The November 2017 insolvency of Guarantee Insurance Company (GIC) created $144 million in claims liabilities that impacted the Florida Worker’s Compensation Insurance Guaranty Association (FWCIGA). State laws require that licensed property and casualty insurance companies belong to the guaranty associations in every state where they are licensed to do business. More information about the Florida Workers’ Compensation insurance assessment is available on the FWCIGA FAQ page.

The Florida Office of Insurance Regulation approved a 1% assessment to be collected by insurance carriers and to increase customer policy premiums to provide additional funds to cover the FWCIGA liabilities associated with the GIC insolvency. The assessment is effective January 1, 2020 and applies to new and renewal policies in the calendar year of 2020.

Florida PEO Clients Affected

In 2020 businesses in Florida who have partnered with a Professional Employer Organization my see a slight increase in their PEO invoiced amount to cover the increased worker’s compensation insurance premium assessment.

Last week, the Committee met to consider adding similar language to another bill. At that time, Senator Broxson (R – District 1) introduced an amendment to SB 1636 that – for purposes of workers’ compensation – would deem a worksite employee to be an employee of a PEO even if the PEO had no prior knowledge of the hiring of that employee by the client contractor. The Committee added the PEO language to that bill before ultimately voting to temporarily postpone the entire bill.

Proposed Amendment Encourages Workers Compensation Insurance Fraud.

At StaffMarket our opinion is that this proposal interferes with the PEO – client relationship and encourages fraud in workers’ compensation claims.  Let’s say my company is a PEO client and my drunk brother fell of a ladder putting up Christmas lights. He has no health insurance. Here’s an idea, I’ll just claim that I hired him last week (sorry mister PEO I forgot to tell you).  That way we can stick the PEO with the medical bills and a workers’ compensation claim.  Stopping this kind of gaming is the reason why PEOs insist on only employees reported on the client’s payroll (where work comp premium is calculated) are covered under the PEO Workers’ Compensation insurance plan. Since PEOs offer business owners work comp coverage on a pay-as-you-go basis based on client’s payroll, it has been long standing practice in the PEO industry to demand PEO clients have workers on the payroll before the workers comp coverage is in force. This practice has allowed PEOs to keep fraudulent claims in check and thus pass those savings on to their clients. If this amendment were to become law, the increased cost of their fraud exposure must ultimately be passed on to their clients.  It would be interesting to know just who is really pushing this amendment and what their motivations really are.

The National Association of Professional Employer Organizations (NAPEO) is working to stop this financial and politically motivated amendment.