Illinois General Assembly - Full Text of HB1287
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Full Text of HB1287  99th General Assembly


Rep. Michael J. Madigan

Filed: 5/21/2015





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2    AMENDMENT NO. ______. Amend House Bill 1287, AS AMENDED, by
3inserting the following in its proper numeric sequence in the
5    "Section 2. The Illinois Insurance Code is amended by
6changing Sections 456, 457, and 458 and by adding Section 462a
7as follows:
8    (215 ILCS 5/456)  (from Ch. 73, par. 1065.3)
9    Sec. 456. Making of rates. (1) All rates shall be made in
10accordance with the following provisions:
11    (a) Due consideration shall be given to past and
12prospective loss experience within and outside this state, to
13catastrophe hazards, if any, to a reasonable margin for profit
14and contingencies, to dividends, savings or unabsorbed premium
15deposits allowed or returned by companies to their
16policyholders, members or subscribers, to past and prospective



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1expenses both countrywide and those specially applicable to
2this state, to underwriting practice and judgment and to all
3other relevant factors within and outside this state;
4    (b) The systems of expense provisions included in the rates
5for use by any company or group of companies may differ from
6those of other companies or groups of companies to reflect the
7requirements of the operating methods of any such company or
8group with respect to any kind of insurance, or with respect to
9any subdivision or combination thereof for which subdivision or
10combination separate expense provisions are applicable;
11    (c) Risks may be grouped by classifications for the
12establishment of rates and minimum premiums. Classification
13rates may be modified to produce rates for individual risks in
14accordance with rating plans which measure variation in hazards
15or expense provisions, or both. Such rating plans may measure
16any differences among risks that have a probable effect upon
17losses or expenses;
18    (d) Rates shall not be excessive, inadequate or unfairly
20    A rate in a competitive market is not excessive. A rate in
21a noncompetitive market is excessive if it is likely to produce
22a long run profit that is unreasonably high for the insurance
23provided or if expenses are unreasonably high in relation to
24the services rendered.
25    A rate is not inadequate unless such rate is clearly
26insufficient to sustain projected losses and expenses in the



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1class of business to which it applies and the use of such rate
2has or, if continued, will have the effect of substantially
3lessening competition or the tendency to create monopoly in any
5    Unfair discrimination exists if, after allowing for
6practical limitations, price differentials fail to reflect
7equitably the differences in expected losses and expenses. A
8rate is not unfairly discriminatory because different premiums
9result for policyholders with like exposures but different
10expenses, or like expenses but different loss exposures, so
11long as the rate reflects the differences with reasonable
13    (e) The rating plan shall contain a mandatory offer of a
14deductible applicable only to the medical benefit under the
15Workers' Compensation Act. Such deductible offer shall be in a
16minimum amount of at least $1,000 per accident.
17    (f) Any rating plan or program shall include a rule
18permitting 2 or more employers with similar risk
19characteristics, who participate in a loss prevention program
20or safety group, to pool their premium and loss experience in
21determining their rate or premium for such participation in the
23    (2) Except to the extent necessary to meet the provisions
24of subdivision (d) of subsection (1) of this Section,
25uniformity among companies in any matters within the scope of
26this Section is neither required nor prohibited.



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1(Source: P.A. 82-939.)
2    (215 ILCS 5/457)  (from Ch. 73, par. 1065.4)
3    Sec. 457. Rate filings. (1) Every Beginning January 1,
41983, every company shall prefile file with the Director every
5manual of classifications, every manual of rules and rates,
6every rating plan and every modification of the foregoing which
7it intends to use. Such filings shall be made at least not
8later than 30 days before after they become effective. A
9company may satisfy its obligation to make such filings by
10adopting the filing of a licensed rating organization of which
11it is a member or subscriber, filed pursuant to subsection (2)
12of this Section, in total or, with the approval of the
13Director, by notifying the Director in what respects it intends
14to deviate from such filing. If a company intends to deviate
15from the filing of a licensed rating organization of which it
16is a member, the company shall provide the Director with
17supporting information that specifies the basis for the
18requested deviation and provides justification for the
19deviation. Any company adopting a pure premium filed by a
20rating organization pursuant to subsection (2) must file with
21the Director the modification factor it is using for expenses
22and profit so that the final rates in use by such company can
23be determined.
24    (2) Each Beginning January 1, 1983, each licensed rating
25organization must prefile file with the Director every manual



