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News: Price Break for FL Business Insurance

image of a man holding a wallet and pulling out 100 dollar bills

Florida businesses get a break on their insurance bills since January 2019

The state Office of Insurance Regulation announced that it has decided to approve an overall 13.8 percent decrease in workers’ compensation insurance rates for 2019. That is a slightly larger cut than a 13.4 percent decrease proposed in August by the National Council on Compensation Insurance, an organization that makes rate proposals for the insurance industry.

Regulators gave the organization, commonly known as NCCI, until Wednesday to take a formal step of amending its filing. But when the 13.8 decrease is finalized, it will follow a 9.5 percent rate decrease that took effect this year.

In an overview of the August filing, NCCI said its proposed double-digit rate decrease was in line with trends in other states. It pointed to issues such as a long-term decline in the frequency of claims — an issue also cited in a 10-page order released Friday by the Office of Insurance Regulation.


NCCI provided testimony at a prior hearing that claim frequency decline for workers’ compensation is not unique to Florida and that for a number of years frequency has been declining countrywide similar to Florida,” said the order, signed by Insurance Commissioner David Altmaier. “NCCI also testified that claim frequency decline is due, in part, to safer workplaces, enhanced efficiencies in the workplace and increased use of automation and innovative technologies. According to NCCI’s testimony, the decline is expected to continue in the future.

Regulators look at numerous factors in setting rates. Friday’s order included a slightly larger rate decrease than proposed by NCCI, at least in part, because of a difference in what is known as a “profit and contingencies provision” for insurers.

Workers’ compensation rates have long been closely watched in Tallahassee. The Legislature and then-Gov. Jeb Bush in 2003 approved an overhaul of the workers’ compensation system that drove down rates — but drew protests from plaintiffs’ attorneys and labor unions that argued the changes reduced benefits for injured workers and improperly took away legal rights.

A major question during the past two years has been how a pair of Florida Supreme Court rulings would affect rates. In one of those cases, known as Castellanos v. Next Door Company, justices ruled that limits on attorneys’ fees in workers’ compensation cases were unconstitutional. The other case, known as Westphal v. City of St. Petersburg, sided with an injured firefighter in a dispute over benefits.

Business groups argued that the Castellanos decision would dramatically increase litigation and drive up costs. While lawmakers have not made changes sought by the business groups, insurance regulators in 2016 approved a 14.5 percent rate hike that was heavily focused on the Castellanos decision.

The NCCI filing in August and the Office of Insurance Regulation order Friday, however, were based on what are known as “policy years” 2015 and 2016, which means the data doesn’t fully take into account the effects of the Supreme Court decisions.

In the order, the Office of Insurance Regulation directed NCCI to provide analysis in future rate filings about the Castellanos decision.


To ensure workers’ compensation rates are not excessive, inadequate or unfairly discriminatory … it is imperative that additional quantitative analysis be conducted to determine the effect the Castellanos decision is having on the Florida workers’ compensation market and the data used to support future rate filings,

Bill Herrle, executive director of the National Federation of Independent Business in Florida, said the decrease  in workers’ compensation rates isn’t a surprise and attributed the reduction to a “hot economy” with “record employment.”

“It’s insurance principle No. 1,” Herrle said. “Premiums are flooding into the workers’ compensation system, and the risk is being spread around.”

However, Herrle maintains that the Supreme Court decision removing caps on attorneys’ fees is problematic, and his group will seek legislation next year to restrict what attorneys can charge.

“We still think uncapped attorneys’ fees in the workers’ comp system is a bad policy,” Herrle said.


News Service staff write Christine Sexton contributed to this report.
News Service of Florida


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