Governor Quinn press release on insurance rate reduction; Reminder on attorneys' fees

Governor Quinn press release on insurance rate reduction  

Governor Quinn: Historic Workers’ Compensation Reform Saved Illinois Employers $315 Million
Recommended Rate Has Dropped 13.3 Percent Since Governor’s 2011 Reforms;
Latest Proposed Decrease of 4.5 Percent Will Help Ensure Fair and Honest Wages

CHICAGO – Governor Pat Quinn today announced that the National Council on Compensation Insurance (NCCI) has filed a request for an overall reduction of 4.5 percent in workers' compensation rates from the Illinois Department of Insurance (DOI).

 

Since the 2011 Workers’ Compensation Reform law championed by Governor Quinn, the department estimates that overall savings have reached $315 million for the Illinois Workers’ Compensation system. With the implementation of the proposed rate reduction, the advisory rate level will have dropped 13.3 percent below the advisory rate level prior to the changes sought and enacted by the governor. 

 

Today's announcement is part of Governor Quinn's commitment to strengthen Illinois’ business climate and drive more economic growth while ensuring that all workers are protected, treated fairly and receive the compensation they deserve. “When I came into office, Illinois had one of the most burdensome workers’ compensation systems in the country,” Governor Quinn said. “We turned that statistic around and delivered real reform that is saving hundreds of millions of dollars for our businesses and keeping the system honest to our workers. This rate review will ensure the state has a responsible advisory rate that supports business growth and protects workers.”

 

Officials estimate the latest proposed reduction in workers’ compensation advisory and loss cost rates could result in overall reduction in premiums of up to $110 million. This estimate is based on the credit rating organization A.M. Best’s calculations as they reviewed 2011 premiums. Individual rates for businesses may vary based on claims experience, payroll, and other factors. 

 

With the implementation of the proposed rate reduction, the advisory rate level will have dropped 13.3 percent below the advisory rate level prior to the 2011 Workers’ Compensation Reform Legislation. The overall premium impact based on the advisory rates is approximately $315 million. Individual companies may reflect different rate changes.

 

The NCCI advisory rates determine the premiums businesses pay for workers’ compensation insurance. Department of Insurance (DOI) actuaries must confirm the calculations submitted by NCCI, a process that typically takes about 60 days. 

 

“We’re pleased about the proposed rate reduction and look forward to the review process to confirm the results,” said DOI Director Andrew Boron. “The lower rate would benefit Illinois employers with cost savings.” 

 

If the department accepts the filing to be effective January 1, 2014, employers should contact their insurance agent prior to their 2014 renewal date to determine the impact on their premium. 

 

Since taking office in 2009, Governor Quinn made workers’ compensation reform and strengthening Illinois’ business climate a top priority. He launched a working group on the issue, proposed legislation and worked with the General Assembly to enact historic reform that is allowing businesses to save hundreds of millions of dollars, which in turn supports economic growth.

 

Earlier this month, Governor Quinn signed three laws that fight questionable practices to protect Illinois workers’ paychecks. House Bill 2649, House Bill 923 and House Bill 3125 deal with the misclassification of workers and the attempts of employers to avoid paying state employment taxes and premiums.

IL Supreme Ct olds that the mailbox rule applies to Commission review cases; First felony conviction won against uninsured employer; NCCI files for 4.5% decrease in 2014 WC advisory insurance rates

Illinois Supreme Court holds that the mailbox rule applies to Commission review cases

In a lengthy and comprehensive analysis, the Illinois Supreme Court held that the mailbox-rule applies when a party appeals from a Commission decision to the Circuit Court.  In Gruszecza v. IWCC, a majority of the Supreme Court interpreted Section 19(f)(1) of the Act to dictate that the proceeding to appeal a Commission decision is commenced when the request for summons is placed in a mailbox.  Section 19(f) states: “A proceeding for review shall be commenced within 20 days of the receipt of notice of decision by the Commission.”  According to the holding in Gruszecza, the date that a summons is mailed, not received and file-stamped by the Clerk of the Circuit Court, will control when a party seeks judicial review of a Commission decision.

