Florida Workers Comp Rates Remain in Flux for 2019

Florida Workers Comp Rates 2019 are headed in a positive direction.  

In 2019, Florida Workers Comp Rates are improving for the business community throughout the state.  The decline amounts to a deduction of 13.9% and will contribute to a savings for business in Florida of approximately $454 million. This is good news because the Florida Workers Compensation System has been in flux for a number of years.  This decrease is the third such decrease over the previous year and a half.  Previous to these three decreases, the workers compensation rates had increased by 14.5% in 2016.

Florida Workers Comp Insurance Rates 2019

What Caused Florida Workers Compensation Rates 2019 to Decrease?   

Florida Workers Comp Rates 2019 are decreasing because of significant improvements in experienced losses by insurance carriers. This means the insurance carriers paid out less in claims. Some within the industry credit safer workplaces, enhanced efficiencies in the workplace, and an increase in the use of technologies for the decrease in costs.

Pond with a waterfall and palm trees in the background at a Miami, Florida Golf Course.

Why have the Workers Comp Florida Rates 2019 Been in Flux?

For the past few years, workers compensation rates within the state of Florida have been in flux for a number of reasons. Two State Supreme Court Decisions have contributed to the instability. Those cases were Castellanos v. Next Door Company and Westphal v. City of St. PetersburgCastellanos vs. Next Door Company made a previous 2009 ruling invalid, meaning judges no longer had to stick to the mandatory fee schedule and now can award additional compensation for attorney’s fees when offering judgments within the workers compensation system.  The Westphal Case, had a ruling that ruled the 104-week statutory limitation on temporary total disability benefits is unconstitutional. This ruling extended this period to a 260-week limitation. This 260-week limit is more in line with states throughout the country and significantly increased the amount carriers had to pay for permanently disabled injured workers.

Another factor that has caused the workers compensation system in the state of Florida to be out of whack is State Senate Bill 1402.  This bill accounted for 1.8% of the recent increase in premium by increasing the cost for updates within the Florida Workers’ Compensation HCPR Manual.

In addition to these issues, in 2017 the Florida Insurance Regulators took over Guarantee Insurance Company (The states assigned risk workers comp provider) because it had become insolvent.  This left 1250 businesses in the state of Florida scrambling to find a workers comp carrier.

Epcot Center, Disney World, Orlando, Florida

What could be in store for future rates?

Hurricane Michael Relief

In response to Hurricane Michael, Florida Governor Rick Scott issued an emergency order that make sure “additional protections” are in place for Florida policyholders – including freezing any rate hikes for 90 days.

The order requires that insurers:

  1. Provide an additional 90 days to policyholders to supply required information to their insurance company. Many Floridians were displaced during this dangerous storm, and providing additional time to submit information to insurance companies gives them needed flexibility.
  2. Rescind for 90 days all non-renewals or cancellations issued to policyholders in the days leading up to Hurricane Michael. This gives policyholders 90 days to either renew their insurance policy, or find a new policy; and
  3. Freeze any and all efforts to increase rates on policyholders for 90 days.

Independent Medical Review Program

Florida is looking in to implementing a 6-year-old independent medical review program for workers compensation claims. This program has been enacted by the state of California and has been a resounding success. Under this program disputes about the medical treatment of injured workers are resolved by physicians instead of by the courts. California has found this has enabled for a more efficient resolution of claims while reducing the need for lengthy and costly judicial processes.

New State Senate Promising to Revisit Florida’s Workers Comp Laws

The new President of the Senate in the state of Florida, Bill Galvano, is promising to revisit Florida’s workers’ compensation insurance laws. At a recent ceremony shortly after taking over as President of the Senate Galvano said, “I don’t want to be in a situation where they spike and then we are running to fix it at that point”. Statements like these from the leadership of the Florida legislature show the decision makers in the house are looking forward to attempt to provide a stable market for the business community and eliminate the volatility businesses have seen in recent years for Florida Workers Comp Rates.

Turtles and Alligator at Busch Gardens, Florida

What can Florida Business Owner do to Maximize Savings?

Shop around your Policy

It is not a wise decision to switch carriers every year for a slight decrease in premium. This is because when a claim does occur a carrier will take in to consideration how long you have been a customers of theirs when they are deciding to raise your rate or deny your business coverage. At the same time, it is important to make sure your business is getting a competitive rate. The best way to do this is to partner with an independent agent who can shop around your policy for you.  This can save you time and usually result in lower premium payments on more comprehensive coverage.

