Florida Supreme Court Decisions Create Workers’ Compensation Unfunded Liability


The National Council on Compensation Insurance (NCCI) has estimated that the combined total statewide unfunded liability related to the Florida Supreme Court’s decisions in Emma Murray (1), Castellanos (2), and Westphal (3) could potentially exceed $1B. This cost will be borne by insurance companies, individual self-insured employers, and employers with deductible policies (due to growth in out-of-pocket costs, or in other words, the amount that the employer agreed to pay on losses up to the deductible threshold). These court decisions are expected to increase overall system costs in Florida for certain accidents occurring prior to 10/1/2016. The unfunded liability relates to costs that cannot be recouped through revising Florida workers compensation rates. Therefore, the unfunded liability is an additional cost over and above the proposed 19.6 percent increase in Florida workers compensation rates proposed effective 10/1/2016. If the filing effective date of 10/1/2016 is delayed, the unfunded liability will necessarily grow.

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