Illinois General Assembly - Full Text of HB4595
Illinois General Assembly

Previous General Assemblies

Full Text of HB4595  100th General Assembly




HB4595 EngrossedLRB100 16822 SMS 31963 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Insurance Code is amended by
5changing Section 416, by adding Article XLVI and adding
6sections 1700, 1705, 1710, 1715, 1720, 1725, 1730, 1735, 1740,
71745, 1750, 1755, 1760 and 1765 as follows:
8    (215 ILCS 5/416)
9    Sec. 416. Illinois Workers' Compensation Commission
10Operations Fund Surcharge.
11    (a) As of July 30, 2004 (the effective date of Public Act
1293-840), every company licensed or authorized by the Illinois
13Department of Insurance and insuring employers' liabilities
14arising under the Workers' Compensation Act or the Workers'
15Occupational Diseases Act shall remit to the Director a
16surcharge based upon the annual direct written premium, as
17reported under Section 136 of this Act, of the company in the
18manner provided in this Section. Such proceeds shall be
19deposited into the Illinois Workers' Compensation Commission
20Operations Fund as established in the Workers' Compensation
21Act. If a company survives or was formed by a merger,
22consolidation, reorganization, or reincorporation, the direct
23written premiums of all companies party to the merger,



HB4595 Engrossed- 2 -LRB100 16822 SMS 31963 b

1consolidation, reorganization, or reincorporation shall, for
2purposes of determining the amount of the fee imposed by this
3Section, be regarded as those of the surviving or new company.
4    (b)(1) Except as provided in subsection (b)(2) of this
5Section, beginning on July 30, 2004 (the effective date of
6Public Act 93-840) and on July 1 of each year thereafter, the
7Director shall charge an annual Illinois Workers' Compensation
8Commission Operations Fund Surcharge from every company
9subject to subsection (a) of this Section equal to 1.01% of its
10direct written premium for insuring employers' liabilities
11arising under the Workers' Compensation Act or Workers'
12Occupational Diseases Act as reported in each company's annual
13statement filed for the previous year as required by Section
14136. The Illinois Workers' Compensation Commission Operations
15Fund Surcharge shall be collected by companies subject to
16subsection (a) of this Section as a separately stated surcharge
17on insured employers at the rate of 1.01% of direct written
18premium. The Illinois Workers' Compensation Commission
19Operations Fund Surcharge shall not be collected by companies
20subject to subsection (a) of this Section from any employer
21that self-insures its liabilities arising under the Workers'
22Compensation Act or Workers' Occupational Diseases Act,
23provided that the employer has paid the Illinois Workers'
24Compensation Commission Operations Fund Fee pursuant to
25Section 4d of the Workers' Compensation Act. All sums collected
26by the Department of Insurance under the provisions of this



HB4595 Engrossed- 3 -LRB100 16822 SMS 31963 b

1Section shall be paid promptly after the receipt of the same,
2accompanied by a detailed statement thereof, into the Illinois
3Workers' Compensation Commission Operations Fund in the State
5    (b)(2) The surcharge due pursuant to Public Act 93-840
6shall be collected instead of the surcharge due on July 1, 2004
7under Public Act 93-32. Payment of the surcharge due under
8Public Act 93-840 shall discharge the employer's obligations
9due on July 1, 2004.
10    (c) In addition to the authority specifically granted under
11Article XXV of this Code, the Director shall have such
12authority to adopt rules or establish forms as may be
13reasonably necessary for purposes of enforcing this Section.
14The Director shall also have authority to defer, waive, or
15abate the surcharge or any penalties imposed by this Section if
16in the Director's opinion the company's solvency and ability to
17meet its insured obligations would be immediately threatened by
18payment of the surcharge due.
19    (d) When a company fails to pay the full amount of any
20annual Illinois Workers' Compensation Commission Operations
21Fund Surcharge of $100 or more due under this Section, there
22shall be added to the amount due as a penalty the greater of
23$1,000 or an amount equal to 5% of the deficiency for each
24month or part of a month that the deficiency remains unpaid.
25    (e) The Department of Insurance may enforce the collection
26of any delinquent payment, penalty, or portion thereof by legal



