Synopsis: Nat’l Council on Compensation Insurance or NCCI Proposes Their Zillionth IL WC Insurance “Advisory Rate” Decrease.
Editor’s comment: Last week, the World of U.S. Workers’ Comp again noted NCCI always recommends reducing IL WC advisory rates. I have been doing this job and reporting to my readers for almost four decades, I don’t ever remember NCCI recommending anything but lower advisory WC insurance rates. As you can’t buy WC insurance at the NCCI advisory rates, the purpose and reporting of them always seems confusing to everyone.
This year, they suggested a 10.9% advisory WC insurance rate decrease effective Jan. 1, 2018 because of improved experience in policy year 2015 by Illinois insurers and declining lost-time claim frequency. Along with that, NCCI recommended a 7.5% decrease for the “assigned risk” market.
I don’t ever remember NCCI recommending IL WC advisory rates should ever go up. In my view, if the insurance industry closely adhered to NCCI’s recommendations, IL WC insurance would be better-than-free and the insurers might owe their customers money!
The good news, sort of, is since the 2011 Amendments to the IL WC Act became law on Sept. 1, 2011, Illinois’ cumulative voluntary insurance rate level change decreased 36.5%, NCCI said in its advisory voluntary and assigned risk filings.
Those 2011 Amendments reduced medical fee payments across the board by 30% and expanded the use of the American Medical Association guidelines for assessing permanent partial disability. The legislation also limited a worker’s choice of medical providers to one if the employee chose non-emergency treatment from a provider who was not within a WC PPO or preferred provider program, and it cut permanent partial disability benefits for most carpal tunnel cases by 20%. The legislation, signed into law by Democratic Gov. Pat Quinn, also limited an award for a wage differential to when the worker reaches age 67 or five years from the date of the award, whichever is later.
For 2017, NCCI filed a 12.9% rate reduction in Illinois – the third-largest decrease in the 38 jurisdictions where the ratings firm operates. NCCI provides advisory loss costs for 34 states including the District of Columbia, and recommends full rates to regulators in Florida and three other states — Arizona, Idaho and Iowa. In Illinois and Indiana, NCCI provides recommendations for both loss costs and full rates.
That said, please note Illinois WC insurers are not required to follow NCCI’s recommendations and generally ignore them. Beginning this past Jan. 1 in Illinois, all insurers must provide their rate deviations from NCCI when filing their proposed rates, according to an IL Department of Insurance bulletin.
NCCI’s latest advisory rate filings recommended decreases in 36 of its 38 jurisdictions.
The Illinois Manufacturers Association or IMA downplayed the proposed advisory insurance rate decrease, noting since the recession ended in 2009, our State lost more than 2,000 manufacturing jobs and we continue to bleed jobs across our borders. The forces for ITLA or the Illinois Trial Lawyers Ass’n again repeated their party-line, claiming this voluntary rate filing confirms IL WC costs are low and the fault lies with those wealthy insurance companies that somehow horde high profits only in Illinois. In my view, the truth lies somewhere betwixt and between.
I am sure Illinois Gov’t went two years without a state budget before Democrats in the IL General Assembly combined with cross-over Republicans to override Governor Rauner’s vetoes earlier this month and borrowed billions of new dollars and passed record high personal income and corporate tax increases. We already have the highest real estate taxes in the U.S. along with an estate tax that very few states have.
In those two years without a budget, the State of IL continued its inexorable march to Financial Armageddon as we accumulated nearly $14.6 billion in unpaid bills, $251 billion in unfunded/defunded fake gov’t pension obligations and the nation’s worst credit rating—that isn’t yet junk but is soon to get there. No one on either side of the IL political matrix is doing anything to block/stop/slow the financial engines that are bringing us further into an ongoing and informal government “bankruptcy.” Please note the State of IL can’t actually file for bankruptcy, as federal bankruptcy law doesn’t cover State governments. I call it an “informal” bankruptcy because we can’t possibly pay any bills in a timely fashion so all State creditors have to deal with years of waiting and begging to eventually get paid.
An NCCI circular explaining the proposed WC advisory rate decreases is here.
Synopsis: The National Safety Council ranks Illinois as the United States’ Second-Safest State!
Editor’s comment: The National Safety Council’s report gave Illinois an overall B grade with an A for Workplace Safety. No state received an overall grade of A.
Please note when States have relatively generous workers’ comp systems, employers create safer workplaces to avoid those costs. We also feel very few national blogs/writers note newly litigated IL WC claims have dropped dramatically over the last decade due in part to employer safety programs.
As we have advised our clients and readers, if you want aggressive defense attorneys that can close pending claims within your authority and reserves, send a reply. We hate badly aging IL WC claims and will work hard with you and your claims staff to close with lots of great techniques to do so.
Other B states were Maryland, Maine, Oregon, Connecticut, California and Washington. Eleven states got F grades: Kansas, Oklahoma, Arkansas, Arizona, South Carolina, South Dakota, Montana, Wyoming, Mississippi, Idaho and Missouri.
“The State of Safety: A State-by-State Report” is here.
Illinois ranked first for maximum duration of temporary disability benefits, second for lifetime permanent disability benefits and fourth for maximum weekly benefits for permanent disabilities at $1,398 a week. (That number was for 2016; the current maximum is $1,441.)
From their report:
WORKPLACE SAFETY | Grade A | Rank #1 | 2015 Work Fatalities - 146
· Prevention, Preparedness and Enforcement Developing
· Safety and health program for employers required (partial credit for incentivized)
· State/local government employee OSHA coverage
· State workplace safety committee law/mandate (partial credit for conditional, incentivized or recommended)
· State workplace violence law (partial credit for minimal or partial coverage)
· State enhanced 911 program for employers
· Workers’ Compensation On Track
· Maximum length of benefits in weeks (temporary disability)* Duration / Rank #1
· Maximum weekly benefit (permanent disability)** $1,398 / Rank #4
· Maximum length of benefits in weeks/amount (permanent disability)*** No Limit / Rank #2
· Worker Health and Wellbeing On Track
· Drug-free workplace law State Grants / Service
· Workplace anti-smoking law (partial credit for partial ban)
· Workplace wellness law
The complete benefit schedule is here.