National Association of Mutual Insurance Companies: It's Good Day for Illinoisans as Prejudgment Interest Bill Vetoed

INDIANAPOLIS, Indiana, March 26 -- The National Association of Mutual Insurance Companies issued the following news release on March 25, 2021:

Illinois Gov. JB Pritzker today prevented cost increases for medical care and other goods and services by vetoing HB 3360 that would have let trial lawyers charge high interest in court cases, drastically increasing potential cost to small businesses and increasing the litigation on them.

"Governor Pritzker showed tremendous sensitivity and support for the people of Illinois today when he vetoed this troublesome bill," said Andrew Perkins, regional vice president, Great Lakes region for the National Association of Mutual Insurance Companies. "Enacting this legislation would have harmed small businesses throughout the state and added unnecessarily to an already-burdened court system."

The bill, HB 3360, would have forced defendants in a lawsuit to pay prejudgment interest of 9 percent, nearly three times the rate in federal court cases, over-compensating the plaintiff at the expense of the small business defendant. Such a drastic increase was bound to have a devastating effect on Illinois' economy and job creation, Perkins noted. "If Illinois is going to proceed down this path of prejudgment interest, why wouldn't legislators pursue the federal rate of 3.25 percent, rather than 9 percent?" he asked.

The mandated interest rate is different with both market conditions and rates in neighboring and competitor states. As a result, it would have driven up insurance and litigation costs for individuals and businesses.

The Illinois Trial Lawyers Association spearheaded introduction of the bill during the lame-duck session, and it passed on a partisan vote by the House at approximately 3:30 a.m. on Jan.13. The pre-dawn passage occurred as House legislators were more focused on electing a new speaker of the House to succeed the longest serving speaker in the history of all 50 state legislatures.

NAMIC worked closely with the Illinois Insurance Association and the Illinois business community to oppose the legislation. NAMIC met with Pritzker's senior staff on Jan. 26 about the governor's potential action on the bill. The Illinois Insurance Association, business community, Illinois Hospital Association, the Illinois Medical Society, and others also met with the Governor's Office to express their opposition.

"The Governor's Office was very engaged and willing to hear all concerns regarding HB 3360 and acknowledged the bill was rushed through at the 11th hour," Perkins said.

"With Illinois citizens and policyholders already reeling from the effects of the COVID-19 pandemic, requiring prejudgment interest on court-awarded damages would have only made economic rebound more difficult," Perkins continued. "Illinois judges already can and do award prejudgment interest when appropriate, so there was absolutely no reason to introduce this bill. In effect, it was a solution looking for a problem."