Florida Insurance Commissioner Kevin McCarty ordered a reduction of workers' compensation premiums yesterday of 18.6 percent, exceeding the rate reduction of 14.1 percent filed by the insurance industry.

Mr. McCarty disapproved the rate filing by the National Council on Compensation Insurance, ordering the group to make an amended filing to reflect the deeper rate cuts.

"The 2003 reforms in Florida's workers' compensation laws are continuing to play a significant role in these rate reductions," he said. "In addition, positive trends in utilization and costs have helped make reductions possible."

The Florida Office of Insurance Regulation, which Mr. McCarty heads, said his rejection of the rate filing was based on a disagreement with NCCI's methodology to calculate profit factors and trend factors that reflect changes in wages, paid losses and claim frequency.

Lori Lovgren, state relations executive for the NCCI, said the specific difference occurred in the medical trend, where the OIR sought a minus 4 percent trend rather than NCCI's minus 3 percent, and the indemnity trend in which the OIR sought an 8.2 percent reduction to the NCCI's 7 percent cut.

The difference in terms of coverage rates, according to the NCCI, would be roughly 2.7 percent.

The difference between the two camps on the profit and contingency provisions in the rate filing equate to a 1.8 percent impact on rates, Ms. Lovgren noted.

According to the OIR, the decrease as ordered would be the sixth reduction of workers' compensation insurance rates since the state enacted reform laws in 2003.

Those laws enhanced fraud compliance, revised disability definitions, set parameters for attorney and physician competition, and improved the dispute resolution system.

OIR said the ordered 18.6 percent decrease would also represent the largest single-year decrease in rates in the state's history. With the change, the OIR said the cumulative overall statewide average rate decrease since 2003 will be more than 60 percent.

Mr. McCarty's order requests the amended rate filing by Nov. 1, although NCCI may also opt to appeal the order. Ms. Lovgren said NCCI "is currently in the process of reviewing the order and making a decision on how to respond."

Special Reports /

Fla. Regulator Orders Comp Cut

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