Tallahassee, FL – Florida’s workers’ compensation market is competitive, well capitalized, and robust, with lower amounts of loss. That is the finding of the 2014 Workers’ Compensation Annual Report, which was recently released by the Office of Insurance Regulation to the Florida Legislature. The report noted that six of the market’s 10 largest writers are now based in Florida, up from four the year before, writing 28% of the premiums.
The private market writes more than 95% of workers’ compensation in the state, making Florida one of the most competitive markets of the largest states in the country and one of only two that do not rely largely on state-created residual market entities.
The analysis found that the market is still buoyed by important reforms passed by the 2003 Florida Legislature and this year’s 5.2% overall reduction of workers’ compensation rates, effective in January 2015 – the first rate reduction in four years. A long-sought revision in the state’s Hospital Reimbursement Manual updated the reimbursement schedules for hospital inpatient and outpatient services, resulting in a 0.8% rate decrease.
Underwriting performance, an important measure of an insurance market, is strong and getting even stronger. Florida’s loss ratios – the amount of direct loss relative to direct earned premium – are second only to Texas among the big states. The report also showed positive movement since last year among different classes of workers in loss costs – the amount of the rate used to pay actual claim expenses.
While costs for physicians’ services and supplies here are below the national average, the costs for drugs, hospital inpatient, hospital outpatient and ambulatory surgical center services continue to be higher in Florida than the national average. The report states that substantial rate reductions would occur if those costs were brought in line with other states. Likewise, further reform on drug repackaging by physicians would help lower costs.
2003 Legislative changes resulted in a 64.7% reduction in rates by 2010, with Florida going from having the highest rates in the country in 2000 to 40th highest in 2010. Rate increases over the past several years caused the state to slip to 29th highest and this year to 28th highest.
The report points out concerns that the state’s significant gains in lowering costs from 2003-2010 could be eroded further, noting several pending court cases that have the potential to negatively affect workers’ compensation rates in the future.
“The National Council on Compensation Insurance, which files rates on behalf of 254 workers’ compensation insurers in Florida, made it clear at our public rate hearing in October that these court cases could potentially increase costs,” said Insurance Commissioner Kevin M. McCarty. “Indeed, they could affect the system itself and Florida’s ability to retain its important economic competitive advantage in this area.”
The Office is required by law to annually evaluate competition in the workers’ compensation market and to investigate and use data in its review of such rate filings.
Click here for a copy of the Report: FL OIR: 2014 Workers’ Compensation Annual Report (PDF)
Source: FL OIR