Current through Reg. 50, No. 187; September 24, 2024
(1)
The trustees shall not allow a premium discount to any member for the period
beginning on September 1, 1990 and ending on December 31, 1991. Beginning on
January 1, 1992, if a self-insurer's fund allows premium discounts to its
members, the trustees shall allow a premium discount to each member as follows:
|
First
|
$5,000 of standard premium
|
0%
|
|
Next
|
95,000 of standard premium
|
10.9%
|
|
Next
|
400,000 of standard premium
|
12.6%
|
|
Over
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500,000 of standard premium
|
14.4%
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It is the intention of the Office that these discounts be
identical to the rates approved by the Office of Insurance for voluntary stock
premium discounts. The trustees may not authorize a discount in excess of that
allowed by the fund's excess insurer in determining the excess policies'
premium and retention.
(2)
In no event shall a fund using a dividend to offset billed premium make any
representation to a member or a potential member that this dividend constitutes
an additional advance discount. Premium reported to the Office shall be normal
premium.
(3) If in any given fund
year, the self-insurers fund will have an unfunded contingent liability, then
no advance discount to members shall be allowed that year until the liability
is funded.
(4) In determining "net
premiums" on which Administrative and Special Disability Assessments are
computed pursuant to Sections
440.49(2)(h)
and 440.51, F.S., self-insurers
funds shall use amounts collected after both advance discounts and refunds. In
no event shall the fund be allowed to deduct more than 15 percent from standard
premium when calculating net premium.
(5) The trustees shall make all reasonable
efforts to collect delinquent premiums. The trustees shall establish premium
payment schedules which provide for premium payment dates, corresponding
amounts due, and a basis for determining when unpaid premiums are to be
considered delinquent. Copies of all payment schedules shall be filed with the
Office within 30 days after implementation.
(6) The trustees at their discretion may
establish any payment schedule that adequately provides for sufficient cash
flow and that gives proper consideration for the potential adverse effects of
delinquent premium on fund solvency. Payment schedules, other than preferred
payment plans, shall require that a member's annual pro-rata normal premium is
payable in full upon presentation of the final annual billing. Such billings
shall include credits for amounts already paid and may include credits for any
dividend or administrative savings allowed. The Office reserves the right to
order modification of any payment schedule contrary to these rules or which it
determines will adversely affect the fund's liquidity or solvency.
(7) The trustees may establish preferred
payment plans for certain members which allow these members to pay a premium
other than normal premium. Each member participating in a preferred payment
plan shall enter into a contract or agreement which sets forth the terms and
conditions of the plan. Such payment plans shall be subject to the following
conditions:
(a) All proposed plans including
the proposed contract or agreement shall be submitted to and approved by the
Office prior to implementation. In approving or disapproving a plan, the Office
shall determine if the plan complies with this rule. Additionally, all
revisions to the approved plan, contract, or agreement shall be submitted to
the Office and approved prior to implementation.
(b) The plan shall establish a minimum normal
premium that a member must pay to qualify for participation in the
plan.
(c) The fund shall conduct a
reasonable financial review of any employer desiring to participate in the plan
for the purpose of determining that the member is financially sound. A
description of the financial review shall be part of the plan. Only financially
sound employers may participate in these plans.
(d) The plan and contract or agreement shall
require that each participant shall pay to the fund a portion of the total
fixed expenses for the fund. At the beginning of each policy year in which the
plan is offered, the fixed expenses associated with the fund's operation shall
be calculated.
1. The minimum fixed expense
shall be based upon the portion of the fund's estimated annual normal premium
in excess of the aggregate retention or loss fund. The percentage of the
estimated annual normal premium determined by the fixed expenses of the fund
shall be applied to the estimated annual normal premium of each member in the
plan to determine the minimum pro-rata fixed expenses to be paid to the fund by
each participant.
2. The fixed
expenses owed by each participant may be greater than the minimum but shall be
fixed at policy inception and adjusted on final audit only to reflect changes
in the member's audited normal premium. Expenses which are allowable charges to
the aggregate excess contract loss fund may be deducted from the member's
claims deposit.
3. Each fund shall
adopt a fixed expense charge which it shall apply to all members of the
preferred payment plan during a given fund year. The fund may elect to apply an
expense charge which is greater than the actual expense factor of the fund but
this charge shall be uniformly applied to all preferred payment plan members in
a given year.
(e) If the
plan allows the member to pay less than the earned normal premium upon final
audit, then the plan shall require, at a minimum, that the member provide
security to the fund for the difference between the premium actually paid and
the member's annual normal premium. After the end of the policy year, the
security may be reduced to the amount of the member's outstanding claims
reserves. Such security may be surety bonds, cash security, letters of credit,
or other methods approved by the Office. This security shall be adjusted
annually to reflect current incurred loss, claims payments, and lump sum
settlements. The fund shall establish a reserve for the amount of the
outstanding claims reserves.
(f)
The plan shall establish a minimum and maximum premium that each member shall
be subject to for each policy period in the plan.
1. The minimum premium shall be greater than
or equal to the sum of the fixed expenses established pursuant to paragraph
69O-190.066(8)(d),
F.A.C., and the cost of all claims incurred net of excess recoveries.
2. The maximum premium shall not be less than
115% of the member's standard premium. The maximum premium established by the
fund shall be the most any member shall be required to pay the fund for
coverage except for assessments made pursuant to the fund's indemnity
agreement.
3. The fund shall
collect a deposit premium which shall be at least equal to the amount of the
claims deposit plus a pro-rata portion of the expense charge. This deposit
premium shall be paid prior to the beginning of the member's participation in
the plan in a given year.
(g) The plan shall require that the member
forfeit any dividends paid by the fund for the period the member participated
in the plan.
