Workers’ Compensation Premium Audit Alert!

Every year, Illinois Workers’ Compensation and Employers Liability rates can change based on the industry loss experience in the Governing Classification.  NCCI compiles data for Illinois, and traditionally rates are adjusted beginning January 1st.


For example, Class Code 5645 Carpentry—Detached One or Two Family Dwellings:


            Voluntary rate was 23.17 per $100 payroll Effective January 1, 2010,

            and increased to 23.60 per $100 payroll Effective January 1, 2011.


We can all recognize how the rising cost of medical expenses and higher weekly wages play a part in the increased rates and subsequent premium an employer pays for a Workers’ Compensation Policy.


For those employers who elect to include coverage for Executive Officers, another dramatic increase in premium is on the horizon. 


Along with the traditional increase in rates, Effective January 1, 2011:


Minimum Payroll applicable in accordance with Basic Manual Rule 2_E-1 –“Executive Officers”  was increased 250% over 2010 to $1,000 per week.


For example, an Owner / Executive Officer of a Carpentry Risk included on the Workers’ Compensation Policy had a Minimum Payroll exposure of $400 / week in 2010, or $20,800. Same Executive Officer has a Minimum Payroll exposure of $1,000 / week in 2011, or $52,000.   Based on the published rates above, at minimum payroll, the Executive Officer’s portion of the Premium just increased from $4,819 to $12,272.


If you have Executive Officers covered on a Workers’ Compensation Policy in Illinois, with exposures that have been at or below the minimum payroll, be aware of the changes that will be reflected come audit time.

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