Credit Scoring, Nonrenewal Bills Highlight of Ill. Legislative Session

Legislation dealing with commercial lines nonrenewals, fee increases and credit scoring were among the top insurance-related bills that passed the 2003 Illinois General Assembly, which adjourned May 31.

“The legislature dealt with a number of insurance issues this session, and the bills that passed represent a mixed bag for the industry and consumers,” said Laura Kotelman, counsel for the National Association of Independent Insurers (NAII).

The general assembly adjourned on May 31, 2003 and will return in November for the fall veto session. The governor has 60 days to sign bills into law. If he does nothing, they are automatically enacted.

Among the insurance-related bills that passed are:
— H.B. 3661, on commercial lines nonrenewals, which implements some much-needed changes to current Illinois law. Insurance agents originally introduced S.B. 559 to address a specific problem that arose due to differing interpretations of how the statute treats commercial lines nonrenewals. The industry added its legislative fix to deal with the Guillen v. Potomac decision and material changes.

— S.B. 1207, the “vexatious delay” bill, which amends the Illinois Insurance Code to increase the potential insurer penalty from 25 percent to 60 percent of the loss amount, and from $25,000 to $60,000, for unreasonable delay in claims settlement. The bill also increases the binding arbitration levels from $20,000 to $50,000 per person, and from $40,000 to $100,000 per occurrence for disputes arising from uninsured motorist coverage. S.B. 1207’s final version represented a compromise between several bar associations and several of the major insurers.

— H.B. 1640, the credit scoring bill based on the NCOIL model, passed the Senate on Tuesday, May 6, and will be sent to the governor for his consideration. The NAII amendment dealing with filing of treatment for no-hits information with the Department is contained in H.B. 3661, which is also on the way to the governor.

The industry also faces several fee increases. These include the following:

— Motor vehicle reports will double from $6 to $12. MVR fees are collected by the Secretary of State.

— Financial regulatory fees are those paid by the companies to cover the cost of financial audits. The governor proposed increasing the fees by 50 percent and increasing the Affiliated Group Maximum from $100,000 to $250,000.

— A 1.5 percent surcharge on workers’ compensation premiums was enacted to fund the Industrial Commission.

— The surplus lines tax was increased from 3 percent to 3.5 percent.

— Insurance producers will also see several fee increases.

One significant bill that did not pass was H.B. 1191, the “sunshine in litigation” bill, which would have prohibited court orders and judgments from concealing alleged public hazards. However, the issue is not off the table. It is likely that some form of “anti-protective orders” legislation will be passed due to the considerable influence of the trial lawyers who support the bill. It is likely there will be a similar bill in the fall legislative session.