By Anita Byer, Setnor Byer Insurance & Risk
Florida employers will be paying less for workers’ compensation insurance in 2023. The Florida Office of Insurance Regulation approved an overall average statewide decrease of 8.4 percent in workers’ compensation insurance premiums. The rate decrease will apply to new and renewal policies beginning January 1, 2023. This is the seventh consecutive year workers’ compensation rates have gone down in Florida.
The 8.4 percent rate reduction was initially proposed by the National Council on Compensation Insurance (NCCI), a rating organization authorized to make rate filings on behalf of workers’ compensation insurance companies in Florida. The reduction was based on NCCI’s analysis of claims experience data for the 2019 and 2020 policy years as of year-end 2021. According to NCCI:
- favorable claims experience has been observed during these time periods;
- Florida’s frequency of lost-time claims (injured employee receives wage replacement benefits) has generally declined over the most recent eight years; and
- Florida’s average indemnity cost per case have been relatively consistent over time, while those for medical have been slightly more volatile from year-to-year.
NCCI notes that the rate reduction not influenced by the pandemic as its analysis did not include COVID-19 claims data. Nevertheless, NCCI’s assessment of possible pandemic-related impacts revealed that:
- most COVID-19 claims are medical-only or indemnity-only and continue to be small (less than $1,500);
- large claims (over $100,000) account for fewer than 2% of all COVID-19 claims, but more than 60% of total COVID-19 losses;
- most claimants were employed in the healthcare industry;
- the average age of workers with large claims is 55, which is 8-10 years older than that those with non-COVID claims; and
- COVID-19 claims decreased significantly in 2021.
Although rates are going down next year, NCCI cautions that inflation has the potential to negatively influence the workers’ compensation system nationwide. Wage inflation is a concern as many workers, particularly those in leisure and hospitality, have seen significant pay increases recently. This directly impacts the cost of workers’ compensation insurance because payroll is used as the base to calculate premium. Rising medical claim costs (medical inflation) can also lead to higher premiums.
Contact us to learn more about the upcoming workers’ compensation rate reduction.