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1 | AN ACT concerning insurance.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Insurance Code is amended by | ||||||
5 | changing Sections 187, 209, 531.03, 531.04, 531.05, 531.06, | ||||||
6 | 531.07, 531.08, 531.09, 531.10, 531.11, 531.12, 531.14, | ||||||
7 | 531.18, 537.2, and 545 and by adding Section 206.1 as follows:
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8 | (215 ILCS 5/187) (from Ch. 73, par. 799)
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9 | Sec. 187. Scope of Article.
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10 | (1) This Article shall apply to every corporation, | ||||||
11 | association, society,
order, firm, company, partnership, | ||||||
12 | individual, and aggregation of
individuals to which any Article | ||||||
13 | of this Code is applicable, or which is
subject to examination, | ||||||
14 | visitation or supervision by the Director under any
provision | ||||||
15 | of this Code or under any law of this State, or which is | ||||||
16 | engaging
in or proposing or attempting to engage in or is | ||||||
17 | representing that it is
doing an insurance or surety business, | ||||||
18 | or is undertaking or proposing or
attempting to undertake to | ||||||
19 | provide or arrange for health care services as a
health care | ||||||
20 | plan as defined in subsection (7) of Section 1-2 of the Health
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21 | Maintenance Organization Act, including the exchanging of | ||||||
22 | reciprocal or
inter-insurance contracts between individuals, | ||||||
23 | partnerships and corporations in
this State, or which is in the |
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1 | process of organization for the purpose of doing
or attempting | ||||||
2 | or intending to do such business, anything as to any such
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3 | corporation, association, society, order, firm, company, | ||||||
4 | partnership,
individual or aggregation of individuals provided | ||||||
5 | in this Code or elsewhere in
the laws of this State to the | ||||||
6 | contrary notwithstanding.
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7 | (2) The word "company" as used in this Article includes all | ||||||
8 | of the
corporations, associations, societies, orders, firms, | ||||||
9 | companies,
partnerships, and individuals specified in | ||||||
10 | subsections
(1), (4), and (5) of this Section and
agents, | ||||||
11 | managing general agents, brokers, premium finance companies,
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12 | insurance holding companies, and all other non-risk bearing | ||||||
13 | entities or persons
engaged in any aspect of the business of | ||||||
14 | insurance on behalf of an insurer
against which a receivership | ||||||
15 | proceeding has been or is being filed under this
Article, | ||||||
16 | including, but not limited to, entities or persons that provide
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17 | management, administrative, accounting, data processing, | ||||||
18 | marketing,
underwriting, claims handling, or any other similar | ||||||
19 | services to that insurer,
whether or not those entities are | ||||||
20 | licensed to engage in the business of
insurance in Illinois, if | ||||||
21 | the
entity or person is an affiliate of that insurer.
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22 | (3) The word "court" shall mean the court before which the
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23 | conservation, rehabilitation, or liquidation proceeding of the | ||||||
24 | company is
pending, or the judge presiding in such proceedings.
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25 | (4) The word "affiliate" as used in this Article means a | ||||||
26 | person that
directly, or indirectly through one or more |
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1 | intermediaries, controls, is
controlled by, or is under common | ||||||
2 | control with, the person specified.
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3 | (5) The word "person" as used in this Article means an | ||||||
4 | individual, an
aggregation
of individuals, a partnership, or a | ||||||
5 | corporation.
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6 | (6) The word "assets" as used in this Article includes all | ||||||
7 | deposits and
funds of a special or trust nature.
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8 | (7) The words "receivership proceedings" mean any | ||||||
9 | conservation,
rehabilitation, liquidation, or ancillary | ||||||
10 | receivership.
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11 | (8) "Netting agreement", as used in this Article, means (a) | ||||||
12 | a contract or agreement (including terms and conditions | ||||||
13 | incorporated by reference therein), including a master | ||||||
14 | agreement (which master agreement, together with all | ||||||
15 | schedules, confirmations, definitions, and addenda thereto and | ||||||
16 | transactions under any thereof, shall be treated as one netting | ||||||
17 | agreement), that documents one or more transactions between the | ||||||
18 | parties to the agreement for or involving one or more qualified | ||||||
19 | financial contracts and that provides for the netting, | ||||||
20 | liquidation, setoff, termination, acceleration, or close out | ||||||
21 | under or in connection with one or more qualified financial | ||||||
22 | contracts or present or future payment or delivery obligations | ||||||
23 | or payment or delivery entitlements thereunder (including | ||||||
24 | liquidation or close-out values relating to such obligations or | ||||||
25 | entitlements) among the parties to the netting agreement; (b) | ||||||
26 | any master agreement or bridge agreement for one or more master |
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1 | agreements described in paragraph (a) of this subsection (8); | ||||||
2 | or (c) any security agreement or arrangement or other credit | ||||||
3 | enhancement or guarantee or reimbursement obligation related | ||||||
4 | to any contract or agreement described in paragraph (a) or (b) | ||||||
5 | of this subsection (8); provided that any contract or agreement | ||||||
6 | described in paragraphs (a) or (b) of this subsection (8) | ||||||
7 | relating to agreements or transactions that are not qualified | ||||||
8 | financial contracts shall be deemed to be a netting agreement | ||||||
9 | only with respect to those agreements or transactions that are | ||||||
10 | qualified financial contracts. | ||||||
11 | (9) "Qualified financial contract" means any commodity | ||||||
12 | contract, forward contract, repurchase agreement, securities | ||||||
13 | contract, swap agreement, or any similar agreement that the | ||||||
14 | Director determines by regulation, resolution, or order to be a | ||||||
15 | qualified financial contract for the purposes of this Act. | ||||||
16 | (a) "Commodity contract" means: | ||||||
17 | (1) a contract for the purchase or sale of a | ||||||
18 | commodity for future delivery on, or subject to the | ||||||
19 | rules of, a board of trade or contract market under the | ||||||
20 | federal Commodity Exchange Act or a board of trade | ||||||
21 | outside the United States; | ||||||
22 | (2) an agreement that is subject to regulation | ||||||
23 | under Section 19 of the federal Commodity Exchange Act | ||||||
24 | and that is commonly known to the commodities trade as | ||||||
25 | a margin account, margin contract, leverage account, | ||||||
26 | or leverage contract; |
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1 | (3) an agreement or transaction that is subject to | ||||||
2 | regulation under Section 4c(b) of the federal | ||||||
3 | Commodity Exchange Act and that is commonly known to | ||||||
4 | the commodities trade as a commodity option; | ||||||
5 | (4) any combination of the agreements or | ||||||
6 | transactions referred to in this paragraph (a); or | ||||||
7 | (5) any option to enter into an agreement or | ||||||
8 | transaction referred to in this paragraph (a). | ||||||
9 | (b) "Forward contract", "repurchase agreement", | ||||||
10 | "securities contract", and "swap agreement" shall have the | ||||||
11 | meanings set forth in the Federal Deposit Insurance Act, 12 | ||||||
12 | U.S.C. ยง 1821(e)(8)(D), as amended from time to time. | ||||||
13 | (Source: P.A. 92-140, eff. 7-24-01.)
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14 | (215 ILCS 5/206.1 new) | ||||||
15 | Sec. 206.1. Qualified financial contracts. | ||||||
16 | (a) Notwithstanding any other provision of this Article, | ||||||
17 | including any other provision of this Article permitting the | ||||||
18 | modification of contracts, or other law of a state, no person | ||||||
19 | shall be stayed or prohibited from exercising: | ||||||
20 | (1) a contractual right to cause the termination, | ||||||
21 | liquidation, acceleration, or close out of obligations | ||||||
22 | under or in connection with any netting agreement or | ||||||
23 | qualified financial contract with an insurer because of: | ||||||
24 | (A) the insolvency, financial condition, or | ||||||
25 | default of the insurer at any time, provided that the |
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1 | right is enforceable under an applicable law other than | ||||||
2 | this Code; or | ||||||
3 | (B) the commencement of a formal delinquency | ||||||
4 | proceeding under this Code; | ||||||
5 | (2) any right under a pledge, security, collateral, | ||||||
6 | reimbursement or guarantee agreement or arrangement, any | ||||||
7 | other similar security agreement or arrangement, or other | ||||||
8 | credit enhancement relating to one or more netting | ||||||
9 | agreements or qualified financial contracts; | ||||||
10 | (3) subject to any provision of Section 206 of this | ||||||
11 | Article, any right to set off or net out any termination | ||||||
12 | value, payment amount, or other transfer obligation | ||||||
13 | arising under or in connection with one or more qualified | ||||||
14 | financial contracts where the counterparty or its | ||||||
15 | guarantor is organized under the laws of the United States | ||||||
16 | or a state or a foreign jurisdiction approved by the | ||||||
17 | Securities Valuation Office of the National Association of | ||||||
18 | Insurance Commissioners as eligible for netting; or | ||||||
19 | (4) if a counterparty to a master netting agreement or | ||||||
20 | a qualified financial contract with an insurer subject to a | ||||||
21 | proceeding under this Article terminates, liquidates, | ||||||
22 | closes out or accelerates the agreement or contract, then | ||||||
23 | damages shall be measured as of the date or dates of | ||||||
24 | termination, liquidation, close out, or acceleration; the | ||||||
25 | amount of a claim for damages shall be actual direct | ||||||
26 | compensatory damages calculated in accordance with |
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1 | subsection (f) of this Section. | ||||||
2 | (b) Upon termination of a netting agreement or qualified | ||||||
3 | financial contract, the net or settlement amount, if any, owed | ||||||
4 | by a nondefaulting party to an insurer against which an | ||||||
5 | application or petition has been filed under this Code shall be | ||||||
6 | transferred to or on the order of the receiver for the insurer, | ||||||
7 | even if the insurer is the defaulting party, notwithstanding | ||||||
8 | any walkaway clause in the netting agreement or qualified | ||||||
9 | financial contract. | ||||||
10 | For the purposes of this subsection (b), the term "walkaway | ||||||
11 | clause" means a provision in a netting agreement or a qualified | ||||||
12 | financial contract that, after calculation of a value of a | ||||||
13 | party's position or an amount due to or from one of the parties | ||||||
14 | in accordance with its terms upon termination, liquidation, or | ||||||
15 | acceleration of the netting agreement or qualified financial | ||||||
16 | contract, either does not create a payment obligation of a | ||||||
17 | party or extinguishes a payment obligation of a party in whole | ||||||
18 | or in part solely because of the party's status as a | ||||||
19 | nondefaulting party. Any limited 2-way payment or first method | ||||||
20 | provision in a netting agreement or qualified financial | ||||||
21 | contract with an insurer that has defaulted shall be deemed to | ||||||
22 | be a full 2-way payment or second method provision as against | ||||||
23 | the defaulting insurer. Any such property or amount shall, | ||||||
24 | except to the extent that it is subject to one or more | ||||||
25 | secondary liens or encumbrances or rights of netting or setoff, | ||||||
26 | be a general asset of the insurer. |
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1 | (c) In making any transfer of a netting agreement or | ||||||
2 | qualified financial contract of an insurer subject to a | ||||||
3 | proceeding under this Code, the receiver shall either: | ||||||
4 | (1) transfer to one party (other than an insurer | ||||||
5 | subject to a proceeding under this Article) all netting | ||||||
6 | agreements and qualified financial contracts between a | ||||||
7 | counterparty or any affiliate of the counterparty and the | ||||||
8 | insurer that is the subject of the proceeding, including: | ||||||
9 | (A) all rights and obligations of each party under | ||||||
10 | each netting agreement and qualified financial | ||||||
11 | contract; and | ||||||
12 | (B) all property, including any guarantees or | ||||||
13 | other credit enhancement, securing any claims of each | ||||||
14 | party under each netting agreement and qualified | ||||||
15 | financial contract; or | ||||||
16 | (2) transfer none of the netting agreements, qualified | ||||||
17 | financial contracts, rights, obligations, or property | ||||||
18 | referred to in paragraph (1) of this subsection (c) (with | ||||||
19 | respect to the counterparty and any affiliate of the | ||||||
20 | counterparty). | ||||||
21 | (d) If a receiver for an insurer makes a transfer of one or | ||||||
22 | more netting agreements or qualified financial contracts, then | ||||||
23 | the receiver shall use its best efforts to notify any person | ||||||
24 | who is party to the netting agreements or qualified financial | ||||||
25 | contracts of the transfer by 12:00 noon (the receiver's local | ||||||
26 | time) on the business day following the transfer. For the |
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1 | purposes of this subsection (d), "business day" means a day | ||||||
2 | other than a Saturday, Sunday, or any day on which either the | ||||||
3 | New York Stock Exchange or the Federal Reserve Bank of New York | ||||||
4 | is closed. | ||||||
5 | (e) Notwithstanding any other provision of this Article, a | ||||||
6 | receiver may not avoid a transfer of money or other property | ||||||
7 | arising under or in connection with a netting agreement or | ||||||
8 | qualified financial contract (or any pledge, security, | ||||||
9 | collateral, or guarantee agreement or any other similar | ||||||
10 | security arrangement or credit support document relating to a | ||||||
11 | netting agreement or qualified financial contract) that is made | ||||||
12 | before the commencement of a formal delinquency proceeding | ||||||
13 | under this Article. | ||||||
14 | (f) The following provisions shall apply concerning | ||||||
15 | disaffirmance and repudiation: | ||||||
16 | (1) In exercising the rights of disaffirmance or | ||||||
17 | repudiation of a receiver with respect to any netting | ||||||
18 | agreement or qualified financial contract to which an | ||||||
19 | insurer is a party, the receiver for the insurer shall | ||||||
20 | either: | ||||||
21 | (A) disaffirm or repudiate all netting agreements | ||||||
22 | and qualified financial contracts between a | ||||||
23 | counterparty or any affiliate of the counterparty and | ||||||
24 | the insurer that is the subject of the proceeding; or | ||||||
25 | (B) disaffirm or repudiate none of the netting | ||||||
26 | agreements and qualified financial contracts referred |
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1 | to in subparagraph (A) (with respect to the person or | ||||||
2 | any affiliate of the person). | ||||||
3 | (2) Notwithstanding any other provision of this | ||||||
4 | Article, any claim of a counterparty against the estate | ||||||
5 | arising from the receiver's disaffirmance or repudiation | ||||||
6 | of a netting agreement or qualified financial contract that | ||||||
7 | has not been previously affirmed in the liquidation or | ||||||
8 | immediately preceding a conservation or rehabilitation | ||||||
9 | case shall be determined and shall be allowed or disallowed | ||||||
10 | as if the claim had arisen before the date of the filing of | ||||||
11 | the petition for liquidation or, if a conservation or | ||||||
12 | rehabilitation proceeding is converted to a liquidation | ||||||
13 | proceeding, as if the claim had arisen before the date of | ||||||
14 | the filing of the petition for conservation or | ||||||
15 | rehabilitation. The amount of the claim shall be the actual | ||||||
16 | direct compensatory damages determined as of the date of | ||||||
17 | the disaffirmance or repudiation of the netting agreement | ||||||
18 | or qualified financial contract. The term "actual direct | ||||||
19 | compensatory damages" does not include punitive or | ||||||
20 | exemplary damages, damages for lost profit or lost | ||||||
21 | opportunity, or damages for pain and suffering, but does | ||||||
22 | include normal and reasonable costs of cover or other | ||||||
23 | reasonable measures of damages utilized in the | ||||||
24 | derivatives, securities, or other market for the contract | ||||||
25 | and agreement claims. | ||||||
26 | (g) The term "contractual right", as used in this Section, |
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1 | includes any right set forth in a rule or bylaw of a | ||||||
2 | derivatives clearing organization, as defined in the Commodity | ||||||
3 | Exchange Act; a multilateral clearing organization, as defined | ||||||
4 | in the Federal Deposit Insurance Corporation Improvement Act of | ||||||
5 | 1991; a national securities exchange; a national securities | ||||||
6 | association; a securities clearing agency; a contract market | ||||||
7 | designated under the Commodity Exchange Act; a derivatives | ||||||
8 | transaction execution facility registered under the Commodity | ||||||
9 | Exchange Act; or a board of trade, as defined in the Commodity | ||||||
10 | Exchange Act or in a resolution of the governing board thereof | ||||||
11 | and any right, whether or not evidenced in writing, arising | ||||||
12 | under statutory or common law or under law merchant or by | ||||||
13 | reason of normal business practice. | ||||||
14 | (h) The provisions of this Section shall not apply to | ||||||
15 | persons who are affiliates of the insurer that is the subject | ||||||
16 | of the proceeding. | ||||||
17 | (i) All rights of counterparties under this Article shall | ||||||
18 | apply to netting agreements and qualified financial contracts | ||||||
19 | entered into on behalf of the general account or separate | ||||||
20 | accounts if the assets of each separate account are available | ||||||
21 | only to counterparties to netting agreements and qualified | ||||||
22 | financial contracts entered into on behalf of that separate | ||||||
23 | account.
