Insurance researchers are recommending a nearly 20 percent hike in workers compensation rates. The increase comes in the wake of recent court decisions.
Employers in Florida—nearly all of them—purchase workers compensation insurance to cover employee injuries. Those benefits can cover missed wages, medical costs and rehab. Right now, Florida premiums are near the middle of the pack compared to other states, but it wasn’t always that way.
“Florida had before the reform, number one, number two highest rates in the country,” Lori Lovgren says. “Eventually through the effects of that reform it dropped to the fortieth lowest, and then kind of leveled out in the middle of the pack and is currently in the middle of the pack of states.
Lovgren works for the National Council on Compensation Insurance. The organization files rate proposals for some of the state’s largest providers. Florida made such a precipitous drop—from one or two all the way to forty—thanks in large part to a measure signed into law by Jeb Bush. That law severely limited attorney fees for workers comp claims.
“We did see claims with attorney involvement closing quicker,” Lovgren says, “reduced claim frequency, and then ultimately during this what we consider the post-reform period, through 2006 rates dropped by about 50 percent.”
Which is pretty nice for an employer’s bottom line.
The only problem is the state Supreme Court tore up a number of those reforms including a state mandated formula for attorney’s fees. Now NCCI senior actuary Jay Rosen says insurance providers need to raise their rates.
“The pending rate filing is comprised of three main components,” he explains, “the first of which is the first year impact of the Castellanos decision, an impact of plus 15 percent. The second is an update to the medical fee schedule—plus 1.8 percent, and then finally the Westphal decision plus 2.2 percent, for an overall combined impact of 19.6 percent.”
Not surprisingly, business interests aren’t happy about the potential increase. But Florida Chamber president Mark Wilson is focusing his fire on the Supreme Court and workers comp lawyers.
“NCCI has already told us that increasing lawsuits by trial lawyers combined with the proposed 19 percent rate increase will cost Florida businesses potentially another 1 billion dollars or more in unfunded liabilities,” Wilson says. “That’s a great deal for the trial lawyers and as you can tell it’s a horrible deal—a raw deal—for injured workers.”
Others speakers from the roofing industry and Walmart echoed Wilson’s complaints, heaping scorn on the judicial system without explicitly opposing the NCCI’s proposal.
Todd Thompson from the greater Pensacola chamber of commerce spoke out against the rate increase. But it seems the wider business community is preparing for a different approach perhaps in the state legislature built around controlling attorney’s fees.