A bill that could provide a landmark captive framework reform in Illinois has been vetoed by governor Bruce Rauner.
The governor was in support of the updates to Illinois’ captive insurance regulatory structure, but vetoed SB 1737 due to the “concerning” regulatory barriers the legislation imposed on short-term limited-duration health plans (STLDs) and workers’ compensation insurance.
The bill proposed a number of amendments to Illinois Insurance Code’s regulatory framework which would provide a substantially improved environment for companies looking for captive solutions, following the lead of jurisdictions like Vermont, Hawaii and South Carolina.
The bill, which passed by the Illinois General Assembly on 31 May 2018, also proposed a drop in the premium rate on self-procured insurance from 3.5 percent to 0.5 percent of gross premium. It had the support of the state’s Department of Insurance, key industry groups, and multiple large Illinois-based taxpayers.
In the Governor Amendatory Veto Message, Rauner suggested portions of the legislation were “both necessary and wise” and recognised that it updated the captive law “to be more attractive to companies that use that insurance option” and to be “in line with other states, and will help Illinois overcome its competitive disadvantage in attracting the companies that offer this product to Illinois businesses”.
Rauner recommended a number of specific recommendations to change, mostly referring to the restrictions he felt it placed on STLDs and workers’ compensation insurance.
He said: “With these changes, Senate Bill 1737 will have my approval.”