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

Sec. 123. Service of process upon an unauthorized foreign or alien company.

(1) The purpose of this Section is to subject unauthorized foreign and alien companies to the jurisdiction of courts of this State in actions by or on behalf of insureds, reinsureds, or beneficiaries under insurance or reinsurance contracts. The Legislature declares that it is a subject of concern that many residents of this State or corporations authorized to do business in this State hold policies of insurance or reinsurance issued by companies not authorized to do business in this State, thus presenting to such residents or corporations authorized to do business in this State the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such State interest, the Legislature herein provides a method of substituted service of process upon such companies and declares that in so doing it exercises its power to protect its residents and corporations authorized to do business in this State and to define, for the purpose of this statute, what constitutes doing business in this State, and also exercises powers and privileges available to the State by virtue of Public Law 15, 79th Congress of the United States, Chapter 20, 1st. Sess., S. 340, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.

(2) Any of the following acts in this State, effected by mail or otherwise, by an unauthorized foreign or alien company: (a) the issuance or delivery of contracts of insurance or reinsurance to residents of this State or to corporations authorized to do business therein, (b) the solicitation of applications for such contracts, (c) the collection of premiums, membership fees, assessments or other considerations for such contracts, or (d) any other transaction of business, is equivalent to and shall constitute an appointment by such company, of the Director and his or her successor or successors in office, to be its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against it, arising out of such policy or contract of insurance or reinsurance, and the acts shall be a signification of its agreement that any such process against it which is so served shall be of the same legal force and validity as if served upon the company.

(3) Service of such process shall be made by delivering and leaving with the Director a copy thereof and the payment to the Director of the fee prescribed by this Code. The Director shall keep a record of all process so served upon him or her. Such process shall be sufficient service upon such foreign or alien company provided notice of such service and a copy of the process are, within 10 days thereafter, sent by certified or registered mail by the plaintiff's attorney of record to the defendant at the last known principal place of business of the defendant, and the defendant's receipt and the plaintiff's attorney's affidavit of compliance herewith are filed with the Clerk of the Court in which such action is pending on or before the return date of the process or within such further time as the court may allow.

(4) Service of process in any such action against any such company shall in addition to the mode hereinabove described be valid and legal if served upon any person within this State who, in this State on behalf of such company, is

(a) soliciting insurance or reinsurance, or

(b) making, issuing, or delivering any policies or contracts of insurance or reinsurance, or

(c) collecting or receiving any premium, membership fee, assessment or other consideration for insurance or reinsurance, or

(d) in any manner aiding or assisting in doing any of the things enumerated in clauses (a), (b), or (c) of this subsection; and a copy of such process is within 10 days thereafter sent by certified or registered mail by the plaintiff's attorney of record to the defendant at the last known principal place of business of the defendant and the defendant's receipt and the plaintiff's attorney's affidavit of compliance herewith are filed with the clerk of the court in which such action is pending on or before the return date of the process or within such further time as the court may allow.

(5) Before any unauthorized foreign or alien company shall file or cause to be filed any pleading in any action or proceeding, including any arbitration, instituted against it, such unauthorized company shall either (1) deposit with the clerk of the court in which such action or proceeding is pending or with the clerk of the court in the jurisdiction in which the arbitration is pending cash or securities or file with such clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered in such action, proceeding, or arbitration; or (2) where the unauthorized company continues to transact the business of insurance by issuing new contracts of insurance or reinsurance, procure a certificate of authority to transact the business of insurance in this State.

The court in any action or proceeding, in which service is made in the manner provided in subsections (3) or (4) may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of this subsection and to defend such action.

Nothing in this Section is to be construed to prevent an unauthorized foreign or alien company from filing a motion to quash process or to set aside service thereof made in the manner provided in subsections (3) or (4) on the ground either (a) that such unauthorized company has not done any of the acts enumerated in subsection (2) or (b) that the person on whom service was made pursuant to subsection (4) was not doing any of the acts therein enumerated.

(6) In any action against an unauthorized foreign or alien company upon a contract of insurance or reinsurance issued or delivered in this State to a resident thereof or to a corporation authorized to do business therein, if the company has failed for 30 days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract, and it appears to the court that such refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include such fee in any judgment that may be rendered in such action. Such fee shall not exceed 12-1/2 per cent of the amount which the court or jury finds the plaintiff is entitled to recover against the insurer, but in no event shall such fee be less than $25. Failure of a company to defend any such action shall be deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause.

(7) No plaintiff shall be entitled to a judgment by default under this Section until the expiration of 30 days from the date of the filing of the affidavit of compliance.

(8) The provisions of this Section shall not apply to any action or proceeding against any unauthorized foreign or alien company arising out of any contract of direct insurance

(a) effected in accordance with Section 445, or

(b) covering ocean marine, aircraft, railway insurance risks, or

(c) against legal liability arising out of the ownership, operation or maintenance of any property having a permanent situs outside this State, or

(d) against loss of or damage to any property having a permanent situs outside this State,

where such contract of insurance contains a provision designating the Director and his or her successor or successors in office or a bona fide resident of Illinois to be the true and lawful attorney of such non-admitted insurer upon whom may be served all lawful process in any action or proceeding arising out of any such contract of insurance or where the insurer enters a general appearance in any such action or proceeding.

(9) Nothing in this Section contained shall limit or affect the right to serve any process, notice or demand required or permitted by law to be served upon any company in any other manner now or hereafter permitted by law.

(Source: P.A. 90-53, eff. 7-3-97.)