The document discusses major changes coming to Florida's workers' compensation system in 2016 and strategies for organizations to prepare. It begins by reviewing the history and basics of workers' compensation. It then explains that in 2016, the Florida Supreme Court ruled attorney fee caps unconstitutional and increased limits on temporary disability payments. This will significantly increase costs for employers. The document estimates a proposed 19.6% rate increase in October 2016. Finally, it outlines strategies organizations can implement to mitigate higher costs, such as workplace safety programs, claim reporting protocols, and transitional duty requirements.

1. Preparing for Change
Florida Workers’ Compensation - 2016
Nonprofits First - August 2016
Steven Light, MBA, CIC
Vice President – Property & Casualty
Marsh & McLennan Agency
1000 Corporate Drive, Suite 400
Fort Lauderdale, FL 33334

2. MARSH & McLENNAN AGENCY, LLC • FLORIDA
 Understand basic concepts of Worker’s Compensation
 Understand the reason for major changes in Florida in 2016
 Quantify the financial impact to your organization
 Identify strategies to mitigate future costs
By the end of our presentation, you will be able to:
Objectives

3. MARSH & McLENNAN AGENCY, LLC • FLORIDA
• Prior to the enactment of workers’ compensation laws,
employees had to prove the employer was negligent to gain any
compensation for lost wages or medical bills.
• This was not only a costly process for both the employee and
employer but fraught with uncertainty.
• 1911 — “The Great Tradeoff” debate. Before any plan could
move forward, an agreement between labor and industry had to
be reached; each had to be willing to give up something for a
workers’ compensation system to function properly.
• A “no-fault” system – The employer agreed to pay medical bills
and lost wages, regardless of fault; and the employee agreed to
give up the right to sue.
Workers’ Compensation History - The Great Tradeoff

4. MARSH & McLENNAN AGENCY, LLC • FLORIDA
Workers’ Compensation – The Basics
Compensable Injury or Illness:
Injury or Illness must arise out of and
in the course and scope of employment
The Federal Government mandates that each state has
its own law and process.
Each state developed an employer-paid program for
employees that sustain occupational injuries or
illnesses.

5. MARSH & McLENNAN AGENCY, LLC • FLORIDA
Includes:
• medical costs for work related injury or illness
• wage replacement while unable to work
• compensation for permanent injuries
• costs for retraining
• death benefits for workers’ dependents when the injuries
result in death.
The COMP in Workers’ Compensation

6. MARSH & McLENNAN AGENCY, LLC • FLORIDA
 Mandatory for all employers with 4+ employees
 Applies like a payroll tax (state-wide rate x gross
payroll)
 Experience modification for each individual
employer – reward / penalty for claims experience
 Affects your budget / profit margin
 Affects $ available for salaries,
bonuses, fringe benefits
 Affects your viability
 Affects morale

7. MARSH & McLENNAN AGENCY, LLC • FLORIDA
 Understand basic concepts of a worker’s compensation
 Understand the reason for major changes in Florida in
2016
 Quantify the financial impact to your organization
 Identify strategies to mitigate future costs
By the end of our presentation, you will be able to:
Objectives

8. MARSH & McLENNAN AGENCY, LLC • FLORIDA
History of Florida Workers’ Comp rates.
Early 2000s: Florida had the highest Workers’ Comp rates of any state.
The cost to employers caused a crisis that constricted business and
employment, kept employers from relocating to FL and caused business
to relocate out of FL
2003: FL Legislature approves tort reform that includes caps on the fees that
Workers’ Compensation attorneys could charge. The cost of claims and
number of law suits against WC carriers plummets.
2003 – 2016: FL Workers’ Comp rates fell by an average of 65-70%
2016: FL Supreme Court rules caps on WC attorney fees are
unconstitutional
2016: FL Supreme Court rules that the 2-year limit for temporary disability
payments is insufficient and increases the limit to 5 years.
2016: June - Industry rating organization files for a 19.6% rate increase to
be effective October 1, 2016. Approval by OIR pending.

9. MARSH & McLENNAN AGENCY, LLC • FLORIDA
 Understand basic concepts of a worker’s compensation
 Understand the reason for major changes in Florida in 2016
 Quantify the financial impact to your organization
 Identify strategies to mitigate future costs
By the end of our presentation, you will be able to:
Objectives

10. MARSH & McLENNAN AGENCY, LLC • FLORIDA
• Approved on a state-wide basis for each employee
classification
• Rate is commensurate with risk. The rate for a
carpenter is higher that the rate for a computer
programmer.
• Rates are represented as a % of gross wages (like a
payroll tax)
How is your WC premium determined?
RATES

11. MARSH & McLENNAN AGENCY, LLC • FLORIDA
Classification Gross Payroll X Rate = Basic Premium
ABC Services of Palm Beach County
Oct. 2016 (est.)
8864 - Social Services $4,000,000 1.63% = $ 65,200 1.95% = $ 78,000
8842 – Group Homes $1,000,000 2.41% = $ 24,100 2.88% = $ 28,800
8810 – Clerical $ 500,000 0.23% = $ 1,150 0.28% = $ 1,400
$5,500,000 $ 90,450 $108,200
8/16/2016 11
The Math – Basic Premium (no experience modification)

12. MARSH & McLENNAN AGENCY, LLC • FLORIDA
Experience modifier –
- factor that compares your claim
expenses over a rolling 3-year period (not
including most recent year) to industry
average.
- credit for better than average /
penalty for worse
8/16/2016 12
So how is your experience?

13. MARSH & McLENNAN AGENCY, LLC • FLORIDA 8/16/2016 13
Full impact of Oct 2016 rate increase?
ABC Services of Palm Beach County
NOW
Basic Premium X Exp Mod = Modified Premium
$ 90,450 X 0.75 = $ 67,837
$ 90,450 X 1.50 = $135,675
OCTOBER 2016 (proposed)
$108,200 X 0.75 = $ 81,150
$108,200 X 1.50 = $162,300

14. MARSH & McLENNAN AGENCY, LLC • FLORIDA
 Understand basic concepts of a worker’s compensation
 Understand the reason for major changes in Florida in 2016
 Quantify the financial impact to your organization
 Identify strategies to mitigate future costs
By the end of our presentation, you will be able to:
Objectives

15. MARSH & McLENNAN AGENCY, LLC • FLORIDA
What’s your strategy???
Mitigating your costs.
Changes in the law mean the cost of claims will
increase, including current claims that have not yet
closed.
Higher claim costs will have more impact on
experience mods.

16. MARSH & McLENNAN AGENCY, LLC • FLORIDA
• Florida Drug Free Workplace – claim prevention, premium discount
• Post Offer Health Self Assessment – prevention, cost containment
• Workplace Safety Committee – prevention, premium discount
• Safety Training - prevention
• Claim Reporting Protocols – cost containment
• Transitional (Modified) Duty Requirement – cost containment
• Pre-claim Triage Services – cost containment
Best Practices – prevention & claim cost reduction

17. MARSH & McLENNAN AGENCY, LLC • FLORIDA
Change is coming!
Be prepared and be
proactive!
AIM HIGH!!

18. MARSH & McLENNAN AGENCY, LLC • FLORIDA
ANY QUESTIONS?

19. MARSH & McLENNAN AGENCY, LLC • FLORIDA