SB2817 96TH GENERAL ASSEMBLY

LRB096 18813 RPM 34199 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB2817

Introduced 1/28/2010, by Sen. Mike Jacobs

SYNOPSIS AS INTRODUCED:

215 ILCS 5/131.4a new
215 ILCS 5/131.11	from Ch. 73, par. 743.11
215 ILCS 5/136	from Ch. 73, par. 748
215 ILCS 5/404	from Ch. 73, par. 1016

Amends the Illinois Insurance Code. Provides that no person possessing a controlling interest in any domestic company may divest, transfer, donate, or otherwise alienate or dispose of a domestic company's securities or enter into agreements for such transactions without obtaining prior written approval from the Director of Insurance. Makes changes concerning annual statements and confidentiality of records. Effective immediately, except that certain provisions take effect on January 1, 2011.

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by changing Sections 131.11, 136, and 404 and by adding Section 131.4a as follows:

(215 ILCS 5/131.4a new)

Sec. 131.4a. Divesture of control of a domestic company.

(a) No person possessing a controlling interest in any domestic company may divest, transfer, donate, or otherwise alienate or dispose of a domestic company's securities, in whole or in part, or enter into agreements for such transactions, without obtaining prior written approval of such transactions or agreements from the Director. The request for approval shall be in writing and shall include a copy of any applicable agreement along with a description of the transaction in sufficient detail, satisfactory to the Director, for the Director to determine whether such transaction satisfies the standards set forth in items (a) and (c) through (e) of subsection (1) of Section 131.8 of this Code. This Section shall not diminish an acquiring party's duty to comply with the provisions of this Article.

(b) The Director may grant an exemption to the approval required under this Section upon written request of the person divesting, transferring, donating, or otherwise alienating or disposing of the controlling interest, where (i) the acquiring party has filed with the Director the statement required by Section 131.5 or (ii) where the transaction qualifies for exemption under Section 131.10.

(c) In the event that the Director denies a request for approval under this Section, the person that filed for the approval may request a hearing in accordance with the provisions of subsection (3) of Section 131.8, where, for purposes of this Section only, references to the statement required by Section 131.5 shall be deemed to refer to a request for approval under this Section.

(215 ILCS 5/131.11) (from Ch. 73, par. 743.11)

Sec. 131.11.

The following are violations of Sections 131.4 through 131.12:

(1) the failure to file any statement, amendment, or other material required to be filed under Sections 131.4, 131.4a, or 131.5; or

(2) the effectuation or any attempt to effectuate an acquisition of control of or merger or consolidation with, a domestic company unless the Director has given his approval thereto.

(Source: P.A. 77-673.)

(215 ILCS 5/136) (from Ch. 73, par. 748)

Sec. 136. Annual statement.

(1) Every company authorized to do business in this State or accredited by this State shall submit to file with the Director by March 1st in each year 2 copies of its financial statement for the year ending December 31st immediately preceding in such manner and in such form as on forms prescribed by the Director, which shall conform substantially to the form of statement adopted by the National Association of Insurance Commissioners. Unless the Director provides otherwise, the annual statement is to be prepared in accordance with the annual statement instructions and the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners. The Director shall have power to make such modifications and additions in this form as he may deem desirable or necessary to ascertain the condition and affairs of the company. The Director shall have authority to extend the time for filing any statement by any company for reasons which he considers good and sufficient. In every statement the admitted assets shall be shown at the actual values as of the last day of the preceding year, in accordance with Section 126.7. The statement shall be verified by oaths of the president and secretary of the company or, in their absence, by 2 other principal officers. In addition, any company may be required by the Director, when he considers that action to be necessary and appropriate for the protection of policyholders, creditors, shareholders, or claimants, to file, within 60 days after mailing to the company a notice that such is required, a supplemental summary statement as of the last day of any calendar month occurring during the 100 days next preceding the mailing of such notice designated by him on forms prescribed and furnished by the Director. The Director may require supplemental summary statements to be certified by an independent actuary deemed competent by the Director or by an independent certified public accountant.

