NCCI December 16 Rate Hearing Report
Dec 16, 2008
The Florida Office of Insurance Regulation (“OIR”) held a public hearing on December 16, 2008 to review and consider the National Council on Compensation Insurance (“NCCI”) workers’ compensation insurance rate filing. Representatives from the OIR included Florida Insurance Commissioner Kevin McCarty, Deputy Insurance Commissioner Belinda Miller, Assistant General Counsel Steve Fredrickson, Property and Casualty Deputy Director Mike Milnes and Actuary Jim Watford.
Commissioner McCarty opened the meeting by stating that NCCI has requested an 8.9 percent rate level increase in the voluntary workers’ compensation market, which equates to a total of $240 million in premium. In its November 14 rate request, NCCI estimated that the full impact of the Murray decision will be an increase in overall Florida workers’ compensation costs of 18.6 percent. To view the November 14 NCCI rate filing, click here.
Steve Fredrickson provided a summary of the Florida Supreme Court’s Emma Murray v. Mariner Health decision, which struck down the statutory fee structure created by House Bill 50A in 2003. It is generally agreed that the Court’s holding will result in increased workers’ compensation rates.
An NCCI actuary and other representatives provided testimony on workers’ compensation filings, including cost trends based on attorneys’ fees. Since the passage of House Bill 50A, workers’ compensation rates have significantly decreased, particularly relating to indemnity costs. Claims frequency also has decreased.
The NCCI representatives noted attorney fees are the single largest factor in determining the rate increase, which was challenged by the OIR representatives.
Florida Insurance Consumer Advocate Actuary Steve Alexander testified that most insurers will be able to absorb the increased costs associated with the NCCI filing. He also commented that the NCCI “one-size-fits-all” approach is not appropriate.
According to Mr. Alexander, workers’ compensation rates decreased because of factors not merely limited to attorney fee reforms. For example, unemployment has increased and the housing market has decreased. He concluded by saying the Insurance Consumer Advocates Office does not support the rate filing.
Employer representatives testified that increased attorney involvement in workers’ compensation claims is expected to cause claims to increase. Thus, in light of the Emma Murray decision, an 18.6 rate increase in insufficient.
Commissioner McCarty concluded the meeting by stating that the OIR will carefully review and consider the comments from the hearing and related materials provided. The record will remain open for comment for 10 days.
Should you have any comments or questions regarding this matter, please feel free to contact Colodny Fass.
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