Workers' Comp Rate Cut Approved in Florida

Florida Insurance Commissioner Kevin McCarty approved a 6.8% average statewide decrease in workers' compensation rates, the state's seventh consecutive decline.

As filed by the National Council on Compensation Insurance, the cut will bring the cumulative drop since the adoption of reforms in 2003 to 63.2%. Payments by Florida businesses will lower by more than $166 million, according to the Office of Insurance Regulation (BestWire, Aug. 24, 2009).

The order will not be final until NCCI resubmits its filing to account for changes in specific methodologies requested by McCarty. Technically, McCarty rejected the original filing but will approve the revised version when it is prepared in a few weeks, the insurance office said.

The new rates, which would apply to the voluntary market for all new and renewal workers' compensation insurance policies written in the state, will go into effect Jan. 1, 2010. NCCI cited both a lower frequency of claims and a lower average cost per claim in making its determination.

In June, McCarty rolled back a 6.4% rate increase for workers' compensation insurance rates, reinstating an 18.6% rate cut, after Gov. Charlie Crist signed legislation restoring the 2003 cap on attorney fees in workers' compensation cases. H.B. 903 banned hourly fees in workers' compensation cases and returned the state to a sliding contingency scale (BestWire, May 7, 2009). The law reversed the effect of a 2008 Florida Supreme Court ruling in Emma Murray vs. Mariners Health, which reinstated hourly attorneys' fees. The court found the previous statutory language to be ambiguous.

"If it were not for this legislation, the workers' compensation industry in Florida would likely have proposed rate increases instead of decreases in 2010," McCarty said in a statement.

Lori Lovgren, NCCI state relations executive for Florida, said the proposed reduction reflects both a lower frequency of claims and a lower average claim cost (BestWire, Aug. 24, 2009).

According to a recent A.M. Best Statistical Study, the top 25 U.S. writers of workers' compensation insurance saw an average 15% fall in direct premiums written, slightly worse than the 14.4% recorded for all workers' compensation insurers. The A.M. Best Special Report, "Workers' Compensation: How Bad Will It Get?" predicted the cumulative impact of the economic downturn, challenging market conditions, increasing loss cost trends and other factors to continue impacting the line through 2009 and into 2010 (BestWire, Sept. 14, 2009).

The top five workers' comp insurers in Florida in 2008, according to A.M. Best Co. state/line data, were: Liberty Mutual Insurance Cos., with a 21.7% market share; American International Group Inc., 8.3%; Zenith National Insurance Group, 6.7%; FCCI Insurance Group, 5.7%; and Zurich Financial Services NA Group, 5.6%.