| |||||||
| |||||||
| |||||||
| 1 | AN ACT concerning insurance.
| ||||||
| 2 | Be it enacted by the People of the State of Illinois,
| ||||||
| 3 | represented in the General Assembly:
| ||||||
| 4 | Section 5. The Illinois Insurance Code is amended by adding | ||||||
| 5 | Section 155.44 as follows: | ||||||
| 6 | (215 ILCS 5/155.44 new) | ||||||
| 7 | Sec. 155.44. Financial requirements; large deductible | ||||||
| 8 | agreements for workers' compensation insurance. | ||||||
| 9 | (a) An insurer shall: | ||||||
| 10 | (1) require full collateralization of the outstanding | ||||||
| 11 | obligations owed under a large deductible agreement by | ||||||
| 12 | using one of the following methods: | ||||||
| 13 | (A) a surety bond issued by a surety insurer | ||||||
| 14 | authorized to transact business by the Department and | ||||||
| 15 | whose financial strength and size ratings from A.M. | ||||||
| 16 | Best Company are not less than "A" and "V", | ||||||
| 17 | respectively; | ||||||
| 18 | (B) an irrevocable letter of credit issued by a | ||||||
| 19 | financial institution with an office physically | ||||||
| 20 | located within the State and the deposits of which are | ||||||
| 21 | federally insured; or | ||||||
| 22 | (C) cash or securities held in trust by a third | ||||||
| 23 | party or by the insurer and subject to a trust | ||||||
| |||||||
| |||||||
| 1 | agreement for the express purpose of securing the | ||||||
| 2 | policyholder's obligation under a large deductible | ||||||
| 3 | agreement, provided that if the assets are held by the | ||||||
| 4 | insurer those assets are not commingled with the | ||||||
| 5 | insurer's other assets; and | ||||||
| 6 | (2) limit the size of the policyholder's obligations | ||||||
| 7 | under a large deductible agreement to no greater than 20% | ||||||
| 8 | of the total net worth of the policyholder at each policy | ||||||
| 9 | inception, as determined by an audited financial statement | ||||||
| 10 | as of the most recently available fiscal year end. | ||||||
| 11 | (b) As used in this Section, "insurer" means any insurer | ||||||
| 12 | authorized to issue a workers' compensation policy covering | ||||||
| 13 | risks located in this State that has an A.M. Best Company | ||||||
| 14 | rating below "A-" and does not have at least $200,000,000 in | ||||||
| 15 | surplus. | ||||||
| 16 | (c) As used in this Section, "large deductible agreement" | ||||||
| 17 | means any combination of one or more policies, endorsements, | ||||||
| 18 | contracts, or security agreements which provide for the | ||||||
| 19 | policyholder to bear the risk of loss of $100,000 or greater | ||||||
| 20 | per claim or occurrence covered under a policy of workers' | ||||||
| 21 | compensation insurance and which may be subject to the | ||||||
| 22 | aggregate limit of policyholder reimbursement obligations. | ||||||
| 23 | (d) Except when approved by the Director of Insurance, any | ||||||
| 24 | insurer determined to be in a financially hazardous condition | ||||||
| 25 | pursuant to Article XII 1/2 or XIII of this Code by the | ||||||
| 26 | Director of Insurance in this State or the equivalent in any | ||||||
| |||||||
| |||||||
| 1 | other state is prohibited from issuing or renewing a policy | ||||||
| 2 | that includes a large deductible agreement. | ||||||
| 3 | (e) This Section applies to large deductible agreements | ||||||
| 4 | issued or renewed by any insurer on or after January 1, 2016.
| ||||||
| 5 | Section 99. Effective date. This Act takes effect on July | ||||||
| 6 | 1, 2015.
| ||||||