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91_HB1975
LRB9104801JSpc
1 AN ACT to amend the Illinois Insurance Code by changing
2 Section 456.
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 changing Section 456 as follows:
7 (215 ILCS 5/456) (from Ch. 73, par. 1065.3)
8 Sec. 456. Making of rates.
9 (1) All rates shall be made in accordance with the
10 following provisions:
11 (a) Due consideration shall be given to past and
12 prospective loss experience within and outside this
13 State, to catastrophe hazards, if any, to a reasonable
14 margin for profit and contingencies, to dividends,
15 savings, or unabsorbed premium deposits allowed or
16 returned by companies to their policyholders, members or
17 subscribers, to past and prospective expenses both
18 countrywide and those specially applicable to this State,
19 to underwriting practice and judgment, and to all other
20 relevant factors within and outside this State.;
21 (b) The systems of expense provisions included in
22 the rates for use by any company or group of companies
23 may differ from those of other companies or groups of
24 companies to reflect the requirements of the operating
25 methods of the any such company or group with respect to
26 any kind of insurance, or with respect to any subdivision
27 or combination thereof for which subdivision or
28 combination separate expense provisions are applicable.;
29 (c) Risks may be grouped by classifications for the
30 establishment of rates and minimum premiums.
31 Classification rates may be modified to produce rates for
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1 individual risks in accordance with rating plans that
2 which measure variation in hazards or expense provisions,
3 or both. The Such rating plans may measure any
4 differences among risks that have a probable effect upon
5 losses or expenses.;
6 (d) Rates shall not be excessive, inadequate, or
7 unfairly discriminatory.
8 (i) A rate in a competitive market is not
9 excessive. A rate in a noncompetitive market is
10 excessive if it is likely to produce a long run
11 profit that is unreasonably high for the insurance
12 provided or if expenses are unreasonably high in
13 relation to the services rendered.
14 (ii) A rate is not inadequate unless the such
15 rate is clearly insufficient to sustain projected
16 losses and expenses in the class of business to
17 which it applies and the use of the such rate has
18 or, if continued, will have the effect of
19 substantially lessening competition or the tendency
20 to create monopoly in any market.
21 (iii) Unfair discrimination exists if, after
22 allowing for practical limitations, price
23 differentials fail to reflect equitably the
24 differences in expected losses and expenses. A rate
25 is not unfairly discriminatory because different
26 premiums result for policyholders with like
27 exposures but different expenses, or like expenses
28 but different loss exposures, so long as the rate
29 reflects the differences with reasonable accuracy.
30 (e) The rating plan shall contain a mandatory offer
31 of a deductible applicable only to the medical benefit
32 under the Workers' Compensation Act. Such deductible
33 offer shall be in a minimum amount of at least $1,000 per
34 accident.
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1 (f) Any rating plan or program shall include a rule
2 permitting 2 or more employers with similar risk
3 characteristics, who participate in a loss prevention
4 program or safety group, to pool their premium and loss
5 experience in determining their rate or premium for such
6 participation in the program.
7 (g) With respect to an employer correctly
8 classified within the construction industry, the amount
9 charged for workers' compensation and employers'
10 liability insurance insuring the employees employed by an
11 employer in any job category or classification shall be
12 based upon hours worked by employees in that job category
13 or classification and shall not be based upon the wages
14 or salaries paid to the employees.
15 (2) Except to the extent necessary to meet the
16 provisions of subdivision (d) of subsection (1) of this
17 Section, uniformity among companies in any matters within the
18 scope of this Section is neither required nor prohibited.
19 (Source: P.A. 82-939.)