NCCI Recommends 8.4% Cut in Florida Workers’ Comp Rates for 2023

The National Council on Compensation Insurance is recommending an average 8.4% cut in workers’ compensation rates for the Florida voluntary market – the seventh straight reduction and double the size of the decrease for this year.

The recommendation, which will be reviewed by the Florida Office of Insurance Regulation, was based on Florida insurers’ favorable experience and trends in 2019 and 2020, as of the end of 2021, the NCCI said in a summary of its filing. The analysis found that lost-time claims have declined over the last eight years and indemnity costs have remained relatively consistent, although medical costs have been slightly more volatile.

As in the last two years, the filing did not include COVID-19 claims. But the “uncertainty” seen in the pandemic and possible pandemic-related effects of the virus were considered, the rating organization said. Nationwide, COVID claims have been many, but most are small – less than $1,500 on average.

The state Division of Workers’ Compensation reports that the number of COVID claims have remained relatively flat since January. After highs in 2020, claims peaked at 7,150 in August of 2021 and again in January of this year, but have stayed in the hundreds per month since then. Florida has seen a total of 73,734 COVID-related claims since the pandemic began.

“COVID-19 has been a manageable event for the system,” NCCI President Bill Donnell said at the group’s Annual Issues Symposium in May.

The NCCI Florida analysis found that wage inflation in recent years has had an impact on payroll, particularly in the leisure and hospitality classifications. Medical inflation has been moderate, about 1.5% per year.

“NCCI’s most recent countrywide data shows that drug costs are declining, physician costs are up slightly, and facility costs are rising in the workers compensation system,” the organization said.

Medical costs could increase for 2022 then drop by as much as 3% in coming years, the Centers for Medicare & Medicaid Services has projected, the NCCI explanatory memo noted.

“Overall, the workers compensation system is faring well,” NCCI said. For most states, private carrier and state funds’ net written premium increased about 1%, to $43 billion in 2021. And private carriers posted a combined ratio of 87% on $38 billion in premium for the 2021 calendar year.

“This was the fifth consecutive year that the private workers compensation insurance market posted a profitable combined ratio below 90% and the eighth consecutive year of underwriting profitability,” the NCCI summary noted.

It remains to be seen what the Florida OIR will think of the 8.4% decrease. In four of the last five years, Insurance Commissioner David Altmaier has demanded a larger reduction than the NCCI has recommended. For 2021, the NCCI proposed a 5.7% cut but Altmaier asked for more, and ultimately approved a 6.6% decrease.

If approved, the latest rate decrease will take effect Jan. 1, 2023. The 107-page filing can be seen here.

Topics Florida Workers' Compensation