(2) The statement of an alien company shall embrace only its condition and transactions in the United States and shall be verified by the oaths of its resident manager or principal representative in the United States, except that in the case of any life company organized under the laws of Canada or any province thereof, the statement may be verified by the oaths of any of its principal officers designated for that purpose by its board of directors.

(3) For the information of the public generally the Director shall cause an abstract of the information contained in the annual statement to be made available to the public as soon as practicable after filing with the Department, by printing those abstracts in pamphlet tabular form for free general distribution by the Department, or by such other publication in the city of Springfield or in the city of Chicago as may be reasonably necessary more fully to inform the public of the financial condition of companies transacting business in this State.

(4) Each domestic, foreign, and alien insurer authorized to do business in this State or accredited by this State shall participate in the National Association of Insurance Commissioners' Insurance Regulatory Information System, including the payment of all fees and charges of the system. Each company shall, on or before March 1 of each year, file with the National Association of Insurance Commissioners a copy of its annual financial statement along with any additional filings prescribed by the Director for the preceding year. The statement filed with the National Association of Insurance Commissioners shall be in the same format and scope as that required by this Code and shall include a signed jurat page and actuarial certification. Any amendments and addendums to the annual statement shall also be filed with the National Association of Insurance Commissioners. Each company shall also file with the National Association of Insurance Commissioners annual and quarterly financial statement information in computer readable format as required by the Insurance Regulatory Information System. Failure of a company to file financial statement information in computer readable format shall subject the company to the provisions of Section 139.

(5) All financial analysis ratios and examination synopsis concerning insurance companies that are submitted to the Director by the National Association of Insurance Commissioners' Insurance Regulatory Information System are confidential and may not be disclosed by the Director.

(6) Every property and casualty insurance company doing business in this State, unless otherwise exempted by the Director, shall annually submit the opinion of an appointed actuary entitled "Statement of Actuarial Opinion". This opinion shall be filed in accordance with the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions.

(a) Every property and casualty insurance company domiciled in this State that is required to submit a Statement of Actuarial Opinion shall annually submit an Actuarial Opinion Summary, written by the company's appointed actuary. This Actuarial Opinion Summary shall be filed in accordance with the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions and shall be considered as a document supporting the Actuarial Opinion required in this subsection (6). Each foreign and alien property and casualty company authorized to do business in this State shall provide the Actuarial Opinion Summary upon request.

(b) An Actuarial Report and underlying workpapers as required by the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions shall be prepared to support each Actuarial Opinion. If the insurance company fails to provide a supporting Actuarial Report or workpapers at the request of the Director or the Director determines that the supporting Actuarial Report or workpapers provided by the insurance company is otherwise unacceptable to the Director, the Director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting Actuarial Report or workpapers.

(c) The appointed actuary shall not be liable for damages to any person (other than the insurance company and the Director) for any act, error, omission, decision, or conduct with respect to the actuary's opinion, except in cases of fraud or willful misconduct on the part of the appointed actuary.

(d) The Statement of Actuarial Opinion shall be provided with the Annual Statement in accordance with the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions and shall be treated as a public document. Documents, materials, or other information in the possession or control of the Director that are considered an Actuarial Report, workpapers, or Actuarial Opinion Summary provided in support of the opinion, and any other material provided by the company to the Director in connection with the Actuarial Report, workpapers or Actuarial Opinion Summary, must be given confidential treatment, are not subject to subpoena, and may not be made public by the Director or any other persons. This paragraph (d) shall not be construed to limit the Director's authority to release the documents to the Actuarial Board for Counseling and Discipline (ABCD), so long as the material is required for the purpose of professional disciplinary proceedings and that the ABCD establishes procedures satisfactory to the Director for preserving the confidentiality of the documents, nor shall this paragraph (d) be construed to limit the Director's authority to use the documents, materials or other information in furtherance of any regulatory or legal action brought as part of the Director's official duties. Neither the Director nor any person who received documents, materials, or other information while acting under the authority of the Director shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to this subsection (6). Except where another provision of this Code expressly prohibits a disclosure of confidential information to the specific officials or organizations described in this subsection, the Director may:

