215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/123A-4) (from Ch. 73, par. 735A-4)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-4. Licenses - Application - Fees.

(1) An advisory organization must be licensed by the Director before it is authorized to conduct activities in this State.

(2) Any advisory organization shall make application for a license as an advisory organization by providing with the application satisfactory evidence to the Director that it has complied with Sections 123A-6 and 123A-7 of this Article.

(3) The fee for filing an application as an advisory organization is $50 payable to the Director.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/123A-5) (from Ch. 73, par. 735A-5)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-5. Issuance of License.

(1) The Director shall examine each application for license as an advisory organization and the supporting documents and data filed with it and may make a further investigation of the applicant and its officers, its affairs, and its proposed plan of operation.

(2) The Director shall issue the license applied for within 45 days from the date the application is properly submitted to him if he is satisfied

(a) that the applicant, its officers, its affairs and its proposed plan of operation conform to this Article;

(b) that the business reputation of the applicant is good and that the business reputation and character of its officers is good; and

(c) that the rules required under Section 123A-7 are reasonable and conform with this Article.

(3) The Director shall notify in writing the applicant of his decision to deny the application and submit the reasons for the denial. The applicant has 10 days from the date he receives the Director's denial to request a hearing which shall be held within 20 days of the date of the request.

(4) Any advisory organization conducting activities in this State for a period of at least 90 days prior to the effective date of this Article is authorized to continue to conduct its activities in this State without the required license for 90 days from the effective date of this Article if the activities comply with this Article.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-6) (from Ch. 73, par. 735A-6)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-6. Documents prerequisite to engaging in activities. No advisory organization and no group, association or other organization authorized in 123A-10 of this Code may engage in activities in this State unless it has filed with the Director

(a) a copy of its constitution, of its articles of incorporation, agreement or association, and of its by-laws, rules and regulations governing its activities, all duly certified by the custodian of the originals thereof;

(b) a list of its members and subscribers; and

(c) the name and address of a resident of this State upon whom notices or orders of the Director or process may be served.

Every such organization shall notify the Director promptly of every change in its constitution, in its article of incorporation, agreement or association, and in its by-laws, rules and regulations governing the conduct of its business; in its list of members and subscribers; and in the name and address of the resident of this State designated by it upon whom notices or orders of the Director or process affecting such organization may be served.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-7) (from Ch. 73, par. 735A-7)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-7. Eligibility for membership-activities of Advisory Organization. Subject to the approval of the Director, every advisory organization must make reasonable rules governing eligibility for membership and must make rules governing their activities. These rules must provide that the advisory organization will

(a) permit any admitted company to become a member of or a subscriber to such organization at a reasonable cost and without discrimination, or to withdraw therefrom;

(b) refrain from adopting any policy, the effect of which would be to require any member or subscriber as a condition to membership or subscribership, to adhere to its insurance statistics, insurance policies, bond forms, or underwriting rules;

(c) neither practice nor sanction any plan or act of boycott or intimidation tending to result in the unreasonable restraint of or monopoly in the business of insurance; and

(d) allow admitted companies who are not members or subscribers to the organization to purchase the same services of such organization as are made available to members and subscribers without discrimination as respects costs to members and subscribers.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-8) (from Ch. 73, par. 735A-8)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-8. Common ownership or management organization. If 2 or more companies have common ownership or are operating in this State under common management, the advisory organization may require as a condition to membership or subscribership of one or more then all such companies must become members or subscribers.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-9) (from Ch. 73, par. 735A-9)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-9. Authorization to act.

(1) Any advisory organization is authorized to compile statistics and to formulate insurance policies, bond forms and underwriting rules and to furnish that which it prepares to its members and subscribers.

(2) Subject to the provisions of this Article, two or more companies are authorized to act in concert with each other and with others with respect to any activities of an advisory organization as authorized under this Article.

(3) Any company is authorized but not required by this Article to furnish to any advisory organization information in its possession relating to that which the advisory organization is authorized in this Article.

(4) Any company is authorized to become a member or subscriber to any advisory organization.

(5) The Director may review such cooperative activities and practices as are authorized in this section and if, after a hearing upon notice to all the cooperating parties, he finds that any activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of the Illinois Insurance Code, he may issue a written order requiring the discontinuance of such activity or practice.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-10) (from Ch. 73, par. 735A-10)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-10. Compliance of membership with Article. Any group, association or organization of admitted companies which engages in joint underwriting or joint reinsurance through any group, association or organizations or by standing agreement among the members of such organizations, which has complied with the applicable provisions of this Article are authorized to conduct joint reinsurance and joint underwriting activities relative to individual risks in this State.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-11) (from Ch. 73, par. 735A-11)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-11. Prohibition against agreements of use or adherence.

