North Carolina and Florida have joined the ranks of states where workers’ compensation costs are falling.
North Carolina Insurance Commissioner Jim Long approved a North Carolina Rate Bureau filing for a 4.4 percent decrease in the voluntary market and a 3.8 percent decrease in assigned risk markets. The rate decreases will go into effect on April 1, 2009.
The decreases will save businesses approximately $65.5 million. The average rate in the voluntary market is now estimated to be 2.17 percent of payroll.
Florida Insurance Commissioner Kevin McCarty approved the National Council on Compensation Insurance’s amended rate filing to reduce the rates by 18.6 percent, an additional 4.5 percent reduction from the NCCI’s originally proposed 14.1 percent decrease. The final 18.6 percent reduction is estimated to produce a savings of more than $610 million for Florida employers.
In recent months, workers’ compensation costs have gone down in Colorado, Maryland, New York, Oregon, Kentucky and Delaware. Meanwhile, costs have gone up in California, Washington and Oregon.
Florida’s decrease of 18.6 percent is the largest one-year decrease on record, following the two previous largest decreases — 18.4 percent for 2008 and 15.7 percent for 2007. The last six filings represent the largest consecutive cumulative decrease on record in Florida dating back to 1965.
The rate decrease marks the sixth consecutive drop since 2003, the year the Florida Legislature passed sweeping reforms.
However, the rate decrease does not contemplate potential increases that could result from the Oct. 23 Florida Supreme Court decision in the Murray v. Mariner case. That ruling overturned limits of attorney fees.
Attorneys’ Fees Ruling
“The reduction of attorney participation in workers’ compensation cases has been cited as one of the significant causes of the reduction in rates since the 2003 legislative reforms,” McCarty said. “Limitations on attorney fees have helped Florida employers to realize a significant savings on their workers’ compensation insurance.”
Prior to the legislative reforms, Florida consistently ranked No. 1 or No. 2 in the country for the highest workers’ compensation rates; however, post-reform Florida has dropped out of the top 10 rankings.
NCCI, which produces and files rates for insurers in many states, said the rate decline was primarily due to a significant drop in claims frequency and a reduction in the costs of claims.
The workers’ comp reform law instituted provisions for enhanced fraud compliance and revised permanent and temporary disability definitions. It also set new parameters for attorney and physician compensation and improved dispute resolution procedures, in addition to making many other modifications to the system.
McCarty expects the NCCI to make a new filing in support of the rate impact that it believes will result from the Murray case.
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