State of Illinois
92nd General Assembly
Legislation

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92_HB0079

 
                                               LRB9200846JSpc

 1        AN ACT to amend the Illinois  Insurance  Code  by  adding
 2    Article XXA.

 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:

 5        Section 5.  The Illinois Insurance  Code  is  amended  by
 6    adding Article XXA as follows:

 7        (215 ILCS 5/Art. XXA heading new)
 8        Article XXA.  Accident and Health Insurance Rate Law

 9        (215 ILCS 5/371A-1 new)
10        Sec.  371A-1.  Short title.  This Article may be cited as
11    the Accident and Health Insurance Rate Law.

12        (215 ILCS 5/371A-5 new)
13        Sec. 371A-1.  Purpose of Article.  The  purpose  of  this
14    Article  is  to  promote  the  public  welfare  by regulating
15    accident and health insurance rates  so  that  they  are  not
16    excessive,   inadequate,   or   unfairly  discriminatory,  to
17    authorize the existence and  operation  of  qualified  rating
18    organizations  and  advisory  organizations,  to require that
19    specified rating services of these  rating  organizations  be
20    generally   available  to  all  admitted  companies,  and  to
21    authorize cooperation between companies in  rate  making  and
22    other  related  matters.  It  is  the  express intent of this
23    Article to permit and encourage competition between companies
24    on a sound financial basis to the  fullest  extent  possible,
25    and  to  establish  a  mechanism  to  ensure the provision of
26    adequate accident and health insurance at reasonable rates to
27    the citizens of this State.

28        (215 ILCS 5/371A-10 new)
 
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 1        Sec. 371A-10.  Definitions.  As used in this Article:
 2        "Rating organization"  means  a  person,  other  than  an
 3    admitted company, who has as his object or purpose the making
 4    of  rates,  rating  plans,  or  rating  systems.  Two or more
 5    admitted companies that act in concert  for  the  purpose  of
 6    making  rates,  rating  plans,  or rating systems, but do not
 7    operate  within  the  specific  authorizations  contained  in
 8    Sections 371A-30, 371A-40, and 371-80 shall be deemed to be a
 9    rating organization. No single company shall be deemed to  be
10    a rating organization.
11        "Advisory  organization"  means  a  person, other than an
12    admitted  company,  who  prepares  policy  forms   or   makes
13    underwriting rules incident to, but not including, the making
14    of rates, rating plans, or rating systems or who collects and
15    furnishes  to admitted companies or rating organizations loss
16    or expense statistics or other  statistical  information  and
17    data  and  acts  in an advisory, as distinguished from a rate
18    making, capacity. No duly authorized attorney at  law  acting
19    in  the  usual course of his profession shall be deemed to be
20    an advisory organization.
21        "Member" means  a  company  who  participates  in  or  is
22    entitled  to  participate  in  the  management  of  a rating,
23    advisory, or other organization.
24        "Subscriber" means a company that  is  furnished  at  its
25    request  (1)  with  rates  and  rating  manuals  by  a rating
26    organization of which it is not a member or (2) with advisory
27    services by an advisory organization of which  it  is  not  a
28    member.

29        (215 ILCS 5/371A-15 new)
30        Sec.  371A-15.  Scope  of Article. The provisions of this
31    Article apply to accident and health insurance.
32        This Article applies to all  companies,  including  stock
33    and mutual companies, Lloyds associations, and reciprocal and
 
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 1    interinsurance  exchanges  that,  under any provisions of the
 2    laws of this State, write accident and health insurance.

 3        (215 ILCS 5/371A-20 new)
 4        Sec. 371A-20.  Classes of rates.
 5        (a) The rates for accident and health  insurance  subject
 6    to  this  Article  shall  not  be  excessive,  inadequate, or
 7    unfairly discriminatory.
 8        (b)  As to all classes of insurance, insurers  or  rating
 9    organizations   shall   establish   and   use  rates,  rating
10    schedules, or rating manuals that allow the insurer to earn a
11    reasonable rate of return on insurance written in this State.
12    A copy of rates, rating schedules,  rating  manuals,  premium
13    credit  or  discount  schedules, and changes thereto shall be
14    filed with the Department as soon as possible following their
15    effective date, but no later than 30 days after that date.  A
16    copy of rates,  rating  schedules,  rating  manuals,  premium
17    credit  or  discount  schedules,  and  changes  thereto, that
18    provide for an increase greater  than  the  increase  in  the
19    medical  care  component  of the Consumer Price Index for the
20    region or city of  the  United  States  having  the  greatest
21    increase  the  previous calendar year shall be filed with and
22    approved by the Department prior to their effective date.
23        (c)  Upon receiving a rate filing, the  Department  shall
24    review  the  rate filing to determine if a rate is excessive,
25    inadequate,  or  unfairly  discriminatory.   In  making  that
26    determination,  the  Department  shall,  in  accordance  with
27    generally  accepted  and  reasonable  actuarial   techniques,
28    consider all of the following factors:
29             (1)  Past  loss  experience  within and without this
30        State.
31             (2)  Past expenses both allocated and unallocated.
32             (3)  The degree of competition  among  insurers  for
33        the risk insured.
 
