Sen. William R. Haine
Filed: 4/17/2015
 
 

 

 

 
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1
AMENDMENT TO SENATE BILL 1805




2    AMENDMENT NO. ______. Amend Senate Bill 1805 by replacing 
3everything after the enacting clause with the following:

 
4    "Section 5. The Illinois Insurance Code is amended  by 
5adding Section 155.44 as follows:
 
6    (215 ILCS 5/155.44 new)
7    Sec. 155.44. Financial requirements; large deductible 
8agreements 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", 
 
 
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1        respectively;
2            (B) an irrevocable letter of credit issued by a 
3        financial institution with an office physically 
4        located within the State and the deposits of which are 
5        federally insured; or
6            (C) cash or securities held in trust by a third 
7        party or by the insurer and subject to a trust 
8        agreement for the express purpose of securing the 
9        policyholder's obligation under a large deductible 
10        agreement, provided that if the assets are held by the 
11        insurer those assets are not commingled with the 
12        insurer's other assets; and
13        (2) limit the size of the policyholder's obligations 
14    under a large deductible agreement to 20% of the total net 
15    worth of the policyholder at each policy inception, as 
16    determined by an audited financial statement as of the most 
17    recently available fiscal year end.
18    (b) As used in this Section, "insurer" means any insurer 
19authorized to issue a workers' compensation policy covering 
20risks located in this State that has an A.M. Best Company 
21rating below "A-" and does not have at least $200,000,000 in 
22surplus.
23    (c) As used in this Section, "large deductible agreement" 
24means any combination of one or more policies, endorsements, 
25contracts, or security agreements which provide for the 
26policyholder to bear the risk of loss of a specified amount per 
 
 
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1claim or occurrence covered under a policy of workers' 
2compensation insurance and which may be subject to the 
3aggregate limit of policyholder reimbursement obligations.
4    (d) Except when approved by the Director of Insurance, any 
5insurer determined to be in a financially hazardous condition 
6pursuant to Article XII 1/2 or XIII of this Code by the 
7Director of Insurance in this State or the equivalent in any 
8other state is prohibited from issuing or renewing a policy 
9that includes a large deductible agreement.
10    (e) This Section applies to large deductible agreements 
11issued or renewed by any insurer on or after January 1, 2016. 

 
12    Section 99. Effective date. This Act takes effect on July 
131, 2015.".