Florida Employers, Get Out Your Wallets: Workers' Comp Insurance Rates Rising 14.5 Percent
On Dec. 1, 2016, Florida employers must swallow a statewide 14.5 percent rate increase to workers’ compensation coverage. The Florida Office of Insurance Regulation (OIR) approved the raise after two 2016 actions by the Florida Supreme Court:
- On April 28, the Florida Supreme Court found the mandatory attorney fee schedule in the Florida Statutes unconstitutional as a violation of due process under both the Florida and U.S. Constitutions; and
- On June 9, it found unconstitutional the 104-week statutory limit on temporary total disability benefits, and reinstated the previous 260-week limit.
Florida employers may take some consolation that in September 2016, the OIR rejected the National Council on Compensation Insurance’s request for a 19.6 percent hike in workers’ comp premiums. The OIR said it did not find justification for such an increase to new, renewal and outstanding insurance policies.
Premium Hike Will Affect All Florida Businesses
The mandatory 14.5 percent rate change hits all Florida companies that handle workers’ compensation insurance and claims, but small businesses will feel the sting most acutely. And as of 2015, small companies made up nearly 99 percent of the state’s employers. Florida claims nearly 405,000 small businesses with employees, and one out of three state working residents work for a firm with fewer than 50 employees. Clearly, the jump in workers’ compensation premiums will have a huge economic impact.
The Florida Chamber of Commerce warned that the rate increase “will top more than $1.5 billion, and force Florida job creators to pay higher premiums designed to benefit billboard trial lawyers – not injured workers.”
The 2017 Florida legislative session aims to examine approaches to keep workers’ compensation premiums under control. All in all, however, the state’s workers’ compensation rates are down more than 50 percent in the last 10 years.
How to Soften the Blow
To mitigate the blow delivered by the workers’ comp rate increase, Florida employers may want to consider joining a professional employer organization (PEO). A PEO is a co-employment model that connects your workforce to a larger benefits and administrative employment group. Most suited to small businesses — 10 to 200 employees — a PEO groups the workforces of many client companies, usually allowing the PEO to negotiate better insurance rates and benefits for all members. The economies of scale provided by a PEO may allow its client businesses to reduce many costs of employment and improve their bottom lines.
With Paychex PEO Workers’ Compensation coverage we can help save you from paying Florida’s state increase and assist you in navigating the changes in the Florida program. You can continue to add more employees rather than cut existing staff, enhance employee benefits, and pursue many other actions that you might otherwise delay due to the rise in your workers’ compensation premiums.
You can also, download a FREE blue paper: What You Need to Know About a Professional Employer Organization (PEO).