HB4595 Engrossed- 4 -LRB100 16822 SMS 31963 b

1action or in any other manner by which the collection of debts
2due the State of Illinois may be enforced under the laws of
3this State.
4    (f) Whenever it appears to the satisfaction of the Director
5that a company has paid pursuant to this Act an Illinois
6Workers' Compensation Commission Operations Fund Surcharge in
7an amount in excess of the amount legally collectable from the
8company, the Director shall issue a credit memorandum for an
9amount equal to the amount of such overpayment. A credit
10memorandum may be applied for the 2-year period from the date
11of issuance, against the payment of any amount due during that
12period under the surcharge imposed by this Section or, subject
13to reasonable rule of the Department of Insurance including
14requirement of notification, may be assigned to any other
15company subject to regulation under this Act. Any application
16of credit memoranda after the period provided for in this
17Section is void.
18    (g) Annually, the Governor may direct a transfer of up to
192% of all moneys collected under this Section to the Insurance
20Financial Regulation Fund.
21    (h) The Director shall make a loan to the Illinois
22Employers Mutual Insurance Company of $10,000,000 from the
23Illinois Workers' Compensation Commission Operations Fund for
24the start-up funding and initial capitalization of the Illinois
25Employers Mutual Insurance Company. The Board of Directors of
26the Illinois Employers Mutual Insurance Company shall make an



HB4595 Engrossed- 5 -LRB100 16822 SMS 31963 b

1application to the Director for the loans, stating the amount
2to be loaned to the Illinois Employers Mutual Insurance
3Company. The Illinois Employers Mutual Insurance Company shall
4repay the loans in full within 5 years after issuance, plus any
5interest that would have accrued thereon had the loan not
7(Source: P.A. 95-331, eff. 8-21-07.)
8    (215 ILCS 5/Art. XLVI heading new)

11    (215 ILCS 5/1700 new)
12    Sec. 1700. Purpose. The purpose of this Article is to
13establish the Illinois Employers Mutual Insurance Company as a
14nonprofit, independent public corporation to insure Illinois
15employers against liability for workers' compensation and
16occupational disease coverage.
17    (215 ILCS 5/1705 new)
18    Sec. 1705. Definitions. As used in this Article:
19    "Board" means the board of directors of the Illinois
20Employers Mutual Insurance Company.
21    "Board director" means a member of the board of directors
22of the Company.
23    "Company" means the Illinois Employers Mutual Insurance



HB4595 Engrossed- 6 -LRB100 16822 SMS 31963 b

1Company created by this Article.
2    (215 ILCS 5/1710 new)
3    Sec. 1710. Establishment of the Company.
4    (a) There is hereby created the Illinois Employers Mutual
5Insurance Company, which shall be a nonprofit, independent
6public corporation. The Company shall be operated as a domestic
7mutual insurance company, subject to all applicable provisions
8of this Code.
9    (b) The Company shall issue insurance for workers'
10compensation and occupational disease. The Company shall not
11provide any other type of insurance.
12    (c) The Company shall provide workers' compensation
13coverage to employers at the highest level of service and
14savings consistent with reasonable applicable actuarial
15standards and shall maintain the financial integrity of the
16Company. The Company shall foster employer involvement in
17safety initiatives and the creation of workplace safety plans
18set forth in Section 1740 of this Article.
19    (d) The Company shall not be considered a State agency or
20instrumentality of the State for any purpose. Employees of the
21Company are not employees of the State and are not subject to
22the Personnel Code. The Company shall not receive any State
23appropriations or funds, except for an initial loan or loans
24made pursuant to Section 416 of this Code. The State shall not
25borrow or otherwise appropriate funds from the Company. The



HB4595 Engrossed- 7 -LRB100 16822 SMS 31963 b

1Company or its liabilities shall not be deemed to constitute a
2debt or a liability of the State or a pledge of the full faith
3and credit of the State.
4    (215 ILCS 5/1715 new)
5    Sec. 1715. Board of directors.
6    (a) The Company shall be managed by a 7-member board of
7directors. The board of directors shall be appointed by the
8Governor with the advice and consent of the Senate. For the
9initial set of appointments, 2 Board directors shall be
10appointed to a term ending July 1, 2020, 2 Board directors
11shall be appointed to a term ending July 1, 2021, 2 Board
12directors shall be appointed to a term ending July 1, 2022, and
13one Board director shall be appointed to a term ending July 1,
142023. All initial appointments shall be made by the Governor
15within 30 days after the effective date of this amendatory Act
16of the 100th General Assembly. Thereafter, all appointments or
17reappointments shall be a for a 5-year term ending on July 1 of
18the fifth year. The appointment and reappointment of Board
19directors by the Governor shall be subject to the provisions of
20Article 3A of the Illinois Governmental Ethics Act.
21    (b) A Board director appointed by the Governor must meet
22all of the following qualifications:
23        (1) he or she does not have any interest as a
24    stockholder, employee, attorney, agent, broker, or
25    contractor of an insurance entity that writes workers'



