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Florida’s Workers’ Comp Rate Cut 10%

Recently, an order to decrease workers’ comp rate levels and premium levels was approved. The order, which goes into effect on January 1, 2018, affects both new and renewal workers’ compensation policies. The move is expected to help businesses across the state.

Workers’ Compensation In Florida

Florida’s workers’ compensation system provides no-fault coverage. The system exists to protect those who are injured while working and provide them access to the medical benefits necessary to again make them whole. If a worker has missed work for more than eight days as a result of an injury, they are also entitled to lost wages benefits.

Workers’ compensation is not cheap for Florida businesses. In 2016, employers in the state paid $3.8 billion in workers’ compensation premiums, up a billion dollars since 2012.

Approving The Order

The order was issued by Florida Insurance Commissioner David Altmaier. It granted approval to the National Council on Compensation Insurance (NCCI) to decrease the overall statewide rate level by 9.5%, and the premium level by 9.8%. NCCI works on behalf of insurance companies to file recommended rates. It submits its rates annually to the state of Florida for approval.

Altmaier said, “I am pleased that today’s approval of NCCI’s rate filing will translate into a decrease in workers’ compensation rates for many Florida employers. The Office will continue to monitor the marketplace and support reforms that provide additional cost savings for Florida’s businesses.”

The executive director of the National Federation of Independent Business-Florida, Bill Herrle, said, “Any rate reduction is welcomed news. We have the confidence in the insurance commissioner that the rate reduction is merited.”

Balancing The Scales

The decrease is well-welcomed by Florida’s businesses, who saw an increase of 14.5% last year. Two recent Supreme Court decisions led many businesses to believe that another rate increase was coming this year.

Rates are typically reflective of the prior year, however. This means that the effects of the Supreme Court decision may not be seen until next year. NCCI said that this year’s announced decrease was a result of declining loss ratios and a significant reduction in the frequency of lost-time claims between 2001 and 2015.

While a decrease is welcomed this year, that feeling will quickly subside if rate increases are announced again next year. Policymakers must work to stabilize rates, which will make it easier for businesses to handle insurance costs. Fortunately, it seems as though lawmakers are aware of this, and are working to solve the problem.

Jimmy Patronis, Florida’s Chief Financial Offer, said, “I’m pleased to see the cost of business going down, and as the Legislature looks at our workers’ compensation system, I will be working with them on proposals to lock in these lowering rates.”

When approving the rates, Altmaier also ordered NCCI to provide a quantitative analysis with future recommended rate filings. The analysis would explain how the workers’ comp system is impacted by attorney-fee caps, and what effect elimination of these caps could have on the system.