The following op-ed by ITLA President Mark D. Prince was published in the Journal-Standard (Freeport) and the Rockford Register Star on December 1, 2018.
Insurance companies are not giving workers’ comp savings to employers
In the span of less than a decade, the price paid by Illinois employers for workers’ compensation insurance dropped from third highest in the nation, as compared to other states, down to 22nd on the list.
That steep decline in relative workers’ comp premiums tracked with the implementation of a 2011 state law passed at the urging of the state’s business community and intended to cut workers’ comp costs.
But you won’t hear insurance companies and their legislative allies point to this state’s much improved position on the nationally respected ranking of premium rates conducted by Oregon regulators. In their zeal to maximize profits, they would instead have you believe that workers, who already sacrificed long-standing rights as part of the 2011 overhaul, must give even more.
It’s past time for insurance companies to be transparent with their pricing and pass their enormous cost savings along to employers in the form of even greater rate reductions. Illinois lawmakers should address the failed promises of the insurance industry and approve meaningful insurance reform that will strictly regulate workers’ comp insurance premiums.
Costs for treating and supporting injured workers have plummeted while workers’ comp insurance profits have measurably grown. Insurers are paying out less and keeping more for themselves. Consider:
- The National Council on Compensation Insurance (NCCI), which publishes workers’ comp advisory rates, has said Illinois employers deserve to see an 8.5 percent cut in their premiums in 2019. It was the sixth consecutive rate reduction that the NCCI has recommended.
- Since 2011, the NCCI has recommended a total 51.4 percent rate reduction for Illinois insurance premiums. Had that suggestion been implemented, Illinois employers would have saved more than $2.25 billion in premium costs – a sum much larger than the relative savings depicted by the Oregon study. But private, for-profit insurance companies have refused to reduce their premiums in accordance with their own industry recommendations.
- The National Academy of Social Insurance (NASI) reports that Illinois had a 12.1 percent decrease in benefits paid between 2012 and 2016. The large decrease – the sixth largest in the country – is likely due to the 2011 rewrite.
- Profits in the insurance workers’ compensation market in Illinois have increased significantly since 2011. In 2015 and 2016, insurers in Illinois made nearly $1 billion in profits.
- Attracted here in part by insufficient insurance regulation made worse by Rauner administration negligence, there are 328 insurance companies writing workers’ comp insurance policies in Illinois, according to the state Department of Insurance. Only Pennsylvania has more. In 2009, there were fewer than 130 insurers competing to write workers’ comp premiums in Illinois.
- The number of new workers’ comp cases filed in Illinois is on a steady decline, down 24 percent since 2011.
Illinois no longer ranks near the top for costs associated with caring for injured workers. In fact, we are now near the middle, relative to other states, and costs here are similar to those of our Midwestern neighbors.
Cries for deeper cuts to the benefits received by injured employees, punctuated with the false claims that businesses avoid Illinois because of too generous workers’ comp benefits, are a transparent ploy to pressure lawmakers into stripping what remains of workers’ rights.
The truth is, Illinois is a good place for business. It is home to 37 of the nation’s largest companies in the 2018 Fortune 500 list – only three other states have more. And according to the U.S. Department of Commerce, we are ranked fifth in the country for gross domestic product.
Insurance companies are clearly taking advantage of both workers and employers. Any further changes to the state’s workers’ comp system, which has already been revised to the detriment of men and women injured on the job, must focus on insurance companies and the unjust premiums they charge business owners.
Deeper benefit cuts for injured workers, diminished medical reimbursements and denied claims will only boost insurance industry profits while shifting the cost of caring for injured workers onto the backs of taxpayers through publicly funded programs – a proposition that neither the worker nor the Illinois taxpayer can afford.
Mark D. Prince is president of the Illinois Trial Lawyers Association