Rolling under the radar like a Stealth bomber, through committee after insurance committee, are HB 4087 and SB 1152 -- among the worst proposed legislation of the 2012 legislative session.
These bills smell fishier than a Key West cannery. (See bills attached below.)
And they are a hair's breadth from becoming law, from approving the repeal of 627.285 -- the section in Florida Statutes that authorizes the only real analysis and oversight workers' compensation rate increases get.
Let me explain what's going on here.
One of the biggest players in Tallahassee this session -- though it stays strictly behind the scenes, of course -- is the National Council on Compensation Insurance. NCCI, owned lock, stock and barrel by insurance companies, is an insurance rating and data collection bureau specializing in workers' compensation. Florida and many other states contract with it to provide information and insight when they are asked for rate increases.
The bottom line is, NCCI has a dog in every workers' comp fight at the Capitol. Why? Because based on NCCI data and NCCI analysis of that data, the Office of Insurance Regulation (OIR) has just granted workers' comp insurers an 8.9 percent rate increase. We're talking some $160 million.
A company made up of insurers -- charged with making a profit for its member insurers -- has just advised Florida OIR that the data support a rate increase nearly three times higher than the current cost-of-living adjustment. And who wins? Only its insurers. Nobody else.
In 2003 the Florida Legislature created 627.285, the Workers' Compensation Independent Actuarial Peer Review Requirement. What that did was establish in state statutes a biennial third-party review of Boca Raton-headquartered NCCI.
For years OIR has paid several independent actuary companies to study insurers' rate requests. One such company is American Actuarial Consulting Group.
And here comes the rub:
In its July 21, 2010, report on the rate-making processes of NCCI, AACG states throughout the report: "AACG believes that the assumptions made by NCCI in connection with the selection trends and loss development factors have led to overall indicated rate changes in Florida which have been excessive." (See attachment below.)
See what's going on here? The last independent third party rips NCCI for excessive rate changes and what happens? Ben Albritton, R-Bartow, in the House and Garrett Richter, R-Naples, in the Senate introduce legislation that would abolish the third-party peer review.
Wipe it off the books.
Make NCCI's critic -- or any future critic -- go away.
Walter Dartland, former deputy attorney general and now executive director of the Consumer Federation of the Southeast, told Sunshine State News, "The problem is, there are so many big players with money in Tallahassee today. But there's no one advocating for the consumer -- the public.
"And with NCCI, here you've got a cartel trying to make sure its rates are high enough for members to make a profit.
"The public doesn't trust insurers as it is. Which is another reason why that independent peer review is so important. The people of Florida need to know they aren't being taken by big business, with their government looking the other way."
If there is a laugh in this, it's the rationale for the bills -- and it's a pretty sour one at that. OIR claims the last peer review cost $30,000 -- "and we need to save our resources."
Thirty thousand dollars? The OIR grants a $160 million workers' comp rate increase and it's quibbling over 30 grand? Besides, read 627.285: "The costs of the independent actuarial peer review shall be paid from the Workers' Compensation Administration Trust Fund."
You know. One of those trust funds the Legislature periodically raids. Perhaps we're saving our resources for the next raid.
Remember this NCCI-OIR sleight of hand when you watch the next chapter in the big-money push to wring a rate-increase savings out of workers' comp doctors who dispense prescriptions in their offices.
And, when you see another proponent of the repackaged-drug cap wave a piece of paper in the air and tell you, "Kevin McCarty, the insurance commissioner himself, says this bill will save the state 2.5 percent," remember that he got his numbers -- be they ever so vague and, frankly, unsubstantiated -- from NCCI.
What shennanigans.
FS 627.285: The Financial Services Commission shall at least once every other year contract for an independent actuarial peer review and analysis of the ratemaking processes of any licensed rating organization that makes rate filings for workers compensation insurance, and the rating organization shall fully cooperate in the peer review. The contract shall require submission of a final report to the commission, the president of the Senate, and the speaker of the House of Representatives by Feb. 1. ... The costs of the independent actuarial peer review shall be paid from the Workers Compensation Administration Trust Fund."
Reach Nancy Smith at nsmith@sunshinestatenews.com or at (850) 727-0859.
