Florida Workers’ Compensation Writers Seek Rate Hike Again

Florida workers’ compensation insurers are seeking a statewide average 6.1 percent rate hike. If approved, the filing by the National Council on Compensation Insurance (NCCI) would mark the third consecutive increase, following a 7.8 percent jump in 2011 and 8.9 percent in 2012.

While there have been hikes the past few years, the overall trend of rates in the state has been down for the past decade.

If approved, the new rates would take effect Jan. 1, 2013.

If approved as filed, all five major classifications would see an average increase. Manufacturing classes would increase by an average 4.8 percent, contracting classes by 7.4 percent, and office and clerical classes by 4.3 percent. Goods and service classes would increase by 6.7 percent while miscellaneous classes would increase by 5.6 percent.

According to NCCI documents, the proposed 6.1 percent increase is being driven by a 6.8 percent increase in the experience and trend portion of the filing.

NCCI noted that there are three factors affecting the state’s recent loss experience including the fact that after nine years of decreases in claims frequency, the claims frequency rate has increased by an average 4.5 percent in 2009 and 2010.

Additionally, the average indemnity cost per case that is in excess of wage growth has remained relatively flat since 2006. At the same time, the average medical cost per case in excess of wage growth has increased since 2006.

The industry says that the savings produced by the 2003 workers’ compensation reforms have been exhausted.

NCCI said that “it has been necessary to adjust the very optimistic outlook, or trend, underlying rates to reflect that significant ongoing experience improvements are no longer occurring and are no longer expected.”

Still, the 2003 reforms did produce savings. Since 2003 the average loss cost has gone from $2.62 per $100 of payroll to a low of $1 per $100. Taking into effect the current filing, the average loss cost would be $1.14 per $100 of payroll, which brings Florida in line with other Southeast states.