NAIFA Illinois Legislative Update

    By: Phil Lackman

    August 2017 - Governor Acts on Insurance Related Bills

    Governor Rauner has acted on several insurance related bills late last week. The following are the most significant:

    Unclaimed Life Insurance
    Legislation initiated by State Treasurer Frerichs, HB 302 (Martwick/Collins), amends the Unclaimed Life Insurance Benefits Act (enacted in 2016) to require insurers to retroactively cross-check lapsed or terminated policies with the Social Security Master Death File, back to the year 2000. The original legislation passed last year required insurers to do this on a proactive basis.

    The legislation was opposed by the Illinois Life Insurance Council and our Agent Broker Coalition. Fortunately, the Governor used an amendatory veto to require life insurers to search for policies in force anytime on or after January 1, 2012. This change mirrors the current requirement that insurers keep lapsed or terminated policy records for the current year, plus the five prior years.

    The Governor’s changes are supported by our Agent Broker Coalition, but the Illinois House has not accepted an amendatory veto from any Governor for years. The General Assembly may override the Governor’s veto or accept it. If they take no action, the bill dies.

    Health Insurance
    HB 2959 (Fine/Biss) imposes a state prohibition on preexisting conditions for individual and group health insurance. The bill exempts short-term travel, disability income, long-term care, accident only and limited or specified disease policies. Effective 1/1/2018.

    HB 2721 (Fine/Mulroe) mandates coverage for treatment of pediatric autoimmune neuropsychiatric disorders (PANDAS) under individual and group health insurance. Effective 7/18/2017.

    HB 2957 (Fine/Mulroe) mandates individual and group policies that provide coverage for prescription drugs shall provide synchronization (coordination of two or more different refills) of prescription drug refills at least once per year. Effective 8/8/2017.

    Workers Compensation
    In addition to his earlier veto of HB 2622, which would have created a state-run work comp company, the Governor also vetoed HB 2525 (Hoffman/Raoul), which would have imposed rate regulation on all work comp companies writing in Illinois. Both bills would have done nothing to address the underlying cost drivers in the system and both were opposed by our Agent Broker Coalition, insurers, and employers. We applaud the Governor for taking this common-sense action.

    Mandatory Auto Insurance
    The Governor signed HB 2610 (D’Amico/Muñoz), which authorizes the Secretary of State to create a cloud-based system to verify compliance with Illinois’ mandatory auto liability law. The program will be operated by a third-party vendor and, if implemented as envisioned, will provide a more effective enforcement mechanism for law enforcement, the judiciary and insurers.

    IIA of Illinois served on the task force that recommended the system and supported the legislation. Although the bill takes effect January 1, 2018, the program is not expected to be operational until July 2019.

    HB 3045 (Harris/McConchie) authorizes the Secretary of State to send random verification of minimum liability auto coverage via email in addition to U.S. mail. Effective 1/1/2018.

    Arbitration
    HB 1444 (Haine/Lang) repeals provisions concerning mandatory arbitration of physical damage subrogation claims under $2,500. The law had been ruled unconstitutional. Effective 8/24/2017.