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1of classification, every manual of rules and advisory rates,
2every pure premium which has been fully adjusted and fully
3developed, every rating plan and every modification of any of
4the foregoing which it intends to recommend for use to its
5members and subscribers, at least not later than 30 days before
6after such manual, premium, plan or modification thereof takes
7effect. Every licensed rating organization shall also file with
8the Director the rate classification system, all rating rules,
9rating plans, policy forms, underwriting rules or similar
10materials, and each modification of any of the foregoing which
11it requires its members and subscribers to adhere to not later
12than 30 days before such filings or modifications thereof are
13to take effect. Every such filing shall state the proposed
14effective date thereof and shall indicate the character and
15extent of the coverage contemplated.
16    (3) A filing and any supporting information made pursuant
17to this Section shall be open to public inspection as soon as
18filed after the filing becomes effective.
19    (4) A filing shall not be effective nor used until approved
20by the Director. A filing shall be deemed approved if the
21Director fails to disapprove within 30 days after the filing.
22(Source: P.A. 82-939.)
23    (215 ILCS 5/458)  (from Ch. 73, par. 1065.5)
24    Sec. 458. Disapproval of filings. (1) If within 30 thirty
25days of any filing the Director finds that such filing does not



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1meet the requirements of this Article, he shall send to the
2company or rating organization which made such filing a written
3notice of disapproval of such filing, specifying therein in
4what respects he finds that such filing fails to meet the
5requirements of this Article and stating when, within a
6reasonable period thereafter, such filing shall be deemed no
7longer effective. A company or rating organization whose filing
8has been disapproved shall be given a hearing upon a written
9request made within 30 days after the disapproval order. If the
10company or rating organization making the filing shall, prior
11to the expiration of the period prescribed in the notice,
12request a hearing, such filings shall be effective until the
13expiration of a reasonable period specified in any order
14entered thereon. If the rate resulting from such filing be
15unfairly discriminatory or materially inadequate, and the
16difference between such rate and the approved rate equals or
17exceeds the cost of making an adjustment, the Director shall in
18such notice or order direct an adjustment of the premium to be
19made with the policyholder either by refund or collection of
20additional premium. If the policyholder does not accept the
21increased rate, cancellation shall be made on a pro rata basis.
22Any policy issued pursuant to this subsection shall contain a
23provision that the premium thereon shall be subject to
24adjustment upon the basis of the filing finally approved.
25    (2) If at any time subsequent to the applicable review
26period provided for in subsection (1) of this Section, the



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1Director finds that a filing does not meet the requirements of
2this Article, he shall, after a hearing held upon not less than
3ten days written notice, specifying the matters to be
4considered at such hearing, to every company and rating
5organization which made such filing, issue an order specifying
6in what respects he finds that such filing fails to meet the
7requirements of this Article, and stating when, within a
8reasonable period thereafter, such filings shall be deemed no
9longer effective. Copies of said order shall be sent to every
10such company and rating organization. Said order shall not
11affect any contract or policy made or issued prior to the
12expiration of the period set forth in said order.
13    (3) Any person or organization aggrieved with respect to
14any filing which is in effect may make written application to
15the Director for a hearing thereon, provided, however, that the
16company or rating organization that made the filing shall not
17be authorized to proceed under this subsection. Such
18application shall specify the grounds to be relied upon by the
19applicant. If the Director shall find that the application is
20made in good faith, that the applicant would be so aggrieved if
21his grounds are established, and that such grounds otherwise
22justify holding such a hearing, he shall, within thirty days
23after receipt of such application, hold a hearing upon not less
24than ten days written notice to the applicant and to every
25company and rating organization which made such filing.
26    If, after such hearing, the Director finds that the filing



