A Democratic member of the state legislature introduced the idea, saying she believes it will help bring prices lower.
Legislation enacted in 2011 has resulted in a reported drop of 9.2 percent in workers' comp premiums. But some lawmakers say workers' comp remains a big burden for companies.
H.B. 2919 would create the Workers' Compensation Insurance State Fund "as an independent body corporate and politic for the purpose of insuring employers against liability for compensation under the Workers' Compensation Act." It was introduced by Rep. Laura Fine and approved by a House Committee in mid-March.
The legislation would cost an estimated $522,927 for four new full-time staff members' personal services and related expenses. Additional staff may later be required.
The proposal comes as other states are moving away from state funds. Fine was quoted as saying she is aware her proposal is bucking a national trend but says there have been success stories of other state funds and hopes Illinois can have one of those stories.
The proposal has met with opposition from organizations representing private carriers, though. The Property Casualty Insurers Association of America, for example, criticized the measure saying it would "put the state in the business of operating an insurance company that would compete with private carriers."
In a statement, PCI cited three reasons for its opposition:
- Illinois taxpayers face "numerous and unending economic crises," and with the state "having the worst credit rating of any state," it should not "take on such a huge cash flow drain and new future liabilities." PCI noted the state faces a pension crisis. "It makes no sense to then add the potentially limitless liability of long-term and often lifelong medical claims for injured workers as well as lost wages. Can the state guarantee these payments?"
- There is no need for a state fund with the 324 workers' comp insurers in Illinois.
- There is no credible evidence a state fund would lower the cost of coverage. "A state's relative workers' comp costs are completely unrelated to the nature of the insurance mechanism and proponents' attempts to sell legislators and employers on the merits of a state fund based on these assertions are wrong," the statement says. "Moreover, self-insured employers have the same cost drivers in Illinois as private insurers."
Read more at the WorkersComp Forum homepage.
April 15, 2013
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