Bill Text: IL SB1723 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Creates the Insurance Industry Innovation Act. Creates the Innovation Division within the Department of Insurance to promote insurance product innovations. Provides that the Innovation Division shall be under the direction of the Deputy Director of the Innovation Division. Sets forth duties of the Deputy Director. Provides that an individual may petition the Department to waive or modify certain requirements in State statutes or Department rules related to an insurance innovation the individual offers or intends to offer. Provides that the petition shall demonstrate that the insurance innovation would serve the public interest, improve access to insurance products or services, and does not present systematic risk to the State and promotes consumer protection. Provides the process by which a petition is submitted to the Department and the process by which the Department may approve or reject the petition. Provides that, if the Department approves a petition, the person may enter into an enforceable compliance agreement with the Department, which includes the terms under which the insurance innovation may be offered. Provides that one year after the effective date, and annually thereafter, the Department shall report to the General Assembly on the aggregate impact of the enforceable compliance agreements. Provides that the Act is repealed on December 31, 2022. Effective January 1, 2018.

Spectrum: Bipartisan Bill

Status: (Failed) 2019-01-09 - Session Sine Die [SB1723 Detail]

Download: Illinois-2017-SB1723-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 SB1723 Introduced 2/9/2017, by Sen. Antonio Muñoz SYNOPSIS AS INTRODUCED:
New Act
Creates the Insurance Industry Innovation Act. Creates the Innovation Division within the Department of Insurance to promote insurance product innovations. Provides that the Innovation Division shall be under the direction of the Deputy Director of the Innovation Division. Sets forth duties of the Deputy Director. Provides that an individual may petition the Department to waive or modify certain requirements in State statutes or Department rules related to an insurance innovation the individual offers or intends to offer. Provides that the petition shall demonstrate that the insurance innovation would serve the public interest, improve access to insurance products or services, and does not present systematic risk to the State and promotes consumer protection. Provides the process by which a petition is submitted to the Department and the process by which the Department may approve or reject the petition. Provides that, if the Department approves a petition, the person may enter into an enforceable compliance agreement with the Department, which includes the terms under which the insurance innovation may be offered. Provides that one year after the effective date, and annually thereafter, the Department shall report to the General Assembly on the aggregate impact of the enforceable compliance agreements. Provides that the Act is repealed on December 31, 2022. Effective January 1, 2018.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the
Insurance Industry Innovation Act.
Section 5. Definitions. In this Act:
"Covered person" means a person that offers or intends to
offer an insurance innovation by submitting a petition to the
Department of Insurance.
"Department" means the Department of Insurance.
"Deputy Director" means the Deputy Director of the
Innovation Division of the Department of Insurance.
"Director" means the Director of Insurance.
"Enforceable compliance agreement" means a contractual
agreement described in subsection (a) of Section 20.
"Insurance innovation" means an innovative service or
product that is or may be subject to regulation by the
Department of Insurance.
"Innovation Division" means the Innovation Division in the
Department of Insurance.
Section 10. Department identification of regulatory ideas.
No later than 60 days after the effective date of this Act, and

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annually thereafter, the Department shall publish on its
website an exclusive list that identifies areas of existing
regulation:
(1) that apply or may apply to an insurance innovation;
and
(2) that the Department would consider modifying or
waiving if the Department were to receive a petition under
Section 20 relating to that regulation.
Section 15. Innovation Division.
(a) The Department shall establish an Innovation Division
to promote insurance product innovations and to assist a
covered person whose petition has been approved under Section
25.
(b) The Director shall appoint an individual to serve as
the Deputy Director of the Innovation Division.
(c) The duties of the Deputy Director shall include:
(1) supporting the Department in the development of
insurance innovations; and
(2) establishing procedures to reduce the time and cost
of offering an insurance innovation to the public and
enable greater access to insurance innovations.
(d) With respect to a covered person whose petition has
been approved under Section 25, the Insurance Division shall:
(1) work with the covered person to address issues of
how existing regulatory frameworks apply to the insurance