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 1             (4)  Investment  income  reasonably  expected by the
 2        insurer,  consistent  with   the   insurer's   investment
 3        practices,  from  investable  premiums anticipated in the
 4        filing, plus any other  expected  income  from  currently
 5        invested  assets  representing  the  amount  expected  on
 6        unearned   premium   reserves  and  loss  reserves.   The
 7        Department  may  promulgate  rules  utilizing  reasonable
 8        techniques of actuarial science and economics to  specify
 9        the  manner  in which insurers shall calculate investment
10        income attributable to the classes of  insurance  written
11        in  this  State  and  the manner in which that investment
12        income shall be used  in  the  calculation  of  insurance
13        rates.
14             (5)  The reasonableness of the judgment reflected in
15        the filing.
16             (6)  Dividends,   savings,   or  unabsorbed  premium
17        deposits allowed or returned to  Illinois  policyholders,
18        members, or subscribers.
19             (7)  The adequacy of loss reserves.
20             (8)  The cost of reinsurance.
21             (9)  Trend   factors,  including  trends  in  actual
22        losses per  insured  unit  for  the  insurer  making  the
23        filing.
24             (10)  A    reasonable    margin   for   profit   and
25        contingencies.
26             (11)  Other relevant factors that  impact  upon  the
27        frequency or severity of claims or upon expenses.
28        (d)  In  addition  to  the  rate  standards  provided  in
29    subsection  (c),  a rate may be found by the Department to be
30    excessive, inadequate, or unfairly discriminatory based  upon
31    any of the following standards:
32             (1)  A  rate  shall  be  deemed  excessive  if it is
33        likely to produce a profit from Illinois business that is
34        unreasonably high in relation to the risk involved in the
 
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 1        class of business or if expenses are unreasonably high in
 2        relation to services rendered.
 3             (2)  A rate shall  be  deemed  excessive  if,  among
 4        other  things,  the rate structure established by a stock
 5        insurance company provides for replenishment of surpluses
 6        from premiums, when the replenishment is attributable  to
 7        investment losses.
 8             (3)  A  rate  shall  be  deemed  inadequate if it is
 9        clearly insufficient, together with the investment income
10        attributable to  it,  to  sustain  projected  losses  and
11        expenses in the class of business to which it applies.
12             (4)  One    rate    shall    be    deemed   unfairly
13        discriminatory in relation to another in the  same  class
14        if   it  fails  to  clearly  and  equitably  reflect  the
15        difference in expected losses and expenses.
16             (5)  A rate shall be deemed  inadequate  as  to  the
17        premium  charged to a risk or group of risks if discounts
18        or  credits  are  allowed  that   exceed   a   reasonable
19        reflection  of  expense  savings  and reasonably expected
20        loss experience from the risk or group of risks.
21             (6)  A rate shall be deemed unfairly  discriminatory
22        as  to  a  risk  or  group of risks if the application of
23        premium discounts or credits among those risks  does  not
24        bear  a  reasonable relationship to the expected loss and
25        expense experience among the various risks.
26        (e)  In reviewing  a  rate  filing,  the  Department  may
27    require  the  insurer to provide at the insurer's expense all
28    information  necessary  to  evaluate  the  condition  of  the
29    company and the reasonableness of the  failure  according  to
30    the criteria enumerated in this Section.
31        (f)  The Department may at any time review a rate, rating
32    schedule,  rating  manual, rate change, the pertinent records
33    of the insurer, and market  conditions.   If  the  Department
34    finds  on  a  preliminary basis that a rate may be excessive,
 
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 1    inadequate, or unfairly discriminatory, the Department  shall
 2    initiate  proceedings  to  disapprove  the  rate and shall so
 3    notify  the  insurer.   If  a  proposed  rate  represents  an
 4    increase greater  than  the  increase  in  the  medical  care
 5    component  of the Consumer Price Index for the region or city
 6    of the United States having  the  greatest  increase  in  the
 7    previous   calendar   year,  the  Department  shall  initiate
 8    proceeding to approve or disapprove the rate and shall notify
 9    the insurer.  Upon being  notified,  the  insurer  or  rating
10    organization  shall, within 60 days, file with the Department
11    all information  that,  in  the  belief  of  the  insurer  or
12    organization,   proves   the  reasonableness,  adequacy,  and
13    fairness of the rate or rate change.  In these instances  and
14    in  any administrative proceeding relating to the legality of
15    the rate, the insurer or rating organization shall carry  the
16    burden  of  proof  by a preponderance of the evidence to show
17    that the rate  is  not  excessive,  inadequate,  or  unfairly
18    discriminatory.   After  the  Department  notifies an insurer
19    that  a  rate  may  be  excessive,  inadequate,  or  unfairly
20    discriminatory,   unless   the   Department   withdraws   the
21    notification, the insurer shall not alter the rate except  to
22    conform with the Department's notice until the earlier of 120
23    days after the date the notification was provided or 180 days
24    after  the  date  of  the  implementation  of  the rate.  The
25    Department may disapprove without the 60-day notification any
26    rate increase filed by an insurer within the prohibited  time
27    period  or during the time that the legality of the increased
28    rate is being contested.
29        (g)  If the Department finds that a rate or  rate  change
30    is  excessive,  inadequate,  or  unfairly discriminatory, the
31    Department shall issue an  order  of  disapproval  specifying
32    that  the  insurer  file  a  new  rate  or rate schedule that
33    responds to the findings of the Department.   The  Department
34    shall  further order that premiums be adjusted reflecting the
 
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 1    findings of the Department.

