In the News
Regulatory Update

• December 2020
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Workers' Comp: With workplaces becoming safer, Florida Insurance Commissioner David Altmaier has ordered a larger decrease in workers' compensation rates than recommended for 2021.

The 6.6% rate decrease would replace the 5.7% cut recently recommended by the National Council on Compensation Insurance.

Altmaier's decision was based on data as of the end of 2019 from policy years 2018 and 2017, the order said. That's when Florida experienced a 4.4% decrease in claims for lost time, which contributed to a “modest” decrease in both indemnity and medical losses, it said.

“The workers' compensation marketplace has reported underwriting profit during the past six years, due in part to safer workplaces and a long-term shift from manufacturing to service sectors,” said Altmaier's order. The order also said the NCCI uses aggregate policy year and calendar-accident year data for its large deductible coverage in Florida, unlike in other states. Over the past 15 years, it said, large deductible indications generally have been similar to standard coverage indications.

The NCCI said during a hearing on the proposed rate change that the use of large deductible data imposes a cost on carriers, but does not have a significant impact on the credibility or predictive value of the filings' aggregate indication, it said. Therefore, the NCCI agreed that large deductible data should be removed, it said.

Accounting Standard: The Financial Accounting Standards Board has issued a final standard that authorizes a one-year delay in the implementation of an update to its accounting standard for long-duration insurance contracts for companies impacted by COVID-19.

The new Accounting Standards Update has two purposes. It is to ensure a high-quality implementation of long-duration targeted improvements guidance by permitting insurance companies impacted by the pandemic to take an additional year to apply the standard. And it is to reduce cost and complexity for insurance companies that remain on track to make a successful transition to the standard by the current effective date, said FASB Vice Chairman James L. Kroeker in a statement.

The FASB approved the extension because the ongoing pandemic has slowed insurers' efforts to meet the current compliance deadline. If finalized, large publicly traded insurance companies would have until 2023 to implement the new rules. For all other entities, LDTI is effective for fiscal years beginning after Dec. 15, 2024, and interim periods within fiscal years beginning after Dec. 15, 2025, the board said.

Insurance carriers, including MetLife Inc. and Aflac, have supported a second delay in the effective dates for changes to a long-duration insurance standard under consideration by the FASB.

Targeted improvements to the accounting for long-duration contracts has the potential to impact the stability and trajectory of how profits are reported over the lifetime of insurance contracts. LDTI is considered a sweeping change to the way companies value their obligations, risk and benefits, and determine how often they need to change their assumptions.