Illinois General Assembly - Bill Status for SB1805

Amends the Illinois Insurance Code. Provides that any insurer with less than $100,000,000 in group surplus authorized to issue workers' compensation policies with a per-occurrence deductible of $100,000 or greater shall report the outstanding obligations owed under the deductible as liabilities of the insurer, unless the obligation is fully collateralized, and limit per-occurrence deductible obligations. Effective July 1, 2015.

Replaces everything after the enacting clause with the introduced bill with the following changes: Defines "insurer" to mean an insurer authorized to issue a workers' compensation policy in this State that has an A.M. Best Company rating below "A-" and does not have at least $200,000,000 in surplus (rather than less than $100,000,000 in group surplus). Defines "large deductible agreement". Requires insurers to require full collateralization of outstanding obligations owed under large deductible agreements using certain methods. Provides that one method for collateralization is through cash or securities held in trust by a third party or by the insurer (rather than by a third party), provided that if the assets are held by the insurer those assets are not commingled with the insurer's other assets. Provides that insurers shall limit the size of the policyholder's obligations under a large deductible agreement to 20% of the total net worth of the policyholder at each policy inception (rather than 20% of full policy premium value or 10% of the total accounting net worth of the policyholder). Provides that an insurer determined to be in a financially hazardous condition under the Illinois Insurance Code by the Director of Insurance in this State or the equivalent in any other state is prohibited from issuing or renewing a policy that includes a large deductible agreement except when approved by the Director. Applies to large deductible agreements issued or renewed by any insurer on or after January 1, 2016. Effective July 1, 2015.

Provides that insurers shall limit the size of a policyholder's obligations under a large deductible agreement to no greater than 20% (rather than to 20%) of the total net worth of the policyholder. In the definition of "large deductible agreement", includes security agreements which provide for the policyholder to bear the risk of loss of $100,000 or greater (rather than a specified amount) per claim or occurrence.

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