Florida Approves Another Rate Decrease for Workers’ Comp

Florida Insurance Commissioner Kevin McCarty approved the National Council on Compensation Insurance’s amended rate filing for workers’ compensation insurance rates that will become effective Jan. 1.

The rate decrease marks the sixth consecutive drop in worker’s compensation rates since 2003, the year the Florida Legislature passed sweeping reforms of the workers’ compensation system.

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 interprets attorney fees provisions in the workers’ compensation statute.

“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.”

In an Oct. 15 order, McCarty asked NCCI to make an amended filing to reduce the rates of workers’ compensation insurance in Florida by 18.6 percent, an additional 4.5 percent reduction from the 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.

With this rate change, the cumulative overall statewide average rate decrease since 2003 will be more than 60 percent.

The approved decrease of 18.6 percent now 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 workers’ compensation rates — dating back to 1965.

In requesting the NCCI to amend its filing, McCarty cited disagreements with the methodology the NCCI used to calculate the profit factors and trend factors. Trend factors incorporate changes in wages, paid losses and claim frequency.

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 (NCCI) believes will result from the Murray case.

Source: Florida Office of Insurance Regulation