Here’s a bit of good news for Florida business owners.
The National Council on Compensation Insurance (NCCI) this week submitted a filing to the state insurance department that recommends an 8.4% reduction on new and renewed policies effective Jan. 1, 2023.
The filing is based on experience data for policy years 2019 and 2020 that was available as of December 2021.
“Favorable experience has been observed in each of these time periods,” Jeff Eddinger, Senior Division Executive of NCCI, told Florida Politics Wednesday.
NCCI State Relations Executive Dawn Ingham said in the filing the Council did not take COVID‐19‐related claims into consideration when recommending the 2023 workers’ compensation rates in order to “better reflect the conditions likely to prevail during the proposed effective period.”
The reduction is due in part to the continued decline in the frequency of lost-time claims, or claims when an injured employee receives wage replacement benefits. Ingham said in the filing that lost time claims have “generally declined when viewed over the most recent eight years.”
But the analysis noted that there has been an increase in medical inflation.
The Centers for Medicare and Medicaid Services estimates that the personal health care index will increase in 2022 and then drop to between 2.5% and 3% thereafter. NCCI said a nationwide review of workers’ compensation data shows the costs of drugs are declining but physician and facility costs are increasing.
Additionally, NCCI noted minimum wage increases also impact the workers compensation system because payroll is used as the base to calculate premiums. So, as wages rise, premiums automatically rise along with workers’ compensation benefits.
The NCCI filing only is a recommendation and rarely is it ever approved as-is.
Florida Insurance Commissioner David Altmaier and his actuaries will review the filing and hold a public hearing on the recommendation. The OIR will advise NCCI whether it wants the proposed rate change for the upcoming year adjusted. Ultimately, the OIR will issue a final order setting the rates for the upcoming year.
NFIB Florida Executive Director Bill Herrle said the filing is welcome news for Florida business owners.
“In these inflationary times, any reduced costs are very welcome to small business owners,” Herrle told Florida Politics. “Inflation combined with a tight labor market makes this proposed workers’ compensation reduction doubly welcome.”
Workers’ compensation is meant to be self-executing, benefitting both the employer and the employee.
The system precludes workers from suing their employer for causing their injuries. In turn, employers are required to provide injured workers access to the health care they need to heal. And employees who miss more than eight days of work as a result of the injury also are compensated for lost wages.
Workers’ compensation impacts a large and disparate group of interests, including business groups, labor unions, insurance companies, hospitals, physicians, ambulatory surgical centers, plaintiffs’ lawyers and injured workers.
NCCI is a licensed rating organization authorized to recommend rate filings on behalf of workers compensation insurance companies in Florida. NCCI’s filings are objectively prepared, utilizing widely accepted actuarial ratemaking methodologies.
Although COVID-19 claims are excluded, the NCCI did include an assessment of possible pandemic impacts.
“From a countrywide perspective, most COVID-19 claims continue to be small, with incurred losses of less than $1,500, and are most often medical-only or indemnity-only. In fact, claims over $100,000 account for fewer than 2% of all COVID-19 claims but represent more than 60% of total incurred COVID-19 losses. Nearly half of the most complex claims — those of more than $500,000 — involved workers who died,” the NCCI summary notes.