Fla. JUA Removes Carrier Reps From Board

The board of the Florida Workers' Compensation Joint Underwriting Association (JUA) removed the four members of its board appointed by the state's largest domestic and foreign carriers Friday as part of a reorganization mandated by the state legislature.

A departure for the JUA since its creation in 1993, the board said it made its decision by conference call "on the advice of its attorneys."

Until now, a majority of the governing board members has been appointed by the insurance industry. Three of the members have been named by the Cabinet serving as the state Financial Services Commission, and a fourth is the state insurance consumer advocate.

As a result, the "holdover" board that took over effective Sunday is composed of the three members previously appointed by the Florida Cabinet, State Insurance Consumer Advocate Bob Milligan and a representative previously appointed by the Florida Association of Insurance Agents (FAIA).

The law establishing the new system requires that Mr. Milligan remain on the board and that the other eight members be appointed by the Cabinet. It also subjects the carrier and its chief officers and directors to financial disclosure and ethics laws.

Gary Landry, a vice president at the Florida Insurance Council, an industry group, said it was aware of the changes.

"Our position is the Florida Insurance Council supports revision to the FWCJUA so long as the legislation ensures that the board is comprised of a qualified and representative group of individuals who fully understand workers' comp issues through appropriate nomination process," he said.

Mr. Landry noted that the law reorganized by the JUA allows the board to replace previously appointed members of the insurance industry through a new nomination process.

He noted that the new process requires five appointees to come from a list of nominees that will be provided by major domestic and foreign carriers.

"The Florida Insurance Council is confident that insurance carriers will carefully nominate members to fill positions on the board and that each of the nominees it presents will be qualified representatives of the insurance industry who fully understand workers' comp issues," Mr. Landry said.

Specifically, officials said that Tom Maida, the JUA general counsel, recommended the new structure after conversations with the Florida Office of Insurance Regulation (OIR), which must approve the reorganization plan required by S.B. 1894. Officials said Mr. Maida cited as the basis for his decision S.B. 1894, signed by Gov. Charlie Crist, and S.B. 628, a companion measure that exempts some of the FWCJUA's records and allows it to hold executive sessions.

Board members who left Friday were Elissa Pacheco, of Associated Industries Insurance Companies; Craig Johnson, vice chairman of FCCI Mutual Insurance; Patrick Cannassa, of the CNA Insurance Group; and Rick Hodges, of Summit Holdings.

But the board agreed unanimously on Friday to retain the three members previously appointed by the Cabinet. They are: Ray Neff, president and chief executive officer of Sarasota, Fla.-based insurance consulting group Neff Consulting; Claude Revels, who represents Jacksonville, Fla.-based Toyota importer JM Family Enterprises Inc.; and Beth Vecchioli, senior government consultant for the law firm of Carlton Fields and a former deputy director of OIR.

The board voted to retain Mr. Neff as chairman.

Also remaining are Mr. Milligan, a retired Marine Corps general and former Florida comptroller, and Dan Dannenhauer, a representative of the Florida Association of Insurance Agents and an agent for Five County Insurance Agency, based in Fort Myers, Fla.

FWCJUA Executive Director Laura Torrence said board members will be required to file state financial disclosure reports by the end of July.

The new laws effectively place the JUA under state operating control. That would allow it to seek tax-exempt status from the Internal Revenue Service. In that way, the JUA would reduce its tax liability by millions of dollars--taxes accrued by the surpluses it has generated as the state's residual market workers' comp carrier in recent years.

The reorganization plan approved June 12 sets up a system for the state's 20 largest domestic carriers, 20 largest foreign carriers and the state's largest association of insurance agencies to nominate five members for approval by the Cabinet.

It also calls for the OIR to determine the largest carriers. Officials have said the FAIA will retain its nominating power as the largest insurance agents' association.