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24 | (215 ILCS 5/209) (from Ch. 73, par. 821)
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25 | Sec. 209. Proof and allowance of claims.
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1 | (1) The following provisions shall apply concerning proof | ||||||
2 | and allowance of claims: | ||||||
3 | (a) Proof of claim shall consist of a statement signed | ||||||
4 | by the claimant or on behalf of the claimant that includes | ||||||
5 | all of the following that are applicable: | ||||||
6 | (i) the particulars of the claim including the | ||||||
7 | consideration given for it; | ||||||
8 | (ii) the identity and amount of the security on the | ||||||
9 | claim; | ||||||
10 | (iii) the payments made on the debt, if any; | ||||||
11 | (iv) that the sum claimed is justly owing and that | ||||||
12 | there is no setoff, counterclaim, or defense to the | ||||||
13 | claim; | ||||||
14 | (v) any right of priority of payment or other | ||||||
15 | specific right asserted by the claimant; | ||||||
16 | (vi) the name and address of the claimant and the | ||||||
17 | attorney, if any, who represents the claimant; and | ||||||
18 | (vii) the claimant's social security or federal | ||||||
19 | employer identification number. | ||||||
20 | (b) The Director may require that a prescribed form be | ||||||
21 | used and may require that other information and documents | ||||||
22 | be included. | ||||||
23 | (c) At any time the Director may require the claimant | ||||||
24 | to present information or evidence supplementary to that | ||||||
25 | required under paragraph (a) and may take testimony under | ||||||
26 | oath, require production of affidavits or depositions, or |
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1 | otherwise obtain additional information or evidence. | ||||||
2 | (2) (1) A proof of claim shall consist of a written | ||||||
3 | statement signed
under oath setting forth the claim, the | ||||||
4 | consideration
for it, whether the claim is secured
and, if
so, | ||||||
5 | how, what payments have been made on the
claim, if any, and | ||||||
6 | that
the sum claimed is justly owing from the company. Whenever
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7 | a claim is based upon a document, the document, unless
lost or | ||||||
8 | destroyed, shall be filed with the proof of claim. If the | ||||||
9 | document is
lost or destroyed, a statement of that fact and of
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10 | the
circumstances of the loss or destruction shall be included | ||||||
11 | in
the proof of claim.
A claim may be allowed even if | ||||||
12 | contingent or unliquidated as of the date
fixed by the court
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13 | pursuant to subsection (a) of Section 194 if it is filed in | ||||||
14 | accordance with
this subsection. Except as otherwise provided | ||||||
15 | in subsection (7), a proof of
claim required under this Section | ||||||
16 | must identify a known loss or occurrence.
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17 | (2) At any time, the Director may require the claimant to | ||||||
18 | present
information or evidence supplementary to that required | ||||||
19 | under subsection (l)
and
may take testimony under oath, require | ||||||
20 | production of affidavits or depositions,
or otherwise obtain | ||||||
21 | additional information or evidence.
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22 | (3) Upon the liquidation, rehabilitation, or conservation | ||||||
23 | of
any
company which has issued policies insuring the lives of | ||||||
24 | persons, the
Director shall, within a reasonable time, after | ||||||
25 | the last day set for the
filing of claims, make a list of the | ||||||
26 | persons who have not filed proofs of
claim with him and whose |
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1 | rights have not been reinsured, to whom it appears
from the | ||||||
2 | books of the company, there are owing amounts on such policies | ||||||
3 | and
he shall set opposite the name of each person such amount | ||||||
4 | so owing to such
person. The Director shall incur no personal | ||||||
5 | liability by reason of any
mistake in such list. Each person | ||||||
6 | whose name shall appear upon said list
shall be deemed to have | ||||||
7 | duly filed prior to the last day set for filing of
claims a | ||||||
8 | proof of claim for the amount set opposite his name on said | ||||||
9 | list.
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10 | (4)(a) When a Liquidation, Rehabilitation, or
Conservation | ||||||
11 | Order has been entered in a proceeding against an insurer under
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12 | this Code, any insured under an insurance policy shall have
the | ||||||
13 | right to file a contingent claim. The Court at the time of the | ||||||
14 | entry of
the Order of Liquidation, Rehabilitation or | ||||||
15 | Conservation shall fix the final
date for the liquidation of | ||||||
16 | insureds' contingent claims, but
in no event
shall said date be | ||||||
17 | more than 3 years after the last day fixed for the filing of
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18 | claims, provided, such date may be extended by the Court on | ||||||
19 | petition of the
Director should the Director determine that | ||||||
20 | such extension will not delay
distribution of assets under | ||||||
21 | Section 210. Such a contingent claim
shall be allowed if such | ||||||
22 | claim is liquidated and the insured
claimant presents evidence | ||||||
23 | of payment of such claim to the Director on or
before the last | ||||||
24 | day fixed by the Court.
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25 | (b) When an insured has been unable to liquidate its claim | ||||||
26 | under paragraph
(a) of this subsection (4), the insured may |
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1 | have its claim allowed by
estimation if (i) it may be | ||||||
2 | reasonably inferred from the proof presented upon
the claim | ||||||
3 | that a claim exists under the policy; (ii) the insured has | ||||||
4 | furnished
suitable proof, unless the court for good cause shown | ||||||
5 | shall otherwise direct,
that no further valid claims against | ||||||
6 | the insurer arising out of the cause of
action other than those | ||||||
7 | already presented can be made, and (iii) the total
liability of | ||||||
8 | the insurer to all claimants arising out of the same act shall | ||||||
9 | be
no greater than its total liability would be were it not in | ||||||
10 | liquidation,
rehabilitation, or conservation.
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11 | (5) The obligation of the insurer, if any, to defend or | ||||||
12 | continue the
defense
of any claim or suit under a liability | ||||||
13 | insurance policy shall terminate on
the entry of the Order of | ||||||
14 | Liquidation, Rehabilitation or Conservation,
except during the | ||||||
15 | appeal of an Order of Liquidation as provided by Section
190.1 | ||||||
16 | or, unless upon the petition of the Director, the court directs
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17 | otherwise. Insureds may include in contingent claims | ||||||
18 | reasonable attorneys
fees for services rendered subsequent to | ||||||
19 | the date of Liquidation,
Rehabilitation or Conservation in | ||||||
20 | defense of claims or suits covered by the
insured's policy | ||||||
21 | provided such attorneys fees have actually been paid by the
| ||||||
22 | assured and evidence of payment presented in the manner | ||||||
23 | required for insured's
contingent claims.
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24 | (6) When a liquidation, rehabilitation, or
conservation | ||||||
25 | order has been
entered in a proceeding against
an insurer under | ||||||
26 | this Code, any person who has a cause of action against an
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1 | insured of the insurer under an insurance
policy issued by the | ||||||
2 | insurer shall have the right to file a
claim in the proceeding, | ||||||
3 | regardless of the fact that the claim
may be contingent, and | ||||||
4 | the claim may be allowed by estimation (a) if it may be
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5 | reasonably, inferred from proof presented upon the claim
that | ||||||
6 | the claimant would be able to obtain a judgment upon
the cause | ||||||
7 | of action against the insured; and (b) if
the person has | ||||||
8 | furnished
suitable proof, unless the court for
good cause shown | ||||||
9 | shall otherwise direct, that no further valid claims
against | ||||||
10 | the insurer arising out of the cause of
action other than those
| ||||||
11 | already presented can be made, and (c) the total liability of
| ||||||
12 | the
insurer to all claimants arising out of the same act shall
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13 | be no greater than its total liability would be were it not in | ||||||
14 | liquidation,
rehabilitation, or
conservation.
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15 | (7) Contingent or unliquidated general creditors' and | ||||||
16 | ceding insurers'
claims that are not made absolute and | ||||||
17 | liquidated by the last day fixed by the
court pursuant to | ||||||
18 | subsection (4) may be determined and allowed by estimation.
