Florida Regulations 69O-190.066

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§ 69O-190.066 Premium Billing and Collection.

(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 500,000 of standard premium 14.4%

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, Florida Statutes, 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 Department of Insurance 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.

Specific Authority 440.591, 440.51(6)(b), 624.4621 FS. Law Implemented 440.51(6)(b), 624.4621 FS. History-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.