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Low rates for workers compensation may end

Businesses are finding it harder and harder to find ways to cut expenses. Thank goodness workers compensation rates are lower than they have ever been. Now that 2009 has finally arrived, workers compensation rates have decreased once again, giving business a break, which in this economy is a breath of fresh air. But of course what goes down must go up. That’s at least how the metaphor works in the world of insurance, don’t you agree?

Since 2003 workers compensation rates have taken the southward route thanks mostly to a bill passed by Florida legislators limiting legal fees an attorney could charge when representing an injured employee. In October 2008, the Florida Supreme Court found that the 2003 statute was ambiguous and thus eliminated the statutory caps on claimant attorney fees. The National Council on Compensation Insurance has advised the state Office of Insurance Regulation that the impact of this decision would yield the need for an increase in rates of approximately 18.6 percent over the next two years.

The National Council on Compensation Insurance suggested the Office of Insurance Regulation increase rates effective March 1 by 8.9 percent. If approved this increase would also affect policyholders with an effective date on or after Jan. 1, 2009 proactively. This recommendation is in the hands of the Office of Insurance Regulation and no decision has been made so far.

Other factors also have affected the future of workers compensation rates. Baby boomers cannot be ignored when estimating the cost of future work-related injuries. Today’s workforce is older than ever. As baby boomers increase in age — coupled with no incentives or security in retirement — there is no overlooking the obvious fallout of a mature workforce. Workers compensation insurance will be affected no differently than Social Security, Medicare/Medicaid, as well as private insurance. The “older” workforce doesn’t jump back into the driver’s seat quickly after an injury. Anyone notice how long it takes to heal from showing off for his or her kids when throwing the baseball or working out? If healing time increases, so goes the medical expense as well as disability.

Being well informed helps, but I’m sure this news isn’t causing business owners to jump for joy. When crystal balls don’t help one cannot stick his or her head in the sand and hope it goes away. It’s going to happen, and the only true question is when.

If you have questions or concerns that means it’s a good time to have a chat with your insurance agent.

Andy Gregory, is co-owner and president of Des Champs & Gregory Inc., with offices in Bradenton and Lakewood Ranch. He specializes in commercial property and casualty insurance, and holds the designation of certified insurance counselor. He can be reached at (941) 748-1812 or by e-mail at agregory@deschampsgregory.com.

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