In Florida the workers’ compensation (WC) rates are fixed, so there is no benefit in shopping from carrier to carrier as far as base WC rates go. So, how can you provide a more competitive quote in FL? There are a few ways to still be competitive even with fixed rates. Below are some strategies to provide more competitive quotes:
Credits: With FL WC your clients have access to some available credits for having the below programs in place. If your insured would like to apply for drug free (5%) or safety (2%) credits in FL, click below applications needed: Drug Free – Safety. Keep in mind that some carriers might ask for a copy of the written drug free or safety program to confirm they have one in place. Additionally, there is a little known credit to contruction companies who pay their employees a higher than average wage: Contracting Classification Premium Adjustment Program (CCPAP) See this website from NCCI for more information. If the employer pays their construction employees a wage higher than the average for their industry, they may qualify for an additional credit. The philosophy is simply that the higher paid construction employees are less likely to have a WC claim since they are most likely more experienced. The application to use apply with NCCI for this credit for FL is Here. While CCPAP is very rare, I have seen a few larger contractor’s receive as much as 10% credit on this program.
Dividends: Since the WC rates in FL are the same with all carriers, there is one more way agents can try to offer a more competitive quote: Dividends. There are essentially two types of dividends. First is the variable dividend (sometimes called slider) which is based on a sliding scale of premium size v. loss ratio. The dividends are not usually calculated until 6-8 months after the policy period. This allows time for possible Injured but not reported (IBR) losses. The second type of dividend in FL is usually called Flat Dividends. This dividend is based on past WC history not future claims like variable dividends. This means the policyholder will earn it automatically, but there is still the 6-8 month lag before receiving the dividends. Some carriers will sometimes offer a hybrid of the two like 5-10% flat plus slider.
Exceptions: In FL, even though the WC rates are all the same there is a little-known FL statute that allows carriers to file for a rate deviation:
Title XXXVII – Insurance
Chapter 627 – Insurance Rates and Contracts
Part I – Rates and Rating Organizations (Ss. 627.011-627.381)
627.211 – Deviations; workers’ compensation and employer’s liability insurance.
This means carriers can file for discounted rates up to 10% off the scheduled fixed rate. This is extremely rare to see, but we have experienced carriers who have offered this and it is clearly a way for carriers and agents to provide a more competitive WC quote. The rate for all other carriers would be 5-10% lower than the filed deviated rate. This approach translates better to the insured who wants to see the bottom-line up front and not wait for the hope and prayer of a dividend. However, we are not aware of any market currently offering this, mostly due to the severity of rate reductions over the past many years. The statute does permit carriers to also file for deviation increases or decreases. The carrier must file for the deviations annually. See FL Statute.
Consent to Rate (CTR): Sometimes just having a quote is competitive. When many carriers might decline a risk with an adverse loss history, another carrier might offer a quote with CTR. In FL since all of the WC rates are the same, a carrier can elect to quote a risk but only with added rate. The client can deny it of course, but if they want the quote and to bind it, they must consent, and the quote will have a consent to rate form which is required and filed with the state. The % of CTR is not limited, but we often see 25-100% surplus rate.
Worthy of mention is the Retro Plan: NCCI Retro Plan Info
The Retro plan is essentially a complicated rating program to determine the final cost of premium based on losses during the policy period. The retro plan is not a WC policy but an endorsement to a WC policy which allows modifications to the final premium. This plan is something that larger carriers used to offer more, but it is rarely used now. A simple search should reveal a lot more information on this rarely used program.
