Bill Amendment: IL HB3211 | 2015-2016 | 99th General Assembly
NOTE: For additional amemendments please see the Bill Drafting List
Bill Title: TREASURER-WARRANTS & PAYMENTS
Status: 2016-06-30 - Rule 19(a) / Re-referred to Rules Committee [HB3211 Detail]
Download: Illinois-2015-HB3211-Senate_Amendment_002.html
Bill Title: TREASURER-WARRANTS & PAYMENTS
Status: 2016-06-30 - Rule 19(a) / Re-referred to Rules Committee [HB3211 Detail]
Download: Illinois-2015-HB3211-Senate_Amendment_002.html
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1 | AMENDMENT TO HOUSE BILL 3211
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2 | AMENDMENT NO. ______. Amend House Bill 3211, AS AMENDED, by | ||||||
3 | replacing everything after the enacting clause with the | ||||||
4 | following:
| ||||||
5 | "Section 5. The Illinois Insurance Code is amended by | ||||||
6 | changing Sections 193, 531.03, 531.05, 531.07, 531.08, 531.09, | ||||||
7 | 531.10, and 531.14 as follows:
| ||||||
8 | (215 ILCS 5/193) (from Ch. 73, par. 805)
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9 | Sec. 193. Duties of
Director as liquidator; sales; | ||||||
10 | reinsurance. | ||||||
11 | (1) Upon the entry of an order directing liquidation, the | ||||||
12 | Director shall
immediately proceed to liquidate the property, | ||||||
13 | business, and affairs of the
company. The Director is hereby | ||||||
14 | authorized to deal with the
property, business, and affairs of
| ||||||
15 | the company in his name as Director, or, if the court shall so | ||||||
16 | order, in
the name of the company.
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1 | (2) The Director may, subject to the approval of the court, | ||||||
2 | sell
or otherwise
dispose of the real and personal property, or | ||||||
3 | any part thereof, and sell or
compromise all debts or claims | ||||||
4 | owing to
the
company, except that
whenever the value of any | ||||||
5 | real or personal property or the amount of any debt
owing to | ||||||
6 | the
company does not exceed $25,000, the Director may sell, | ||||||
7 | dispose
of,
compromise, or compound the
same upon such terms as | ||||||
8 | the Director deems to
be in the best interest of the company
| ||||||
9 | without obtaining approval of the court.
| ||||||
10 | (3) The Director may bring any action, claim, suit, or | ||||||
11 | proceeding
against any director or officer of the company or | ||||||
12 | against any other person
with respect to that person's dealings | ||||||
13 | with the company including, but not
limited to, prosecuting any | ||||||
14 | action, claim, suit, or proceeding on behalf of the
creditors, | ||||||
15 | members, policyholders, or shareholders of
the company. | ||||||
16 | Nothing in this subsection shall be construed to affect the
| ||||||
17 | standing of the Illinois Insurance Guaranty Fund, the Illinois | ||||||
18 | Life and Health
Insurance Guaranty Association, or the Illinois | ||||||
19 | Health Maintenance Organization
Guaranty Association to sue or | ||||||
20 | be sued under applicable law.
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21 | (4) In order to preserve so far as possible the rights and | ||||||
22 | interests of
the policyholders of the company whose contracts | ||||||
23 | were cancelled by the
liquidation order and of such other | ||||||
24 | creditors as may be possible, the
Director may solicit a | ||||||
25 | contract or contracts whereby a solvent company or
companies | ||||||
26 | will agree to assume in whole, or in part, or upon a modified
|
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| |||||||
1 | basis, the liabilities owing to said former policyholders or | ||||||
2 | creditors. The
Director may, subject to paragraph (h) of | ||||||
3 | subsection (11) of Section 531.08 531.08(h) of this Code or | ||||||
4 | Section 6-8 of
the Health Maintenance Organization Act, cede or | ||||||
5 | reinsure
all or so much as may be necessary of the
in-force | ||||||
6 | business to another company using assets of the liquidated | ||||||
7 | company
to pay therefor in preference to satisfying other | ||||||
8 | obligations or creditors.
The Director may assign any rights or | ||||||
9 | interests of the company to receive
reinsurance proceeds for | ||||||
10 | losses to the Illinois Life and Health Insurance
Guaranty | ||||||
11 | Association, the Illinois Health Maintenance Organization | ||||||
12 | Guaranty
Association or any similar organization in any other | ||||||
13 | state. If,
after a full hearing upon a petition filed by the | ||||||
14 | Director, the court
shall find that the Director endeavored to | ||||||
15 | obtain the best contract for the
benefit of said parties in | ||||||
16 | interest, and if the said Director shall report
to the court | ||||||
17 | that he is ready and willing to enter into a contract and
| ||||||
18 | submit a copy thereof to the court, the court shall examine the | ||||||
19 | procedure
and acts of the Director, and if the court shall find | ||||||
20 | that the best
possible contract in the interests of said | ||||||
21 | parties has been obtained and
that it is best for the interests | ||||||
22 | of said parties that said contract be
entered into, the court | ||||||
23 | shall by written order approve the acts of the
Director and | ||||||
24 | authorize him to execute said contract.
| ||||||
25 | (5) In recognition of the rights of policyholders whose | ||||||
26 | "claims
made" contracts were cancelled by the liquidation |
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| |||||||
1 | order, he may, in his
discretion, permit such policyholders to | ||||||
2 | purchase an extended discovery
period which is subject to the | ||||||
3 | limitations in this Article. The
policyholder shall pay to the | ||||||
4 | liquidator a premium which is appropriate for
the rights | ||||||
5 | purchased as determined by the liquidator and approved by the
| ||||||
6 | court. No extended discovery period purchased before or after | ||||||
7 | the entry of
the liquidation order shall extend the time to | ||||||
8 | file claims as set by the
court pursuant to Section 208 of this | ||||||
9 | Code. Claims accruing by virtue of
such extended discovery | ||||||
10 | period shall be treated as any other claim under
Article XXXIV | ||||||
11 | of this Code, and shall be subject to the limitations,
| ||||||
12 | exclusions and conditions in the Illinois Insurance Guaranty | ||||||
13 | Fund Act and
in the laws governing similar organizations in | ||||||
14 | other states.
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15 | (6) The Director is authorized to cancel policies, bonds, | ||||||
16 | and contracts of
insurance subject to court approval.
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17 | (7) All persons, companies, and entities shall immediately | ||||||
18 | turn over to
the Director all unearned premium that has been | ||||||
19 | collected by or on behalf of
the company and all earned premium | ||||||
20 | owing the company unless otherwise directed
in writing by the | ||||||
21 | Director or by court order. Within 30 days of the date of a
| ||||||
22 | written request of
the Director, those persons, companies, and | ||||||
23 | entities shall
submit affidavits verifying amounts collected | ||||||
24 | by, on behalf
of, or due and owing the company and further | ||||||
25 | shall provide copies of all
premium fund trust account | ||||||
26 | information and such other applicable documentation
as |
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1 | requested by the Director. Nothing in this subsection shall be | ||||||
2 | construed to
affect the rights of (i) the Illinois Life and | ||||||
3 | Health Insurance Guaranty
Association to collect premium under | ||||||
4 | subsection (4) item (6) of Section 531.08 of this Code or
(ii) | ||||||
5 | the Illinois Health Maintenance Organization Guaranty | ||||||
6 | Association to
collect premium under item (11) of Section 6-8 | ||||||
7 | of the Health Maintenance
Organization Act.
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8 | (8) The amount recoverable by the Director from a reinsurer | ||||||
9 | shall not be
reduced or diminished as a result of the entry of | ||||||
10 | an order of liquidation
notwithstanding any provision in the | ||||||
11 | reinsurance contract or other such
agreement. Payment made by a | ||||||
12 | reinsurer to or on behalf of an insured of the
company shall | ||||||
13 | not diminish the reinsurer's obligation to the company except
| ||||||
14 | when the reinsurance agreement lawfully provides for payment to | ||||||
15 | or on behalf of
the company's insured by the reinsurer. All | ||||||
16 | reinsurance contracts to which the
company is a party, which do
| ||||||
17 | not contain the provisions required with respect to the | ||||||
18 | obligation of a
reinsurer in the event of insolvency of the | ||||||
19 | reinsured to obtain credit for
reinsurance or pursuant to other | ||||||
20 | applicable statutes, shall contain or be
construed to contain | ||||||
21 | all of the following provisions:
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22 | (a) Upon the entry of an order of liquidation and | ||||||
23 | notwithstanding the
Director's failure to pay all or a | ||||||
24 | portion of a claim, the reinsurance
obligation shall be due | ||||||
25 | and owing to the Director on the
basis of claims allowed in | ||||||
26 | the liquidation proceeding. The reinsurer
shall submit the |
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1 | amounts due and owing directly to the company as ceding
| ||||||
2 | insurer or to the Director.
| ||||||
3 | (b) The Director shall give written notice or arrange | ||||||
4 | for the giving of
written notice to reinsurers or their | ||||||
5 | agents of the pendency of a claim against
the
company | ||||||
6 | indicating the policy or bond reinsured within a reasonable | ||||||
7 | time after
the claim is filed. The reinsurer may interpose, | ||||||
8 | at its own expense, in the
proceeding where the claim is to | ||||||
9 | be adjudicated, any defenses that it may deem
available to | ||||||
10 | the company or the Director.
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11 | (Source: P.A. 88-297; 89-206, eff. 7-21-95.)
| ||||||
12 | (215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
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13 | Sec. 531.03. Coverage and limitations.
