Florida: Comp system 'attractive market for insurers,' regulators report

The state that once had the highest workers' comp insurance rates in the country is now a "competitive market," according to the Florida Office of Insurance Regulation. The comments came in the OIR's 2010 Workers' Compensation Annual Report.

Using various data, the report analyzes the availability and affordability of workers' comp coverage. The system gets overall high marks, except in terms of availability for some companies.

"The majority of complaints about not being able to get coverage in the voluntary market comes from small employers, new businesses and construction employers," the report says. "Employers with a combination of these characteristics are especially difficult to place in the voluntary market. In some cases, coverage is related to the availability of agents in the local area and the number of insurers the local agents represent."

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Overall, though, availability does not appear to be a major concern. The report noted Florida's residual market is small, "suggesting that the voluntary market is absorbing the vast majority of demand." The report also noted the growing use of professional employer organizations among small employers and said that has helped with both availability and affordability.

In terms of rates, Florida has apparently made great strides since legislative reforms were enacted in 2003. After having the highest workers' comp rates in the country in 2000, rates have declined by nearly 62 percent. This year's 7.8 percent rate hike was the first increase since 2002.

The legislative reforms enacted in the early 2000s included:

A cap on attorney's fees.
Tightening construction industry requirements.
Doubling impairment benefits for injured workers.
Increasing the medical fee schedule.
Eliminating the Social Security disability test.

"Before the reforms, Florida consistently ranked as the first or second state with the highest workers' compensation rates in the country," the report says. "Post-reform, Florida dropped out of the top 10 rankings. By 2008, Florida had dropped to 28th place and the latest ranking based on January 1, 2010 rates shows that Florida has the 12th lowest average rates for all the states in the country."

In addition to lower rates, the report noted that Florida continues to be the largest state for which the private market insurance industry is the dominant provider of workers' comp insurance. Bridgefield Employers Insurance Co.'s business in Florida has the largest market share of any private insurer in the six most populous states with 13.1 percent of the Florida market.

Read more at the WorkersComp Forum homepage.

February 7, 2011

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