund as a whole. In no event shall the cumulative net worth or current ratio of the combined assets and liabilities of all members be less than the minimum amounts currently required for a fund to qualify.

(n) Each applicant shall submit a feasibility study, prepared by an independent qualified actuary and an independent certified public accountant to satisfactorily address market potential, market penetration, market competition, operating expenses, gross revenues, net income total assets and liabilities, cash flow, and such other items as the division may require. The study shall be for the greater of 3 years or until the arrangement has been projected to be profitable for 12 consecutive months. The feasibility study must reflect and support all premium, reserve, and other financial requirements with which the fund must comply.

(4) Upon receipt of the application and other required materials, the Office will investigate the application and will request any additional information which is required in a letter to the applicant.

(5) The financial condition of the proposed fund shall be determined in light of the following:

(a) In considering the financial strength and liquidity of the group as evidence of ability to pay normal compensation claims promptly, the Office will take into consideration contracts or policies of aggregate excess liability insurance secured in accordance with rule 69O-190.061, F.A.C.

(b) The trustees shall satisfy the Office that the normal premiums of the self-insurers fund will be at least $500,000 for the first and succeeding years of operation.

(c) The trustees shall submit at least ten (10) days prior to the proposed effective date, positive proof that the members have paid into a common claims fund in a designated depository, cash premiums in an amount of not less than $125,000 or twenty-five percent (25%) of the estimated annual standard premium of the members at inception, whichever amount is greater. The remainder of the deposit premiums shall be collected based on the schedule adopted by the trustees.

(6) If the initial contract for aggregate excess insurance contains a minimum loss fund or retention provision in excess of $70,000 then the trustees must submit with their initial filing, in addition to those of the members at inception, signed member agreements evidencing additional earned normal premium for the first year of operation sufficient to meet the minimum loss fund. These additional agreements may have varying effective dates.

(7) No applicant shall have an aggregate excess contract which provides for a minimum loss fund or retention greater than the product of the aggregate retention percentage and the normal premium of the members submitting signed agreements.

(8) Prior to making a final determination on the approval or denial of the application, the Office may schedule an informal conference in Tallahassee. In the event a meeting is scheduled, the board of trustees of the prospective fund, its administrator, a representative of the service company, its attorney, and its CPA shall meet with the representative of the Office to discuss any matters relevant to the qualification of the fund. A time and date that is mutually agreeable will be selected within the statutory time frame established by chapter 120, F.S., for the approval and denial of the application.

Rulemaking Authority 440.38(2)(b), 440.591, 624.4621(3) FS. Law Implemented 440.38(1)(b), (2)(b), 624.4621 FS. History–New 10-1-82, Amended 12-25-84, Formerly 38F-5.56, Amended 6-12-91, 12-19-93, Formerly 38F-5.056, 4-190.056.