The Florida Insurance Council, (FIC) is warning regulators against steep, politically-motivated cuts in workers’ compensation insurance rates.
FIC said the reforms resulting from the massive workers’ comp bill passed in 2003 are working, and Florida needs to stay the course and not be tempted during an election year to stray from the improvements laid out in the plan.
Since the reforms were passed, on-the-job injury insurance has been readily available for Florida employers, and rates will have decreased nearly 25 percent in three years, assuming approval of a 7.2 percent reduction for 2006 being recommended by The National Council on Compensation Insurance (NCCI).
The Florida Department of Financial Services, however, is seeking a much larger, 22 percent reduction for next year. And that, FIC fears, may be too steep.
“If rates are cut too deeply, the insurance community’s ability to provide coverage will be impaired. Companies may have to reduce their existing writings or, at least, not write new business in the future,” said Sam Miller, executive vice president of the Florida Insurance Council.
“The DFS suggested rate cut is based upon an actuarial ratemaking methodology that is different than what was approved by the Office of Insurance Regulation last year,” said Miller. “Furthermore, these recommendations, made by AIS Consultants, an independent actuarial firm hired by DFS, follow a pattern of unreasonable projections that have consistently been discounted by Florida legislators,” Miller added.
FIC is also concerned about suggested changes to the attorney fee limits that are a key component of the reform legislation.
“While the number of workers’ comp claims are down, many industry leaders speculate that claimant attorneys are waiting to file claims in hopes that the First District Court of Appeals will side with trial lawyers and overturn the vital provision that places limits on attorney fees in some workers’ comp cases,” said Miller.
“If we jeopardize sound reforms for political expediency, we could reverse the progress we have made and put Florida’s employers back to where we started, with extremely limited choices in workers’ comp coverage at skyrocketing costs,” he added.
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