Any | ||||||
19 | such estimate shall be based upon an actuarial evaluation made
| ||||||
20 | with reasonable actuarial certainty or upon another accepted | ||||||
21 | method of valuing
claims with reasonable certainty and, with | ||||||
22 | respect to ceding insurers' claims,
may include an estimate of | ||||||
23 | incurred but not reported losses.
| ||||||
24 | (7.5) (a) The estimation and allowance of the loss | ||||||
25 | development on a known loss or occurrence shall trigger a | ||||||
26 | reinsurer's obligation to pay pursuant to its reinsurance |
| |||||||
| |||||||
1 | contract with the insolvent company, provided that the | ||||||
2 | allowance is made in accordance with paragraph (b) of | ||||||
3 | subsection (4) or subsection (6). The Director shall have the | ||||||
4 | authority to exercise all available remedies on behalf of the | ||||||
5 | insolvent company to marshal these reinsurance recoverables. | ||||||
6 | (b) That portion of any estimated and allowed contingent | ||||||
7 | claim that is attributable to claims incurred but not reported | ||||||
8 | to the insolvent company's reinsured shall not be billable to | ||||||
9 | the insolvent company's reinsurers, except to the extent that | ||||||
10 | (A) such claims develop into known losses or occurrences and | ||||||
11 | become billable under paragraph (a) of this subsection or (B) | ||||||
12 | the reinsurance contract specifically provides for the payment | ||||||
13 | of such losses or reserves. | ||||||
14 | (c) Notwithstanding any other provision of this Code, the | ||||||
15 | liquidator may negotiate a voluntary commutation and release of | ||||||
16 | all obligations arising from reinsurance contracts or other | ||||||
17 | agreements.
| ||||||
18 | (8) No judgment against such an insured or an
insurer taken | ||||||
19 | after the date of the entry of the liquidation,
rehabilitation, | ||||||
20 | or conservation order shall be considered in the
proceedings
as | ||||||
21 | evidence of liability, or of the amount of damages, and no | ||||||
22 | judgment
against an insured or an insurer taken by default, or | ||||||
23 | by collusion prior to
the entry of the liquidation order shall | ||||||
24 | be considered as conclusive
evidence in the proceeding either | ||||||
25 | of the liability of such insured to such
person upon such cause | ||||||
26 | of action or of the amount of damages to which such
person is |
| |||||||
| |||||||
1 | therein entitled.
| ||||||
2 | (9) The value of securities held by secured creditors shall | ||||||
3 | be
determined by converting the same into money according to | ||||||
4 | the terms of the
agreement pursuant to which such securities | ||||||
5 | were delivered to such
creditors, or by such creditors and the | ||||||
6 | Director by agreement, or by the
court, and the amount of such | ||||||
7 | value shall be credited upon the claims of
such secured | ||||||
8 | creditors and their claims allowed only for the balance.
| ||||||
9 | (10) Claims of creditors or policyholders who have received
| ||||||
10 | preferences
voidable under Section 204 or to whom conveyances | ||||||
11 | or transfers,
assignments or incumbrances have been made or | ||||||
12 | given which are void under
Section 204, shall not be allowed | ||||||
13 | unless such creditors or policyholders
shall surrender such | ||||||
14 | preferences, conveyances, transfers, assignments or
| ||||||
15 | incumbrances.
| ||||||
16 | (11)(a) When the Director denies a claim or allows a claim | ||||||
17 | for less than
the amount requested by the claimant, written | ||||||
18 | notice of the determination and
of the right to object shall be | ||||||
19 | given promptly to the claimant or the
claimant's representative | ||||||
20 | by first class mail at the address shown on the
proof of claim. | ||||||
21 | Within 60 days from the mailing of the notice, the claimant
may
| ||||||
22 | file his written objections with the Director. If no such | ||||||
23 | filing is made on a
timely basis, the claimant may not further | ||||||
24 | object to the determination.
| ||||||
25 | (b) Whenever objections are filed with the Director and he | ||||||
26 | does not alter
his determination as a result of the objection |
| |||||||
| |||||||
1 | and the claimant continues to
object, the Director shall | ||||||
2 | petition the court for a hearing as soon as
practicable and | ||||||
3 | give notice of the hearing by first class mail to the claimant
| ||||||
4 | or his representative and to any other persons known by the | ||||||
5 | Director to be
directly affected, not less than 10 days before | ||||||
6 | the date of the hearing.
| ||||||
7 | (12) The Director shall review all claims duly filed in the | ||||||
8 | liquidation,
rehabilitation, or conservation proceeding, | ||||||
9 | unless otherwise directed by the
court, and shall make such | ||||||
10 | further investigation as he considers necessary.
The Director | ||||||
11 | may compound, compromise, or in any other manner negotiate the
| ||||||
12 | amount for which claims will be recommended to the court. | ||||||
13 | Unresolved disputes
shall be determined under subsection (11).
| ||||||
14 | (13)(a) The Director shall present to the court reports of | ||||||
15 | claims reviewed
under subsection (12) with his recommendations | ||||||
16 | as to each claim.
| ||||||
17 | (b) The court may approve or disapprove any recommendations | ||||||
18 | contained in the
reports of claims filed by the Director, | ||||||
19 | except that the Director's agreements
with claimants shall be | ||||||
20 | accepted as final by the court on claims settled for
$10,000 or | ||||||
21 | less.
| ||||||
22 | (14) The changes made in this Section by this amendatory | ||||||
23 | Act of 1993
apply to
all
liquidation, rehabilitation, or
| ||||||
24 | conservation proceedings that are pending on the effective date | ||||||
25 | of this
amendatory Act of 1993 and to all future liquidation, | ||||||
26 | rehabilitation, or
conservation proceedings,
except that the |
| |||||||
| |||||||
1 | changes made to the provisions of
this Section by this | ||||||
2 | amendatory Act of 1993 shall not apply to any company
ordered | ||||||
3 | into liquidation on or before January 1, 1982.
| ||||||
4 | (15) The changes made in this Section by this amendatory | ||||||
5 | Act of the 93rd General Assembly do not apply to any company | ||||||
6 | ordered into liquidation on or before January 1, 2004.
| ||||||
7 | (Source: P.A. 93-1083, eff. 2-7-05.)
| ||||||
8 | (215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
| ||||||
9 | Sec. 531.03. Coverage and limitations.
| ||||||
10 | (1) This Article shall provide
coverage for the policies | ||||||
11 | and contracts specified in paragraph (2) of this
Section:
| ||||||
12 | (a) to persons who, regardless of where they reside | ||||||
13 | (except for
non-resident certificate holders under group | ||||||
14 | policies or contracts), are the
beneficiaries, assignees | ||||||
15 | or payees of the persons covered under subparagraph
(1)(b), | ||||||
16 | and
| ||||||
17 | (b) to persons who are owners of or certificate holders | ||||||
18 | under the policies or contracts (other than unallocated | ||||||
19 | annuity contracts and structured settlement annuities) and | ||||||
20 | in each case who: | ||||||
21 | (i) are residents; or | ||||||
22 | (ii) are not residents, but only under all of the | ||||||
23 | following conditions: | ||||||
24 | (A) the insurer that issued the policies or | ||||||
25 | contracts is domiciled in this State; |
| |||||||
| |||||||
1 | (B) the states in which the persons reside have | ||||||
2 | associations similar to the Association created by | ||||||
3 | this Article; | ||||||
4 | (C) the persons are not eligible for coverage | ||||||
5 | by an association in any other state due to the | ||||||
6 | fact that the insurer was not licensed in that | ||||||
7 | state at the time specified in that state's | ||||||
8 | guaranty association law. | ||||||
9 | (c) For unallocated annuity contracts specified in | ||||||
10 | subsection (2), paragraphs (a) and (b) of this subsection | ||||||
11 | (1) shall not apply and this Article shall (except as | ||||||
12 | provided in paragraphs (e) and (f) of this subsection) | ||||||
13 | provide coverage to: | ||||||
14 | (i) persons who are the owners of the unallocated | ||||||
15 | annuity contracts if the contracts are issued to or in | ||||||
16 | connection with a specific benefit plan whose plan | ||||||
17 | sponsor has its principal place of business in this | ||||||
18 | State; and | ||||||
19 | (ii) persons who are owners of unallocated annuity | ||||||
20 | contracts issued to or in connection with government | ||||||
21 | lotteries if the owners are residents. | ||||||
22 | (d) For structured settlement annuities specified in | ||||||
23 | subsection (2), paragraphs (a) and (b) of this subsection | ||||||
24 | (1) shall not apply and this Article shall (except as | ||||||
25 | provided in paragraphs (e) and (f) of this subsection) | ||||||
26 | provide coverage to a person who is a payee under a |
| |||||||
| |||||||
1 | structured settlement annuity (or beneficiary of a payee if | ||||||
2 | the payee is deceased), if the payee: | ||||||
3 | (i) is a resident, regardless of where the contract | ||||||
4 | owner resides; or | ||||||
5 | (ii) is not a resident, but only under both of the | ||||||
6 | following conditions: | ||||||
7 | (A) with regard to residency: | ||||||
8 | (I) the contract owner of the structured | ||||||
9 | settlement annuity is a resident; or | ||||||
10 | (II) the contract owner of the structured | ||||||
11 | settlement annuity is not a resident but the | ||||||
12 | insurer that issued the structured settlement | ||||||
13 | annuity is domiciled in this State and the | ||||||
14 | state in which the contract owner resides has | ||||||
15 | an association similar to the Association | ||||||
16 | created by this Article; and | ||||||
17 | (B) neither the payee or beneficiary nor the | ||||||
18 | contract owner is eligible for coverage by the | ||||||
19 | association of the state in which the payee or | ||||||
20 | contract owner resides. | ||||||
21 | (e) This Article shall not provide coverage to: | ||||||
22 | (i) a person who is a payee or beneficiary of a | ||||||
23 | contract owner resident of this State if the payee or | ||||||
24 | beneficiary is afforded any coverage by the | ||||||
25 | association of another state; or | ||||||
26 | (ii) a person covered under paragraph (c) of this |
| |||||||
| |||||||
1 | subsection (1), if any coverage is provided by the | ||||||
2 | association of another state to that person. | ||||||
3 | (f) This Article is intended to provide coverage to a | ||||||
4 | person who is a resident of this State and, in special | ||||||
5 | circumstances, to a nonresident. In order to avoid | ||||||
6 | duplicate coverage, if a person who would otherwise receive | ||||||
7 | coverage under this Article is provided coverage under the | ||||||
8 | laws of any other state, then the person shall not be | ||||||
9 | provided coverage under this Article. In determining the | ||||||
10 | application of the provisions of this paragraph in | ||||||
11 | situations where a person could be covered by the | ||||||
12 | association of more than one state, whether as an owner, | ||||||
13 | payee, beneficiary, or assignee, this Article shall be | ||||||
14 | construed in conjunction with other state laws to result in | ||||||
15 | coverage by only one association. to persons who are owners | ||||||
16 | of or certificate holders under such
policies or contracts; | ||||||
17 | or, in the case of unallocated annuity contracts, to
the | ||||||
18 | persons who are the contract holders, and who
| ||||||
19 | (i) are residents of this State, or
| ||||||
20 | (ii) are not residents, but only under all of the | ||||||
21 | following conditions:
| ||||||
22 | (A) the insurers which issued such policies or | ||||||
23 | contracts are domiciled
in this State;
| ||||||
24 | (B) such insurers never held a license or | ||||||
25 | certificate of authority in
the states in which | ||||||
26 | such persons reside;
|
| |||||||
| |||||||
1 | (C) such states have associations similar to | ||||||
2 | the association created
by this Act; and
| ||||||
3 | (D) such persons are not eligible for coverage | ||||||
4 | by such associations.
| ||||||
5 | (2)(a) This Article shall provide coverage to the persons
| ||||||
6 | specified in paragraph (l) of this Section for direct, (i)
| ||||||
7 | nongroup life, health, annuity and
supplemental policies, or | ||||||
8 | contracts, (ii) for
certificates under direct group policies or | ||||||
9 | contracts, (iii) for unallocated
annuity contracts and (iv) for | ||||||
10 | contracts to furnish
health care services and subscription | ||||||
11 | certificates for medical or health
care services issued by | ||||||
12 | persons licensed to transact insurance business
in this State | ||||||
13 | under the Illinois Insurance Code.
Annuity contracts and | ||||||
14 | certificates under group annuity contracts include
but are not | ||||||
15 | limited to guaranteed investment contracts, deposit
| ||||||
16 | administration contracts, unallocated funding agreements, | ||||||
17 | allocated funding
agreements, structured settlement | ||||||
18 | agreements, lottery contracts
and any immediate or deferred | ||||||
19 | annuity contracts.
