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Workers' Compensation Insurance

April 12th, 2011

FWCJUA

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Martin Summers

Insurance Agent

FWCJUA stands for the Florida Workers Compensation Joint Underwriters Association. Because workers’ compensation in Florida is mandatory for most businesses, there must be place for businesses to secure coverage when they are unable to find it in the marketplace.

Before there was an FWCJUA, the Florida Workers Compensation Insurance Plan (FWCIP) was the market of last resort. The Florida Department of Insurance had complete control over the operation of the FWCIP including operating rules and rates, and merely delegated day-to-day responsibilities to the NCCI (National Council on Compensation Insurance), as Plan Administrator. The FWCIP was not a self-funding plan, but rather was funded by insurance carriers licensed to write workers’ compensation insurance in Florida. In the mid-1980’s, premiums became insufficient to cover losses in the FWCIP and carrier assessments were levied. Because carriers funded the FWCIP on the basis of their voluntary market share, the result of more sizable FWCIP operating losses caused the voluntary market to shrink and forced businesses to find other alternatives to workers’ compensation insurance, such as self-insured funds. By the early 1990’s, 35% of Florida’s workers’ compensation market was in the FWCIP generating in excess of $200 million in underwriting losses. This was a large problem.

It led to Florida’s workers’ compensation reform in 1993, and the FWCJUA was established and designed as a self-funding plan to provide workers compensation and employer’s liability insurance to employers who are required by law to maintain such insurance and who are in good faith entitled to, but who are unable to purchase insurance through the voluntary market. As a result, employers insured within the FWCJUA pay premiums in excess of those paid in the voluntary market. From inception in 1994 through July 2003, there were three rating plans established for various classifications of risks and all employers were assigned to one of these three rating subplans either “A”, “B”, or “C” with Subplan “C” insureds receiving an assessable policy. In 2004, the Legislature created a three tier rating plan that based the insured’s premium on their experience and while capping the rates, the surcharges over manual rates were increased and provisions were made to ensure actuarially sound rates by January 2007. Any FWCJUA deficits will be funded through a Workers’ Compensation Trust Fund contingency reserve or through a below-the line assessment levied to all employers purchasing workers compensation insurance in Florida. The goal of the FWCJUA is to depopulate the Florida workers’ compensation residual market and invigorate the competitive or voluntary market.

Here are some important facts about the FWCJUA:

  • The FWCJUA was designed to be self-supporting.
  • Standard classification and rating rules apply.
  • No premium discount or deductible credits apply to FWCJUA policies.
  • A flat fee of $475 is applicable to all new and renewal FWCJUA policies.
  • The FWCJUA has three different rating tiers, each with different surcharge amounts. In order to properly calculate the total estimated annual premium, you must determine the tier for which the Employer is eligible.

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