CHICAGO - The following statement regarding today’s Illinois House Labor & Commerce Committee hearing on the progress of the 2011 workers compensation reforms can be attributed to Jeffrey Junkas, assistant vice president, state government relations for the Property Casualty Insurers Association of America (PCI).
“After enacting several important reforms in 2011, Illinois is on the road to improving its workers compensation system for the benefit of injured workers, employers, and state’s overall business climate.
“While progress is being made in Illinois focusing on preventing fraud, implementing cost control measures such as a new medical fee schedule, and establishing a preferred provider organization (PPO) program for injured workers, it is critical that these reforms be given an appropriate amount of time to be fully integrated into the marketplace.
“When the reform bill was signed in 2011, it was noted that the savings associated with legislation will take time to appear. A report issued by Milliman at the time indicated that it may take three to six years before employers and insurers experience an 8.5 percent -12.75 percent reduction in annual workers compensation payments. Any analysis of the reforms must take into account that there were different effective dates for various provisions and some of the reforms such as the one establishing preferred provider organization rules were not implemented until 2013.
“Despite the lag in implementing some of the changes, the National Council on Compensation Insurance (NCCI) proposed loss costs are 19.3 percent below the level prior to 2011 workers compensation reform including a recent loss cost level reduction of 6.2 percent. The significant decline in the advisory loss costs highlights that the reforms are working and costs are being reduced. Per prior Oregon Workers’ Compensation Premium Rate Ranking Reports, Illinois had the 3rd highest workers compensation premium rates in the study, with a premium rate index of $3.05 per $100 of payroll. In the 2014 Oregon report, Illinois’ premium rate index decreased to $2.35, a 22 percent decrease in the rate index and Illinois improved its position to 7th place.
“The Illinois system is not perfect, nor is there a perfect system in any state. Illinois needs to continue to improve its system to maintain an appropriate balance for all stakeholders including requiring the workplace to be the primary cause of the injury.
“Additionally, the state’s workers compensation marketplace is highly competitive which provides employers with significant choice among over 327 companies actively writing in Illinois in 2013. This high level of competition is critically needed to maintain a stable workers compensation system for all stakeholders.
“Although there may be voices calling for changes as a response to a financially healthy workers compensation marketplace, decisions must be made with understanding that the workers compensation business is cyclical and insurers must be prepared to handle cost fluctuations and have the necessary financial resources to make insurance coverage available to the public and to policyholders.”