Illinois State Run Workers’ Compensation Fund and Price Control Legislation Fails to Provide Meaningful Reforms

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Steve Schneider, Midwest region vice president for the American Insurance Association (AIA), issued the following statement after the Illinois House passed two adverse pieces of workers’ compensation legislation (HB 2525 and HB 2622) last night. If enacted, HB 2525 would require insurers to submit rates to the Illinois Department of Insurance, and then wait up to 30 days before using them.

Steve Schneider, Midwest region vice president for the American Insurance Association (AIA), issued the following statement after the Illinois House passed two adverse pieces of workers’ compensation legislation (HB 2525 and HB 2622) last night. If enacted, HB 2525 would require insurers to submit rates to the Illinois Department of Insurance, and then wait up to 30 days before using them. This removes considerable flexibility for both insurers and their customers from the marketplace, adds unnecessary delays and imposes significant resource demands and costs. HB 2622 would create the Illinois Employers Mutual Insurance Company (IEMIC), a state-sponsored fund to provide workers’ compensation insurance in Illinois.

Mr. Schneider’s statement follows:

“AIA is disappointed by the House’s passage of HB 2525 and HB 2622, adverse workers’ compensation legislation.

Illinois is the most competitive state for worker’s compensation insurance. More than 300 insurers compete for the right to earn a customer’s business. Competition is intrinsically good for all Illinois employers who must purchase this mandated, comprehensive coverage. This competition stems from Illinois’ current open competitive rating law that has been in effect for 35 years. HB 2525 would eviscerate that law and its benefits for Illinois employers.

By replacing healthy competition with an extremely vague regulatory standard, HB 2525 could lead to every single workers’ compensation policy and its premiums undergoing formal review by the Department of Insurance every year, or even more frequently. Such bureaucratic interference with open competition will hurt not just workers’ compensation insurers, but all Illinois businesses.

Additionally, HB 2622 not only inappropriately interferes with the private market, but also fails to provide meaningful reform to the Illinois’ workers’ compensation system. No reason exists for Illinois to create its own state-sponsored workers’ compensation insurance company to compete against private sector insurers and jobs when no major crisis is present and massive government intervention is not necessary.

Insurers stand ready to work with policymakers on meaningful reform to provide an effective workers’ compensation system with reduced cost drivers for employers and appropriate benefits and medical care for injured workers with a minimum of delays and disputes. HB 2525 and HB 2622 is not the right approach to achieving meaningful reform.”

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