Regulators pressed representatives of a workers’ compensation insurance rating service Wednesday about whether two Florida Supreme Court rulings had in fact increased the cost of administering claims, as many had feared.
The answer: Still too soon to say.
Nor is it clear that carriers adjusted their reserves or other practices in response to the rulings to any degree of consistency.
“At this point, the data is too immature,” said Jay Rosen, senior actuary for the National Council on Compensation Insurance, which proposed rates for around 240 Florida carriers.
“Not much of the data that has been impacted by these court decisions has been reported to NCCI, and therefore it is not reflected in this particular rate filing,” Rosen said.
Rosen and other NCCI representatives said the 9.3 percent average premium rate drop the council has proposed is mostly driven by a downward trend in payouts to injured workers. In other words, notwithstanding the court, workplaces have been safer.
“This is really the major driver behind this proposed rate decrease,” said Jeff Eddinger, an executive with NCCI.
If approved by the Office of Insurance Regulation, the new rates would take effect on Jan. 1
The office approved a 14.5 percent average premium increase last year, blaming Florida Supreme Court rulings in Castellanos v. Next Door Co. and Westphal v. City of St. Petersburg that critics said would encourage litigation by claimants.
Steve Alexander, an actuary who studied NCCI’s numbers for Florida Workplace Advocates — that is, plaintiffs’ lawyers — argued NCCI’s proposal didn’t reflect carriers’ investment earnings. He suggested a rate decrease of 15.4 percent, plus the opportunity for insurers to deviate from NCCI’s rates or to earn discounts.
Insurance Commissioner David Altmaier said following the hearing that he’ll consider those options, and otherwise look for ways to stabilize Florida’s workers’ compensation premiums.
Advocates president Mark Touby underscored Alexander’s argument in a written statement.
“The lack of transparency throughout NCCI’s process portrays the perception that its analysis is outcome-driven — rather than based on an unbiased presentation of the data,” Touby said. “What is clear is that NCCI’s unpredictable rollercoaster ride of rates is unquestionably bad for Florida’s businesses and the workers they employ.”
Bill Herrle, Florida director for the National Federation of Independent Business, issued a statement of his own, expressing anxiety about the lingering effects of those court rulings.
“While the possibility of a rate reduction is exciting for small business owners, NFIB members are very aware that the problem of out-of-control attorneys’ fees lingers, leaving rates and small business owners in a cone of uncertainty,” Herrle said.
“Lower rates are always good news, but NFIB remains cautious about the unknown ramifications of the Castellanos decision.”