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(B) an irrevocable letter of credit issued by a
financial institution with an office physically
located within the State and the deposits of which are
federally insured; or
(C) cash or securities held in trust by a third
party or by the insurer and subject to a trust
agreement for the express purpose of securing the
policyholder's obligation under a large deductible
agreement, provided that if the assets are held by the
insurer those assets are not commingled with the
insurer's other assets; and
(2) 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, as
determined by an audited financial statement as of the most
recently available fiscal year end.
(b) As used in this Section, "insurer" means any insurer
authorized to issue a workers' compensation policy covering
risks located in this State that has an A.M. Best Company
rating below "A-" and does not have at least $200,000,000 in
(c) As used in this Section, "large deductible agreement"
means any combination of one or more policies, endorsements,
contracts, or security agreements which provide for the
policyholder to bear the risk of loss of a specified amount per
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claim or occurrence covered under a policy of workers'
compensation insurance and which may be subject to the
aggregate limit of policyholder reimbursement obligations.
(d) Except when approved by the Director of Insurance, any
insurer determined to be in a financially hazardous condition
pursuant to Article XII 1/2 or XIII of this 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.
(e) This Section applies to large deductible agreements
issued or renewed by any insurer on or after January 1, 2016.
This Act takes effect on July