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1does not meet the requirements of this Article, he shall issue
2an order specifying in what respects he finds that such filing
3fails to meet the requirements of this Article, and stating
4when, within a reasonable period thereafter, such filing shall
5be deemed no longer effective. Copies of said order shall be
6sent to the applicant and to every such company and rating
7organization. Said order shall not affect any contract or
8policy made or issued prior to the expiration of the period set
9forth in said order.
10    (4) Whenever an insurer has no legally effective rates as a
11result of the Director's disapproval of rates or other act, the
12Director shall on request of the insurer specify interim rates
13for the insurer that are high enough to protect the interests
14of all parties and may order that a specified portion of the
15premiums be placed in an escrow account approved by him or her.
16When new rates become legally effective, the Director shall
17order the escrowed funds or any overcharge in the interim rates
18to be distributed appropriately, except that refunds to
19policyholders that are de minimus shall not be required.
20(Source: P.A. 82-939.)
21    (215 ILCS 5/462a new)
22    Sec. 462a. Premiums; review.
23    (a) Premiums shall not be excessive. A premium is excessive
24if it is likely to produce a long run profit that is
25unreasonably high for the insurance provided or if expenses are



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1unreasonably high in relation to the coverage or services
3    (b) At any time, an insured may file a request for review
4of a premium with the Director. The request shall be in such
5form as the Director prescribes and shall specify the grounds
6on which the premium is excessive.
7    If within 30 days of any proper request for review under
8this Section, the Director finds that the premium does not meet
9the requirements of this Section, he or she shall send to the
10insurer a written notice of disapproval of premium, specifying
11therein in what respects he or she finds that the premium fails
12to meet the requirements of this Section, stating when, within
13a reasonable period thereafter, the premium shall be deemed no
14longer effective, and ordering an adjustment of the premium. An
15insurer whose premium has been disapproved shall be given a
16hearing upon a written request made within 30 days after the
17disapproval order. If the insurer requests a hearing, the
18premium shall be effective until the expiration of a reasonable
19period specified in any order entered thereon. If, after a
20hearing, the premium is found to be excessive, the Director
21shall order an adjustment of the premium. The insurer shall
22refund to the insured any amount found to be excessive under
23this Section.
24    If the Director finds that a review is not warranted or a
25premium is not excessive, he or she shall provide notice of
26that decision to the insured and the insurer.



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1    (c) An insurer shall provide all information requested by
2the Director as he or she determines necessary to assist in
3review of premiums under this Section.
4    (215 ILCS 5/460 rep.)
5    Section 3. The Illinois Insurance Code is amended by
6repealing Section 460.
7    Section 4. The Workers' Compensation Act is amended by
8adding Section 4e as follows:
9    (820 ILCS 305/4e new)
10    Sec. 4e. Safety programs and return to work programs;
11recalculation of premiums and waiver of self-insurers fee.
12    (a) An employer may file with the Commission a workers'
13compensation safety program or a workers' compensation return
14to work program implemented by the employer. The Commission may
15certify any such safety program as a bona fide safety program
16after reviewing the program for the following minimum
17requirements: adequate safety training for employees;
18establishment of joint employer-employee safety committees;
19use of safety devices; and consultation with safety
20organizations. The Commission may certify any such return to
21work program as a bona fide return to work program after
22reviewing the program for the following minimum requirements:
23light duty or restricted duty work; leave of absence policy;



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1and full duty return to work policy. The Commission shall
2notify the Department of Insurance of the certification.
3    (b) Upon receipt of a certification notice from the
4Commission under this Section related to an employer that
5provides workers' compensation through an insurer, the
6Director of Insurance shall immediately direct in writing the
7employer's workers' compensation insurer to recalculate the
8workers' compensation premium rates for the employer so that
9those premium rates incorporate and take into account the
10certified program.
11    (c) If any workers' compensation safety program or a
12workers' compensation return to work program implemented by a
13self-insured employer is certified under this Section, the
14annual fee under Section 4d of this Act is waived for the
15self-insured employer as long as the workers' compensation
16safety program or a workers' compensation return to work
17program continues. The self-insured employer shall certify the
18continuation of the program by each July 1 after the waiver is