Florida Office of Insurance Regulation Holds Public Rate Hearing On National Council on Compensation Insurance (NCCI) Workers’ Compensation Rate Increase Request of 6.1 Percent
Oct 4, 2012
The Florida Office of Insurance Regulation (“OIR”) held a public rate hearing today, October 4, 2012, to discuss the National Council on Compensation Insurance’s (“NCCI”) proposed statewide average rate increase of 6.1 percent for its workers’ compensation line of business.
The hearing was called to order by Florida Insurance Commissioner Kevin McCarty, who noted that, if this rate filing were approved, it would effect an overall increase of $111 million in workers’ compensation premium and represent the third annual increase in rates.
Florida’s 2003 workers’ compensation reforms led to a 64 percent decrease in rates. If the latest rate filing from NCCI were approved, the application of 2003 reforms would still reflect a total savings of 56 percent.
NCCI’s Lori Lovgren outlined the cost drivers in the rate filing. These included claim frequency, average claim severity and repackaged drugs. She stated that NCCI’s most recent estimate of the savings that would be realized if the cost of drug repackaging was contained is 1.1 percent. This is based on 2011 data.
Kirt Dooley, an NCCI actuary, described the components of the rate filing, noting that the 1.9 percent increase in loss experience and the 4.8 percent increase in trend were consistent with previous years’ filings. The loss experience was based on 2009 and 2010 policy year data. The rate filing did not contain a change in the profit and contingency factor. Mr. Dooley noted that rates should stabilize going forward.
Florida Insurance Consumer Advocate Robin Westcott testified that her office also will review NCCI’s rate filing. She stated in her initial review that she feels she agrees with NCCI’s conservative assumptions.
Ms. Westcott also discussed legislation passed during Florida’s 2012 Legislative Session to combat workers’ compensation fraud in the money services business.
On the subject of drug repackaging, she noted that some carriers have changed their related contract provisions, which may help to drive costs down.
Rob Springer, President-Elect of the Florida Roofing, Sheet Metal and Air Conditioning Contractors Association, stated that 2012 legislation relating to the money services businesses was very important, and that his association would still like to address drug repackaging in the future. Mr. Springer also noted that fraud relating to professional employer organizations is growing and needs to be addressed.
Joseph Paduda, President of CompPharma, an association of pharmacy benefit managers, spoke about cost controls associated with drug repackaging.
With no further testimony, the meeting was adjourned.
Click here to review a copy of the hearing agenda.
Click here to read a statement by the OIR released on August 23, 2012 regarding this filing.
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