Florida Regulator Orders Further Reduction in Workers’ Comp Rates
Oct 16, 2008
Insurance Journal--October 16, 2008
Florida Insurance Commissioner Kevin McCarty disapproved a worker’s compensation rate filing that the National Council on Compensation Insurance submitted on Aug. 27.
McCarty ordered NCCI to make an amended filing to reduce the rates of workers’ compensation insurance in Florida by 18.6 percent versus its initial request of 14.1 percent.
The further reduction in rates will save Florida employers more than $610 million, McCarty said.
In requesting NCCI to amend its filing, McCarty cited disagreements with the methodology it used to calculate the profit factors and trend factors. Trend factors incorporate changes in wages, paid losses and claim frequency.
Prior to the state’s legislative reforms in 2003, Florida consistently ranked No. 1 or No. 2 in the country for the highest workers’ compensation rates. Post-reform Florida has dropped out of the top 10 rankings, according to McCarty.
The amended rate decrease will mark the sixth consecutive drop in worker’s compensation rates since the Florida Legislature passed the reforms in 2003. With this change, the cumulative overall statewide average rate decrease since 2003 will be more than 60 percent.
In addition, the ordered 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.
The 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’ compensation 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.
Source: Florida Office of Insurance Regulation