State of Illinois
91st General Assembly
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91_HB3903eng

 
HB3903 Engrossed                               LRB9112209JSpc

 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
 
HB3903 Engrossed            -2-                LRB9112209JSpc
 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.
 
HB3903 Engrossed            -3-                LRB9112209JSpc
 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.)

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