What: Florida legislators recently approved a 14.5% rate increase on all new and renewal workers’ compensation policies. This is less than the 19.6% rate increase originally requested by the National Council on Compensation Insurance (NCCI).
When: The higher rates are effective December 1, 2016. This increase will not apply mid-term to existing coverage.
Why: The rate increase was in response to two Florida Supreme Court rulings that reversed reforms enacted in 2003 that sought to contain workers’ compensation costs:
- Castellanos v. Next Door Co.—This ruling was issued on April 28, striking down a mandatory attorney fee schedule under the Florida and U.S. constitutions. This decision accounts for slightly more than 10% of the rate hike. NCCI estimates the Castellanos ruling could increase claim costs by as much as 37.5%.
- Westphal v. City of St. Petersburg—Issued on June 9, 2016, the ruling stated the 104-week statutory limit on temporary total disability benefits was unconstitutional. It reinstated a 260-week limit. This decision accounts for 2.2% of the rate increase.
These court rulings undo the reforms that were put in place in 2003, which lowered claim costs and successfully drove down workers’ compensation rates by approximately 65% over the past 11 years.
Questions: If you have any questions, please contact us at 407-740-5550.