(i) share documents, materials, or other information, including the confidential and privileged documents, materials or information subject to this paragraph (d) with the insurance department of any other state or country or with law enforcement officials of this or any other state or agency of the federal government at any time, as long as the agency or office receiving the document, material, or other information agrees in writing to hold it confidential and in a manner consistent with this Code;

(ii) receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and

(iii) enter into agreements governing sharing and use of information consistent with paragraph (d).

(e) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the Director under this Section or as a result of sharing as authorized in subparagraphs (i), (ii), and (iii) of paragraph (d) of subsection (6) of this Section. All 2008 Annual Statements, which are filed in 2009, and all subsequent Annual Statement filings shall be done in accordance with subsection (6) of this Section.

(Source: P.A. 96-145, eff. 8-7-09.)

(215 ILCS 5/404) (from Ch. 73, par. 1016)

Sec. 404. Office of Director; A public office; destruction or disposal of records, papers, documents, and memoranda.

(1) (a) The office of the Director shall be a public office and the records, books, and papers thereof on file therein, except those records or documents containing or disclosing any analysis, opinion, calculation, ratio, recommendation, advice, viewpoint, or estimation by any Department staff regarding the financial or market condition of an insurer not otherwise made part of the public record by the Director, shall be accessible to the inspection of the public, except as the Director, for good reason, may decide otherwise, or except as may be otherwise provided in this Code.

(b) Except where another provision of this Code expressly prohibits a disclosure of confidential information to the specific officials or organizations described in this subsection, the Director may disclose or share any confidential records or information in his custody and control with any insurance regulatory officials of any state or country, with the law enforcement officials of this State, any other state, or the federal government, or with the National Association of Insurance Commissioners, upon the written agreement of the official or organization receiving the information to hold the information or records confidential and in a manner consistent with this Code.

(c) The Director shall maintain as confidential any records or information received from the National Association of Insurance Commissioners or insurance regulatory officials of other states or countries or law enforcement officials of this or any other state or country or agency of the federal government which is confidential in that other jurisdiction.

(2) Upon the filing of the examination to which they relate, the Director is authorized to destroy or otherwise dispose of all working papers relative to any company which has been examined at any time prior to that last examination by the Department, so that in such circumstances only current working papers of that last examination may be retained by the Department.

(3) Five years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all books, records, papers, memoranda and correspondence directly related to consumer complaints or inquiries.

(4) Two years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all books, records, papers, memoranda, and correspondence directly related to all void, obsolete, or superseded rate filings and schedules required to be filed by statute; and all individual company rating experience data and all records, papers, documents and memoranda in the possession of the Director relating thereto.

(5) Five years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all examination reports of companies made by the insurance supervisory officials of states other than Illinois; applications, requisitions, and requests for licenses; all records of hearings; and all similar records, papers, documents, and memoranda in the possession of the Director.

(6) Ten years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all official correspondence of foreign and alien companies, all foreign companies' and alien companies' annual statements, valuation reports, tax reports, and all similar records, papers, documents and memoranda in the possession of the Director.

(7) Whenever any records, papers, documents or memoranda are destroyed or otherwise disposed of pursuant to the provisions of this section, the Director shall execute and file in a separate, permanent office file a certificate listing and setting forth by summary description the records, papers, documents or memoranda so destroyed or otherwise disposed of, and the Director may, in his discretion, preserve copies of any such records, papers, documents or memoranda by means of microfilming or photographing the same.

(8) This Section shall apply to records, papers, documents, and memoranda presently in the possession of the Director as well as to records, papers, documents, and memoranda hereafter coming into his possession.

(Source: P.A. 89-97, eff. 7-7-95.)

Section 99. Effective date. This Act takes effect upon becoming law, except that the provisions changing Sec. 136 of the Illinois Insurance Code take effect on January 1, 2011.