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92_HB2013 LRB9205762JSpc 1 AN ACT concerning insurance. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Insurance Code is amended by 5 changing Section 456 as follows: 6 (215 ILCS 5/456) (from Ch. 73, par. 1065.3) 7 Sec. 456. Making of rates. 8 (1) All rates shall be made in accordance with the 9 following provisions: 10 (a) Due consideration shall be given to past and 11 prospective loss experience within and outside this 12 State, to catastrophe hazards, if any, to a reasonable 13 margin for profit and contingencies, to dividends, 14 savings, or unabsorbed premium deposits allowed or 15 returned by companies to their policyholders, members or 16 subscribers, to past and prospective expenses both 17 countrywide and those specially applicable to this State, 18 to underwriting practice and judgment, and to all other 19 relevant factors within and outside this State.
;20 (b) The systems of expense provisions included in 21 the rates for use by any company or group of companies 22 may differ from those of other companies or groups of 23 companies to reflect the requirements of the operating 24 methods of the any suchcompany or group with respect to 25 any kind of insurance, or with respect to any subdivision 26 or combination thereof for which subdivision or 27 combination separate expense provisions are applicable. ;28 (c) Risks may be grouped by classifications for the 29 establishment of rates and minimum premiums. 30 Classification rates may be modified to produce rates for 31 individual risks in accordance with rating plans that -2- LRB9205762JSpc 1 whichmeasure variation in hazards or expense provisions, 2 or both. The Suchrating plans may measure any 3 differences among risks that have a probable effect upon 4 losses or expenses. ;5 (d) Rates shall not be excessive, inadequate, or 6 unfairly discriminatory. 7 (i) A rate in a competitive market is not 8 excessive. A rate in a noncompetitive market is 9 excessive if it is likely to produce a long run 10 profit that is unreasonably high for the insurance 11 provided or if expenses are unreasonably high in 12 relation to the services rendered. 13 (ii) A rate is not inadequate unless the such14 rate is clearly insufficient to sustain projected 15 losses and expenses in the class of business to 16 which it applies and the use of the suchrate has 17 or, if continued, will have the effect of 18 substantially lessening competition or the tendency 19 to create monopoly in any market. 20 (iii) Unfair discrimination exists if, after 21 allowing for practical limitations, price 22 differentials fail to reflect equitably the 23 differences in expected losses and expenses. A rate 24 is not unfairly discriminatory because different 25 premiums result for policyholders with like 26 exposures but different expenses, or like expenses 27 but different loss exposures, so long as the rate 28 reflects the differences with reasonable accuracy. 29 (e) The rating plan shall contain a mandatory offer 30 of a deductible applicable only to the medical benefit 31 under the Workers' Compensation Act. Such deductible 32 offer shall be in a minimum amount of at least $1,000 per 33 accident. 34 (f) Any rating plan or program shall include a rule -3- LRB9205762JSpc 1 permitting 2 or more employers with similar risk 2 characteristics, who participate in a loss prevention 3 program or safety group, to pool their premium and loss 4 experience in determining their rate or premium for such 5 participation in the program. 6 (g) With respect to an employer correctly 7 classified within the construction industry, the amount 8 charged for workers' compensation and employers' 9 liability insurance insuring the employees employed by an 10 employer in any job category or classification shall be 11 based upon hours worked by employees in that job category 12 or classification and shall not be based upon the wages 13 or salaries paid to the employees. 14 (2) Except to the extent necessary to meet the 15 provisions of subdivision (d) of subsection (1) of this 16 Section, uniformity among companies in any matters within the 17 scope of this Section is neither required nor prohibited. 18 (Source: P.A. 82-939.)
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