NCCI proposes 15% rate decrease for Florida workers’ compensation insurance in 2024
Florida employers may be paying less for workers’ compensation insurance next year. The National Council on Compensation Insurance (NCCI) is recommending an average 15.1 percent rate level decrease in Florida’s voluntary workers’ compensation market for 2024. NCCI, a rating organization authorized to make rate filings on behalf of workers’ compensation insurance companies in Florida, submitted its proposed rate decrease to the Florida Office of Insurance Regulation for review and approval. If approved, the rate decrease would become effective January 1, 2024.
NCCI’s proposed rate reduction is based on claims experience data for policy years 2020 and 2021, as of year-end 2022. According to NCCI’s rate filing summary, a favorable loss experience has been observed in each of these time periods. This was a primary driver of the proposed 15.1 percent decrease. NCCI also notes that the proposed rate reduction includes additional changes due to recent medical fee schedule updates and higher investment returns expected in today’s interest rate environment.
The favorable conditions prompting the proposed rate decrease in Florida seem to extend nationwide. According to NCCI, the workers compensation system remains healthy.
- Lost-time claims relative to premium have returned to their 20-year trend trajectory, declining 4% in the past year.
- Employment and wage growth marked a return to pre-pandemic levels.
- Recent wage increases are outpacing average claim costs along with continued countrywide declines in total claims.
- Payroll, as the exposure base, is inflation-sensitive, so as wages rise, premiums automatically increase along with the cost of associated workers compensation benefits. Consequently, wages, premiums, and indemnity benefits typically stay in balance.
There are, however, some areas of concern. According to NCCI, there was a notable rise in claim costs for 2022. Year over year, medical claim costs increased approximately 5 percent and indemnity claim costs increased approximately 6 percent. Although medical inflation is predicted to increase at a rate of about 3% per year, it remains below the inflation rate of the Consumer Price Index.
Remember, the 15.1 percent rate decrease has only been proposed by NCCI. Florida’s Office of Insurance Regulation must still 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.
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