Workers’ Compensation Certificate of Insurance Guidelines – Florida Edition

I’d like to impress upon people how important it is to us to make sure that all employers properly provide workers’ compensation insurance to their employees; especially in these times. It is often difficult to understand the legal arrangements between employers and employees and contractors and subcontractors in who is defined as an employee for the purposes of workers’ compensation.  Who is ultimately responsible for occupational safety and workers compensation premium payments is our collective role to understand and enforce?  Our country is built on the back of the American worker it is up to all of us to make sure they are properly protected.

Before allowing contractors to perform work on your behalf, make sure to do your research. Below are a few tips.

  • Compliance Management – Verify that the contractor has workers’ comp insurance by requesting a COI. Make sure the COI has the complete company name and indicates coverage dates. There are web-based solutions that will help you automate this process as well.
  • Sign Up – The Construction Policy Tracking Database provides information to contractors regarding the coverage status of the contractor they use. This system will send automatic notification of any changes to their contractor’s coverage status.
  • Endorsement – Request 30 Day Notice of Cancellation Endorsement. This endorsement notifies the holder if the insured’s policy is under notice to cancel. *Not all carriers will offer this endorsement.
  • Proof of Coverage – Check the Proof of Coverage websites for coverage effective and cancellation dates. Also, check for Exemptions. *State website verification can vary. or

What else can be done to protect employers with regards to uninsured subs? We would love to hear some of your tips and strategies! Contact Libertate Insurance at 407-445-2414 to learn more about how to protect your business.

The 72’nd Annual Workers’ Compensation Educational Conference – Orlando

Another year and another convergence of the who’s who in the field of workers’ compensation at the Marriott World Center in Orlando this week.  Known as the largest insurance conference in the country, the Workers’ Compensation Institute brings together “centers of influence” in law, medicine, claims adjusting, underwriting, brokerage, risk-bearing, managed care, regulation, legislation, staffing and of course coemployment.

Dating back over a decade, the Workers’ Compensation Institute and specifically Jim McConnaughhay and Steve Rissman have granted the PEO community a one day educational track.  Shortly thereafter, FAPEO and NAPEO threw their influence and sponsorship behind it.  Special thanks to the WCI, FAPEO and NAPEO for making this a success and bringing positive exposure to the PEO industry.

I am proud to participate on a panel Tuesday morning at 9:00 am with Andy Olwert (Next Level), Deb Hetzer (PEMCO), Phil Herron (Continuum HR) and Robert Barrett (Rissman, Barrett, Hurt, Donahue, McLain & Manganese’s, PA) titled “Accountability in the PEO Industry – Posting Wins for PEO’s and Their Claims Teams”.  More information on this data-driven session can be found on the WCI 360 site here:

Hope to see you Thursday morning and look forward to catching up with lots of old friends!

NCCI Estimates Florida Supreme Court Decisions Create Workers Compensation Unfunded Liability Potentially Exceeding $1 Billion


NCCI has estimated that the combined total statewide unfunded liability related to the Florida Supreme Court’s decisions in (1) Emma Murray, (2) Castellanos, and (3) Westphal could potentially exceed $1B. This cost will be borne by insurance companies, individual self-insured employers, and employers with deductible policies (due to growth in out-of-pocket costs, or in other words, the amount that the employer agreed to pay on losses up to the deductible threshold).

These court decisions are expected to increase overall system costs in Florida for certain accidents occurring prior to 10/1/2016. The unfunded liability relates to costs that cannot be recouped through revising Florida workers compensation rates. Therefore, the unfunded liability is an additional cost over and above the proposed 19.6% increase in Florida workers compensation rates proposed effective 10/1/2016. If the filing effective date of 10/1/2016 is delayed, the unfunded liability will necessarily grow.


