The Incredible Shrinking Department of Insurance

Just had an interesting, if depressing, conversation with someone I know at the Illinois Department of Insurance.  It looks like the long-term plan of the insurance industry to effectively dismantle insurance regulation in Illinois is continuing apace.  The department is supposed to have 352 people there when it is fully staffed.  They are now down to 200, and experienced people there are getting out as quickly as possible.

Now, keep in mind that taxpayer dollars aren't involved in the IDOI--the funding all comes from fees and taxes levied on the insurance industry.  So starving the department of personnel doesn't save taxpayers any money.  It just makes sure there won't be any genuinely effective insurance oversight and regulation in the state.

This de facto deregulation was set in motion years ago, when the then-President of the Illinois Senate asked representatives of the insurance industry if they understood the long-term implications of starving the IDOI.  It was made clear by those insurance industry people, so I am told, that they were indeed fine with that.

When employers and their representatives get all upset over the cost of Workers Compensation in Illinois, they tend to focus rather obsessively on the benefits paid to workers.  And while that is certainly a significant driver of WC costs, it isn't the whole story.  What has usually been overlooked in Springfield, when they consider 'reforms' of the Workers Comp system,  is the role of insurance companies.  For most employers,  it is the cost of Workers Compensation insurance that they have to wrestle with.  And without effective and experienced insurance regulators, it is a foregone conclusion (in my mind, at least) that insurance companies will interpret things to their own benefit when computing insurance premiums and writing rules.  And when there are finally no experienced
people in the department of insurance to help employers dispute these abuses,  employers will truly be at the mercy of the insurance industry.  It is not a pleasant future to contemplate, but it is almost upon us.