NCCI Submits Workers’ Compensation Filing
The National Council on Compensation Insurance (NCCI) has filed a proposed 8.3% workers’ compensation rate increase with the Office of Insurance Regulation with an effective date of January 1, 2011. The proposed change change consists of a 3.4% increase due to a change in experience, a 3.9% increase due to a change in trend, and a 0.8% increase due to a change in expenses. There are no changes associated with benefits or the profit and contingency factor.
NCCI cites two primary reasons for the proposed rate increase. First, NCCI points out that claims experience has deteriorated slightly over the last couple of years, although the relatively small (3.4%) increase due to the experience change is still within the range of a reasonable annual adjustment. The experience years used in the filing, 2008 and 2009, are the first two years following the 2003 workers’ compensation reform to show a possible new post-reform baseline. Through 2007, the effects of the reforms continued to provide benefits, and these benefits should be expected to level out over time.
Second, Florida’s extremely favorable workers’ compensation claims environment in the post-reform era has flattened. The current claims outlook still calls for a negative trend, but simply not to the degree as was seen in the years following the reforms to the workers’ compensation laws.
This NCCI filing marks the first increase since before the 2003 reforms (excluding Emma Murray- related filings). The cumulative effect of eight decreases following the 2003 reforms has been -64.7%. This reduced Florida’s workers’ compensation rates from among the highest in the country to among the top ten lowest. NCCI points out that even if the current filing is approved, the cumulative rate decrease will exceed -61%, and Florida’s workers’ compensation rates likely will remain among the ten lowest in the country.
The Office of Insurance Regulation conducts a public hearing each year on NCCI’s annual workers’ compensation rate filings. The public hearing is likely to occur in October. The filing remains subject to the OIR’s own review as well as its analysis of information presented at the public hearing.