Oregon Study Analyzes Rates in 50 States & Highlights Sharp Reduction in Illinois Workersâ€™ Compensation Costs
CHICAGO, IL â€“ The administration of Governor Pat Quinn, the Illinois Workersâ€™ Compensation Commission and the Department of Insurance (DOI) announced that a national study has provided additional evidence that Illinoisâ€™ historic workersâ€™ compensation reforms are delivering major savings for businesses across the state. The biennial report by the Oregon Department of Consumer and Business Services shows Illinois recorded the sharpest reductions in workersâ€™ compensation insurance premiums in the nation over the last two years.
â€œIllinoisâ€™ economy is making a comeback, and the historic workersâ€™ compensation reforms we enacted in 2011 are a key part of it,â€ Governor Quinn said. â€œThis new study shows once again that these critical reforms are making Illinois is a national leader in reducing workersâ€™ compensation costs.â€
The new study comes just weeks after another report found workersâ€™ compensation costs in Illinois have dropped 19.3 percentage points, for a savings of more than $450 million, since workersâ€™ compensation reforms championed by Governor Quinn were enacted in 2011.
The Oregon study -Â http://www.oregon.gov/DCBS/docs/news_releases/2014/workers-comp-rate-study-14.pdf – ranks all 50 states and the District of Columbia by the amount insurance premiums rose or dropped in the last two years. It highlights that Illinois had the steepest reduction in workersâ€™ compensation rates when compared to the median, with an estimated rate drop of 24 percentage points between 2012 and 2014 (see chart below), compared to the national median reduction of only 2 percent.
The report shows Illinois employers workersâ€™ compensation premiums dropped from $2.83 per $100 of payroll in 2012 to $2.35 in 2014. This means hundreds of millions of dollars in savings for Illinois businesses.
â€œThe Oregon study demonstrates that Workersâ€™ Compensation insurance premiums in Illinois have been reduced more than any other state over the last two years,â€ Workersâ€™ Compensation Commission Chairman Michael Latz said. â€œThis premium reduction demonstrates decisivelyÂ that actuaries have recordedÂ significant savings in workers compensation costs in Illinois since the 2011 reforms.â€
Workersâ€™ compensation reform has been a priority of this administration since Governor Quinn took office in 2009. By working with business stakeholders and the General Assembly, Governor Quinn championed historic legislation that reformed the workersâ€™ compensation insurance industry and is allowing businesses to save hundreds of millions of dollars, driving economic growth throughout the state.
DOI has accepted the 5.5 percent drop in the advisory workersâ€™ comp rate for 2015 recommended by the National Council on Compensation Insurance. According to DOI, 70 percent of carriers adopted the advisory rate.
Department actuaries estimate the latest proposed reduction in workersâ€™ compensation advisory and loss cost rates could result in an overall reduction in premiums of up to $143 million in 2015, with the total savings since the reforms were enacted of $458 million.
â€œWeâ€™re pleased Illinoisâ€™ workersâ€™ compensation rates have dropped for the third straight year. The decline shows our reforms are working,â€ DOI Director Andrew Boron said. â€œThe lower rate will mean significant savings for Illinois employers. These savings support business growth and help protect workers.â€
The average rate change for the January 1, 2015 rate filing by Industry Groups are as follows:
- Manufacturing = -5.1 percent
- Contracting = -4.8 percent
- Office = -7.6 percent
- Good & Services = -5 percent
- Miscellaneous = -6.4 percent
Employers should contact their insurance agent prior to their 2015 renewal date to determine the impact on their premium.
Illinois Leads the Nation in Workers Comp Cost Savings
Chart courtesy of Oregon Department of Consumer and Business Services
About the Illinois Department of Insurance;
The Departmentâ€™s mission is to protect consumers by providing assistance and information, by efficiently regulating the insurance industryâ€™s market behavior and financial solvency, and by fostering a competitive insurance marketplace.Â Consumers who have any questions or concerns about their insurance should contact the Departmentâ€™s Consumer Division at http://insurance.illinois.gov or call 866-445-5364.