| ||||||
20 | (b) This Article shall not provide coverage for:
| ||||||
21 | (i) that portion of a policy or contract not guaranteed | ||||||
22 | by the insurer, or under which the risk is borne by the | ||||||
23 | policy or contract owner or part of such policies or | ||||||
24 | contracts under which the
risk is borne by the | ||||||
25 | policyholder; provided however, that nothing in this
| ||||||
26 | subparagraph (i) shall make this Article inapplicable
to |
| |||||||
| |||||||
1 | assessment life and
accident and health insurance policies | ||||||
2 | or contracts ; or
| ||||||
3 | (ii) any such policy or contract or part thereof | ||||||
4 | assumed by the impaired
or insolvent insurer under a | ||||||
5 | contract of reinsurance, other than reinsurance
for which | ||||||
6 | assumption certificates have been issued; or
| ||||||
7 | (iii) any portion of a policy or contract to the extent | ||||||
8 | that the rate of interest on which it is based or the | ||||||
9 | interest rate, crediting rate, or similar factor is | ||||||
10 | determined by use of an index or other external reference | ||||||
11 | stated in the policy or contract employed in calculating | ||||||
12 | returns or changes in value: any portion of a policy or | ||||||
13 | contract to the extent such portion
represents an accrued | ||||||
14 | value that the rate of interest on which it is accrued
| ||||||
15 | (A) averaged over the period of 4 years prior to | ||||||
16 | the date on which the member insurer becomes an | ||||||
17 | impaired or insolvent insurer under this Article, | ||||||
18 | whichever is earlier, exceeds the rate of interest | ||||||
19 | determined by subtracting 2 percentage points from | ||||||
20 | Moody's Corporate Bond Yield Average averaged for that | ||||||
21 | same 4-year period or for such lesser period if the | ||||||
22 | policy or contract was issued less than 4 years before | ||||||
23 | the member insurer becomes an impaired or insolvent | ||||||
24 | insurer under this Article, whichever is earlier | ||||||
25 | averaged over the period of four years prior to the | ||||||
26 | date on which
the Association becomes obligated with |
| |||||||
| |||||||
1 | respect to such policy or contract,
exceeds a rate of | ||||||
2 | interest determined by subtracting two percentage | ||||||
3 | points
from Moody's Corporate Bond Yield Average | ||||||
4 | averaged for that same four year
period or for such | ||||||
5 | lesser period if the policy or contract was issued less
| ||||||
6 | than four years before the Association became | ||||||
7 | obligated ; and
| ||||||
8 | (B) on and after the date on which the member | ||||||
9 | insurer becomes an impaired or insolvent insurer under | ||||||
10 | this Article, whichever is earlier, exceeds the rate of | ||||||
11 | interest determined by subtracting 3 percentage points | ||||||
12 | from Moody's Corporate Bond Yield Average as most | ||||||
13 | recently available on and after the date on which the | ||||||
14 | Association becomes obligated
with respect to such | ||||||
15 | policy or contract, exceeds the rate of interest
| ||||||
16 | determined by subtracting three percentage points from | ||||||
17 | Moody's Corporate
Bond Yield Average as most recently | ||||||
18 | available ; or
| ||||||
19 | (iv) any unallocated annuity contract issued to or in | ||||||
20 | connection with a benefit plan protected under the federal | ||||||
21 | Pension Benefit Guaranty Corporation, regardless of | ||||||
22 | whether the federal Pension Benefit Guaranty Corporation | ||||||
23 | has yet become liable to make any payments with respect to | ||||||
24 | the benefit plan any unallocated annuity contract issued to | ||||||
25 | an employee benefit plan
protected under the federal | ||||||
26 | Pension Benefit Guaranty Corporation ; or
|
| |||||||
| |||||||
1 | (v) any portion of any unallocated annuity contract | ||||||
2 | which is not issued
to or in connection with a specific | ||||||
3 | employee, union or association of
natural persons benefit | ||||||
4 | plan or a government lottery; or
| ||||||
5 | (vi) an obligation that does not arise under the | ||||||
6 | express written terms of the policy or contract issued by | ||||||
7 | the insurer to the contract owner or policy owner, | ||||||
8 | including without limitation: | ||||||
9 | (A) a claim based on marketing materials; | ||||||
10 | (B) a claim based on side letters, riders, or other | ||||||
11 | documents that were issued by the insurer without | ||||||
12 | meeting applicable policy form filing or approval | ||||||
13 | requirements; | ||||||
14 | (C) a misrepresentation of or regarding policy | ||||||
15 | benefits; | ||||||
16 | (D) an extra-contractual claim; or | ||||||
17 | (E) a claim for penalties or consequential or | ||||||
18 | incidental damages; any burial society organized under | ||||||
19 | Article XIX of this Act, any
fraternal benefit society | ||||||
20 | organized under Article XVII of this Act, any
mutual | ||||||
21 | benefit association organized under Article XVIII of | ||||||
22 | this
Act, and any foreign fraternal benefit society | ||||||
23 | licensed under Article
VI of this Act; or
| ||||||
24 | (vii) any health maintenance organization established
| ||||||
25 | pursuant to the Health
Maintenance Organization Act
| ||||||
26 | including any health maintenance organization business of |
| |||||||
| |||||||
1 | a member insurer; or
| ||||||
2 | (viii) any health services plan corporation | ||||||
3 | established pursuant to the
Voluntary Health Services | ||||||
4 | Plans Act;
or
| ||||||
5 | (ix) (blank); or
| ||||||
6 | (x) any dental service plan corporation established
| ||||||
7 | pursuant to the Dental
Service Plan Act; or
| ||||||
8 | (vii) (xi) any stop-loss insurance, as defined in | ||||||
9 | clause (b) of Class 1 or
clause (a) of Class 2 of Section | ||||||
10 | 4, and further defined in subsection (d) of
Section 352; or
| ||||||
11 | (viii) any policy or contract providing any hospital, | ||||||
12 | medical, prescription drug, or other health care benefits | ||||||
13 | pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 | ||||||
14 | of Title 42 of the United States Code (commonly known as | ||||||
15 | Medicare Part C & D) or any regulations issued pursuant | ||||||
16 | thereto; | ||||||
17 | (ix) any portion of a policy or contract to the extent | ||||||
18 | that the assessments required by Section 531.09 of this | ||||||
19 | Code with respect to the policy or contract are preempted | ||||||
20 | or otherwise not permitted by federal or State law; | ||||||
21 | (x) any portion of a policy or contract issued to a | ||||||
22 | plan or program of an employer, association, or other | ||||||
23 | person to provide life, health, or annuity benefits to its | ||||||
24 | employees, members, or others to the extent that the plan | ||||||
25 | or program is self-funded or uninsured, including, but not | ||||||
26 | limited to, benefits payable by an employer, association, |
| |||||||
| |||||||
1 | or other person under: | ||||||
2 | (A) a multiple employer welfare arrangement as | ||||||
3 | defined in 29 U.S.C. Section 1144; | ||||||
4 | (B) a minimum premium group insurance plan; | ||||||
5 | (C) a stop-loss group insurance plan; or | ||||||
6 | (D) an administrative services only contract; | ||||||
7 | (xi) any portion of a policy or contract to the extent | ||||||
8 | that it provides for: | ||||||
9 | (A) dividends or experience rating credits; | ||||||
10 | (B) voting rights; or | ||||||
11 | (C) payment of any fees or allowances to any | ||||||
12 | person, including the policy or contract owner, in | ||||||
13 | connection with the service to or administration of the | ||||||
14 | policy or contract; | ||||||
15 | (xii) any policy or contract issued in this State by a | ||||||
16 | member insurer at a time when it was not licensed or did | ||||||
17 | not have a certificate of authority to issue the policy or | ||||||
18 | contract in this State; | ||||||
19 | (xiii) any contractual agreement that establishes the | ||||||
20 | member insurer's obligations to provide a book value | ||||||
21 | accounting guaranty for defined contribution benefit plan | ||||||
22 | participants by reference to a portfolio of assets that is | ||||||
23 | owned by the benefit plan or its trustee, which in each | ||||||
24 | case is not an affiliate of the member insurer; | ||||||
25 | (xiv) any portion of a policy or contract to the extent | ||||||
26 | that it provides for interest or other changes in value to |
| |||||||
| |||||||
1 | be determined by the use of an index or other external | ||||||
2 | reference stated in the policy or contract, but which have | ||||||
3 | not been credited to the policy or contract, or as to which | ||||||
4 | the policy or contract owner's rights are subject to | ||||||
5 | forfeiture, as of the date the member insurer becomes an | ||||||
6 | impaired or insolvent insurer under this Code, whichever is | ||||||
7 | earlier. If a policy's or contract's interest or changes in | ||||||
8 | value are credited less frequently than annually, then for | ||||||
9 | purposes of determining the values that have been credited | ||||||
10 | and are not subject to forfeiture under this Section, the | ||||||
11 | interest or change in value determined by using the | ||||||
12 | procedures defined in the policy or contract will be | ||||||
13 | credited as if the contractual date of crediting interest | ||||||
14 | or changing values was the date of impairment or | ||||||
15 | insolvency, whichever is earlier, and will not be subject | ||||||
16 | to forfeiture; or
| ||||||
17 | (xv) (xii) that portion or part of a variable life | ||||||
18 | insurance or
variable
annuity
contract not guaranteed by an | ||||||
19 | insurer.
| ||||||
20 | (3) The benefits for which the Association may become | ||||||
21 | liable shall in
no event exceed the lesser of:
| ||||||
22 | (a) the contractual obligations for which the insurer | ||||||
23 | is liable or would
have been liable if it were not an | ||||||
24 | impaired or insolvent insurer, or
| ||||||
25 | (b)(i) with respect to any one life, regardless of the | ||||||
26 | number of policies
or
contracts:
|
| |||||||
| |||||||
1 | (A) $300,000 in life insurance death benefits, but | ||||||
2 | not more than
$100,000 in net cash surrender and net | ||||||
3 | cash withdrawal values for life
insurance;
| ||||||
4 | (B) in health insurance benefits: | ||||||
5 | (I) $100,000 for coverages not defined as | ||||||
6 | disability insurance or basic hospital, medical, | ||||||
7 | and surgical insurance or major medical insurance | ||||||
8 | or long-term care insurance, including any net | ||||||
9 | cash surrender and net cash withdrawal values; | ||||||
10 | (II) $300,000 for disability insurance and | ||||||
11 | $300,000 for long-term care insurance as defined | ||||||
12 | in Section 351A-1 of this Code; and | ||||||
13 | (III) $500,000 for basic hospital medical and | ||||||
14 | surgical insurance or major medical insurance | ||||||
15 | $300,000 in health insurance benefits, including | ||||||
16 | any net cash
surrender and net cash withdrawal | ||||||
17 | values ;
| ||||||
18 | (C) $250,000 in the present value of annuity | ||||||
19 | benefits, including net cash surrender and net cash | ||||||
20 | withdrawal values; | ||||||
21 | (ii) with respect to each individual participating in a | ||||||
22 | governmental retirement benefit plan established under | ||||||
23 | Sections 401, 403(b), or 457 of the U.S. Internal Revenue | ||||||
24 | Code covered by an unallocated annuity contract or the | ||||||
25 | beneficiaries of each such individual if deceased, in the | ||||||
26 | aggregate, $250,000 in present value annuity benefits, |
| |||||||
| |||||||
1 | including net cash surrender and net cash withdrawal | ||||||
2 | values; | ||||||
3 | (iii) with respect to each payee of a structured | ||||||
4 | settlement annuity or beneficiary or beneficiaries of the | ||||||
5 | payee if deceased, $250,000 in present value annuity | ||||||
6 | benefits, in the aggregate, including net cash surrender | ||||||
7 | and net cash withdrawal values, if any; or | ||||||
8 | (iv) with respect to either (1) one contract owner | ||||||
9 | provided coverage under subparagraph (ii) of paragraph (c) | ||||||
10 | of subsection (1) of this Section or (2) one plan sponsor | ||||||
11 | whose plans own directly or in trust one or more | ||||||
12 | unallocated annuity contracts not included in subparagraph | ||||||
13 | (ii) of paragraph (b) of this subsection, $5,000,000 in | ||||||
14 | benefits, irrespective of the number of contracts with | ||||||
15 | respect to the contract owner or plan sponsor. However, in | ||||||
16 | the case where one or more unallocated annuity contracts | ||||||
17 | are covered contracts under this Article and are owned by a | ||||||
18 | trust or other entity for the benefit of 2 or more plan | ||||||
19 | sponsors, coverage shall be afforded by the Association if | ||||||
20 | the largest interest in the trust or entity owning the | ||||||
21 | contract or contracts is held by a plan sponsor whose | ||||||
22 | principal place of business is in this State. In no event | ||||||
23 | shall the Association be obligated to cover more than | ||||||
24 | $5,000,000 in benefits with respect to all these | ||||||
25 | unallocated contracts. | ||||||
26 | In no event shall the Association be obligated to cover |
| |||||||
| |||||||
1 | more than (1) an aggregate of $300,000 in benefits with respect | ||||||
2 | to any one life under subparagraphs (i), (ii), and (iii) of | ||||||
3 | this paragraph (b) except with respect to benefits for basic | ||||||
4 | hospital, medical, and surgical insurance and major medical | ||||||
5 | insurance under item (B) of subparagraph (i) of this paragraph | ||||||
6 | (b), in which case the aggregate liability of the Association | ||||||
7 | shall not exceed $500,000 with respect to any one individual or | ||||||
8 | (2) with respect to one owner of multiple nongroup policies of | ||||||
9 | life insurance, whether the policy owner is an individual, | ||||||
10 | firm, corporation, or other person and whether the persons | ||||||
11 | insured are officers, managers, employees, or other persons, | ||||||
12 | $5,000,000 in benefits, regardless of the number of policies | ||||||
13 | and contracts held by the owner. | ||||||
14 | The limitations set forth in this subsection are | ||||||
15 | limitations on the benefits for which the Association is | ||||||
16 | obligated before taking into account either its subrogation and | ||||||
17 | assignment rights or the extent to which those benefits could | ||||||
18 | be provided out of the assets of the impaired or insolvent | ||||||
19 | insurer attributable to covered policies. The costs of the | ||||||
20 | Association's obligations under this Article may be met by the | ||||||
21 | use of assets attributable to covered policies or reimbursed to | ||||||
22 | the Association pursuant to its subrogation and assignment | ||||||
23 | rights. | ||||||
24 | $100,000 in the present value of annuity benefits, | ||||||
25 | including net
cash surrender and net cash withdrawal | ||||||
26 | values;
|
| |||||||
| |||||||
1 | (ii) with respect to each individual participating in a | ||||||
2 | governmental
retirement plan established under Section | ||||||
3 | 401, 403(b) or 457 of the U.S.
Internal Revenue Code | ||||||
4 | covered by an unallocated annuity contract or the
| ||||||
5 | beneficiaries of each such individual if deceased, in the | ||||||
6 | aggregate,
$100,000 in present value annuity benefits, | ||||||
7 | including net cash surrender
and net cash withdrawal | ||||||
8 | values; provided, however, that in no event shall
the | ||||||
9 | Association be liable to expend more than $300,000 in the | ||||||
10 | aggregate
with respect to any one individual under | ||||||
11 | subparagraph (1) and this
subparagraph;
| ||||||
12 | (iii) with respect to any one contract holder covered | ||||||
13 | by any unallocated
annuity contract not included in | ||||||
14 | subparagraph (3)(b)(ii) of this Section
above, $5,000,000
| ||||||
15 | in benefits, irrespective of the number of such contracts | ||||||
16 | held by that contract
holder.
| ||||||
17 | (4) In performing its obligations to provide coverage under | ||||||
18 | Section 531.08 of this Code, the Association shall not be | ||||||
19 | required to guarantee, assume, reinsure, or perform or cause to | ||||||
20 | be guaranteed, assumed, reinsured, or performed the | ||||||
21 | contractual obligations of the insolvent or impaired insurer | ||||||
22 | under a covered policy or contract that do not materially | ||||||
23 | affect the economic values or economic benefits of the covered | ||||||
24 | policy or contract. | ||||||
25 | (Source: P.A. 90-177, eff. 7-23-97; 91-357, eff. 7-29-99.)
|
| |||||||
| |||||||
1 | (215 ILCS 5/531.04) (from Ch. 73, par. 1065.80-4)
| ||||||
2 | Sec. 531.04.
