Florida Insurance Conference on Financial Reporting

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Florida PC Guaranty Funds
Florida Insurance Conference on Financial
Reporting September 14, 2011
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Presenter
Tom Streukens, Director of Operations American
Guaranty Fund Group Representing Florida
Insurance Guaranty Association Florida
Workers Compensation Insurance Guaranty
Association

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Presentation Overview

• American Guaranty Fund Group Guaranty Fund Group
• Florida Insurance Guaranty Association
• Florida Workers Compensation Insurance Guaranty
  Association
• Revenue Sources
• Assessments Basis / Calculation
• Assessment Over Recoupment
• 2010 and 2011 Legislation
• Questions?

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What is American Guaranty Fund Group?

• Formed in 2004
• Management company for FIGA and FWCIGA
• Controlled by FIGA and FWCIGA
• 34 staff
• Governed by a separate Board

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Florida Insurance Guaranty Association

• FIGA is a statutorily created nonprofit
  corporation established in 1970 its mission is
  to pay covered claims of property and casualty
  insolvent insurers (excluding workers
  compensation)
• Membership in FIGA is mandatory for all insurers
  as a condition of their authority to transact
  business in Florida
• FIGA is organized into two separate accounts
• Auto Account
• All Other Insurance Account
• Statutorily limited to 300,000 (additional
  200,000 for residential homeowner claims)
• Covers PC lines not excluded by 631.52 (i.e.
  Fidelity, Surety, Credit, Surplus Lines, Title,
  Workers Compensation)
• Five to Nine Member Board (the Board currently
  consists of 7 members)
• Board candidates are recommended by member
  insurers and approved by the Department of
  Financial Services
• Members are all industry representatives
• Members serve four year terms

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Florida Workers Compensation Insurance Guaranty
Association

• FWCIGA is a statutorily created nonprofit
  corporation established in 1997 its mission is
  to pay covered claims of insolvent workers
  compensation insurers.
• Created by the merger of the workers
  compensation line from FIGA and the Florida Self
  Insurance Fund Guaranty Association
• Membership in FWCIGA is mandatory for all
  insurers as a condition of their authority to
  transact business in Florida
• No statutory cap for workers compensation claims
  and a 300,000 cap for employers liability claims
• Covers workers compensation and employee
  liability claims (effective 2010)
• Eleven Member Board (the Board currently consists
  of 10 members)
• Insurance Consumer Advocate
• CFO Designee
• Nine board candidates are recommended by member
  insurers and approved by the Department of
  Financial Services
• Members serve four year terms

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Revenue Sources

• FIGA and FWCIGA activities are funded from the
  following sources
• Distributions of funds from assets of insolvent
  insurers
• Reimbursements from FHCF due the insolvent
  insurers for hurricane claims paid by FIGA
• Assessments are levied by OIR after certification
  by applicable Board
• FIGA
• Regular Assessment maximum of 2 per year on
  each insurers net direct written premium
• Emergency Assessment provides up to an
  additional 2 per year on the All Other account
  to pay claims or debt incurred to pay claims of
  insurers rendered insolvent by the effects of a
  hurricane
• FWCIGA
• Regular Assessment maximum of 2 per year on
  each insurers and 1.5 on each self insurance
  funds net direct written premium
• Emergency Assessment provides up to an
  additional 1.5 per year on insurers and self
  insurance funds
• Investment Income earned on assets.
• Bonding (FIGA only) Florida Insurance
  Assistance Interlocal Agency (FIAIA)

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History of Insolvent Companies (2004 Present)
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Assessment Basis / Calculation

• Net Direct Written Premium
• Premium data is obtained from the Office of
  Insurance Regulation and the NCIGF based on
  statements filed with the NAIC
• Board reviews cash needs at least annually for
  assessment determination purposes
• Board certify the need for an assessment and OIR
  levies the assessment
• FIGA had 7,094 open claims with outstanding
  reserves of 147 million as of June 30, 2011.
• FWCIGA had 1,096 open claims with outstanding
  reserves of 260 million as of June 30, 2011.
• Recent assessment history
• FIGA FWCIGA
• 2010 No assessment No assessment
• 2009 0.8 regular No assessment
• 2008 No assessment No assessment
• 2007 2 regular No assessment
• 2006 2 regular No assessment
• 2 emergency
• 2005 No assessment 2 insurers / 1.5 SIFs

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FIGA Assessment Over Recoupment

• 2010 change gave insurers the option of remitting
  over recoupments to FIGA alleviating the
  administrative burden of returning very small
  amounts of monies to large numbers of
  policyholders.
• Recoupment can only be remitted if it is 15 or
  less of the assessment paid by the insurer
• Must be remitted within 60 days after the
  12-month collection period
• Informational filing to the OIR of final
  accounting no later than 90 days after completion
  of the recoupment process
• Remittance to FIGA
• Check payable to the Florida Insurance Guaranty
  Association
• P.O. Box 14249, Tallahassee, FL 32317
• Include documentation supporting the over
  recoupment calculation and documentation
  supporting the OIR information filing (if
  completed).
• If paying for multiple companies be sure to
  included individual company names and adequate
  support to determined the over recoupment amount
  by company.

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2010 and 2011 Legislation

• 2010 HB 159 Guaranty Associations (effective
  date July 1, 2010)
• 631.52 (14) transferred the responsibility for
  employers liability coverage from FIGA to the
  Florida Workers Compensation Insurance Guaranty
  Association with a 300,000 limit.
• 631.55(2)(a) - Collapsed the auto liability and
  auto physical damage accounts into a single
  account
• 631.57(3)(f) streamlined the assessment
  recoupment process
• Factor selected by insurer to recoup over a 12
  month or longer period
• Informational filing to the OIR 15 days before
  implementing recoupment factor
• Informational filing to the OIR of final
  accounting no later than 90 days after completion
  of the recoupment process
• If recoupment exceeds 15 of the assessment -
  return to policyholders
• If recoupment is 15 or less of the assessment
  remit to FIGA
• 2011 SB 408 Property and Casualty Insurance
• 631.54 (3) limits the payment of sinkholes
  claims to cost of testing and actual repairs.
  Claims for attorney fees, public adjuster fees or
  payment to policyholder are not covered claims.
• 95.11(2) First party loss statute of limitation
  tied to date of loss
• 627.70132 Three year windstorm / hurricane
  notice requirement
• 627.706 (5) Two year limitation on initial,
  supplemental or reopened sinkholes claims

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Other

• SSAP 35 Revision.
• Adopted GAAP guidance (with some statutory
  modifications) for establishing liability for
  guaranty fund assessment.
• The National Conference of Insurance Guaranty
  Funds (NCIGF) has a useful tool on its website to
  track guaranty fund assessments levied by all
  guaranty associations.

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Florida Insurance Guaranty Association
Thomas D. Streukens Director of Operation (850)
523-1802 tstreukens_at_agfgroup.org