Workers’ Compensation Excess Profits Repeal Passes House
The Florida House of Representatives has passed a bill (HB 4169) that would repeal Florida’s excess profits law for workers’ compensation insurance. The Senate should consider this favorable proposal, but unfortunately no companion bill exists.
The excess profits law requires workers’ compensation insurers to refund their “excess” profits earned over a three-year period if they excess a specified margin. Of course, no reciprical mechanism exists for insurers to recover “excess” losses.
The excess profits statute is left over from an old workplace compensation system in Florida that was changed many years ago. Insurers point out that because Florida is a mandated rate state, the excess profits law really serves only to penalize efficient insurers and deter capacity. Even Florida’s major business groups support the repeal, believing that a better regulatory climate in Florida will attract more insurers and better products, ultimately benefitting employers more than the current system.
The only opposition to the repeal has come from the trial lawyers. The question Florida’s business groups’ reasoning behind supporting the repeal, but the business groups do not hesitate to articulate their positions. The trial lawyers also attempt to weave together an argument that increased costs to employers eventually will cause the legislature to revisit costs in the workers’ compensation system, which will lead to reductions in benefits for the clients they serve.
The merits of the repeal carried the issue in the House. However, that might be as far as the proposal goes, at least for 2012.