Florida Signals 6.4% Workers’ Comp Rate Hike to Pay For Court Ruling

January 26, 2009

Florida Insurance Commissioner Kevin McCarty said that he would approve a rate filing to increase Florida’s workers’ compensation insurance rates by 6.4 percent to be effective April 1 for new and renewal business.

McCarty’s action is technically a denial of the Nov. 14 rate filing by the advised the carriers’ National Council on Compensation Insurance (NCCI) in which insurers sought an 8.9 percent rate increase as a result of the impact on rates it projects following the Oct. 23 Florida Supreme Court opinion in the case of Emma Murray v. Mariner Health Inc.

The court’s decision eliminated the statutory caps on attorney fees that were imposed as a result of 2003 reforms (under SB 50A) and enable claimant attorneys handling workers’ compensation claims to collect increased fees for their services.

“It’s very early to know for sure what the full impact of the Supreme Court’s decision on workers’ compensation rates will be,” said McCarty. “But, if history holds true, we will see these rates start to go up as more attorneys get back involved, likely extending the litigation process, with workers’ compensation cases.

“I am cautiously optimistic that business leaders and the plaintiff attorneys will get together and propose an amendment to our law that will help to ensure that workers’ compensation insurance remains affordable for our employers, while also protecting injured workers by ensuring their access to courts, medical care and other necessary benefits.”

Prior to the legislative reforms, McCarty said, 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.

The NCCI proposed spreading an 18.6 percent rate increase over two years – 8.9 percent for the first year, to become effective March 1 – for the voluntary market for all new and renewal workers’ compensation insurance policies written in Florida. Over two years, the 6.4 percent increase recommended by McCarty could amount to a 13.1 percent increase, unless changes to the system are made to minimize the impact of attorney involvement.

In requesting the NCCI to amend its most recent filing, McCarty cited disagreements with the data and methodology the NCCI used to calculate the projected effect of the Court’s ruling.

In October, McCarty approved an 18.6 percent reduction in rates, effective Jan. 1. It was the sixth consecutive drop in worker’s compensation rates since the Florida Legislature passed the reforms in 2003; and with the change, the cumulative overall statewide average rate decrease since 2003 is more than 60 percent. The NCCI originally had requested a 14.1 percent decrease in its filing of Aug. 27. The further reduction in rates had the potential to save Florida employers more than $610 million.

When filed and approved, the latest recommended increase in rates will add about $172 million in insurance costs for Florida employers. But, in combination with the 18.6 percent decrease that took effect Jan. 1, the net effect still is a savings of $438 million.

The 2003 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, in addition to making many other improvements to the system.

Source: Florida Office of Insurance Regulation

Topics Legislation Florida Workers' Compensation Pricing Trends

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