69O-187.009. Termination or Merger of Self-Insurance Trust Fund

(1) The Trustees of the Fund shall oversee and approve the voluntary termination or voluntary merger of the Fund in accordance with Section 627.357(7)(i), F.S. The Service Agent shall cooperate and provide the necessary assistance required to effectuate such termination or merger.

(2) For a voluntary termination or voluntary merger of the Fund, the Trustees shall:

(a) Provide the Office with written notification of the Fund's intent to terminate or merge but only with the consent of a two-thirds vote of the Trustees and of the members.

(b) Provide the Office with minutes of the Trustees’ meeting approving the termination or merger.

(c) Submit to the Office a detailed plan to handle the termination or merger. Such plan shall be subject to the approval of the Office and shall include the following:

1. Evidence of adequate disclosure to affected parties including the members and the Trustees of the contemplated termination or merger. Transactions involving affiliates, representatives or interested parties shall be fully disclosed to the members and Trustees, and shall include evidence that said transactions are in the best interest of the Fund. Furthermore, the Office shall require the Trustees to seek independent legal and actuarial counsel regarding the actions taken in contemplation of the termination or merger, to certify the adequacy of all disclosures made and the sufficiency of all due diligence conducted on behalf of the members or the Trustees, in order to assist the Office in determining actuarial soundness. Parties providing such counsel shall not be employed with or in any way affiliated with the assuming insurer.

2. For a termination:

a. The Fund shall continue in a run-off mode, which is a common insurance industry term which means that assets are not released until the last claim has been fully settled. The Fund shall have a reserve analysis completed on its existing liabilities by an actuary who is a member of the Casualty Actuarial Society. The Fund shall maintain compliance with Section 627.357, F.S., and the applicable provisions of this Part, including the continued service of the Trustees and the administration of the Fund by the Service Agent.

b. The Office shall exempt the Fund from the requirements of sub-subparagraph (2)(c)2.a., if the Fund demonstrates that the purchase through competitive bidding of an appropriate insurance product relieving the Fund of any liabilities incurred while operating pursuant to Section 627.357, F.S., is in the best interest of the Fund and that the provider of the product is an insurer authorized to transact insurance in this state.

c. Any monies remaining in the Fund after the satisfaction of all liabilities incurred while operating pursuant to Section 627.357, F.S., shall be declared dividends and returned to the members of the Fund.

3. For a merger:

a. The Fund shall submit a request for a Loss Portfolio Transfer. All filings shall be submitted electronically to http://www.floir.com/iportal.

b. The Fund shall have a reserve analysis completed on its existing liabilities by an independent actuary who is a member of the Casualty Actuarial Society. The liabilities of the Fund as determined in the reserve analysis shall be assumed, as evidenced in the Loss Portfolio Transfer Agreement, by an insurer authorized to transact insurance in this state. The assuming insurer shall provide a three-year pro-forma on both a countrywide and Florida only basis indicating the projected impact of the contemplated assumption of the Fund’s liabilities. Furthermore, a three-year business plan shall be provided if the assuming insurer plans to or is currently writing medical malpractice insurance. Rates for any assuming insurer planning to or currently writing medical malpractice insurance shall be actuarially sound and in compliance with Section 627.062(1), F.S. The most recent Annual Statement of the assuming insurer shall contain the appropriate loss reserve certification, as required by Section 624.424, F.S., and Rule 69O-137.001, F.A.C.

c. The Office shall require a portion of the LPT assets deemed to be material in accordance with the application of generally accepted accounting practices and procedures to be placed in an interest bearing trust account designated by the Treasurer of this state and maintained for the purpose of holding such deposits. Such deposit is to be maintained as assurance of the payment of claims arising from policies issued by the Fund; provided, that the interest shall be credited to the assuming insurer and reported to the assuming insurer’s taxpayer ID number and that the assuming insurer may take financial statement credit for this deposit. Such deposit shall remain in place for a period of 5 years; provided, that the assuming insurer may apply for release of all or part of the deposit prior to the end of the 5 year period. The Office shall release the deposit if the insurer demonstrates that the interests of the Fund members are otherwise protected. The assuming insurer shall not, without the express consent of the Office, for a period of 5 years, pay any dividend to its shareholders or permit the ratio of its premiums to surplus and capital to exceed 3:1. If the assuming insurer seeks the Office’s consent to grant a dividend or increase its writing to surplus ratio, the Office shall grant such a request if the insurer demonstrates that the interests of the Fund members are otherwise protected. In the event the assuming insurer’s claims payments for the liabilities of the Fund, including ALAE and ULAE, are less than that projected in the reserve indication set forth in the material presented to the members at the time of the merger, the difference between the projected amount and the amount actually paid shall be refunded back to the Fund members.

(3) A termination or merger of the Fund initiated by the Office shall be in accordance with the provisions of Section 627.357(7)(i), F.S.

Rulemaking Authority 624.308(1), 627.357(6) FS. Law Implemented 624.307(1), 624.424(6), 627.357 FS. History–New 1-18-94, Formerly 4-187.009, Amended 7-30-17.