National Council on Compensation Insurance Rate Filing Public Hearing Report: October 6
Oct 6, 2009
On October 6, 2009, the Florida Office of Insurance Regulation (“OIR”) held a public hearing on the most recent workers’ compensation insurance rate filing by the National Council on Compensation Insurance (“NCCI”). To view the hearing agenda, click here.
The filing represents a 6.8 percent overall rate decrease, which is estimated to result in policyholder savings of approximately $166 million. If approved, the filing would represent the seventh consecutive rate decrease attributable to Florida legislative changes effected in 2003 and 2009.
Florida Insurance Commissioner Kevin McCarty presided over the hearing and provided brief opening remarks.
Several witnesses testified on the filing, including Lori Lovgren from NCCI, who gave a presentation on the overall state of the Florida workers’ compensation market. She noted that rates have decreased 63.2 percent from October 1, 2003 through January 1, 2010, and that change in claim frequency is the largest contributing factor to the decreases. She also explained that House Bill 903, which was signed into law after being passed by the 2009 Florida Legislature, “fixed” the landmark 2008 Murray v. Mariner Health decision and enabled NCCI to file a rate decrease, as opposed to the rate increase that would have been filed if HB 903 had not passed.
Other NCCI officials and actuaries testified that claim frequency is beginning to flatten, and that the selected loss ratio trends for indemnity and medical costs are negative seven (-7) percent and negative four (-4) percent, respectively. The recommended change in the profit and contingency factor is from one (1) to 2.5 percent.
Steve Lotanzio, an actuary, testified about his analysis of the NCCI filing in which he interpreted the loss development and trend analysis from a different perspective that resulted in his recommendation that the rates should be even lower.
NCCI Chief Economist Harry Shuford provided a financial analysis of NCCI’s filing. He noted the profit and contingency factor has changed, largely due to improvements in the financial markets.
Milliman Economic Consultant David Appel reviewed the NCCI filing from an economic standpoint and said that the 2.5 percent profit and contingency factor is modest and very reasonable.
During public testimony, a representative of the Florida Association of Roofing Professionals testified that NCCI’s proposed rates are too low, which will discourage insurers from issuing policies. He recommended that roofing industry rates should be frozen and a stable rate should be determined.
OIR Deputy Commissioner Mike Milnes provided closing remarks, during which he noted that the filings will be carefully considered and that a timely decision can be expected.
The record will remain open until October 9, 2009 for additional written comments.
Should you have any questions or comments, please contact Colodny Fass.
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