Construction. ) This Article shall be is to be | ||||||
3 | liberally construed to
effect the purpose under Section 531.02 | ||||||
4 | which constitutes an aid and guide to
interpretation .
| ||||||
5 | (Source: P.A. 81-899.)
| ||||||
6 | (215 ILCS 5/531.05) (from Ch. 73, par. 1065.80-5)
| ||||||
7 | Sec. 531.05. Definitions. As used in this Act:
| ||||||
8 | (1) "Account" means either of the 3 accounts created under | ||||||
9 | Section
531.06.
| ||||||
10 | (2) "Association" means the Illinois Life and Health | ||||||
11 | Insurance
Guaranty Association created under Section 531.06.
| ||||||
12 | "Authorized assessment" or the term "authorized" when used | ||||||
13 | in the context of assessments means a resolution by the Board | ||||||
14 | of Directors has been passed whereby an assessment shall be | ||||||
15 | called immediately or in the future from member insurers for a | ||||||
16 | specified amount. An assessment is authorized when the | ||||||
17 | resolution is passed. | ||||||
18 | "Benefit plan" means a specific employee, union, or | ||||||
19 | association of natural persons benefit plan. | ||||||
20 | "Called assessment" or the term "called" when used in the | ||||||
21 | context of assessments means that a notice has been issued by | ||||||
22 | the Association to member insurers requiring that an authorized | ||||||
23 | assessment be paid within the time frame set forth within the | ||||||
24 | notice. An authorized assessment becomes a called assessment | ||||||
25 | when notice is mailed by the Association to member insurers. |
| |||||||
| |||||||
1 | (3) "Director" means the Director of Insurance of this | ||||||
2 | State.
| ||||||
3 | (4) "Contractual obligation" means any obligation under a | ||||||
4 | policy or
contract or certificate under a group policy or | ||||||
5 | contract, or portion
thereof for which coverage is provided | ||||||
6 | under Section 531.03.
| ||||||
7 | (5) "Covered person" means any person who is entitled to | ||||||
8 | the
protection of the Association as described in Section | ||||||
9 | 531.02.
| ||||||
10 | (6) "Covered policy" means any policy or contract within | ||||||
11 | the scope
of this Article under Section 531.03.
| ||||||
12 | "Extra-contractual claims" shall include claims relating | ||||||
13 | to bad faith in the payment of claims, punitive or exemplary | ||||||
14 | damages, or attorneys' fees and costs. | ||||||
15 | "Impaired insurer" means (A) a member insurer which, after | ||||||
16 | the effective date of this amendatory Act of the 96th General | ||||||
17 | Assembly, is not an insolvent insurer, and is placed under an | ||||||
18 | order of rehabilitation or conservation by a court of competent | ||||||
19 | jurisdiction or (B) a member insurer deemed by the Director | ||||||
20 | after the effective date of this amendatory Act of the 96th | ||||||
21 | General Assembly to be potentially unable to fulfill its | ||||||
22 | contractual obligations and not an insolvent insurer. (7) | ||||||
23 | "Impaired insurer" means a member insurer deemed by the | ||||||
24 | Director
after the effective date of this Article to be | ||||||
25 | potentially unable to
fulfill its contractual obligations and | ||||||
26 | not an insolvent insurer.
|
| |||||||
| |||||||
1 | "Insolvent insurer" means a member insurer that, after the | ||||||
2 | effective date of this amendatory Act of the 96th General | ||||||
3 | Assembly, is placed under a final order of liquidation by a | ||||||
4 | court of competent jurisdiction with a finding of insolvency. | ||||||
5 | (8) "Insolvent insurer" means (a) a member insurer
either at | ||||||
6 | the time the policy was issued or when the insured event
| ||||||
7 | occurred, or any company which has acquired such direct policy | ||||||
8 | obligations
through purchase, merger, consolidation, | ||||||
9 | reinsurance or otherwise, whether
or not such acquiring company | ||||||
10 | held a certificate of authority to transact
insurance in this | ||||||
11 | State at the time such policy was issued or when the
insured | ||||||
12 | event occurred; and (b) becomes insolvent and is placed under a
| ||||||
13 | final order of liquidation, rehabilitation or conservation by a | ||||||
14 | court of
competent jurisdiction.
| ||||||
15 | "Member insurer" means an insurer licensed or holding a | ||||||
16 | certificate of authority to transact in this State any kind of | ||||||
17 | insurance for which coverage is provided under Section 531.03 | ||||||
18 | of this Code and includes an insurer whose license or | ||||||
19 | certificate of authority in this State may have been suspended, | ||||||
20 | revoked, not renewed, or voluntarily withdrawn or whose | ||||||
21 | certificate of authority may have been suspended pursuant to | ||||||
22 | Section 119 of this Code, but does not include: | ||||||
23 | (1) a hospital or medical service organization, | ||||||
24 | whether profit or nonprofit; | ||||||
25 | (2) a health maintenance organization; | ||||||
26 | (3) any burial society organized under Article XIX of |
| |||||||
| |||||||
1 | this Code, any fraternal benefit society organized under | ||||||
2 | Article XVII of this Code, any mutual benefit association | ||||||
3 | organized under Article XVIII of this Code, and any foreign | ||||||
4 | fraternal benefit society licensed under Article VI of this | ||||||
5 | Code or
a fraternal benefit society; | ||||||
6 | (4) a mandatory State pooling plan; | ||||||
7 | (5) a mutual assessment company or other person that | ||||||
8 | operates on an assessment basis; | ||||||
9 | (6) an insurance exchange; | ||||||
10 | (7) an organization that is permitted to issue | ||||||
11 | charitable gift annuities pursuant to Section 121-2.10 of | ||||||
12 | this Code; | ||||||
13 | (8) any health services plan corporation established | ||||||
14 | pursuant to the Voluntary Health Services Plans Act; | ||||||
15 | (9) any dental service plan corporation established | ||||||
16 | pursuant to the Dental Service Plan Act; or | ||||||
17 | (10) an entity similar to any of the above. (9) "Member | ||||||
18 | insurer" means any person licensed or who holds a | ||||||
19 | certificate
of authority to transact in this
State any kind | ||||||
20 | of insurance business to which this Article applies under
| ||||||
21 | Section 531.03. For purposes of this Article "member | ||||||
22 | insurer" includes
any person whose certificate of | ||||||
23 | authority may have been suspended pursuant
to Section 119.
| ||||||
24 | (10) "Moody's Corporate Bond Yield Average" means the | ||||||
25 | Monthly Average
Corporates as published by Moody's Investors | ||||||
26 | Service, Inc., or any successor
thereto. |
| |||||||
| |||||||
1 | "Owner" of a policy or contract and "policy owner" and | ||||||
2 | "contract owner" mean the person who is identified as the legal | ||||||
3 | owner under the terms of the policy or contract or who is | ||||||
4 | otherwise vested with legal title to the policy or contract | ||||||
5 | through a valid assignment completed in accordance with the | ||||||
6 | terms of the policy or contract and properly recorded as the | ||||||
7 | owner on the books of the insurer. The terms owner, contract | ||||||
8 | owner, and policy owner do not include persons with a mere | ||||||
9 | beneficial interest in a policy or contract. | ||||||
10 | "Person" means an individual, corporation, limited | ||||||
11 | liability company, partnership, association, governmental body | ||||||
12 | or entity, or voluntary organization. | ||||||
13 | "Plan sponsor" means: | ||||||
14 | (1) the employer in the case of a benefit plan | ||||||
15 | established or maintained by a single employer; | ||||||
16 | (2) the employee organization in the case of a benefit | ||||||
17 | plan established or maintained by an employee | ||||||
18 | organization; or | ||||||
19 | (3) in a case of a benefit plan established or | ||||||
20 | maintained by 2 or more employers or jointly by one or more | ||||||
21 | employers and one or more employee organizations, the | ||||||
22 | association, committee, joint board of trustees, or other | ||||||
23 | similar group of representatives of the parties who | ||||||
24 | establish or maintain the benefit plan. | ||||||
25 | "Premiums" mean amounts or considerations, by whatever | ||||||
26 | name called, received on covered policies or contracts less |
| |||||||
| |||||||
1 | returned premiums, considerations, and deposits and less | ||||||
2 | dividends and experience credits. | ||||||
3 | "Premiums" does not include: | ||||||
4 | (A) amounts or considerations received for policies or | ||||||
5 | contracts or for the portions of policies or contracts for | ||||||
6 | which coverage is not provided under Section 531.03 of this | ||||||
7 | Code except that assessable premium shall not be reduced on | ||||||
8 | account of the provisions of subparagraph (iii) of | ||||||
9 | paragraph (b) of subsection (a) of Section 531.03 of this | ||||||
10 | Code relating to interest limitations and the provisions of | ||||||
11 | paragraph (b) of subsection (3) of Section 531.03 relating | ||||||
12 | to limitations with respect to one individual, one | ||||||
13 | participant, and one contract owner; | ||||||
14 | (B) premiums in excess of $5,000,000 on an unallocated | ||||||
15 | annuity contract not issued under a governmental | ||||||
16 | retirement benefit plan (or its trustee) established under | ||||||
17 | Section 401, 403(b) or 457 of the United States Internal | ||||||
18 | Revenue Code; or | ||||||
19 | (C) with respect to multiple nongroup policies of life | ||||||
20 | insurance owned by one owner, whether the policy owner is | ||||||
21 | an individual, firm, corporation, or other person, and | ||||||
22 | whether the persons insured are officers, managers, | ||||||
23 | employees, or other persons, premiums in excess of | ||||||
24 | $5,000,000 with respect to these policies or contracts, | ||||||
25 | regardless of the number of policies or contracts held by | ||||||
26 | the owner. (11) "Premiums" means direct gross insurance |
| |||||||
| |||||||
1 | premiums or
subscriptions and annuity
considerations | ||||||
2 | received on covered policies or contracts, less return | ||||||
3 | premiums
and
considerations thereon and dividends paid or | ||||||
4 | credited to policyholders
on such direct business. | ||||||
5 | "Premiums" do not include premiums and
considerations on | ||||||
6 | contracts between insurers and reinsurers.
"Premiums" do | ||||||
7 | not include any amounts received for any policies or
| ||||||
8 | contracts or for the portions of any policies or contracts | ||||||
9 | for which
coverage is not provided under paragraph (2) of | ||||||
10 | Section 531.03 except that
assessable premium shall not be | ||||||
11 | reduced on account of subparagraph
(2)(b)(iii) of Section | ||||||
12 | 531.03 relating to interest limitations and
subparagraph | ||||||
13 | (3)(b) of Section 531.03 relating to limitations with | ||||||
14 | respect
to any one individual, any one participant and any | ||||||
15 | one contractholder;
provided that "premiums" shall not | ||||||
16 | include any premiums in excess of five
million dollars on | ||||||
17 | any unallocated annuity contract not issued under a
| ||||||
18 | governmental retirement plan established under Sections | ||||||
19 | 401, 403(b) or 457
of the United States Internal Revenue | ||||||
20 | Code.
| ||||||
21 | (12) "Person" means any individual, corporation, | ||||||
22 | partnership,
association or voluntary organization.
| ||||||
23 | "Principal place of business" of a plan sponsor or a person | ||||||
24 | other than a natural person means the single state in which the | ||||||
25 | natural persons who establish policy for the direction, | ||||||
26 | control, and coordination of the operations of the entity as a |
| |||||||
| |||||||
1 | whole primarily exercise that function, determined by the | ||||||
2 | Association in its reasonable judgment by considering the | ||||||
3 | following factors: | ||||||
4 | (A) the state in which the primary executive and | ||||||
5 | administrative headquarters of the entity is located; | ||||||
6 | (B) the state in which the principal office of the | ||||||
7 | chief executive officer of the entity is located; | ||||||
8 | (C) the state in which the board of directors (or | ||||||
9 | similar governing person or persons) of the entity conducts | ||||||
10 | the majority of its meetings; | ||||||
11 | (D) the state in which the executive or management | ||||||
12 | committee of the board of directors (or similar governing | ||||||
13 | person or persons) of the entity conducts the majority of | ||||||
14 | its meetings; | ||||||
15 | (E) the state from which the management of the overall | ||||||
16 | operations of the entity is directed; and | ||||||
17 | (F) in the case of a benefit plan sponsored by | ||||||
18 | affiliated companies comprising a consolidated | ||||||
19 | corporation, the state in which the holding company or | ||||||
20 | controlling affiliate has its principal place of business | ||||||
21 | as determined using the above factors. However, in the case | ||||||
22 | of a plan sponsor, if more than 50% of the participants in | ||||||
23 | the benefit plan are employed in a single state, that state | ||||||
24 | shall be deemed to be the principal place of business of | ||||||
25 | the plan sponsor. | ||||||
26 | The principal place of business of a plan sponsor of a |
| |||||||
| |||||||
1 | benefit plan described in this Section shall be deemed to be | ||||||
2 | the principal place of business of the association, committee, | ||||||
3 | joint board of trustees, or other similar group of | ||||||
4 | representatives of the parties who establish or maintain the | ||||||
5 | benefit plan that, in lieu of a specific or clear designation | ||||||
6 | of a principal place of business, shall be deemed to be the | ||||||
7 | principal place of business of the employer or employee | ||||||
8 | organization that has the largest investment in the benefit | ||||||
9 | plan in question. | ||||||
10 | "Receivership court" means the court in the insolvent or | ||||||
11 | impaired insurer's state having jurisdiction over the | ||||||
12 | conservation, rehabilitation, or liquidation of the insurer. | ||||||
13 | "Resident" means a person to whom a contractual obligation | ||||||
14 | is owed and who resides in this State on the date of entry of a | ||||||
15 | court order that determines a member insurer to be an impaired | ||||||
16 | insurer or a court order that determines a member insurer to be | ||||||
17 | an insolvent insurer. A person may be a resident of only one | ||||||
18 | state, which in the case of a person other than a natural | ||||||
19 | person shall be its principal place of business. Citizens of | ||||||
20 | the United States that are either (i) residents of foreign | ||||||
21 | countries or (ii) residents of United States possessions, | ||||||
22 | territories, or protectorates that do not have an association | ||||||
23 | similar to the Association created by this Article, shall be | ||||||
24 | deemed residents of the state of domicile of the insurer that | ||||||
25 | issued the policies or contracts. (13) "Resident" means any | ||||||
26 | person who resides in this State at the
time the insurer is |
| |||||||
| |||||||
1 | determined to be impaired or insolvent and to whom
contractual | ||||||
2 | obligations are owed.
