Florida Administrative Code › 69 - DEPARTMENT OF FINANCIAL SERVICES › 69O - OIR - Insurance Regulation › Chapter 69O-187 - PROFESSIONAL LIABILITY SELF-INSURANCE TRUST FUNDS › Section 69O-187.009 - Termination or Merger of Self-Insurance Trust Fund

Current through Reg. 50, No. 138; July 16, 2024
(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.