Illinois Administrative Code
Title 50 - INSURANCE
Part 2909 - WORKERS' COMPENSATION LARGE DEDUCTIBLE BUSINESS
Section 2909.40 - Collateral Requirements
Current through Register Vol. 48, No. 12, March 22, 2024
a) Exempt insurers are not required to comply with the requirements of this Part.
b) As provided in this Part, every nonexempt insurer writing workers' compensation policies that are subject to a large deductible agreement covering employees located in Illinois must require full collateralization of the policyholders' obligations under the agreement, including policyholder obligations for employees located in other states.
c) If the collateral is in the form of a surety bond, it shall be issued by a company that is authorized to transact business by the Department and whose strength and size ratings from A.M. Best Company are not less than "A" and "V", respectively, shall contain an evergreen clause and cannot be cancelled or nonrenewed without 60 days' notice to the nonexempt insurer. The nonexempt insurer shall require the policyholder to replace a cancelled or nonrenewed surety bond with collateral that meets the requirements of this Section.
d) If the collateral is a letter of credit, it must be clean, irrevocable, contain an evergreen clause and be issued by a financial institution with an office physically located within Illinois and whose deposits are federally insured. The nonexempt insurer shall require the policyholder to replace any nonrenewed letter of credit with collateral that meets the requirements of this Section.