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14 | (1) This Article shall provide
coverage for the policies | ||||||
15 | and contracts specified in paragraph (2) of this
Section:
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16 | (a) to persons who, regardless of where they reside | ||||||
17 | (except for
non-resident certificate holders under group | ||||||
18 | policies or contracts), are the
beneficiaries, assignees | ||||||
19 | or payees of the persons covered under subparagraph
(1)(b), | ||||||
20 | and
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21 | (b) to persons who are owners of or certificate holders | ||||||
22 | under the policies or contracts (other than unallocated | ||||||
23 | annuity contracts and structured settlement annuities) and | ||||||
24 | in each case who: | ||||||
25 | (i) are residents; or |
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1 | (ii) are not residents, but only under all of the | ||||||
2 | following conditions: | ||||||
3 | (A) the insurer that issued the policies or | ||||||
4 | contracts is domiciled in this State; | ||||||
5 | (B) the states in which the persons reside have | ||||||
6 | associations similar to the Association created by | ||||||
7 | this Article; | ||||||
8 | (C) the persons are not eligible for coverage | ||||||
9 | by an association in any other state due to the | ||||||
10 | fact that the insurer was not licensed in that | ||||||
11 | state at the time specified in that state's | ||||||
12 | guaranty association law. | ||||||
13 | (c) For unallocated annuity contracts specified in | ||||||
14 | subsection (2), paragraphs (a) and (b) of this subsection | ||||||
15 | (1) shall not apply and this Article shall (except as | ||||||
16 | provided in paragraphs (e) and (f) of this subsection) | ||||||
17 | provide coverage to: | ||||||
18 | (i) persons who are the owners of the unallocated | ||||||
19 | annuity contracts if the contracts are issued to or in | ||||||
20 | connection with a specific benefit plan whose plan | ||||||
21 | sponsor has its principal place of business in this | ||||||
22 | State; and | ||||||
23 | (ii) persons who are owners of unallocated annuity | ||||||
24 | contracts issued to or in connection with government | ||||||
25 | lotteries if the owners are residents. | ||||||
26 | (d) For structured settlement annuities specified in |
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1 | subsection (2), paragraphs (a) and (b) of this subsection | ||||||
2 | (1) shall not apply and this Article shall (except as | ||||||
3 | provided in paragraphs (e) and (f) of this subsection) | ||||||
4 | provide coverage to a person who is a payee under a | ||||||
5 | structured settlement annuity (or beneficiary of a payee if | ||||||
6 | the payee is deceased), if the payee: | ||||||
7 | (i) is a resident, regardless of where the contract | ||||||
8 | owner resides; or | ||||||
9 | (ii) is not a resident, but only under both of the | ||||||
10 | following conditions: | ||||||
11 | (A) with regard to residency: | ||||||
12 | (I) the contract owner of the structured | ||||||
13 | settlement annuity is a resident; or | ||||||
14 | (II) the contract owner of the structured | ||||||
15 | settlement annuity is not a resident but the | ||||||
16 | insurer that issued the structured settlement | ||||||
17 | annuity is domiciled in this State and the | ||||||
18 | state in which the contract owner resides has | ||||||
19 | an association similar to the Association | ||||||
20 | created by this Article; and | ||||||
21 | (B) neither the payee or beneficiary nor the | ||||||
22 | contract owner is eligible for coverage by the | ||||||
23 | association of the state in which the payee or | ||||||
24 | contract owner resides. | ||||||
25 | (e) This Article shall not provide coverage to: | ||||||
26 | (i) a person who is a payee or beneficiary of a |
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1 | contract owner resident of this State if the payee or | ||||||
2 | beneficiary is afforded any coverage by the | ||||||
3 | association of another state; or | ||||||
4 | (ii) a person covered under paragraph (c) of this | ||||||
5 | subsection (1), if any coverage is provided by the | ||||||
6 | association of another state to that person. | ||||||
7 | (f) This Article is intended to provide coverage to a | ||||||
8 | person who is a resident of this State and, in special | ||||||
9 | circumstances, to a nonresident. In order to avoid | ||||||
10 | duplicate coverage, if a person who would otherwise receive | ||||||
11 | coverage under this Article is provided coverage under the | ||||||
12 | laws of any other state, then the person shall not be | ||||||
13 | provided coverage under this Article. In determining the | ||||||
14 | application of the provisions of this paragraph in | ||||||
15 | situations where a person could be covered by the | ||||||
16 | association of more than one state, whether as an owner, | ||||||
17 | payee, beneficiary, or assignee, this Article shall be | ||||||
18 | construed in conjunction with other state laws to result in | ||||||
19 | coverage by only one association.
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20 | (2)(a) This Article shall provide coverage to the persons
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21 | specified in paragraph (l) of this Section for direct, (i)
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22 | nongroup life, health, annuity and
supplemental policies, or | ||||||
23 | contracts, (ii) for
certificates under direct group policies or | ||||||
24 | contracts, (iii) for unallocated
annuity contracts and (iv) for | ||||||
25 | contracts to furnish
health care services and subscription | ||||||
26 | certificates for medical or health
care services issued by |
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1 | persons licensed to transact insurance business
in this State | ||||||
2 | under the Illinois Insurance Code.
Annuity contracts and | ||||||
3 | certificates under group annuity contracts include
but are not | ||||||
4 | limited to guaranteed investment contracts, deposit
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5 | administration contracts, unallocated funding agreements, | ||||||
6 | allocated funding
agreements, structured settlement | ||||||
7 | agreements, lottery contracts
and any immediate or deferred | ||||||
8 | annuity contracts.
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9 | (b) This Article shall not provide coverage for:
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10 | (i) that portion of a policy or contract not guaranteed | ||||||
11 | by the insurer, or under which the risk is borne by the | ||||||
12 | policy or contract owner;
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13 | (ii) any such policy or contract or part thereof | ||||||
14 | assumed by the impaired
or insolvent insurer under a | ||||||
15 | contract of reinsurance, other than reinsurance
for which | ||||||
16 | assumption certificates have been issued;
| ||||||
17 | (iii) any portion of a policy or contract to the extent | ||||||
18 | that the rate of interest on which it is based or the | ||||||
19 | interest rate, crediting rate, or similar factor is | ||||||
20 | determined by use of an index or other external reference | ||||||
21 | stated in the policy or contract employed in calculating | ||||||
22 | returns or changes in value:
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23 | (A) averaged over the period of 4 years prior to | ||||||
24 | the date on which the member insurer becomes an | ||||||
25 | impaired or insolvent insurer under this Article, | ||||||
26 | whichever is earlier, exceeds the rate of interest |
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1 | determined by subtracting 2 percentage points from | ||||||
2 | Moody's Corporate Bond Yield Average averaged for that | ||||||
3 | same 4-year period or for such lesser period if the | ||||||
4 | policy or contract was issued less than 4 years before | ||||||
5 | the member insurer becomes an impaired or insolvent | ||||||
6 | insurer under this Article, whichever is earlier; and
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7 | (B) on and after the date on which the member | ||||||
8 | insurer becomes an impaired or insolvent insurer under | ||||||
9 | this Article, whichever is earlier, exceeds the rate of | ||||||
10 | interest determined by subtracting 3 percentage points | ||||||
11 | from Moody's Corporate Bond Yield Average as most | ||||||
12 | recently available;
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13 | (iv) any unallocated annuity contract issued to or in | ||||||
14 | connection with a benefit plan protected under the federal | ||||||
15 | Pension Benefit Guaranty Corporation, regardless of | ||||||
16 | whether the federal Pension Benefit Guaranty Corporation | ||||||
17 | has yet become liable to make any payments with respect to | ||||||
18 | the benefit plan;
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19 | (v) any portion of any unallocated annuity contract | ||||||
20 | which is not issued
to or in connection with a specific | ||||||
21 | employee, union or association of
natural persons benefit | ||||||
22 | plan or a government lottery;
| ||||||
23 | (vi) an obligation that does not arise under the | ||||||
24 | express written terms of the policy or contract issued by | ||||||
25 | the insurer to the contract owner or policy owner, | ||||||
26 | including without limitation: |
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1 | (A) a claim based on marketing materials; | ||||||
2 | (B) a claim based on side letters, riders, or other | ||||||
3 | documents that were issued by the insurer without | ||||||
4 | meeting applicable policy form filing or approval | ||||||
5 | requirements; | ||||||
6 | (C) a misrepresentation of or regarding policy | ||||||
7 | benefits; | ||||||
8 | (D) an extra-contractual claim; or | ||||||
9 | (E) a claim for penalties or consequential or | ||||||
10 | incidental damages;
| ||||||
11 | (vii) any stop-loss insurance, as defined in clause (b) | ||||||
12 | of Class 1 or
clause (a) of Class 2 of Section 4, and | ||||||
13 | further defined in subsection (d) of
Section 352;
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14 | (viii) any policy or contract providing any hospital, | ||||||
15 | medical, prescription drug, or other health care benefits | ||||||
16 | pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 | ||||||
17 | of Title 42 of the United States Code (commonly known as | ||||||
18 | Medicare Part C & D) or any regulations issued pursuant | ||||||
19 | thereto; | ||||||
20 | (ix) any portion of a policy or contract to the extent | ||||||
21 | that the assessments required by Section 531.09 of this | ||||||
22 | Code with respect to the policy or contract are preempted | ||||||
23 | or otherwise not permitted by federal or State law; | ||||||
24 | (x) any portion of a policy or contract issued to a | ||||||
25 | plan or program of an employer, association, or other | ||||||
26 | person to provide life, health, or annuity benefits to its |
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1 | employees, members, or others to the extent that the plan | ||||||
2 | or program is self-funded or uninsured, including, but not | ||||||
3 | limited to, benefits payable by an employer, association, | ||||||
4 | or other person under: | ||||||
5 | (A) a multiple employer welfare arrangement as | ||||||
6 | defined in 29 U.S.C. Section 1002 29 U.S.C. Section | ||||||
7 | 1144 ; | ||||||
8 | (B) a minimum premium group insurance plan; | ||||||
9 | (C) a stop-loss group insurance plan; or | ||||||
10 | (D) an administrative services only contract; | ||||||
11 | (xi) any portion of a policy or contract to the extent | ||||||
12 | that it provides for: | ||||||
13 | (A) dividends or experience rating credits; | ||||||
14 | (B) voting rights; or | ||||||
15 | (C) payment of any fees or allowances to any | ||||||
16 | person, including the policy or contract owner, in | ||||||
17 | connection with the service to or administration of the | ||||||
18 | policy or contract; | ||||||
19 | (xii) any policy or contract issued in this State by a | ||||||
20 | member insurer at a time when it was not licensed or did | ||||||
21 | not have a certificate of authority to issue the policy or | ||||||
22 | contract in this State; | ||||||
23 | (xiii) any contractual agreement that establishes the | ||||||
24 | member insurer's obligations to provide a book value | ||||||
25 | accounting guaranty for defined contribution benefit plan | ||||||
26 | participants by reference to a portfolio of assets that is |
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1 | owned by the benefit plan or its trustee, which in each | ||||||
2 | case is not an affiliate of the member insurer; | ||||||
3 | (xiv) any portion of a policy or contract to the extent | ||||||
4 | that it provides for interest or other changes in value to | ||||||
5 | be determined by the use of an index or other external | ||||||
6 | reference stated in the policy or contract, but which have | ||||||
7 | not been credited to the policy or contract, or as to which | ||||||
8 | the policy or contract owner's rights are subject to | ||||||
9 | forfeiture, as of the date the member insurer becomes an | ||||||
10 | impaired or insolvent insurer under this Code, whichever is | ||||||
11 | earlier. If a policy's or contract's interest or changes in | ||||||
12 | value are credited less frequently than annually, then for | ||||||
13 | purposes of determining the values that have been credited | ||||||
14 | and are not subject to forfeiture under this Section, the | ||||||
15 | interest or change in value determined by using the | ||||||
16 | procedures defined in the policy or contract will be | ||||||
17 | credited as if the contractual date of crediting interest | ||||||
18 | or changing values was the date of impairment or | ||||||
19 | insolvency, whichever is earlier, and will not be subject | ||||||
20 | to forfeiture; or
| ||||||
21 | (xv) that portion or part of a variable life insurance | ||||||
22 | or
variable
annuity
contract not guaranteed by an insurer.
