Section 575.110  Definitions

 

Administrator shall mean the Service Company that has been issued a license under Section 107a.09 of the Code and has contracted with a group workers' compensation pool to manage the activities of the pool, or, if the pool is self-administered, administrator shall mean the pool officers or employees designated by the pool to provide this service.

 

Basic Manual means the Basic Manual for Workers Compensation and Employers Liability Insurance (10920 W. Glennon Dr., Lakewood, Colorado 80226, 2001 edition, as supplement through October 26, 2006) of the National Council on Compensation Insurance, Incorporated (NCCI) that is used to classify employers by assigning their payroll to one or more NCCI codes.

 

Code means the Illinois Insurance Code [215 ILCS 5].

 

Department means the Department of Insurance.

 

Director means the Director of the Illinois Department of Insurance.

 

Homogeneous Risk Characteristics means similar qualities or dispositions that impact the likelihood of incurring a financial loss from workers' compensation and employers' liability exposures.  The following are characteristics identifying some, but not all, elements of homogeneity:

 

Inherent means existing in the risk as a natural and inseparable quality or characteristic.

 

Loss means the amount that any person providing workers' compensation coverage has a legal obligation to pay.

 

Loss Frequency means the ratio of the total number of claims divided by the number of units of exposure, such as the number of claims divided by the number of employees exposed to injury, or the number of claims divided by the employees' total payroll.

 

Loss Severity, which is also known as the average loss amount, means the ratio of the total costs for all claims divided by the total number of claims.

 

Occupational Framework means factors describing a member's business operations, including but not limited to industries, locations, production and services processes, materials handled, machinery and equipment used, tasks performed by employees, and exposure of employees to injury or disease.

 

Membership Scope means the type of businesses or employers eligible to join a pool.  Membership scope will be evaluated by the Director pursuant to Section 575.112 of this Part.

 

Member means an employer who pools the workers' compensation and employer's liability exposures imposed on the employer pursuant to the Workers' Compensation Act, or the Workers' Occupational Diseases Act [820 ILCS 305 and 820 ILCS 310] with other employers that either exhibit homogeneous risk characteristics or are members of a bona fide professional, commercial, industrial or trade association that exhibits homogeneous risk characteristics.

 

NCCI means the National Council on Compensation Insurance, Incorporated.

 

NCCI Class Code means one of the four digit numbers assigned according to the Basic Manual.

 

Person means any individual, entity, corporation, partnership, association, group workers' compensation pool or limited liability company.

 

Pool has the same meaning as qualified group workers' compensation pool defined in Section 107a.05 of the Code.

 

Trustee means, for purposes of this Part, any member of the pool's Board of Trustees, if the pool is a trust, or any member of the pool's Board of Directors, if the pool is any other type of entity. 

 

Section 575.112  Evaluation of Membership Scope

 

The Director shall evaluate the membership scope of a pool based on a description of the types of employers eligible for membership in the pool along with the list of NCCI classifications into which the member payrolls can be primarily classified.  Primarily classified means that no more than 10% of a member's payroll would be classified in a classification code that is not included in the membership scope using the classifications in the NCCI basic manual.  The membership scope may also include businesses that have homogeneous risk characteristics and will involve business activities that are common groupings or common business combinations.  Example of acceptable scopes (common groupings) would be pools of restaurants, offices, trucking companies, and nursing homes.  Examples of acceptable scopes (common business combinations) would be moving and storage companies, gas stations and convenience stores, and residential and commercial construction contractors.  An example of an unacceptable scope would be the members of a chamber of commerce of a city.

 

Section 575.115  Noncompliance

 

Failure of a pool to meet the requirements of this Part shall subject the pool to penalty provisions of Section 403A of the Code.

 

Section 575.125  Non-homogeneous Pools and Members

 

Pursuant to Section 107a.15 of the Code, if the Director determines that a pool does not exhibit homogeneous risk characteristics, the Director shall require the pool to eliminate the condition within 90 days after certified notice has been given to the pool.

 

Section 575.400  Pool Membership and Homogeneity

 

For the initial certification, March 1, 2010, and annually each March 1 thereafter, every pool authorized by the Director that is issuing new or renewal pooling agreements shall file with the Director certifications signed by each trustee of the pool that certify the pool, for the prior calendar year, is in compliance with Section107a.08 of the Code and this Part.

Section 575.EXHIBIT A   Requirements for Certification of Homogeneity and Certification Format

 

Certification by the Trustees

 

a)         Each pool must certify its compliance with Section 107a.08(a) and (b) of the Illinois Insurance Code [215 ILCS 5/107a.08(a) and (b)] to the Director by having each pool trustee file the prescribed certification form below by March 1 of each year to indicate that the pool members possess homogeneous risk characteristics. The Director may require certifications more frequently than on an annual basis if deemed necessary.

 

b)         The Trustees shall each certify that:

 

1)         The trustee has requested the administrator to provide all relevant information regarding the homogeneous risk characteristics of the members.

 

2)         The trustee has reviewed all relevant information regarding the homogeneous risk characteristics of the members as well as the guidelines relating to homogeneity in Section 107a.08 of the Code, in addition to those defined in Section 575.110 of this Part.

 

3)         Based on the trustee's knowledge and review, the trustee shall verify that the certification is true, complete and not misleading.

 

4)         Based on the trustee's knowledge, the certification presents in all material respects that the members exhibit homogeneous risk characteristics under the membership scope adopted by the pool.

 

5)         The trustee understands his or her legal responsibility to ensure under Article V¾ of the Code that the members exhibit homogeneous risk characteristics.

 

c)         The certification must be accompanied by a list of members as of the end of the previous year that includes for each member a description of business activities, list of NCCI class codes used to classify the member's payroll, gross annual payroll by class code, number of employees, and identification of new members added during the previous year.

 

d)         For the initial certification, March 1, 2010, an affidavit describing the membership scope of the pool consistent with the standards prescribed in this Part must accompany the certification. Supporting documentation must be submitted that demonstrates that the membership scope possesses homogeneous risk characteristics.

 

STATE OF ILLINOIS

 

CERTIFICATION OF HOMOGENEITY

 

I,		(Name of Trustee)		, a Trustee or Director of		(Name of Workers' Compensation
	Pool)		present this Certification to the Director of Insurance of the State of Illinois
for the period of January 1 through December 31,							.  I certify that:

 

(1)        I have requested the administrator provide all relevant information regarding the homogeneous risk characteristics of the members.

 

(2)        I have reviewed all relevant information regarding the homogeneous risk characteristics of the members, as well as the guidelines relating to homogeneity in Section 107a.08 of the Illinois Insurance Code [215 ILCS 5/107a.08] and 50 Ill. Adm. Code 575.

 

(3)        Based on my knowledge and review of (2) above, I verify that the certification is true, complete and not misleading.

 

(4)        I understand the legal responsibility I have in respect to ensuring that the members exhibit homogeneous risk characteristics.

 

(5)        I certify that the members  do exhibit or  do not exhibit (Please check one) homogeneous risk characteristics relative to the membership scope adopted by the pool.

 

 

 

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Notary Public

(Seal)

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