The National Council on Compensation Insurance will take no position on a Senate bill that would require workers’ compensation carriers to propose their own rates to the Office of Insurance Regulation.
“We don’t have an opinion in it. We operate in both environments,” Susan Donegan, chief regulatory services officer for NCCI, said in a telephone interview Monday.
SB 1582 would shift Florida from a “fully administered” state to a “loss cost” system. That means that instead of proposing premium levels for most of the carriers in the state, as NCCI does now, the companies would compete with each other on rates.
NCCI would have a role under either system, Donegan said. In fact, of the 36 states in which it operates, only four — including Florida — are fully administered. In the others, the company crunches numbers for individual carriers.
“We have a lot to do in the states that are loss cost, too,” Donegan said. “We are still very much part of the process. It’s just a different way we provide the reports to the regulators.”
The shift would mean more work for the insurance office, she added.
“It means they have a little bit more to to on their end. The they will have to understand there’s going to be a part of the rate that they’ll get directly from the carriers, and then they’ll have to approve that.”
The House’s proposed workers’ compensation fix would keep Florida an administered-rate state but allow carriers to diverge from the statewide rate by no more than 5 percent.
NCCI routinely analyzes proposed legislation for the effect on the market. Company analyists were still reviewing the House and Senate bills, Donegan said.
“We have not had a chance to do a deep dive on it,” she said.
Workers’ compensation reform is a top priority for business interests, alarmed at a 14.5 percent increased the insurance office approved to take effect beginning in December. Those interests and many in the Legislature blame Florida Supreme Court rulings striking caps on attorney fees in workers’ comp litigation, and on permanent disability eligibility.
A challenge to the rate increase is pending before the 1st District Court of Appeal, which must decide whether the Sunshine Law applies to NCCI’s internal deliberations and documents.
Donegan wants to knock down any perception that NCCI is “an evil empire unto itself — a secret society.” Or that it actually sets premium levels.
“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 OIR the direction we think a rate needs to go in order for it to be neither execessive or inadequate … and that it is not unfairly discriminatory. That’s the legal standard that’s baked into the the statute,” Donegan said.
Insurance Commissioner David Altmaier and his staff then do their own analysis and decide “whether we are in the right neighborhood or whether they feel there are some other factors they need to take into consideration.”
The office did just that in approving last year’s rate increase — NCCI had recommended a hike closer to 19 percent.
“It’s a little bit of an art. It’s a science, because it’s based on facts and real-life claims information,” said Donegan, herself a former insurance commissioner in Vermont.
“The art is on the regulatority side. There may be facts a commissioner has to take under consideration. That might be a political consideration. It might be an economic situation in the state. It could be a legislative they’re dealing with on a local level.”
Donegan emphasized that NCCI is a Florida-based company with about 850 of its 1,000 employees in its Boca Raton headquarters. It pays $94 million in direct compensation to its workers. They’re good jobs, too — the median salary is $86,000.
“We want people to understand that, even though we’ve been a fairly quiet company, we’ve been a very important part of the Boca Raton and Palm Beach County economic structure.”