By Tom Murphy of Danna-Gracey

In the insurance industry, like life, things tend to be cyclical. After more than seven years of declining rates and premiums, the National Council on Compensation Insurance (NCCI) recently recommended a rate increase of 8.9% in Florida, to take effect on January 1, 2012.
 
The workers’ compensation line in Florida, as well as throughout the country, faces three major challenges:
 
1.    Deteriorating Underwriting Results – For the first time since 2001, the combined loss ratio for private carriers has risen to 115%. This is unstable in the current economic environment. Carriers start to see profit at about 100% or less.

2.    Political Environment – The establishment of the new Federal Insurance Office will most certainly increase the possibility of greater regulation for property and casualty companies.    

3.    Frequency of Claims – For the first time in thirteen years, the national claims-frequency level has increased and looks to be trending that way.
These three factors, in addition to others such as the Patient Protection and Affordable Care Act (PPACA), have created an uncertain environment for the future of workers’ compensation rates in Florida and will lead to a rate increase for 2012. This may be the start of a trend and the changing “cycle” that appears to be inevitable, based upon history.  

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