I recently spent four days in Orlando with some 8,000 workers' compensation insurance professionals, from claims adjusters to attorneys, agents, brokers, and experts from the provider and medical arenas. Presented for the 25th year by the non-profit Florida Workers' Compensation Institute, the 66th annual Workers' Compensation Educational Conference has become a must-attend event that reaches far beyond our state's borders and draws participants and speakers from across the nation.
Florida, however, is always uppermost in my mind, and I had the opportunity to visit with our CFO Jeff Atwater, who addressed the gathering. The National Council on Compensation Insurance (NCCI) had made its annual Florida rate filing just days before, so I asked Atwater if the 8.9-percent increase was a number he could support.
Prefacing his remarks by saying that he had not yet seen the filing or response, Atwater acknowledged that given the "significant rate decline over the last number of years … it is probably not unpredictable that the industry is showing a need for some increased rates. I don't think that it's unreasonable where they are coming out, but I do think that everything needs to be justified in the end." In its filing, NCCI noted, as did Atwater, rising medical costs as one of the criteria for the call of higher rates. NCCI additionally said that the improvements generated by the 2003 reforms have now fully played out, and that claims frequency has been rising significantly since 2009 after several years of decline.
I also quizzed Atwater about his views regarding PIP, noting that Gov. Rick Scott is increasingly calling for the coverage to be optional. Atwater outlined his position: "I hate to see us do away with PIP, but frankly it has so much fraud built in that the citizens of Florida can't afford that. Therefore they are going to make the decision to go bare, and that's not the answer. We do need to see reforms." He called for legislative actions to address high legal fees and fraud by clinic owners and claimants. He added that if we cannot reduce costs through reforms, "Then we're going to have to look to the alternative. I hope that that's not the case, but we can't rule it out."
Of course, I asked about Citizens Property Insurance Corp.—specifically, how we can tone down the rhetoric regarding the proposed sinkhole rate increase. "I think you calm down the rhetoric by looking at where the cost driver is located, and that's not Citizens," Atwater said. "Citizens wants to offer only the rate necessary to provide the product. Remember, this is government-run. When you look at the 2010 number, they took in $32 million in premium and paid out $245 million in loss claims, and so clearly that business model doesn't work."
Atwater said that fraudulent claims are inflating the numbers, and that everyone needs to fight back against them. He further suggested that we should allow some time for the reform components of SB 408 to kick in. If fraud can be brought under control, "then maybe that kind of increase won't be necessary," he said. "That's our hope. That's why you had the glide path of 10 percent originally, so that you could see if the improvements in a bill work. So let's see how this plays out. But the homeowners can't afford that kind of rate increase. Those are honest-to-goodness citizens who did not defraud [the system]. It's the defrauding people who have made off with the money."
We all know what happened to many of our efforts in the 2011 session—especially how our massive drive for PIP reform was derailed by special interest groups. Hopefully, with Atwater's help in fighting fraud and other cost drivers, we will see better results in 2012 on many fronts. Remember, session is early next year to accommodate redistricting. Lawmakers will meet January 10 through March 9.
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