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91_HB1783 LRB9104680JSpc 1 AN ACT to amend the Illinois Insurance Code by changing 2 Section 456. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The Illinois Insurance Code is amended by 6 changing Section 456 as follows: 7 (215 ILCS 5/456) (from Ch. 73, par. 1065.3) 8 Sec. 456. Making of rates. 9 (1) All rates shall be made in accordance with the 10 following provisions: 11 (a) Due consideration shall be given to past and 12 prospective loss experience within and outside this 13 State, to catastrophe hazards, if any, to a reasonable 14 margin for profit and contingencies, to dividends, 15 savings, or unabsorbed premium deposits allowed or 16 returned by companies to their policyholders, members or 17 subscribers, to past and prospective expenses both 18 countrywide and those specially applicable to this State, 19 to underwriting practice and judgment, and to all other 20 relevant factors within and outside this State.;21 (b) The systems of expense provisions included in 22 the rates for use by any company or group of companies 23 may differ from those of other companies or groups of 24 companies to reflect the requirements of the operating 25 methods of theany suchcompany or group with respect to 26 any kind of insurance, or with respect to any subdivision 27 or combination thereof for which subdivision or 28 combination separate expense provisions are applicable.;29 (c) Risks may be grouped by classifications for the 30 establishment of rates and minimum premiums. 31 Classification rates may be modified to produce rates for -2- LRB9104680JSpc 1 individual risks in accordance with rating plans that 2whichmeasure variation in hazards or expense provisions, 3 or both. TheSuchrating plans may measure any 4 differences among risks that have a probable effect upon 5 losses or expenses.;6 (d) Rates shall not be excessive, inadequate, or 7 unfairly discriminatory. 8 (i) A rate in a competitive market is not 9 excessive. A rate in a noncompetitive market is 10 excessive if it is likely to produce a long run 11 profit that is unreasonably high for the insurance 12 provided or if expenses are unreasonably high in 13 relation to the services rendered. 14 (ii) A rate is not inadequate unless thesuch15 rate is clearly insufficient to sustain projected 16 losses and expenses in the class of business to 17 which it applies and the use of thesuchrate has 18 or, if continued, will have the effect of 19 substantially lessening competition or the tendency 20 to create monopoly in any market. 21 (iii) Unfair discrimination exists if, after 22 allowing for practical limitations, price 23 differentials fail to reflect equitably the 24 differences in expected losses and expenses. A rate 25 is not unfairly discriminatory because different 26 premiums result for policyholders with like 27 exposures but different expenses, or like expenses 28 but different loss exposures, so long as the rate 29 reflects the differences with reasonable accuracy. 30 (e) The rating plan shall contain a mandatory offer 31 of a deductible applicable only to the medical benefit 32 under the Workers' Compensation Act. Such deductible 33 offer shall be in a minimum amount of at least $1,000 per 34 accident. -3- LRB9104680JSpc 1 (f) Any rating plan or program shall include a rule 2 permitting 2 or more employers with similar risk 3 characteristics, who participate in a loss prevention 4 program or safety group, to pool their premium and loss 5 experience in determining their rate or premium for such 6 participation in the program. 7 (g) With respect to an employer correctly 8 classified within the construction industry, the amount 9 charged for workers' compensation and employers' 10 liability insurance insuring the employees employed by an 11 employer in any job category or classification shall be 12 based upon hours worked by employees in that job category 13 or classification and shall not be based upon the wages 14 or salaries paid to the employees. 15 (2) Except to the extent necessary to meet the 16 provisions of subdivision (d) of subsection (1) of this 17 Section, uniformity among companies in any matters within the 18 scope of this Section is neither required nor prohibited. 19 (Source: P.A. 82-939.)