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innovation that is the subject of the petition;
(2) assist the covered person in complying with the
requirements of State statutes of the insurance
innovation; and
(3) assist the covered person in responding to any
challenges to a modification or a waiver granted under
subsection (e).
(e) With respect to a covered person whose petition has
been approved under Section 20, if the Department has a
rational basis for doing so and if the Department determines
that a provision of a State statute under which the Department
has rulemaking authority or a Department rule is burdensome to
the covered person, the Department shall, acting through the
Innovation Division, modify or waive the application of the
State statute or the Department regulation.
(f) Not later than 90 days after the effective date of this
Act, the Department shall modify any offices or programs at the
Department that promote insurance innovations or assist
covered persons in developing insurance innovations to operate
within the Innovation Division. Any legal action or proceeding
commenced by or against such office or program of the
Department, including no-action letters and staff advisory
opinions, shall be transferred to the Innovation Division.
(g) Not later than 6 months after the effective date of
this Act, and annually thereafter, the Department shall submit
a report to the General Assembly, and shall present testimony

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to the General Assembly, on the activities of the Innovation
Division, including a description of the petitions considered,
the rationale for acceptance or rejection of petitions, and the
efforts of the Innovation Division to encourage insurance
innovations.
Section 20. Petition to the Department.
(a) A covered person may submit a petition to the
Department, through the Innovation Division, in such form and
in such manner as the Innovation Division may require, to
request to enter into an enforceable compliance agreement
containing a modification or waiver of a rule of the Department
or State statutory requirement under which the Department has
rulemaking authority with respect to the covered person or an
insurance innovation the covered person offers or intends to
offer.
(b) A petition submitted under this Section, shall:
(1) include an alternative compliance strategy that
proposes a method to comply with the Department rule or
State statutory requirement; and
(2) demonstrate that under the alternative compliance
strategy, the insurance innovation:
(A) would serve the public interest;
(B) improves access to insurance products or
services; and
(C) does not present systemic risk to the State and

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promotes consumer protection.
(c) One or more covered persons that offers or intends to
offer similar financial innovations may jointly submit a
petition under this Section.
(d) During the period after a covered person submits a
petition under this Section and before the Department makes a
determination on the petition pursuant to Section 25, the
Department may not take an enforcement action against a covered
person relating to the insurance innovation that was the
subject of the petition.
If the Department determines that an insurance innovation
that a covered person has submitted presents an immediate
danger to consumers or presents systemic risk to the State, the
Department may prohibit a covered person from offering such
financial innovation while the Department makes a
determination on the petition.
(e) No later than 30 days after receiving a petition, the
Department shall publish the petition on the Department's
website and provide a 60-day period for public notice and
comment.
The Department may waive the notice and comment period if
the Department determines that the covered person submitting
the petition is similarly situated to another covered person
that has been granted approval of a petition pursuant to
Section 25.
The Department shall maintain the confidentiality of any

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nonpublicly available data or information in any petition
submitted under this Section. The Department shall give
reasonable consideration to maintaining the confidentiality of
data or information identified by the covered person in the
petition submitting under this Section as nonpublicly
available data or information.
Section 25. Department determination of petition.
(a) No later than 30 days after the end of the comment
period pursuant to subsection (e) of Section 20, or if the
comment period was waived, not later than 60 days after receipt
of a petition under Section 20, the Director shall complete a
review of the petition and notify the covered person, in
writing, of the Department's determination of the petition.
(b) If the covered person submitting the petition shows
that it is more likely than not that the covered person meets
the requirements for establishing an alternative compliance
strategy, the Department shall:
(1) approve the petition; and
(2) enter into an enforceable compliance agreement
with the covered person in accordance with the requirements
of Section 30.
(c) If the Department rejects a petition, the Director
shall provide the covered person with a written notice
explaining the reason for rejecting the petition, including:
(1) evidence that the covered person did not satisfy

