On December 1st, rates on Workers Comp Premium are set to go up 14.5 % throughout the state of Florida. This could have a drastic impact on Florida Small Business.
Approved by the Florida Office of Insurance Regulation (OIR), rates on premium for workers compensation are going to increase by 14.5 % beginning the first of December. There are the reasons for this dramatic increase and it will have an immense impact of the Florida small business community. There were two court cases ruled on over the Summer and there was a Senate Bill that caused a very small portion of the increase. The two cases were Castellanos vs. Next Door Company and Westphal vs. City of St. Petersburg. The additional part of the increase was related to Senate Bill 1402 which dealt with a a new printing of the Florida Workers’ Compensation HCPR Manual.
Castellanos vs. Next Door Company
This court case was ruled on this year and it was between a Florida small business owner named Marvin Castellanos and Next Door Company. Marvin was an injured employee who sued Next Door Company and the Florida Supreme Court overruled a previous court ruling from 2009. The previous ruling was overturned because it limited the ability of the claimant to get a reasonable amount for attorney’s fees. Pretty much the previous ruling limited the amount a judge could award for attorneys fees. As a result, most of the money being awarded in workers compensation cases was going to the lawyers to cover their fees instead of going to the inured employees who it was meant for. With this ruling in place judges merely had to use the previous fee schedule as a recommendation, but depending on the situations surrounding each case the can award more or less for attorney’s fees. Because of this ruling insurance companies anticipate they will have to pay larger amounts for workers compensation lawsuits in the future. For this reason they asked for and were approved by the Florida Office of Insurance Regulation (OIR) a 10.1 percent on average statewide.
The next case that had a negative impact on workers’ compensation rates in the state of Florida was Westphal vs. City of St. Petersburg. This case was regarding the 104-week statutory limitation on temporary total disability benefits. This time period was ruled unconstitutional. In its ruling the court stated the previous time period denied injured workers the ability to obtain proper right of access to the courts. The ruling extended this time period to 260 weeks. Because injured employees will now be receiving partial salary benefits for an additional 156 weeks insurance companies were taking on additional risk to offer workers comp coverage within the state of Florida. For this reason the OIR approved an average increase of 2.2 percent statewide.
Senate Bill 1402
The additional 1.8 percent increase on premium for workers’ compensation was related to updates within the Florida Workers’ Compensation HCPR Manual. This increase was approved as part of Senate Bill 1402.
What can business owners do to protect their business?
Shop your policy
The first thing a Florida small business owner should do when they get sticker shock from their renewal quote is to shop their policy around to different agencies. One thing that can save you a lot of time doing this is to partner with an independent agent who has the ability to shop your policy with many different carriers. A lot of agencies have exclusive relationships with only one or a select few carriers. This dramatically impacts the amount you pay in premium, especially if you are in a difficult to quote class code. A typical independent agent can quote your policy with 10 or more insurance carriers. This gives them the ability to negotiate more effectively for more comprehensive coverage and better rates on premium.
Pay as You Go
Pay as You Go Workers’ Compensation is a flexible payment option that allows business owners to get coverage in place at a much lower price and allows them to pay their premium monthly based on the payroll each month. This is an excellent option for cash strapped or seasonal businesses.