A plan imposing greater restrictions on Illinois workers’ compensation insurance policies has passed the Senate – again.
Identical to Earlier Plan
The plan, which passed 34-21 on April 17, is identical to one that Gov. Bruce Rauner vetoed the previous year.
Sponsored by Democratic Sen. Kwame Raoul, the bill would require Illinois workers’ compensation insurance companies writing policies to justify requested changes and file intended rates with the state. Benefits would also depend on a causal connection between work and injury, and there would be tighter guidelines to determine a worker’s disability.
Gov. Rauner has argued that workers’ compensation costs hinder economic growth. For their part, the Democrats claim that a bill that became law in 2011 already restricted payouts and imposed rules on worker injuries, but Illinois workers’ compensation insurance companies have not passed the savings onto businesses by making similar premium reductions.
Benefits Down, Profits Up
The Democrats appear to have the facts on their side. According to a study by the National Academy of Social Insurance (NASI) that looked at workers’ compensation trends for all 50 states from 2011 through 2015, total benefits paid to medical providers and total workers’ compensation benefits paid to injured workers dropped 19.3 percent in Illinois. This decline represents the second-largest drop in overall costs in the country. In contrast, NASI found that these costs actually increased by 2 percent nationwide during the same period.
While Illinois has clearly done its part to reduce the costs associated with workers’ compensation benefits, insurance premiums have not followed suit.
There are 332 carriers writing policies for Illinois employers, the most in the United States, and these companies profited handsomely from the 2011 law. In the five years captured by the NASI study, the premiums collected from employers and kept by insurance companies – that is, not paid out in claims for injured workers – have more than doubled.
In 2011, Illinois workers’ compensation insurers collected $2.4 billion in premiums from the state’s employers, 75% of which – or $1.8 billion – were utilized to pay workers’ compensation benefits. By 2015, the annual intake of workers’ compensation premiums had increased to $2.83 billion, but the amount paid out in benefits had decreased to $1.5 billion, roughly 53% of the premiums collected. In fact, from 2011 through 2016, workers’ compensation insurance companies in Illinois have kept over $6 billion in premiums.
Insurers Not Required to Reduce Premiums
That’s because, unlike in many other states, Illinois workers’ compensation insurance companies are not required to adopt lower rates based on market need. Therefore, while workers’ compensation insurance providers have seen significant savings thanks to changes in Illinois law, they have not been legally compelled to pass those savings onto businesses in terms of reduced premiums, so they have not done so – something that the bill that just passed the Senate seeks to change.
In response, Gov. Rauner’s spokeswoman said that the bill did not represent a “real” reform to the Illinois workers’ compensation system, though she claimed that the governor hopes for a “bipartisan” fix.
Chicago Workers’ Compensation Attorneys
If you have been injured in the workplace, please contact GWC today to schedule a free consultation with one of our Chicago workers’ compensation attorneys. Call our office at (312) 464-1234 or click here to chat with one of our representatives.