Fla. Workers’ Comp Rate Decrease not Enough for Commissioner

Florida Insurance Commissioner Kevin McCarty disapproved the National Council on Compensation Insurance’s latest rate filing for workers’ compensation insurance rates, due to become effective next year.

McCarty ordered NCCI to make an amended filing to reduce the rates of workers’ compensation insurance in Florida by 18.4 percent.

The order to amend the filing means a further rate reduction from the NCCI’s originally requested 16.5 percent decrease and would produce a savings of over $700 million for Florida employers. McCarty asked the NCCI to amend the filing citing disagreements with the methodology NCCI used to calculate the profit factors and trend factors. Trend factors incorporate changes in wages, paid losses and claim frequency.

“Much of the thanks for positive changes such as these goes to the Legislature for passing the 2003 law that reformed the workers’ compensation system,” said McCarty. “It was both courageous and necessary, because for years workers’ compensation was a troublesome issue for the state.”

Prior to the legislative reforms, Florida consistently ranked first or second in the country for the highest workers’ compensation rates. Post-reform, Florida has dropped out of the top 10 rankings.

The amended rate decrease will denote the fifth consecutive drop since the Legislature passed the reforms; and with this change, the cumulative overall statewide average rate decrease since 2003 will be over 50 percent. The 18.4 percent decrease will be the largest one-year decrease in workers’ compensation rates on record for Florida. The five filings since reform represent the largest consecutive cumulative decrease in Florida rates.

NCCI said the rate decline was primarily due to a significant drop in claims frequency and a reduction in the costs of claims.

“The rate for roofers is especially noteworthy,” said McCarty. “It would be the lowest the rate has been since 1984 and would represent a 58 percent decrease overall since the new law took effect. We’re aware that the new building codes have increased costs for new roofs; but the good news is that with the decrease, the labor portion would see a favorable effect.”

A public rate hearing on the filing was held in October by the Office of Insurance Regulation.

The 2003 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 changes to the system.

Source: Florida Office of Insurance Regulation

Topics Florida Trends Legislation Workers' Compensation Pricing Trends