(1) Two or more companies, except as authorized in this Article or in Section 478.1 of this Code, must not agree with each other or any advisory organization to adhere to or to use any statistics, policy or bond forms or underwriting rules furnished by any advisory organization or other source, either as a condition to receive such statistics, policy or bond forms or underwriting rules or otherwise.

(2) The fact that two or more companies, whether or not members or subscribers of an advisory organization, use consistently or intermittently, the insurance statistics, insurance policy or bond forms or underwriting rules of an advisory organization, is not sufficient in itself to support a finding that an agreement to adhere exists, and may be used only for the purpose of supplementing or explaining direct evidence of the existence of any such agreement.

(3) Two or more companies having a common ownership or operating in this State under common management or control may act in concert with respect to any matters pertaining to those activities authorized in this Article or in Section 478.1 of this Code between or among themselves the same as if they constituted a single company, and to the extent that such matters relate to co-surety bonds, two or more admitted companies executing such bonds are authorized to act in concert between or among themselves as if they constituted a single company. Nothing hereunder requires such companies to act in concert.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-12) (from Ch. 73, par. 735A-12)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-12. Exchange of information or statistical data between advisory Organizations and companies. Advisory organizations, or advisory organizations and companies may exchange the type of information or statistical data authorized under this Article. The Director may review such cooperative activities and practices and if, after a hearing, upon notice of all the cooperating parties, he finds that any activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of the Illinois Insurance Code, he may issue a written order requiring the discontinuance of such activity or practice.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-13) (from Ch. 73, par. 735A-13)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-13. Examination of advisory organization, members, subscribers and other companies.

(1) As often as may be reasonable and necessary, the Director must make or cause to be made an examination of any advisory organization. In lieu of any such examination the Director may accept the report of an examination made by the insurance regulatory official of another state. In examining any organization pursuant to this Section, the Director shall ascertain whether such organization complies with the requirements of this Article and all other applicable provisions of the Illinois Insurance Code.

(2) If after examination of a company or advisory organization, or upon the basis of other information, the Director has good cause to believe that the company or organization does not comply with the applicable provisions of the Illinois Insurance Code, he shall, unless he has good cause to believe such noncompliance is knowingly and wilfully, give notice in writing to the company or organization, stating therein to the extent practicable, in what manner such noncompliance is allowed to exist and specifying therein a reasonable time, not less than 10 days thereafter, in which such noncompliance may be corrected. Notices under this Section shall be confidential between the Director and the parties unless a hearing is held thereon.

(3) If the Director has good cause to believe such noncompliance to be wilful, or if within, the period prescribed by the Director in the notice required by paragraph (2) of this Section the company or organization does not make the changes as may be necessary to correct the noncompliance specified by the Director or establish to the satisfaction of the Director that the specified noncompliance does not exist, then the Director may hold a public hearing in connection therewith, provided that within a reasonable period of time, which shall be not less than 10 days before the date of such hearing, he must mail written notice specifying the matters to be considered at such hearing to such company or organization. If no notice has been given as provided in paragraph (2) of this Section, notice of hearing shall state therein, to the extent practicable, in what manner such noncompliance is alleged to exist.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-14) (from Ch. 73, par. 735A-14)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-14. Notice of violation-suspension or revocation of certificate-cease and desist order. If after a hearing pursuant to Sec. 123A-13, the Director finds

(a) that a company or advisory organization is in violation of this Article or other applicable provisions of the Illinois Insurance Code, he may issue an order to such company or organization which has been the subject of the hearing specifying the violation which exists and requiring compliance within a reasonable time thereafter;

(b) that the violation of any of the applicable provisions of the Illinois Insurance Code by any company or advisory organization was wilful, he may suspend or revoke, in whole or in part, the certificate of authority of such company, and revoke the license of the advisory organization and order it to cease all activities within the State of Illinois.

(Source: P.A. 77-1882.)

(215 ILCS 5/123A-15) (from Ch. 73, par. 735A-15)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123A-15. Failure to comply with final order of Director; penalty; collection; to be in addition to other penalties; wilful violation of Act-misdemeanor.

(1) Any person, company or organization who fails to comply with a final order of the Director under this Article shall be liable to the State up to $100 per violation, according to the findings of the Director. If the Director finds the noncompliance wilful, the person, company, or organization shall be liable to the State up to $5,000 per violation. The Director may bring action in the name of the people of the State of Illinois to enforce collection. These penalties may be in addition to any other penalties provided by law.

