Florida OIR Orders Further Cuts in WC Rates

Florida Insurance Commissioner Kevin McCarty announced that he has disapproved the National Council on Compensation Insurance’s (NCCI) Aug. 27 rate filing for workers' compensation insurance rates that would become effective Jan. 1.

Commissioner McCarty has ordered the NCCI to make an amended filing to reduce the rates of workers’ comp insurance in Florida by 18.6 percent. The order reflects an additional 4.5 percent rate reduction from the NCCI’s initially requested 14.1 percent decrease. The further reduction in rates will save Florida employers more than $610 million.

In requesting the NCCI to amend its filing, McCarty cited disagreements with the methodology the NCCI used to calculate the profit factors and trend factors. Trend factors incorporate changes in wages, paid losses and claim frequency.

Prior to the legislative reforms, Florida consistently ranked No. 1 or No. 2 in the country for the highest workers’ comp rates; however, post-reform Florida has dropped out of the top 10 rankings.

The amended rate decrease will mark the sixth consecutive drop in worker’s comp rates since the Florida Legislature passed the reforms in 2003; and 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’ comp 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’ comp 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.