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the requirements for establishing an alternative
compliance strategy;
(2) an identification of the rules of the Department
applicable to the covered person with respect to the
insurance innovation; and
(3) a description of:
(A) any beneficial effects, including an
identification of persons likely to benefit, from
rejecting the petition;
(B) any potential costs, including an
identification of persons likely to bear the costs, of
rejecting the petition; and
(C) the baseline used by the Department to measure
the likely economic consequences of rejecting the
petition.
(d) No later than 90 days after receiving a notice of
disapproval, a covered person may revise and resubmit a
petition to the agency under Section 20.
(e) If the Department disapproves a petition submitted in
good faith under this Section, the Department shall provide the
covered person a reasonable amount of time before the
Department takes an enforcement action against the covered
person relating to the insurance innovation that was the
subject of the petition.
Section 30. Enforceable compliance agreement.

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(a) If the Department approves a petition under Section 25,
the covered person may enter into an enforceable compliance
agreement with the Department, which shall include the terms
under which the covered person may develop or offer the
approved insurance innovation to the public and any
requirements of the covered person and the Department with
respect to the insurance innovation.
(b) The Department, by rule, shall establish requirements
relating to enforceable compliance agreements that include:
(1) procedures for modifying the terms of the
agreement;
(2) consequences for failure to comply with the terms
of the agreement;
(3) a compliance examination process that solicits
feedback from other agencies on the agreement and occurs
not less frequently than annually;
(4) a termination date for the agreement that is at
least one year after the date on which the agreement is
entered into;
(5) procedures for extending the termination date;
(6) procedures for judicial review; and
(7) procedures for maintaining the confidentiality of
any information disclosed to the Department in making the
agreement.
(c) If a covered person and the Department enter into an
enforceable compliance agreement:

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(1) another agency may not commence an enforcement
action against the covered person with respect to the
insurance innovation that is the subject of the enforceable
compliance agreement; and
(2) a State agency may not commence an enforcement
action against the covered person with respect to the
insurance innovation that is the subject of the enforceable
compliance agreement if the covered person provides the
State agency with the enforcement compliance agreement and
a statement of policies and procedures the covered person
has in place to comply with State laws that are applicable
to the financial innovation.
(d) Notwithstanding subsection (c) of this Section, the
State may commence an enforcement action against a covered
person with respect to an insurance innovation that is the
subject of an enforceable compliance agreement if, in an action
brought by the State in a court of competent jurisdiction, the
court determines that the Department's action was arbitrary and
capricious and the insurance innovation has substantially
harmed consumers within the State.
(e) A covered person may elect to arbitrate any action
initiated by another person relating to a financial innovation
that is the subject of the enforceable compliance agreement.
Section 35. Report to the General Assembly. No later than
one year after the effective date of this Act, and annually

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thereafter, the Department shall submit to the General Assembly
a report on the aggregate impact of enforceable compliance
agreements entered into under this Act, which shall include:
(1) the number and characteristics of the agreements;
(2) the most innovative and least burdensome tools that
the Innovation Division has implemented for achieving
regulatory ends;
(3) the existing State laws, rules, or practices that
the Department identifies as the most burdensome to
innovation in developing or providing insurance products
and services, that adversely affect competition in the
insurance industry, or that restrict improvements for
consumers of insurance products or services; and
(4) an identification of the overlap or fragmentation
of regulation of financial products or services and
recommendations for reducing, consolidating, or
eliminating such overlap or fragmentation.
Section 40. Funding. The Department, by rule, shall
establish the cost of each application for petition.
Section 45. Rulemaking authority. The Director may adopt
reasonable rules as necessary to implement the purposes and
provisions of this Act.
Section 50. Repeal. This Act is repealed on December 31,

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2022.
Section 99. Effective date. This Act takes effect January
1, 2018.