August
26, 2018
To
the Honorable Members of
The
Illinois Senate,
100th
General Assembly:
Today I
return Senate Bill 1737 with specific recommendations for change.
This
omnibus bill overhauls the Illinois Insurance Code on a number of fronts, including
reforming Illinois’ handling of reinsurers to conform with best practices,
updating our captive insurance law to be more attractive to companies that use
this insurance option, and adds flexibility to the process of dividing domestic
stock companies. However, it also would impose detrimental new limitations on
certain types of health coverage upon Illinois consumers and would overregulate
our competitive market for workers’ compensation insurance.
Portions
of this legislation are both necessary and wise, such as the provisions that
bring Illinois in line with national and international accreditation standards
for reinsurers. The changes in collateral requirements are based on a tested
model and will bring Illinois in equivalence with international regulatory
frameworks. Similarly, the updates to the captive insurance regulatory
structure are in line with other states, and will help Illinois overcome its
competitive disadvantage in attracting the companies that offer this product to
Illinois businesses. It also further increases clarity for domestic stock
companies undergoing corporate divisions. However, this legislation imposes
concerning additional regulatory barriers to short-term limited-duration health
plans (STLDs) and workers’ compensation insurance.
STLDs
have historically been utilized to cover individuals who may be experiencing a
gap in longer term coverage options, such as between jobs with
employer-sponsored plans. They are exempt from certain mandates under federal
law, and often offer participants lower costs, more flexible coverage, and
broader access to providers than traditional individual market plans.
This
legislation would impose numerous restrictions on these plans, including strict
maximum time frames and prohibitions on renewal. I recognize concerns that
certain STLDs have not always been clear in their terms and coverage, but
ultimately broad restrictions such as those contained in Senate Bill 1737 will
reduce consumer plan choice as well as the availability of STLD options in
Illinois. The scope of STLDs has recently been debated at the federal level,
and we should look to be consistent with the regulatory structures of other
states and the federal government, as further regulation will create barriers
to Illinoisans’ access to the health care plans that best fit their needs.
This
legislation also includes unnecessary new restrictions on rate-setting in the
Illinois workers’ compensation insurance industry. Illinois has one of the
country’s most competitive markers for workers’ compensation insurance, which
has a history of modulating rates through market dynamics. This legislation,
much like other workers’ compensation legislation passed by the General
Assembly in recent years, demonstrates a misunderstanding of the true cost
drivers in our system and increases regulation to the detriment of Illinois
businesses and individuals, to whom additional costs will inevitably be passed
on.
Therefore,
pursuant to Section 9(e) of Article IV of the Illinois Constitution of 1970, I
hereby return Senate Bill 1737, entitled “AN ACT concerning regulation,” with
the following recommendation for change:
By
deleting Page 1, line 4 through Page 5, line 16; and
On page
5, by replacing line 17 through 22 with the following:
“Section 90. The
Illinois Insurance Code is amended by adding Article IIB and Sections 123C-23,
123C-24, 123C-25, 123C-26, 123C-27, and 123C-28 and by changing Sections
121-2.08, 123C-1, 123C-2, 123C-3, 123C-9, 123C-11, 123C-12, 123C-13, 123C-16,
123C-17, 123C-19, 156, and 173.1 as follows:”; and
By
deleting Page 99, Line 7 through page 107, line 15; and
By
replacing page 107 lines 16 through 19 with:
“(215
ILCS 5/123C-4 rep.)
Section 95. The
Illinois Insurance Code is amended by repealing Sections 123C-4.”; and
On page
107, by replacing lines 20 through 24 with: “Section 99. Effective date. This
Act takes effect upon becoming law.”.
With
these changes, Senate Bill 1737 will have my approval. I respectfully request
your concurrence.
Sincerely,
Bruce
Rauner
GOVERNOR