Two recent Florida Supreme Court decisions, Castellanos and Westphal, have retroactively changed Florida’s workers compensation law. Prior to these decisions, the last Florida Supreme Court decision to retroactively change Florida’s workers compensation law was Emma Murray in 2008. Each of the above retroactive changes in the law has resulted in additional workers compensation claims costs for certain claims. The chart below describes the type of claims retroactively impacted by each Florida Supreme Court decision.Screen Shot 2016-08-04 at 5.10.18 PM

Workers compensation ratemaking does not address the added costs associated with these claims because ratemaking is prospective. As an example, the rates approved by the Florida Office of Insurance Regulation in 2014 for use on a Florida policy effective from 1/1/2015 to 12/31/2015 were calculated based on the law in effect during 2014. An injury that occurred on 7/1/2015 is expected to be paid for by the premiums collected on the 1/1/2015 policy—even if the claim remains open for 20 or more years. When there is a retroactive change in the law that results in additional costs, there is no ability to go back and amend the 1/1/2015 Florida workers compensation rates in order to collect additional premium for the 2015 year. Nor is there any other current method for collecting additional premium for that 1/1/2015 policy. As a result, any additional costs incurred must be absorbed by the insurers that wrote those policies, or in the case of individual self-insured employers and employers with deductible policies, by each employer.

On occasion, the Florida Legislature will change the law in response to decisions of the Florida Supreme Court. Any legislative changes to Florida law under this scenario would apply only on a going-forward basis. This occurred subsequent to Emma Murray. After the Emma Murray decision on 10/23/2008, the Florida Legislature enacted a change to the attorney fee law which was effective on 7/1/2009. The retroactive impact of Emma Murray remained however for open or re-opened claims for accidents occurring between 10/1/2003 and 6/30/2009. Similarly, any potential legislative response to Castellanos or Westphal would apply on a going-forward basis and would not address the additional workers compensation costs for claims retroactively impacted.

Retroactive Impact of Castellanos and Westphal Decisions Are Not Part of the Proposed 10/1/2016 Rate Increase

On 6/30/2016, NCCI submitted to the Florida Office of Insurance Regulation (OIR) an amended filing proposing an increase of 19.6% in Florida workers compensation rates effective 10/1/2016. The Castellanos component of this filing (+15%) addresses the expected first-year impact on Florida workers compensation system costs for accidents occurring on or after the proposed filing effective date of 10/1/2016. The decision in Castellanos is expected to increase overall system costs in the state for open or re-opened claims related to accidents occurring between 7/1/2009 (the effective date of the last reform to the attorney fee statute) and 10/1/2016.

The Westphal component of this filing (+2.2%) addresses the impact on Florida workers compensation system costs for accidents occurring on or after the proposed filing effective date of 10/1/2016. The decision is also expected to increase overall system costs in the state for open or re-opened claims related to accidents occurring between 1994 (the effective date of the last reform to temporary benefits) and 10/1/2016.

As noted previously, the Florida Supreme Court’s decision in Emma Murray also retroactively changed the law. That decision increased overall system costs in the state for certain accidents occurring on or after 10/1/2003 and prior 7/1/2009. Many of those claims remain open today.

NCCI has estimated that the combined total statewide (including individual self-insured employers) unfunded liability related to the Florida Supreme Court’s decisions in Emma Murray, Castellanos, and Westphal could potentially exceed $1B. If the filing effective date of 10/1/2016 is delayed, the unfunded liability will grow.

This estimate of the unfunded liability does not consider the following:

 Impacts related to the First District Court of Appeal decision dated 4/20/2016 known as Miles v. City of Edgewater Police Department related to claimant paid attorney fees

 Subsequent year impacts, if any, that NCCI is unable to quantify

An individual insurer or self-insured employer should not draw any conclusions as to its own unfunded liability from NCCI’s estimate of the statewide figure. Each insurer’s/self-insured employer’s unfunded liability will vary based on many factors, including, but not limited to, the number and type of open claims, average claim costs, and claims handling practices.

In order to place this $1B figure in context, note that since the 2003 reform, Florida’s annual statewide direct written premium volume (including individual self-insured employers) has ranged from a low of $2.4B to a high of $5.5B. In 2015, Florida’s premium volume was $3.6B.

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What Next for Florida Workers’ Compensation Rates?

