NCCI Won't Comment on Proposal to Switch State to a Loss Cost System

Tuesday, March 7, 2017 | 0

The National Council on Compensation Insurance will not take a position on a state Senate bill that would overhaul Florida’s entire workers’ compensation rate-making process by converting it from a fully administered system to a loss cost state.

Susan Donegan

SB 1582 would end the practice of NCCI recommending full rates on behalf of every Florida comp carrier, a process it uses in only three other states — Arizona, Idaho and Iowa.

“We don’t have an opinion in it. We operate in both environments,” Susan Donegan, NCCI chief regulatory services officer, told floridapolitics.com on Monday. “We have a lot to do in the states that are loss cost, too. We are still very much part of the process. It’s just a different way we provide the reports to the regulators.”

Sen. Rob Bradley, R-Fleming Island, said when he introduced Senate Bill 1582 on Friday that it would make sweeping changes capable of withstanding judicial review, and would stabilize rates in the wake of two state Supreme Court decisions and an opinion by the 1st District Court of Appeal, all in the spring of 2016.

Florida raised its workers’ compensation rates 14.5% effective Dec. 1, mainly as a result of a state Supreme Court ruling that struck down caps on claimants’ attorney fees as unconstitutional.

The rate increase is being challenged in a case before the 1st District Court of Appeal, which is expected to rule any day.

Donegan told floridapolitics.com that NCCI is not “an evil empire unto itself — a secret society.”

“We gather the data for the insurance commissioners — the actual, real claims data,” she said. “We analyze that and make a recommendation based on the data that tells the (Office of Insurance Regulation) the direction we think a rate needs to go in order for it to be neither excessive or inadequate … and that it is not unfairly discriminatory. That’s the legal standard that’s baked into the statute.”

NCCI provides advisory loss costs for 34 states including the District of Columbia, and recommends full rates to regulators in Florida and three other states. In Illinois and Indiana, NCCI provides recommendations for both loss costs and full rates.