A person may be a resident of only one | ||||||
3 | state which, in the case of a
person other than a natural | ||||||
4 | person, shall be its principal place of business.
| ||||||
5 | "Structured settlement annuity" means an annuity purchased | ||||||
6 | in order to fund periodic payments for a plaintiff or other | ||||||
7 | claimant in payment for or with respect to personal injury | ||||||
8 | suffered by the plaintiff or other claimant. | ||||||
9 | "State" means a state, the District of Columbia, Puerto | ||||||
10 | Rico, and a United States possession, territory, or | ||||||
11 | protectorate. | ||||||
12 | "Supplemental contract" means a written agreement entered | ||||||
13 | into for the distribution of proceeds under a life, health, or | ||||||
14 | annuity policy or a life, health, or annuity contract. (14) | ||||||
15 | "Supplemental contract" means any agreement entered into for | ||||||
16 | the
distribution of policy or contract proceeds.
| ||||||
17 | (15) "Unallocated annuity contract" means any annuity | ||||||
18 | contract or group
annuity certificate which is not issued to | ||||||
19 | and owned by an individual,
except to the extent of any annuity | ||||||
20 | benefits guaranteed to an individual by
an insurer under such | ||||||
21 | contract or certificate.
| ||||||
22 | (Source: P.A. 86-753.)
| ||||||
23 | (215 ILCS 5/531.06) (from Ch. 73, par. 1065.80-6)
| ||||||
24 | Sec. 531.06. Creation of the Association. There is created | ||||||
25 | a
non-profit legal entity to be known as the Illinois Life and |
| |||||||
| |||||||
1 | Health
Insurance Guaranty Association. All member insurers are | ||||||
2 | and must remain
members of the Association as a condition of | ||||||
3 | their authority to transact
insurance in this State. The | ||||||
4 | Association must perform its functions under
the plan of | ||||||
5 | operation established and approved under Section 531.10 and | ||||||
6 | must
exercise its powers through a board of directors | ||||||
7 | established under
Section 531.07. For purposes of | ||||||
8 | administration and assessment, the Association
must maintain 2 | ||||||
9 | accounts:
| ||||||
10 | (1) The life insurance and annuity account , which | ||||||
11 | includes the following
subaccounts:
| ||||||
12 | (a) Life Insurance Account;
| ||||||
13 | (b) Annuity account, which shall include annuity | ||||||
14 | contracts owned by a governmental retirement plan (or | ||||||
15 | its trustee) established under Section 401, 403(b), or | ||||||
16 | 457 of the United States Internal Revenue Code, but | ||||||
17 | shall otherwise exclude unallocated annuities Annuity | ||||||
18 | account ; and
| ||||||
19 | (c) Unallocated annuity account, which shall | ||||||
20 | exclude contracts owned by a governmental retirement | ||||||
21 | benefit plan (or its trustee) established under | ||||||
22 | Section 401, 403(b), or 457 of the United States | ||||||
23 | Internal Revenue Code Unallocated Annuity Account | ||||||
24 | which shall include contracts qualified
under Section | ||||||
25 | 403(b) of the United States Internal Revenue Code .
| ||||||
26 | (2) The health insurance account.
|
| |||||||
| |||||||
1 | The Association shall be supervised by the Director
and is | ||||||
2 | subject to the applicable provisions of the Illinois Insurance
| ||||||
3 | Code. Meetings or records of the Association may be opened to | ||||||
4 | the public upon majority vote of the board of directors of the | ||||||
5 | Association.
| ||||||
6 | (Source: P.A. 95-331, eff. 8-21-07.)
| ||||||
7 | (215 ILCS 5/531.07) (from Ch. 73, par. 1065.80-7)
| ||||||
8 | Sec. 531.07.
Board of Directors.) The board of directors of | ||||||
9 | the
Association consists of not less than 7 5 nor more than 11 | ||||||
10 | 9 members serving
terms as established in the plan of | ||||||
11 | operation. The insurers members of the board
are to be selected | ||||||
12 | by member insurers subject to the approval of the
Director. In | ||||||
13 | addition, 2 persons who must be public representatives may be | ||||||
14 | appointed by the Director to the board of directors. A public | ||||||
15 | representative may not be an officer, director, or employee of | ||||||
16 | an insurance company or any person engaged in the business of | ||||||
17 | insurance. Vacancies on the board must be filled for the | ||||||
18 | remaining period
of the term in the manner described in the | ||||||
19 | plan of operation. To select
the initial board of directors, | ||||||
20 | and initially organize the Association,
the Director must give | ||||||
21 | notice to all member insurers of the time and
place of the | ||||||
22 | organizational meeting. In determining voting rights at the
| ||||||
23 | organizational meeting each member insurer is entitled to one | ||||||
24 | vote in
person or by proxy. If the board of directors is not | ||||||
25 | selected within
60 days after notice of the organizational |
| |||||||
| |||||||
1 | meeting, the Director may
appoint the initial members.
| ||||||
2 | In approving selections or in appointing members to the | ||||||
3 | board, the
Director must consider, whether all member insurers | ||||||
4 | are
fairly represented.
| ||||||
5 | Members of the board may be reimbursed from the assets of | ||||||
6 | the Association
for expenses incurred by them as members of the | ||||||
7 | board of directors but
members of the board may not otherwise | ||||||
8 | be compensated by the Association for
their services.
| ||||||
9 | (Source: P.A. 81-899.)
| ||||||
10 | (215 ILCS 5/531.08) (from Ch. 73, par. 1065.80-8)
| ||||||
11 | Sec. 531.08. Powers and duties of the Association. | ||||||
12 | (a) In addition to
the powers and duties enumerated in | ||||||
13 | other Sections of this Article:
| ||||||
14 | (1) If a member insurer is an impaired insurer, then | ||||||
15 | the Association may, in its discretion and subject to any | ||||||
16 | conditions imposed by the Association that do not impair | ||||||
17 | the contractual obligations of the impaired insurer and | ||||||
18 | that are approved by the Director: | ||||||
19 | (A) guarantee, assume, or reinsure or cause to be | ||||||
20 | guaranteed, assumed, or reinsured, any or all of the | ||||||
21 | policies or contracts of the impaired insurer; or | ||||||
22 | (B) provide such money, pledges, loans, notes, | ||||||
23 | guarantees, or other means as are proper to effectuate | ||||||
24 | paragraph (A) and assure payment of the contractual | ||||||
25 | obligations of the impaired insurer pending action |
| |||||||
| |||||||
1 | under paragraph (A). | ||||||
2 | (2) If a member insurer is an insolvent insurer, then | ||||||
3 | the Association shall, in its discretion, either: | ||||||
4 | (A) guaranty, assume, or reinsure or cause to be | ||||||
5 | guaranteed, assumed, or reinsured the policies or | ||||||
6 | contracts of the insolvent insurer or assure payment of | ||||||
7 | the contractual obligations of the insolvent insurer | ||||||
8 | and provide money, pledges, loans, notes, guarantees, | ||||||
9 | or other means reasonably necessary to discharge the | ||||||
10 | Association's duties; or | ||||||
11 | (B) provide benefits and coverages in accordance | ||||||
12 | with the following provisions: | ||||||
13 | (i) with respect to life and health insurance | ||||||
14 | policies and annuities, ensure payment of benefits | ||||||
15 | for premiums identical to the premiums and | ||||||
16 | benefits (except for terms of conversion and | ||||||
17 | renewability) that would have been payable under | ||||||
18 | the policies or contracts of the insolvent insurer | ||||||
19 | for claims incurred: | ||||||
20 | (a) with respect to group policies and | ||||||
21 | contracts, not later than the earlier of the | ||||||
22 | next renewal date under those policies or | ||||||
23 | contracts or 45 days, but in no event less than | ||||||
24 | 30 days, after the date on which the | ||||||
25 | Association becomes obligated with respect to | ||||||
26 | the policies and contracts; |
| |||||||
| |||||||
1 | (b) with respect to nongroup policies, | ||||||
2 | contracts, and annuities not later than the | ||||||
3 | earlier of the next renewal date (if any) under | ||||||
4 | the policies or contracts or one year, but in | ||||||
5 | no event less than 30 days, from the date on | ||||||
6 | which the Association becomes obligated with | ||||||
7 | respect to the policies or contracts; | ||||||
8 | (ii) make diligent efforts to provide all | ||||||
9 | known insureds or annuitants (for nongroup | ||||||
10 | policies and contracts), or group policy owners | ||||||
11 | with respect to group policies and contracts, 30 | ||||||
12 | days notice of the termination (pursuant to | ||||||
13 | subparagraph (i) of this paragraph (B)) of the | ||||||
14 | benefits provided; | ||||||
15 | (iii) with respect to nongroup life and health | ||||||
16 | insurance policies and annuities covered by the | ||||||
17 | Association, make available to each known insured | ||||||
18 | or annuitant, or owner if other than the insured or | ||||||
19 | annuitant, and with respect to an individual | ||||||
20 | formerly insured or formerly an annuitant under a | ||||||
21 | group policy who is not eligible for replacement | ||||||
22 | group coverage, make available substitute coverage | ||||||
23 | on an individual basis in accordance with the | ||||||
24 | provisions of paragraph (3), if the insureds or | ||||||
25 | annuitants had a right under law or the terminated | ||||||
26 | policy or annuity to convert coverage to |
| |||||||
| |||||||
1 | individual coverage or to continue an individual | ||||||
2 | policy or annuity in force until a specified age or | ||||||
3 | for a specified time, during which the insurer had | ||||||
4 | no right unilaterally to make changes in any | ||||||
5 | provision of the policy or annuity or had a right | ||||||
6 | only to make changes in premium by class.
| ||||||
7 | (1) If a domestic insurer is an impaired insurer, the | ||||||
8 | Association
may, subject to any conditions imposed by the | ||||||
9 | Association other than
those which impair the contractual | ||||||
10 | obligations of the impaired insurer,
and approved by the | ||||||
11 | impaired insurer and the Director:
| ||||||
12 | (a) Guarantee or reinsure, or cause to be | ||||||
13 | guaranteed, assumed or
reinsured, any or all of the | ||||||
14 | covered policies of covered persons of the
impaired | ||||||
15 | insurer;
| ||||||
16 | (b) Provide such monies, pledges, notes, | ||||||
17 | guarantees, or other means
as are proper to effectuate | ||||||
18 | paragraph (a), and assure payment of the
contractual | ||||||
19 | obligations of the impaired insurer pending action | ||||||
20 | under
paragraph (a);
| ||||||
21 | (c) Loan money to the impaired insurer;
| ||||||
22 | (2) If a domestic, foreign, or alien insurer is an | ||||||
23 | insolvent
insurer, the Association
shall, subject to the | ||||||
24 | approval of the Director;
| ||||||
25 | (a)(i) Guarantee, assume or reinsure or cause to be | ||||||
26 | guaranteed,
assumed, or reinsured the covered policies |
| |||||||
| |||||||
1 | of covered persons of the
insolvent insurer;
| ||||||
2 | (ii) Assure payment of the contractual obligations | ||||||
3 | of the insolvent
insurer to covered persons;
| ||||||
4 | (iii) Provide such monies, pledges, notes, | ||||||
5 | guaranties, or other means
as are reasonably necessary | ||||||
6 | to discharge such duties; or
| ||||||
7 | (b) with respect to only life and health insurance | ||||||
8 | policies, provide
benefits and coverages in accordance | ||||||
9 | with Section 531.08(3).
| ||||||
10 | (c) Provided however
that this subsection (2) | ||||||
11 | shall not apply when the Director has determined
that | ||||||
12 | the foreign or alien insurers domiciliary jurisdiction | ||||||
13 | or state of
entry provides, by statute, protection | ||||||
14 | substantially similar to that
provided by this Article | ||||||
15 | for residents of this State and such protection
will be | ||||||
16 | provided in a timely manner.
