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Illinois is Good for Business, so Why Don’t Our Workers’ Comp Premiums Reflect That?

Earlier this week on our blog, we shared facts from the Illinois Trial Lawyers Association (ITLA) regarding the recent growth boom of Illinois businesses. Governor Rauner would like Illinois residents to believe a lenient workers’ comp program has caused too many claims, resulting in higher insurance premiums paid by employers. Rauner has repeatedly stated that these high premiums are scaring businesses out of Illinois and taking jobs with them. ITLA, citing multiple reputable sources, proved that workers’ comp claims are the lowest they’ve been in years in Illinois and that while premiums are still high, the cause is obviously not because of claims. Instead, ITLA has proven that the cause of high workers’ comp premiums is insurance companies not passing savings onto Illinois businesses.

We would also like to share ITLA’s recent email regarding workers’ comp claims and insurance premiums in Illinois. Particularly striking is the fact that workers’ compensation insurance is the second most profitable line of insurance, proving that there are savings to be passed to businesses, but that insurance companies just aren’t willing to do so.

The following information was taken directly from an email newsletter ITLA shared with our attorneys yesterday. To see more facts and figures on Illinois’ Workers’ Comp program courtesy of ITLA, please click here.

  •  The National Council on Compensation Insurance (NCCI – an insurance industry rate making agency which provides workers’ compensation data) has issued its workers’ compensation advisory rates for 2017. It states that Illinois employers should see a 12.9 percent cut in their workers’ compensation insurance premiums in 2017 – the third largest cut in the nation and totaling more than all of our neighboring states combined.
  •  Since the 2011 “reforms,” the NCCI has recommended a nearly 30 percent rate reduction for Illinois insurance premiums. This reduction should have resulted in a $2 billion savings in insurance premiums for Illinois employers.
  •  The workers’ compensation loss ratio – the difference between claims paid by an insurer to the premiums earned – in Illinois has drastically improved since 2011. The loss ratio decreased by 7.2 percent in 2015, drastically ahead of the national average. This drop brings Illinois’ loss ratio below the national average.
  •  Insurers in Illinois saw profits increase by 1.7 percent in 2015, ahead of the national average. Profits in the insurance workers’ compensation market in Illinois have significantly increased since 2010, up nearly 22 percent.
  •  In 2015, indemnity payments were down $39 million and medical payments were down about $30 million from 2014.
  •  Workers compensation medical payments for injured workers treatment have fallen nearly 15 percent since 2011. Illinois’ average payments are lower than Indiana, Wisconsin and Iowa.
  •  Between 2010 and 2014, worker benefits in Illinois fell over 20 percent, while employer costs only fell 4.4 percent. There is no evidence that further reductions to worker benefits will yield significant savings to employers.
  •  The National Academy of Social Insurance (NASI) reports workers’ compensation remains the second most profitable line of insurance after auto insurance.
  •  There are 332 insurance companies competing for and writing workers compensation insurance in our state, more than any other state in the nation.

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