Florida Formalizes Seventh Consecutive Workers' Comp Cut

Florida's seventh consecutive drop in workers' compensation rates will go into effect Jan. 1, 2010, after the state Office of Insurance Regulation formally approved the new levels.

Insurance Commissioner Kevin McCarty issued a final order approving the filing from the National Council on Compensation Insurance. McCarty previously announced his backing of the 6.8% average statewide rate cut, but stayed the final order pending a resubmission by NCCI with revisions of specific methodologies (BestWire, Oct. 15, 2009). NCCI resubmitted the filing Oct. 19, according to the OIR.

The rates will apply to the voluntary market for all new and renewal workers' compensation insurance policies written in the state.

NCCI cited both a lower frequency of claims and a lower average cost per claim in making its 6.8% determination. 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 OIR (BestWire, Aug. 24, 2009).

The overall average impact, per industry group, will be: contracting, -10.8%; goods and services, -3.8%; manufacturing, -4.7%; office and clerical, -6.2%; and miscellaneous, -6.7%.

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.

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 BestLink, 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%.