Florida Office of Insurance Regulation Considers NCCI Workers’ Compensation Rate Increase Filing

Aug 18, 2016


The Florida Office of Insurance Regulation (“OIR”) conducted a hearing on August 16, 2016 to consider a workers’ compensation rate filing made by the National Council on Compensation Insurance (“NCCI”).  

NCCI has proposed an overall average increase of 19.6 percent for the voluntary market for all new, renewal and current workers’ compensation policies in effect in Florida effective October 1, 2016 on a pro-rata basis for the remainder of each policy’s term.

Individual projected rate impacts for all three recent legal changes include the following:

  • A 2.2 percent projected rate increase for the June 9th Florida Supreme Court decision in the case of Westphal v. City of St. Petersburg, in which the Florida Supreme Court found the 104-week statutory limitation on temporary total disability benefits in Section 440.15(2)(a), Florida Statutes, unconstitutional because it causes a statutory gap in benefits in violation of an injured worker’s constitutional right of access to courts. The Supreme Court reinstated the 260-week limitation in effect prior to the 1994 law change.
  • A 15 percent projected rate increase for the April 28th Florida Supreme Court decision in the case of Castellanos v. Next Door Company, which found the mandatory attorney fee schedule in Section 440.34, Florida Statutes, unconstitutional as a violation of due process under both the Florida and United States Constitutions.
  • A 1.8 percent projected rate increase related to updates within the Florida Workers’ Compensation Health Care Provider Reimbursement Manual per Senate Bill 1402.  The Manual is effective on July 1, 2016.

Florida Insurance Commissioner David Altmaier who made opening remarks and introduced the OIR staff in attendance at this week’s hearing, noted that the record will be left open for comments until the close of business on August 23, 2016.

The NCCI representatives presented the filing, including testimony from the NCCI actuary and consulting actuary.    NCCI Division Executive for State Relations Lori Lovgren gave an overview of NCCI and its role in the workers’ compensation system, pointing out that, since Florida enacted workers’ compensation reforms in 2003, rates have decreased by 60 percent.  She noted that the current rate increase filing is one of the largest requested in recent history.  

Hyperlinks to the testimonies are below:

In June and July of this year, the NCCI surveyed the 10 largest workers’ compensation carriers in Florida, which represent approximately 66 percent of the state’s workers’ compensation market.  Since the Castellanos decision, these carriers have noticed that older claims have been re-opened, attorney involvement has increased, and it has become more difficult to settle claims, the NCCI representatives explained.  Additionally, there have been increases in petitions and depositions, and these trends likely will continue.  A sampling of Judges of Compensation awards since the Castellanos decision demonstrates that attorneys’ fees awards have increased, it was noted.

Two items were not included in this filing:  

  • The decision in Miles v. Edgewater Police Department, which removed the restrictions on claimant-paid attorneys fees, as well as the unfunded liability.  The NCCI representatives explained that they believe the Miles decision will increase and encourage litigation in the system, but the NCCI is unable to price the impact.  
  • The NCCI proposed no annual experience filing for January 1, 2017.

Various stakeholders spoke during the public testimony portion of the hearing.  

One speaker predicted the increased attorney involvement because of the Castellanos decision will result in injured workers taking longer to return to work.  

There was discussion that the positive impacts of the 2003 reforms on the workers’ compensation system might be lost.  Another speaker said the rate increase on non-profit groups might have the effect of reducing the services available to those in need.  

Representatives of business groups noted that the Castellanos decision will raise costs in the workers’ compensation system without increasing benefits to workers.  

An actuary who reviewed the NCCI filing on behalf of a group representing injured workers in Florida disputed it, explaining that the negative effects of the filing might be overstated.

The OIR representatives did not give an indication of when the agency might reach a decision on the rate filing.

To view the OIR informational Web page on this week’s hearing, click here.


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