Florida 2014 Workers’ Compensation Annual Report Shows Competitive Market
Dec 23, 2014
Florida’s workers’ compensation market is competitive, well-capitalized and robust, with lower amounts of loss, according to the 2014 Workers’ Compensation Annual Report (“Report”) released by the Florida Office of Insurance Regulation (“OIR”) to the Florida Legislature today, December 23, 2014.
To view the Report, click here.
In the Report, the OIR noted that six of the market’s 10 largest writers are now based in Florida writing 28 percent of the premiums, up from four the year before.
The private market writes more than 95 percent of workers’ compensation in the state, making Florida one of the most competitive markets in the nation and one of only two that do not rely largely on state-created residual market entities.
The OIR analysis found that Florida’s workers’ compensation market is still buoyed by 2003 legislative reforms, which resulted in a 64.7 percent reduction in rates by 2010, with Florida going from having the highest rates in the country in 2000 to 40th highest in 2010. Rate increases over the past several years caused the state to slip to 28th highest this year.
This year saw an overall reduction of workers’ compensation rates by 5.2 percent, effective in January 2015–the first rate reduction in four years.
Also, a long-sought revision in the Florida Hospital Reimbursement Manual updated the reimbursement schedules for hospital inpatient and outpatient services, resulting in a 0.8 percent rate decrease.
Underwriting performance, an important measure of an insurance market is strong and getting even stronger, the Report indicates. Florida’s loss ratios–the amount of direct loss relative to direct earned premium–are second only to Texas among the “big states.” The Report also showed positive movement since last year among different classes of workers in loss costs, which are defined as the amount of the rate used to pay actual claim expenses.
While costs for physicians’ services and supplies in Florida are below the national average, the Report said that costs for drugs, hospital inpatient, hospital outpatient and ambulatory surgical center services continue to be higher in Florida than the national average. It also states that substantial rate reductions would occur if those costs were brought in line with other states. Likewise, further reform on drug repackaging by physicians would help lower costs, the OIR suggested.
The Report points out concerns that Florida’s significant gains in lowering workers’ compensation costs from 2003-2010 could be further eroded through the outcome of several pending court cases that could negatively affect future rates.
“The National Council on Compensation Insurance, which files rates on behalf of 254 workers’ compensation insurers in Florida, made it clear at our public rate hearing in October that these court cases could potentially increase costs,” said Florida Insurance Commissioner Kevin M. McCarty. “Indeed, they could affect the system itself and Florida’s ability to retain its important economic competitive advantage in this area.”
The OIR is required by law to annually evaluate and report on Florida’s workers’ compensation market. For more information, please visit the OIR’s Workers’ Compensation Web page.
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