102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB2739

 

Introduced 2/19/2021, by Rep. Thaddeus Jones

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Private Primary Residential Flood Insurance Act. Sets forth provisions concerning flood insurance rates. Provides that an insurer shall file with the Department of Insurance all rates and any change to such rates within 30 days after the effective date of the rate change. Sets forth provisions concerning flood insurance forms. Provides that authorized insurers must notify the Department of plans to sell primary residential flood insurance products at least 30 days before writing flood insurance in the State and file a plan of operation and financial projections or material revisions to such plan. Sets forth provisions concerning notice to consumers that live in a special flood hazard area, notice of cancellation and nonrenewal, and surplus line placements of private flood insurance. Provides that rates, supplementary rate information, and any supporting information filed under the Act shall be open to public inspection upon disposition, except information marked and accepted by the Director of Insurance as confidential, trade secret, or proprietary by the insurer or filer. Provides that the Department may adopt rules to implement the Act.


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A BILL FOR

 

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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Private Primary Residential Flood Insurance Act.
 
6    Section 3. Purpose. To provide protection of lives and
7property from the peril of flood, this Act is designed to
8encourage a robust private primary residential flood insurance
9market to provide consumer choices and alternatives to the
10existing National Flood Insurance Program.
 
11    Section 5. Definitions. As used in this Act:
12    "Authorized insurer" means an insurer that is authorized
13by the Department of Insurance to write insurance under a
14certificate of authority issued by the Department of Insurance
15to transact insurance in this State.
16    "Department" means the Department of Insurance.
17    "National Flood Insurance Program" means the program of
18flood insurance coverage and floodplain management
19administered under the National Flood Insurance Act of 1968
20(42 U.S.C. 4001 et seq.) and applicable federal regulations
21promulgated in Title 44 of the Code of Federal Regulations.
22    "Primary residential flood insurance" means an insurance

 

 

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1policy covering losses from flood to residential property,
2other than commercial property insurance, written in this
3State by any insurer authorized to do business that is not
4written to apply coverage in excess of the coverage provided
5under another flood insurance policy, whether issued by a
6private insurer or the National Flood Insurance Program.
 
7    Section 10. Rates.
8    (a) Rates for flood insurance coverage established
9pursuant to this Act are not subject to prior approval by the
10Department. An insurer shall attest that the rates are based
11on actuarial data, methodologies, standards, and guidelines
12relating to flood that are not excessive, inadequate, or
13unfairly discriminatory. The Department may audit an insurer's
14flood rates to ensure compliance with State laws and rules.
15    (b) An insurer shall file with the Department all rates
16and any change to such rates within 30 days after the effective
17date of the rate change. The notice of a rate change must
18include the name of the insurer and the average statewide
19percentage change in rates. Actuarial data with regard to such
20rates for flood coverage must be maintained by the insurer for
212 years after the effective date of the rate change.
 
22    Section 15. Forms. The Department may require that:
23        (1) an insurer file the forms for primary residential
24    flood insurance coverage;

 

 

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1        (2) an authorized insurer may issue an insurance
2    policy, contract, or endorsement; and
3        (3) the coverage for residential properties required
4    to have flood insurance that are in a special flood hazard
5    area designated by the Federal Emergency Management Agency
6    at least meets the private flood insurance requirements
7    specified in subsection (b) of 42 U.S.C. 4012a and
8    applicable federal regulations in 84 FR 4953, effective
9    July 1, 2019.
 
10    Section 20. Regulatory notice of intent. Authorized
11insurers must:
12        (1) notify the Department of plans to sell primary
13    residential flood insurance products in accordance with
14    the State's rate filing laws at least 30 days before
15    writing primary residential flood insurance in this State;
16    and
17        (2) file a plan of operation and financial projections
18    or material revisions to such plan.
 
19    Section 25. Notice to consumers.
20    (a) If a consumer currently has no coverage under the
21National Flood Insurance Program, the consumer applicant must
22be informed of the existence of the National Flood Insurance
23Program before being placed with private flood insurance.
24    (b) All consumers must be informed that the coverage under

 

 

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1the National Flood Insurance Program may be provided at a
2subsidized rate and that the full-risk rate for flood
3insurance may apply to the property if the applicant later
4seeks to reinstate coverage under the program. The insurance
5producer, the surplus lines broker, or the insurer, upon its
6election or if there is no insurance producer or surplus lines
7broker, must provide the notice under subsection (a).
8    (c) This Section only applies if the applicant lives in a
9special flood hazard area. This Section is inoperative if
10federal legislation is enacted allowing the insured to switch
11between private flood insurance and National Flood Insurance
12Program coverage without risk of penalty.
 
13    Section 30. Notice of cancellation and nonrenewal. Notice
14of cancellation or nonrenewal, other than for nonpayment of
15premium, shall be made and provided in compliance with
16Sections 143.14, 143.15, and 143.16 of the Illinois Insurance
17Code, but at least 45 days before the cancellation or
18nonrenewal of private flood insurance coverage to the insured.
 
19    Section 35. Surplus line placements. The diligent effort
20requirement of Section 445 of the Illinois Insurance Code
21shall not apply to flood coverage under an insurance policy
22issued by an eligible surplus lines insurer unless and until
23the Director of Insurance certifies in a bulletin or order
24that the admitted private flood insurance market is adequate.
 

 

 

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1    Section 40. Other provisions.
2    (a) All rates, supplementary rate information, and any
3supporting information filed under this Act shall be open to
4public inspection upon disposition, except information marked
5and accepted by the Director of Insurance as confidential,
6trade secret, or proprietary by the insurer or filer. Copies
7may be obtained from the Director of Insurance upon request
8and upon payment of a reasonable fee.
9    (b) With respect to the regulation of private flood
10insurance coverage written in this State by authorized
11insurers, this Section supersedes any other provision of the
12Illinois Insurance Code in the event of a conflict.
13    (c) An insurer may certify that the insurance policy meets
14the definition of "private flood insurance", as specified in
15paragraph (7) of subsection (b) of 42 U.S.C. 4012a and
16applicable federal regulations.
17    (d) Nothing in this Act is intended to restrict the use of
18existing filings by an insurer or limit the ability of private
19insurers to provided flood insurance coverage of any type not
20addressed in this Act.
 
21    Section 45. Rules. The Department may adopt rules to
22implement this Act.