69O-189.003: Workers' Compensation: Application and Audit Procedures
PURPOSE AND EFFECT: Allows but does not require electronic signatures in the application for workers compensation coverage. Makes explicit those audit procedures that under the old rule were incorporated by reference to NCCI publications. Adds additional audit procedures.
SUBJECT AREA TO BE ADDRESSED: Workers’ Compensation Insurance, Application and Audit Procedures.
SPECIFIC AUTHORITY: 624.308 FS.
LAW IMPLEMENTED: 440.381 FS.
IF REQUESTED IN WRITING AND NOT DEEMED UNNECESSARY BY THE AGENCY HEAD, A RULE DEVELOPMENT WORKSHOP WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:
TIME AND DATE: March 31, 2009, 9:30 a.m.
PLACE: 116 Larson Building, 200 East Gaines Street, Tallahassee, Florida
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 5 days before the workshop/meeting by contacting: Theresa Eaton, Office of Insurance Regulation, E-mail: Theresa.eaton@floir.com. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE DEVELOPMENT AND A COPY OF THE PRELIMINARY DRAFT, IF AVAILABLE, IS: Theresa Eaton, Office of Insurance Regulation, E-mail Theresa.eaton@floir.com
THE PRELIMINARY TEXT OF THE PROPOSED RULE DEVELOPMENT IS:
69O-189.003 Workers’ Compensation: Application and Audit Procedures.
(1)(a) Each employer applying to a carrier in the voluntary market for workers’ compensation coverage required by Section 440.38, F.S., shall use Form ACORD 130-FL (rev. 7/02), “Florida Workers’ Compensation Application,” which is hereby adopted and incorporated by reference. The form shall be completed and submitted to the carrier with which the employer wishes to contract for coverage.
(b) A carrier wishing to use its own application form shall submit the form electronically to the Florida Office of Insurance Regulation (Office) at https://iportal.fldfs.com, and receive approval prior to its use.
1. At a minimum the form shall require the employer to provide the following information:
a. Name, address, and legal status of the employer;
b. Federal employer identification number;
c. Type of business and contractor licensing number if the employer is a contractor;
d. Rating information including past and prospective payroll;
e. Estimated revenue;
f. Locations;
g. List of officers, sole proprietors and partners including their social security numbers (disclosure of social security number is voluntary; as an alternative, attach a copy of exclusion or inclusion forms filed with the state);
h. List of all employee names, employees’ social security numbers and classifications (disclosure of social security numbers is voluntary; as an alternative, the latest UCT-6 form with class codes added can be used in lieu of a separate listing of employee names, employees’ social security numbers and classifications);
i. Previous workers’ compensation experience;
j. Former business names and predecessor companies for the last five years;
k. Former and current owners in the last five years;
l. All names under which the corporation operates; and
m. Any other information necessary to enable the carrier to accurately underwrite the employer.
2. The application shall contain a statement that the filing of an application containing false, misleading, or incomplete information with the purpose of avoiding or reducing the amount of premiums for workers’ compensation coverage is a felony of the third degree.
3. The application shall contain a sworn statement by the employer attesting to the accuracy of the information submitted.
4. The application shall contain a sworn statement by the agent attesting that the agent explained to the employer or officer the classification codes that are used for premium calculations.
(c) Each employer applying for workers’ compensation coverage in the Florida Workers’ Compensation Joint Underwriting Association (FWCJUA) shall use ACORD Form 130-FL (rev. 7/02) unless the FWCJUA files and receives approval by the Office of Insurance Regulation to use a different application form in accordance with paragraph (1)(b). The FWCJUA shall submit any addendum to the application to the Office and receive approval prior to using. The completed application and all addenda shall be submitted to the FWCJUA at the address on the form.
(d) The forms adopted in this subsection (1) may be obtained from: ACORD, Number 1 Blue Hill Plaza, 15th Floor, Post Office Box 1529, Pearl River, New York 10965-8529.
(2)(a) An application complying with this rule is required for all policies having covered Florida exposure. For new business effective after the implementation of this rule, a carrier shall use an application which complies with this rule. When this new business policy is renewed, the carrier is not required to obtain another application. These requirements also apply to policies written in other states where there is covered Florida exposure other than incidental Florida exposure.
(b) The applicant’s signature on the applicant form shall be notarized. The carrier is authorized to require the producer’s signature to be notarized.
