Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Florida Law and EthicsMedium
A Florida 2-20 General Lines Agent is explaining to a commercial client the purpose of the Florida Workers' Compensation Joint Underwriting Association (FWCJUA). The client has a small, high-risk construction business and has been denied coverage by several standard market insurers. Which of the following statements accurately describes the FWCJUA's role?
- AIt acts as a residual market to provide workers' compensation coverage for employers unable to obtain it in the voluntary market.
- BIt is a private insurer that specializes in high-risk workers' compensation policies.
- CIt provides workers' compensation coverage for all employers in Florida, regardless of risk.
- DIt regulates workers' compensation rates and policies for all insurers in Florida.
Show answer & explanationAnswer & explanation
Correct answer: A. It acts as a residual market to provide workers' compensation coverage for employers unable to obtain it in the voluntary market.
The FWCJUA is Florida's residual market for workers' compensation insurance. Its role is to ensure that employers who are legally required to carry workers' compensation coverage, but who cannot obtain it in the standard voluntary market, can still secure coverage.
Why the other options are wrong
- B. The FWCJUA is a state-created entity and a residual market, not a private insurer.
- C. FWCJUA is for employers unable to get coverage in the voluntary market, not for all employers.
- D. The Office of Insurance Regulation (OIR) regulates rates, not the FWCJUA.
FWCJUA
The Florida Workers' Compensation Joint Underwriting Association (FWCJUA) is a residual market mechanism providing workers' compensation insurance to eligible employers unable to obtain coverage in the voluntary market.
- Residual market for Workers' Comp.
- Ensures coverage for high-risk employers.
- Not a voluntary market insurer.
Memory trick: Residual Markets: Last Resort Coverage