HB4595 Engrossed- 8 -LRB100 16822 SMS 31963 b

1    compensation insurance or whose affiliates write workers'
2    compensation insurance; however, nothing in this Section
3    shall be construed to prohibit an individual who previously
4    had an interest in an insurance entity that writes workers'
5    compensation insurance or whose affiliates write workers'
6    compensation insurance from being appointed to the Board;
7        (2) he or she is not the spouse or an immediate family
8    member living with a person who has an interest as a
9    stockholder, employee, attorney, agent, broker, or
10    contractor of an insurance entity that writes workers'
11    compensation insurance or whose affiliates write workers'
12    compensation insurance; however, nothing in this Section
13    shall be construed to prohibit an individual who previously
14    had an interest in an insurance entity that writes workers'
15    compensation insurance or whose affiliates write workers'
16    compensation insurance from being appointed to the Board;
17        (3) he or she is a resident of the State of Illinois;
18        (4) he or she is of good moral character and has never
19    pleaded guilty to, or been found guilty of, a felony; and
20        (5) he or she is not a registered lobbyist under the
21    Lobbyist Registration Act.
22    (c) The Board directors shall elect a chairman from the
24    (d) The Board is vested with the full power, authority, and
25jurisdiction over the Company and may perform any necessary or
26convenient act in the exercise of its power. The Board shall



HB4595 Engrossed- 9 -LRB100 16822 SMS 31963 b

1discharge its duties with the care, skill, prudence, and
2diligence as that of prudent directors acting in a similar
3enterprise and purpose. The powers of the Board include, but
4are not limited to:
5        (1) the ability to enter into contracts;
6        (2) the purchase of reinsurance; and
7        (3) the declaration of dividends.
8    (e) The Board shall develop bylaws which shall be subject
9to the restrictions set forth in this Article. The bylaws shall
10provide for a schedule of at least quarterly meetings and set
11forth rules specifically relating to the conduct of meetings
12and voting procedures.
13    (f) The Board shall reflect the ethnic, cultural, and
14geographical diversity of the State.
15    (215 ILCS 5/1720 new)
16    Sec. 1720. Ratemaking. The Board shall have full power and
17authority to establish rates to be charged by the Company for
18insurance, subject to the applicable provisions of this Code.
19The Board shall contract for the services of or hire an
20independent actuary, who is a member in good standing with the
21American Academy of Actuaries, to develop and recommend
22actuarially sound rates. Rates shall be set at amounts
23sufficient, when invested, to carry all claims to maturity,
24meet the reasonable expenses of conducting the business of the
25Company, and maintain a reasonable surplus.



HB4595 Engrossed- 10 -LRB100 16822 SMS 31963 b

1    (215 ILCS 5/1725 new)
2    Sec. 1725. Guaranty fund. The Company shall be subject to
3Article XXXIV of this Code and shall pay any assessments
4required for members of the Illinois Insurance Guaranty Fund.
5    (215 ILCS 5/1730 new)
6    Sec. 1730. Chief executive officer.
7    (a) The Board shall hire a chief executive officer who
8shall serve at the pleasure of the Board. The chief executive
9officer shall not be a member of the Board and must be
10qualified by education and experience to manage an organization
11with financial and operational obligations to policyholders
12and claimants. The compensation of the chief executive officer
13shall be determined by the Board.
14    (b) The chief executive officer shall be responsible for
15conducting the day-to-day operations of the Company, including
16the hiring of personnel. The chief executive officer shall also
17maintain an Internet website for the Company, which shall
18include information regarding the purchase of policies from the
19Company, as well as any reports required to be published under
20this Article.
21    (c) The chief executive officer shall present a proposed
22operating budget for the Company to the Board for its approval
23on an annual basis. The operating budget shall include a
24description of administrative and personnel costs.



