National Council on Compensation Insurance: Florida Has Reached New Workers’ Comp Post-Reform Baseline

At a Florida Office of Insurance Regulation (“OIR”) public hearing held yesterday, October 5, 2010, National Council on Compensation Insurance (“NCCI”) representatives explained that, after many years of decreasing workers’ compensation insurance rates, Florida has reached its “new, post-reform baseline,” and that an 8.3 percent rate increase is the “bare minimum needed at this time.”

NCCI executives, along with their actuaries and economists, participated in the hearing, which was chaired by Florida Insurance Commissioner Kevin McCarty.  Other OIR officials present included Deputy Insurance Commissioner Belinda Miller, Deputy Director Mike Milnes, and OIR attorneys Jim Watford and Steve Fredrickson.   

Florida has effected eight workers’ compensation rate decreases since the State’s substantial legislative reforms of 2003 and, if approved, yesterday’s recommended 8.3 percent increase would be the first since that time. 

In support of the proposed increase, NCCI representatives explained the various factors and components involved in calculating the 8.3 percent, of which “change in trend” was described as the key element.   This factor was then broken down into indemnity severity, and medical and claim frequency.  NCCI representatives acknowledged that, while 8.3 percent is significant, any further reductions in the pending fillings could create a “large hole” for next year. 

In his testimony, Florida Insurance Consumer Advocate Actuary Steve Alexander recommended that the OIR disapprove the rate increase and opined that many Florida businesses will not be able to survive it.  Rather, a further decrease–accomplished through individual carrier rate filings–would promote price competition through the expected ensuing rate reductions.

OIR officials responded that the agency does not have the statutory authority or manpower to do handle so many rate filings. 

A Sarasota roofer testified that a rate increase would make competition extremely difficult in the marketplace, since higher rates would render his business unable to compete with unlicensed roofers or secure large contracts.  Year-to-year rate stability is paramount, he explained.

At the conclusion of the meeting, the OIR officials stated that they would carefully review and consider the comments from the hearing and the related materials provided.  No further comments on the matter will be received.

To view the meeting agenda, click here.

Should you have any comments or questions, please contact Colodny Fass.