Florida Administrative Code › 69 - DEPARTMENT OF FINANCIAL SERVICES › 69O - OIR - Insurance Regulation › Chapter 69O-190 - RULES FOR SELF-INSURERS UNDER THE WORKERS' COMPENSATION ACT › Section 69O-190.071 - Authorized Investments for Self-Insurers Funds

Current through Reg. 50, No. 138; July 16, 2024
(1) The trustees of a fund are authorized to
				invest the assets of the fund only in the manner prescribed by these
				rules.
(2) Monies allocated to
				claims reserves net of excess recoveries for all policy years prior to the
				current year, the current year loss fund, all security deposits, and encumbered
				miscellaneous income shall be invested only in the following manner:
(a) Bankers acceptances from Prime Money
				Center Banks located within the United States and purchased through authorized
				financial institutions as defined in this rule.
(b) Savings accounts, checking accounts,
				money market accounts, certificates of deposit and fully collateralized
				repurchase agreements in financial institutions authorized pursuant to this
				rule.
(c) U.S. Treasury notes,
				bonds, and bills.
(d) Any security
				issued by the U.S. government or government agency and backed by the full faith
				and credit of the U.S. government.
(e) Any security which is a general
				obligation of the U.S. government or U.S. government agency.
(f) Securities issued by the State of
				Florida, or any agency or political subdivision which are backed by the full
				faith and credit of the State of Florida.
(g) Mutual funds which invest 100% in U.S.
				government or U.S. governments agency securities and whose published management
				policy limits the risk to principal amount invested. Funds must maintain
				current prospectuses on all mutual funds in which they invest.
(h) Annuities issued by insurers licensed by
				the State of Florida and whose policies are subject to the protection of the
				Florida Life and Health Insurance Guaranty Association. Investments in
				annuities are subject to the following limitations:
1. At least 30 days prior to the fund
				purchasing its first annuity, and annually thereafter, a fund shall submit an
				actuarial review by a qualified actuary examining the impact on the fund's
				present and future financial condition of purchasing annuities and foregoing
				the earning of investment income on the amounts invested in the annuities. The
				actuarial review shall take into account all aggregate reserve requirements and
				shall estimate the percent of the fund's reserves which may safely be invested
				in annuities. This percentage shall be the maximum amount allowable for
				investment in annuities subject to subsequent annual reviews by the fund's
				actuary. For purposes of this paragraph only, the actuary may be a member of
				the Society of Actuaries, American Academy of Actuaries or Casualty Actuarial
				Society.
2. Annuities shall be
				single premium annuities and shall be purchased only for the purpose of
				providing a payment stream for a given claim. Claims eligible for annuity
				funding shall be those claims with specific periodic benefit payments and with
				payments expected to continue for at least 61 months.
3. All annuities purchased shall have the
				fund as beneficiary. The fund may instruct the insurer to pay benefits directly
				to the claimant. The policy shall provide that the sum of the periodic benefit
				payments paid plus the cash value of the policy shall be greater than or equal
				to the amount of premium paid.
4.
				All annuities shall be tied to the claimant's life span.
5. If the cash value of the annuity exceeds
				$100,000 or the estimated benefits payable under the terms of the annuity,
				including cash value, exceeds $300,000, then the annuity shall be purchased
				only from a licensed insurer with a rating from the most recent edition of the
				A. M. BEST INSURANCE REPORTS, LIFE-HEALTH, of at least "A." The annuity policy
				shall also be subject to the protection of the Florida Life and Health
				Insurance Guaranty Association.
6.
				The rules contained in paragraph (f) relating to the purchase of annuities
				shall not apply to annuities purchased for a claim settlement pursuant to an
				order of a Deputy Commissioner.
(i) Land and existing buildings used or
				acquired for use as its principal home office and for use by its service
				company, if any, when conducting business involving the fund. Prior to
				investing in land and buildings, the fund shall submit to the Office the
				following items:
1. An appraisal of the
				building and land showing that the market value of the building and land is
				greater than or equal to the principal amount of the investment. The appraisal
				shall be prepared in accordance with the Uniform Standards of Professional
				Appraisal Practice. The Uniform Standards of Professional Appraisal Practice of
				the Society of Real Estate Appraisers (effective July 1, 1987) are hereby
				adopted by reference and made a part of this rule by reference.
2. An analysis by the fund's actuary on the
				impact of the investment on the liquidity of the fund for claims payment
				purposes.
3. A financial analysis
				using generally accepted accounting principles showing that the proposed
				investment will decrease the expense overhead of the fund compared to acquiring
				office space through renting commercial property.
4. A certified resolution of the board of
				trustees stating that the investment is intended solely for reducing the
				overhead expense of the fund and that the investment is not for purposes of
				speculation or resale.
(j) If the building or land purchased
				requires modification or renovation in order to make it suitable for the fund's
				use, then the total cost of purchase of the building and land plus the cost of
				renovation or modification shall not exceed the 5 percent limit imposed by
				paragraph (n).
(k) If, instead of
				buying an existing building, a fund wishes to purchase land and construct a
				building on the land, then the following conditions shall be met in addition to
				those imposed by paragraph (i):
1. Land
				acquired for use in the construction of a building may be held for no longer
				than 18 months before construction shall begin. If construction is not begun
				within 18 months, then the fund may request a one time extension period to
				begin construction. An extension shall be granted upon submission of evidence
				that the fund has made a reasonable effort to begin construction within the
				time prescribed and that construction will begin before the end of the
				extension. If no extension is granted or if construction does not begin by the
				end of the extension then the land shall be sold.
2. All contracts awarded to the prime
				contractor shall contain a maximum fixed cost. The fund shall secure a
				performance bond in the amount of the contract from the prime
				contractor.
3. The total cost of
				acquiring the land, improving the land and construction of the building shall
				not exceed the 5 percent limit imposed by paragraph (n).
(l) The fund shall be the sole owner or
				mortgagee of the land and building, and no sale of real property for a price
				less than the original cost of the land and building shall take place without
				the written consent of the Office. The Office shall approve the sale unless the
				sale impairs the ability of the fund to meet its financial
				obligations.
(m) Investment in land
				or building pursuant to paragraphs (i) and (k), shall be subject to the
				approval of the Office. In approving this investment, the Office shall consider
				the impact of the investment on fund liquidity and solvency, the percent of net
				claims reserves invested and the amount of fund overhead expenses reduced by
				the investment. All books and records of the fund relating to acquiring land
				and acquiring or constructing a building shall be open to inspection by the
				Office.
(n) In no event shall the
				amount invested in land or building exceed 5 percent of the fund's claims
				reserves, net of excess recoveries.
1. If the
				cost of purchasing land, purchasing or constructing a building, renovating a
				building or improving the land exceeds the 5 percent limit imposed by paragraph
				(n), then the fund shall allocate all its unencumbered surplus until an amount
				equal to the portion of the cost in excess of 5 percent is transferred to
				claims reserves.
2. If the Office
				subsequently determines that the investment endangers fund solvency or
				liquidity, or if the original cost of purchasing land, purchasing or
				constructing a building, renovating a building or improving the land ever
				exceeds 10 percent of loss reserves as defined by subsection
				69O-190.059(3),
				F.A.C., the fund shall sell the land or building, obtain a mortgage on the
				property or allocate unappropriated surplus in order to provide sufficient
				liquidity to meet its obligations.
3. The fund shall allocate an amount each
				year to claims reserves equal to the amount of depreciation taken on the land
				and building.