 2        (215 ILCS 5/371A-25 new)
 3        Sec. 371A-25.  Companies authorized to  act  in  concert.
 4    Subject  to  and  in  compliance  with the provisions of this
 5    Article authorizing companies to be members or subscribers of
 6    rating or  advisory  organizations  or  to  engage  in  joint
 7    underwriting  or  joint  reinsurance, 2 or more companies may
 8    act in concert with respect to any matters pertaining to  the
 9    making  of rates or rating systems, the preparation or making
10    of  insurance  policy  forms,  underwriting  rules,  surveys,
11    inspections and investigations, the  furnishing  of  loss  or
12    expense  statistics  or  other  information  and data, or the
13    carrying on of research.

14        (215 ILCS 5/371A-30 new)
15        Sec. 371A-30.  Admitted companies with  common  ownership
16    or  management. With respect to any matters pertaining to the
17    making of rates or rating systems, the preparation or  making
18    of  insurance  policy  forms,  underwriting  rules,  surveys,
19    inspections,  and  investigations,  the furnishing of loss or
20    expense statistics or other  information  and  data,  or  the
21    carrying  on of research, 2 or more admitted companies having
22    a common ownership or operating in this  State  under  common
23    management  or  control  are authorized to act in concert the
24    same as if they constituted a single company. Nothing in this
25    Section shall require that such companies so act in concert.

26        (215 ILCS 5/371A-35 new)
27        Sec. 371A-35.  Use of rates, rating systems,  and  policy
28    forms  of  rating  or  advisory  organizations; agreements to
29    adhere thereto. Members and subscribers of rating or advisory
30    organizations may use the rates, rating systems, underwriting
31    rules,  or  policy  forms  of  those  organizations,   either
 
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 1    consistently  or  intermittently,  but  except as provided in
 2    Sections 371A-30 and 371A-80, may not agree with each  other,
 3    rating  organizations,  or others to adhere thereto. The fact
 4    that 2 or more admitted companies, whether or not members  or
 5    subscribers of a rating or advisory organization, use, either
 6    consistently  or  intermittently, the rates or rating systems
 7    made or adopted by a  rating  organization  or  policy  forms
 8    prepared  by  a  rating or advisory organization shall not be
 9    sufficient in itself to support a finding that  an  agreement
10    to  so  adhere exists and may be used only for the purpose of
11    supplementing or explaining direct evidence of the  existence
12    of any such agreement.

13        (215 ILCS 5/371A-40 new)
14        Sec.  371A-40.  Exchange  of  information  or  experience
15    data;  consultation  with rating organizations and companies.
16    Cooperation  among  rating  organizations  or  among   rating
17    organizations  and  companies  in  rate  making  or  in other
18    matters  within  the  scope  of  this   Article   is   hereby
19    authorized.  The Director may review this cooperation and if,
20    after a hearing upon notice to all  cooperating  parties,  he
21    finds  that  the  cooperation  is  unfair  or unreasonable or
22    otherwise inconsistent with the provisions of  this  Article,
23    he  may issue a written order specifying in what respects the
24    cooperation  is   unfair   or   unreasonable   or   otherwise
25    inconsistent   with   the  provisions  of  this  Article  and
26    requiring the discontinuance of the cooperation.

27        (215 ILCS 5/371A-45 new)
28        Sec. 371A-45.  Joint underwriters and reinsurers; conduct
29    of  operation  in  State;  membership  or   subscription   to
30    organization;  noncompliance  with  Article.  Upon compliance
31    with the provisions of this Article, a  rating  organization,
32    advisory  organization,  and any group, association, or other
 
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 1    organization of admitted  companies  that  engages  in  joint
 2    underwriting or joint reinsurance through the organization or
 3    by  standing  agreement among the members of the organization
 4    may  conduct  operations  in  this  State.  With  respect  to
 5    insurance risks or operations in this State, no  company  may
 6    be a member or subscriber of any such organization, group, or
 7    association that has not complied with the provisions of this
 8    Article.

 9        (215 ILCS 5/371A-50 new)
10        Sec.  371A-50.  Rating  organizations;  existing licenses
11    continued.
12        (a)  No rating organization may conduct its operations in
13    this State without first filing with the Director  a  written
14    application  for  and  securing  a license to act as a rating
15    organization,  however,  a  license  issued   to   a   rating
16    organization pursuant to Section 459 shall continue in effect
17    until   the   expiration  date  of  that  license.  A  rating
18    organization may make application for and obtain a license as
19    a rating  organization  if  it  meets  the  requirements  for
20    license set forth in this Article.
21        (b)  A   rating   organization   shall   file   with  its
22    application:
23             (1)  a copy of its  constitution,  its  articles  of
24        incorporation,   agreement,   or   association,  and  its
25        by-laws, rules, and regulations governing the conduct  of
26        its  business, all duly certified by the custodian of the
27        originals thereof;
28             (2)  a list of its members and subscribers;
29             (3)  the name and address  of  a  resident  of  this
30        State  upon  whom  notices  or  orders of the Director or
31        process affecting the rating organization may be  served;
32        and
33             (4)  a  statement  of its qualifications as a rating
 
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 1        organization.
 2        The fee for filing an application for license as a rating
 3    organization is $25, payable in advance to the Director.