(c) It is permissible but not mandatory that insurers accept electronic signatures in satisfaction of the application signature requirements. For purposes of this section, “electronic signature(s)” shall mean an electronic identifier, including a digital signature which is:
1. Unique to the person using it;
2. Capable of verification;
3. Under the sole control of the person using it;
4. Attached to or associated with data contained within the application document in such a manner that authenticates the attachment of the signature to particular data and integrity of the data transmitted;
5. Intended by the party using it to have the same force and effect as the use of a signature affixed by hand; and
6. Compliant with all applicable state and federal laws governing electronic signatures.
(d) It is permissible but not mandatory that insurers accept electronic notarizations in satisfaction of the application notarization requirements. For purposes of this section, a notary public shall use an electronic signature that is:
1. Unique to the notary public;
2. Capable of independent verification;
3. Retained under the notary public’s sole control;
4. Attached to or logically associated with the application document in a manner that any subsequent alteration to the application document displays evidence of the alteration; and
5. Compliant with all applicable state and federal laws governing electronic notarization.
(3) Each employer in the voluntary market or the FWCJUA may be required by their carrier to submit Form ACORD 175-FL (rev. 3/97), “Florida Workers’ Compensation Monthly Change Sheet,” which is hereby adopted and incorporated by reference. Carriers may use their own monthly change sheet containing the same information shown on the adopted form. This form is used to reflect any change in the required application. The monthly change sheet is applicable to new and renewal policies which have been issued with an application that complies with this rule. It is not necessary for an employer to submit a monthly change sheet if there are no changes to report.
(4)(a)1. In order to ensure that the appropriate premium is charged for workers’ compensation coverage, each employer and carrier shall comply with:
1.a. The requirements of Section 440.381, F.S.; and
2.b. As applicable, the voluntary market minimum audit requirements and FWCJUA minimum audit requirements as set forth in paragraphs (4)(b) and (4)(c) below. “Florida State Special Audit Rules”, (rev. 7/02) and “Part Three – Service Providers D. Performance Standards for Service Providers” (rev. 7/02) which are hereby adopted and incorporated by reference.
2.a. Copies of the “Florida State Special Audit Rules” (rev. 7/02) are contained in the workers’ compensation manual issued by the National Council on Compensation Insurance, Inc., 901 Peninsula Corporate Circle, Boca Raton, FL 33487.
b. Copies of Part Three – Service Providers D. Performance Standards for Service Providers” (rev. 7/02) are contained in the operations manual of the Florida Workers’ Compensation Joint Underwriting Association, Inc., P. O. Box 48957, Sarasota, FL 34230-5937.
(b) Each voluntary market carrier and each employer covered by a voluntary market carrier shall comply with the following minimum audit requirements:
1. Final audits shall be conducted for both new and renewal policies as follows:
a. For policies with an estimated annual premium of $10,000 and over, a final physical audit shall be completed annually on all risks regardless of governing classification code;
b. For policies with an estimated annual premium of $9,999 to $1, a final mail or physical audit shall be completed annually on all risks regardless of governing classification;
c. For all new business policies having construction classifications, regardless of premium range a final physical audit shall be completed annually;
d. For all renewal business policies having construction classifications, a final physical audit shall be conducted annually if the estimated annual premium is $5,000 and over; and
e. Per capita policies shall have a final mail or physical audit not less than biennially.
2. Physical audits will be made whenever requested by the employer with reasonable grounds.
3. Mail audit reports by the employer are permitted only where a physical audit is not required.
4. Records examined during the physical audit shall include, but not be limited to, the use of the following as applicable:
a. Unemployment Compensation Tax (UCT) forms;
b. Federal reports of employee income;
c. Payroll records;
d. Cash disbursement journals;
e. Other acceptable accounting records;
f. Certificates of insurance covering subcontractors; and
g. Independent contractor documents.
5. Each voluntary market carrier or the National Council on Compensation Insurance shall conduct audits to ensure the accurate classification assignments for duties of employees.
