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Learn how worker compensation rates affect economy, date accuracy and more

Cotney Consulting Group - Learn how worker compensation rates affect an areas economy, date accuracy, and more
November 29, 2023 at 6:00 a.m.

By Cotney Consulting Group.

Decreasing workers' compensation rates in Florida marks a significant development for the state's business landscape.

Florida's decision to implement a substantial 15.1% decrease in workers' compensation rates, effective January 1, 2024, represents a pivotal shift in the state's approach to workers' compensation insurance. This decision, approved by the Florida Office of Insurance Regulation (OIR) and initiated by the National Council on Compensation Insurance (NCCI), marks a continuation of the trend of decreasing rates that Florida has experienced since 2018.

Historical context and cumulative impact

Historically, Florida has seen a consistent reduction in workers' compensation rates. Since October 2003, rates have cumulatively decreased by 73.8%, and with the latest approval, this reduction extends to 77.7%​​. This sustained decline underscores a significant shift in the state's workers' compensation landscape, fostering a more favorable business environment.

Rationale behind the rate reduction

The 15.1% decrease aligns with the NCCI's filing, which was based on claims experience in the 2020 and 2021 policy years​​. According to NCCI, favorable loss experiences during these periods were primary drivers for proposing the rate decrease. The decision reflects an understanding of businesses' evolving needs and challenges, particularly in the post-pandemic era. The rate reduction presents several implications for businesses in Florida.

Economic stimulus and business growth

  • As Chief Financial Officer Jimmy Patronis noted, lower insurance costs for employers mean businesses can redirect financial resources into growth and expansion, strengthening the state's economy​​.
  • Agriculture Commissioner Wilton Simpson highlighted that the announcement opens more cost-saving opportunities for businesses, reinforcing Florida's commitment to supporting small businesses​​.

Stability and competitiveness

  • Insurance Commissioner Michael Yaworsky emphasized the stability and competitiveness of Florida's workers' compensation market, suggesting that lower rates will contribute to the overall success of businesses in the state​​.

Despite the overall positive outlook, some industry members have expressed concerns.

Potential inaccuracy of data

  • Roofing contractors, particularly those affiliated with the Florida Roofing and Sheet Metal Association (FRSA), argued that the data used to track workplace injuries might be skewed, focusing on the pandemic years of 2020 and 2021, when not all industries were operating at full capacity​​.
  • Concerns were raised about the increased use of subcontractors in roofing and the potential underreporting of minor injuries by Professional Employer Organizations (PEOs), which could lead to inaccuracies in the data used to justify the rate decrease​​.

Risk of systemic instability

  • There are apprehensions that continual decreases might lead to workers' compensation insurance carriers leaving the state, as they might not be able to manage higher attorney fees and medical costs sustainably​​.

Conclusion

Decreasing workers' compensation rates in Florida marks a significant development for the state's business landscape. While it offers numerous benefits, including economic stimulus and enhanced competitiveness, it is also met with data accuracy and systemic stability concerns. As the state navigates these changes, it will be crucial to balance the needs of businesses with the long-term sustainability of the workers' compensation system.

Learn more about Cotney Consulting Group in their Coffee Shop Directory or visit www.cotneyconsulting.com.



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