Florida Office of Insurance Regulation Approves NCCI Proposed Workers’ Compensation Insurance Rate Decrease
Oct 15, 2009
The proposed rate decrease submitted by the National Council on Compensation Insurance (“NCCI”) on August 20, 2009 has been approved by the Florida Office of Insurance Regulation (“OIR”). An overall average statewide rate decrease of 6.8 percent for all Florida new and renewal workers’ compensation insurance policies will be effective beginning January 1, 2010.
The October 15, 2009 OIR press release announcing Florida Insurance Commissioner Kevin McCarty’s approval Order is reprinted below. To view the Order, click here.
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Commissioner Approves Proposed Workers’ Compensation Insurance Rate Decrease
Marks 7th consecutive year of rate declines
TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty today announced he has issued an order approving the proposed rate decrease submitted by the National Council on Compensation Insurance (NCCI) for workers’ compensation insurance rates. The NCCI filing submitted Aug. 20 includes an overall average statewide rate decrease of 6.8 percent beginning Jan. 1, 2010 for all new and renewal workers’ compensation insurance in Florida.
The rate decrease will produce an estimated savings of more than $166 million for Florida employers, and represents the seventh consecutive decline in workers’ compensation rates since the Legislature passed sweeping reforms. The cumulative overall statewide average is 63.2 percent since the 2003 reforms.
“This is good news for Florida employers, and the Florida economy,” stated Commissioner McCarty. “Both the Legislature and Governor should be commended for enacting HB 903, which clarified attorney’s fees are subject to limitations in response to the Florida Supreme Court decision in the Emma Murray case. If it were not for this legislation, the workers’ compensation industry in Florida would likely have proposed rate increases instead of decreases in 2010.”
Before the 2003 legislative reforms, Florida had the first or second highest workers’ compensation rates in the country. Last year, Florida dropped to the 28th highest; the most recent round of rate reductions will place Florida among the lowest 10 states in the country.
NCCI, which produces and files rates for insurers in many states, noted the rate decline was primarily due to significant reductions in claims frequency although there are indications this trend has moderated. The Office conducted a rate hearing on Oct. 6, 2009, and heard testimony from NCCI, industry experts and the public before rendering a decision.
Although the commissioner found the overall rate reduction of 6.8 percent justified, the commissioner did take exception to some of NCCI’s methodologies including its calculation of policyholder dividends, cost of capital, investment yields, minimum premiums and proposed roofing rate. Technically, the order issued today denies the original rate filing. However, the overall rate reduction will be approved when NCCI modifies its current filing. The Office anticipates NCCI will need a few weeks to resubmit this filing; the commissioner will issue a final order at that time.
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