State of Illinois
92nd General Assembly
Legislation

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92_HB4445

                                               LRB9215738JSpr

 1        AN ACT concerning medical malpractice 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 155.18 as follows:

 6        (215 ILCS 5/155.18) (from Ch. 73, par. 767.18)
 7        Sec. 155.18.  (a) This Section shall apply  to  insurance
 8    on  risks  based  upon negligence by a physician, hospital or
 9    other health care provider, referred  to  herein  as  medical
10    liability   insurance.   This  Section  shall  not  apply  to
11    contracts of reinsurance, nor to any farm,  county,  district
12    or  township  mutual  insurance  company transacting business
13    under an Act  entitled  "An  Act  relating  to  local  mutual
14    district,  county and township insurance companies", approved
15    March 13, 1936, as now or hereafter amended, nor to any  such
16    company operating under a special charter.
17        (b)  The  following  standards  shall apply to the making
18    and use  of  rates  pertaining  to  all  classes  of  medical
19    liability insurance:
20             (1)  Rates  shall not be excessive or inadequate, as
21        herein   defined,   nor   shall    they    be    unfairly
22        discriminatory.   No  rate  shall be held to be excessive
23        unless such rate is unreasonably high for  the  insurance
24        provided, and a reasonable degree of competition does not
25        exist  in  the area with respect to the classification to
26        which such rate is applicable.
27             No rate  shall  be  held  inadequate  unless  it  is
28        unreasonably low for the insurance provided and continued
29        use of it would endanger solvency of the company.
30             (2)  Consideration  shall  be  given,  to the extent
31        applicable,  to  past  and  prospective  loss  experience
 
                            -2-                LRB9215738JSpr
 1        within and outside this State, to a reasonable margin for
 2        underwriting  profit  and  contingencies,  to  past   and
 3        prospective   expenses   both   countrywide   and   those
 4        especially  applicable  to  this  State, and to all other
 5        factors,  including  judgment  factors,  deemed  relevant
 6        within and outside this State.
 7             Consideration may also be given in  the  making  and
 8        use  of rates to dividends, savings or unabsorbed premium
 9        deposits  allowed  or  returned  by  companies  to  their
10        policyholders, members or subscribers.
11             (3)  The systems of expense provisions  included  in
12        the  rates  for  use by any company or group of companies
13        may differ from those of other  companies  or  groups  of
14        companies  to  reflect  the operating methods of any such
15        company or group with respect to any kind  of  insurance,
16        or   with  respect  to  any  subdivision  or  combination
17        thereof.
18             (4)  Risks may be grouped by classifications for the
19        establishment   of   rates    and    minimum    premiums.
20        Classification rates may be modified to produce rates for
21        individual  risks  in  accordance with rating plans which
22        establish standards for measuring variations  in  hazards
23        or  expense  provisions,  or  both.   Such  standards may
24        measure any difference among risks that have  a  probable
25        effect  upon losses or expenses.  Such classifications or
26        modifications  of  classifications  of   risks   may   be
27        established   based   upon   size,  expense,  management,
28        individual experience, location or dispersion of  hazard,
29        or any other reasonable considerations and shall apply to
30        all  risks  under  the  same  or  substantially  the same
31        circumstances or conditions.  The rate for an established
32        classification  should  be  related  generally   to   the
33        anticipated loss and expense factors of the class.
34        (c)  Every  company  writing  medical liability insurance
 
                            -3-                LRB9215738JSpr
 1    shall file with the  Director  of  Insurance  the  rates  and
 2    rating schedules it uses for medical liability insurance.
 3             (1)  This  filing  shall occur at least annually and
 4        as often as the rates are changed or amended.
 5             (2)  For the purposes of this Section any change  in
 6        premium to the company's insureds as a result of a change
 7        in  the company's base rates or a change in its increased
 8        limits factors shall constitute a  change  in  rates  and
 9        shall require a filing with the Director.
10             (3)  It  shall  be  certified  in  such filing by an
11        officer of the company and a qualified actuary  that  the
12        company's  rates  are based on sound actuarial principles
13        and are not inconsistent with the company's experience.
14        (d)  If after a hearing the Director finds:
15             (1)  that any rate, rating  plan  or  rating  system
16        violates the provisions of this Section applicable to it,
17        he  may  issue an order to the company which has been the
18        subject of the hearing specifying in what  respects  such
19        violation  exists  and  stating when, within a reasonable
20        period of time, the further use of such  rate  or  rating
21        system  by  such  company  in contracts of insurance made
22        thereafter shall be prohibited;
23             (2)  that the violation of any of the provisions  of
24        this  Section  applicable  to it by any company which has
25        been the subject of hearing was wilful, he may suspend or
26        revoke, in whole or in part, the certificate of authority
27        of such company with respect to the  class  of  insurance
28        which has been the subject of the hearing.
29        (e)  Insurers  in  the  business  of providing Class 2(c)
30    insurance must, with respect to medical malpractice policies,
31    establish a premium scale within each coverage classification
32    wherein premiums are proportional to settlements paid on  the
33    physician's behalf.
34    (Source: P.A. 79-1434.)
 
                            -4-                LRB9215738JSpr
 1        Section  10.  The Medical Practice Act of 1987 is amended
 2    by adding Section 27.5 as follows:

 3        (225 ILCS 60/27.5 new)
 4        Sec. 27.5.  Medical malpractice insurance.   A  physician
 5    licensed under this Act must maintain a minimum of $1,000,000
 6    in  liability  coverage.  The Department shall adopt rules to
 7    develop procedures to verify that a physician  maintains  the
 8    minimum  coverage.   The Department shall suspend the license
 9    of a physician who violates this Section.  The physician  may
10    have  his  or  her  license  reinstated upon showing proof of
11    coverage.  The Department may also impose a civil penalty, as
12    determined by rule, for the violation of this Section.

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