| ||||||
23 | (3) The benefits for which the Association may become | ||||||
24 | liable shall in
no event exceed the lesser of:
| ||||||
25 | (a) the contractual obligations for which the insurer | ||||||
26 | is liable or would
have been liable if it were not an |
| |||||||
| |||||||
1 | impaired or insolvent insurer, or
| ||||||
2 | (b)(i) with respect to any one life, regardless of the | ||||||
3 | number of policies
or
contracts:
| ||||||
4 | (A) $300,000 in life insurance death benefits, but | ||||||
5 | not more than
$100,000 in net cash surrender and net | ||||||
6 | cash withdrawal values for life
insurance;
| ||||||
7 | (B) in health insurance benefits: | ||||||
8 | (I) $100,000 for coverages not defined as | ||||||
9 | disability insurance or basic hospital, medical, | ||||||
10 | and surgical insurance or major medical insurance | ||||||
11 | or long-term care insurance, including any net | ||||||
12 | cash surrender and net cash withdrawal values; | ||||||
13 | (II) $300,000 for disability insurance and | ||||||
14 | $300,000 for long-term care insurance as defined | ||||||
15 | in Section 351A-1 of this Code ; and | ||||||
16 | (III) $500,000 for basic hospital medical and | ||||||
17 | surgical insurance or major medical insurance;
| ||||||
18 | (C) $250,000 in the present value of annuity | ||||||
19 | benefits, including net cash surrender and net cash | ||||||
20 | withdrawal values; | ||||||
21 | (ii) with respect to each individual participating in a | ||||||
22 | governmental retirement benefit plan established under | ||||||
23 | Sections 401, 403(b), or 457 of the U.S. Internal Revenue | ||||||
24 | Code covered by an unallocated annuity contract or the | ||||||
25 | beneficiaries of each such individual if deceased, in the | ||||||
26 | aggregate, $250,000 in present value annuity benefits, |
| |||||||
| |||||||
1 | including net cash surrender and net cash withdrawal | ||||||
2 | values; | ||||||
3 | (iii) with respect to each payee of a structured | ||||||
4 | settlement annuity or beneficiary or beneficiaries of the | ||||||
5 | payee if deceased, $250,000 in present value annuity | ||||||
6 | benefits, in the aggregate, including net cash surrender | ||||||
7 | and net cash withdrawal values, if any; or | ||||||
8 | (iv) with respect to either (1) one contract owner | ||||||
9 | provided coverage under subparagraph (ii) of paragraph (c) | ||||||
10 | of subsection (1) of this Section or (2) one plan sponsor | ||||||
11 | whose plans own directly or in trust one or more | ||||||
12 | unallocated annuity contracts not included in subparagraph | ||||||
13 | (ii) of paragraph (b) of this subsection, $5,000,000 in | ||||||
14 | benefits, irrespective of the number of contracts with | ||||||
15 | respect to the contract owner or plan sponsor. However, in | ||||||
16 | the case where one or more unallocated annuity contracts | ||||||
17 | are covered contracts under this Article and are owned by a | ||||||
18 | trust or other entity for the benefit of 2 or more plan | ||||||
19 | sponsors, coverage shall be afforded by the Association if | ||||||
20 | the largest interest in the trust or entity owning the | ||||||
21 | contract or contracts is held by a plan sponsor whose | ||||||
22 | principal place of business is in this State. In no event | ||||||
23 | shall the Association be obligated to cover more than | ||||||
24 | $5,000,000 in benefits with respect to all these | ||||||
25 | unallocated contracts. | ||||||
26 | (3.1) Notwithstanding the provisions of subsection (3), in |
| |||||||
| |||||||
1 | In no event shall the Association be obligated to cover more | ||||||
2 | than (1) an aggregate of $300,000 in benefits with respect to | ||||||
3 | any one life under subparagraphs (i), (ii), and (iii) of this | ||||||
4 | paragraph (b) of subsection (3) except with respect to benefits | ||||||
5 | for basic hospital, medical, and surgical insurance and major | ||||||
6 | medical insurance under item (B) of subparagraph (i) of this | ||||||
7 | paragraph (b) of subsection (3) , in which case the aggregate | ||||||
8 | liability of the Association shall not exceed $500,000 with | ||||||
9 | respect to any one individual or (2) with respect to one owner | ||||||
10 | of multiple nongroup policies of life insurance, whether the | ||||||
11 | policy owner is an individual, firm, corporation, or other | ||||||
12 | person and whether the persons insured are officers, managers, | ||||||
13 | employees, or other persons, $5,000,000 in benefits, | ||||||
14 | regardless of the number of policies and contracts held by the | ||||||
15 | owner. | ||||||
16 | (3.2) The limitations set forth in subsections (3) and | ||||||
17 | (3.1) this subsection are limitations on the benefits for which | ||||||
18 | the Association is obligated before taking into account either | ||||||
19 | its subrogation and assignment rights or the extent to which | ||||||
20 | those benefits could be provided out of the assets of the | ||||||
21 | impaired or insolvent insurer attributable to covered | ||||||
22 | policies. The costs of the Association's obligations under this | ||||||
23 | Article may be met by the use of assets attributable to covered | ||||||
24 | policies or reimbursed to the Association pursuant to its | ||||||
25 | subrogation and assignment rights.
| ||||||
26 | (4) In performing its obligations to provide coverage under |
| |||||||
| |||||||
1 | Section 531.08 of this Code, the Association shall not be | ||||||
2 | required to guarantee, assume, reinsure, or perform or cause to | ||||||
3 | be guaranteed, assumed, reinsured, or performed the | ||||||
4 | contractual obligations of the insolvent or impaired insurer | ||||||
5 | under a covered policy or contract that do not materially | ||||||
6 | affect the economic values or economic benefits of the covered | ||||||
7 | policy or contract. | ||||||
8 | (Source: P.A. 96-1450, eff. 8-20-10.)
| ||||||
9 | (215 ILCS 5/531.05) (from Ch. 73, par. 1065.80-5)
| ||||||
10 | Sec. 531.05. Definitions. As used in this Act:
| ||||||
11 | "Account" means either of the 2 3 accounts created under | ||||||
12 | Section
531.06.
| ||||||
13 | "Association" means the Illinois Life and Health Insurance
| ||||||
14 | Guaranty Association created under Section 531.06.
| ||||||
15 | "Authorized assessment" or the term "authorized" when used | ||||||
16 | in the context of assessments means a resolution by the Board | ||||||
17 | of Directors has been passed whereby an assessment shall be | ||||||
18 | called immediately or in the future from member insurers for a | ||||||
19 | specified amount. An assessment is authorized when the | ||||||
20 | resolution is passed. | ||||||
21 | "Benefit plan" means a specific employee, union, or | ||||||
22 | association of natural persons benefit plan. | ||||||
23 | "Called assessment" or the term "called" when used in the | ||||||
24 | context of assessments means that a notice has been issued by | ||||||
25 | the Association to member insurers requiring that an authorized |
| |||||||
| |||||||
1 | assessment be paid within the time frame set forth within the | ||||||
2 | notice. An authorized assessment becomes a called assessment | ||||||
3 | when notice is mailed by the Association to member insurers. | ||||||
4 | "Director" means the Director of Insurance of this State.
| ||||||
5 | "Contractual obligation" means any obligation under a | ||||||
6 | policy or
contract or certificate under a group policy or | ||||||
7 | contract, or portion
thereof for which coverage is provided | ||||||
8 | under Section 531.03.
| ||||||
9 | "Covered person" means any person who is entitled to the
| ||||||
10 | protection of the Association as described in Section 531.02.
| ||||||
11 | "Covered policy" means any policy or contract within the | ||||||
12 | scope
of this Article under Section 531.03.
| ||||||
13 | "Extra-contractual claims" shall include , for example, | ||||||
14 | claims relating to bad faith in the payment of claims, punitive | ||||||
15 | or exemplary damages, or attorneys' fees and costs. | ||||||
16 | "Impaired insurer" means (A) a member insurer which, after | ||||||
17 | the effective date of this amendatory Act of the 96th General | ||||||
18 | Assembly, is not an insolvent insurer, and is placed under an | ||||||
19 | order of rehabilitation or conservation by a court of competent | ||||||
20 | jurisdiction or (B) a member insurer deemed by the Director | ||||||
21 | after the effective date of this amendatory Act of the 96th | ||||||
22 | General Assembly to be potentially unable to fulfill its | ||||||
23 | contractual obligations and not an insolvent insurer.
| ||||||
24 | "Insolvent insurer" means a member insurer that, after the | ||||||
25 | effective date of this amendatory Act of the 96th General | ||||||
26 | Assembly, is placed under a final order of liquidation by a |
| |||||||
| |||||||
1 | court of competent jurisdiction with a finding of insolvency.
| ||||||
2 | "Member insurer" means an insurer licensed or holding a | ||||||
3 | certificate of authority to transact in this State any kind of | ||||||
4 | insurance for which coverage is provided under Section 531.03 | ||||||
5 | of this Code and includes an insurer whose license or | ||||||
6 | certificate of authority in this State may have been suspended, | ||||||
7 | revoked, not renewed, or voluntarily withdrawn or whose | ||||||
8 | certificate of authority may have been suspended pursuant to | ||||||
9 | Section 119 of this Code, but does not include: | ||||||
10 | (1) a hospital or medical service organization, | ||||||
11 | whether profit or nonprofit; | ||||||
12 | (2) a health maintenance organization; | ||||||
13 | (3) any burial society organized under Article XIX of | ||||||
14 | this Code, any fraternal benefit society organized under | ||||||
15 | Article XVII of this Code, any mutual benefit association | ||||||
16 | organized under Article XVIII of this Code, and any foreign | ||||||
17 | fraternal benefit society licensed under Article VI of this | ||||||
18 | Code or
a fraternal benefit society ; | ||||||
19 | (4) a mandatory State pooling plan; | ||||||
20 | (5) a mutual assessment company or other person that | ||||||
21 | operates on an assessment basis; | ||||||
22 | (6) an insurance exchange; | ||||||
23 | (7) an organization that is permitted to issue | ||||||
24 | charitable gift annuities pursuant to Section 121-2.10 of | ||||||
25 | this Code; | ||||||
26 | (8) any health services plan corporation established |
| |||||||
| |||||||
1 | pursuant to the Voluntary Health Services Plans Act; | ||||||
2 | (9) any dental service plan corporation established | ||||||
3 | pursuant to the Dental Service Plan Act; or | ||||||
4 | (10) an entity similar to any of the above.
