97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3826

 

Introduced 2/10/2012, by Sen. Kwame Raoul

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/457  from Ch. 73, par. 1065.4
215 ILCS 5/458  from Ch. 73, par. 1065.5
215 ILCS 5/459  from Ch. 73, par. 1065.6
215 ILCS 5/459a new
215 ILCS 5/461  from Ch. 73, par. 1065.8
215 ILCS 5/462  from Ch. 73, par. 1065.9
215 ILCS 5/463  from Ch. 73, par. 1065.10

    Amends the Illinois Insurance Code in the Article concerning workers' compensation and employer's liability insurance rates. Creates the Illinois Compensation Rating Bureau as a quasi-governmental entity. In the provisions concerning rate filings, disapproval of filings, appeal by minority, information that is to be furnished to insureds and hearings and appeals of insureds, and advisory organizations, replaces references of licensed rating organizations with that of the Illinois Compensation Rating Bureau. Provides that the Director of Insurance shall have oversight over the Bureau only as established by law. Provides that every insurer that writes, amends, delivers, issues, or renews any policy of insurance specified under the Article concerning workers' compensation and employer's liability insurance rates has membership in the Bureau. Sets forth the purposes of the Bureau. Provides that the Bureau shall be governed by the Rating Committee. Provides that the Rating Committee shall establish bylaws for the operation of the Bureau which, with amendments thereto, shall be filed with and approved by the Director before they are effective. Deletes certain provisions concerning filings and cooperation among rating organizations and sets forth provisions concerning membership, services, and the furnishing of information.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning insurance.
 
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 Sections 457, 458, 459, 461, 462, and 463 and by
6adding Section 459a as follows:
 
7    (215 ILCS 5/457)  (from Ch. 73, par. 1065.4)
8    Sec. 457. Rate filings.
9    (1) Beginning January 1, 1983, every company shall file
10with the Director every manual of classifications, every manual
11of rules and rates, every rating plan and every modification of
12the foregoing which it intends to use. Such filings shall be
13made not later than 30 days after they become effective. A
14company may satisfy its obligation to make such filings by
15adopting the filing of the Illinois Compensation Rating Bureau
16a licensed rating organization of which it is a member or
17subscriber, filed pursuant to subsection (2) of this Section,
18in total or by notifying the Director in what respects it
19intends to deviate from such filing. Any company adopting a
20pure premium filed by the Illinois Compensation Rating Bureau a
21rating organization pursuant to subsection (2) must file with
22the Director the modification factor it is using for expenses
23and profit so that the final rates in use by such company can

 

 

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1be determined.
2    (2) Beginning January 1, 1983, the Illinois Compensation
3Rating Bureau each licensed rating organization must file with
4the Director every manual of classification, every manual of
5rules and advisory rates, every pure premium which has been
6fully adjusted and fully developed, every rating plan and every
7modification of any of the foregoing which it intends to
8recommend for use to its members and subscribers, not later
9than 30 days after such manual, premium, plan or modification
10thereof takes effect. The Illinois Compensation Rating Bureau
11Every licensed rating organization shall also file with the
12Director the rate classification system, all rating rules,
13rating plans, policy forms, underwriting rules or similar
14materials, and each modification of any of the foregoing which
15it requires its members and subscribers to adhere to not later
16than 30 days before such filings or modifications thereof are
17to take effect. Every such filing shall state the proposed
18effective date thereof and shall indicate the character and
19extent of the coverage contemplated.
20    (3) A filing and any supporting information made pursuant
21to this Section shall be open to public inspection after the
22filing becomes effective.
23(Source: P.A. 82-939.)
 
24    (215 ILCS 5/458)  (from Ch. 73, par. 1065.5)
25    Sec. 458. Disapproval of filings.

 

 

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

 

 

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

 

 

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1the applicant and to every company and rating organization
2which made such filing.
3    If, after such hearing, the Director finds that the filing
4does not meet the requirements of this Article, he shall issue
5an order specifying in what respects he finds that such filing
6fails to meet the requirements of this Article, and stating
7when, within a reasonable period thereafter, such filing shall
8be deemed no longer effective. Copies of said order shall be
9sent to the applicant and to every such company and rating
10organization. Said order shall not affect any contract or
11policy made or issued prior to the expiration of the period set
12forth in said order.
13(Source: P.A. 82-939.)
 
