While the rationale for this reduction I suppose makes sense as the brilliant people at the NCCI proposed it, I have to wonder what now happens at the end of the year when data from the 2016 Castellanos and Westphal verdicts comes into play. Specifically, will rates go up or down this coming year due to increased cost of litigation (Castellanos) as well as the doubled TTD exposure (Westphal). When rates were reduced this past 1/1 by almost 10 points, data was not in on the impact of these two watershed cases.
Perhaps the NCCI will speak to that in Orlando at their Annual Issues Symposium May 16-18 where they provide guidance on the “state of the line”…This coupled with Anniversary Rating Dates going away will make things lively from a pricing standpoint in Florida for PEO’s. If you have an effective date prior to 1.1.18, you are now at a pricing deficit of 11.6% (9.8 + the 1.8 effective June 1)….
OIR Approves Workers’ Comp Insurance Rate Decrease
The Florida Office of Insurance Regulation announced today that it has approved a rate decrease for workers’ compensation insurance in Florida. The 1.8% decrease was filed by the National Council on Compensation Insurance (NCCI) in a law-only filing resulting from the effects of the Federal Tax Cuts and Jobs Act.
Florida Chief Financial Officer Jimmy Patronis said, “Reducing insurance costs and financial burdens is great news for our business community. Businesses in Florida support our local communities, create jobs, and help our state’s economy. This rate reduction is a much needed insurance cost savings for Florida businesses.”
Florida Department of Agriculture and Consumer Services Commissioner Adam H. Putnam said, “Reducing the cost of business spurs job growth, and this rate reduction is exactly what Florida needs to continue to create the business climate that will help our economy thrive.”
Florida Insurance Commissioner David Altmaier said, “NCCI has demonstrated through its rate filing that this decrease is an actuarially-sound response to the savings workers’ compensation insurers have realized as a result of recent federal legislation. The data indicates that passing the savings along to businesses through a rate decrease is an appropriate response at this time.”
The overall rate level change is a 1.8% decrease due to a change in the Profit and Contingency (P&C) Factor to 0.5% from 1.85%. NCCI’s analysis to determine the revised P&C reflects provisions from the recently-passed Tax Cuts and Jobs Act, including top corporate tax rate decreases, changes to reserve discount factors, and other factors. This applies to both new and renewal workers’ compensation insurance policies effective in Florida as of June 1, 2018.
About the Florida Office of Insurance Regulation
The Florida Office of Insurance Regulation has primary responsibility for regulation, compliance and enforcement of statutes related to the business of insurance and the monitoring of industry markets. For more information about the Office, please visit or follow us on Twitter @FLOIR_command Facebook.
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