As the dust continues to settle in Florida in the aftermath of the Castellanos v. Next Door Company, et al, AIG has increased its reserves to cover the expected outcome. In an article posted by our friends at workcompcentral this morning, AIG indicated that they will boost their reserves by $100 million, feeling the decision reached in the case will have a retroactive impact on current policies.
NCCI has also echoed the retroactive impact of this decision in its amended rate filings shortly after the Castellanos decision was reached, stating “because workers' compensation rate-making is prospective only, insurers are not able to recoup premium to cover such unforeseen retroactive system cost increases. Even if the proposed rates are to apply to outstanding policies, a significant portion of the full retroactive impact and unfunded liability remains."
This is most certainly a dynamic time for workers’ compensation in Florida, especially considering the recent request for the United States Supreme Court to review the constitutionality of the entire Florida workers’ compensation system altogether. One can safely assume that the ramifications of the Castellanos, and other similar decisions across Florida, will be felt for years to come.