 4        (215 ILCS 5/371A-55 new)
 5        Sec.  371A-55.  Evidence  prerequisite  to  license.   To
 6    obtain  and  retain  a  license,  a rating organization shall
 7    provide satisfactory evidence to the Director that it will:
 8        (1)  permit any admitted company to become a member of or
 9    a subscriber to the rating organization at a reasonable  cost
10    and without discrimination, or to withdraw therefrom;
11        (2)  neither  have  nor  adopt  any  rule  or  exact  any
12    agreement, the effect of which would be to require any member
13    or subscriber as a condition to membership or subscribership,
14    to  adhere  to  its  rates,  rating  plans,  rating  systems,
15    underwriting rules, or policy forms;
16        (3)  neither  adopt  any rule nor exact any agreement the
17    effect of which would be to prohibit or regulate the  payment
18    of dividends, savings, or unabsorbed premium deposits allowed
19    or  returned by companies to their policyholders, members, or
20    subscribers;
21        (4)  neither practice nor sanction any  plan  or  act  of
22    boycott, coercion, or intimidation;
23        (5)  neither  enter into nor sanction any contract or act
24    by which any person is restrained from lawfully  engaging  in
25    the insurance business; and
26        (6)  notify  the Director promptly of every change in its
27    constitution, its articles of  incorporation,  agreement,  or
28    association,  its  by-laws,  rules, and regulations governing
29    the  conduct  of  its  business,  its  list  of  members  and
30    subscribers, and the name and address of the resident of this
31    State designated by it upon whom notices  or  orders  of  the
32    Director or process affecting the organization may be served.
 
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 1        (215 ILCS 5/371A-60 new)
 2        Sec.    371A-60.  Examination    of    application    and
 3    investigation of applicant; issuance of license.
 4        (a)  The  Director  shall  examine  each  application for
 5    license to act as a rating organization and and may make such
 6    further investigation of the applicant, its affairs, and  its
 7    proposed plan of business as he deems desirable.
 8        (b)  The  Director  shall  issue  the license applied for
 9    within 60 days after the application is  filed  with  him  if
10    from the examination and investigation he is satisfied that:
11             (1)  the  business  reputation  of the applicant and
12        its officers is good;
13             (2)  the facilities of the applicant are adequate to
14        enable it to furnish the services it proposes to furnish;
15        and
16             (3)  the  applicant  and  its   proposed   plan   of
17        operation conform to the requirements of this Article.
18        Otherwise,  but  only  after  hearing  upon  notice,  the
19    Director shall in writing deny the application and notify the
20    applicant of his decision and his reasons therefor.
21        (c)  Licenses  issued  pursuant  to  this  Section  shall
22    remain in effect until revoked as provided in this Article.

23        (215 ILCS 5/371A-65 new)
24        Sec.    371A-65.  Rules    governing    eligibility   for
25    membership.  Subject  to  the  approval  of  the  Director  a
26    licensed  rating  organization  may  make  reasonable   rules
27    governing eligibility for membership.

28        (215 ILCS 5/371A-70 new)
29        Sec.   371A-70.  Companies   with   common  ownership  or
30    management. If 2 or more companies having a common  ownership
31    or  operating  in  this  State  under  common  management are
32    admitted for the classes or types of insurance  for  which  a
 
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 1    rating  organization  is  licensed  to make rates, the rating
 2    organization may require as  a  condition  to  membership  or
 3    subscribership  of  one or more that all such companies shall
 4    become members or subscribers.

 5        (215 ILCS 5/371A-75 new)
 6        Sec. 371A-75.  Advisory organization.
 7        (a)  No   advisory   organization   shall   conduct   its
 8    operations in this State unless and until it has  filed  with
 9    the Director:
10             (1)  a  copy  of  its  constitution, its articles of
11        incorporation,  agreement,  or   association,   and   its
12        by-laws, rules, and regulations governing its activities,
13        all  duly  certified  by  the  custodian of the originals
14        thereof;
15             (2)  a list of its members and subscribers; and
16             (3)  the name and address  of  a  resident  of  this
17        State  upon  whom  notices  or  orders of the Director or
18        process may be served.
19        (b)  An advisory organization shall notify  the  Director
20    promptly of every change in its constitution, its articles of
21    incorporation, agreement, or association, its by-laws, rules,
22    and  regulations  governing  the conduct of its business, its
23    list of members and subscribers, and the name and address  of
24    the resident of this State designated by it upon whom notices
25    or   orders   of   the  Director  or  process  affecting  the
26    organization may be served.
27        (c)  An advisory  organization  may  not  engage  in  any
28    unfair   or   unreasonable   practice  with  respect  to  its
29    activities.

30        (215 ILCS 5/371A-80 new)
31        Sec. 371A-80.  Joint underwriting and joint reinsurance.
32        (a)  A  group,  association,  or  other  organization  of
 
                            -13-               LRB9200846JSpc
 1    companies  that  engages  in  joint  underwriting  or   joint
 2    reinsurance  through  the group, association, or organization
 3    or by standing agreement among the members thereof shall file
 4    with the Director:
 5             (1)  a copy of its  constitution,  its  articles  of
 6        incorporation,   agreement,   or   association,  and  its
 7        by-laws, rules, and regulations governing  its  business,
 8        all  duly  certified  by  the  custodian of the originals
 9        thereof;
10             (2)  a list of its members; and
11             (3)  the name and address  of  a  resident  of  this
12        State  upon  whom  notices  or  orders of the Director or
13        process affecting the group, association, or organization
14        may be served.
15        (b)  A group, association,  or  other  organization  that
16    engages  in  joint  underwriting  or  joint reinsurance shall
17    notify  the  Director  promptly  of  every  change   in   its
18    constitution,  its  articles  of incorporation, agreement, or
19    association, its by-laws, rules,  and  regulations  governing
20    the  conduct  of  its  business, its list of members, and the
21    name and address of the resident of this State designated  by
22    it  upon  whom  notices  or orders of the Director or process
23    affecting the  group,  association  or  organization  may  be
24    served.
25        (c)  A  group,  association, or organization that engages
26    in joint underwriting or joint reinsurance may not engage  in
27    any  unfair  or  unreasonable  practice  with respect to such
28    activities.

