With summer around the corner, Florida businesses will be spending their summer sweating more than the heat. A rate hike of 17.1 percent on workers’ compensation insurance was recently proposed to Florida’s Office of Insurance Regulation, and would go into effect on August 1 if accepted. However, employee advocates like our very own John Morgan have come out against the proposed rate hike, calling it a ploy by the insurance companies rather than a necessary increase.
“It’s basically a money grab by insurance companies who are trying to scare employers into supporting a change in the state’s laws,” John told the Orlando Sentinel.
The rate hike was proposed by the influential National Council on Compensation Insurance, a Boca Raton based not-for-profit that is the largest database of workers’ compensation insurance information in the country, and whose board is almost entirely made up of insurance company representatives.
The NCCI proposed the rate hike to the Office of Insurance Regulation, the government agency dedicated to promoting a stable and competitive insurance market for consumers. In the NCCI’s report to the Office of Insurance Regulation it cited the recent Florida Supreme Court decision that ruled the $1.25 per hour cap on attorney’s fees in workers’ compensation cases unconstitutional as the main factor for the rate hike.
The cap on attorney fees was implemented in 2009 in an effort to further control workers’ compensation insurance costs. Workers’ compensation laws had previously been addressed in 2003 when the Florida legislature cut benefits from workers’ compensation laws in order to drive down workers’ compensation premiums that had ballooned to the second highest in the nation. The 2003 legislation in addition to the cap on attorneys fees kept insurance rates down, but also hurt a worker’s’ ability to find representation for a workers’ compensation claim.
The final decision to raise the rate is up to the Office of Insurance Regulation, which does not have to accept the hike, and can set the rate at whatever it decides is fair. If the Office of Insurance Regulation does accept the rate hike as proposed, Florida would have the highest rate for workers’ compensation insurance in the entire Southeast despite the national average for workers’ compensation rates being at a 25-year low across the country.
According to the Office of Insurance Regulation’s press release on the NCCI’s proposal, a public hearing is scheduled for July, although a date has not been specified. This issue will likely get more contentious, and ultimately may not be decided completely until the Florida Legislature meets again in March 2017 and adjusts workers’ compensation laws.
For more information on workers’ compensation laws please visit our workers’ compensation information page.