Florida OIR Backs Work Comp Rate Increase

Florida Insurance Commissioner Kevin McCarty has advised the National Council on Compensation Insurance (NCCI) 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 NCCI’s Nov. 14 rate filing in which it was seeking 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 eliminates the statutory caps on attorney fees that were imposed as a result of the 2003 reforms under SB 50A and will enable claimant attorneys handling workers’ comp claims to collect increased fees for their services.

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 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’ comp 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 comp 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, Monday’s 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.