OIR News: FLORIDA INSURANCE COMMISSIONER MCCARTY APPROVES RATE DECREASE FOR WORKERS’ COMPENSATION

 

The Florida Office of Insurance Regulation (“OIR”) has just released the following:

 

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-NEWS FROM THE FLORIDA OFFICE OF INSURANCE REGULATION-

 

For Immediate Release:

Contact:  

Ed Domansky OR Tom Zutell
850/413-2515

 

FLORIDA INSURANCE COMMISSIONER MCCARTY APPROVES RATE DECREASE FOR WORKERS’ COMPENSATION

TALLAHASSEE, Fla. (10/31/2007) – Florida Insurance Commissioner Kevin McCarty announced today that he has approved the National Council on Compensation Insurance’s (NCCI) amended rate filing for workers’ compensation insurance rates. Commissioner McCarty ordered the NCCI Oct. 22 to make an amended filing to reduce the rates of workers’ compensation insurance in Florida by 18.4 percent, a further reduction from the originally proposed 16.5 percent decrease. The new rate will become effective Jan. 1.

The final, 18.4 percent reduction is estimated to produce a savings of over $700 million for Florida employers. McCarty had asked the NCCI to amend the filing citing disagreements with the methodology NCCI used to calculate the profit factors and trend factors. Trend factors incorporate changes in wages, paid losses and claim frequency.

“The extra reduction in rates will mean a significant amount of added savings to be passed on to Florida’s employers,” said McCarty.  “The National Council on Compensation Insurance has recognized that the cost of doing business in Florida has become less expensive and has filed appropriate rates to reflect those savings.”

The overall average rate impact at an industry group level will be as follows:

 

Industry Group                1/1/08 Filing             Cumulative 10/1/03–1/1/08

Manufacturing               -17.5%                          – 47.6%

Contracting                   -17.9%                          – 52.0%

Office and Clerical         -21.3%                          – 50.8%

Goods and Services       -19.0%                          – 51.5%

Miscellaneous                -15.2%                          – 53.0%

TOTAL                          -18.4%                          – 51.4%

 

Prior to legislative reforms in 2003, Florida consistently ranked No. 1 or No. 2 in the country for the highest workers’ compensation rates; however, post-reform, Florida has dropped out of the top 10 rankings. This 2008 change could drop Florida as far as the mid-twenties depending on the rate changes in the other states.

The approval marks the fifth consecutive drop in rates since the Legislature passed the reforms; and with this change, the cumulative overall statewide average rate decrease since 2003 is more than 50 percent. The 18.4 percent decrease is the largest one-year decrease in workers’ compensation rates on record for Florida. The five filings since reform represent the largest consecutive cumulative decrease in Florida rates.

The NCCI produces and files rates for insurers in many states. It said that the rate decline was primarily due to a significant drop in claims frequency and a reduction in the costs of claims.

The 2003 law instituted provisions for enhanced fraud compliance and revised permanent and temporary disability definitions. It also set new parameters for attorney and physician compensation and improved dispute resolution procedures, in addition to making many other changes to the system. Further, the Department of Financial Services Division of Workers’ Compensation has significantly stepped up its compliance efforts to ensure that more employers are buying workers’ compensation insurance to protect their employees, which has added premium to the system.

A public rate hearing on the filing was held Oct. 8 by the Office of Insurance Regulation. Video of the Workers’ Compensation Rate Reduction Public Hearing <http://www.floir.com/pcfr/RateHearingVideo.htm> is available on the Office’s Web site.

A copy of the order approving the filing from the NCCI <http://www.floir.com/pdf/KMBT35020071031084854.pdf> is available for viewing online.

 

About the Florida Office of Insurance Regulation

The Florida Office of Insurance Regulation (Office) has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. Business units within the Office are organized based on regulatory expertise and include the areas of life and health, property and casualty, specialty lines and other regulated insurance entities. It is within the Office that the mission of public protection is implemented through regulatory oversight of insurance company solvency, policy forms and rates, market conduct performance and new company entrants to the Florida market.

For more information about the Office, please visit www.floir.com <http://www.floir.com/>. If you would like to review and compare homeowners insurance rates in Florida, go to www.shopandcomparerates.com <http://www.shopandcomparerates.com/>.

 

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