(2) A wilful violation of the provisions of this Article by any person is a misdemeanor.

(Source: P.A. 77-1882.)

(215 ILCS 5/Art. VIIB heading) ARTICLE VIIB. RISK RETENTION COMPANIES (Article scheduled to be repealed on January 1, 2027)

(215 ILCS 5/123B-1) (from Ch. 73, par. 735B-1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123B-1. Purpose. The purpose of this Article is to regulate the formation or operation, or both, of risk retention groups and purchasing groups in Illinois formed pursuant to the provisions of the federal Liability Risk Retention Act of 1986 to the extent permitted by such law.

(Source: P.A. 85-131.)

(215 ILCS 5/123B-2) (from Ch. 73, par. 735B-2)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123B-2. Definitions. As used in this Article:

(1) "Director" means the Director of the Department of Insurance.

(2) "Completed operations liability" means liability arising out of the installation, maintenance, or repair of any product at a site which is not owned or controlled by:

(a) any person who performs that work; or

(b) any person who hires an independent contractor to perform that work; but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability.

(3) "Domicile", for purposes of determining the state in which a purchasing group is domiciled, means:

(a) for a corporation, the state in which the purchasing group is incorporated; and

(b) for an unincorporated entity, the state of its principal place of business.

(4) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able:

(a) to meet obligations to policyholders with respect to known claims and reasonably anticipated claims; or

(b) to pay other obligations in the normal course of business.

(5) "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of Illinois.

(6) "Liability" means:

(a) legal liability for damages (including costs of defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of:

(i) any business (whether for profit or not for profit), trade, product, services (including professional services), premises, or operations; or

(ii) any activity of any state or local government, or any agency or political subdivision thereof; but

(b) does not include personal risk liability and an employer's liability with respect to its employees other than legal liability under the Federal Employers' Liability Act (45 U.S.C. 51 et seq.).

(7) "Personal risk liability" means liability for damage because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in paragraph (a) of subsection (6) of this Section;

(8) "Plan of operation or a feasibility study" means an analysis which presents the expected activities and results of a risk retention group including, at a minimum:

(a) information sufficient to verify that its members are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises or operations;

(b) for each state in which it intends to operate, the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer;

(c) historical and expected loss experience of the proposed members and national experience of similar exposures to the extent this experience is reasonably available;

(d) pro forma financial statements and projections;

(e) appropriate opinions by a qualified, independent casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;

(f) identification of management, underwriting and claims procedures, marketing methods, managerial oversight methods, investment policies and reinsurance agreements;

(f-5) identification of each state in which the risk retention group has obtained, or sought to obtain, a charter and license and a description of its status in each such state; and

(g) such other matters as may be prescribed by the commissioner of the state in which the group is chartered for liability insurance companies authorized by the insurance laws of such state.

(9) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.

(10) "Purchasing group" means any group which:

(a) has as one of its purposes the purchase of liability insurance on a group basis;

(b) purchases such insurance only for its group members and only to cover their similar or related liability exposure, as described in paragraph (c) of this subsection (10);

(c) is composed of members whose businesses or activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and

(d) is domiciled in any State.

(11) "Risk retention group" means any corporation or other limited liability association:

(a) whose primary activity consists of assuming and spreading all, or any portion, of the liability exposure of its group members;

(b) which is organized for the primary purpose of conducting the activity described under paragraph (a) of this subsection (11);

(c) which:

(i) is organized and licensed as a liability insurance company and authorized to engage in the business of insurance under the laws of any state; or

(ii) before January 1, 1985 was organized or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purposes of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Risk Retention Act of 1986);

(d) which does not exclude any person from membership in the group solely to provide for members of such a group a competitive advantage over such a person;

(e) which:

(i) has as its owners (directly or indirectly) only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or

(ii) has as its sole owner (directly or indirectly) an organization which:

(I) has as its members only persons who comprise the membership of the risk retention group; and

(II) has as its owners only persons who comprise the membership of the risk retention group and who are provided insurance by such group;

(f) whose members are engaged in businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;

(g) whose activities do not include the provision of insurance other than:

(i) liability insurance for assuming and spreading all or any portion of the liability of its group members; and

(ii) reinsurance with respect to the liability of any other risk retention group (or any members of such other group) which is engaged in businesses or activities so that such group or member meets the requirement described in paragraph (f) of this subsection (11) for membership in the risk retention group which provides such reinsurance; and

(h) the name of which includes the phrase "Risk Retention Group".

(12) "State" means any state of the United States or the District of Columbia.

(13) "NAIC" means the National Association of Insurance Commissioners.

(Source: P.A. 99-512, eff. 1-1-17.)