SB1805 Engrossed LRB099 09021 MLM 29204 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 adding
5		Section 155.44 as follows:
6		(215 ILCS 5/155.44 new)
7		Sec. 155.44. Financial requirements; large deductible
8		agreements for workers' compensation insurance.
9		(a) An insurer shall:
10		(1) require full collateralization of the outstanding
11		obligations owed under a large deductible agreement by
12		using one of the following methods:
13		(A) a surety bond issued by a surety insurer
14		authorized to transact business by the Department and
15		whose financial strength and size ratings from A.M.
16		Best Company are not less than "A" and "V",
17		respectively;
18		(B) an irrevocable letter of credit issued by a
19		financial institution with an office physically
20		located within the State and the deposits of which are
21		federally insured; or
22		(C) cash or securities held in trust by a third
23		party or by the insurer and subject to a trust

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1		agreement for the express purpose of securing the
2		policyholder's obligation under a large deductible
3		agreement, provided that if the assets are held by the
4		insurer those assets are not commingled with the
5		insurer's other assets; and
6		(2) limit the size of the policyholder's obligations
7		under a large deductible agreement to 20% of the total net
8		worth of the policyholder at each policy inception, as
9		determined by an audited financial statement as of the most
10		recently available fiscal year end.
11		(b) As used in this Section, "insurer" means any insurer
12		authorized to issue a workers' compensation policy covering
13		risks located in this State that has an A.M. Best Company
14		rating below "A-" and does not have at least $200,000,000 in
15		surplus.
16		(c) As used in this Section, "large deductible agreement"
17		means any combination of one or more policies, endorsements,
18		contracts, or security agreements which provide for the
19		policyholder to bear the risk of loss of a specified amount per
20		claim or occurrence covered under a policy of workers'
21		compensation insurance and which may be subject to the
22		aggregate limit of policyholder reimbursement obligations.
23		(d) Except when approved by the Director of Insurance, any
24		insurer determined to be in a financially hazardous condition
25		pursuant to Article XII 1/2 or XIII of this Code by the
26		Director of Insurance in this State or the equivalent in any

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1		other state is prohibited from issuing or renewing a policy
2		that includes a large deductible agreement.
3		(e) This Section applies to large deductible agreements
4		issued or renewed by any insurer on or after January 1, 2016.
5		Section 99. Effective date. This Act takes effect on July
6		1, 2015.