| ||||||
17 | (3) When proceeding under subparagraph (2)(b) of this | ||||||
18 | Section the
Association shall, with respect to only life | ||||||
19 | and health insurance policies:
| ||||||
20 | (a) assure payment of benefits for premiums | ||||||
21 | identical to the premiums
and benefits (except for | ||||||
22 | terms of conversion and renewability) that would
have | ||||||
23 | been payable under the policies of the insolvent | ||||||
24 | insurer, for claims
incurred:
| ||||||
25 | (i) with respect to group policies, not later | ||||||
26 | than the earlier of the
next renewal date under |
| |||||||
| |||||||
1 | such policies or contracts or sixty days, but in no
| ||||||
2 | event less than thirty days, after the date on | ||||||
3 | which the Association
becomes obligated with | ||||||
4 | respect to such policies;
| ||||||
5 | (ii) with respect to non-group policies, not | ||||||
6 | later than the earlier of
the next renewal date (if | ||||||
7 | any) under such policies or one year, but in no
| ||||||
8 | event less than thirty days, from the date on which | ||||||
9 | the Association becomes
obligated with respect to | ||||||
10 | such policies;
| ||||||
11 | (b) make diligent efforts to provide all known | ||||||
12 | insureds or group
policyholders with respect to group | ||||||
13 | policies thirty days notice of the
termination of the | ||||||
14 | benefits provided; and
| ||||||
15 | (c) with respect to non-group policies, make | ||||||
16 | available to each known
insured, or owner if other than | ||||||
17 | the insured, and with respect to an
individual formerly | ||||||
18 | insured under a group policy who is not eligible for
| ||||||
19 | replacement group coverage, make available substitute | ||||||
20 | coverage on an
individual basis in accordance with the | ||||||
21 | provisions of subparagraph (3)(d) of
this Section, if | ||||||
22 | the insureds had a right under law or the terminated
| ||||||
23 | policy to convert coverage to individual coverage or to | ||||||
24 | continue a
non-group policy in force until a specified | ||||||
25 | age or for a specified time,
during which the insurer | ||||||
26 | has no right unilaterally to make changes in any
|
| |||||||
| |||||||
1 | provision of the policy or had a right only to make | ||||||
2 | changes in premium by
class.
| ||||||
3 | (b) (d)(i) In providing the substitute coverage required | ||||||
4 | under subparagraph (iii) of paragraph (B) of item (2) of | ||||||
5 | subsection (a)
(3)(c) of this Section, the Association may | ||||||
6 | offer either to reissue the
terminated coverage or to issue an | ||||||
7 | alternative policy.
| ||||||
8 | (ii) Alternative or reissued policies shall be offered | ||||||
9 | without requiring
evidence of insurability, and shall not | ||||||
10 | provide for any waiting period or
exclusion that would not have | ||||||
11 | applied under the terminated policy.
| ||||||
12 | (iii) The Association may reinsure any alternative or | ||||||
13 | reissued policy.
| ||||||
14 | (e)(i) Alternative policies adopted by the Association | ||||||
15 | shall be subject
to the approval of the Director. The | ||||||
16 | Association may adopt alternative
policies of various types for | ||||||
17 | future insurance without regard to any
particular impairment or | ||||||
18 | insolvency.
| ||||||
19 | (ii) Alternative policies shall contain at least the | ||||||
20 | minimum statutory
provisions required in this State and provide | ||||||
21 | benefits that shall not be
unreasonable in relation to the | ||||||
22 | premium charged. The
Association shall set the premium in | ||||||
23 | accordance with a table of rates which
it shall adopt. The | ||||||
24 | premium shall reflect the amount of insurance to be
provided | ||||||
25 | and the age and class of risk of each insured, but shall not
| ||||||
26 | reflect any changes in the health of the insured after the |
| |||||||
| |||||||
1 | original policy
was last underwritten.
| ||||||
2 | (iii) Any alternative policy issued by the Association | ||||||
3 | shall provide
coverage of a type similar to that of the policy | ||||||
4 | issued by the impaired or
insolvent insurer, as determined by | ||||||
5 | the Association.
| ||||||
6 | (c) (f) If the Association elects to reissue terminated | ||||||
7 | coverage at a
premium rate different from that charged under | ||||||
8 | the terminated policy, the
premium shall be set by the | ||||||
9 | Association in accordance with the amount of
insurance provided | ||||||
10 | and the age and class of risk, subject to approval of
the | ||||||
11 | Director or by a court of competent jurisdiction.
| ||||||
12 | (d) (g) The Association's obligations with respect to | ||||||
13 | coverage under any
policy of the impaired or insolvent insurer | ||||||
14 | or under any reissued or
alternative policy shall cease on the | ||||||
15 | date such coverage or policy is
replaced by another similar | ||||||
16 | policy by the policyholder, the insured, or the
Association.
| ||||||
17 | (e) (4) When proceeding under subparagraph (2)(b) of this | ||||||
18 | Section with
respect to any policy or contract carrying | ||||||
19 | guaranteed minimum interest
rates, the Association shall | ||||||
20 | assure the payment or crediting of a rate of
interest | ||||||
21 | consistent with subparagraph (2)(b)(iii)(B) of Section 531.03.
| ||||||
22 | (f) (5) Nonpayment of premiums thirty-one days after the | ||||||
23 | date required under
the terms of any guaranteed, assumed, | ||||||
24 | alternative or reissued policy or
contract or substitute | ||||||
25 | coverage shall terminate the Association's
obligations under | ||||||
26 | such policy or coverage under this Act with respect to
such |
| |||||||
| |||||||
1 | policy or coverage, except with respect to any claims incurred | ||||||
2 | or any
net cash surrender value which may be due in accordance | ||||||
3 | with the provisions of
this Act.
| ||||||
4 | (g) (6) Premiums due for coverage after entry of an order | ||||||
5 | of liquidation of
an insolvent insurer shall belong to and be | ||||||
6 | payable at the direction of the
Association,
and the | ||||||
7 | Association shall be liable for unearned premiums due to policy | ||||||
8 | or
contract owners arising after the entry of such order.
| ||||||
9 | (h) In carrying out its duties under paragraph (2) of | ||||||
10 | subsection (a) of this Section, the Association may: | ||||||
11 | (1) subject to approval by a court in this State, | ||||||
12 | impose permanent policy or contract liens in connection | ||||||
13 | with a guarantee, assumption, or reinsurance agreement if | ||||||
14 | the Association finds that the amounts which can be | ||||||
15 | assessed under this Article are less than the amounts | ||||||
16 | needed to assure full and prompt performance of the | ||||||
17 | Association's duties under this Article or that the | ||||||
18 | economic or financial conditions as they affect member | ||||||
19 | insurers are sufficiently adverse to render the imposition | ||||||
20 | of such permanent policy or contract liens to be in the | ||||||
21 | public interest; or | ||||||
22 | (2) subject to approval by a court in this State, | ||||||
23 | impose temporary moratoriums or liens on payments of cash | ||||||
24 | values and policy loans or any other right to withdraw | ||||||
25 | funds held in conjunction with policies or contracts in | ||||||
26 | addition to any contractual provisions for deferral of cash |
| |||||||
| |||||||
1 | or policy loan value. In addition, in the event of a | ||||||
2 | temporary moratorium or moratorium charge imposed by the | ||||||
3 | receivership court on payment of cash values or policy | ||||||
4 | loans or on any other right to withdraw funds held in | ||||||
5 | conjunction with policies or contracts, out of the assets | ||||||
6 | of the impaired or insolvent insurer, the Association may | ||||||
7 | defer the payment of cash values, policy loans, or other | ||||||
8 | rights by the Association for the period of the moratorium | ||||||
9 | or moratorium charge imposed by the receivership court, | ||||||
10 | except for claims covered by the Association to be paid in | ||||||
11 | accordance with a hardship procedure established by the | ||||||
12 | liquidator or rehabilitator and approved by the | ||||||
13 | receivership court.
| ||||||
14 | (7) (a) In carrying out its duties under subsection | ||||||
15 | (2),
permanent policy liens, or contract liens, may be | ||||||
16 | imposed in connection
with any guarantee, assumption or | ||||||
17 | reinsurance agreement, if the court:
| ||||||
18 | (i) Finds that the amounts which can be assessed | ||||||
19 | under this Act are
less than the amounts needed to | ||||||
20 | assure full and prompt performance of
the insolvent | ||||||
21 | insurer's contractual obligations, or that the | ||||||
22 | economic or
financial conditions as they affect member | ||||||
23 | insurers are sufficiently
adverse to render the | ||||||
24 | imposition of policy or contract liens, to be in
the | ||||||
25 | public interest; and
| ||||||
26 | (ii) Approves the specific policy liens or |
| |||||||
| |||||||
1 | contract liens to be used.
| ||||||
2 | (b) Before being obligated under subsection (2) the
| ||||||
3 | Association may request that there be imposed temporary | ||||||
4 | moratoriums or
liens on payments of cash values and policy | ||||||
5 | loans in addition to any
contractual provisions for | ||||||
6 | deferral of cash or policy loan
values, and such
temporary | ||||||
7 | moratoriums and liens may be imposed if they are approved | ||||||
8 | by
the court.
| ||||||
9 | (i) (8) There shall be no liability on the part of and no | ||||||
10 | cause of action
shall arise against the Association or against | ||||||
11 | any transferee from the
Association in connection with the | ||||||
12 | transfer by reinsurance or otherwise of
all or any part of an | ||||||
13 | impaired or insolvent insurer's business by reason of
any | ||||||
14 | action taken or any failure to take any action by the impaired | ||||||
15 | or
insolvent insurer at any time.
| ||||||
16 | (j) (9) If the Association fails to act within a reasonable | ||||||
17 | period of
time as provided in subsection (2) of this Section | ||||||
18 | with respect to an
insolvent insurer, the
Director shall have | ||||||
19 | the powers and duties of the Association under this
Act with | ||||||
20 | regard to such insolvent insurers.
| ||||||
21 | (k) (10) The Association or its designated representatives
| ||||||
22 | may render assistance and advice to the
Director, upon his | ||||||
23 | request, concerning rehabilitation, payment of
claims, | ||||||
24 | continuations of coverage, or the performance of other
| ||||||
25 | contractual obligations of any impaired or insolvent insurer.
| ||||||
26 | (l) The Association shall have standing to appear or |
| |||||||
| |||||||
1 | intervene before a court or agency in this State with | ||||||
2 | jurisdiction over an impaired or insolvent insurer concerning | ||||||
3 | which the Association is or may become obligated under this | ||||||
4 | Article or with jurisdiction over any person or property | ||||||
5 | against which the Association may have rights through | ||||||
6 | subrogation or otherwise. Standing shall extend to all matters | ||||||
7 | germane to the powers and duties of the Association, including, | ||||||
8 | but not limited to, proposals for reinsuring, modifying, or | ||||||
9 | guaranteeing the policies or contracts of the impaired or | ||||||
10 | insolvent insurer and the determination of the policies or | ||||||
11 | contracts and contractual obligations. The Association shall | ||||||
12 | also have the right to appear or intervene before a court or | ||||||
13 | agency in another state with jurisdiction over an impaired or | ||||||
14 | insolvent insurer for which the Association is or may become | ||||||
15 | obligated or with jurisdiction over any person or property | ||||||
16 | against whom the Association may have rights through | ||||||
17 | subrogation or otherwise. (11) The Association has standing to | ||||||
18 | appear before any court concerning
all matters germane to the | ||||||
19 | powers and duties of
the Association, including, but not | ||||||
20 | limited to, proposals for reinsuring
or guaranteeing the | ||||||
21 | covered policies of the impaired or insolvent
insurer and the | ||||||
22 | determination of the covered policies and contractual
| ||||||
23 | obligations.
| ||||||
24 | (m)(1) A person receiving benefits under this Article shall | ||||||
25 | be deemed to have assigned the rights under and any causes of | ||||||
26 | action against any person for losses arising under, resulting |
| |||||||
| |||||||
1 | from, or otherwise relating to the covered policy or contract | ||||||
2 | to the Association to the extent of the benefits received | ||||||
3 | because of this Article, whether the benefits are payments of | ||||||
4 | or on account of contractual obligations, continuation of | ||||||
5 | coverage, or provision of substitute or alternative coverages. | ||||||
6 | The Association may require an assignment to it of such rights | ||||||
7 | and cause of action by any payee, policy, or contract owner, | ||||||
8 | beneficiary, insured, or annuitant as a condition precedent to | ||||||
9 | the receipt of any right or benefits conferred by this Article | ||||||
10 | upon the person. (12) (a) Any person receiving benefits under | ||||||
11 | this Article is deemed
to have assigned the rights under the | ||||||
12 | covered policy
to the Association
to the extent of the benefits | ||||||
13 | received because of this Article whether
the benefits are | ||||||
14 | payments of contractual obligations or continuation of
| ||||||
15 | coverage. The Association may require an assignment to it of | ||||||
16 | such
rights by any payee, policy or contract owner, | ||||||
17 | beneficiary, insured,
certificate holder or
annuitant as a | ||||||
18 | condition precedent to the receipt of any rights or
benefits | ||||||
19 | conferred by this Article upon such person. The Association is
| ||||||
20 | subrogated to these rights against the assets of any insolvent | ||||||
21 | insurer.
