HB1287ham004 99TH GENERAL ASSEMBLY

Rep. Michael J. Madigan

Filed: 5/21/2015

09900HB1287ham004 LRB099 05153 JLS 35866 a

AMENDMENT TO HOUSE BILL 1287

AMENDMENT NO. ______. Amend House Bill 1287, AS AMENDED, by inserting the following in its proper numeric sequence in the bill:

"Section 2. The Illinois Insurance Code is amended by changing Sections 456, 457, and 458 and by adding Section 462a as follows:

(215 ILCS 5/456) (from Ch. 73, par. 1065.3)

Sec. 456. Making of rates. (1) All rates shall be made in accordance with the following provisions:

(a) Due consideration shall be given to past and prospective loss experience within and outside this state, to catastrophe hazards, if any, to a reasonable margin for profit and contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned by companies to their policyholders, members or subscribers, to past and prospective expenses both countrywide and those specially applicable to this state, to underwriting practice and judgment and to all other relevant factors within and outside this state;

(b) The systems of expense provisions included in the rates for use by any company or group of companies may differ from those of other companies or groups of companies to reflect the requirements of the operating methods of any such company or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof for which subdivision or combination separate expense provisions are applicable;

(c) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which measure variation in hazards or expense provisions, or both. Such rating plans may measure any differences among risks that have a probable effect upon losses or expenses;

(d) Rates shall not be excessive, inadequate or unfairly discriminatory.

A rate in a competitive market is not excessive. A rate in a noncompetitive market is excessive if it is likely to produce a long run profit that is unreasonably high for the insurance provided or if expenses are unreasonably high in relation to the services rendered.

A rate is not inadequate unless such rate is clearly insufficient to sustain projected losses and expenses in the class of business to which it applies and the use of such rate has or, if continued, will have the effect of substantially lessening competition or the tendency to create monopoly in any market.

Unfair discrimination exists if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in expected losses and expenses. A rate is not unfairly discriminatory because different premiums result for policyholders with like exposures but different expenses, or like expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.

(e) The rating plan shall contain a mandatory offer of a deductible applicable only to the medical benefit under the Workers' Compensation Act. Such deductible offer shall be in a minimum amount of at least $1,000 per accident.

(f) Any rating plan or program shall include a rule permitting 2 or more employers with similar risk characteristics, who participate in a loss prevention program or safety group, to pool their premium and loss experience in determining their rate or premium for such participation in the program.

(2) Except to the extent necessary to meet the provisions of subdivision (d) of subsection (1) of this Section, uniformity among companies in any matters within the scope of this Section is neither required nor prohibited.

(Source: P.A. 82-939.)

(215 ILCS 5/457) (from Ch. 73, par. 1065.4)

Sec. 457. Rate filings. (1) Every Beginning January 1, 1983, every company shall prefile file with the Director every manual of classifications, every manual of rules and rates, every rating plan and every modification of the foregoing which it intends to use. Such filings shall be made at least not later than 30 days before after they become effective. A company may satisfy its obligation to make such filings by adopting the filing of a licensed rating organization of which it is a member or subscriber, filed pursuant to subsection (2) of this Section, in total or, with the approval of the Director, by notifying the Director in what respects it intends to deviate from such filing. If a company intends to deviate from the filing of a licensed rating organization of which it is a member, the company shall provide the Director with supporting information that specifies the basis for the requested deviation and provides justification for the deviation. Any company adopting a pure premium filed by a rating organization pursuant to subsection (2) must file with the Director the modification factor it is using for expenses and profit so that the final rates in use by such company can be determined.

(2) Each Beginning January 1, 1983, each licensed rating organization must prefile file with the Director every manual of classification, every manual of rules and advisory rates, every pure premium which has been fully adjusted and fully developed, every rating plan and every modification of any of the foregoing which it intends to recommend for use to its members and subscribers, at least not later than 30 days before after such manual, premium, plan or modification thereof takes effect. Every licensed rating organization shall also file with the Director the rate classification system, all rating rules, rating plans, policy forms, underwriting rules or similar materials, and each modification of any of the foregoing which it requires its members and subscribers to adhere to not later than 30 days before such filings or modifications thereof are to take effect. Every such filing shall state the proposed effective date thereof and shall indicate the character and extent of the coverage contemplated.

(3) A filing and any supporting information made pursuant to this Section shall be open to public inspection as soon as filed after the filing becomes effective.

(4) A filing shall not be effective nor used until approved by the Director. A filing shall be deemed approved if the Director fails to disapprove within 30 days after the filing.

(Source: P.A. 82-939.)

(215 ILCS 5/458) (from Ch. 73, par. 1065.5)

Sec. 458. Disapproval of filings. (1) If within 30 thirty days of any filing the Director finds that such filing does not meet the requirements of this Article, he shall send to the company or rating organization which made such filing a written notice of disapproval of such filing, specifying therein in what respects he finds that such filing fails to meet the requirements of this Article and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. A company or rating organization whose filing has been disapproved shall be given a hearing upon a written request made within 30 days after the disapproval order. If the company or rating organization making the filing shall, prior to the expiration of the period prescribed in the notice, request a hearing, such filings shall be effective until the expiration of a reasonable period specified in any order entered thereon. If the rate resulting from such filing be unfairly discriminatory or materially inadequate, and the difference between such rate and the approved rate equals or exceeds the cost of making an adjustment, the Director shall in such notice or order direct an adjustment of the premium to be made with the policyholder either by refund or collection of additional premium. If the policyholder does not accept the increased rate, cancellation shall be made on a pro rata basis. Any policy issued pursuant to this subsection shall contain a provision that the premium thereon shall be subject to adjustment upon the basis of the filing finally approved.

