NCCI: Frequency increase drives need for higher rates in Florida
The Florida-based ratemaking agency is asking state regulators to approve the increase, citing increased frequency as one of the primary reasons. "Following several years of significant declines, claim frequency in 2009 was up significantly," the organization said. "Preliminary 2010 data also shows claim frequency up further."
The estimated 6.5 percent increase in the frequency of workers' comp claims is not unexpected, given the ongoing economic recovery, albeit a sluggish one. NCCI also notes that improvements resulting from 2003 workers' comp reforms in Florida have run their course.
"The system is operating from a new baseline reflecting the total cumulative effects of the reform," the organization said. "As a result, it has been necessary to adjust the very optimistic outlook, or trend, underlying rates to reflect that significant ongoing experience improvements are no longer occurring and are no longer expected. Trend adjustments reflecting less optimistic outlooks were approved in the Jan. 1, 2011 rates."
NCCI had proposed increasing rates by 8.3 percent last year. The figure was ultimately reduced to 7.8 percent.
"An increase is always tough, particularly in this economy," said Lori Lovgren, NCCI state relations executive for Florida. "But there are obviously very good reasons."
Lovgren points out that the cumulative impact of rate decreases following the 2003 reform was negative 64.7 percent. If the latest rate filing is approved, overall rates from the period October 2003 through January 2012 would be a 58.6 percent decrease.
NCCI said if the proposed rate hike were approved, Florida would still rank among the 20 states with the lowest workers' comp rates nationally and would be the only large state in that category. Also, Florida would continue to have the lowest workers' comp rates of any state in the Southeast.
State regulators are planning a public hearing on the recommendation in mid-October.
Read more at the WorkersComp Forum homepage.
September 8, 2011
Copyright 2011© LRP Publications