| ||||||
5 | "Moody's Corporate Bond Yield Average" means the Monthly | ||||||
6 | Average
Corporates as published by Moody's Investors Service, | ||||||
7 | Inc., or any successor
thereto. | ||||||
8 | "Owner" of a policy or contract and "policy owner" and | ||||||
9 | "contract owner" mean the person who is identified as the legal | ||||||
10 | owner under the terms of the policy or contract or who is | ||||||
11 | otherwise vested with legal title to the policy or contract | ||||||
12 | through a valid assignment completed in accordance with the | ||||||
13 | terms of the policy or contract and properly recorded as the | ||||||
14 | owner on the books of the insurer. The terms owner, contract | ||||||
15 | owner, and policy owner do not include persons with a mere | ||||||
16 | beneficial interest in a policy or contract. | ||||||
17 | "Person" means an individual, corporation, limited | ||||||
18 | liability company, partnership, association, governmental body | ||||||
19 | or entity, or voluntary organization. | ||||||
20 | "Plan sponsor" means: | ||||||
21 | (1) the employer in the case of a benefit plan | ||||||
22 | established or maintained by a single employer; | ||||||
23 | (2) the employee organization in the case of a benefit | ||||||
24 | plan established or maintained by an employee | ||||||
25 | organization; or | ||||||
26 | (3) in a case of a benefit plan established or |
| |||||||
| |||||||
1 | maintained by 2 or more employers or jointly by one or more | ||||||
2 | employers and one or more employee organizations, the | ||||||
3 | association, committee, joint board of trustees, or other | ||||||
4 | similar group of representatives of the parties who | ||||||
5 | establish or maintain the benefit plan. | ||||||
6 | "Premiums" mean amounts or considerations, by whatever | ||||||
7 | name called, received on covered policies or contracts less | ||||||
8 | returned premiums, considerations, and deposits and less | ||||||
9 | dividends and experience credits. | ||||||
10 | "Premiums" does not include: | ||||||
11 | (A) amounts or considerations received for policies or | ||||||
12 | contracts or for the portions of policies or contracts for | ||||||
13 | which coverage is not provided under Section 531.03 of this | ||||||
14 | Code except that assessable premium shall not be reduced on | ||||||
15 | account of the provisions of subparagraph (iii) of | ||||||
16 | paragraph (b) of subsection (2) (a) of Section 531.03 of | ||||||
17 | this Code relating to interest limitations and the | ||||||
18 | provisions of paragraph (b) of subsection (3) , subsection | ||||||
19 | (3.1), or subsection (3.2) of Section 531.03 relating to | ||||||
20 | limitations with respect to one individual, one | ||||||
21 | participant, and one contract owner; | ||||||
22 | (B) premiums in excess of $5,000,000 on an unallocated | ||||||
23 | annuity contract not issued under a governmental | ||||||
24 | retirement benefit plan (or its trustee) established under | ||||||
25 | Section 401, 403(b) or 457 of the United States Internal | ||||||
26 | Revenue Code; or |
| |||||||
| |||||||
1 | (C) with respect to multiple nongroup policies of life | ||||||
2 | insurance owned by one owner, whether the policy owner is | ||||||
3 | an individual, firm, corporation, or other person, and | ||||||
4 | whether the persons insured are officers, managers, | ||||||
5 | employees, or other persons, premiums in excess of | ||||||
6 | $5,000,000 with respect to these policies or contracts, | ||||||
7 | regardless of the number of policies or contracts held by | ||||||
8 | the owner.
| ||||||
9 | "Principal place of business" of a plan sponsor or a person | ||||||
10 | other than a natural person means the single state in which the | ||||||
11 | natural persons who establish policy for the direction, | ||||||
12 | control, and coordination of the operations of the entity as a | ||||||
13 | whole primarily exercise that function, determined by the | ||||||
14 | Association in its reasonable judgment by considering the | ||||||
15 | following factors: | ||||||
16 | (A) the state in which the primary executive and | ||||||
17 | administrative headquarters of the entity is located; | ||||||
18 | (B) the state in which the principal office of the | ||||||
19 | chief executive officer of the entity is located; | ||||||
20 | (C) the state in which the board of directors (or | ||||||
21 | similar governing person or persons) of the entity conducts | ||||||
22 | the majority of its meetings; | ||||||
23 | (D) the state in which the executive or management | ||||||
24 | committee of the board of directors (or similar governing | ||||||
25 | person or persons) of the entity conducts the majority of | ||||||
26 | its meetings; |
| |||||||
| |||||||
1 | (E) the state from which the management of the overall | ||||||
2 | operations of the entity is directed; and | ||||||
3 | (F) in the case of a benefit plan sponsored by | ||||||
4 | affiliated companies comprising a consolidated | ||||||
5 | corporation, the state in which the holding company or | ||||||
6 | controlling affiliate has its principal place of business | ||||||
7 | as determined using the above factors. | ||||||
8 | However, in the case of a plan sponsor, if more than 50% of | ||||||
9 | the participants in the benefit plan are employed in a single | ||||||
10 | state, that state shall be deemed to be the principal place of | ||||||
11 | business of the plan sponsor. | ||||||
12 | The principal place of business of a plan sponsor of a | ||||||
13 | benefit plan described in paragraph (3) of the definition of | ||||||
14 | "plan sponsor" this Section shall be deemed to be the principal | ||||||
15 | place of business of the association, committee, joint board of | ||||||
16 | trustees, or other similar group of representatives of the | ||||||
17 | parties who establish or maintain the benefit plan that, in | ||||||
18 | lieu of a specific or clear designation of a principal place of | ||||||
19 | business, shall be deemed to be the principal place of business | ||||||
20 | of the employer or employee organization that has the largest | ||||||
21 | investment in the benefit plan in question. | ||||||
22 | "Receivership court" means the court in the insolvent or | ||||||
23 | impaired insurer's state having jurisdiction over the | ||||||
24 | conservation, rehabilitation, or liquidation of the insurer. | ||||||
25 | "Resident" means a person to whom a contractual obligation | ||||||
26 | is owed and who resides in this State on the date of entry of a |
| |||||||
| |||||||
1 | court order that determines a member insurer to be an impaired | ||||||
2 | insurer or a court order that determines a member insurer to be | ||||||
3 | an insolvent insurer. A person may be a resident of only one | ||||||
4 | state, which in the case of a person other than a natural | ||||||
5 | person shall be its principal place of business. Citizens of | ||||||
6 | the United States that are either (i) residents of foreign | ||||||
7 | countries or (ii) residents of United States possessions, | ||||||
8 | territories, or protectorates that do not have an association | ||||||
9 | similar to the Association created by this Article, shall be | ||||||
10 | deemed residents of the state of domicile of the insurer that | ||||||
11 | issued the policies or contracts.
| ||||||
12 | "Structured settlement annuity" means an annuity purchased | ||||||
13 | in order to fund periodic payments for a plaintiff or other | ||||||
14 | claimant in payment for or with respect to personal injury | ||||||
15 | suffered by the plaintiff or other claimant. | ||||||
16 | "State" means a state, the District of Columbia, Puerto | ||||||
17 | Rico, and a United States possession, territory, or | ||||||
18 | protectorate. | ||||||
19 | "Supplemental contract" means a written agreement entered | ||||||
20 | into for the distribution of proceeds under a life, health, or | ||||||
21 | annuity policy or a life, health, or annuity contract.
| ||||||
22 | "Unallocated annuity contract" means any annuity contract | ||||||
23 | or group
annuity certificate which is not issued to and owned | ||||||
24 | by an individual,
except to the extent of any annuity benefits | ||||||
25 | guaranteed to an individual by
an insurer under such contract | ||||||
26 | or certificate.
|
| |||||||
| |||||||
1 | (Source: P.A. 96-1450, eff. 8-20-10.)
| ||||||
2 | (215 ILCS 5/531.07) (from Ch. 73, par. 1065.80-7)
| ||||||
3 | Sec. 531.07. Board of Directors. ) The board of directors | ||||||
4 | of the
Association consists of not less than 7 nor more than 11 | ||||||
5 | members serving
terms as established in the plan of operation. | ||||||
6 | The insurer members insurers of the board
are to be selected by | ||||||
7 | member insurers subject to the approval of the
Director. In | ||||||
8 | addition, 2 persons who must be public representatives may be | ||||||
9 | appointed by the Director to the board of directors. A public | ||||||
10 | representative may not be an officer, director, or employee of | ||||||
11 | an insurance company or any person engaged in the business of | ||||||
12 | insurance. Vacancies on the board must be filled for the | ||||||
13 | remaining period
of the term in the manner described in the | ||||||
14 | plan of operation.
| ||||||
15 | In approving selections or in appointing members to the | ||||||
16 | board, the
Director must consider, whether all member insurers | ||||||
17 | are
fairly represented.
| ||||||
18 | Members of the board may be reimbursed from the assets of | ||||||
19 | the Association
for expenses incurred by them as members of the | ||||||
20 | board of directors but
members of the board may not otherwise | ||||||
21 | be compensated by the Association for
their services.
| ||||||
22 | (Source: P.A. 96-1450, eff. 8-20-10.)
