Public Act 099-0369

SB1805 Enrolled LRB099 09021 MLM 29204 b

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois,

represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by adding

Section 155.44 as follows:

(215 ILCS 5/155.44 new)

Sec. 155.44. Financial requirements; large deductible

agreements for workers' compensation insurance.

(a) An insurer shall:

(1) require full collateralization of the outstanding

obligations owed under a large deductible agreement by

using one of the following methods:

(A) a surety bond issued by a surety insurer

authorized to transact business by the Department and

whose financial strength and size ratings from A.M.

Best Company are not less than "A" and "V",

respectively;

(B) an irrevocable letter of credit issued by a

financial institution with an office physically

located within the State and the deposits of which are

federally insured; or

(C) cash or securities held in trust by a third

party or by the insurer and subject to a trust

agreement for the express purpose of securing the

policyholder's obligation under a large deductible

agreement, provided that if the assets are held by the

insurer those assets are not commingled with the

insurer's other assets; and

(2) limit the size of the policyholder's obligations

under a large deductible agreement to no greater than 20%

of the total net worth of the policyholder at each policy

inception, as determined by an audited financial statement

as of the most recently available fiscal year end.

(b) As used in this Section, "insurer" means any insurer

authorized to issue a workers' compensation policy covering

risks located in this State that has an A.M. Best Company

rating below "A-" and does not have at least $200,000,000 in

surplus.

(c) As used in this Section, "large deductible agreement"

means any combination of one or more policies, endorsements,

contracts, or security agreements which provide for the

policyholder to bear the risk of loss of $100,000 or greater

per claim or occurrence covered under a policy of workers'

compensation insurance and which may be subject to the

aggregate limit of policyholder reimbursement obligations.

(d) Except when approved by the Director of Insurance, any

insurer determined to be in a financially hazardous condition

pursuant to Article XII 1/2 or XIII of this Code by the

Director of Insurance in this State or the equivalent in any

other state is prohibited from issuing or renewing a policy

that includes a large deductible agreement.

(e) This Section applies to large deductible agreements

issued or renewed by any insurer on or after January 1, 2016.

Section 99. Effective date. This Act takes effect on July

1, 2015.