It’s Official: Florida Workers’ Comp Rates Going Up Nearly 15%

October 11, 2016

The Florida Office of Insurance Regulation (OIR) has issued a final order granting approval to the National Council on Compensation Insurance (NCCI) for an overall combined statewide average rate increase of 14.5 percent. This rate increase applies to both new and renewal workers’ compensation insurance policies effective in Florida as of Dec. 1, 2016.

NCCI received this approval after submitting an amended rate filing to the Office on October 4, 2016, which met the stipulations of an order issued on Sept. 27, 2016.

NCCI originally requested a 19.6 percent increase on behalf of Florida insurers in June, which it said was needed after two Florida Supreme Court rulings that essentially reversed reforms passed in 2003 and rocked the state’s workers’ compensation system.

But in the Sept. 27 order, OIR disapproved NCCI’s request saying that much of an increase on new, renewal and outstanding policies was not justified.

The revised rate filing addressed the impact of Castellanos v. Next Door Company and Westphal v. City of St. Petersburg, as well as legislatively-mandated updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual (HCPR Manual).

OIR said the individual rate impacts will include:

  • A 10.1 percent statewide average rate increase for the April 28 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 2.2 percent statewide average rate increase for the June 9 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 1.8 percent statewide average rate increase related to updates within the Florida Workers’ Compensation HCPR Manual per Senate Bill 1402. The manual became effective on July 1, 2016.

Though the decision was expected, it is still a blow for the state, which had seen rates reduced by 60.3 percent since 2003 because of workers’ comp reforms, according to the American Insurance Association. The Association, which represents approximately 350 insurers across the country, said it will work with state policymakers to find a legislative solution to the Court’s decisions.

“NCCI’s amended filing of a 14.5 percent rate hike emphasizes the urgent need for the [Florida] Legislature to reverse the harmful effects of the Castellanos and Westphal decisions,” said Ron Jackson, Southeast Region vice president for AIA. “In particular, the Castellanos decision overturned reasonable parameters on claimant attorney fees that fairly regulate costs in Florida and many other states with similar laws, in favor of what has proved to be an uncapped approach that unjustly enriches those attorneys and will inevitably plunge the workers’ compensation system into the type of crisis that necessitated the 2003 reforms.”

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