| ||||||
23 | (215 ILCS 5/531.08) (from Ch. 73, par. 1065.80-8)
| ||||||
24 | Sec. 531.08. Powers and duties of the Association. |
| |||||||
| |||||||
1 | (a) In addition to
the powers and duties enumerated in | ||||||
2 | other Sections of this Article:
| ||||||
3 | (1) If a member insurer is an impaired insurer, then | ||||||
4 | the Association may, in its discretion and subject to any | ||||||
5 | conditions imposed by the Association that do not impair | ||||||
6 | the contractual obligations of the impaired insurer and | ||||||
7 | that are approved by the Director: | ||||||
8 | (a) (A) guarantee, assume, or reinsure or cause to | ||||||
9 | be guaranteed, assumed, or reinsured, any or all of the | ||||||
10 | policies or contracts of the impaired insurer; or | ||||||
11 | (b) (B) provide such money, pledges, loans, notes, | ||||||
12 | guarantees, or other means as are proper to effectuate | ||||||
13 | paragraph (a) (A) and assure payment of the contractual | ||||||
14 | obligations of the impaired insurer pending action | ||||||
15 | under paragraph (a) (A) . | ||||||
16 | (2) If a member insurer is an insolvent insurer, then | ||||||
17 | the Association shall, in its discretion, either: | ||||||
18 | (a) (A) guaranty, assume, or reinsure or cause to | ||||||
19 | be guaranteed, assumed, or reinsured the policies or | ||||||
20 | contracts of the insolvent insurer or assure payment of | ||||||
21 | the contractual obligations of the insolvent insurer | ||||||
22 | and provide money, pledges, loans, notes, guarantees, | ||||||
23 | or other means reasonably necessary to discharge the | ||||||
24 | Association's duties; or | ||||||
25 | (b) (B) provide benefits and coverages in | ||||||
26 | accordance with the following provisions: |
| |||||||
| |||||||
1 | (i) with respect to life and health insurance | ||||||
2 | policies and annuities, ensure payment of benefits | ||||||
3 | for premiums identical to the premiums and | ||||||
4 | benefits (except for terms of conversion and | ||||||
5 | renewability) that would have been payable under | ||||||
6 | the policies or contracts of the insolvent insurer | ||||||
7 | for claims incurred: | ||||||
8 | (A) (a) with respect to group policies and | ||||||
9 | contracts, not later than the earlier of the | ||||||
10 | next renewal date under those policies or | ||||||
11 | contracts or 45 days, but in no event less than | ||||||
12 | 30 days, after the date on which the | ||||||
13 | Association becomes obligated with respect to | ||||||
14 | the policies and contracts; | ||||||
15 | (B) (b) with respect to nongroup policies, | ||||||
16 | contracts, and annuities not later than the | ||||||
17 | earlier of the next renewal date (if any) under | ||||||
18 | the policies or contracts or one year, but in | ||||||
19 | no event less than 30 days, from the date on | ||||||
20 | which the Association becomes obligated with | ||||||
21 | respect to the policies or contracts; | ||||||
22 | (ii) make diligent efforts to provide all | ||||||
23 | known insureds or annuitants (for nongroup | ||||||
24 | policies and contracts), or group policy owners | ||||||
25 | with respect to group policies and contracts, 30 | ||||||
26 | days notice of the termination (pursuant to |
| |||||||
| |||||||
1 | subparagraph (i) of this paragraph (b) (B) ) of the | ||||||
2 | benefits provided; | ||||||
3 | (iii) with respect to nongroup life and health | ||||||
4 | insurance policies and annuities covered by the | ||||||
5 | Association, make available to each known insured | ||||||
6 | or annuitant, or owner if other than the insured or | ||||||
7 | annuitant, and with respect to an individual | ||||||
8 | formerly insured or formerly an annuitant under a | ||||||
9 | group policy who is not eligible for replacement | ||||||
10 | group coverage, make available substitute coverage | ||||||
11 | on an individual basis in accordance with the | ||||||
12 | provisions of subparagraph (iv) paragraph (3) , if | ||||||
13 | the insureds or annuitants had a right under law or | ||||||
14 | the terminated policy or annuity to convert | ||||||
15 | coverage to individual coverage or to continue an | ||||||
16 | individual policy or annuity in force until a | ||||||
17 | specified age or for a specified time, during which | ||||||
18 | the insurer had no right unilaterally to make | ||||||
19 | changes in any provision of the policy or annuity | ||||||
20 | or had a right only to make changes in premium by | ||||||
21 | class.
| ||||||
22 |
(iv) (b) In providing the substitute coverage | ||||||
23 | required under subparagraph (iii) of this | ||||||
24 | subsection (2), of paragraph (B) of item (2) of | ||||||
25 | subsection (a)
of this Section, the Association | ||||||
26 | may offer either to reissue the
terminated |
| |||||||
| |||||||
1 | coverage or to issue an alternative policy.
| ||||||
2 |
Alternative or reissued policies shall be | ||||||
3 | offered without requiring
evidence of | ||||||
4 | insurability, and shall not provide for any | ||||||
5 | waiting period or
exclusion that would not have | ||||||
6 | applied under the terminated policy.
| ||||||
7 |
The Association may reinsure any alternative | ||||||
8 | or reissued policy.
| ||||||
9 |
Alternative policies adopted by the | ||||||
10 | Association shall be subject
to the approval of the | ||||||
11 | Director. The Association may adopt alternative
| ||||||
12 | policies of various types for future insurance | ||||||
13 | without regard to any
particular impairment or | ||||||
14 | insolvency.
| ||||||
15 |
(v) Alternative policies shall contain at | ||||||
16 | least the minimum statutory
provisions required in | ||||||
17 | this State and provide benefits that shall not be
| ||||||
18 | unreasonable in relation to the premium charged. | ||||||
19 | The
Association shall set the premium in | ||||||
20 | accordance with a table of rates which
it shall | ||||||
21 | adopt. The premium shall reflect the amount of | ||||||
22 | insurance to be
provided and the age and class of | ||||||
23 | risk of each insured, but shall not
reflect any | ||||||
24 | changes in the health of the insured after the | ||||||
25 | original policy
was last underwritten.
| ||||||
26 |
Any alternative policy issued by the |
| |||||||
| |||||||
1 | Association shall provide
coverage of a type | ||||||
2 | similar to that of the policy issued by the | ||||||
3 | impaired or
insolvent insurer, as determined by | ||||||
4 | the Association.
| ||||||
5 |
(vi) (c) If the Association elects to reissue | ||||||
6 | terminated coverage at a
premium rate different | ||||||
7 | from that charged under the terminated policy, the
| ||||||
8 | premium shall be set by the Association in | ||||||
9 | accordance with the amount of
insurance provided | ||||||
10 | and the age and class of risk, subject to approval | ||||||
11 | of
the Director or by a court of competent | ||||||
12 | jurisdiction.
| ||||||
13 |
(vii) (d) The Association's obligations with | ||||||
14 | respect to coverage under any
policy of the | ||||||
15 | impaired or insolvent insurer or under any | ||||||
16 | reissued or
alternative policy shall cease on the | ||||||
17 | date such coverage or policy is
replaced by another | ||||||
18 | similar policy by the policyholder, the insured, | ||||||
19 | or the
Association.
| ||||||
20 |
(viii) (e) When proceeding under this Section | ||||||
21 | with
respect to any policy or contract carrying | ||||||
22 | guaranteed minimum interest
rates, the Association | ||||||
23 | shall assure the payment or crediting of a rate of
| ||||||
24 | interest consistent with subparagraph | ||||||
25 | (2)(b)(iii) (B) of Section 531.03.
| ||||||
26 |
(3) (f) Nonpayment of premiums thirty-one days after |
| |||||||
| |||||||
1 | the date required under
the terms of any guaranteed, | ||||||
2 | assumed, alternative or reissued policy or
contract or | ||||||
3 | substitute coverage shall terminate the Association's
| ||||||
4 | obligations under such policy or coverage under this Act | ||||||
5 | with respect to
such policy or coverage, except with | ||||||
6 | respect to any claims incurred or any
net cash surrender | ||||||
7 | value which may be due in accordance with the provisions of
| ||||||
8 | this Act.
| ||||||
9 |
(4) (g) Premiums due for coverage after entry of an | ||||||
10 | order of liquidation of
an insolvent insurer shall belong | ||||||
11 | to and be payable at the direction of the
Association,
and | ||||||
12 | the Association shall be liable for unearned premiums due | ||||||
13 | to policy or
contract owners arising after the entry of | ||||||
14 | such order.
| ||||||
15 | (5) (h) In carrying out its duties under subsection | ||||||
16 | paragraph (2) of subsection (a) of this Section, the | ||||||
17 | Association may: | ||||||
18 | (a) (1) subject to approval by a court in this | ||||||
19 | State , impose permanent policy or contract liens in | ||||||
20 | connection with a guarantee, assumption, or | ||||||
21 | reinsurance agreement if the Association finds that | ||||||
22 | the amounts which can be assessed under this Article | ||||||
23 | are less than the amounts needed to assure full and | ||||||
24 | prompt performance of the Association's duties under | ||||||
25 | this Article or that the economic or financial | ||||||
26 | conditions as they affect member insurers are |
| |||||||
| |||||||
1 | sufficiently adverse to render the imposition of such | ||||||
2 | permanent policy or contract liens to be in the public | ||||||
3 | interest; or | ||||||
4 | (b) (2) subject to approval by a court in this | ||||||
5 | State , impose temporary moratoriums or liens on | ||||||
6 | payments of cash values and policy loans or any other | ||||||
7 | right to withdraw funds held in conjunction with | ||||||
8 | policies or contracts in addition to any contractual | ||||||
9 | provisions for deferral of cash or policy loan value. | ||||||
10 | In addition, in the event of a temporary moratorium or | ||||||
11 | moratorium charge imposed by the receivership court on | ||||||
12 | payment of cash values or policy loans or on any other | ||||||
13 | right to withdraw funds held in conjunction with | ||||||
14 | policies or contracts, out of the assets of the | ||||||
15 | impaired or insolvent insurer, the Association may | ||||||
16 | defer the payment of cash values, policy loans, or | ||||||
17 | other rights by the Association for the period of the | ||||||
18 | moratorium or moratorium charge imposed by the | ||||||
19 | receivership court, except for claims covered by the | ||||||
20 | Association to be paid in accordance with a hardship | ||||||
21 | procedure established by the liquidator or | ||||||
22 | rehabilitator and approved by the receivership court.
| ||||||
23 |
(6) (i) There shall be no liability on the part of and | ||||||
24 | no cause of action
shall arise against the Association or | ||||||
25 | against any transferee from the
Association in connection | ||||||
26 | with the transfer by reinsurance or otherwise of
all or any |
| |||||||
| |||||||
1 | part of an impaired or insolvent insurer's business by | ||||||
2 | reason of
any action taken or any failure to take any | ||||||
3 | action by the impaired or
insolvent insurer at any time.
| ||||||
4 |
(7) (j) If the Association fails to act within a | ||||||
5 | reasonable period of
time as provided in subsection (2) of | ||||||
6 | this Section with respect to an
insolvent insurer, the
| ||||||
7 | Director shall have the powers and duties of the | ||||||
8 | Association under this
Act with regard to such insolvent | ||||||
9 | insurers.
| ||||||
10 |
(8) (k) The Association or its designated | ||||||
11 | representatives
may render assistance and advice to the
| ||||||
12 | Director, upon his request, concerning rehabilitation, | ||||||
13 | payment of
claims, continuations of coverage, or the | ||||||
14 | performance of other
contractual obligations of any | ||||||
15 | impaired or insolvent insurer.