Invest in Safety Protocols

Safety is the name of the game in any business. It is what is best for your employees as well as your customers. It is also important when it comes time to purchase commercial insurance. a safer business will have less claims and the claims it does have will be less severe. A small investment in a safety program can pay huge dividends when looking for the lowest Florida Workers Comp Rates.

Choose the Pay as You Go Option

Pay as You Go Workers Compensation Insurance is an excellent option for seasonal and cash strapped businesses. This option allows businesses to get coverage in place at a significantly lower rate than a traditional workers comp policy. Once a policy is in place, the premium is paid monthly based upon the actual payroll from the previous month.  This is a great option if your business operates in an industry that has a hard time forecasting payroll for a number of reasons. If your payroll is significantly lower one month the payment will reflect that and the same will occur in months when your workforce represents more man hours. Finally, a Pay as You Go Policy prevents most mid-term audits from occurring because the payments are more accurate from month to month and not based upon an estimate from previous years payroll.  This prevents an unwelcome surprise from occurring at the end of a term when a business under pays premium throughout the year and has an unexpected payment to end the year.

 

Florida faces another new twist.

The workers’ compensation market in the state of Florida has faced some turbulent times over the last year.  More shocking news came the Wednesday before Thanksgiving in the form of a ruling by Leon County Circuit Court.   Judge Karen Gievers released the shocking news in the form of a ruling in a case that claims the National Council on Compensation Insurance (NCCI) and the Florida Office of Insurance Regulation (OIR) did not follow proper procedure under the states Sunshine Law.

The case that is challenging this ruling was brought before the court by James Fee.  Fee is a Miami attorney who represents injured workers. He claimed, and Judge Gievers agreed, that NCCI was in violation of the Sunshine Laws by holding “multiple, non-public, secret meetings” internally and with the OIR over the rates.  Representatives with NCCI and the OIR claim they have complied with the Sunshine Laws.

How much was the rate increase in Florida?

The total rate change was an in crease 14.5% for workers compensation insurance coverage, on average throughout the state of Florida.

What cause the rate increase?

The rate increase was the result of two court cases, Castellanos v. Next Door Company and Westphal v. City of St. Petersburg, and updates to the Florida Workers’ Compensation Health Care Provider Reimbursement Manual mandated by Senate Bill 1402.

Castellanos vs. Next Door Company

Marvin Castellanos was an injured employee who sued Next Door Company. This court decision ruled invalid a previous court ruling from 2009. The previous ruling put in place a mandatory attorney fee schedule.  THe overturn of this ruling means judges no longer have to stick to the mandatory fee schedule and now can award additional compensation for attorney’s fees.  The judges now use the fee schedule as a starting point.  This will cause the amount judges award to injured employees to increase dramatically because there is no longer a cap on what the judges can recommend for compensation to the injured employees attorney fees.  This ruling resulted in the Florida Office of Insurance Regulation (OIR) approving an increase of 10.1 percent on average statewide.

Westphal v. City of St. Petersburg

The Westphal vs. City of St. Petersburg case found the 104-week statutory limitation on temporary total disability benefits to be unconstitutional.  The Florida Supreme Court reinstated a 260-week limitation.  This Increased the amount of time an injured employees will get partial salary benefits by an additional 156 weeks.  This additional 156 weeks of coverage caused the OIR to approve 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.

14.5% Workers Comp Rate Hikes in Florida! What do I do now?

Get the best answers to your Florida Workers Compensation Insurance questions  at MyInsuranceQuestion.comYou do what you can to do your business every day and create opportunities for yourself, your employees and your customers. Rates of everything is rising, property cost, materials, shipping, employee wages. The state of Florida has now said its time for workers’ comp insurance to do the same. The rate increase is to be 14.5%! Articles can go into much more detail but ultimately medical costs, legal costs and claims expenses rise over time and Florida workers compensation rates are rising to catch up for the natural changes that have taken place and certain court rulings have made precedence that support the increased cost. There are fair arguments for and against this change but at this point we work with what we have, so as a business owner what can you do?