(h) The participation
in the plan by a member shall be terminated by the fund if the member's
financial condition deteriorates to the point where its ability to meet future
financial obligations is in doubt. The fund shall maintain a file for each
participant, and such file shall be made available to Office personnel upon
request. Each file shall contain, but shall not be limited to, financial
statements or audited financial statements for each member's three (3) most
recent fiscal years.
(i) The plan
shall provide that the member provide a cash deposit out of which the fund will
pay the member's claims. Such deposit shall be reviewed by the fund at least
quarterly and increased or decreased to reflect the actual claims paid by the
fund on behalf of the member.
1. Each member
shall be billed monthly for any claims paid by the fund during the previous
month. It is the intent of this rule that funds should use only the preferred
payment plan claims deposits or collateral to pay preferred payment plan
claims.
2. Cash claims deposits
shall be treated as a liability for accounting purposes and payments made from
cash deposits shall be accounted for separately by fund year.
3. A fund may elect to use a loss conversion
factor or factors when billing members for reimbursement of the cash claims
deposit. These factors will require that the members reimburse the fund for the
actual amount of claims paid plus an additional fixed percentage of the amount
paid. The loss conversion factors shall be a part of the plan and shall be
fixed for any given policy year. If more than one factor is to be used by the
fund, the plan shall explicitly state the criteria for applying a specific
factor to an individual member.
4.
The fund may limit the liability of a member to reimburse the fund for actual
claims payments by capping the cost associated with a given claim at the fund's
specific excess retention. No other limit shall be used to cap the members'
liability to reimburse the fund on individual claims. If the contract period
for a member's participation in the preferred payment plan includes two or more
specific retentions, then the contract shall be amended to reflect the actual
specific retentions in effect during the preferred payment plan contract
period. The loss limits specified in this paragraph shall not affect or amend
the maximum premium required in paragraph (f).
(j) The plan shall provide that any claims
reserves, less specific excess recoveries, outstanding when a member leaves the
fund, shall be paid in full by the member or shall be guaranteed by security
acceptable to the Office.
(k) The
fund's aggregate excess policy shall provide that the retention be determined
by using the premium paid or if normal premium is used, then the fund shall
establish a reserve funded from surplus in the amount of the difference between
normal premium and premium paid.
(l) The fund shall limit the participation in
the plan to insure that it has adequate liquidity. In no event shall the fund
allow more than 25 percent of its premium in these plans. Such percentage shall
be determined by calculating the participating members' normal premium and
expressing this amount as a percentage of the fund's total normal
premium.
(m) The fund shall report
to the Office, as part of its Quarterly Status Reports or annual financial
statement, the number of employers participating in the plan, their equivalent
normal fund premium, the amount of premium paid in, the amount of claims paid,
the amount of reserves outstanding and the amount of any delinquent premium.
The Preferred Payment Plan Quarterly Status Reports shall be filed on OIR Form
BSI-30.
(n) The fund shall pay its
assessments on the basis of normal premium for any employers participating in
the plan.
(o) The Office reserves
the right to order the preferred payment plans terminated if it determines that
the continuation of the plan would adversely affect the solvency of the fund or
if the fund fails to comply with the provisions of this rule. All approvals for
preferred payment plans shall be for a single fund year only. Plans or any
amendments to previously filed plans shall be filed annually and be subject to
approval of the Office in the same manner as and according to the same criteria
used for approving new plans. If a fund wishes to continue a plan with no
changes from the previous year, then the fund may advise the Office in writing
and the fund need not make any additional filing for that year.
(p) Any claims remaining open two years after
the end of the policy period in which they were incurred may be commuted into a
lump sum payment by the employer at the request of the fund or at the request
of the employer and with the concurrence of the fund.
(8) Funds may be allowed to offer
retrospectively rated plans to their members. Funds may request permission to
use plans filed by the National Council on Compensation Insurance (NCCI) with
the Office or funds may develop their own plans.
(a) Funds shall obtain the approval of the
Office prior to offering any retrospectively rated plans.
(b) Funds shall adopt explicit underwriting
criteria which shall be submitted to the Office along with the actual plan. The
fund shall also submit with the request an actuarial analysis of the impact of
the plan on the solvency and liquidity of the fund.
(c) The Office may approve the use of a plan
if the offering of a plan does not adversely affect fund solvency and
liquidity. In approving a plan, the Office may limit the participation in the
plan to a fixed percentage of fund premium when such limit is necessary to
assure fund solvency and liquidity.
(d) Funds may submit their own
retrospectively rated plans which have been developed by a qualified actuary.
These plans shall address the same issues as are contained in the NCCI plans.
Any plan which allows a minimum premium of less than standard premium shall
have a maximum premium which is in excess of standard premium. The fund's
actuary shall attest that the plan is actuarially sound.
(e) All plans shall be reviewed annually by
the fund's actuary. The review shall include an analysis of the actuarial
soundness of the plan and the effect of the plan on fund solvency and
liquidity.
(f) Changes in a plan
must be filed with and approved by the Office prior to implementation. All
changes must be reviewed by the fund's actuary and included in the actuary's
annual analysis of the plan and in its impact on the fund's financial
condition.
(g) The Office may
withdraw the authorization of a fund to offer a retrospectively rated plan if
the office determines that the continuation of the plan would adversely affect
fund solvency and liquidity.
Rulemaking Authority 440.591, 440.51(6)(b), 624.4621 FS.
Law Implemented 440.51(6)(b), 624.4621
FS.
New 10-1-82, Amended 12-25-84, Formerly 38F-5.66, Amended
3-11-87, 1-8-91, 6-12-91, 8-28-91, 3-16-92, 12-19-93, Formerly 38F-5.066,
4-190.066.
