EmployerNomics, a Florida HR consulting firm, has assembled this article from various sources, including our own HR specialists, friends at Progressive Employer Solutions, and various articles in state and local publications.
Significant changes have been proposed to the costs associated with Florida workers’ compensation insurance. A recent decision from the Florida Supreme Court has prompted the National Council on Compensation Insurance (NCCI) to recommend a 19.1 percent rate increase to the Florida Office of Insurance Regulation (OIR) for all new, renewal and existing policies in effect on a pro-rata basis.
The public hearing was held on August 16th in Tallahassee. Comments were accepted until August 23rd. The OIR has not released their decision yet. The decision is expected to be published this week on the OIR News Release web page.
Assuming that the changes will be accepted, and early reports indicate that is so, understanding how these changes may affect your business in Florida will be important as we move closer to the proposed, effective date of October 1st. Florida Workers’ Compensation insurance quotes will reflect these changes on or about that date. Important information to consider before this date include:
Why the Change?
This Miami Herald article briefly covers the controversy around the changes.
The Florida Supreme Court ruling on April 28, 2016 stated that the attorney fee schedule that was passed in 2009 was unconstitutional under both Florida and the U.S. Constitution as a violation of due process. The court ruling said the current schedule eliminates the right of a claimant to get a reasonable attorney’s fee – a “critical feature” of the workers’ compensation law. The court said the statute violates due process by installing an “irrebuttable presumption” that whatever fee the schedule comes up with is reasonable and by not providing any way for a claimant to refute the fee.
On June 9, 2016, The Florida Supreme Court also issued its opinion in the case of Bradley Westphal v. City of St. Petersburg, etc, et al declaring the 104-week limitation on temporary total disability benefits unconstitutional. The anticipated impact of the decision is a combined 260-week limitation on temporary disability benefits (temporary total disability and/or temporary partial disability).
As a result, if this change is accepted, expect a significant increase to the legal and medical costs of workers’ comp claims.
More information can be found in this article
When Will Rate Changes Go into Effect?
The “mid-year” rate changes, if accepted, will be enacted on October 1.
Florida is an “administrative” state, which means the rates for each workers’ comp code is set by the state. The NCCI recommends rates and they are accepted, declined or modified by the OIR. It is expected that the changes will go in to effect on October 1st and will not be retroactive.
How Will This Affect My Workers’ Compensation Rates?
Not all carriers (or PEOs) will implement the rate change right away. Some carriers (or PEOs) may make claims that these rate changes by the NCCI will not immediately affect rates to their policies. Some may wait until January 1 to make the rate change.
If They Wait Until January 1, Will That Affect My Audit in 2017?
Yes it will. The audit will have to take in to account the increased rates for the last quarter of 2016.
Will It Affect My Renewal?
In both cases, your renewal rates will be increased. Some carriers (and PEOs) may “increase the increase” to cover the extra cost from the last quarter of 2016.
Can My Carrier or PEO Ignore the Change?
Rate changes that are being recommended by NCCI and accepted by the State of Florida are mandatory for all workers’ comp carriers that operate in the state. These rate changes are not something that can be “opted out” of by insurers doing business in the state of Florida. The PEOs can certainly charge whatever they want, since technically they are not charging you for workers’ comp insurance, just cost of employment. They will, however, be charged more by their overseeing carrier. It is expected that they will have to pass this cost on to the employer clients somehow.
How Can EmployerNomics Help?
If you need more information on rate changes and how they can affect your Florida business, or your company needs assistance in understanding how to proactively plan for the changes related to this NCCI rate change and to prepare for future financial changes, please use the contact for below or call 800-788-8343. Options can be reviewed to insure proper employer coverage. But remember …
“We can’t help you unless you call”
Thanks to our friends at Progressive Employer Services for their help with this article.