| ||||||
16 |
(9) (l) The Association shall have standing to appear | ||||||
17 | or intervene before a court or agency in this State with | ||||||
18 | jurisdiction over an impaired or insolvent insurer | ||||||
19 | concerning which the Association is or may become obligated | ||||||
20 | under this Article or with jurisdiction over any person or | ||||||
21 | property against which the Association may have rights | ||||||
22 | through subrogation or otherwise. Standing shall extend to | ||||||
23 | all matters germane to the powers and duties of the | ||||||
24 | Association, including, but not limited to, proposals for | ||||||
25 | reinsuring, modifying, or guaranteeing the policies or | ||||||
26 | contracts of the impaired or insolvent insurer and the |
| |||||||
| |||||||
1 | determination of the policies or contracts and contractual | ||||||
2 | obligations. The Association shall also have the right to | ||||||
3 | appear or intervene before a court or agency in another | ||||||
4 | state with jurisdiction over an impaired or insolvent | ||||||
5 | insurer for which the Association is or may become | ||||||
6 | obligated or with jurisdiction over any person or property | ||||||
7 | against whom the Association may have rights through | ||||||
8 | subrogation or otherwise.
| ||||||
9 |
(10)(a) (m)(1) A person receiving benefits under this | ||||||
10 | Article shall be deemed to have assigned the rights under | ||||||
11 | and any causes of action against any person for losses | ||||||
12 | arising under, resulting from, or otherwise relating to the | ||||||
13 | covered policy or contract to the Association to the extent | ||||||
14 | of the benefits received because of this Article, whether | ||||||
15 | the benefits are payments of or on account of contractual | ||||||
16 | obligations, continuation of coverage, or provision of | ||||||
17 | substitute or alternative coverages. The Association may | ||||||
18 | require an assignment to it of such rights and cause of | ||||||
19 | action by any payee, policy, or contract owner, | ||||||
20 | beneficiary, insured, or annuitant as a condition | ||||||
21 | precedent to the receipt of any right or benefits conferred | ||||||
22 | by this Article upon the person.
| ||||||
23 |
(b) (2) The subrogation rights of the Association | ||||||
24 | under this subsection
have the same priority against the | ||||||
25 | assets of the impaired or insolvent insurer as
that | ||||||
26 | possessed by the person entitled to receive benefits under |
| |||||||
| |||||||
1 | this
Article. | ||||||
2 | (c) (3) In addition to paragraphs (a) (1) and (b) (2) , | ||||||
3 | the Association shall have all common law rights of | ||||||
4 | subrogation and any other equitable or legal remedy that | ||||||
5 | would have been available to the impaired or insolvent | ||||||
6 | insurer or owner, beneficiary, or payee of a policy or | ||||||
7 | contract with respect to the policy or contracts, including | ||||||
8 | without limitation, in the case of a structured settlement | ||||||
9 | annuity, any rights of the owner, beneficiary, or payee of | ||||||
10 | the annuity to the extent of benefits received pursuant to | ||||||
11 | this Article, against a person originally or by succession | ||||||
12 | responsible for the losses arising from the personal injury | ||||||
13 | relating to the annuity or payment therefor, excepting any | ||||||
14 | such person responsible solely by reason of serving as an | ||||||
15 | assignee in respect of a qualified assignment under | ||||||
16 | Internal Revenue Code Section 130. | ||||||
17 | (d) (4) If the preceding provisions of this subsection | ||||||
18 | (10) (l) are invalid or ineffective with respect to any | ||||||
19 | person or claim for any reason, then the amount payable by | ||||||
20 | the Association with respect to the related covered | ||||||
21 | obligations shall be reduced by the amount realized by any | ||||||
22 | other person with respect to the person or claim that is | ||||||
23 | attributable to the policies, or portion thereof, covered | ||||||
24 | by the Association. | ||||||
25 | (e) (5) If the Association has provided benefits with | ||||||
26 | respect to a covered obligation and a person recovers |
| |||||||
| |||||||
1 | amounts as to which the Association has rights as described | ||||||
2 | in the preceding paragraphs of this subsection (10), then | ||||||
3 | the person shall pay to the Association the portion of the | ||||||
4 | recovery attributable to the policies, or portion thereof, | ||||||
5 | covered by the Association.
| ||||||
6 |
(11) (n) The Association may:
| ||||||
7 |
(a) (1) Enter into such contracts as are necessary | ||||||
8 | or proper to carry
out the provisions and purposes of | ||||||
9 | this Article.
| ||||||
10 |
(b) (2) Sue or be sued, including taking any legal | ||||||
11 | actions necessary or
proper for recovery of any unpaid | ||||||
12 | assessments under Section 531.09. The
Association | ||||||
13 | shall not be liable for punitive or exemplary damages.
| ||||||
14 |
(c) (3) Borrow money to effect the purposes of | ||||||
15 | this Article. Any notes
or other evidence of | ||||||
16 | indebtedness of the Association not in default are
| ||||||
17 | legal investments for domestic insurers and may be | ||||||
18 | carried as admitted
assets.
| ||||||
19 |
(d) (4) Employ or retain such persons as are | ||||||
20 | necessary to handle the
financial transactions of the | ||||||
21 | Association, and to perform such other
functions as | ||||||
22 | become necessary or proper under this Article.
| ||||||
23 |
(e) (5) Negotiate and contract with any | ||||||
24 | liquidator, rehabilitator,
conservator, or ancillary | ||||||
25 | receiver to carry out the powers and duties of
the | ||||||
26 | Association.
|
| |||||||
| |||||||
1 |
(f) (6) Take such legal action as may be necessary | ||||||
2 | to avoid payment of
improper claims.
| ||||||
3 |
(g) (7) Exercise, for the purposes of this Article | ||||||
4 | and to the extent
approved by the Director, the powers | ||||||
5 | of a domestic life or health
insurer, but in no case | ||||||
6 | may the Association issue insurance policies or
| ||||||
7 | annuity contracts other than those issued to perform | ||||||
8 | the contractual
obligations of the impaired or | ||||||
9 | insolvent insurer.
| ||||||
10 |
(h) (8) Exercise all the rights of the Director | ||||||
11 | under Section 193(4) of
this Code with respect to | ||||||
12 | covered policies after the association becomes
| ||||||
13 | obligated by statute.
| ||||||
14 | (i) (9) Request information from a person seeking | ||||||
15 | coverage from the Association in order to aid the | ||||||
16 | Association in determining its obligations under this | ||||||
17 | Article with respect to the person, and the person | ||||||
18 | shall promptly comply with the request. | ||||||
19 | (j) (10) Take other necessary or appropriate | ||||||
20 | action to discharge its duties and obligations under | ||||||
21 | this Article or to exercise its powers under this | ||||||
22 | Article. | ||||||
23 |
(12) (o) With respect to covered policies for which | ||||||
24 | the Association becomes
obligated after an entry of an | ||||||
25 | order of liquidation or rehabilitation,
the Association | ||||||
26 | may
elect to succeed to the rights of the insolvent insurer |
| |||||||
| |||||||
1 | arising after the
date of the order of liquidation or | ||||||
2 | rehabilitation under any contract
of reinsurance to which
| ||||||
3 | the insolvent insurer was a party, to the extent that such | ||||||
4 | contract
provides coverage for losses occurring after the | ||||||
5 | date of the order of
liquidation or rehabilitation. As a | ||||||
6 | condition to making this election,
the Association must pay | ||||||
7 | all unpaid premiums due under the contract for
coverage | ||||||
8 | relating to periods before and after the date of the order | ||||||
9 | of
liquidation or rehabilitation.
| ||||||
10 | (13) (p) A deposit in this State, held pursuant to law | ||||||
11 | or required by the Director for the benefit of creditors, | ||||||
12 | including policy owners, not turned over to the domiciliary | ||||||
13 | liquidator upon the entry of a final order of liquidation | ||||||
14 | or order approving a rehabilitation plan of an insurer | ||||||
15 | domiciled in this State or in a reciprocal state, pursuant | ||||||
16 | to Article XIII 1/2 of this Code, shall be promptly paid to | ||||||
17 | the Association. The Association shall be entitled to | ||||||
18 | retain a portion of any amount so paid to it equal to the | ||||||
19 | percentage determined by dividing the aggregate amount of | ||||||
20 | policy owners' claims related to that insolvency for which | ||||||
21 | the Association has provided statutory benefits by the | ||||||
22 | aggregate amount of all policy owners' claims in this State | ||||||
23 | related to that insolvency and shall remit to the | ||||||
24 | domiciliary receiver the amount so paid to the Association | ||||||
25 | less the amount retained pursuant to this subsection (13) . | ||||||
26 | Any amount so paid to the Association and retained by it |
| |||||||
| |||||||
1 | shall be treated as a distribution of estate assets | ||||||
2 | pursuant to applicable State receivership law dealing with | ||||||
3 | early access disbursements. | ||||||
4 | (14) (q) The Board of Directors of the Association | ||||||
5 | shall have discretion and may exercise reasonable business | ||||||
6 | judgment to determine the means by which the Association is | ||||||
7 | to provide the benefits of this Article in an economical | ||||||
8 | and efficient manner. | ||||||
9 | (15) (r) Where the Association has arranged or offered | ||||||
10 | to provide the benefits of this Article to a covered person | ||||||
11 | under a plan or arrangement that fulfills the Association's | ||||||
12 | obligations under this Article, the person shall not be | ||||||
13 | entitled to benefits from the Association in addition to or | ||||||
14 | other than those provided under the plan or arrangement. | ||||||
15 | (16) (s) Venue in a suit against the Association | ||||||
16 | arising under the Article shall be in Cook County. The | ||||||
17 | Association shall not be required to give any appeal bond | ||||||
18 | in an appeal that relates to a cause of action arising | ||||||
19 | under this Article. | ||||||
20 | (17) (t) The Association may join an organization of | ||||||
21 | one or more other State associations of similar purposes to | ||||||
22 | further the purposes and administer the powers and duties | ||||||
23 | of the Association. | ||||||
24 | (18) (u) In carrying out its duties in connection with | ||||||
25 | guaranteeing, assuming, or reinsuring policies or | ||||||
26 | contracts under subsections (1) or (2), the Association |
| |||||||
| |||||||
1 | may, subject to approval of the receivership court, issue | ||||||
2 | substitute coverage for a policy or contract that provides | ||||||
3 | an interest rate, crediting rate, or similar factor | ||||||
4 | determined by use of an index or other external reference | ||||||
5 | stated in the policy or contract employed in calculating | ||||||
6 | returns or changes in value by issuing an alternative | ||||||
7 | policy or contract in accordance with the following | ||||||
8 | provisions: | ||||||
9 | (a) (1) in lieu of the index or other external | ||||||
10 | reference provided for in the original policy or | ||||||
11 | contract, the alternative policy or contract provides | ||||||
12 | for (i) a fixed interest rate, or (ii) payment of | ||||||
13 | dividends with minimum guarantees, or (iii) a | ||||||
14 | different method for calculating interest or changes | ||||||
15 | in value; | ||||||
16 | (b) (2) there is no requirement for evidence of | ||||||
17 | insurability, waiting period, or other exclusion that | ||||||
18 | would not have applied under the replaced policy or | ||||||
19 | contract; and | ||||||
20 | (c) (3) the alternative policy or contract is | ||||||
21 | substantially similar to the replaced policy or | ||||||
22 | contract in all other material terms. | ||||||
23 | (Source: P.A. 96-1450, eff. 8-20-10; 97-333, eff. 8-12-11.)
