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Minnesota's. Nationwide, Alaska and California have the highest insurance premiums at $5 and $4.13 respectively. Indiana's
is second-lowest, with North Dakota the cheapest at $1.10.
Jay Shattuck, executive director of the Illinois Chamber of Commerce's Employment Law Council, says workers' compensation
insurance premium rates rank as one of the hottest issues with Illinois employers.
Shattuck says the comprehensive set of workers' comp reforms passed by the Illinois General Assembly in 2005 have not yet
produced the savings they promised.
"Illinois remains very uncompetitive," Shattuck said. "It's even more recognizable when you compare us to
Indiana,
Missouri and Iowa. What many, many of the employers that we've heard from see so much in the way of abuse. Illinois' system
is loaded up against the employer."
Comparative workers' compensation costs assuredly played a factor in Honda Motor Co.'s decision in late June
of 2006 to
build its $400 million plant southeast of Indianapolis - and not in Illinois, which was one of the states vying for it,
Shattuck said.
Another example where Illinois' high cost of workers' comp insurance costs makes site selection a hard sell,
Shattuck
said, is in the decisions of native Illinois corporations such as Peoria-based Caterpillar Inc. Caterpillar has opted to
make major plant expansions over the past several years in South Carolina, Alabama, Mississippi and other states, but not in
its home state.
"When we answer to outside site locators, the toughest subject is on our workers' compensation costs," he
said. "This
Illinois Workers' Compensation Commission study that ranks Illinois 26th highest is actually flattering study. There are
other studies of workers' compensation costs that don't paint Illinois in quite as favorable of a light."
Dennis Ruth, chairman of the Illinois Workers' Compensation Commission, asserts that it's not a fair
comparison to hold
Illinois' $2.69 per $100 of payroll insurance premium cost against Indiana's $1.24 premium.
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"Indiana really doesn't have a humane work law," said Ruth. "They don't treat their workers fairly. They
have low minimum
and maximum rates of compensation and they're very restrictive. Most people wouldn't think they're fair. We're (Illinois)
not going to compare fairly to Indiana. Nobody likes to bear these costs, but when you look at these numbers, we're not out
of control. Illinois tends to be right in the middle of the pack," he added.
The IWCC's FY2006 study ranked Illinois 17th highest of all 50 U.S. states in workers' compensation
indemnity costs per
claim (costs for injuries suffered). The study also ranked Illinois 9th highest in the nation in wages; 21st highest in
workers' comp medical costs per claim; 21st highest in the growth rate of workers' comp payments; 26th highest nationally in
the workers' comp benefit cost rate, which are benefits paid per payroll; and Illinois ranked only 37th highest in workers'
comp injury rate.
What the legislative reforms of 2005 have allowed the IWCC to make progress on, according to Ruth, is beefed
up enforcement in the field relative to investigating workers' compensation fraud.
"One of the significant things we did in 2005 was to create an anti-fraud division and fully fund an
investigative unit
at the Department of Insurance," Ruth said. "And within the past six months, we've received our first guilty plea."
Prior to 2005, according to Ruth, there was no state law on the books specifically for workers' compensation
fraud. "Frequently the fraud cases our investigators see pertain to individuals faking how seriously they are actually injured,"
Ruth said. "For example, someone may legitimately be injured and entitled to benefits but is trying to settle for more than
he is entitled to. Our investigators are cracking down on settlements that maybe should be $50,000 rather than $200,000, for
example," he added.
Thanks to more workers in the field since the 2005 reforms were set in motion, the backlog of workers' comp
cases in the
system has decreased. Ruth said there are currently some 97,000 cases pending statewide compared to approximately 116,000
that were pending five years ago.
Tying Illinois workers' comp medical reimbursement rates to the Consumer Price Index is a recent move the
IWCC has made to try to hold these costs steady, Ruth said. "As of Jan. 1, 2008, reimbursement rates increased by 1.97
percent," he said. "Historically, we've seen increases of 9, 10 and 11 percent. We're really starting to see the effects of
tying medical reimbursement rates to the CPI paying off."
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