94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB2428

 

Introduced 2/17/2005, by Rep. Jay C. Hoffman

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/456   from Ch. 73, par. 1065.3

    Amends the Illinois Insurance Code. Provides that with respect to employers correctly classified within the construction industry, the amount charged to the insured for workers' compensation and employers' liability insurance shall be based upon hours worked by employees in specific job categories or classifications, not the wages or salaries paid to the employees. Makes technical changes.


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A BILL FOR

 

HB2428 LRB094 08066 LJB 38250 b

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
5 changing Section 456 as follows:
 
6     (215 ILCS 5/456)  (from Ch. 73, par. 1065.3)
7     Sec. 456. Making of rates.
8     (1) All rates shall be made in accordance with the
9 following provisions:
10         (a) Due consideration shall be given to past and
11     prospective loss experience within and outside this State,
12     to catastrophe hazards, if any, to a reasonable margin for
13     profit and contingencies, to dividends, savings, or
14     unabsorbed premium deposits allowed or returned by
15     companies to their policyholders, members or subscribers,
16     to past and prospective expenses both countrywide and those
17     specially applicable to this State, to underwriting
18     practice and judgment, and to all other relevant factors
19     within and outside this State. ;
20         (b) The systems of expense provisions included in the
21     rates for use by any company or group of companies may
22     differ from those of other companies or groups of companies
23     to reflect the requirements of the operating methods of the
24     any such company or group with respect to any kind of
25     insurance, or with respect to any subdivision or
26     combination thereof for which subdivision or combination
27     separate expense provisions are applicable. ;
28         (c) Risks may be grouped by classifications for the
29     establishment of rates and minimum premiums.
30     Classification rates may be modified to produce rates for
31     individual risks in accordance with rating plans that which
32     measure variation in hazards or expense provisions, or

 

 

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1     both. The Such rating plans may measure any differences
2     among risks that have a probable effect upon losses or
3     expenses. ;
4         (d) Rates shall not be excessive, inadequate, or
5     unfairly discriminatory.
6             (i) A rate in a competitive market is not
7         excessive. A rate in a noncompetitive market is
8         excessive if it is likely to produce a long run profit
9         that is unreasonably high for the insurance provided or
10         if expenses are unreasonably high in relation to the
11         services rendered.
12             (ii) A rate is not inadequate unless the such rate
13         is clearly insufficient to sustain projected losses
14         and expenses in the class of business to which it
15         applies and the use of the such rate has or, if
16         continued, will have the effect of substantially
17         lessening competition or the tendency to create
18         monopoly in any market.
19             (iii) Unfair discrimination exists if, after
20         allowing for practical limitations, price
21         differentials fail to reflect equitably the
22         differences in expected losses and expenses. A rate is
23         not unfairly discriminatory because different premiums
24         result for policyholders with like exposures but
25         different expenses, or like expenses but different
26         loss exposures, so long as the rate reflects the
27         differences with reasonable accuracy.
28         (e) The rating plan shall contain a mandatory offer of
29     a deductible applicable only to the medical benefit under
30     the Workers' Compensation Act. Such deductible offer shall
31     be in a minimum amount of at least $1,000 per accident.
32         (f) Any rating plan or program shall include a rule
33     permitting 2 or more employers with similar risk
34     characteristics, who participate in a loss prevention
35     program or safety group, to pool their premium and loss
36     experience in determining their rate or premium for such

 

 

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1     participation in the program.
2         (g) With respect to an employer correctly classified
3     within the construction industry, the amount charged for
4     workers' compensation and employers' liability insurance
5     insuring the employees employed by an employer in any job
6     category or classification shall be based upon hours worked
7     by employees in that job category or classification and
8     shall not be based upon the wages or salaries paid to the
9     employees.
10     (2) Except to the extent necessary to meet the provisions
11 of subdivision (d) of subsection (1) of this Section,
12 uniformity among companies in any matters within the scope of
13 this Section is neither required nor prohibited.
14 (Source: P.A. 82-939.)