| ||||||
24 | (215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)
| ||||||
25 | Sec. 531.09. Assessments. |
| |||||||
| |||||||
1 | (1) For the purpose of providing the funds
necessary to | ||||||
2 | carry out the powers and duties of the Association, the board
| ||||||
3 | of directors shall assess the member insurers, separately for | ||||||
4 | each account, at such
times and for such amounts as the board | ||||||
5 | finds necessary. Assessments shall
be due not less than 30 days | ||||||
6 | after written notice to the member insurers
and shall accrue | ||||||
7 | interest from the due date at such adjusted rate as is
| ||||||
8 | established under Section 6621 of Chapter 26 of the United | ||||||
9 | States Code and
such interest shall be compounded daily.
| ||||||
10 | (2) There shall be 2 classes of assessments, as follows:
| ||||||
11 | (a) Class A assessments shall be made for the purpose | ||||||
12 | of meeting administrative
costs and other general expenses | ||||||
13 | and examinations conducted under the authority
of the | ||||||
14 | Director under subsection (5) of Section 531.12.
| ||||||
15 | (b) Class B assessments shall be made to the extent | ||||||
16 | necessary to carry
out the powers and duties of the | ||||||
17 | Association under Section 531.08 with regard
to an impaired | ||||||
18 | or insolvent domestic insurer or insolvent foreign or alien | ||||||
19 | insurers.
| ||||||
20 | (3)(a) The amount of any Class A assessment shall be | ||||||
21 | determined at the discretion of the board of directors and such | ||||||
22 | assessments shall be authorized and called on a non-pro rata | ||||||
23 | basis. The amount of any Class B
assessment shall be allocated | ||||||
24 | for assessment
purposes among the accounts
and subaccounts | ||||||
25 | pursuant to an allocation formula which may be based on
the | ||||||
26 | premiums or reserves of the impaired or insolvent insurer or |
| |||||||
| |||||||
1 | any other
standard deemed by the board in its sole discretion | ||||||
2 | as being fair and
reasonable under the circumstances.
| ||||||
3 | (b) Class B assessments against member insurers for each | ||||||
4 | account and
subaccount shall
be in the proportion that the | ||||||
5 | premiums received on business in this State
by each assessed | ||||||
6 | member insurer on policies or contracts covered by
each account | ||||||
7 | or subaccount for the three most recent calendar years
for | ||||||
8 | which information is available preceding the year in which the | ||||||
9 | insurer
became impaired or insolvent, as the case may be, bears | ||||||
10 | to such premiums
received on business in this State for such | ||||||
11 | calendar years by all assessed
member insurers.
| ||||||
12 | (c) Assessments for funds to meet the requirements of the | ||||||
13 | Association
with respect to an impaired or insolvent insurer | ||||||
14 | shall not be made until
necessary to implement the purposes of | ||||||
15 | this Article. Classification
of assessments
under subsection | ||||||
16 | (2) and computations of assessments under this subsection
shall | ||||||
17 | be made with a reasonable degree of accuracy, recognizing that | ||||||
18 | exact
determinations may not always be possible.
| ||||||
19 | (4) The Association may abate or defer, in whole or in | ||||||
20 | part, the assessment of a member insurer if, in the opinion of | ||||||
21 | the board, payment of the assessment would endanger the ability | ||||||
22 | of the member insurer to fulfill its contractual obligations. | ||||||
23 | In the event an assessment against a member insurer is abated | ||||||
24 | or deferred in whole or in part the amount by which the | ||||||
25 | assessment is abated or deferred may be assessed against the | ||||||
26 | other member insurers in a manner consistent with the basis for |
| |||||||
| |||||||
1 | assessments set forth in this Section. Once the conditions that | ||||||
2 | caused a deferral have been removed or rectified, the member | ||||||
3 | insurer shall pay all assessments that were deferred pursuant | ||||||
4 | to a repayment plan approved by the Association. | ||||||
5 | (5) (a) (i) Subject to the provisions of subparagraph (ii) | ||||||
6 | of this paragraph, the total of all assessments authorized by | ||||||
7 | the Association with respect to a member insurer for each | ||||||
8 | subaccount of the life insurance and annuity account and for | ||||||
9 | the health account shall not in one calendar year exceed 2% of | ||||||
10 | that member insurer's average annual premiums received in this | ||||||
11 | State on the policies and contracts covered by the subaccount | ||||||
12 | or account during the 3 calendar years preceding the year in | ||||||
13 | which the insurer became an impaired or insolvent insurer. | ||||||
14 | (ii) If 2 or more assessments are authorized in one | ||||||
15 | calendar year with respect to insurers that become impaired or | ||||||
16 | insolvent in different calendar years, the average annual | ||||||
17 | premiums for purposes of the aggregate assessment percentage | ||||||
18 | limitation referenced in subparagraph (a) of this paragraph | ||||||
19 | shall be equal and limited to the higher of the 3-year average | ||||||
20 | annual premiums for the applicable subaccount or account as | ||||||
21 | calculated pursuant to this Section. | ||||||
22 | (iii) If the maximum assessment, together with the other | ||||||
23 | assets of the Association in an account, does not provide in | ||||||
24 | one year in either account an amount sufficient to carry out | ||||||
25 | the responsibilities of the Association, the necessary | ||||||
26 | additional funds shall be assessed as soon thereafter as |
| |||||||
| |||||||
1 | permitted by this Article. | ||||||
2 | (b) The board may provide in the plan of operation a method | ||||||
3 | of allocating funds among claims, whether relating to one or | ||||||
4 | more impaired or insolvent insurers, when the maximum | ||||||
5 | assessment will be insufficient to cover anticipated claims. | ||||||
6 | (c) If the maximum assessment for a subaccount of the life | ||||||
7 | insurance and annuity account in one year does not provide an | ||||||
8 | amount sufficient to carry out the responsibilities of the | ||||||
9 | Association, then pursuant to paragraph (b) of subsection (3), | ||||||
10 | the board shall assess the other subaccounts of the life and | ||||||
11 | annuity account for the necessary additional amount, subject to | ||||||
12 | the maximum stated in paragraph (a) of this subsection.
| ||||||
13 | (6) The board may, by an equitable method as established in | ||||||
14 | the
plan of operation, refund to member insurers, in proportion | ||||||
15 | to the contribution
of each insurer to that account, the amount | ||||||
16 | by which the assets of the account
exceed the amount the board | ||||||
17 | finds is necessary to carry out during the coming
year the | ||||||
18 | obligations of the Association with regard to that account, | ||||||
19 | including
assets accruing from net realized gains and income | ||||||
20 | from investments. A
reasonable amount may be retained in any | ||||||
21 | account to provide funds for the
continuing expenses of the | ||||||
22 | Association and for future losses.
| ||||||
23 | (7) An assessment is deemed to occur on the date upon which | ||||||
24 | the board
votes such assessment. The board may defer calling | ||||||
25 | the payment of the
assessment or may call for payment in one or | ||||||
26 | more installments.
|
| |||||||
| |||||||
1 | (8) It is proper for any member insurer, in determining its | ||||||
2 | premium
rates and policyowner dividends as to any kind of | ||||||
3 | insurance within the scope of
this Article, to consider the | ||||||
4 | amount reasonably necessary to meet its assessment
obligations | ||||||
5 | under this Article.
| ||||||
6 | (9) The Association must issue to each insurer paying a
| ||||||
7 | Class B assessment
under this Article a certificate of | ||||||
8 | contribution,
in a form acceptable to the
Director, for the | ||||||
9 | amount of the assessment so paid. All outstanding certificates
| ||||||
10 | are of equal
dignity and priority without reference to amounts | ||||||
11 | or dates of issue. A certificate
of contribution may be shown | ||||||
12 | by the insurer in its financial statement as an asset
in such | ||||||
13 | form and for such amount, if any, and period of time as the | ||||||
14 | Director
may approve, provided the insurer shall in any event | ||||||
15 | at its option have
the right to show a certificate of | ||||||
16 | contribution as an admitted asset at
percentages of the | ||||||
17 | original face amount for calendar years as follows:
| ||||||
18 | 100% for the calendar year after the year of issuance;
| ||||||
19 | 80% for the second calendar year after the year of | ||||||
20 | issuance;
| ||||||
21 | 60% for the third calendar year after the year of issuance;
| ||||||
22 | 40% for the fourth calendar year after the year of | ||||||
23 | issuance;
| ||||||
24 | 20% for the fifth calendar year after the year of issuance.
| ||||||
25 | (10) The Association may request information of member | ||||||
26 | insurers in order to aid in the exercise of its power under |
| |||||||
| |||||||
1 | this Section and member insurers shall promptly comply with a | ||||||
2 | request. | ||||||
3 | (Source: P.A. 95-86, eff. 9-25-07 (changed from 1-1-08 by P.A. | ||||||
4 | 95-632); 96-1450, eff. 8-20-10.)
| ||||||
5 | (215 ILCS 5/531.10) (from Ch. 73, par. 1065.80-10)
| ||||||
6 | Sec. 531.10. Plan of Operation. ) | ||||||
7 | (1)(a) The Association must
submit to the Director a plan | ||||||
8 | of operation and any amendments thereto necessary
or suitable | ||||||
9 | to assure the fair, reasonable, and equitable administration of | ||||||
10 | the
Association. The plan of operation and any amendments | ||||||
11 | thereto become effective
upon approval in writing by the | ||||||
12 | Director.
| ||||||
13 | (b) If the Association fails to submit a suitable plan of | ||||||
14 | operation
within 180 days following the effective date of this | ||||||
15 | Article or if at any time
thereafter the Association fails to | ||||||
16 | submit suitable amendments to the plan, the
Director may, after | ||||||
17 | notice and hearing, adopt and promulgate such reasonable
rules | ||||||
18 | as are necessary or advisable to effectuate the provisions of | ||||||
19 | this Article.
