Initial Rate Filing Shows Decrease in Workers’ Comp Rates
On Friday August 22, 2014, the National Council on Compensation Insurance (NCCI), the industry’s provider of workers’ compensation analysis and rates, announced that they are requesting an average 2.5 percent decrease in workers’ compensation rates, effective January 1, 2015. This is the first rate decrease in four years- employers have had rate increases of 8.9 percent and 6.1 percent in 2012 and 2013, a 2013 mid-year decrease of 0.7 percent followed by an increase of 0.7 percent for 2014.
According to NCCI, both claim frequency and loss experience have improved. Additionally, indemnity and medical loss ratios have declined, which is due in part to a reduction in claims.
Despite this reduction, there are still a number of cost drivers in the workers’ compensation system. According to a 2013 report by the Department of Financial Services’ three member panel, medical costs, especially those related to hospital inpatient and outpatient services, are a significant cost driver. The Florida Chamber of Commerce continues advocating for lawmakers to address rising medical costs. The fight for free enterprise continues as we will once again be the leading voice encouraging lawmakers to determine an appropriate fee schedule for workers’ comp claims when lawmakers resume for the next legislative session.
NCCI warns that while they are currently seeking a 2.5 percent rate decrease, court decisions related to Castellanos v. Next Door Company, Westphal v. St. Petersburg, Morales v. Zenith Insurance Company, and Padgett v. State of Florida could dramatically increase rates. The Florida Chamber has filed amicus curiae briefs on the three cases currently before the Florida Supreme Court, and will monitor the rehearing of the Padgett case before the 11th Circuit Court in Miami Dade.
This rate decrease still must be approved by the Florida Office of Insurance Regulation. The Florida Chamber will continue to monitor workers’ compensation rates, increasing costs in the system and pending litigation that might impact rates.
Save the Date:
Be sure to join us on January 21-23, 2015, for the Florida Chamber 2015 Insurance Summit. For more information, click here.