The proposed rulemaking amends Rule 69L-5.209, F.A.C., deleting references to a Current or Former Self-Insurer’s Net Worth requirements, with regards to Financial Statements Reporting requirements; the proposed rule is renumbered, accordingly. ...

 

DEPARTMENT OF FINANCIAL SERVICES

Division of Worker's Compensation

RULE NOS.:RULE TITLES:

69L-5.209Financial Statements Reporting

69L-5.215Parental Guaranty

69L-5.219Excess Insurance

69L-5.225Requirements

PURPOSE AND EFFECT: The proposed rulemaking amends Rule 69L-5.209, F.A.C., deleting references to a Current or Former Self-Insurer’s Net Worth requirements, with regards to Financial Statements Reporting requirements; the proposed rule is renumbered, accordingly. Proposed Rule 69L-5.225, F.A.C., is amended to provide guidance to Current and Former Self-Insured entities regarding purpose-specific distinctions in methodologies used when determining a self-insured’s Net Worth. Proposed Rule 69L-5.219, F.A.C., is amended to increase a self-insurer’s maximum per occurrence retention from the greater of $500,000 or 1% of the self-insurer’s net worth to the greater of $600,000 or 1.5% of the self-insurer’s Net Worth, and to clarify factors that the Department must consider when reviewing a Current Self-Insurer’s request for a higher self-insured retention. The aforementioned changes are made to reflect inflation in the costs of claims and to provide self-insurers with a measure of control over premium costs for excess insurance. Proposed Rule 69L-5.215, F.A.C., is amended to delete erroneous references to Rule 69L-5.209, F.A.C., and to make certain technical changes.

SUMMARY: The proposed rulemaking provides guidance to current, former and prospective self-insurers regarding allowable, purpose-specific methods for use when determining a self-insured’s Net Worth. The proposed rulemaking also provides for an increase in the maximum dollar-amount (and, in the alternative an increase in the percentage-amount of a self-insured’s net worth) of a self-insured’s per occurrence retention rate. The proposed increase in the maximum amount of the per occurrence retention rate provides self-insurers with a measure of flexibility in controlling the costs of excess insurance.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The Department conducted an analysis of the proposed rule’s economic impact and determined that it did not exceed any of the criteria established in paragraph 120.541(2) (a), F.S.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 440.38(1), (2), (3), 440.385(6), 440.525(2), 440.591 FS.

LAW IMPLEMENTED: 440.38(1), (2), (3), 440.385(1), (3), (6), 440.525 FS.

IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):

DATE AND TIME: Tuesday, April 8, 2014, 9:00 a.m. ‒ 11:00 a.m.

PLACE: Room 102, Hartman Building, 2012 Capital Circle Southeast, Tallahassee, Florida

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Dwayne Manning, [phone] or [e-mail]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Dwayne Manning, Insurance Administrator, Self-Insurance Unit, Bureau of Financial Accountability, Division of Workers’ Compensation, Department of Financial Services, 200 East Gaines Street, Tallahassee, Florida 32399-4221, [phone] or [e-mail]

 

THE FULL TEXT OF THE PROPOSED RULE IS:

 

69L-5.209 Financial Statements Reporting.

Current Self-Insurers and Former Self-Insurers, other than Governmental Entities, shall submit their Financial Statements no later than 120 days after the end of their fiscal year. Failure to submit the required Financial Statements shall constitute good cause for revocation of the self-insurance authorization in addition to civil penalties specified in Rule 69L-5.217, F.A.C.

(1) The Financial Statements shall meet the following requirements:

(a) through (b) No change.

(c) The Financial Statements shall show a Net Worth of the greater of $10,000,000 U.S. or three (3) times Standard Premium, and;

(c)(d) The Financial Statements shall be audited in accordance with Generally Accepted Auditing Standards.

(d)(e) Financial statements submitted for Current Self Insurers and Former Self Insurers under an authorization granted prior to January 1, 1997, are not required to be audited in accordance with Generally Accepted Auditing Standards.

(2) All legal entities included under the self-insurance authorization shall submit Financial Statements in accordance with this rule. Separate Financial Statements shall be submitted for each entity unless consolidated or combined Financial Statements are submitted. All Financial Statements submitted must comply with the provisions of this rule. However, for purposes of meeting the Net Worth requirement, the Net Worths of the companies comprising an Affiliated Self-Insurer may be combined.

(3) through (6) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.525(2), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6), 440.525 FS. History–New 3-9-10, Amended________.

 

69L-5.215 Parental Guaranty.

Notwithstanding any other provisions of these Rules to the contrary, if a parent company that directly or indirectly owns 100% of a Current Self-Insurer, Former Self-Insurer or applicant for self-insurance elects to execute Form DFS-F2-SI-10 (Parental Guaranty and Corporate Resolution for Self-Insured Subsidiary Entity), effective 08/09, as incorporated by reference, then:

(1) through (3) No change.

(4) The Net Worth of the parent company shall be used to apply the Net Worth requirements in subsection subparagraph 69L-5.209(1)(a)3. and paragraph 69L-5.225(1)(a), F.A.C., and

(5) through (6) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6) FS. History–New 3-9-10, Amended_________.

 

69L-5.219 Excess Insurance.

(1) Current Self-Insurers, other than Governmental Entities, shall maintain a Specific Excess Insurance Policy. Such policy shall have a workers’ compensation limit of not less than $50,000,000.

(a) The self-insured retention of Specific Excess Insurance Policies shall be as follows:

1. The self-insurer’s per occurrence retention shall be no more than $600,000500,000 or 1.5 1% of the self-insurer’s Net Worth as shown on the self-insurer’s latest audited Financial Statements, whichever is greater. The self-insured retention shall be rounded to the nearest $50,000.

2. A higher self-insured retention shall be allowed, if approved by the Department. The Department shall consider the Current Self-Insurer’s financial strength, including but not limited to its Net Worth, and its Net Worth in relation to the requested self-insured retention, in its review of the requested self-insured retention.

(b) through (k) No change.

(2) through (4) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6) FS. History–New 3-9-10, Amended_________.

 

69L-5.225 Requirements.

An entity applying for a self-insurance authorization pursuant to paragraph Section 440.38(1)(b), F.S., shall meet the following requirements and shall submit a completed application package at least ninety (90) days prior to the desired effective date of the self-insurance authorization:

(1) Net Worth – The applicant’s most recent audited Financial Statements shall show a Net Worth of the greater of $10,000,000 U.S. or three (3) times Standard Premium.  For purposes of meeting the Net Worth requirement, the Net Worths of the companies comprising an Affiliated Self-Insurer may be combined.

(2) through (8) No change.

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6) FS. History–New 3-9-10, Amended_________.

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Dwayne Manning, Insurance Administrator, Self-Insurance Unit, Bureau of Financial Accountability, Division of Workers’ Compensation, Department of Financial Services

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Jeff Atwater, Chief of Financial Officer, Department of Financial Services

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: March 3, 2014

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: December 19, 2013