Illinois Workers' Compensation Commission Operations Fund Surcharge

(215 ILCS 5/416)     Sec. 416. Illinois Workers' Compensation Commission Operations Fund Surcharge.     (a) As of July 30, 2004 (the effective date of Public Act 93-840), every company licensed or authorized by the Illinois Department of Insurance and insuring employers' liabilities arising under the Workers' Compensation Act or the Workers' Occupational Diseases Act shall remit to the Director a surcharge based upon the annual direct written premium, as reported under Section 136 of this Act, of the company in the manner provided in this Section. Such proceeds shall be deposited into the Illinois Workers' Compensation Commission Operations Fund as established in the Workers' Compensation Act. If a company survives or was formed by a merger, consolidation, reorganization, or reincorporation, the direct written premiums of all companies party to the merger, consolidation, reorganization, or reincorporation shall, for purposes of determining the amount of the fee imposed by this Section, be regarded as those of the surviving or new company.     (b) Beginning on July 30, 2004 (the effective date of Public Act 93-840) and on July 1 of each year thereafter through 2023, the Director shall charge an annual Illinois Workers' Compensation Commission Operations Fund Surcharge from every company subject to subsection (a) of this Section equal to 1.01% of its direct written premium for insuring employers' liabilities arising under the Workers' Compensation Act or Workers' Occupational Diseases Act as reported in each company's annual statement filed for the previous year as required by Section 136. Within 15 days after June 5, 2024 (the effective date of Public Act 103-590) and on July 1 of each year thereafter, the Director shall charge an annual Illinois Workers' Compensation Commission Operations Fund Surcharge from every company subject to subsection (a) of this Section equal to 1.092% of its direct written premium for insuring employers' liabilities arising under the Workers' Compensation Act or Workers' Occupational Diseases Act as reported in each company's annual statement filed for the previous year as required by Section 136. The Illinois Workers' Compensation Commission Operations Fund Surcharge shall be collected by companies subject to subsection (a) of this Section as a separately stated surcharge on insured employers at the rate of 1.092% of direct written premium for the surcharge due in 2024 and each year thereafter, plus an additional amount determined under subsection (b-5) beginning in 2026. The Illinois Workers' Compensation Commission Operations Fund Surcharge shall not be collected by companies subject to subsection (a) of this Section from any employer that self-insures its liabilities arising under the Workers' Compensation Act or Workers' Occupational Diseases Act, provided that the employer has paid the Illinois Workers' Compensation Commission Operations Fund Fee pursuant to Section 4d of the Workers' Compensation Act. All sums collected by the Department of Insurance under the provisions of this Section shall be paid promptly after the receipt of the same, accompanied by a detailed statement thereof, into the Illinois Workers' Compensation Commission Operations Fund in the State treasury.     (b-5) As used in this subsection:     "Annual funding target for the year" means $7,000,000 for 2026 and, for each year thereafter, the previous year's annual funding target increased by 3.5%.     "Statewide underwriting gain for the previous year" means the sum of the underwriting gains for all companies that had an underwriting gain for their workers' compensation and excess workers' compensation lines in this State, as reported in the companies' annual statements filed for the previous year under Section 136.     "Underwriting gain" means, if the difference is a positive dollar amount, the difference between direct earned premiums and the sum of the following expenses and fees:         (A) direct losses incurred;         (B) direct defense and cost containment expense     incurred;        (C) commission and brokerage expenses; and         (D) taxes, licenses, and fees.     On or before July 1, 2026 or 15 days after the effective date of this amendatory Act of the 104th General Assembly, whichever is later, and on or before July 1 of each year thereafter, in addition to the amount required by subsections (a) and (b), the Director shall charge an amount to be included in a company's obligation to pay the annual Illinois Workers' Compensation Commission Operations Fund Surcharge under this Section. The additional amount shall be collected from every company subject to subsection (a) that had an underwriting gain for its workers' compensation and excess workers' compensation lines in this State, as reported in the company's annual statement filed for the previous year under Section 136. All provisions of this Section for the administration and enforcement of the portion of the annual Illinois Workers' Compensation Commission Operations Fund Surcharge described in subsection (b) shall apply to the additional amount described in this subsection.     The additional amount included in each company's surcharge for a given year shall be a percentage of the company's underwriting gain for its workers' compensation and excess workers' compensation lines in this State, as reported in the company's annual statement filed for the previous year under Section 136. Each year's percentage shall be calculated as the annual funding target for the year divided by the statewide underwriting gain for the previous year multiplied by 100.     Before collecting the additional amount each year, the Department shall publish a company bulletin demonstrating the calculation of the percentage in accordance with this subsection. The bulletin shall include or contain a hyperlink to download the underlying data from the companies' annual statements that the Department used to perform the calculation.     The additional amount included in the surcharge shall be deposited into the Illinois Workers' Compensation Commission Operations Fund in accordance with the Workers' Compensation Act. If a company survives or was formed by a merger, consolidation, reorganization, or reincorporation, the underwriting gain in this State for all companies that are parties to the merger, consolidation, reorganization, or reincorporation shall, for purposes of determining the additional amount imposed by this subsection, be regarded as those of the surviving or new company.     (c) In addition to the authority specifically granted under Article XXV of this Code, the Director shall have such authority to adopt rules or establish forms as may be reasonably necessary for purposes of enforcing this Section. The Director shall also have authority to defer, waive, or abate the surcharge or any penalties imposed by this Section if in the Director's opinion the company's solvency and ability to meet its insured obligations would be immediately threatened by payment of the surcharge due.     (d) When a company fails to pay the full amount of any annual Illinois Workers' Compensation Commission Operations Fund Surcharge of $100 or more due under this Section, there shall be added to the amount due as a penalty an amount equal to 10% of the deficiency for each month or part of a month that the deficiency remains unpaid.     (e) The Department of Insurance may enforce the collection of any delinquent payment, penalty, or portion thereof by legal action or in any other manner by which the collection of debts due the State of Illinois may be enforced under the laws of this State.     (f) Whenever it appears to the satisfaction of the Director that a company has paid pursuant to this Act an Illinois Workers' Compensation Commission Operations Fund Surcharge in an amount in excess of the amount legally collectable from the company, the Director shall issue a credit memorandum for an amount equal to the amount of such overpayment. A credit memorandum may be applied for the 2-year period from the date of issuance, against the payment of any amount due during that period under the surcharge imposed by this Section or, subject to reasonable rule of the Department of Insurance including requirement of notification, may be assigned to any other company subject to regulation under this Act. Any application of credit memoranda after the period provided for in this Section is void.     (g) Annually, the Governor may direct a transfer of up to 2% of all moneys collected under this Section to the Insurance Financial Regulation Fund. (Source: P.A. 103-590, eff. 6-5-24; 104-417, eff. 8-15-25; 104-792, eff. 8-7-26.)