Florida Workers’ Compensation Market in Good Shape, Says State

Availability and affordability in Florida’s voluntary workers’ compensation market overall is good, although small firms, new firms and construction firms might face affordability issues due to unique characteristics such as lack of historical risk experience and the nature of the risk.

That’s the assessment by the Florida Office of Insurance Regulation in its 2008 Workers’ Compensation Annual Report. The report analyzes the market during 2007 and concludes that it is competitive.

Florida’s residual market for workers’ compensation insurance is small relative to other states, which the report says implies that the voluntary market is absorbing the vast majority of demand.

And, since 2003 legislative reforms, the marketplace has experienced an overall average rate decrease of more than 60 percent.

“I’m pleased that the 2008 report shows that Florida’s 2003 legislative reforms have had an enduring effect as workers’ compensation rates continue to decline,” said Insurance Commissioner Kevin McCarty. “Florida continues to offer a good environment for employers to do business.”

The report shows that there are two primary reasons for the continued rate reductions: the claims frequency has been decreasing faster than medical costs have increased; and the continued crackdown on companies that fraudulently avoid payment for workers’ compensation has added more than $8 million to Florida’s premium base while providing greater protection for employees.

During 2007, 12 new workers’ compensation writers started doing business in Florida, bringing to 241 the number actively writing in the voluntary market. Three of the 12 were new to the state, while nine were already operating in Florida, and expanded by adding workers’ compensation. Of the 12, only one is domiciled in Florida.

For calendar year 2008, McCarty has approved an 18.6 percent reduction in workers’ compensation insurance rates that will become effective Jan. 1, 2009. The OIR says the reduction will save Florida employers more than $610 million and represents the sixth consecutive drop in rates since the Florida Legislature passed the reforms in 2003. With this change, the cumulative overall statewide average rate decrease since 2003 will be more than 60 percent.

In addition, the approved 2008 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.

Still under review by the OIR, however, is a request for an 18.6 percent rate increase over two years by the insurers’ National Council on Compensation Insurance. This is based on the Oct. 23 Florida Supreme Court ruling in Murray v. Mariner that eliminates the statutory caps on attorney fees and provides for a return to the “reasonable fee” standard for attorneys handling workers’ compensation claims. This could stall the pattern of rate decreases.

The NCCI has proposed a first year increase of 8.9 percent, to become effective March 1, 2009, if approved by McCarty. An order from the commissioner is expected soon.

Topics Florida Workers' Compensation Talent