Cam Fentriss, FRSA LEGISLATIVE COUNSEL
Well, it’s late summer/early fall so that means time for football and a workers’ comp rate filing. It’s time for discussion and decision on what your rates will be for the next year. This year is a little different for two or three reasons that are all tied to each other. Here they are.
First, we are impacted by the Florida Supreme Court Castellanos decision from April 2016 which threw out limits on what claimant attorneys are paid, guaranteeing one or more rate increases in the near future.
Second, the impact of the Castellanos decision was so great that it was necessary to request a rate increase in May 2016 (instead of or in addition to the annual request later in the year). The requested increase was a little over 17 percent to start August 1, 2016 (rather than the usual January 1, 2017). Based on even more bad news from various sources, at the end of June, the rate request was increased to 19.6 percent. After review and a hearing, the Office of Insurance Regulation (OIR) granted a 14.5 percent increase to start December 1, 2016. These were the only rate filings in 2016.
Third, because a 14.5 percent increase would likely get employers calling and complaining to their legislators, it was very possible our Legislature could pass a law fixing the bad court decision(s). To try to avoid those calls, the claimant lawyers set out to postpone the increase by holding it up in court at least for the duration of the legislative session set to run until the end of session on May 5, 2017. By doing this, no employer would receive a bill with the big increase in time to call and complain to his or her legislators.
With these events and factors, what would you expect to see happen when the time came for the usual 2017 rate filing? Some people expected the proposal of a small increase, some feared a large increase, and likely no one expected a decrease. The answer is: a proposed overall decrease of 9.3 percent. Of course, we will not know for sure until the actual rate is determined by the OIR so the decrease could be less.
A decrease does not sound logical but there are some good explanations we need to understand.
The decrease will sort of coincide with the approved 14.5 percent increase so that you will really have an overall net increase of 5.2 percent for your 2017 premiums. This will be an important point when attorneys try to isolate the information and talk only about the decrease for 2018 to convince the Legislature that, because of the proposed decrease, rates are actually going down, not up.
The proposed decrease is based on experience data from 2014-2015. The court decisions that will impact rates were handed down in 2016. This means that not one thin dime of this proposed rate decrease can be attributed to anything (good or bad) related to these court cases. Instead, the proposed decrease is thanks to improved claim frequency (aka a decrease in claims). There are many reasons for this (increased safety, automation, etc.). It is important to note that fewer claims means less attorney involvement – an important factor that keeps rates down.
The rate filing that will occur in late summer 2018 will be based on experience data from 2015-2016 which will include the impact of the court decisions in 2016. We need to be ready to see proposed increases that may be large.
Of course, we could avoid that if Florida’s Legislature would take the opportunity to fix the attorney fee free-for-all caused by Castellanos. But don’t hold your breath as we are in much the same place this year as we were last year with legislative leadership leaning very heavily toward claimant lawyers. And as if that is not enough, even a more balanced Legislature may not be willing to take the political hit of making workers’ compensation changes unless and until rates start to climb significantly. With this year’s decrease, there will be no appetite for change among politicians.
Anna Cam Fentriss is an attorney licensed in Florida since 1988 representing clients with legislative and state agency interests. Cam has represented FRSA since 1993, is an Honorary Member of FRSA, recipient of the FRSA President’s Award and the Campanella Award in 2010. She is a past member of the Florida Building Commission Special Occupancy Technical Advisory Committee (2001-2013), President of Building A Safer Florida, Inc. and past Construction Coalition Chair (1995-1997).
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