OIR Hears NCCI Request for Rate Increase
NCCI filed a request for a statewide average rate increase of 8.9% and the OIR held a public hearing to gather testimony and evidence regarding the request. Insurance Commissioner Kevin McCarty chaired the panel listening to the presentation of the NCCI. He was joined on the panel by Belinda Miller (General Counsel), Richard Koon (Deputy Director for Property and Casualty), Jim Watford (Actuary for Workers’ Compensation) and Cyndi Cooper (Actuary). NCCI presentation was led by Lori Lovgren and Tony DiDonato (Senior Actuary).
NCCI emphasized it believed the filing was prepared using conservative assumptions and therefore it represented a minimum rate need projection. Both Lovgren and DiDonato emphasized they believed the legislative reforms from past years were no longer driving loss costs down. They identified three basic indicators to support their concern: (1) combined loss and expense ratios are up, (2) JUA applications are increasing, and (3) claim frequency is up.
A significant change that moderated the impact of these trends was NCCI’s use of policy year data instead of calendar/accident year. This was done because of concerns about the quality of the calendar/accident year data and the ability to audit the data. However, the indication would have been over 11% if the NCCI had relied on the calendar/accident year data to support its proposed rates.
The OIR focused on potential cost drivers and possible legislative responses that might reduce those costs. One area of great concern was “drug repackaging.” This process, wherein drugs are sold in doctors’ offices, was believed to add substantially to the cost of benefits because the drugs tend to be more expensive when obtained through a physician than through a pharmacist. Commisioner McCarty relayed his own experience of being given the opportunity to secure a muscle relaxant from a doctor’s office for more than $200. His pharmicist provided the same drug for less than $10.
There were some additional issues raised regarding the appropriate rate of return, trend periods and the impact of dividends. The Consumer Advocate, Robin Westcott, also particpated in the hearing and encouraged all to look at ways to reduce the cost drivers in the system and avoid unnecessary rate increases. Members of the business community, including Bill Herrle diretor of the National Federation of Independent Business in Florida, argued that an increase would adversely impact small businesses and limit such businesses’ ability to hire new workers.
OIR will review the filing and the record of the hearing and issue a ruling within the next several weeks.