The rising cost of commercial liability and unemployment insurance and worker`s compensation is making it difficult for smaller companies to do business in Illinois, according to a survey by the National Federation of Independent Business/Illinois.
”The high cost of doing business in Illinois needs to be addressed right now,” said Don Hughes, director of governmental relations for the NFIB.
The NFIB, the state`s largest representative of small business, is aligned with 59 other Illinois organizations in a coalition that is proposing legislation to correct what it believes to be the source of business insurance problems–multimillion dollar settlements against companies.
Hughes said 93 percent of the members surveyed want legislation to limit the amount of punitive damages that can be awarded in commercial liability lawsuits, and 90 percent asked for limitations on damages courts may award in personal injury cases.
The NFIB, which has 16,000 members in Illinois, sent surveys to all and received a 15 percent response.
Of those surveyed, 94 percent also said they want restrictions on payments that attorneys received in contingent fee cases.
”Fortunately, Gov. (James) Thompson is heading the list of lawmakers who are pushing for reforms in all three areas,” said Hughes. ”Any steps taken to lower these costs of doing business will have a positive effect on the business climate in the state, and will go a long way toward attracting new businesses in Illinois.”
According to Hughes, 86 percent of the NFIB members surveyed also want Illinois to simplify the system it uses to determine a company`s unemployment insurance tax rate.
And, 82 percent of those surveyed want the state to adopt an objective set of uniform standards for determining the degree of medical disability in workers compensation cases.
Hughes said the cost of obtaining or renewing casualty insurance premiums is also at a crisis stage.
”Many companies are seeing their premiums raised anywhere from 200 percent to as high as 1,000 percent,” he said. ”Others are finding their policies canceled without warning.”
”Unless corrective measures are taken, insurance premiums will continue to go through the roof. As a result, companies may be forced to either go without liability insurance, or close their doors,” said Hughes. ”This is a problem that needs immediate attention.”
Hughes said a substantial number of small businesses are faced with few or no alternatives to handle the costs.
”The rising insurance costs have become more burdensome to small business owners. Small business is more labor than capital intensive. When their payroll goes up so do their taxes. There`s no incentive to hire additional employees,” he said.
”We get letters and calls from people who say their costs are so high that they are operating with 3 fewer people and they may have had only 10 people to begin with,” he said.
The NFIB represents 16,000 businesses in Illinois that average 12 employees in size and $372,000 in annual gross sales.
