On August 21, 2026, the National Council on Compensation Insurance (NCCI) filed a recommendation with the Florida Office of Insurance Regulation (OIR) for a 7.4% average workers’ compensation rate decrease effective January 1, 2027. The filing would mark the tenth consecutive annual rate reduction in Florida, extending a streak that began in 2017.
The trade press framed this as a cost-savings story. The reserve story is different.
What the net number hides
The 7.4% decrease is a net figure. Embedded within it is a 0.6% medical fee schedule increase tied to Medicare’s 2026 Resource-Based Relative Value Scale (RBRVS) physician rate adjustments. Florida’s WC medical fee schedule references Medicare physician rates, so the 2026 RBRVS update flows directly into maximum allowable reimbursements for physicians on open Florida WC claims. That 0.6% increase affects every currently open medical claim in the program, not just new ones.
The rate still moves down because lost-time claim frequency continues to fall faster than severity rises. That arithmetic works until it does not.
NCCI’s 2026 State of the Line data shows the deceleration is already in progress. Nationally, lost-time claim frequency declined 2% in 2025, compared with 5% in 2024. At the same time, both medical claim severity and indemnity claim severity grew 4% nationally in 2025. The rate continues to move down, but the spread between the two forces is narrowing.
Who it affects
Florida self-insured employers in construction, hospitality, healthcare, and logistics carry the most concentrated exposure to this dynamic. Hurricane-recovery classifications in construction and cleaning diverge sharply from statewide average rates; those class codes are not benefiting equally from systemwide frequency decline.
Any self-insured employer or captive whose actuarial expected claim ratio (ECR) is calibrated by reference to the carrier rate level faces a specific risk. A decade of frequency-driven rate cuts has pushed the ECR anchor steadily downward, even as the underlying severity component of that rate has been rising. The WCRI CompScope Benchmarks 2026 document WC claim costs growing 6% per year from 2022 to 2025 across 18 study states, driven by medical price growth rather than frequency reduction.
The reserve mechanism
The expected loss ratio method sets IBNR from an a priori expectation rather than from triangle development alone. That expectation is often checked for reasonableness against the carrier rate level. When a rate moves because frequency and severity are both declining, the reasonableness check is sound. When the rate moves because frequency is declining faster than severity is rising, using the net rate as a benchmark understates expected losses.
A self-insured employer whose actuary benchmarks the ECR against a rate reflecting ten years of frequency improvement, without decomposing that rate into its frequency and severity components, will find the ECR understated at exactly the point when claim costs begin rising on a net basis.
The 2% frequency decline in 2025 is not a reversal; it is a signal that the frequency tailwind is weakening. If frequency decline moderates to 1% or flattens while severity continues growing at 4%, the carrier rate will lag the underlying cost before the self-insured reserve catches up.
What this means for your next review
Before your next actuarial opinion, ask whether the ECR was derived from the carrier rate as a net figure or from separately disclosed frequency and severity components. If the former, ask for the decomposition. A rate that moves down for a sound reason is a different benchmark than one that moves down for an increasingly fragile reason.
Also confirm how the 0.6% RBRVS fee schedule increase is reflected in case reserve estimates on currently open medical claims. Open claims in Florida are subject to the revised maximum allowable rates once they take effect; case reserves set before the filing should be reviewed for adequacy.
The Florida OIR decision on the NCCI filing is expected by year-end 2026. That decision will either accept or modify the frequency and severity assumptions underlying the 7.4% figure, providing an updated benchmark for self-insured reserve reviews ahead of 2026 annual actuarial opinions.