Familiar Issues Expected to Surface Early in 2017
As we begin 2017, we can expect some of the high profile issues addressed early in the year to be continuations of issues that gathered significant attention in 2016. One of the hottest topics early in the year is likely to be the state of Florida’s workers’ compensation insurance market. Beginning with reforms made in 2003, workers’ compensation rates in Florida declined significantly over the following decade. However, court cases began to challenge the validity of some of the reforms, arguing that they reduced benefits too significantly and resulted in the workers’ compensation system no longer being an adequate alternative to the tort system. Two Florida Supreme Court decisions in 2016 upheld challenges to portions of the workers’ compensation law. These decisions led to a proposed rate increase of more than 19% filed by NCCI. The filing ultimately was approved at approximately 14%. However, litigation continues over that filing, with opponents arguing that the rate development process did not conform to Florida’s open government laws.
We also can expect to see continued discussion of the “assignment of benefits” and water damage issues. These issues have led to increased frequency and severity of claims, particularly in areas of south Florida. As a result, rates for the non-catastrophe portion of homeowners’ premiums are increasing and insurers are rethinking the amount of business they are willing to write in the most affected areas. Citizens Property Insurance Corporation has been proactive in pointing out that the trend is affecting it, and its policyholders. Citizens has shown that its rates are increasing due to these issues, and would be even higher if not for a legislatively mandated cap. In addition, Citizens again will become the primary (or only) option for policyholders in some areas notwithstanding its substantial efforts to reduce its exposures in recent years.
With the 2017 legislative session just around the corner, legislative committees already have started the process of evaluating these items. We can expect substantial discussion of them in the coming weeks, although finding workable solutions might provide to be more elusive.