7.5% Decrease Marks The Third Consecutive Decline in Florida
Florida Workers Compensation Rates in 2020 are declining by an average of 7.5 percent. This comes after the National Council on Compensation Insurance (NCCI) recommended in September a modest decline of 5.4 percent. This is the third consecutive year with a cut in annual workers compensation rates. According to officials with the NCCI, the declining rates are attributed to technology, safer workplaces, improved risk management and a long-term shift from manufacturing to service sectors.
Volatility in the Florida Workers Compensation System
Over the course of the past five years, the workers compensation system in the state of Florida has gone through some substantial ebbs and flows. In 2017, rates increased by an average of 14.5 percent. This increase was in response to three key issues, two court cases Castellanos vs. Next Door Company and Westphal v. City of St. Petersburg along with Senate Bill 1402.
Castellanos vs. Next Door Company
This case was between a Florida man named Marvin Castellanos and Next Door Company. Castellanos was an employee who sued Next Door Company of negligence. As part of these proceedings, the Florida Supreme Court overruled a previous court ruling from 2009. The previous ruling was overturned because it limited the ability of the claimant to get a reasonable amount for attorney’s fees. The previous ruling limited the amount a judge could award for attorneys fees in workers compensation lawsuits. As a result, most of the money being awarded in workers compensation cases were going to lawyers to cover their fees instead of going to the inured employees. With this ruling in place judges merely had to use the previous fee schedule as a recommendation, but depending on the situations surrounding each case they could award more or less for attorney’s fees. Because of this ruling insurance companies anticipate pay outs of much larger amounts for workers compensation lawsuits in the future. This court cases accounted for 10.1 percent of the average statewide increase.
Westphal v. City of St. Petersburg
Westphal vs. City of St. Petersburg was a case dealing with the 104-week statutory limitation on temporary total disability benefits. As a result of this case, the 104-week statutory time period was ruled unconstitutional. In its ruling the Florida Supreme Court stated the previous time period denied injured workers the ability to obtain proper right of access to the courts. The ruling extended this time period to 260 weeks. Because injured employees will now be receiving partial salary benefits for an additional 156 weeks insurance companies were taking on additional risk to offer workers comp coverage. This court case accounted for 2.2 percent of the entire increase in 2017.
Senate Bill 1402
The final issue that caused workers comp rates to rise in 2017 was Senate Bill 1402. This was related to updates within the Florida Workers’ Compensation HCPR Manual. This bill accounted for the final 1.8 percent increase on premium for workers’ compensation in 2017.
Guarantee Insurance Company Closes
In late 2017, Guarantee Insurance Company (The states assigned risk workers comp provider) was declared insolvent by Florida Regulators. According to the Florida Office of Insurance Regulation (OIR), Guarantee was materially under-reserved at year end 2016 and consented to being placed in receivership on Nov 13, 2017. This means they did not have the ability to cover predicted claims moving forward. Guarantee Insurance Company was the largest workers comp provider in the state of Florida. Because of this failure, more then a thousand businesses were forced to find a new carrier for this required coverage. Luckily, insurance carriers significantly raise prices in 2017 as a response to the previous issues. In 2018, the OIR recommended average decreases of 9.6 percent.
Continued declines in 2019
After the issues from the previous years had somewhat settled, OIR announced continued declines of 13.9 percent on Florida Workers Comp Rates in 2019. The declines in 2019 are accredited to significant improvements in experienced losses by insurance carriers. These improvements come as a result of safer workplaces, enhanced efficiencies in the workplace, and an increase in the use of technologies for the decrease in costs throughout the workers compensation system.