29        (215 ILCS 5/371A-85 new)
30        Sec. 371A-85.  Maintenance of  records;  compliance  with
31    Section.
32        (a)  A   company,   rating   organization   or   advisory
33    organization, and a group, association, or other organization
 
                            -14-               LRB9200846JSpc
 1    of  companies  that  engages  in  joint underwriting or joint
 2    reinsurance  shall  maintain  reasonable  records,   of   its
 3    experience  or the experience of its members and of the data,
 4    statistics,  or  information  collected  or  used  by  it  in
 5    connection with the  rates,  rating  plans,  rating  systems,
 6    underwriting  rules,  policy  forms,  surveys, or inspections
 7    made or used by it so that the records will be  available  at
 8    all  reasonable  times  to  enable  the Director to determine
 9    whether the organization, company, group, or association and,
10    in the case of a company or rating organization, every  rate,
11    rating  plan,  and  rating system made or used by it complies
12    with the provisions of this Article. The maintenance of these
13    records in the office of a licensed  rating  organization  of
14    which  a  company  is  a  member  or subscriber is sufficient
15    compliance with this  Section  for  any  company  maintaining
16    membership  or  subscribership  in  the  organization  to the
17    extent that the company uses  the  rates,  rating  plans,  or
18    rating  systems of the organization. The records must be made
19    available for examination or inspection by  the  Director  at
20    any time upon reasonable notice.
21        (b)  The Director shall adopt, and may modify, reasonable
22    rules and statistical plans that each company must use in the
23    recording  and  reporting of its loss and countrywide expense
24    experience in order that the experience of all companies  may
25    be  made  available at least annually in such form and detail
26    as may be  necessary  to  aid  the  Director  in  determining
27    whether  rates  comply  with  this  Article.  The  rules  and
28    statistical  plans  may  also  provide  for the recording and
29    reporting of expense  experience  items  that  are  specially
30    applicable   to   this  State  and  are  not  susceptible  of
31    determination  by  a   prorating   of   countrywide   expense
32    experience.
33        (c)  In  adopting the rules and plans, the Director shall
34    give due consideration to the rating systems in use  in  this
 
                            -15-               LRB9200846JSpc
 1    State  and,  in  order  that  the  rules  and plans may be as
 2    uniform as is possible among the several states, to the rules
 3    and to the form of the plans used for rating systems in other
 4    states. No company shall be required to record or report  its
 5    loss   experience   on   a   classification   basis  that  is
 6    inconsistent with the rating system used by it.
 7        (d)  The  Director  may  designate  one  or  more  rating
 8    organizations or other agencies to assist  him  in  gathering
 9    and  making  compilations of loss and expense experience. The
10    compilations must be made available,  subject  to  reasonable
11    rules  adopted  by  the  Director,  to  companies  and rating
12    organizations.

13        (215 ILCS 5/371A-90 new)
14        Sec. 371A-90.  Report of loss and expense data.
15        (a) The Department shall promulgate rules that require an
16    insurer licensed to write accident and  health  insurance  in
17    the   State  to  record  and  report  its  loss  and  expense
18    experience and other data as may be  necessary  to  determine
19    whether  rates  are fair and appropriate.  The Department may
20    designate  one  or  more  rating  service  organizations   or
21    advisory  organizations  to  gather  and compile the loss and
22    expense experience and data.  The Department shall require an
23    insurer licensed to write accident and  health  insurance  in
24    this  State  to  submit  a report, on a form furnished by the
25    Department, showing its direct writings in this State and the
26    United States.
27        (b)  The report must include all of the  following  data,
28    both specific to this State and also to the United States, by
29    the  type  of  insurance  for the previous year ending on the
30    31st day of December:
31             (1)  Direct premiums written.
32             (2)  Direct premiums earned.
33             (3)  Net investment income, including  net  realized
 
                            -16-               LRB9200846JSpc
 1        capital  gains  and  losses,  using appropriate estimates
 2        where necessary.
 3             (4)  Incurred claims, developed as the  sum  of  the
 4        following  (the  report must include data for each of the
 5        following categories used to develop the sum of  incurred
 6        claims):
 7                  (A)  dollar   amount   of  claims  closed  with
 8             payment; plus
 9                  (B)  reserves for reported claims at the end of
10             the current year; minus
11                  (C)  reserves for reported claims at the end of
12             the previous year; plus
13                  (D)  reserves for  incurred  but  not  reported
14             claims at the end of the current year; minus
15                  (E)  reserves  for  incurred  but  not reported
16             claims at the end of the previous year; plus
17                  (F)  loss  adjustment   expenses   for   claims
18             closed; plus
19                  (G)  reserves  for  Loss  Adjustment Expense at
20             the end of the current year; minus
21                  (H)  reserves for Loss  Adjustment  Expense  at
22             the end of the previous year.
23             (5)  Actual  incurred  expenses allocated separately
24        to loss adjustment, commissions, other acquisition costs,
25        advertising, general office expenses, taxes, licenses and
26        fees, and all other expenses.
27             (6)  Net underwriting gain or loss.
28             (7)  Net  operation  gain  or  loss,  including  net
29        investment income.
30             (8)  The number and dollar amount of  claims  closed
31        with  payment,  by  year incurred and the amount reserved
32        for them.
33             (9)  The number of claims closed without payment and
34        the dollar amount reserved for those claims.
 