(2) If at any time subsequent to the applicable review period provided for in subsection (1) of this Section, the Director finds that a filing does not meet the requirements of this Article, he shall, after a hearing held upon not less than ten days written notice, specifying the matters to be considered at such hearing, to every company and rating organization which made such filing, issue an order specifying in what respects he finds that such filing fails to meet the requirements of this Article, and stating when, within a reasonable period thereafter, such filings shall be deemed no longer effective. Copies of said order shall be sent to every such company and rating organization. Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in said order.

(3) Any person or organization aggrieved with respect to any filing which is in effect may make written application to the Director for a hearing thereon, provided, however, that the company or rating organization that made the filing shall not be authorized to proceed under this subsection. Such application shall specify the grounds to be relied upon by the applicant. If the Director shall find that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established, and that such grounds otherwise justify holding such a hearing, he shall, within thirty days after receipt of such application, hold a hearing upon not less than ten days written notice to the applicant and to every company and rating organization which made such filing.

If, after such hearing, the Director finds that the filing does not meet the requirements of this Article, he shall issue an order specifying in what respects he finds that such filing fails to meet the requirements of this Article, and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. Copies of said order shall be sent to the applicant and to every such company and rating organization. Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in said order.

(4) Whenever an insurer has no legally effective rates as a result of the Director's disapproval of rates or other act, the Director shall on request of the insurer specify interim rates for the insurer that are high enough to protect the interests of all parties and may order that a specified portion of the premiums be placed in an escrow account approved by him or her. When new rates become legally effective, the Director shall order the escrowed funds or any overcharge in the interim rates to be distributed appropriately, except that refunds to policyholders that are de minimus shall not be required.

(Source: P.A. 82-939.)

(215 ILCS 5/462a new)

Sec. 462a. Premiums; review.

(a) Premiums shall not be excessive. A premium is excessive if it is likely to produce a long run profit that is unreasonably high for the insurance provided or if expenses are unreasonably high in relation to the coverage or services rendered.

(b) At any time, an insured may file a request for review of a premium with the Director. The request shall be in such form as the Director prescribes and shall specify the grounds on which the premium is excessive.

If within 30 days of any proper request for review under this Section, the Director finds that the premium does not meet the requirements of this Section, he or she shall send to the insurer a written notice of disapproval of premium, specifying therein in what respects he or she finds that the premium fails to meet the requirements of this Section, stating when, within a reasonable period thereafter, the premium shall be deemed no longer effective, and ordering an adjustment of the premium. An insurer whose premium has been disapproved shall be given a hearing upon a written request made within 30 days after the disapproval order. If the insurer requests a hearing, the premium shall be effective until the expiration of a reasonable period specified in any order entered thereon. If, after a hearing, the premium is found to be excessive, the Director shall order an adjustment of the premium. The insurer shall refund to the insured any amount found to be excessive under this Section.

If the Director finds that a review is not warranted or a premium is not excessive, he or she shall provide notice of that decision to the insured and the insurer.

(c) An insurer shall provide all information requested by the Director as he or she determines necessary to assist in review of premiums under this Section.

(215 ILCS 5/460 rep.)

Section 3. The Illinois Insurance Code is amended by repealing Section 460.

Section 4. The Workers' Compensation Act is amended by adding Section 4e as follows:

(820 ILCS 305/4e new)

Sec. 4e. Safety programs and return to work programs; recalculation of premiums and waiver of self-insurers fee.

(a) An employer may file with the Commission a workers' compensation safety program or a workers' compensation return to work program implemented by the employer. The Commission may certify any such safety program as a bona fide safety program after reviewing the program for the following minimum requirements: adequate safety training for employees; establishment of joint employer-employee safety committees; use of safety devices; and consultation with safety organizations. The Commission may certify any such return to work program as a bona fide return to work program after reviewing the program for the following minimum requirements: light duty or restricted duty work; leave of absence policy; and full duty return to work policy. The Commission shall notify the Department of Insurance of the certification.

(b) Upon receipt of a certification notice from the Commission under this Section related to an employer that provides workers' compensation through an insurer, the Director of Insurance shall immediately direct in writing the employer's workers' compensation insurer to recalculate the workers' compensation premium rates for the employer so that those premium rates incorporate and take into account the certified program.

(c) If any workers' compensation safety program or a workers' compensation return to work program implemented by a self-insured employer is certified under this Section, the annual fee under Section 4d of this Act is waived for the self-insured employer as long as the workers' compensation safety program or a workers' compensation return to work program continues. The self-insured employer shall certify the continuation of the program by each July 1 after the waiver is obtained.".