The state of Florida is a rate mandated state for Workers Compensation which means the starting rate is the same for everyone based on their classification code, so every carrier should be offering the same rate. There are some exceptions that can be helpful for you to keep in mind. Here are a few things that can help benefit you in combating this increase with a more competitive option:

 

There are some exceptions:  Some of our carriers have programs for particular industries that allow for discounted rates(5% below state set rates) one in particular caters to Retail stores, Restaurants and Professional Offices(Law firms, Accountants, Doctors offices, etc.)

Check with appropriate discount programs:  The Florida workers compensation system has discount options available if you meet the guidelines and have these policies in place for your business. They do have an application for each and require certain protocols in place but these can save 5% on your Florida workers compensation rate.

  • Drug Free Workplace Credit
  • Safety Credit

Divident Plans:  Some of our carriers offer dividend plans in Florida that reward businesses that control their claims. One in particular offers a 5% dividend for businesses paying 5-10k in premium and keeping a loss ratio under 5% and for accounts over 30k in annual premium they can qualify for a 20% dividend if they have a loss ratio under 20%. Like anything they do have some basic eligibility criteria but this is a huge way to reward safe business operations and lower your overhead against your competition.

Review loss control Measures: We do understand accidents do happen, however most accidents with better preparation can be prevented. A few areas to focus on:

Hiring Practices: Hiring the right employees that are experienced in the field and vested in your business are your lifeblood. Don’t put that in the hands of just anyone.

Safety Controls: Start with OSHA basics and if you have a unique business you might need more. Keeping your employees safe and preventing workers comp claims is the best way to save money on your workers comp.

Document everything: If you have safety meetings, a safety policy, drug free workplace, make sure this is all in writing and in your employee handbook. Make sure sign offs are in place so your employees are aware of these policies. This can be a great tool to prevent claims and keep a culture of safety that you take seriously in your business.

Manage your workers compensation claims:  As you develop an Experience MOD over time for your Florida workers compensation claims history, your premium can go up or down based on this experience. This means your premium is directly affected by claims you had 2-5 years ago. Settling those claims and learning from them can help you combat the rising workers comp costs. This process takes time but you will thank yourself in the next couple years as that MOD drops lower.

Buy in to avoid the increase:  If you have not placed your workers comp coverage for your business yet and are in the market, get this coverage before December 1, 2016. This is when the rate change takes place. You will still have to face the rates next year but at least this is one year you are paying 14.5% less on this policy.

Put some skin in the game:  Especially if you are paying premiums in excess of $20,000 annual, Deductible plans as well as coinsurance plans can allow you to put some skin in the game and take on a little risk of your own. Some start as small as $500-$1000 deductibles but go up and the savings increases with that. It might not make a lot of sense for the smaller premium amounts but this is a good tool to help save money without putting too much of your business at risk. Pick a deductible that saves you money and you feel comfortable with.

Alternate payment options:  Plans like Pay-As-You-GO can be helpful tools which allow you to pay your premium when you run your payroll. This won’t change the price but for companies that have a tough time with premiums in the slow season but still have a year round payroll, this can be a great solution.

In times like these were pricing can have such a direct impact on your business and its livelihood, Rate increases are inevitable, however taking these steps above if you are not already, could show savings of up to 25% below market for some clients but 5-10% is very obtainable for most clients. The increase in Florida is a tough one to swallow, however taking these actions could allow you to offset these increases. Speak with one of our Professional Insurance agents to learn how you can implement and benefit from some of these tools.

Differentiating Workers’ Comp Insurance from being a Commodity Product

Workers’ Comp Insurance is often thought of as a commodity product. There is some logic to that line of thinking. Pricing is determined by classifying employees and then taking the percentage rate assigned to that classification and multiplying it by estimated payroll. In some states such as Florida and Wisconsin, the workers’ comp rates assigned to those classifications are set by states, whereas in some states the rates by classification can vary from carrier to carrier. In competitive states, pricing is often thought to be the main differentiator between workers’ comp carriers. Most of the benefits paid from claims related to workers’ comp insurance are set by statutes, so carriers should be viewed pretty similarly in that regard as well.

Other than pricing, what can separate workers’ comp insurance carriers? Carrier rating is one factor that is considered. It relates to the financial strength of carriers. A higher carrier rating should lead to more certainty that claims will get paid, but it is highly unusual for claims not to get paid by any workers’ comp insurance carrier. Higher carrier ratings are sometimes required to meet insurance requirements of vendors or customers. A carrier’s customer service reputation can also be relevant. Additionally, payment plans can vary by carriers. Some carriers offer pay as you go. This allows premium to be paid in line with how busy a company is at a particular time. Furthermore, it generally reduces large audit balances.

