Florida Would Cut Comp Rates 16.5%

Florida Insurance Commissioner Kevin McCarty late Friday announced a proposed statewide rate decrease of 16.5 percent for workers' compensation insurance.

If approved, the rate cut proposed by the National Council on Compensation Insurance (NCCI), which produces and files rates for insurers, would be effective for new and renewal business as of Jan. 1, 2008.

The announcement said that a hearing will be held by the Office of Insurance Regulation (OIR) sometime in October.

The proposed rate decline was primarily due to a significant drop in claims frequency and a reduction in the costs of claims, according to the Boca Raton, Fla.-based NCCI.

If approved, the cut would produce a savings of over $650 million for Florida employers, according to the OIR, and would be the fifth-consecutive drop since major reforms to the state's workers' comp system in 2003. The cumulative overall statewide average rate decrease since 2003 would total 50.4 percent.

"Every sector of our economy is going to benefit from a more affordable workers' compensation marketplace," said Mr. McCarty, upon receiving the filing. "It is great news for both employers and employees because benefits are being delivered more fairly and efficiently, and our employers are paying lower rates. The reduction of fraud and abuse in the system is certainly paying off."

He noted that prior to the legislative reforms, Florida consistently ranked first or second in the country for the highest workers comp rates, but that since reforms the state has dropped from the top-10 rankings.

The reform law, passed in 2003, instituted provisions for enhanced fraud compliance, and revised permanent and temporary disability definitions. It also set new parameters for attorney and physician compensation and improved dispute resolution procedures, in addition to making many other improvements to the system.