Hartford to refund $48 million in comp premiums

Hartford to refund $48 million in comp premiums

By MICHAEL PELTIER | THE NEWS SERVICE OF FLORIDA

TALLAHASSEE — Hartford Financial Service Group will repay $48.2 million in workers’ compensation premiums to Florida companies under an agreement announced Wednesday by Florida Insurance Commissioner Kevin McCarty.

Saying the company earned excess profits from its Florida policies in 2004, 2005 and 2006, McCarty’s office in October 2008 had originally sought $64.8 million in repayments from the Connecticut-based insurer but reduced its estimates after additional documentation was provided.

“During these tough economic times, Florida businesses will receive a very significant and important return of premium,” McCarty said in a statement. “Companies certainly are entitled to earn reasonable profits; but the excess profit law protects Florida business owners from paying more than what is actuarially justified.”

Company officials say better-than-expected cost containment programs resulted in revenues above those allowed by the state. Workers’ compensation insurers are required to return profits in excess of 5 percent. State law requires companies to submit excess profit estimates that are then reviewed by regulators.

“The combination of these loss prevention efforts, along with The Hartford’s strong workers’ compensation underwriting and risk selection in the state, resulted in lower claims costs,” said Jim Ward, regional vice president of The Hartford’s Orlando, Fla. regional office. “We can think of no better testimony to the partnership achieved between our agents, policyholders and The Hartford than is reflected in the return of these funds.”

A January 2002 industry study found that Florida employers were paying the second-highest rates based on premiums charged of any state in the country, averaging $4.50 for every $100 of payroll. Carriers were paying out $1.27 in claims for every dollar of premium.

Lawmakers responded in 2003 with a major reform package that targeted the medical fee schedule; increased limits on chiropractic services; eligibility standards for permanent total and partial disability and limits on the number of independent medical examinations.

Since that time, average premiums have dropped by more than 60 percent.

Hartford’s refund brings the amount of refunded excess workers’ comp profits in Florida to more than $98.8 million so far this year, OIR reported. Over $29.7 million in excess workers’ comp profits were refunded to Florida businesses in 2008.

Under the agreement, Hartford will provide refunds or renewal credits within 60 days from the date of the order. It must also document attempts to reach all policyholders.