NCCI Proposes Decrease to Florida Workers’ Comp Rates

The Florida Office of Insurance Regulation said today that it has received the 2016 Florida workers’ compensation rate filing by the National Council on Compensation Insurance (NCCI), which proposes a statewide average premium decrease of 2.2 percent. This includes a statewide average rate decrease of 1.9 percent and a reduction of the fixed expense cost applicable to every workers’ compensation policy in Florida from $200 to $160. The new rates would become effective Jan. 1, 2016.

“The Florida Office of Insurance Regulation said it will review the filing to ensure the proposed changes are not excessive, inadequate, or unfairly discriminatory and evaluate its potential effects on the insurance marketplace and employers, who are required by law to carry this insurance on their employees. A public rate hearing will be conducted in October. The Florida Office of Insurance Regulation said the state’s workers’ compensation market remains one of the most competitive, efficient, and affordable, thanks in large part to the 2003 legislative reforms. Workers’ compensation rates are currently 58 percent lower than they were in 2003.

NCCI, a licensed rating organization authorized to make rate filings on behalf of insurers in Florida, provided the following key observations in its Florida rate filing:

- Loss experience in the two most recently available policy years (2012 and 2013) shows overall improvement;

- Indemnity and medical trends have declined, driven in part by a decrease in frequency;

- Loss adjustment expenses have decreased slightly, but remain higher than the countrywide average; and

- Interest rates have remained near historic lows for several years, which has prompted NCCI to request a higher profit and contingency provision of 4 percent.

If approved as filed, the overall average rate level change for each industry group will be as follows: -4.7 percent for manufacturing; +1.0 percent for contracting; -5.1 percent for office and clerical; -1.6 percent for goods and services; and -1.8 percent for miscellaneous. NCCI said Florida’s workers’ compensation insurance rates, overall, remain stable and commensurate with other southeastern states. However, NCCI added, rates could increase, perhaps dramatically, depending on decisions issued in a couple of pending court cases. These cases include: Westphal v. City of St. Petersburg; Castellanos v. Next Door Company; and Florida Workers Advocates v. State of Florida (if accepted by the Florida Supreme Court). NCCI said it is monitoring these cases, and once final, will be prepared to issue estimated cost impact analyses, and if necessary, submit amendments to the pending rate filing or submit future rate filings.

Based on the filing, Florida’s overall workers’ compensation rates would fall for the second year in a row in 2016. In November 2014, the Florida Office of Insurance Regulation approved an overall decrease of 5.2 percent in workers’ compensation rates in Florida for 2015, following its disapproval of NCCI’s original filing requesting a 3.3 percent overall decrease in rates. Last November’s approved rate decrease, the state’s first reduction in four years, became effective for new and renewal policies on Jan. 1, 2015.