Workers’ compensation insurance costs may dip
Florida regulators could reduce premiums in 2021
TALLAHASSEE — For Florida businesses struggling during the COVID-19 pandemic, here’s a bit of good news: Workers’ compensation insurance costs could go down in 2021.
State insurance regulators have received a rate filing that would reduce premiums next year in the workers’ compensation system by an average of 5.7%, which would be the fourth straight year of premium decreases, according to information released Tuesday.
The National
Council on Compensation Insurance, which makes annual rate filings for the industry, pointed to “unprecedented results” in the workers’ compensation insurance system nationally. Florida’s average rates dropped 7.5% this year, after reductions of 13.8% in 2019 and 9.5% in 2018.
“For decades, with few annual exceptions, frequency (of claims) has continued on a clear downward path driven by technology, safer workplaces, improved risk management, and a longterm shift from manufacturing to service sectors,” the organization, known as NCCI, said in a summary of the filing. “NCCI has no expectation that this trend will change course. For the last several years, severity trends (of claims) have remained fairly moderate, tracking very closely with wage inflation. For these reasons, NCCI’s analysis has indicated decreases across most of its jurisdictions in recent years.”
The state Office of Insurance Regulation will review the filing before issuing an order setting the rates, which would take effect Jan. 1. In setting the 2020 rates, for example, the office approved a 7.5% decrease after NCCI initially proposed a 5.4% average reduction.
“As always, OIR will review the filing to ensure the proposed changes are not excessive, inadequate or unfairly discriminatory and evaluate its potential effects on the insurance marketplace and employers, who are required by law to carry this insurance on their employees,” the Office of Insurance Regulation said Tuesday as it released information about the filing.
In its summary, NCCI said the filing does not take into account potential effects of the COVID-19 pandemic on the workers’ compensation system. The News Service of Florida reported last week that a state report showed nearly 12,000 workers’ compensation claims related to COVID-19 had been filed as of July 31 —with more than 43% of what are known as “indemnity” claims rejected by insurers.
NCCI said the potential impact of COVID-19 on the workers’ compensation system “is in the very beginning stages of being understood; therefore, the data underlying this filing does not include claims from COVID-19. Due to the lack of this COVID-19- related ratemaking data and the current level of uncertainty, NCCI has not yet assessed the potential impact on future rate levels.”
But the organization said COVID-19 could end up having offsetting effects on the system. For example, the system could see an increase in claims that warrant compensation for people in “frontline COVID-19-related occupations.” But the group said other claims could be reduced because more people are working remotely.