Florida's workers' compensation market remains competitive and affordable, and with a few exceptions, coverage is available to employers, according to an annual report from the state's regulator.
In its "2010 Workers' Compensation Annual Report," which is mandated by statute, the Florida Office of Insurance Regulation (OIR) said, "Based on the number of entities and market shares of actively writing companies in the market, the number of entities entering and exiting the market, and the financial performance of the entities in the market, Florida's workers' compensation market can readily be characterized as a competitive market."
The report stated that Florida is served by a large number of independent insurers, but none of the firms have "sufficient market share to exercise any meaningful control over the price of workers' compensation insurance."
Additionally, the OIR said that of the six most populous states, "Florida is the largest market dominated by private market insurers, rather than a state-sponsored residual market." The residual market is small, the OIR said, meaning that the voluntary market is absorbing the majority of the demand.
According to the report, out of the six largest states, Florida ranked fourth in number of different insurers writing workers' compensation insurance in 2009 with 255 companies. The top three states with respect to number of insurers were Illinois (311), Pennsylvania (305) and Texas (268). Behind Florida were New York (244) and California (212).
On availability in the state, the report noted, "The majority of complaints about not being able to get coverage in the voluntary market come from small employers, new businesses and construction employers." In the aggregate, though, availability does not seem to be a significant concern, the report said.
Speaking to pricing, the report stated that legislative reforms in 2003 have led to a 61.9 percent decline in rates since that time. Before the reforms, the report said that Florida consistently had either the highest or second highest rates in the country. By Jan. 1, 2010, Florida had the 12th lowest rates in the country.
The OIR recently rejected an 8.3 percent workers' comp. rate increase for 2011 but later approved a 7.8 percent increase.
Regarding written premiums, Florida ranked sixth in 2009 among the six largest states with $1.7 billion. California was first with $6.6 billion. Premium has declined since 2006, when it was $3.74 billion. The OIR report said the economic downturn has impacted written premium, but it has also declined because of the significant rate reductions over the years.
Florida was also sixth in premium per entity, at $6.7 million. California ranked first in this category as well with $32.6 million. The OIR said, "This comparison suggests there are more 'small' competitors in Florida than are present, on average, in the other most populous states, although except for California, the data is comparable."
Of these six states, New York, California, Texas and Pennsylvania saw their state-sponsored insurer grab the largest market share in their respective states in 2009. In Florida and Illinois, the OIR said, a private insurer held the most market share. In Florida, Bridgefield Employers Insurance Co. held this distinction, writing 13.1 percent of the state's workers' comp business.
After Bridgefield, the largest writers of Florida workers' comp business based on written premiums were FCCI Insurance Company, Zenith Insurance Company, Florida Retail Federation Self Insurance Fund, FFVA Mutual Insurance Company, Twin City Fire Insurance Company, Amerisure Insurance Company, Insurance Company of the State of PA, Technology Insurance Company, and Zurich American Insurance Company.
All of the top 10 companies are property and casualty companies organized as stock companies with the exception of Florida Retail Federation SIF, which is organized as a self-insurance fund. Four of the top ten are Florida domestics, and one--Insurance Company of the State of PA--is a member of the AIG insurance group.
Sam Miller, executive vice president of the Florida Insurance Council (FIC), agreed with the OIR's conclusions that the workers' comp market in Florida is healthy. The 2003 reforms, he said, have had "just a dramatic, positive impact."
On the horizon, Mr. Miller said the FIC is looking to address an issue where certain workers' comp providers buy medicine in bulk and then repackage and distribute it at marked up prices. A bill in 2010 prohibited such action, he said, but it was vetoed by former Gov. Charlie Crist. Mr. Miller said the FIC will try to get action on similar legislation this year.
Aside from that, he noted that a big reform in 2003 was to cap attorney fees. A Florida Supreme Court ruling overturned that reform, but the legislature addressed the ruling and reinstituted the cap. Mr. Miller said other lawsuits challenging the cap are still out there, and the FIC is monitoring those cases.
