Florida’s new insurance commissioner has a rare, meaningful and high-stakes opportunity to earn his chops and establish his credibility for years to come.
He can demonstrate he has the mettle to stand up to the insurance industry to the benefit of both consumers and the business community.
How often does that happen?
Just three months into his tenure in one of the most consequential jobs in Florida, state Insurance Commissioner David Altmaier can flex his regulatory muscle and prove his determination to stand up for working Floridians and those who employ them.
The solution is simple, established by precedent and long-overdue: Altmaier can bust up the insurance cartel that is the National Council on Compensation Insurance (NCCI), ensuring real price competition within Florida’s workers’ compensation system.
NCCI, the organization that proposes workers’ comp rates for Florida, recently filed a request for a 17.1 percent rate increase — then hiked it to nearly 20 percent, its second-largest rate increase request since 1999.
To quote the late baseball great Yogi Berra, “It’s déjà vu all over again.”
Back in 1997, then-Insurance Commissioner Bill Nelson pushed unsuccessfully to end Florida’s half-century relationship with NCCI to force down premiums, suggesting other companies be permitted to compete for its functions. Nelson was visionary.
In recent years, several other states, including South Carolina and New York, have opened up their workers’ compensation insurance markets to actual rate competition, and doing so realized significant savings.
Meanwhile, Florida still tolerates an antiquated system in which an NCCI board stacked with insurance executives sets a rate to serve as a floor for workers’ compensation insurers — in other words, they can’t charge less.
Documentation to validate the filing is largely protected from public scrutiny, with NCCI citing “trade secrets” as an excuse to shield the data. How could an entity that has no competition claim trade secrets and, even more, how could regulators accept that claim?
When New York opened up its workers’ comp system in 2013 to true rate competition, the state’s business community saw rates drop 30 percent over two years, saving employers more than $45 million.
In contrast, the proposed rate hike here would make Florida one of the costliest states for employers to buy workers’ comp insurance. That’s money that could otherwise be used for job creation.
The Florida Chamber of Commerce warns that a nearly 20 percent rate hike would cause uncertainty among Florida job creators — the small businesses that create two out of every three jobs.
Altmaier should follow the example of the South Carolina Insurance Department, which challenged NCCI’s requested 23.7 percent rate hike in 2007 and ultimately settled on a much more reasonable 9.8 percent increase. That move saved South Carolina businesses approximately $130 million.
Here’s a no-brainer: What if Florida just says no?
How about taking NCCI out of the rate-making driver’s seat, opening up Florida to real rate competition as other states have done; calling NCCI’s bluff?
That would make Altmaier a hero to both injured workers who depend on a properly functioning workers’ compensation system and employers who need their labor force to get back to work.
It’s a rare moment when an insurance commissioner can satisfy both the lion and the lamb — all by getting the fox out of the henhouse.