14    (215 ILCS 5/459)  (from Ch. 73, par. 1065.6)
15    Sec. 459. Rating bureau organizations.
16    (1) The Illinois Compensation Rating Bureau is created as a
17quasi-governmental entity. The Director shall have oversight
18over the Bureau only as established by law. Every insurer that
19writes, amends, delivers, issues, or renews any policy of
20insurance specified under Article XXIX of this Code has
21membership in the Bureau.
22    (1.5) The Bureau has the following purposes:
23        (a) to establish, maintain, and administer rules,
24    regulations, classifications, rates, and rating plans to
25    govern the transaction of insurance included in Article

 

 

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1    XXIX of this Code;
2        (b) to cooperate with other rate service organizations
3    and with insurers in the development of rules, rates, and
4    rating plans and insurance policies and forms;
5        (c) to secure and analyze statistical and other data
6    required to accomplish the purposes set forth in this
7    subsection (1.5);
8        (d) to inspect and classify risks;
9        (e) to file with the Director on behalf of its members
10    every manual of classifications, rules, and rates and every
11    rating plan and rating plan modification proposed for use
12    in this State;
13        (f) to assist the Director and insurers in the
14    promotion of safety in industry; and
15        (g) to assist in any matter necessary for the
16    accomplishment of these purposes.
17    A corporation, an unincorporated association, a
18partnership or an individual, whether located within or outside
19this state, may make application to the Director for license as
20a rating organization for such kinds of insurance or
21subdivisions thereof as are specified in its application and
22shall file therewith (a) a copy of its constitution, its
23articles of agreement or association or its certificate of
24incorporation, and of its bylaws, rules and regulations
25governing the conduct of its business, (b) a list of its
26members and subscribers, (c) the name and address of a resident

 

 

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1of this state upon whom notices or orders of the Director or
2process affecting such rating organization may be served and
3(d) a statement of its qualifications as a rating organization.
4If the Director finds that the applicant is competent,
5trustworthy and otherwise qualified to act as a rating
6organization and that its constitution, articles of agreement
7or association or certificate of incorporation, and its bylaws,
8rules and regulations governing the conduct of its business
9conform to the requirements of law, he shall issue a license
10specifying the kinds of insurance or subdivisions thereof for
11which the applicant is authorized to act as a rating
12organization. Every such application shall be granted or denied
13in whole or in part by the Director within sixty days of the
14date of its filing with him. Licenses issued pursuant to this
15Section shall remain in effect for three years unless sooner
16suspended or revoked by the Director. The fee for said license
17shall be twenty-five dollars. Licenses issued pursuant to this
18Section may be suspended or revoked by the Director, after
19hearing upon notice, in the event the rating organization
20ceases to meet the requirements of this subsection. Every
21rating organization shall notify the Director promptly of every
22change in (a) its constitution, its articles of agreement or
23association or its certificate of incorporation, and its
24bylaws, rules and regulations governing the conduct of its
25business, (b) its list of members and subscribers and (c) the
26name and address of the resident of this state designated by it

 

 

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1upon whom notices or orders of the Director or process
2affecting such rating organization may be served.
3    (2) (Blank). Subject to rules and regulations which have
4been approved by the Director as reasonable, each rating
5organization shall permit any company, not a member, to be a
6subscriber to its rating services for any kind of insurance or
7subdivision thereof for which it is authorized to act as a
8rating organization. Notice of proposed changes in such rules
9and regulations shall be given to subscribers. Each rating
10organization shall furnish its rating services without
11discrimination to its members and subscribers. The
12reasonableness of any rule or regulation in its application to
13subscribers, or the refusal of any rating organization to admit
14a company as a subscriber, shall, at the request of any
15subscriber or any such company, be reviewed by the Director at
16a hearing held upon at least ten days' written notice to such
17rating organization and to such subscriber or company. If the
18Director finds that such rule or regulation is unreasonable in
19its application to subscribers, he shall order that such rule
20or regulation shall not be applicable to subscribers. If the
21rating organization fails to grant or reject a company's
22application for subscribership within thirty days after it was
23made, the company may request a review by the Director as if
24the application had been rejected. If the Director finds that
25the company has been refused admittance to the rating
26organization as a subscriber without justification, he shall