Another differentiating factor is, are different programs offered by workers’ comp insurance carriers. Missouri Employers Mutual is one carrier who offers several programs to enhance employee safety. They often safety grants to policy holders. The grants will provide dollar for dollar matching funds up to $20,000 for successful applicants to purchase more permanent type safety devices. Some applicants may be able to get a grant larger than their policy premium. Missouri Employers Mutual also offers safety dividends to policy holders with lower loss ratios as a way to reward good safety practices. The Hartford is another carrier that offers numerous programs to differentiate its product. They offer programs to provide discounted slip resistant footwear to employees, programs that can lead to weight loss and overall a healthier employee pool and discounts related to vendors which can provide a more ergonomic friendly workplace. The Hartford also provides a broad form policy which includes things like more cancellation notices, pays benefits for more additional expenses, includes complimentary waivers when needed and provides longer notification periods for insureds related to certain mandatory notification events. Some carriers, such as Employers, offer price differentiators such as filing for a 5% rate deviation in Florida which allows them to offer worker’s comp rates which are 5% lower than other carriers in Florida which must use the rates set by the state.

Another area carriers can differentiate themselves is by superior loss control or claims management services. Utah Business Insurance (UBIC) is a carrier that offers superior loss control. Very knowledgeable field reps meet with prospects and insureds to provide insight on safe work places. These field reps are strongly versed in OSHA and other safety protocols. Both UBIC and Missouri Employers Mutual also diligently investigate claims as they arise.

While price is always an important consideration as it relates to workers’ comp insurance, there are numerous other factors worth considering when selecting a workers’ comp provider.

Workers’ Compensation Rates Could be on the Rise in Florida

Workers’ compensation insurance rates in Florida could be on the rise. As reported in outlets such as the Miami Herald, the Orlando Sentinel and the Insurance Journal.  The National Council on Compensation Insurance (NCCI) filed for a 17.1 rate increase to take affect August 1st. The bulk of the recommended rate increase is due to an expectation that attorneys’ fees will increase the Florida workers comp landscape due to a recent Supreme Court Ruling.

Florida Workers Comp Insurance System

The increased rates are unfortunate in that Florida workers comp insurance is already a significant expense to business owners. Furthermore, increased legal fees should not be a necessary expense to add to the system. Increased education, safety devices, adoption of return to work programs and decreased prescribing of opiates are all trends within the industry which are helping to control workers’ comp rates. Thus, while this appears to be a blow to work comp rates in the state, there are some trends that are working to reduce rates as well (which is a challenge given the ever increasing cost of medical care in the United States).

Another factor which drives Florida workers comp rates higher is the existence of fraud and other scams. Florida is one of the highest states in the country for fraudulent work comp claims, especially in the Miami area. Additionally, as demonstrated in this article from the Insurance Journal, scams to artificially reduce workers’ comp premium are prevalent in Florida. Scams and fraud unfairly increase work comp rates for business owners that are trying to work within the system.

Florida is what is known as a rate mandated state for workers’ compensation insurance. Wisconsin and several other states are set up like this as well. This means workers’ comp rates are set by the state. Work comp rates vary by employee classification and experience modifications, but they are otherwise set by the state. This is in contrast with most states where insurance carriers file rates and there is different pricing between carriers. Florida’s workers’ compensation rates are just below average compared to other rates in the most recently published national study.

Given Florida is a rate mandated state, business owners may wonder what they can do to reduce workers’ compensation rates. In Florida, a small number of carriers, such as Employers, have file with the state of Florida to offer a 5% discount from the rates set by the state of Florida. On the other hand, there is a consent to rate, which can be offered by certain carriers in Florida for difficult to quote businesses. This means a carrier offers workers comp insurance, but they are allowed to charge up to 25% more than the rates set by the state of Florida if an insured signs off on this pricing. If rates can’t be improved, business owners may have better payment options available such as pay as you go insurance. Furthermore, better safety practices leading to lower claims (and thus a lower experience modification factor) are always a way business owners can decrease their work comp insurance costs. Most within the industry believe the Florida legislature will make sweeping changes to the workers compensation system at some point in 2017 or 2018.  So business owners can rest assured that in some way, help is on the way in Florida.