Jeff Atwater warns that workers compensation hikes could stall economy
Chief Financial Officer Jeff Atwater said that Florida's rebounding economy could be stymied by the projected 14.5 percent increase in worker compensation costs unless legislators step in to impose some reforms.
Speaking to a gathering of the state's business and economic development officials at the Future of Florida Forum organized by the Florida Chamber Foundation, Atwater warned: "if this is unaddressed, these costs are going to drive up and it is going to impact our recovery."
The Florida Office of Insurance Regulation announced Wednesday that it would approve rate increases of 14.5 percent beginning this year in the wake of a Florida Supreme Court decision in April that ruled that the state's attempt to limit attorneys fees in workers compensation cases was unconstitutional.
The court ruled that in the case of Marvin Castellanos v. Next Door Company awarding an attorney the equivalent of $1.53 an hour after he successfully pursued a claim for a worker injured in Miami served to limit access the the worker's constitutional right to access to the courts.
In 2003, business groups persuaded then-Gov. Jeb Bush and the Republican-controlled Legislature to limit attorneys fees in workers compensation cases, arguing that it would drive down the spiraling costs of claims. In the following several years, workers compensation rates in Florida dropped as much as 60 percent and stabilized.
OIR said the 14.5 percent increase will likely take effect Dec. 1 and apply to new policies and renewal policies.
"I've been around in this process long enough to tell you, this is not self correcting,'' Atwater told the business group. "It is time for legislators to look it straight up and deal with the fact that if we do nothing..,the 14.5 percent rate increase that was just announced is just the opening act."
His second legislative priority is to continue to pursue the explosion of what he considers fraudulent water claims in South Florida.
"In 2010, seven percent of the homes in the tri-county South Florida area had a water claim. The average cost was $8,600. It was far less than that in the rest of the state...now it's 16 percent of all households had a water claim and now severity is $14,000 [per claim.]"
He said that the trends will likely result in another spike in the cost of property insurance, driving companies to leave the state and more homeowners will flee to Citizens Property Insurance.
"These are cost drivers to the households they cannot afford,'' he said. "We are not going to allow the bad actions of a few to drive up capital and run up cost."
Atwater also told the group that the $1 billion surge in state revenue expected in the 2017-18 budget year will also quickly be consumed by Medicaid and education costs and stressed the importance of Florida diversifying its economy -- away from its dependence on tourism and away from an unfettered recruitment model of economic development.
"As we look ahead in the next 10 to 15 years, this is our time to diversify this economy -- in technology and life sciences is going to be far better for us. Get away from the idea that we are throwing money to everybody that wants to come."