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Rate hike's slight silver lining


NCCI’s request last week for an 8.9% hike for Florida’s 2012 workers compensation rates will be a burden for employers if Insurance Commissioner Kevin McCarty approves it.

But there is a bit of good news behind the rating organization’s rate increase call: claim frequency, which typically spikes along with employment growth, has risen.

NCCI said the economy is partially responsible for it seeking the rate hike and Lori Lovegren, NCCI’s state relations executive, explained it to Comp Time.

It’s common that as the economy improves the newly hired, lacking experience, are more likely to get injured than workers who have been on the job all along. So in Florida and across the country there has been an upswing in claims frequency as companies have brought on new workers, Ms. Lovegren explained.

In Florida the economy reached a trough during the end of 2008 and first quarter of 2009, Ms. Lovegren said. NCCI based that finding on information it obtained by

“Since the first quarter of 2009 Florida has seen job growth in only two sectors, healthcare and tourism,” Ms. Lovegren said. “But lately as you expand into 2010 and the first couple quarters of 2011 is seeing job growth into other sectors. Even construction is starting to see a little bit of recovery.”

There has also been some of that happening across the country.

Obviously, the economy isn’t healthy, job growth still stinks, and the workers comp industry is feeling the unemployment rate along with the rest of the nation.

But had we not pulled out of the depths of the recession we wouldn’t be seeing the increase in claims activity and the need for more rate in Florida.

Meanwhile, recently reported that although business confidence has weakened lately it remains encouraging that it has only weakened slightly given all the turmoil in financial markets of late.

But it’s still too early to conclude whether that turmoil won’t hurt the economy further and there isn’t any data pointing to sharp increases in hiring.