 

 

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1order the rating organization to admit the company as a
2subscriber. If he finds that the action of the rating
3organization was justified, he shall make an order affirming
4its action.
5    (3) The Illinois Compensation Rating Bureau No rating
6organization shall not adopt any rule the effect of which would
7be to prohibit or regulate the payment of dividends, savings or
8unabsorbed premium deposits allowed or returned by companies to
9their policyholders, members or subscribers.
10    (4) (Blank). Cooperation among rating organizations or
11among rating organizations and companies in matters within the
12scope of this Article is hereby authorized, provided the
13filings resulting from such cooperation are subject to all the
14provisions of this Article which are applicable to filings
15generally. The Director may review such cooperative activities
16and practices and if, after a hearing, he finds that any such
17activity or practice is unfair or unreasonable or otherwise
18inconsistent with the provisions of this Article, he may issue
19a written order specifying in what respects such activity or
20practice is unfair or unreasonable or otherwise inconsistent
21with the provisions of this Article, and requiring the
22discontinuance of such activity or practice.
23    (5) The Illinois Compensation Rating Bureau A rating
24organization may require members and subscribers to adhere to a
25rate classification system, rating rules, rating plans, policy
26forms, and underwriting rules or similar materials; however, no

 

 

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1insurer may agree with any other insurer or with a rating
2organization to adhere to or use any rate or schedule rating
3plan. For the purposes of this Article, "rate" means the charge
4for insurance per unit of exposure, prior to any application of
5individual risk variations based on loss or expense
6considerations, or a consideration of both, and does not
7include minimum premiums.
8    (6) Two or more insurers having a common ownership or
9operating in this State under common management or control may
10act in concert between or among themselves with respect to
11those activities authorized in this Article as if they were a
12single insurer.
13    (7) The fact that 2 or more insurers consistently or
14intermittently use the same rates is not sufficient in itself
15to support a finding that an illegal agreement exists, and may
16be used only for the purpose of supplementing or explaining
17other direct evidence of the existence of any such agreement.
18(Source: P.A. 82-939.)
 
19    (215 ILCS 5/459a new)
20    Sec. 459a. Operation and control of the Illinois
21Compensation Rating Bureau.
22    (1) The Bureau shall be governed by the Rating Committee.
23The Rating Committee shall establish bylaws for the operation
24of the Bureau that, with amendments thereto, shall be filed
25with and approved by the Director before they are effective.

 

 

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1    (2) The Rating Committee shall consist of 10 members. Two
2members of the Rating Committee shall represent self-insured
3employer interests and shall be appointed by and serve at the
4pleasure of the Governor. Of the remaining 8 members, 4 shall
5be chosen by a majority vote of the members of the Bureau who
6are stock insurers and 4 shall be chosen by a majority vote of
7the members of the Bureau who are mutual insurers. Both stock
8and mutual insurers shall be represented equally on all other
9committees, including any managing committee. Each member of a
10committee shall have one vote, with the Director of Insurance
11deciding the matter in the event of a tie.
12    (3) The services of the Bureau shall be supplied to members
13without discrimination. Each member of the Bureau shall pay an
14equitable share of the cost of operating the Bureau.
15    (4) Upon demand, the Bureau shall furnish to any employer
16upon whose risk a survey has been made and to any insurer full
17information about the survey.
18    (5) The Bureau shall, within a reasonable time after
19receiving a written request and upon payment of a reasonable
20charge, furnish information as to any rate to the insured
21affected by it or to an authorized representative.
 
