Two recent Florida Supreme Court rulings have led the National Council on Compensation Insurance (NCCI) to request a 19.6% workers’ compensation rate increase, the largest Florida has seen in many years.
What prompted the NCCI’s increase was an April 28, 2016, decision in the case of Castellano v. Next Door Company/ Amerisure Insurance Company. This case overturned the 2003 cap on plaintiff attorney fees, ruling that cap to be unconstitutional. The NCCI calculated that a 15% rate increase would be necessary to cover the elimination of these attorney fee limits that have been in place since 2003.
The Castellano case was followed by a June 9th decision in the case of Westphal v. City of St. Petersburg. This second ruling found the state’s 104-week limit on temporary total disability to be unconstitutional and reinstated the decade’s old 260-week limit that existed prior to 1994. The NCCI concluded the extension of this benefit would require an additional 2.2% rate increase.
As if these Florida Supreme Court rulings weren’t enough, another 1.8% was requested due to changes in the Florida Workers’ Compensation Health Care Provider Reimbursement rules that went into effect on July 1, 2016. The combined effect of these three factors resulted in the requested increase of 19.6%.
The NCCI proposed that the new rates go into effect October 1, 2016 and apply to both new and renewal policies. The inclusion of renewal policies indicates NCCI is requesting the rate be adjusted pro rata for policies already in force on October 1.
That said, the provisions of this requested increase still require approval by the Florida Office of Insurance Regulation (FLOIR). Public hearings and significant lobbying efforts by business groups will occur.
Historically the FLOIR has approved smaller or larger decreases than those requested by NCCI. In 2014, for example, NCCI requested a 3.3% decrease and the OIR approved a 5.2% decrease. In 2015, NCCI requested a 1.9% decrease with the OIR approving a 4.7% decrease. If history holds true, the ultimate increase will be significantly less than the 19.6% requested by NCCI.
MagMutual will continue to provide ongoing updates regarding this issue, and is ready to assist our policyholders with support and helpful information to minimize or prevent claims in their organizations.
In addition, MagMutual is advocating against this rate increase, in addition to recently enhancing our Florida workers compensation dividend program for our PolicyOwners benefit. We are closely monitoring this issue and will continue to provide ongoing updates.
 Dividends are declared at the discretion of the MagMutual Board of Directors.