Workers’ Compensation is insurance coverage purchased by the employer/business that provides benefits for job-related employee injuries. Florida law requires all employers to purchase workers’ compensation coverage (with a few exceptions). Under a workers’ compensation policy, employees are compensated for occupationally incurred injuries, regardless of fault.
On function performed by the ‘FLOIR’ is reviewing and adjusting the rates paid by Florida’s employers. Depending upon statewide longitudinal trends in claims, reserves, and losses, the FLOIR increases or decreases the applicable workers’ compensation insurance premium rates. Starting on January 1, 2020 Florida’s workers’ compensation rate will decrease by 7.5%. Here is a link to the FLOIR’s November 6, 2019 Final Order on Rate Filing.
This decrease will, of course, make business funds available for other purposes. An operational suggestion about the use of funds ‘freed-up’ by the 7.5% decrease: Consider using some or all of that ‘found money’ to improve a company’s safety-related activities.
Why? Because while the premium decrease impacts the state at-large, an individual company’s rate impact is based upon its own three-year rolling history of claims and losses, called the “Mod Rate”. 4 Simply put, the lower this history, the more likely a company will get a rebate on its premiums; the higher this history, the more likely the company will have to pay a premium additive.
The calculation and impact of the Mod Rate is complex. The following is a useful explanation of the Mod Rate 5:
How Are Experience Modifications Calculated?
The average experience modification for each industry is 1.00. The final workers compensation premium on each policy is determined by multiplying your manual premium by your experience mod. If your mod is .85, then your business is saving 15% on your premium. Conversely, if your mod is 1.15, then your business is paying an extra 15%.
NCCI calculates the experience modification for every business that qualifies in the state of Florida. The calculation is computed by using claims and premium data from 3 policy periods skipping the most recent policy. In other words, you look back 4 years and use the three policy periods after that point. This is done because claims and audited premiums are often not completely reported yet on the most recent policy. With this data, NCCI uses a formula to compute the experience modification for the business.
Starting on January 1, 2020 Florida’s workers’ compensation rate will decrease by 7.5%.
While the FLOIR can assist companies by decreasing the workers’ compensation insurance structure, when that is statistically appropriate, in the end it is the companies’ responsibility to protect its employees from being put in the position of being injured and filing claims for temporary or permanent and partial or full disability claims.
1 Unless there is an applicable exception. https://quoteinvestigator.com/2012/04/13/taxes-civilize/
2 See generally https://www.floir.com/Sections/PandC/WC/default.aspx.
3 Ibid. See generally https://www.floir.com/.
4 See https://www.floridawc.com/workerscompensation/policy/mod/.
5 Ibid. The “NCCI” is the National Council on Compensation Insurance, Inc. [https://www.ncci.com/pages/default.aspx].
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– For more information, call Philip N. Kabler of the Gainesville, FL office of Bogin, Munns & Munns at 352.332.7688, where he practices in the areas of business, banking, real estate, and equine law. He has taught business and real estate law courses at the University of Florida Warrington College of Business Administration and Levin College of Law and is the President-Elect of the Eighth Judicial Circuit Bar Association.
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