103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB5512

 

Introduced 2/9/2024, by Rep. Jehan Gordon-Booth

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/Art. XLVIII heading new
215 ILCS 5/1800 new
215 ILCS 5/1805 new
215 ILCS 5/1810 new
215 ILCS 5/1815 new

    Amends the Illinois Insurance Code. Sets forth findings and definitions. Provides that the Department of Insurance is authorized to enter into a contract with a private insurance broker to establish an Owner-Controlled Insurance Program. Provides that the Owner-Controlled Insurance Program shall provide specified forms of insurance, if applicable, to construction contractors for the purpose of satisfying requirements to contract with a construction agency. Requires the Department to comply with the Illinois Procurement Code when procuring a contract for an Owner-Controlled Insurance Program. Provides that a contract between the Department and an insurance broker for the provision of an Owner-Controlled Insurance Program shall not exceed 5 years in duration. Provides that all tiers of construction contractors shall be eligible to obtain any form of insurance required to contract with a construction agency for the purposes of satisfying the insurance obligations necessary to execute a construction contract for a construction agency. Effective immediately.


LRB103 37793 RPS 67922 b

 

 

A BILL FOR

 

HB5512LRB103 37793 RPS 67922 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5adding Article XLVIII as follows:
 
6    (215 ILCS 5/Art. XLVIII heading new)
7
ARTICLE XLVIII. OWNER-CONTROLLED INSURANCE PROGRAM

 
8    (215 ILCS 5/1800 new)
9    Sec. 1800. Findings. The General Assembly finds the
10following:
11    (1) Small contractors, including many small businesses,
12minority-owned businesses, women-owned businesses, and
13businesses owned by persons with disabilities often struggle
14to find competitive insurance options that meet the standards
15required for public construction projects, and these
16businesses particularly struggle to obtain insurance options
17that are affordable. High insurance premiums make these
18businesses less competitive as prime contractors and
19subcontractors because the contractors and subcontractors pass
20along increased costs to public owners in the form of higher
21bid prices.
22    (2) Under an Owner-Controlled Insurance Program, a single

 

 

HB5512- 2 -LRB103 37793 RPS 67922 b

1policy held by the owner covers the owner and contractors of
2all levels for the entire construction project or group of
3projects, which reduces barriers by allowing contractors that
4historically struggle to obtain insurance at an affordable and
5competitive price to not only bid but be awarded the contract.
6    (3) In a conventional project structure, in which many
7contractors provide insurance to the public owner, disputes
8between different carriers over liability and coverage consume
9considerable time and resources, escalating costs. In
10contrast, an Owner-Controlled Insurance Program can provide
11more efficient coverage through a single policy. Further, when
12a public owner implements an Owner-Controlled Insurance
13Program, the owner is relieved of the burden of monitoring
14that each contractor maintains coverage if the project
15continues beyond the length of an applicable policy.
16    (4) Owners, in this case, the State of Illinois, can
17attain economies of scale when using an Owner-Controlled
18Insurance Program versus a traditional insurance approach.
19    (5) Owner-Controlled Insurance Programs also create safe
20worksites. In contrast to a conventional project structure
21wherein contractors and subcontractors hold multiple policies
22with separate safety requirements, Owner-Controlled Insurance
23Programs typically harmonize safety standards across
24contractors. Additionally, Owner-Controlled Insurance
25Programs can allow for an integrated data platform to
26facilitate safety data collection and review.

 

 

HB5512- 3 -LRB103 37793 RPS 67922 b

1    (6) It is in the interest of the State of Illinois to
2ensure efficient and uniform insurance coverage required
3throughout the duration of construction agencies projects.
4    (7) It is in the interest of the State of Illinois to use
5economies of scale to be good stewards of taxpayer dollars.
6    (8) It is necessary to reduce barriers of entry to assist
7in the development of new and emerging construction
8contractors.
9    (9) It is in the best interest of the State of Illinois to
10promote safe worksites
 
11    (215 ILCS 5/1805 new)
12    Sec. 1805. Definitions. In this Article:
13    "Construction" means building, altering, repairing,
14improving, or demolishing any public structure or building, or
15making improvements of any kind to public real property.
16"Construction" does not include the routine operation, routine
17repair, or routine maintenance of existing structures,
18buildings, or real property.
19    "Construction agency" means the Capital Development Board
20for construction or remodeling of State-owned facilities; the
21Illinois Department of Transportation for construction or
22maintenance of roads, highways, bridges, and airports; the
23Illinois Toll Highway Authority for construction or
24maintenance of toll highways; Central Management Services;
25public institutions of higher education as defined in

 

 

HB5512- 4 -LRB103 37793 RPS 67922 b

1subsection (f) of Section 1-13 of the Illinois Procurement
2Code; and any other State agency entering into construction
3contracts as authorized by law or by delegation from the chief
4procurement officer.
5    "Construction contractor" means any person having a
6contract, as defined in Section 1-15.30 of the Illinois
7Procurement Code, with a State agency.
8    "Department" means the Department of Insurance.
9    "Owner-Controlled Insurance Program" means a single
10insurance policy that the State or any municipality may use
11for construction projects that covers the owner and
12contractors of all levels for the entire project or group of
13projects.
 
14    (215 ILCS 5/1810 new)
15    Sec. 1810. Owner-Controlled Insurance Program.
16    (a) The Department is authorized to enter into a contract
17with a private insurance broker to establish an
18Owner-Controlled Insurance Program. The Owner-Controlled
19Insurance Program shall provide the following forms of
20insurance, if applicable, to construction contractors for the
21purpose of satisfying requirements to contract with a
22construction agency:
23        (1) general and excess liability;
24        (2) professional liability;
25        (3) builders' risk;

 

 

HB5512- 5 -LRB103 37793 RPS 67922 b

1        (4) contractors' pollution liability;
2        (5) workers' compensation; and
3        (6) cyber liability.
4    (b) The Department shall comply with all applicable
5provisions of the Illinois Procurement Code when procuring a
6contract for the provision of an Owner-Controlled Insurance
7Program.
8    (c) A contract between the Department and an insurance
9broker for the provision of an Owner-Controlled Insurance
10Program shall not exceed 5 years in duration.
 
11    (215 ILCS 5/1815 new)
12    Sec. 1815. Eligibility. All tiers of construction
13contractors shall be eligible to obtain any form of insurance
14required to contract with a construction agency, as authorized
15in Section 1810, for the purposes of satisfying the insurance
16obligations necessary to execute a construction contract for a
17construction agency.
 
18    Section 99. Effective date. This Act takes effect upon
19becoming law.