(c) The FWCJUA or its service provider and each employer covered by the FWCJUA shall comply with the following minimum audit requirements:
1. Final physical audits shall be conducted as follows:
a. For all policies producing an estimated annual premium of $4,000 and over regardless of classification code;
b. For all policies producing an estimated annual premium of $3,999 to $3,000, at least once every three years;
c. For all policies with a classification code of 2702, 2710, 5022, 5403, 5437, 5445, 5474, 5551, 5606, 5645, 6217, 7219, 8829, 8835, 8861 and 9110, regardless of premium range;
d. For all policies for employers engaged in leasing employees to others or in providing temporary help to others, regardless of premium range;
e. For all new business policies having construction classification codes, regardless of premium range;
f. For all policies with a loss ratio of 120% or greater the first year the employer qualifies and thereafter, subject to the FWCJUA’s or its service provider’s underwriting judgement, regardless of premium range;
g. Whenever requested by the employer on reasonable grounds; and
h. Whenever otherwise warranted in the FWCJUA’s or its service provider’s judgement by the type of business, or by questions concerning the amount of exposure, the accuracy of classifications, or the reliability of previous mail or physical audits.
2. Mail audit reports by the employer are permitted only where a physical audit is not required.
3. Records examined during the physical audit shall include, but not be limited to, the use of the following as applicable:
a. Unemployment Compensation Tax (UCT) forms;
b. Federal reports of employee income;
c. Payroll records;
d. Cash disbursement journals;
e. Other acceptable accounting records;
f. Certificates of insurance covering subcontractors; and
g. Independent contractor documents.
4. The FWCJUA, its service provider or the National Council on Compensation Insurance shall conduct audits to ensure the accurate classification assignment for duties of employees.
(d)(b)1. In addition, each employer shall submit a copy of the quarterly earning report required by Chapter 443, F.S., to the carrier at the end of each quarter.
2. Each carrier shall develop its own procedures for terminating coverage when the quarterly earning report forms are not received. However, such forms shall be considered timely if received within 45 days of the end of the quarter reported.
(e)(c) The carrier shall retain new or renewal applications, monthly change sheets, and the quarterly earning reports for a minimum of three years from the date the applications, sheets, or reports were received.
(f)(d) Telephone audits are not permitted in lieu of mail or physical audits.
(g)(e) An initial application is required only at the inception of a three-year fixed rate policy or at renewal, if the inception date was prior to the effective date of this rule. Audit procedures are required at the expiration of each policy.
(h)(f) Signatures.
1.a. A carrier, in order to comply with the signature requirements as provided in Section 440.381(3), F.S., shall use, as applicable:
(I) Form OIR-B1-1562 (rev. 7/03), “Partner’s, Sole Proprietor’s or Corporate Officer’s Statement”;
(II) Form OIR-B1-1561 (rev. 7/03), “Statement of Individual Providing Audit Information (other than Partner, Sole Proprietor or Corporate Officer)”; and
(III) Form OIR-B1-1560 (rev. 7/03), “Auditor’s Statement”.
b. The forms in this subsection (4) are hereby adopted and incorporated by reference and may be obtained from the Office’s web site at www.floirfldfs.com/pcfr/forms_list.aspx.
c. These forms shall be signed by the appropriate party and submitted to the carrier at the completion of an audit.
2.a. A carrier wishing to use its own signature forms shall submit the forms electronically to Property and Casualty Product Review at https://iportal.fldfs.com, and receive approval prior to use.
b. At a minimum the forms shall contain all text as it appears on:
(I) Form OIR-B1-1562 (rev. 7/03), “Partner’s, Sole Proprietor’s or Corporate Officer’s Statement”;
(II) Form OIR-B1-1561 (rev. 7/03), “Statement of Individual Providing Audit Information (other than Partner, Sole Proprietor or Corporate Officer)”; and
(III) Form OIR-B1-1560 (rev. 7/03), “Auditor’s Statement”.
3. It is permissible but not mandatory that insurers accept electronic signatures in Electronic signature(s) shall be accepted in satisfaction of the signature requirements of Section 440.381(3), F.S. For purposes of this section, “electronic signature(s)” shall mean an electronic identifier, including a digital signature, which is:
a. Unique to the person using it;
b. Capable of verification;
c. Under the sole control of the person using it;
d. Attached to or associated with data contained within the audit document in such a manner that authenticates the attachment of the signature to particular data and integrity of the data transmitted;
e. Intended by the party using it to have the same force and effect as the use of a signature affixed by hand; and
f. Compliant with all applicable state and federal laws governing electronic signatures.
Specific Authority 440.381, 624.308(1) FS. Law Implemented 440.105(4)(b)5., 440.381, 624.307, 624.424(1)(c) FS. History–New 8-1-91, Formerly 4-28.007, Amended 10-3-95, 10-10-96, 1-15-98, 11-21-00, 11-5-02, 9-22-03, Formerly 4-189.003, Amended 3-29-05,_______.