Florida Regulations 69L-5.109

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§ 69L-5.109 Excess Insurance.

(1) Individual self-insurers, except those identified pursuant to Section 440.38(6), Florida Statutes, and those with audited financial statements and a net worth in excess of $250,000,000, shall maintain specific excess insurance. Such specific excess insurance shall have a limit of not less than $1,000,000.

(2) To be acceptable to the division in fulfillment of the excess insurance requirements, worker' compensation excess policies shall be written by insurance companies licensed in Florida pursuant to Chapters 624, 628 or 629, Florida Statutes, and shall be subject to the protection afforded by the Florida Insurance Guaranty Association Act(Section 631.50, Florida Statutes). Policies issued without the protection of the Florida Insurance Guaranty Association Act shall be issued by insurance companies whose policyholders - and financial ratings as shown in the most current issue of A.M. BEST'S INSURANCE REPORTS, PROPERTY-LIABILITY, shall not be less than "A-" and "VII" respectively. A.M. BEST'S INSURANCE REPORTS, PROPERTY-LIABILITY is hereby incorporated by reference into Rule Chapter 4L-5, F.A.C. The edition required by this rule shall bear the date September 1996 (9/96). Copies may be obtained from A.M. Best Company, Old Wick, New Jersey 08858, telephone 1(800)424-BEST. This report is published annually and the version of the report used should be the most current year. A copy is available for viewing at the Division of Workers' Compensation, Bureau of Monitoring and Audit, Self-Insurance Section, 200 East Gaines Street, Tallahassee, FL 32399-4224. (3) In the event an insurance company is not covered by the Florida Insurance Guaranty Association Act (Section 631.50, Florida Statutes) or not rated by BEST's, and adequate coverage is not available from either of the companies identified in subsection 4L-5.109(2), F.A.C., above, then the division shall accept excess policies written by this company if the company is licensed in Florida pursuant to Chapters 624, 628, 629, Florida Statutes, or authorized to transact business in Florida by the Surplus Lines Law, Section 626.913, Florida Statutes, and provides security to the division for all policies issued which fulfill requirements under these rules. The division shall reject any insurer which: (a) Does not pay its claims when due; or (b) Is not in compliance with any requirement of Chapter 624, Florida Statutes. (4) If an excess policy with a rated company cannot be secured by the self-insurer, the amount of security required shall be determined at policy effective date and shall equal 50 percent of all required aggregate limits and 25 percent of all required specific limits. Following the policy period end, the amount of security shall be redetermined by the division and shall be the amount of any future reimbursements due or payable from the excess policies. The amount of any reimbursements shall be calculated from an actuarially determined loss reserve including incurred but not reported (IBNR) loss. (a) Excess recoveries not guaranteed by proper security shall become part of the self-insurer's security deposit requirement, even if a security deposit would not otherwise be required. (b) The amount of security shall be redetermined by the division annually based on the most current actuarial analysis available. Security will be required to be maintained as long as any outstanding reimbursements remain on the excess policies in question. (5) No contract or policy of excess liability shall be accepted by the division in consideration of the ability of an applicant to fulfill its financial obligations under Chapter 440, Florida Statutes, the Workers' Compensation Law, unless such contract or policy: (a) Is issued by an insurance company conforming to the Rules for Self-Insurance and naming the Division as additional insured for the purposes of notification. (b) Cannot be canceled except upon sixty (60) days' written notice by certified mail to the other party to the policy and to the division. (c) Is automatically renewable at the expiration of the policy period unless written notice by certified mail is given to the other party to the policy and to the division, sixty (60) days prior to such expiration, by the party desiring to cancel or not to renew the policy. (d) Provides that any commutation affected under a commutation clause shall not relieve the underwriter of further liability in respect to claims and expenses unknown at the time of such commutation. The underwriter shall not be relieved in regard to claims apparently closed but which may be subsequently revived, by or through a competent authority. In the event the underwriter proposes to redeem any future payments as compensation for accidents occurring during the term of the policy by the payment of a lump sum to be fixed as provided in the commutation clause of the policy, not less than 60 days prior to notice of such commutation shall be given to the division by certified mail by the underwriter or its agent. (e) In the event any commutation is effected, the division shall have the right to direct that such sum either be placed in trust for the benefit of the injured employee or employees entitled to such future payments of compensation or be invested in approved securities and deposited with the division to insure such future payments of compensation to the employee or employees entitled thereto. Said commutation must contain a provision that the division may order that the monies due under the terms of an excess contract or policy be paid directly to the injured employee or such other party as the division may appoint. Such an action shall be ordered only if the division determines that it is necessary to insure continued benefits to the injured employee. (f) Contains the provision that in the event of the insolvency of a member of the Florida Self-Insurers Guaranty Association, Inc. (FSIGA), that the policy will reimburse FSIGA for any monies expended on behalf of the member. Any reimbursement will be subject to the terms of the contract between the member and the insurer. (6) No more than one named insured, which shall be defined as a principal named insured and its subsidiaries, shall be covered by any contract or policy of excess liability. (7) The retention of specific excess policies shall be as follows: (a) The maximum retention shall be no more than $350,000 or 1% of the self-insurers net worth, whichever is greater. The maximum retention so calculated shall be rounded to the nearest $50,000. (b) Should a self-insurer purchase, after review by the division, a specific excess policy with a retention greater than the maximum specified in paragraph (7)(a), the higher retention may be allowed. If a higher retention is allowed, the self-insurer's security deposit requirement will be increased by an amount equal to twice the difference between the maximum retention allowed by paragraph (7)(a) and the retention to be purchased by the self-insurer. (c) The division shall determine retention levels for each self-insurer based on an evaluation of the self-insurer's financial condition, loss history, actuarial report, and exposure to future loss. (8) Self-insurers with a financial net worth between $1,000,000 and $5,000,000 shall maintain aggregate excess insurance with a maximum retention of one hundred fifteen percent (115%) of estimated standard premium or 115% of manual premium, whichever is greater, for the term of the policy. (9) All aggregate excess policies shall have a limit of at least fifty percent (50%) of the estimated standard premium for the term of the policy or $1,000,000, whichever is greater. Such policy shall only apply to the self-insurer's operations within the scope of Chapter 440, Florida Statutes. Specific Authority 440.38(1)(b) FS. Law Implemented 440.38(1)(b) FS. History-New 10-1-82, Formerly 38F-5.36, Amended 2-3-88, 12-19-93, Formerly 38F-5.036, Amended 5-19-97, Formerly 38F-5.109.