Rep. Daniel Davis, R-Jacksonville, filed House Bill 4169 on Dec. 20, seeking to remove workers' compensation and employers' liability from Florida's controversial excess-profits law, which requires carriers to return premiums when they exceed 5% of anticipated underwriting profit.
The bill is being opposed by Florida Insurance Consumer Advocate Robin Smith Westcott and Florida Workers' Advocates (FWA), a claimants' attorneys' group.
HB 4169 would remove workers' compensation and employers' liability from a 1979 law that requires carriers to report their premiums, losses, expenses and dividends to the Florida Office of Insurance Regulation (OIR) each July 1 to cover the most recent three-year reporting period available.
OIR's Property and Casualty Product Review unit told WorkCompCentral Friday that Insurance Commissioner Kevin McCarty collected nearly $16.7 million in excess profits from carriers during fiscal 2010-2011.
But Westcott said collections are down substantially from previous years because of reforms that triggered rate reductions of more than 60% between 2003 and 2010. However McCarty has approved rate increases effective Jan 1, 2011 and again for 2012, for a combined total of 17.7%.
According to NCCI's last report in September, despite the lastest increases, rates in the state are still down 58% from their peak and the current rates are still too low for the 2012 policy year by 8.9%.
Total direct written premium in the state is around $2.325 billion with a accident year combined ratio of around 119%.
Compare that to the 2006 accident year combined ratio of only 74%.
Florida has the second highest increase of loss costs in the South at 8.9%. Virginia's increase of 10.5% beat Florida, and 9 other states are showing either flat or decreases in loss costs.
With the 2012 rate increase, NCCI places Florida at 19th out of all states in terms of premium per $100 of payroll at $1.91. For comparison, North Dakota is cheapest at $1.02 per $100 of payroll, and Montana is highest at $3.33 per $100 of payroll.
In addition, according to NCCI, claims frequency experienced its first increase in 2010 accident year, the first increase in 9 years, seemingly contradictory to the economic decline.
There are still plenty of issues in Florida confronting workers' compensation regulators for 2012 with the usual issues concerning physician dispensed drugs, pharmaceutical overdosing, changes to experience rating formulas, continued decline in claims frequency (noted by NCCI as a continuing international phenomenon related to much safer work places) and recent case law such as the Kaufmann case on attorney fees.
To the extent that Florida's excess profit law impacts the state's carriers the record is less complete.
Attorneys for FFVA Mutual Insurance Co., a Maitland, Fla.-based workers' compensation carrier, agreed to suspend a 2009 lawsuit filed with DOAH over McCarty's order that the carrier return nearly $10.5 million in excess profits. OIR based its assessment on revenues and expenses FFVA collected between 2004 and 2006.
In return, McCarty agreed to hold hearings and review the rules by which he makes the assessments. FFVA's law firm, Foley & Lardner, argued that OIR regulations don't allow carriers to include such items as federal and state income taxes, reinsurance costs and surplus-note expenses in their calculations of profit and loss.
It seems to me that given the issues above and the current volatility of Florida's workers' compensation market, including the continued tepid growth in employment in the state that HB 4169 won't get much traction. Still, it will be an interesting issue to observe as the new year opens in the Florida Legislature on Jan. 10.
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