Fla. Comp Rate To Drop 6.8 %

NU Online News Service, Oct. 15, 1:08 p.m. EDT

Florida Insurance Commissioner Kevin McCarty announced he will approve an average statewide decrease of 6.8 percent for workers' compensation insurance rates.

The decrease for new and renewal policies will take effect Jan. 1, 2010. It was proposed Aug. 20 by the National Council on Compensation Insurance, the statistical rating organization.

Mr. McCarty's announcement said the decrease will produce estimated savings of more than $166 million for Florida employers, and represents the seventh consecutive decline in workers' compensation rates since the state legislature passed comp law reforms.

The cumulative overall statewide average is 63.2 percent since the 2003 reforms, according to Mr. McCarty.

He said the state legislature and Gov. Charlie Crist were to be commended for enacting HB 903, which was enacted to clarify the law on attorney's fees for representation in workers' compensation cases.

The Florida Supreme Court in the Emma Murray v Mariner Health Inc. decision Oct. 23, 2008, had overturned limits on comp lawyers' fees saying the law was unclear.

Without the legislation restoring the caps "the workers' compensation industry in Florida would likely have proposed rate increases instead of decreases in 2010," said Mr. McCarty."

He added that before the 2003 legislative reforms, Florida had the first or second highest workers' comp rates in the country. Last year, Florida dropped to the 28th highest and the most recent round of rate reductions will place Florida among the lowest 10 states in the country.

Mr. McCarty said further that NCCI, which produces and files rates for insurers in many states, noted the rate decline was primarily due to significant reductions in claims frequency although there are indications this trend has moderated.

The Florida Office of Insurance Regulation conducted a rate hearing on Oct. 6, and heard testimony from NCCI, industry experts and the public.

His rate announcement noted that while he found the overall rate reduction of 6.8 percent justified, he took exception to some of NCCI's methodologies including its calculation of policyholder dividends, cost of capital, investment yields, minimum premiums and proposed roofing rate.

It was explained that while the commissioner had issued an order today that denies the original proposed rate filing the overall rate reduction will be approved when NCCI modifies its current filing.

The OIR said it anticipates NCCI will need a few weeks to resubmit the filing and when that occurs the commissioner will issue a final order.