(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.

Terms Used In Illinois Compiled Statutes 215 ILCS 5/155.44

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • State: when applied to different parts of the United States, may be construed to include the District of Columbia and the several territories, and the words "United States" may be construed to include the said district and territories. See Illinois Compiled Statutes 5 ILCS 70/1.14

     (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.
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