22    (215 ILCS 5/461)  (from Ch. 73, par. 1065.8)
23    Sec. 461. Appeal by minority. Any member of or subscriber
24to the Illinois Compensation Rating Bureau a rating
25organization may appeal to the Director from the action or

 

 

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1decision of such rating organization in approving or rejecting
2any proposed change in or addition to the filings of such
3rating organization and the Director shall, after a hearing
4held upon not less than ten days' written notice to the
5appellant and to such rating organization, issue an order
6approving the action or decision of such rating organization or
7directing it to give further consideration to such proposal,
8or, if such appeal is from the action or decision of the rating
9organization in rejecting a proposed addition to its filings,
10he may, in the event he finds that such action or decision was
11unreasonable, issue an order directing the rating organization
12to make an addition to its filings, on behalf of its members
13and subscribers, in a manner consistent with his findings,
14within a reasonable time after the issuance of such order.
15    If such appeal is based upon the failure of the rating
16organization to make a filing on behalf of such member or
17subscriber which is based on a system of expense provisions
18which differs, in accordance with the right granted in
19subdivision (b) of subsection (1) of Section 456, from the
20system of expense provisions included in a filing made by the
21rating organization, the Director shall, if he grants the
22appeal, order the rating organization to make the requested
23filing for use by the appellant. In deciding such appeal the
24Director shall apply the standards set forth in Section 456.
25(Source: Laws 1947, p. 1098.)
 

 

 

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1    (215 ILCS 5/462)  (from Ch. 73, par. 1065.9)
2    Sec. 462. Information to be furnished insureds - Hearings
3and appeals of insureds. The Illinois Compensation Rating
4Bureau Every rating organization, and every company which does
5not adopt the rates of the Illinois Compensation Rating Bureau
6a rating organization, shall, within a reasonable time after
7receiving written request therefor, furnish to any insured
8affected by a rate made by it, or to the authorized
9representative of such insured, in readily understandable
10language, all pertinent information as to such rate as
11specified in rules adopted by the Department.
12    The Illinois Compensation Rating Bureau Every rating
13organization, and every company which does not adopt the rates
14of the Illinois Compensation Rating Bureau a rating
15organization, shall provide within this state reasonable means
16whereby any person aggrieved by the application of its rating
17system may be heard, in person or by his authorized
18representative, on his written request to review the manner in
19which such rating system has been applied in connection with
20the insurance afforded him. If the Illinois Compensation Rating
21Bureau rating organization or company fails to grant or reject
22such request within thirty days after it is made, the applicant
23may proceed in the same manner as if his application had been
24rejected. Any party affected by the action of the Illinois
25Compensation Rating Bureau such rating organization or such
26company on such request may, within thirty days after written

 

 

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1notice of such action, appeal to the Director, who, after a
2hearing held upon not less than ten days' written notice to the
3appellant and to such rating organization or company, may
4affirm or reverse such action.
5(Source: P.A. 82-939.)
 
6    (215 ILCS 5/463)  (from Ch. 73, par. 1065.10)
7    Sec. 463. Advisory organizations.
8    (1) Every group, association or other organization of
9companies whether located within or outside this state, which
10assists companies which make their own filings or the Illinois
11Compensation Rating Bureau rating organizations in rate
12making, by the collection and furnishing of loss or expense
13statistics, or by the submission of recommendations, but which
14does not make filings under this Article, shall be known as an
15advisory organization.
16    (2) Every advisory organization shall file with the
17Director (a) a copy of its constitution, its articles of
18agreement or association or its certificate of incorporation
19and of its by-laws, rules and regulations governing its
20activities, (b) a list of its members, (c) the name and address
21of a resident of this state upon whom notices or orders of the
22Director or process issued at his direction may be served, and
23(d) an agreement that the Director may examine such advisory
24organization in accordance with the provisions of Section 465
25of this Article.

 

 

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1    (3) If, after a hearing, the Director finds that the
2furnishing of such information or assistance involves any act
3or practice which is unfair or unreasonable or otherwise
4inconsistent with the provisions of this Article, he may issue
5a written order specifying in what respects such act or
6practice is unfair or unreasonable or otherwise inconsistent
7with the provisions of this Article, and requiring the
8discontinuance of such act or practice.
9    (4) No company which makes its own filings nor any rating
10organization shall support its filings by statistics or adopt
11rate making recommendations, furnished to it by an advisory
12organization which has not complied with this Section or with
13an order of the Director involving such statistics or
14recommendations issued under subsection (3) of this Section. If
15the Director finds such company or rating organization to be in
16violation of this subsection he may issue an order requiring
17the discontinuance of such violation.
18(Source: Laws 1947, p. 1098.)