Budget Dominates Ill. Special Sessions

Although the 2004 Illinois legislative session continues into overtime with several insurance issues left on the table, it is unlikely that legislators will focus on anything but restoring a viable budget, according to a leading industry lobby.

“Although bills dealing with medical malpractice reform, workers’ compensation reform and a potential tax on surplus lines transactions are still pending, the pressing need to achieve an agreement on budget overshadows them,” said Laura Kotelman, regional manager and senior counsel for the Property Casualty Insurers Association of America (PCI).

June 30 marked the end of the fiscal year, and although the Legislature passed a temporary budget, no final 2005 fiscal year budget is in place.

Although legislators failed to pass S.B. 2241, the medical malpractice reform bill, the House moved the bill to a second reading and out of the Rules Committee extending the passage deadline to July 15, thus keeping the door open for passage. “Some reforms are no doubt a part of the budget negotiations, and medical malpractice reform is a high priority for both Republicans and Democrats, especially those from the Chicago metropolitan area hardest hit with the crisis,” Kotelman said.

While the current version of the bill includes caps on noneconomic damages, these will most likely be amended out of the bill, keeping text that amends the insurance code and provides more oversight of medical liability insurers rates.

An alternative bill, H.B. 4847, is supported by much of the health care community in Illinois, including the Illinois State Medical Society, but is awaiting House concurrence with a Senate amendment. The final action deadline for H.B. 4847 was also extended to July 15.

H.B. 805, the workers’ compensation reform package, includes revisions to penalties allowing for good and just cause for delay. While the bill includes a $30 per day penalty, the attorney fees provision was removed. Business groups are split on its support, and the City of Chicago opposes the bill. Insurer associations have maintained a neutral position.

H.B. 864, which deals with taxation of surplus lines insurers, contained a provision to impose apportionment of the corporate income tax upon surplus lines insurers. A provision suggesting that companies accepting exported business be required to file and pay the corresponding Illinois corporate tax makes the bill unacceptable to PCI, which would be willing to go to court should it pass, Kotelman said.

Additionally, several insurance-related bills are on the Governor’s desk awaiting signature, although observers do not expect him to sign anything soon. He has 60 days to sign a bill into law once it is sent to him; if he fails to take action, the bill automatically becomes law.

S.B. 2491 is a PCI initiative that allows for electronic notification of agents, brokers, mortgagees, lien holders and premium finance companies, which is effective January 1, 2005. PCI has sent a letter to the Governor urging him to sign the bill, which was sent to him on June 2.
S.B. 2238, which deals with uninsured and underinsured (UM/UIM) driver coverage, It deletes a sentence in the statute that provides that the maximum amount payable by the underinsured motorist coverage carrier shall not exceed the amount by which the limits of the UIM coverage exceeds the limits of the bodily injury liability insurance of the underinsured driver. This change will affect policies issued on or after Dec. 1, 2004.

The bill also stipulates that consumer choice on the amount of UIM coverage can be implemented even if the insurer receives the selection/rejection form required by statute after the policy is issued. This change was necessary to remedy the Illinois Supreme Court’s decision in Lee v. John Deere and will become effective upon the Governor’s signature.

S.B. 3077 amends the Mortgage Insurance Limitation and Notification Act. It prohibits a lender from requiring a borrower to provide hazard insurance coverage against risks to the improvements on the property in an amount exceeding replacement value. An amendment removed the requirement that the lender’s disclosure to the borrower be in writing. The bill will become effective immediately after the Governor signs it.

S.B. 2122 requires automobile registration applications to include proof of liability insurance. Provisions regarding uniform insurance cards were stricken from the bill, which becomes effective January 1, 2005.

H.B. 5175 authorizes the Secretary of State to adopt rules requiring that reasonable measures be taken to prevent the fraudulent production of insurance cards, effective January 1, 2005.

H.B. 393 provides that nonprofit risk organizations are exempt from taxation and allows domestic mutual companies or reciprocals, including risk retention groups, to be organized as nonprofit risk organizations to provide insurance for nonprofits. This applies only to casualty, fidelity, surety, fire, and marine insurance. The bill, which was brought by a PCI member company, is effective January 1, 2005.

H.B. 4712 revises the Consumer Fraud and Deceptive Business Practices Act and prevents an entity from printing an individual’s Social Security number on any materials that are mailed to the individual, unless required by state or federal law; effective July 1, 2006.

S.B. 2560 provides that surplus line insurance may be procured from unauthorized insurers or domestic surplus line insurers as defined. PCI supported this bill, which is effective immediately.

H.B. 4481 adds a representative of the paint industry to the Lead-Safe Housing Advisory Council. An insurance representative is currently on the Council; effective immediately.

H.B. 5928 is the NCIGF task force package model amendment addressing large deductibles in insurance insolvency. This is an industry initiative supported by PCI; effective immediately.

H.B. 3981 establishes the Commonsense Consumption Act which prohibits legal action against food sellers for damages or injunctive relief based on a claim of injury resulting from a person’s weight gain, obesity, or any related health condition; effective January 1, 2005.

Topics Carriers Excess Surplus Illinois