                            -17-               LRB9200846JSpc
 1             (10)  Federal income tax recoverable.
 2             (11)  Any  other  information   requested   by   the
 3        Department.
 4        (c)  For  the  first  year  only  in which the insurer is
 5    required to file this report, the data required by paragraphs
 6    (1) through (7) of subsection (b) must include  the  previous
 7    calendar year and each of the preceding 4 calendar years.
 8        (d)  It is the duty of the Department to annually compile
 9    and review all reports submitted by insurers pursuant to this
10    Section to determine the appropriateness of premium rates for
11    accident   and   health   insurance   in   this  State.   The
12    Department's findings and the  filings  shall  be  published,
13    provided  to  the General Assembly, and made available to any
14    interested insured or citizen.  If the  Department  finds  at
15    any  time  that any rate is no longer fair or appropriate, it
16    shall issue an order withdrawing  its  approval.   The  order
17    shall  specify  reasons  for withdrawal of approval, shall be
18    furnished to each affected insurer and  rating  organization,
19    and  shall  be  effective  in not less than 30 days after its
20    issuance unless an  affected  insurer  meets  the  burden  of
21    showing that the rate is in fact fair and appropriate.
22        (f)  An   insurance   company   shall  file  all  of  the
23    information required under this Section with  the  Department
24    as  a prerequisite to obtaining permission to write coverage,
25    to continue to do business, or to file for rate increases.
26        (g)  An insurer that fails to comply with  the  terms  of
27    this  Section  shall pay a civil penalty of a fine of $10,000
28    and thereafter a fine of $200 daily until  it  complies  with
29    this Section.

30        (215 ILCS 5/371A-95 new)
31        Sec.   371A-95.  Examination   of   rating  and  advisory
32    organizations, joint underwriters, and reinsurers; acceptance
33    of report from another state; compliance with Article.
 
                            -18-               LRB9200846JSpc
 1        (a)  At least once every 5 years and may as often as  may
 2    be reasonable and necessary, the Director shall make or cause
 3    to   be   made   an   examination  of  each  licensed  rating
 4    organization.   The  Director  may,  as  often  as   may   be
 5    reasonable  and  necessary,  make  or  cause  to  be  made an
 6    examination  of   any   advisory   organization   or   group,
 7    association,  or other organization of companies that engages
 8    in joint underwriting or joint reinsurance.
 9        (b)  Instead of making an examination, the  Director  may
10    accept  the  report  of  an examination made by the insurance
11    supervisory official of another state.
12        (c)  In examining any organization, group or  association
13    pursuant  to  this  Section,  the  Director  shall  ascertain
14    whether  the  organization, group, or association and, in the
15    case of a rating organization, any rate or rating system made
16    or used by it complies with this Article.

17        (215 ILCS 5/371A-100 new)
18        Sec. 371A-100.  Examination of Admitted  companies;  rate
19    overcharge refunds.
20        (a)  A  company found to have failed or refused to refund
21    any overcharges as determined  pursuant  to  Section  371A-20
22    shall  pay  a  penalty to the Department of Insurance of $100
23    per  day  for  each  such  violation.  A  refusal  to  refund
24    overcharges to any one policyholder is a violation under this
25    Article  and  additional   refusals   shall   be   considered
26    additional violations under this Article.
27        (b)  Continued   refusal   by   a   company   to   refund
28    policyholder overcharges after an Order of the Director to so
29    refund under this Article may subject a company to suspension
30    of  its  certificate  of authority until it has complied with
31    the Order of the Director and refunded the overcharges.

32        (215 ILCS 5/371A-105 new)
 
                            -19-               LRB9200846JSpc
 1        Sec.  371A-105.  Examination   of   officers,   managers,
 2    agents,  and  employees;  exhibition  of books. The officers,
 3    managers, agents, and employees of any  organization,  group,
 4    association,  or  company  subject  to  this  Article  may be
 5    examined at any time under oath and shall exhibit all  books,
 6    records,  accounts,  documents,  or  agreements governing its
 7    methods of operation, together with all data, statistics  and
 8    information   of   every  kind  and  character  collected  or
 9    considered  by  the  organization,  group,  association,   or
10    company  in  the  conduct  of  the  operations  to  which the
11    examination relates.

12        (215 ILCS 5/371A-110 new)
13        Sec.  371A-110.  Payment  of  cost  of  examination.  The
14    reasonable cost of any examination authorized by this Article
15    shall be paid by the  organization,  group,  association,  or
16    company to be examined.

17        (215 ILCS 5/371A-115 new)
18        Sec.  371A-115.  Noncompliance  of  rate,  rating plan or
19    system;  notice  by  Director.  If  after  examination  of  a
20    company,  rating  organization,  advisory  organization,   or
21    group,  association,  or other organization of companies that
22    engages  in  joint  underwriting  or  joint  reinsurance  the
23    Director has good cause to believe that the  company,  rating
24    or  advisory organization, group, or association or any rate,
25    rating plan, or rating system made or used  by  the  company,
26    rating  or  advisory organization, group, or association does
27    not comply  with  the  requirements  and  standards  of  this
28    Article,  he  shall,  unless he has good cause to believe the
29    noncompliance is  wilful,  give  notice  in  writing  to  the
30    company,   rating   or   advisory   organization,  group,  or
31    association stating to the extent  possible  the   manner  in
32    which  the noncompliance is alleged to exist and specifying a
 
                            -20-               LRB9200846JSpc
 1    reasonable time of not fewer than 10 days  within  which  the
 2    noncompliance may be corrected.

