Insurance Commissioner Kevin McCarty was in a good mood. Faced with a slate of controversial homeowners' rate filings and other issues that are stacked up like planes circling Chicago's O'Hare airport waiting to land, he was finally faced with a piece of good news in the form of the National Council on Compensation Insurance's relatively non-controversial call for a 16.5 percent workers' compensation rate decrease. Setting the tone for the annual public hearing, McCarty emphasized the improvements in the industry that have succeeded far beyond what anyone could have anticipated.

Speaking of the 2003 reforms, he said, “The legislature took the courageous and necessary step to solve the problems for employers. It is significant to point out that the current filing would be a savings of $650 million for employers and would be the fifth consecutive decrease resulting in a total 50.4 percent statewide decrease since the reforms.”

Traditionally, any rate reduction is seen as good news for the industry and employers. However, this year's filing, and the prospect of rates being sliced in half over a five-year period, has brought a slight sense of unease to the market. It is purely a financial question that goes to the heart of the intersection between regulators and the economic factors that are beyond their control. As a regulated line of insurance, lawmakers and regulators can affect issues such as benefit schedules, medical reimbursements, and attorneys' fees. But they cannot influence factors such as the ongoing downward trend in claim frequency and the pullback in construction due to the reversal in the housing market.