How is your company responding to recent developments in the Florida workers’ compensation market?
In case you missed it, the Florida Office of Insurance Regulation (OIR) has issued a final order granting approval to the National Council on Compensation Insurance (NCCI) for an overall combined statewide average rate increase of 14.5%. This rate increase applies to both new and renewal workers’ compensation insurance policies effective in Florida as of Dec. 1, 2016, with no change in rates for current in-force policies. This is a result of fallout from two recent Florida Supreme Court decisions, Castellanos and Westphal.
Why the large rate increase?
In Castellanos, the Florida Supreme Court has ruled that the state’s mandatory attorneys’ fee schedule for workers’ compensation cases is unconstitutional under both Florida’s and the U.S. constitution as a violation of due process. According to one Florida attorney familiar with the ruling in Castellanos vs. Next Door Co., the decision will “kick the courthouse doors open” to claimants whose cases are perceived as having low value.”
While artificially depressed plaintiff attorney compensation in the past might have been a dis-incentive for lawyers to take certain cases, an all-at-once rate increase of this magnitude has the potential to hurt Florida's employers of all shapes and sizes, slowing growth as some businesses delay hiring or reduce payroll to cover this leap in their workers' comp premiums.
The Florida Supreme Court delivered another blow to the WC system in Westphal by ruling that cutting off temporary disability benefits at the cap of 104 weeks before the plaintiff reached maximum medical improvement is unconstitutional, This will provide additional benefits to the injured workers, which ultimately increases the WC rates.
So, what is a workers’ comp buyer to do?
1. Educate yourself on these Florida Supreme Court decisions and their potential impact on your workers’ comp experience.
2. Speak with your work comp claims advocate to get the best advice on if or how to adjust your claims handling strategies in the wake of this decision.
3. Review your current workers’ comp program and consider alternatives to simply taking the hit on that almost 15% increase.