We still have no formal update since the National Council of Compensation Insurance (“NCCI”) withdrew their rate filing…

…that the Florida Office of Insurance Regulation responded to with this press release:

…which in essence recognized the rate filing that the NCCI had submitted in late May to address the Castellanos v Next Door case as well as the increased Florida medical fee schedule.  The big deal here is capping of plaintiff attorney fees.


Westphal v City of St Petersburg – another case that now extends the ability for an injured worker to obtain benefits from 2 years to 5 years.  The NCCI promptly withdrew their filing to reassess this third hit to the system.

The plaintiff attorneys are pleased, businesses are scared and the jury is still out…

Morgan & Morgan chimes in on worker’s comp rulings

What we do know is that before the Westphal case, the NCCI thought that a Florida workers’ compensation rate increase of 17.1% was necessary.  Westphal obviously brings more exposure to insurers by increasing the collection of temporary benefits, but the NCCI has not yet formalized what this should mean to Florida rates.  The resubmitted rate filing I am guessing will be plus 20%…

Only 26 business days until a proposed August 1 effective date for all policyholders.

I’m hoping we will get some guidance soon and will distribute it as it comes –


McCarty to Leave Florida OIR Post


Kevin McCarty will be remembered as a significant force behind many significant initiatives in Florida for over 20 years.  He was a prominent member in the National Association of Insurance Commissioners and a past President.  As the below article evidences, he was an advocate of a more consumer-friendly insurance bureaucracy…

The release of out of AM Best of his departure is here:

Florida Commissioner McCarty Has ‘Mixed Emotions’ as He Readies to Resign May 2

TALLAHASSEE, Fla. – Florida Insurance Commissioner Kevin McCarty said he will resign effective May 2.
McCarty has been Florida’s only insurance commissioner since the Office of Insurance Regulation formed in 2003 and he was a past president of the National Association of Insurance Commissioners in 2012. “I have mixed emotions about leaving,” he told Best’s News Service. “In many ways, it’s like leaving your family.” He said he is looking at available options and has one in mind, but would not elaborate.

The next commissioner will likely inherit a good, stable insurance market, one whose residual property insurer of last resort, Citizens Property Insurance Corp., has seen its shares depopulated from 1.6 million to just slightly more than 500,000 in recent years, with hundreds of thousands more policies scheduled to be made available to private insurers. He said the automobile insurance market was strong, and workers’ compensation rates have been reduced, although the workers’ compensation arena has some court challenges ahead that could complicate matters.

…and a more pertinent release for what he should be remembered for below – He was an advocate of the people and as progressive as they come in this role.

Thanks Kevin and good luck into the future!



McCarty raises concerns on coordination and transparency
WASHINGTON, D.C. (April 28, 2015) —Kevin M. McCarty, Florida Insurance Commissioner and past NAIC president, testified before Congress today on behalf of the National Association of Insurance Commissioners (NAIC). The hearing, titled “The State of the Insurance Industry and Insurance Regulation,” was held by the U.S. Senate Committee on Banking, Housing, and Urban Affairs. His testimony focused on the need to coordinate insurance policy to protect American policyholders and benefit U.S. markets and companies.

“While we are committed to collaborating with our federal and foreign counterparts where we can, we have a responsibility to the U.S. insurance sector,” McCarty said. “We will not implement any international standard that is inconsistent with our time-tested solvency regime that puts policyholders first.”

McCarty’s testimony specifically addressed concerns regarding domestic and global capital rules for insurers. “Capital requirements are important,” McCarty said, “but if imposed incorrectly or without regard to difference in products and institutions, they can be onerous to companies, harmful to policyholders and may even encourage new risk-taking in the insurance industry.”

McCarty will return to Capitol Hill on Wednesday, April 29 to testify before the U.S. House Financial Services Subcommittee on Housing and Insurance. That hearing will focus on international regulatory standard-setting. McCarty’s remarks will cover how U.S. regulators are working internationally to strengthen open and competitive insurance markets globally, while protecting U.S. interests.