Cost savings in two Florida funds paid into by workers’ compensation carriers are expected to equal a nearly $20 million reduction in expenses for insurers operating in the state next year, according to a statement from the Florida Department of Financial Services.
The cost reductions are a direct result of the sound financial management of the Workers’ Compensation Administration Trust Fund (WCATF) and the Special Disability Trust Fund (SDTF), two funds that workers’ compensation carriers contribute to, DFS said.
Florida Chief Financial Officer (CFO) Jimmy Patronis said the reductions in costs for insurers are expected to translate into savings for Florida businesses in 2019.
“Reducing the cost of doing business for workers’ compensation carriers by $20 million means additional savings could be passed on to Florida businesses, easing financial burdens,” Patronis said.
Legislative changes in 1997 resulted in the SDTF being prospectively abolished and statutorily prohibited from accepting any new claims for dates of accident after Dec. 31, 1997. However, in accordance with Florida law, insurers and individual self-insured employers continue to be assessed to fund a small number of older claims. Further, fiscally responsible management of the WCATF has allowed for assessment rates to be reduced.
The 2019 assessment rate reduction will be the seventh reduction for the WCATF, and the ninth for the SDTF.
DFS said other factors that contribute to a healthy Workers’ Compensation Administration Trust Fund (WCATF) that enable the CFO to reduce the assessment rate, include but are not limited to:
- Division of Worker’s Compensation, Bureau of Compliance enforcement actions;
- Increase of exemption applications processed due to a healthy economy;
- Other regulatory fines, fees and infrequent wind-falls for the WCATF;
- Decrease in COLA payments to seriously injured claimants.
These expected costs reductions come on the heels of the Florida Office of Insurance Regulation approving a 1.8 percent decrease in workers’ comp rates, effective June 1, 2018. The decrease, filed by the National Council on Compensation Insurance (NCCI), was attributed to a change in the profit and contingency factor thanks to the recently-passed Tax Cuts and Jobs act. DFS estimated the change could equal a $79.5 million savings for Florida businesses.
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