HB4595 Engrossed- 11 -LRB100 16822 SMS 31963 b

1    (215 ILCS 5/1735 new)
2    Sec. 1735. Liability. The Board and its employees shall
3not be personally liable for acts performed in good faith,
4without the intent to defraud, and made in an official
6    (215 ILCS 5/1740 new)
7    Sec. 1740. Workplace safety plan.
8    (a) The chief executive officer shall formulate,
9implement, and monitor a workplace safety plan for all
10policyholders. This plan shall include written guidance to
11reduce workplace accidents, prevent injuries, and promote safe
12working conditions. Each plan shall have clearly stated safety
13objectives for the policyholder.
14    (b) Employees of the Company shall have access to the
15premises of any policyholder for the purpose of examining the
16safety conditions of the workplace. The Company may terminate a
17policy if there is a refusal by the policyholder to permit
18on-site examinations by the Company or if the policyholder
19disregards or fails to comply with the safety objectives set
20forth by the Company in the workplace safety plan.
21    (215 ILCS 5/1745 new)
22    Sec. 1745. Investments.
23    (a) The Company shall formulate and adopt an investment



HB4595 Engrossed- 12 -LRB100 16822 SMS 31963 b

1policy that safeguards the value of all assets and maximizes
2investment potential. All investments by the Company shall be
3subject to the applicable restrictions for domestic mutual
4insurers set forth in this Code.
5    (b) The Company may retain an independent investment
6counsel who shall be subject to standards applicable to
7fiduciaries responsible for safeguarding the assets of a
9    (215 ILCS 5/1750 new)
10    Sec. 1750. Dividends.
11    (a) The Company may declare a dividend in accordance with
12the requirements set forth in this Code.
13    (b) Dividends may be distributed in the form of premium
14discounts, dividends, or a combination of dividends and
16    (c) In addition to any requirements for dividends set forth
17in this Code, dividends may only be distributed if:
18        (1) the initial funding of the Company has been repaid
19    in full;
20        (2) an independent actuarial report of the prior year's
21    operations has been completed and reviewed by the Board;
22        (3) the Company has met all expenses for administration
23    and claims for the prior year; and
24        (4) adequate reserves exist to pay all claims.



HB4595 Engrossed- 13 -LRB100 16822 SMS 31963 b

1    (215 ILCS 5/1755 new)
2    Sec. 1755. Sale of policies. The Company shall administer
3the sale of policies for workers' compensation and occupational
4disease coverage. The Company shall utilize the Internet and
5other technologies to the greatest extent possible in order to
6facilitate the purchase of a policy for employers in this
8    (215 ILCS 5/1760 new)
9    Sec. 1760. Auditing requirements.
10    (a) The Company shall be subject to all examinations and
11audits required under this Code.
12    (b) The Board shall retain a competent and independent firm
13of certified public accountants to perform an annual audit of
14the performance and management of the Company and an audit of
15the accounts, funds, and securities of the Company. The costs
16of these audits shall be paid for by the Company. The audits
17shall be published on the Company's Internet website.
18    (215 ILCS 5/1765 new)
19    Sec. 1765. Annual report.
20    (a) On July 1, 2019, the Board shall prepare and submit a
21report to the Governor, the President of the Senate, the
22Minority Leader of the Senate, the Speaker of the House, and
23the Minority Leader of the House. This report shall describe
24the progress of the Company to date in establishing its



HB4595 Engrossed- 14 -LRB100 16822 SMS 31963 b

1operations as a domestic mutual insurance company in this State
2providing workers' compensation and occupational disease
3coverage. This report shall include the information required in
4subsection (b) of this Section, if available.
5    (b) Beginning July 1, 2020 and continuing every July 1
6thereafter, the Board shall prepare and submit a report to the
7Governor, the President of the Senate, the Minority Leader of
8the Senate, the Speaker of the House, and the Minority Leader
9of the House. This report shall contain, at a minimum, the
10following information:
11        (1) a summary of the most recent audits performed
12    pursuant to Section 1760 of this Code;
13        (2) statistical and actuarial data related to the
14    determination of premium rate levels; and
15        (3) the incidence of work-related injuries and costs
16    related to those injuries.
17    (c) The reports required under this Section shall be
18submitted electronically and posted on the Internet website of
19the Company.
20    Section 99. Effective date. This Act takes effect upon
21becoming law.



HB4595 Engrossed- 15 -LRB100 16822 SMS 31963 b

2 Statutes amended in order of appearance
3    215 ILCS 5/416
4    215 ILCS 5/Art. XLVI
5    heading new
6    215 ILCS 5/1700 new
7    215 ILCS 5/1705 new
8    215 ILCS 5/1710 new
9    215 ILCS 5/1715 new
10    215 ILCS 5/1720 new
11    215 ILCS 5/1725 new
12    215 ILCS 5/1730 new
13    215 ILCS 5/1735 new
14    215 ILCS 5/1740 new
15    215 ILCS 5/1745 new
16    215 ILCS 5/1750 new
17    215 ILCS 5/1755 new
18    215 ILCS 5/1760 new
19    215 ILCS 5/1765 new