Stressing that Illinois’ insurance marketplace remains both competitive and ethical, the Illinois Policy Institute took issue with a series of claims made recently by Chicago-based personal injury lawyer Christopher Hurley.
Hurley, the president of the Illinois Trial Lawyers Association, maintained in a letter to the Belleville News-Democrat that “workers’ comp insurers saw profits jump nearly 22 points between 2010 and 2014, from negative 11 percent to positive 11 percent, while between 2011 and 2015 they reduced their financial payouts on claims to below the national average.”
Hurley argued that in his annual budget address, Gov. Bruce Rauner neglected to enlighten the public about what Hurley believes is “the real problem” with Illinois’ workers’ compensation system: “insurance company profiteering.”
He also claimed that insurance agents have made a practice of pocketing profits rather than passing savings on to their clients, especially since state law was changed in 2011, and he recommended stricter legislative control over the industry.
Illinois Policy analysts chided Hurley, deeming his approach a “demonstrably false narrative” and offering their own evidence to the contrary. Citing statistics from the State of Illinois'Department of Insurance’s 2016 "Workers’ Compensation Insurance Oversight Report," the institute argued that the state’s insurance industry profits have ranked below the national average for up to five consecutive years -- between 2011 and 2015.
Nationally, the profit rate is approximately 7.1 percent, whereas Illinois insurers realize only 2.7 percent, the analysts said.
Moreover, institute spokespersons viewed Hurley’s attack as a potential red herring, designed to distract residents and lawmakers from the true reasons for the state’s overly expensive workers’ compensation: that “Illinois’ system drives manufacturers and workers out of the state while enriching personal injury attorneys like Hurley."
While Illinois rated foremost in the nation in terms of the number of insurers writing workers’ compensation in 2015, according to the state’s report, its premiums for that time period — which totaled $2.83 billion, according to the state — totaled only 4.9 percent of the U.S. market share, placing it behind both New York at 9.6 percent and top-ranked California, at 21.5 percent.
Illinois Policy views the state’s high number of individual insurers as a sign of economic health, not the glut that Hurley suggests.
“Low, competitive profit rates for insurers mean their customers are getting a good deal,” the institute's analysts said. “Yet somehow Hurley sees insurance profiteering as the problem in Illinois, even though Illinois profit rates are below average. There is no profiteering happening, and Hurley shouldn’t claim that there is.”
The institute also argued that the state has overly expensive medical care and profit-driven pharmacy practices, as well as a system that encourages wanton litigation interests.
Adding that Illinois is inherently structured to favor special interest groups over businesses and the work force, the institute said that in general, neither businesses nor workers are being treated well.
“[B]usinesses and workers aren’t getting a good deal overall,” it stated via its website.
Finally, the institute suggested that the legal industry might do well to question its own profit rates — specifically, those practices that specialize in workers’ compensation cases.
“Insurers have to report their profit rates – so why not the trial bar too?” the institute said.
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