To read the decision, go to http://www.iwcc.il.gov/grusz.pdf


First felony conviction won against uninsured employer

For the first time, an uninsured employer has been convicted of a Class 4 felony for failing to obtain workers' compensation insurance. Class 4 felony penalties are 1-3 years in penitentiary and/or fines up to $25,000.

The IWCC's Insurance Compliance Unit worked for over one year with the Cook County Sheriff's Office and the Cook County State's Attorney's Special Prosecutions Division to bring about this result.

Ahmed Ghosien, d/b/a Ghosien European Auto Werks in Hometown, was first contacted in 2010 about his lack of insurance. He agreed to get insurance and pay a fine for noncompliance, but he never made payments and the insurance was cancelled for nonpayment. He was indicted in 2012, and the case was continued several times until he finally pled guilty on July 25. His sentencing date is in October.

Making sure that employers have insurance protects workers and other employers. Congratulations to the Insurance Compliance staff for their achievement!


NCCI files for 4.5% decrease in 2014 WC advisory insurance rates

The National Council on Compensation Insurance (NCCI) filed for an 4.5% decrease in voluntary advisory insurance rates, effective January 1, 2014, following the 3.8% decrease in 2013. These significant savings follow the enactment of House Bill 1698 on June 28, 2011.

2012 NCCI IL Statutory Data Report & Advisory Rates

A couple of additional Illinois Department of Insurance updates...

The IDOI recently posted NCCI's 2012 Rating Organization Statutory Data Submission on its website.  NCCI is required by the Illinois Insurance Code to submit the following information annually: 

1. Indemnity and medical paid and paid+case losses for each of the past 10 years, by policy year
2. Medical payments for each of the past 10 years, by policy year
3. Indemnity claim Information including cumulative paid+case losses, by policy year by calendar year of development. This includes losses and frequency of claims in medical only, permanent partial disability, permanent total disability, temporary total disability and fatalities 
4. Frequency and severity by injury type
5. Aggregate (indemnity+medical) paid+case losses, and claim count by class of employee

The IDOI also confirmed that it had completed its review and filed NCCI's proposed 3.8% reduction for the WC Advisory and Lost Cost rates effective 2013 (see our previous overview of the filing & the IDOI's August press release announcing the rate review).

National WC Premium Rate Ranking Study

The Oregon Department of Consumer and Business Services' 2012 Oregon Workers’ Compensation Premium Rate Ranking Summary is now available.  This biannual report ranks the WC premiums of all 50 states and the District of Columbia.

Illinois is ranked as the 4th highest premium in 2012 rankings, at 151% of the median states of Georgia & New Mexico, down one spot from 3rd highest premium in the 2010 study. 

The workers' compensation premium rates used for the study are from 1/1/2012, or late 2011 depending on the state, so they do not appear to include any of NCCI's current recommended rate changes for various states.  Our previous post detailed the announcement that the Illinois Department of Insurance is currently reviewing NCCI's recommended 3.8% decrease to the IL workers' compensation advisory and loss cost rates.

Illinois-Specific WC Statistics

We received several inquiries regarding additional Illinois-specific WC statistics since last week's NCCI Illinois State Advisory Forum presentation post. 
 
In addition to workers' compensation industry research organizations (e.g., NCCI, WCRI, etc.), the IL Workers' Compensation Commission (IWCC), IL Department of Insurance (IDOI), and IL Department of Public Health (IDPH) have annual reports posted on their respective websites. These reports detail numerous components of Illinois' workers' compensation claims and departmental activities.
 

Illinois Workers' Compensation Commission

The most recent Fiscal Year Annual Report (FY 2011) is located under the Annual Report tab on the IWCC website.  Currently, its website contains reports dating back to Fiscal Year 1995.

In addition to its Annual Reports, the IWCC also provides links to other entities for workers' compensation statistics.
 

Illinois Department of Insurance

The IDOI publishes two WC-specific annual reports. 

• The 2012 Annual Report, submitted to the Governor's office on 6/29/2012, details the IDOI Fraud Unit's departmental activities.
• NCCI's 2011 Illinois Workers' Compensation Advisory Organization Data is submitted to the IDOI, and published on its website, on an annual basis. 

