Florida employers may be paying less for workers’ compensation insurance in 2023

Florida employers may be paying less for workers’ compensation insurance in 2023. The National Council on Compensation Insurance (NCCI) is recommending an overall average rate level decrease of 8.4 percent for next year. The proposed rate reduction filed with Florida’s Office of Insurance Regulation (OIR) would apply to new and renewal workers’ compensation policies in the voluntary market beginning January 1, 2023. If the OIR approves a rate reduction, it would be the seventh consecutive year workers’ compensation rates have gone down in Florida.

NCCI’s recommended rate reduction is based on 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’s recommendation was 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.

Despite recommending a rate reduction, NCCI cautions that inflation has the potential to 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.

Remember, NCCI is only recommending an overall average rate level decrease of 8.4 percent in 2023. Florida’s Office of Insurance Regulation will analyze NCCI’s data and may request an adjustment to the current recommendation before holding a public hearing. Although optimism surrounds NCCI’s recommendation, next year’s workers’ compensation premium rates will not be known until Florida’s Office of Insurance Regulation issues a final order.

The Human Equation prepares all risk management and insurance content with the professional guidance of Setnor Byer Insurance & Risk.