Fla. Admin. Code Ann. R. 69L-5.218 - Security Deposits

Current through Reg. 47, No. 249; December 28, 2021

(1) Current Self-Insurers and Former Self-Insurers, other than Governmental Entities, that have a current Investment Grade Credit Rating shall maintain a minimum Security Deposit of $100,000.

(2) Current Self-Insurers, other than Governmental Entities, that do not have a current Investment Grade Credit Rating shall provide a Security Deposit in an amount equal to the greater of the actuarially determined outstanding loss reserves discounted to present value, using a four percent (4%) discount rate, or the actuarially determined outstanding loss reserves forecasted to a date one year in the future, discounted to such forecasted date using a four percent (4%) discount rate, as calculated in its Actuarial Report. In no case, shall the amount of the Security Deposit be less than $100,000.

(3) Former Self-Insurers, other than Governmental Entities, that do not have an Investment Grade Credit Rating shall provide a Security Deposit equal to the actuarially determined outstanding loss reserves discounted to present value at a four percent (4%) discount rate. In no case shall the amount of the Security Deposit be less than $100,000.

(4) In the event that a Current Self-Insurer or Former Self-Insurer does not have a current published Credit Rating, the Association or the Department shall determine an equivalent rating by performing an analysis of the Financial Statements provided in accordance with Rule 69L-5.209, F.A.C., and the amount of the Security Deposit shall be determined using the equivalent rating as the Credit Rating. A Current Self-Insurer or Former Self-Insurer that disagrees with the equivalent rating may provide a current Credit Rating. If the Current Self-Insurer or Former Self-Insurer provides a current Credit Rating, the security deposit requirement will be determined using the current Credit Rating instead of the equivalent rating and any excess security deposit will be released.

(5) As of the effective date of this rule, Current Self-Insurers and Former Self-Insurers that do not have an Investment Grade Credit Rating, or an equivalent rating at least equal to an Investment Grade Credit Rating as determined by the Association, shall provide the required security deposit increase amount in accordance with subsection (2) or (3) above, as applicable, within twelve (12) months of the effective date of this rule. However, within this twelve (12) month period, any Current Self-Insurer or Former Self-Insurer who experiences a deterioration in its Credit Rating or equivalent rating as determined by the Association to a Credit Rating that is less than an Investment Grade Credit Rating shall be required to provide an Actuarial Report and to post the security increase amount as determined by subsection (2) or (3) above, as applicable, immediately upon request by the Department. The provisions of this subparagraph expire twelve (12) months after the effective date of this rule.

(6) The Security Deposit shall be maintained until the authorization holder is a Former Self-Insurer who has demonstrated that there is no remaining value to its self-insured workers' compensation claims and the statute of limitations has run on closed claims. Prior to the release of the Security Deposit, the Former Self-Insurer and its Qualified Servicing Entity(ies) shall provide signed affidavits stating that all self-insured workers' compensation claims have been settled or the statute of limitations has run on closed claims.

(7) If the self-insurer is a FSIGA Member, the Security Deposit must be submitted to and executed in favor of the Association. The Security Deposit shall be held by the Association or the Department exclusively for the benefit of workers' compensation claimants. The Security Deposit shall not be subject to assignment, execution, attachment, or any legal process whatsoever, except as necessary to guarantee the payment of workers' compensation benefits under Chapter 440, F.S.

For FSIGA Members, security deposit forms DFS-F2-SI-4F (Self-Insurer's Surety Bond for FSIGA Member) and Form DFS-F2-SI-6 (Self-Insurer's Irrevocable Letter of Credit) can be obtained from and shall be submitted to the:

Florida Self-Insurers Guaranty Association, Inc.

1427 E. Piedmont Dr., 2nd Floor

Tallahassee, Florida 32308

(8) A Security Deposit shall consist of, at the option of the employer:

(a) A surety bond on Form DFS-F2-SI-4F (Self-Insurer's Surety Bond for FSIGA Member), effective 08/09, as incorporated by reference, which shall be issued by a corporation surety authorized to transact surety business by the Florida Department of Financial Services, Office of Insurance Regulation, and whose financial strength and size ratings from A. M. Best Company are not less than "A" and "V" respectively, or

(b) An irrevocable letter of credit on Form DFS-F2-SI-6 (Self-Insurer's Irrevocable Letter of Credit), effective 08/09, as incorporated by reference, which shall be issued by a financial institution located within the State of Florida and the deposits of which are insured through the Federal Deposit Insurance Corporation.

(9) No surety bond shall be terminated and no irrevocable letter of credit shall be allowed to expire, without ninety (90) days prior written notice and a deposit by the self-insurer of some other Security Deposit of equal value within ten (10) business days after such notice. Failure to provide such written notice or failure to timely provide a replacement Security Deposit after such notice shall constitute grounds for the Association or Division to call or sue upon the surety bond or to exercise its rights under the letter of credit. For Former Self-Insurers, a surety bond may be terminated without replacement, but shall not be released until such time as the Former Self-Insurer has demonstrated that there is no remaining value to its self-insured workers' compensation claims, the statute of limitations has run on closed claims, and the Former Self-Insurer has submitted the signed affidavits in accordance with these rules. Notice shall be submitted to:

For FSIGA Members,

Florida Self-Insurers Guaranty Association, Inc.

1427 E. Piedmont Dr., 2nd Floor

Tallahassee, Florida 32308

Notes

Fla. Admin. Code Ann. R. 69L-5.218

Rulemaking Authority 440.38(1), (2), (3), 440.385(6), 440.591 FS. Law Implemented 440.38(1), (2), (3), 440.385(1), (3), (6) FS.

New 3-9-10.