Good news in the insurance world is rare in the Sunshine State. Health-care costs are up, the auto personal injury protection debate continues, and then there is the ongoing drumbeat of bad news from the property market, which remains one good hurricane away from falling into the abyss. For a moment, however, those concerns can be pushed aside as businesses can look forward to saving more than $400 million next year after Insurance Commissioner Kevin McCarty ordered a 15.7 percent workers' compensation rate cut.
Normally, when an insurance commissioner offers up a double-digit rate cut in any line of insurance, it gets people's attention and is usually good for one or two days of positive stories in the media. This year, however, it seems McCarty's announcement has been greeted by one giant yawn, or greater yet, silence. A silence that is almost mystifying given the fact that no class of insureds in recent years has benefited more from an act of the legislature than workers' compensation policyholders. After facing double-digit increases and scrambling for coverage before the 2003 reforms, employers now have a wide variety of available and affordable coverage, the likes of which homeowners can only dream. Seeing how this is the case, why does it seem that news of the rate change ranks somewhere between the obituaries and the used-car ads?
Ask those in the media and the answer is fairly easy to surmise. There are more important issues at hand, such as a small matter like an election. And keeping in the spirit of that thought, many said it wasn't like McCarty pulled some October "surprise" in cutting compensation rates. After all, the National Council on Compensation Insurance recommended a rate cut of 13.3 percent, which marked the fourth consecutive rate decrease since the enactment of the 2003 reforms. So, given those factors, it is not surprising that McCarty's recent action didn't rank high on the "10 things citizens are demanding to be changed about insurance in Florida." Still, one would assume McCarty would have appreciated some nod of thanks given that the rate cut represents one of the rare pieces of good news to come out of his office this year.
Even though the recent workers' compensation rate cut didn't draw much attention from the public at large, it doesn't mean employers won't be grateful come January. But until then, McCarty's action stands as an abject lesson. The workers' compensation reforms, and the subsequent rate cuts that followed, were the result of a complicated process that didn't come together overnight. It required several tries and all the political capital that could be mustered by Governor Jeb Bush, Chief Financial Officer Tom Gallagher, and the legislative leadership. Hard choices were made and, with few exceptions, nobody walked away happy and some are still more than willing to show their scars. In the end, however, what once seemed an insurmountable crisis has become a historical footnote.
As we were preparing this issue of Florida Underwriter, the state was just days away from an election that will reshape the Cabinet as voters choose a new governor, chief financial officer, and attorney general. Along with the current Commissioner of Agriculture and Consumer Services Charles Bronson, the newly elected officers will work for the Financial Services Commission, which has evolved into the centerpiece of insurance regulation. Post-election, the challenge to the industry is to educate the commission and, more importantly, earn their trust. There is no better place to turn to than the lessons and the successes of the 2003 workers' compensation reforms.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.