Tag: Florida Office of Insurance Regulation

Help is on the way in Florida

Not much good news has come out of the state of Florida for the past month. If there ever was a state that needed some good news it is the state of Florida. Well yesterday the business community got some much needed relief in the form of an announcement by the National Council on Compensation Insurance (NCCI). The announcement recommends the Florida Office of Insurance Regulation (FLOIR) to decrease Florida Workers Compensation Insurance Premiums by 9.6%.

Florida Workers Compensation Insurance

A 9.6 % rate decrease has been proposed by NCCI for Florida Workers Compensation Insurance Premiums.

The rate decreases on Florida Workers Compensation Insurance will not be across the board. Some industries will see larger increase than others. According to FLOIR and first reported by the Insurance Journal rate level changes by industry group are as follows:

  • Manufacturing: -10.3 percent
  • Contracting: -6.9 percent
  • Office and Clerical: -11.3 percent
  • Goods and Services:-10.4 percent
  • Miscellaneous: -8.1 percent

This is good news for business owners in Florida because, the workers compensation system in Florida has been in flux for more than a year.  About a year ago NCCI recommended a 17.1 % increase on workers comp rates last August.  The amount of increase that eventually went through was 14.5 %. This increase was in response to three main issues.  Those issues were 2 court cases and a state senate bill (Castellanos vs. Next Door Company, Westphal v. City of St. Petersburg and Senate Bill 1402).  

Castellanos vs. Next Door Company was a court case that involved Marvin Castellanos who was an injured employee who sued Next Door Company. This court decision ruled invalid a previous court ruling from 2009 which put in place a mandatory attorney fee schedule.  The overturn of this ruling meant judges no longer have to stick to the mandatory fee schedule and now can award additional compensation for attorney’s fees.   Insurance carriers anticipated this to cause them to pay out more in the future and resulted in additional premiums.

Westphal v. City of St. Petersburg was a case that found  the 104-week statutory limitation on temporary total disability benefits to be unconstitutional.  The Florida Supreme Court reinstated a 260-week limitation.  This Increased the amount of time an injured employees will get partial salary benefits by an additional 156 weeks.  This additional 156 weeks of coverage caused the OIR to approve an average increase of 2.2 percent statewide.

Senate Bill 1402 caused the additional 1.8 percent increase on premium for workers’ compensation was related to updates within the Florida Workers’ Compensation HCPR Manual. This increase was approved as part of Senate Bill 1402.

The decrease proposed this week reflects frequency and experience data that pre-dates the Castellanos and Westphal decisions. Data regarding the impact of Castellanos and Westphal will continue to mature and will more than likely be reflected in future rate filings. For now Florida will experience a much needed decrease in workers compensation insurance premium.

 

Florida faces another new twist.

The workers’ compensation market in the state of Florida has faced some turbulent times over the last year.  More shocking news came the Wednesday before Thanksgiving in the form of a ruling by Leon County Circuit Court.   Judge Karen Gievers released the shocking news in the form of a ruling in a case that claims the National Council on Compensation Insurance (NCCI) and the Florida Office of Insurance Regulation (OIR) did not follow proper procedure under the states Sunshine Law.

The case that is challenging this ruling was brought before the court by James Fee.  Fee is a Miami attorney who represents injured workers. He claimed, and Judge Gievers agreed, that NCCI was in violation of the Sunshine Laws by holding “multiple, non-public, secret meetings” internally and with the OIR over the rates.  Representatives with NCCI and the OIR claim they have complied with the Sunshine Laws.

How much was the rate increase in Florida?

The total rate change was an in crease 14.5% for workers compensation insurance coverage, on average throughout the state of Florida.

What cause the rate increase?

The rate increase was the result of two court cases, Castellanos v. Next Door Company and Westphal v. City of St. Petersburg, and updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual mandated by Senate Bill 1402.

Castellanos vs. Next Door Company

Marvin Castellanos was an injured employee who sued Next Door Company. This court decision ruled invalid a previous court ruling from 2009. The previous ruling put in place a mandatory attorney fee schedule.  THe overturn of this ruling means judges no longer have to stick to the mandatory fee schedule and now can award additional compensation for attorney’s fees.  The judges now use the fee schedule as a starting point.  This will cause the amount judges award to injured employees to increase dramatically because there is no longer a cap on what the judges can recommend for compensation to the injured employees attorney fees.  This ruling resulted in the Florida Office of Insurance Regulation (OIR) approving an increase of 10.1 percent on average statewide.

Westphal v. City of St. Petersburg

The Westphal vs. City of St. Petersburg case found the 104-week statutory limitation on temporary total disability benefits to be unconstitutional.  The Florida Supreme Court reinstated a 260-week limitation.  This Increased the amount of time an injured employees will get partial salary benefits by an additional 156 weeks.  This additional 156 weeks of coverage caused the OIR to approve an average increase of 2.2 percent statewide.

Senate Bill 1402

The additional 1.8 percent increase on premium for workers’ compensation was related to updates within the Florida Workers’ Compensation HCPR Manual. This increase was approved as part of Senate Bill 1402.

Workers’ Compensation Rates Could be on the Rise in Florida

Workers’ compensation insurance rates in Florida could be on the rise. As reported in outlets such as the Miami Herald, the Orlando Sentinel and the Insurance Journal.  The National Council on Compensation Insurance (NCCI) filed for a 17.1 rate increase to take affect August 1st. The bulk of the recommended rate increase is due to an expectation that attorneys’ fees will increase the Florida workers comp landscape due to a recent Supreme Court Ruling.

Florida Workers Comp Insurance System

The increased rates are unfortunate in that Florida workers comp insurance is already a significant expense to business owners. Furthermore, increased legal fees should not be a necessary expense to add to the system. Increased education, safety devices, adoption of return to work programs and decreased prescribing of opiates are all trends within the industry which are helping to control workers’ comp rates. Thus, while this appears to be a blow to work comp rates in the state, there are some trends that are working to reduce rates as well (which is a challenge given the ever increasing cost of medical care in the United States).

Another factor which drives Florida workers comp rates higher is the existence of fraud and other scams. Florida is one of the highest states in the country for fraudulent work comp claims, especially in the Miami area. Additionally, as demonstrated in this article from the Insurance Journal, scams to artificially reduce workers’ comp premium are prevalent in Florida. Scams and fraud unfairly increase work comp rates for business owners that are trying to work within the system.

Florida is what is known as a rate mandated state for workers’ compensation insurance. Wisconsin and several other states are set up like this as well. This means workers’ comp rates are set by the state. Work comp rates vary by employee classification and experience modifications, but they are otherwise set by the state. This is in contrast with most states where insurance carriers file rates and there is different pricing between carriers. Florida’s workers’ compensation rates are just below average compared to other rates in the most recently published national study.

Given Florida is a rate mandated state, business owners may wonder what they can do to reduce workers’ compensation rates. In Florida, a small number of carriers, such as Employers, have file with the state of Florida to offer a 5% discount from the rates set by the state of Florida. On the other hand, there is a consent to rate, which can be offered by certain carriers in Florida for difficult to quote businesses. This means a carrier offers workers comp insurance, but they are allowed to charge up to 25% more than the rates set by the state of Florida if an insured signs off on this pricing. If rates can’t be improved, business owners may have better payment options available such as pay as you go insurance. Furthermore, better safety practices leading to lower claims (and thus a lower experience modification factor) are always a way business owners can decrease their work comp insurance costs. Most within the industry believe the Florida legislature will make sweeping changes to the workers compensation system at some point in 2017 or 2018.  So business owners can rest assured that in some way, help is on the way in Florida.