 3        (215 ILCS 5/371A-120 new)
 4        Sec.  371A-120.  Hearing;  notice; hearing not to include
 5    additional subjects.  If  the  Director  has  good  cause  to
 6    believe  noncompliance  to be wilful or if, within the period
 7    prescribed by the Director in the notice required by  Section
 8    371A-115,  the  company,  rating  or  advisory  organization,
 9    group,  or association does not make the changes necessary to
10    correct  the  noncompliance  specified  by  the  Director  or
11    establish to  the  satisfaction  of  the  Director  that  the
12    specified noncompliance does not exist, then the Director may
13    hold  a public hearing regarding the noncompliance.  Within a
14    reasonable period of time, which shall be not  less  than  10
15    days  before the date of the hearing, the Director shall mail
16    written notice specifying the matters to be considered at the
17    hearing to the  company,  rating  or  advisory  organization,
18    group,  or  association.  If  no  notice  has  been  given as
19    provided in Section 371A-115, the notice shall state  to  the
20    extent  possible  in what manner the noncompliance is alleged
21    to exist.  The  hearing  shall  not  include  any  additional
22    subjects  not  specified  in  the notices required by Section
23    371A-115 or this Section.

24        (215 ILCS 5/371A-125 new)
25        Sec.  371A-125.  Issuance  of   Orders;   suspension   or
26    revocation of certificate of authority or license.
27        (a)  If after a hearing pursuant to Section 371A-120, the
28    Director  finds  that  a  rate, rating plan, or rating system
29    violates the provisions of this  Article,  he  may  issue  an
30    order  to  the  company  or rating organization specifying in
31    what respects the violation exists and stating when, within a
32    reasonable period of time, the further use  of  the  rate  or
 
                            -21-               LRB9200846JSpc
 1    rating  system  by  the  company  or  rating  organization in
 2    contracts of insurance made thereafter shall be prohibited.
 3        (b)  If after a hearing pursuant to Section 371A-120, the
 4    Director finds that a company, rating organization,  advisory
 5    organization,  or a group, association, or other organization
 6    of companies that engages  in  joint  underwriting  or  joint
 7    reinsurance  is in violation of the provisions of the Article
 8    other than the provisions dealing with rates,  rating  plans,
 9    or  rating  systems,  he  may  issue an order to the company,
10    rating  or  advisory  organization,  group,  or   association
11    specifying   in   what  respects  the  violation  exists  and
12    requiring compliance within a reasonable time thereafter.
13        (c)  If after a hearing pursuant to Section 371A-120, the
14    Director finds that a violation of any of the  provisions  of
15    this  Article by a company or rating organization was wilful,
16    he  may  suspend  or  revoke,  in  whole  or  in  part,   the
17    certificate of authority of the company or the license of the
18    rating organization.
19        (d)  If after a hearing pursuant to Section 371A-120, the
20    Director  finds  that  a  rating  organization  has  wilfully
21    engaged  in  any fraudulent or dishonest act or practices, he
22    may suspend or revoke, in whole or in part,  the  license  of
23    the organization in addition to any other penalty provided in
24    this Code.

25        (215 ILCS 5/371A-130 new)
26        Sec.  371A-130.  Failure to comply with Order; suspension
27    or revocation of license or certificate. In addition to other
28    penalties provided in this Code, the Director may suspend  or
29    revoke,  in  whole  or  in  part,  the  license of any rating
30    organization or the certificate of authority of  any  company
31    that  fails to comply, within the time specified by the order
32    or any extension thereof that the Director may grant, with an
33    order of the  Director  lawfully  made  by  him  pursuant  to
 
                            -22-               LRB9200846JSpc
 1    Section  371A-125  and  not  reversed or modified pursuant to
 2    Section 371A-135.

 3        (215 ILCS 5/371A-135 new)
 4        Sec.  371A-135.  Conduct  or   proceedings;   powers   of
 5    Director; judicial review.
 6        (a)  Except  as  otherwise  provided  in  this  Code, all
 7    administrative proceedings in  connection  with  the  denial,
 8    suspension,  or  revocation  of  a  license or certificate of
 9    authority under this Article shall be conducted in accordance
10    with the provisions of Sections 401, 402,  403,  and  405  of
11    this Code.
12        (b)  All  orders  or decisions of the Director under this
13    Article  are   subject   to   judicial   review   under   the
14    Administrative Review Law.

15        (215 ILCS 5/371A-140 new)
16        Sec.    371A-140.  Rebates   prohibited;   exclusion   of
17    commissions,  dividends.  An  insurance  producer   may   not
18    knowingly charge, demand, or receive a premium for any policy
19    of insurance except in accordance with the provisions of this
20    Article.  A  company, employee of a company, and an insurance
21    producer may not pay, allow, or give, directly or indirectly,
22    as an inducement to insurance or  after  insurance  has  been
23    effected,   any   rebate,  discount,  abatement,  credit,  or
24    reduction of the premium named in a policy  of  insurance  or
25    any  special  favor  or  advantage  in the dividends or other
26    benefits to accrue thereon, or any valuable consideration  or
27    inducement   whatever,   not   specified  in  the  policy  of
28    insurance, except to the extent provided for in an applicable
29    filing. An insured named in a policy  of  insurance  and  any
30    employee  of the insured may not knowingly receive or accept,
31    directly or  indirectly,  any  rebate,  discount,  abatement,
32    credit  or reduction of premium, or any such special favor or
 
                            -23-               LRB9200846JSpc
 1    advantage or valuable consideration or inducement. Nothing in
 2    this Section shall be construed as prohibiting the payment of
 3    commissions or other compensation to duly licensed  insurance
 4    producers  nor  as  prohibiting  any company from allowing or
 5    returning to its  participating  policyholders,  members,  or
 6    subscribers   dividends,   savings,   or  unabsorbed  premium
 7    deposits.

