NCCI: Hike Florida Comp Rate 21.5 Percent

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By Daniel Hays

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NU Online News Service Aug. 26, 3:37 p.m. EST?Florida officials are reviewing a recommendation for a 21.5percent increase in workers' compensation rates, a representativefor the state's regulators said today.

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The proposed rate figure was received Friday from the NationalCouncil on Compensation Insurance, the statistical data group thatanalyzes the market for the state, said Tammy Torres, speaking forthe Department of Insurance.

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She said the department has 90 days to review the annual ratefiling for the voluntary insurance market.

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Last year the NCCI recommended an 8 percent boost, Ms. Torressaid, and the department instead approved a 2 percent increase--adecision that was appealed to an administrative judge, whoconcurred with the department's action.

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After further discussion with NCCI, Ms. Torres said regulatorsagreed to a 2.7 percent increase that became effective at thebeginning of this month. The latest proposal would be effectiveJan. 1, 2003.

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NCCI, based in Boca Raton, Fla., said the primary componentsdriving this requested rate change are accident experience benefitsof plus-7.6 percent, and a profit and contingency factor ofplus-10.1 percent.

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The loss experience, trend and benefits component results from acombination of deteriorating experience, trends showing increasingcosts in Florida and countrywide, and a medical benefitincrease.

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The medical component amounts to 0.9 percent and recognizes thestate's updated physician fee schedule, which took effect in July7.

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The profit and contingency component, NCCI said, has increasedprimarily due to changing financial market conditions and the needto account for policyholder dividends in determining adequateworkers' comp rates. The current profit and contingency factor hasnot changed in six years despite varying financial marketconditions, NCCI noted.

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NCCI said that during 2001 alone, the Federal Reserve reducedshort-term interest rates 11 times, and there has been a sharpdecline in stock prices. "Both of these developments havesignificantly reduced investment income opportunities forinsurers," NCCI said in a statement.

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