Illinois General Assembly - Full Text of SB1805
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Full Text of SB1805  99th General Assembly




SB1805 EngrossedLRB099 09021 MLM 29204 b

1    AN ACT concerning insurance.
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 adding
5Section 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",
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



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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 20% of the total net
8    worth of the policyholder at each policy inception, as
9    determined by an audited financial statement as of the most
10    recently available fiscal year end.
11    (b) As used in this Section, "insurer" means any insurer
12authorized to issue a workers' compensation policy covering
13risks located in this State that has an A.M. Best Company
14rating below "A-" and does not have at least $200,000,000 in
16    (c) As used in this Section, "large deductible agreement"
17means any combination of one or more policies, endorsements,
18contracts, or security agreements which provide for the
19policyholder to bear the risk of loss of a specified amount per
20claim or occurrence covered under a policy of workers'
21compensation insurance and which may be subject to the
22aggregate limit of policyholder reimbursement obligations.
23    (d) Except when approved by the Director of Insurance, any
24insurer determined to be in a financially hazardous condition
25pursuant to Article XII 1/2 or XIII of this Code by the
26Director of Insurance in this State or the equivalent in any



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1other state is prohibited from issuing or renewing a policy
2that includes a large deductible agreement.
3    (e) This Section applies to large deductible agreements
4issued or renewed by any insurer on or after January 1, 2016.
5    Section 99. Effective date. This Act takes effect on July
61, 2015.