 8        (215 ILCS 5/371A-145 new)
 9        Sec. 371A-145.  Information not to be wilfully  withheld.
10    No  person,  company, or organization shall wilfully withhold
11    information from,  or  knowingly  give  false  or  misleading
12    information  to,  the Director or to any rating organization,
13    advisory organization, company,  or  group,  association,  or
14    other  organization  of companies that will affect the rates,
15    rating systems, or premiums  for  the  classes  of  insurance
16    subject to this Article.

17        (215 ILCS 5/371A-150 new)
18        Sec.  371A-150.  Failure  to  comply  with final order of
19    Director; penalty.
20        (a)  A   person,   company,   organization,   group,   or
21    association that fails to comply with a final  order  of  the
22    Director  under  this Article shall be liable to the State in
23    an amount not exceeding $50, but if the failure is wilful  he
24    or it shall be liable to the State in an amount not exceeding
25    $5,000  for  such  failure.  The  Director  shall collect the
26    amount so payable and may bring an action in the name of  the
27    people of the State of Illinois to enforce collection.  These
28    penalties  may be in addition to any other penalties provided
29    by law.
30        (b)  A wilful violation of the provisions of this Article
31    by any person is a misdemeanor.
 
                            -24-               LRB9200846JSpc
 1        (215 ILCS 5/371A-155 new)
 2        Sec. 371A-155.  Payment of dividends  not  prohibited  or
 3    regulated;  plan  for  payment  not rating system. Nothing in
 4    this Article shall be construed to prohibit or  regulate  the
 5    payment of dividends, savings, or unabsorbed premium deposits
 6    allowed  or  returned  by  companies  to their policyholders,
 7    members, or subscribers. A plan for the payment of dividends,
 8    savings, or unabsorbed premium deposits allowed  or  returned
 9    by  companies  to their policyholders, members or subscribers
10    shall not be deemed a rating plan or system.

11        (215 ILCS 5/371A-160 new)
12        Sec. 371A-160.  Acts done by  authority  of  Article  not
13    violation  of  other  laws.  No  act  done,  action taken, or
14    agreement made pursuant to the authority  conferred  by  this
15    Article  shall  constitute  a  violation  of  or  grounds for
16    prosecution or civil proceedings under any other law of  this
17    State   heretofore   or  hereafter  enacted  which  does  not
18    specifically refer to insurance.

19        (215 ILCS 5/371A-165 new)
20        Sec. 371A-165.  Submission of rates,  rating  plans,  and
21    rating manuals. The Director may require submission of copies
22    of  the  rates,  rating  schedules,  and  rating manuals of a
23    company as he deems necessary and proper. The  submission  of
24    rates,  rating  schedules, and rating manuals to the Director
25    by a licensed rating organization of which  a  company  is  a
26    member  or  subscriber  is  sufficient  compliance  with this
27    Section   for   any   company   maintaining   membership   or
28    subscribership in the organization, to the  extent  that  the
29    company  uses the rates, rating schedules, and rating manuals
30    of the organization. Submission to the Director by a  company
31    or  rating  organization  within  a reasonable time after the
32    date that the rates,  rating  schedules,  or  rating  manuals
 
                            -25-               LRB9200846JSpc
 1    become  effective  shall be deemed sufficient compliance with
 2    the requirements of this Section.

 3        Section 99.   Effective  date.   This  Act  takes  effect
 4    January 1, 2002.
 
                            -26-               LRB9200846JSpc
 1                                INDEX
 2               Statutes amended in order of appearance
 3                              SEE INDEX
 4    215 ILCS 5/Art. XXA heading new
 5    215 ILCS 5/371A-1 new
 6    215 ILCS 5/371A-5 new
 7    215 ILCS 5/371A-10 new
 8    215 ILCS 5/371A-15 new
 9    215 ILCS 5/371A-20 new
10    215 ILCS 5/371A-25 new
11    215 ILCS 5/371A-30 new
12    215 ILCS 5/371A-35 new
13    215 ILCS 5/371A-40 new
14    215 ILCS 5/371A-45 new
15    215 ILCS 5/371A-50 new
16    215 ILCS 5/371A-55 new
17    215 ILCS 5/371A-60 new
18    215 ILCS 5/371A-65 new
19    215 ILCS 5/371A-70 new
20    215 ILCS 5/371A-75 new
21    215 ILCS 5/371A-80 new
22    215 ILCS 5/371A-85 new
23    215 ILCS 5/371A-90 new
24    215 ILCS 5/371A-95 new
25    215 ILCS 5/371A-100 new
26    215 ILCS 5/371A-105 new
27    215 ILCS 5/371A-110 new
28    215 ILCS 5/371A-115 new
29    215 ILCS 5/371A-120 new
30    215 ILCS 5/371A-125 new
31    215 ILCS 5/371A-130 new
32    215 ILCS 5/371A-135 new
33    215 ILCS 5/371A-140 new
34    215 ILCS 5/371A-145 new
 
                            -27-               LRB9200846JSpc
 1    215 ILCS 5/371A-150 new
 2    215 ILCS 5/371A-155 new
 3    215 ILCS 5/371A-160 new
 4    215 ILCS 5/371A-165 new

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