Your workers’ comp rates will decrease… for now

By: Florida Chamber of Commerce

Workers’ Comp Rates Set to Decrease for Third Year, Attorney Fees Still a Problem

For more than 15 years, the Florida Chamber has been on the front lines, actively fighting to reduce workers’ compensation rates by more than 60 percent. Fixing Florida’s workers’ comp system has been key to becoming one of the nation’s top business climates.

Today the news got even better.

The National Council on Compensation Insurance (NCCI) filed a proposed 5.4 percent average decrease in workers’ comp rates. If approved by the Office of Insurance Regulation (OIR), the new rates will take effect January 1, 2020 for new and renewal policies.

Today’s annual experience rate filing is the first where the majority of data analyzed comes after a 2016 Florida Supreme Court decision that eliminated the cap on attorney fees (Castellanos v. Next Door Company.) The rate decrease filing uses data from 2016 and 2017, and 90 percent of the policies examined became effective after that Supreme Court decision. As of right now, the favorable loss experience has offset the cost increases that have emerged from the court decision, but NCCI points out that the court decisions are exerting upward pressure on system costs.

An NCCI analysis of the impact of the Supreme Court decision in this rate decrease filing shows:

  1. That all workers’ comp carriers are reporting increases in claimant attorney fees, and that litigated claims are beginning to represent a relatively larger portion of claims compared to before the Supreme Court decision. Litigated claims take longer to close and are generally more expensive.
  2. Data from the Division of Administrative Hearings shows that attorney fees are representing a larger portion of benefit and settlement amounts. In 2014 and 2015, claimant attorney fees were 13 percent compared to benefits and settlements. In 2017, it increased to 19 percent, and in 2018, claimant attorney fees made up 22 percent compared to benefits and settlements.

Today’s proposed rate decrease is a result of improved loss experiences which has more than offset the increase in attorney fees. A decline in the frequency of claims is driven by technology, safer workplaces, improved risk management and a change in industry makeup.

While the upward pressure from attorney fees has not increased rates, it has reduced the potential rate decrease that could be afforded to Florida job creators. The majority of states are seeing rate decreases, with several states enjoying double-digit decreases.

However, because workers’ comp has a “long-tail” line, it could take several years for businesses to feel the full impact of the Florida Supreme Court Castellanos decision. That’s why the Florida Chamber’s Workers’ Comp Task Force continues to be engaged in protecting injured workers and reducing cost drivers like attorney fees.

Learn More This Thursday

Register for the Florida Chamber’s Workers’ Comp Task Force webinar this Thursday, August 29 at 4:00 p.m. to discuss today’s rate filing in detail with the National Council on Compensation Insurance and Senator Keith Perry.

Contact Carolyn Johnson at cjohnson@flchamber.com to register.