093_HB2785

 
                                     LRB093 07635 JLS 07814 b

 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 such company 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
 
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 1        which measure variation in hazards or expense provisions,
 2        or   both.   The   Such  rating  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 such
14             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  such  rate  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-      LRB093 07635 JLS 07814 b
 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.)