Illinois Department of Public Health

The IDPH publishes reports on both fatal and non-fatal occupational injuries under the Epidemiologic Studies tab on its website.

Illinois-Specific NCCI Presentations

The National Council on Compensation Insurance, Inc. (NCCI) has a couple of Illinois-specific presentations/reports currently available on its website.

On 9/13/2012, NCCI presented its complete overview of the Illinois workers' compensation environment.  The Illinois State Advisory Forum presentation provides a detailed comparison of national workers' compensation and employment trends to the economic conditions of the workers' comp industry in Illinois. 

• In August, the Illinois Department of Insurance announced it had begun its roughly 60 day calculation confirmation process after NCCI filed for an overall 3.8% decrease to the workers' compensation advisory and loss cost rates.
• This IWCC release contains an overview from the NCCI report regarding the potential rate reductions for several employer categories.

In addition to the 2012 Illinois State Advisory Forum, NCCI has a parallel report and  presentation that research the impact of the introduction of the Illinois workers' compensation fee schedule in 2006.

NCCI's IWCC Presentation

On Wednesday, November 30, NCCI (National Council on Compensation Insurance, Inc) presented an overview of both the Illinois and national workers' compensation markets for the IWCC Advisory Board and Medical Fee Advisory Board. 

This presentation, by Terri Robinson and Karen Ayres, was a slightly condensed version of the 2011 Illinois State Advisory Forum report NCCI released in October at its Rosemont, IL meeting. 

During Wednesday's meeting, many of the questions and comments from the audience revolved around NCCI's recommended -8.8% advisory premium rate adjustment on 9/1/2011.  HB 1698/Public Act 097-0018 required NCCI to file revised rates and loss costs by September 1, and the Illinois Department of Insurance approved that rate reduction. 

According to the presentation, while NCCI stated that many of HB 1698's modifications to the workers' comp system should lower system costs, it could only quantify a few of those changes with the information available and the required deadline to recommend a new premium rate.  The actuaries at NCCI calculated that the following reforms would reduce the overall workers' compensation costs for Illinois by 8.8%:

• the 30% fee schedule reduction                     -7.4%
• the changes to the wage differential benefits   -0.8%
• the changes to PPD carpal tunnel benefits       -0.6%  

NCCI has also filed its annual rate update, a 3.5% increase, with the IDOI for 1/1/2012.  NCCI's 1/1/2012 rate updates for neighboring states: 

• Indiana:  +2.6%
• Iowa:  +4.4%
• Missouri:  -3.0%

While the Illinois rate increase is 3.5%, that number is misleading when compared to its neighboring states.  Unlike those states, the Illinois rate increase is calculated off the 9/1/2011 rates, rather than the 1/1/2011 rates. 

Taking into account the -8.8% reduction to the rates on 9/1/2011, the recommended 3.5% increase to the Illinois rates equate to a rate reduction of -5.3% from the 1/1/2011 rates for Illinois.

The full NCCI Illinois State Advisory Forum report is available on the NCCI website.

NCCI's Illinois Insurance Market Presentation

On Wednesday, November 30, the National Council on Compensation Insurance (NCCI) will present its findings concerning the state of both the Illinois and national workers' compensation insurance markets to the IWCC's Medical Fee Advisory Board.

In response to the passage of HB 1698/Public Act 097-0018, NCCI filed, and the Illinois Department of Insurance approved, an 8.8% decrease in the voluntary advisory insurance rates effective 9/1/11.  However, in September, NCCI requested a 3.5% increase for the 2012 rates. This Business Insurance article from October provides a general overview of the two rate changes.

The NCCI presentation is scheduled for 9:00am in Room 9-040 of the James R. Thompson Center.

NCCI Requests IL Rate Increase for Next Year

In addition to the announcement of the new Illinois workers' compensation arbitrator appointments, there is another update regarding the Illinois workers' compensation landscape.

Business Insurance posted an article that details NCCI Holding's request with the Illinois Department of Insurance for a 3.5% workers' compensation rate increase next year.