Interesting News

 Just received interesting news. The National Council on Compensation Insurance (NCCI) has contacted us to obtain the details about a recent classification decision by the Illinois Department of Insurance for our client. This client did manufacturing work but maintained an in-house tool and die department. For many years, Illinois had an NCCI State Special rule that allowed such tool and die departments to be separately rated into a less expensive class.

But last year, a client came to us because their insurer started using a new interpretation of the (admittedly awkwardly written) state special rule, and using this novel interpretation, the insurer said this client was not eligible for the lower tool and die class.

We first went to the Illinois Workers Compensation Appeal Board over this, but that board ruled in favor of the insurer. We then appealed that decision, on behalf of our client, to the Illinois Department of Insurance.

This case illustrates, I think, the unique capabilities of my company in such disputes. I was originally involved in helping the client, but once a legal hearing was required, my son and partner, Scott Priz, took over, as he is an attorney admitted to the bar in Illinois. Of course, he's worked with me for over twenty years here at A.I.M. so he has extensive experience with the details of Workers Comp insurance classifications and rates.

The Illinois Department of Insurance ruled in favor of our client, as I've reported here earlier. But now NCCI has reached out, asking us to provide details of the ruling by Illinois DOI, so NCCI can revise their manuals.

This will help make sure other Illinois manufacturers don't have to deal with this "novel" rule interpretation. We had heard that some other insurers were doing so, but this should head them off at the pass.

Congratulations to Scott Priz for obtaining this important decision at the Illinois Department of Insurance. And kudos to the National Council on Compensation Insurance for acting promptly to reflect this DOI decision in their manual rules.

A Case We lost--and Then Won

 A little while ago, we lost a case at the Illinois Workers Compensation Appeal Board. But we just got word we have prevailed in an appeal of that decision by the board. Here's the skinny on all this:

The Workers Comp insurer for a client of ours had insisted on a new interpretation of a long-standing understanding regarding application of an Illinois state special classification rule for companies that have an in-house tool and die operation as part of their manufacturing company. The understanding had always been that the language of that state special classification rule was that such tool and die operations should be separately classified into the less expensive Code 3113. This had been routinely and regularly done by premium auditors for many years.

But this insurer insisted on a different interpretation—that the tool and die operations had to be conducted as a separate business and not as a support function of the overall business.

We took this dispute to the Illinois Workers Comp Appeal Board on behalf of this client. And lost.

But we then appealed that decision by the board, to a legal hearing at the Illinois Dept. of Insurance. And we have now been informed that we have prevailed there.

This was possible because my son and business partner, Scott Priz, is also an attorney (in addition to being a brilliant and experienced consultant on Workers Compensation insurance premium issues). And Scott handled this appeal for our client, since a legal hearing, unlike the Appeal Board, really requires an attorney to properly represent the interests of the client.

We are also informed, from our agent contacts, that this new interpretation of the state special rules is being applied by other insurance companies in Illinois. And while this decision by the Illinois Department of Insurance solves this problem for our particular client, it will not address the wider issue of other insurers doing this to other small businesses.

If you know of a company being impacted by this, perhaps we should talk. We’ll be doing our best to identify other policyholders harmed by this, but that will take some time and likely can’t find everyone. Still, we’ll be doing our best.