Florida Insurance Commissioner Kevin McCarty has given the green light to an overall statewide average workers’ compensation rate decrease of 6.8 percent.
The decrease, which was proposed by the industry’s National Council on Compensation Insurance (NCCI), goes into effect beginning Jan. 1, 2010 for all new and renewal policies in Florida.
According to McCarty, the rate decrease will produce an estimated savings of more than $166 million for Florida employers, and represents the seventh consecutive decline in rates since the Legislature passed reforms in 2003. Rates have dropped a cumulative 63.2 percent since the reforms.
“This is good news for Florida employers and the Florida economy,” said McCarty, who credited lawmakers for some of the savings. He said if it had not been for the Legislature clarifying state law on attorneys’ fees that had been muddied by a state Supreme Court ruling, the workers’ compensation industry in Florida “would likely have proposed rate increases instead of decreases in 2010.”
NCCI, which produces and files rates for insurers in many states, noted that the rate decline was justified by significant reductions in claims frequency, although there are indications this trend has moderated.
The Office of Insurance Regulation conducted a rate hearing on Oct. 6, 2009, and heard testimony from NCCI, industry experts and the public before rendering its decision.
Although McCarty found the overall rate reduction of 6.8 percent justified, he 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.
OIR said it thinks NCCI will need a few weeks to resubmit this filing; McCarty will issue a final order at that time.