Such rules are in force until modified by the | ||||||
20 | Director or superseded by a plan
submitted by the Association | ||||||
21 | and approved by the Director.
| ||||||
22 | (2) All member insurers must comply with the plan of | ||||||
23 | operation.
| ||||||
24 | (3) The plan of operation must, in addition to requirements | ||||||
25 | enumerated
elsewhere in this Article:
|
| |||||||
| |||||||
1 | (a) Establish procedures for handling the assets of the | ||||||
2 | Association;
| ||||||
3 | (b) Establish the amount and method of reimbursing | ||||||
4 | members of the
board of directors under Section 531.07;
| ||||||
5 | (c) Establish regular places and times for meetings of | ||||||
6 | the board
of directors;
| ||||||
7 | (d) Establish procedures for records to be kept of all | ||||||
8 | financial
transactions of the Association, its agents, and | ||||||
9 | the board of directors;
| ||||||
10 | (e) Establish the procedures whereby selections for | ||||||
11 | the board
of directors will be made and submitted to the | ||||||
12 | Director;
| ||||||
13 | (f) Establish any additional procedures for | ||||||
14 | assessments under
Section 531.09; and
| ||||||
15 | (g) Contain additional provisions necessary or proper | ||||||
16 | for the execution
of the powers and duties of the | ||||||
17 | Association.
| ||||||
18 | (4) The plan of operation shall establish a procedure for | ||||||
19 | protest by
any member insurer of assessments made by the | ||||||
20 | Association pursuant to
Section 531.09. Such procedures shall | ||||||
21 | require that:
| ||||||
22 | (a) a member insurer that wishes to protest all or part | ||||||
23 | of an assessment shall pay when due the full amount of the | ||||||
24 | assessment as set forth in the notice provided by the | ||||||
25 | Association. The payment shall be available to meet | ||||||
26 | Association obligations during the pendency of the protest |
| |||||||
| |||||||
1 | or any subsequent appeal. Payment shall be accompanied by a | ||||||
2 | statement in writing that the payment is made under protest | ||||||
3 | and setting forth a brief statement of the grounds for the | ||||||
4 | protest;
| ||||||
5 | (b) within 30 days following the payment of an | ||||||
6 | assessment under
protest by any protesting member insurer, | ||||||
7 | the Association must notify the
member insurer in writing | ||||||
8 | of its determination with respect to the protest
unless the | ||||||
9 | Association notifies the member that additional time is | ||||||
10 | required
to resolve the issues raised by the protest;
| ||||||
11 | (c) in the event the Association determines that the | ||||||
12 | protesting member
insurer is entitled to a refund, such | ||||||
13 | refund shall be made within 30
days following the date upon | ||||||
14 | which the Association makes its determination;
| ||||||
15 | (d) the decision of the Association with respect to a | ||||||
16 | protest may be
appealed to the Director pursuant to Section | ||||||
17 | 531.11(3);
| ||||||
18 | (e) in the alternative to rendering a decision with | ||||||
19 | respect to any
protest based on a question regarding the | ||||||
20 | assessment base, the Association
may refer such protests to | ||||||
21 | the Director for final decision, with or without
a | ||||||
22 | recommendation from the Association; and
| ||||||
23 | (f) interest on any refund due a protesting member | ||||||
24 | insurer shall be paid
at the rate actually earned by the | ||||||
25 | Association.
| ||||||
26 | (5) The plan of operation may provide that any or all |
| |||||||
| |||||||
1 | powers and duties
of the Association, except those under | ||||||
2 | paragraph (c) of subsection (11) (10)
of Section 531.08 and | ||||||
3 | Section 531.09 are delegated to a corporation,
association or | ||||||
4 | other organization which performs or will perform functions
| ||||||
5 | similar to those of this Association, or its equivalent, in 2 | ||||||
6 | or more states.
Such a corporation, association or organization | ||||||
7 | shall be reimbursed for any
payments made on behalf of the | ||||||
8 | Association and shall be paid for its
performance of any | ||||||
9 | function of the Association. A delegation under this
subsection | ||||||
10 | shall take effect only with the approval of both the Board of
| ||||||
11 | Directors and the Director, and may be made only to a | ||||||
12 | corporation, association
or organization which extends | ||||||
13 | protection not substantially less favorable and
effective than | ||||||
14 | that provided by this Act.
| ||||||
15 | (Source: P.A. 96-1450, eff. 8-20-10.)
| ||||||
16 | (215 ILCS 5/531.14) (from Ch. 73, par. 1065.80-14)
| ||||||
17 | Sec. 531.14. Miscellaneous Provisions. | ||||||
18 | (1) Nothing in this
Article may be construed to reduce the | ||||||
19 | liability for unpaid assessments of the insured
of an impaired | ||||||
20 | or insolvent insurer operating under a plan with assessment | ||||||
21 | liability.
| ||||||
22 | (2) Records must be kept of all negotiations and meetings | ||||||
23 | in which
the Association or its representatives are involved to | ||||||
24 | discuss the activities of the
Association in carrying out its | ||||||
25 | powers and duties under Section 531.08. Records of such
|
| |||||||
| |||||||
1 | negotiations or meetings may be made public only upon the | ||||||
2 | termination of a
liquidation, rehabilitation, or conservation | ||||||
3 | proceeding involving the impaired
or insolvent insurer, upon | ||||||
4 | the termination of the impairment or insolvency
of the insurer, | ||||||
5 | or upon the order
of a court of competent jurisdiction. Nothing | ||||||
6 | in this paragraph (2) limits the
duty of the Association to | ||||||
7 | render a report of its activities under Section
531.15.
| ||||||
8 | (3) For the purpose of carrying out its obligations under | ||||||
9 | this Article,
the Association is deemed to be a creditor of the | ||||||
10 | impaired or insolvent
insurer to the extent of assets | ||||||
11 | attributable to covered policies reduced by any
amounts to | ||||||
12 | which the Association is entitled as subrogee (under subsection | ||||||
13 | (10) paragraph (8)
of Section 531.08). All assets of the | ||||||
14 | impaired or insolvent insurer
attributable to covered policies | ||||||
15 | must be used to continue all covered policies
and pay all | ||||||
16 | contractual obligations of the impaired insurer as required by | ||||||
17 | this
Article. "Assets attributable to covered policies", as | ||||||
18 | used in this paragraph
(3), is that proportion of the
assets | ||||||
19 | which the reserves that should have been established
for such | ||||||
20 | policies bear to the reserve that should have been
established | ||||||
21 | for all policies of
insurance written by the impaired or | ||||||
22 | insolvent insurer.
| ||||||
23 | (4) (a) Prior to the termination of any liquidation, | ||||||
24 | rehabilitation,
or conservation proceeding, the court may take | ||||||
25 | into consideration the contributions
of the respective | ||||||
26 | parties, including the Association, the shareholders and
|
| |||||||
| |||||||
1 | policyowners of the impaired or insolvent insurer, and any | ||||||
2 | other party with
a bona fide interest,
in making an equitable | ||||||
3 | distribution of the ownership rights of such impaired
or | ||||||
4 | insolvent
insurer. In such a determination, consideration must | ||||||
5 | be given to the welfare of the
policyholders of the continuing | ||||||
6 | or successor insurer.
| ||||||
7 | (b) No distribution to stockholders, if any, of an impaired | ||||||
8 | or insolvent insurer
may be made until and unless the total
| ||||||
9 | amount of valid claims of the Association for funds expended | ||||||
10 | with interest in carrying
out its powers and duties under | ||||||
11 | Section 531.08, with respect to such insurer
have been fully | ||||||
12 | recovered by the Association.
| ||||||
13 | (5) (a) If an order for liquidation or rehabilitation of
an | ||||||
14 | insurer
domiciled in this State has been entered, the receiver | ||||||
15 | appointed under such
order has a right to recover on behalf of | ||||||
16 | the insurer, from any affiliate that
controlled it, the amount | ||||||
17 | of distributions, other than stock dividends paid by
the | ||||||
18 | insurer on its capital stock, made at any time during the 5 | ||||||
19 | years preceding
the petition for liquidation or rehabilitation | ||||||
20 | subject to the limitations of
paragraphs (b) to (d).
| ||||||
21 | (b) No such dividend is recoverable if the insurer shows | ||||||
22 | that when
paid the distribution was lawful and reasonable, and | ||||||
23 | that the insurer did not
know and could not reasonably have | ||||||
24 | known that the distribution might adversely affect
the ability | ||||||
25 | of the insurer to fulfill its contractual obligations.
| ||||||
26 | (c) Any person who as an affiliate that controlled the |
| |||||||
| |||||||
1 | insurer at
the time the distributions were paid is liable up to | ||||||
2 | the amount of distributions
he received. Any person who was an | ||||||
3 | affiliate that controlled the insurer at the
time the | ||||||
4 | distributions were declared, is liable up to the amount of | ||||||
5 | distributions
he would have received if they had been paid | ||||||
6 | immediately. If 2 persons are
liable with respect to the same | ||||||
7 | distributions, they are jointly and severally liable.
| ||||||
8 | (d) The maximum amount recoverable under subsection (5) of | ||||||
9 | this Section is
the amount needed in excess of all other | ||||||
10 | available assets of the insolvent insurer
to pay the | ||||||
11 | contractual obligations of the insolvent insurer.
| ||||||
12 | (e) If any person liable under paragraph (c) of subsection | ||||||
13 | (5) of this
Section is insolvent, all its
affiliates that | ||||||
14 | controlled it at the time the dividend was paid are jointly and
| ||||||
15 | severally liable for any resulting deficiency in the amount | ||||||
16 | recovered from
the insolvent affiliate.
| ||||||
17 | (6) As a creditor of the impaired or insolvent insurer as | ||||||
18 | established in subsection (3) of this Section and consistent | ||||||
19 | with subsection (2) of Section 205 of this Code, the | ||||||
20 | Association and other similar associations shall be entitled to | ||||||
21 | receive a disbursement of assets out of the marshaled assets, | ||||||
22 | from time to time as the assets become available to reimburse | ||||||
23 | it, as a credit against contractual obligations under this | ||||||
24 | Article. If the liquidator has not, within 120 days after a | ||||||
25 | final determination of insolvency of an insurer by the | ||||||
26 | receivership court, made an application to the court for the |
| |||||||
| |||||||
1 | approval of a proposal to disburse assets out of marshaled | ||||||
2 | assets to guaranty associations having obligations because of | ||||||
3 | the insolvency, then the Association shall be entitled to make | ||||||
4 | application to the receivership court for approval of its own | ||||||
5 | proposal to disburse these assets. | ||||||
6 | (Source: P.A. 96-1450, eff. 8-20-10.)
| ||||||
7 | Section 99. Effective date. This Act takes effect upon | ||||||
8 | becoming law.".
|