| ||||||
22 | (2) (b) The subrogation rights of the Association under this | ||||||
23 | subsection
have the same priority against the assets of the | ||||||
24 | impaired or insolvent insurer as
that possessed by the person | ||||||
25 | entitled to receive benefits under this
Article. | ||||||
26 | (3) In addition to paragraphs (1) and (2), the Association |
| |||||||
| |||||||
1 | shall have all common law rights of subrogation and any other | ||||||
2 | equitable or legal remedy that would have been available to the | ||||||
3 | impaired or insolvent insurer or owner, beneficiary, or payee | ||||||
4 | of a policy or contract with respect to the policy or | ||||||
5 | contracts, including without limitation, in the case of a | ||||||
6 | structured settlement annuity, any rights of the owner, | ||||||
7 | beneficiary, or payee of the annuity to the extent of benefits | ||||||
8 | received pursuant to this Article, against a person originally | ||||||
9 | or by succession responsible for the losses arising from the | ||||||
10 | personal injury relating to the annuity or payment therefor, | ||||||
11 | excepting any such person responsible solely by reason of | ||||||
12 | serving as an assignee in respect of a qualified assignment | ||||||
13 | under Internal Revenue Code Section 130. | ||||||
14 | (4) If the preceding provisions of this subsection (l) are | ||||||
15 | invalid or ineffective with respect to any person or claim for | ||||||
16 | any reason, then the amount payable by the Association with | ||||||
17 | respect to the related covered obligations shall be reduced by | ||||||
18 | the amount realized by any other person with respect to the | ||||||
19 | person or claim that is attributable to the policies, or | ||||||
20 | portion thereof, covered by the Association. | ||||||
21 | (5) If the Association has provided benefits with respect | ||||||
22 | to a covered obligation and a person recovers amounts as to | ||||||
23 | which the Association has rights as described in the preceding | ||||||
24 | paragraphs of this subsection (10), then the person shall pay | ||||||
25 | to the Association the portion of the recovery attributable to | ||||||
26 | the policies, or portion thereof, covered by the Association.
|
| |||||||
| |||||||
1 | (n) (13) The Association may:
| ||||||
2 |
(1) (a) Enter into such contracts as are necessary or | ||||||
3 | proper to carry
out the provisions and purposes of this | ||||||
4 | Article;
| ||||||
5 |
(2) (b) Sue or be sued, including taking any legal | ||||||
6 | actions necessary or
proper for recovery of any unpaid | ||||||
7 | assessments under Section 531.09. The
Association shall | ||||||
8 | not be liable for punitive or exemplary damages;
| ||||||
9 |
(3) (c) Borrow money to effect the purposes of this | ||||||
10 | Article. Any notes
or other evidence of indebtedness of the | ||||||
11 | Association not in default are
legal investments for | ||||||
12 | domestic insurers and may be carried as admitted
assets.
| ||||||
13 |
(4) (d) Employ or retain such persons as are necessary | ||||||
14 | to handle the
financial transactions of the Association, | ||||||
15 | and to perform such other
functions as become necessary or | ||||||
16 | proper under this Article.
| ||||||
17 |
(5) (e) Negotiate and contract with any liquidator, | ||||||
18 | rehabilitator,
conservator, or ancillary receiver to carry | ||||||
19 | out the powers and duties of
the Association.
| ||||||
20 |
(6) (f) Take such legal action as may be necessary to | ||||||
21 | avoid payment of
improper claims.
| ||||||
22 |
(7) (g) Exercise, for the purposes of this Article and | ||||||
23 | to the extent
approved by the Director, the powers of a | ||||||
24 | domestic life or health
insurer, but in no case may the | ||||||
25 | Association issue insurance policies or
annuity contracts | ||||||
26 | other than those issued to perform the contractual
|
| |||||||
| |||||||
1 | obligations of the impaired or insolvent insurer.
| ||||||
2 |
(8) (h) Exercise all the rights of the Director under | ||||||
3 | Section 193(4) of
this Code with respect to covered | ||||||
4 | policies after the association becomes
obligated by | ||||||
5 | statute.
| ||||||
6 | (9) Request information from a person seeking coverage | ||||||
7 | from the Association in order to aid the Association in | ||||||
8 | determining its obligations under this Article with | ||||||
9 | respect to the person, and the person shall promptly comply | ||||||
10 | with the request. | ||||||
11 | (10) Take other necessary or appropriate action to | ||||||
12 | discharge its duties and obligations under this Article or | ||||||
13 | to exercise its powers under this Article.
| ||||||
14 | (o) (14) With respect to covered policies for which the | ||||||
15 | Association becomes
obligated after an entry of an order of | ||||||
16 | liquidation or rehabilitation,
the Association may
elect to | ||||||
17 | succeed to the rights of the insolvent insurer arising after | ||||||
18 | the
date of the order of liquidation or rehabilitation under | ||||||
19 | any contract
of reinsurance to which
the insolvent insurer was | ||||||
20 | a party, to the extent that such contract
provides coverage for | ||||||
21 | losses occurring after the date of the order of
liquidation or | ||||||
22 | rehabilitation. As a condition to making this election,
the | ||||||
23 | Association must pay all unpaid premiums due under the contract | ||||||
24 | for
coverage relating to periods before and after the date of | ||||||
25 | the order of
liquidation or rehabilitation.
| ||||||
26 | (p) A deposit in this State, held pursuant to law or |
| |||||||
| |||||||
1 | required by the Director for the benefit of creditors, | ||||||
2 | including policy owners, not turned over to the domiciliary | ||||||
3 | liquidator upon the entry of a final order of liquidation or | ||||||
4 | order approving a rehabilitation plan of an insurer domiciled | ||||||
5 | in this State or in a reciprocal state, pursuant to Article | ||||||
6 | XIII 1/2 of this Code, shall be promptly paid to the | ||||||
7 | Association. The Association shall be entitled to retain a | ||||||
8 | portion of any amount so paid to it equal to the percentage | ||||||
9 | determined by dividing the aggregate amount of policy owners' | ||||||
10 | claims related to that insolvency for which the Association has | ||||||
11 | provided statutory benefits by the aggregate amount of all | ||||||
12 | policy owners' claims in this State related to that insolvency | ||||||
13 | and shall remit to the domiciliary receiver the amount so paid | ||||||
14 | to the Association less the amount retained pursuant to this | ||||||
15 | subsection (13). Any amount so paid to the Association and | ||||||
16 | retained by it shall be treated as a distribution of estate | ||||||
17 | assets pursuant to applicable State receivership law dealing | ||||||
18 | with early access disbursements. | ||||||
19 | (q) The Board of Directors of the Association shall have | ||||||
20 | discretion and may exercise reasonable business judgment to | ||||||
21 | determine the means by which the Association is to provide the | ||||||
22 | benefits of this Article in an economical and efficient manner. | ||||||
23 | (r) Where the Association has arranged or offered to | ||||||
24 | provide the benefits of this Article to a covered person under | ||||||
25 | a plan or arrangement that fulfills the Association's | ||||||
26 | obligations under this Article, the person shall not be |
| |||||||
| |||||||
1 | entitled to benefits from the Association in addition to or | ||||||
2 | other than those provided under the plan or arrangement. | ||||||
3 | (s) Venue in a suit against the Association arising under | ||||||
4 | the Article shall be in Cook County. The Association shall not | ||||||
5 | be required to give any appeal bond in an appeal that relates | ||||||
6 | to a cause of action arising under this Article. | ||||||
7 | (t) The Association may join an organization of one or more | ||||||
8 | other State associations of similar purposes to further the | ||||||
9 | purposes and administer the powers and duties of the | ||||||
10 | Association. | ||||||
11 | (u) In carrying out its duties in connection with | ||||||
12 | guaranteeing, assuming, or reinsuring policies or contracts | ||||||
13 | under subsections (1) or (2), the Association may, subject to | ||||||
14 | approval of the receivership court, issue substitute coverage | ||||||
15 | for a policy or contract that provides an interest rate, | ||||||
16 | crediting rate, or similar factor determined by use of an index | ||||||
17 | or other external reference stated in the policy or contract | ||||||
18 | employed in calculating returns or changes in value by issuing | ||||||
19 | an alternative policy or contract in accordance with the | ||||||
20 | following provisions: | ||||||
21 | (1) in lieu of the index or other external reference | ||||||
22 | provided for in the original policy or contract, the | ||||||
23 | alternative policy or contract provides for (i) a fixed | ||||||
24 | interest rate, or (ii) payment of dividends with minimum | ||||||
25 | guarantees, or (iii) a different method for calculating | ||||||
26 | interest or changes in value; |
| |||||||
| |||||||
1 | (2) there is no requirement for evidence of | ||||||
2 | insurability, waiting period, or other exclusion that | ||||||
3 | would not have applied under the replaced policy or | ||||||
4 | contract; and | ||||||
5 | (3) the alternative policy or contract is | ||||||
6 | substantially similar to the replaced policy or contract in | ||||||
7 | all other material terms. | ||||||
8 | (Source: P.A. 93-326, eff. 1-1-04.)
| ||||||
9 | (215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)
| ||||||
10 | Sec. 531.09. Assessments. | ||||||
11 | (1) For the purpose of providing the funds
necessary to | ||||||
12 | carry out the powers and duties of the Association, the board
| ||||||
13 | of directors shall assess the member insurers, separately for | ||||||
14 | each account, at such
times and for such amounts as the board | ||||||
15 | finds necessary. Assessments shall
be due not less than 30 days | ||||||
16 | after written notice to the member insurers
and shall accrue | ||||||
17 | interest from the due date at such adjusted rate as is
| ||||||
18 | established under Section 6621 of Chapter 26 of the United | ||||||
19 | States Code and
such interest shall be compounded daily.
| ||||||
20 | (2) There shall be 2 classes of assessments, as follows:
| ||||||
21 | (a) Class A assessments shall be made for the purpose | ||||||
22 | of meeting administrative
costs and other general expenses | ||||||
23 | and examinations conducted under the authority
of the | ||||||
24 | Director under subsection (5) of Section 531.12.
| ||||||
25 | (b) Class B assessments shall be made to the extent |
| |||||||
| |||||||
1 | necessary to carry
out the powers and duties of the | ||||||
2 | Association under Section 531.08 with regard
to an impaired | ||||||
3 | or insolvent domestic insurer or insolvent foreign or alien | ||||||
4 | insurers.
| ||||||
5 | (3)(a) The amount of any Class A assessment shall be | ||||||
6 | determined at the discretion of the board of directors and such | ||||||
7 | assessments shall be authorized and called on a non-pro rata | ||||||
8 | basis. The amount of any Class B
assessment shall be allocated | ||||||
9 | for assessment
purposes among the accounts
and subaccounts | ||||||
10 | pursuant to an allocation formula which may be based on
the | ||||||
11 | premiums or reserves of the impaired or insolvent insurer or | ||||||
12 | any other
standard deemed by the board in its sole discretion | ||||||
13 | as being fair and
reasonable under the circumstances.
| ||||||
14 | (b) Class B assessments against member insurers for each | ||||||
15 | account and
subaccount shall
be in the proportion that the | ||||||
16 | premiums received on business in this State
by each assessed | ||||||
17 | member insurer on policies or contracts covered by
each account | ||||||
18 | or subaccount for the three most recent calendar years
for | ||||||
19 | which information is available preceding the year in which the | ||||||
20 | insurer
became impaired or insolvent, as the case may be, bears | ||||||
21 | to such premiums
received on business in this State for such | ||||||
22 | calendar years by all assessed
member insurers.
| ||||||
23 | (c) Assessments for funds to meet the requirements of the | ||||||
24 | Association
with respect to an impaired or insolvent insurer | ||||||
25 | shall not be made until
necessary to implement the purposes of | ||||||
26 | this Article. Classification
of assessments
under subsection |
| |||||||
| |||||||
1 | (2) and computations of assessments under this subsection
shall | ||||||
2 | be made with a reasonable degree of accuracy, recognizing that | ||||||
3 | exact
determinations may not always be possible.
| ||||||
4 | (4) The Association may abate or defer, in whole or in | ||||||
5 | part, the assessment of a member insurer if, in the opinion of | ||||||
6 | the board, payment of the assessment would endanger the ability | ||||||
7 | of the member insurer to fulfill its contractual obligations. | ||||||
8 | In the event an assessment against a member insurer is abated | ||||||
9 | or deferred in whole or in part the amount by which the | ||||||
10 | assessment is abated or deferred may be assessed against the | ||||||
11 | other member insurers in a manner consistent with the basis for | ||||||
12 | assessments set forth in this Section. Once the conditions that | ||||||
13 | caused a deferral have been removed or rectified, the member | ||||||
14 | insurer shall pay all assessments that were deferred pursuant | ||||||
15 | to a repayment plan approved by the Association. | ||||||
16 | (5) (a) Subject to the provisions of subparagraph (ii) of | ||||||
17 | this paragraph, the total of all assessments authorized by the | ||||||
18 | Association with respect to a member insurer for each | ||||||
19 | subaccount of the life insurance and annuity account and for | ||||||
20 | the health account shall not in one calendar year exceed 2% of | ||||||
21 | that member insurer's average annual premiums received in this | ||||||
22 | State on the policies and contracts covered by the subaccount | ||||||
23 | or account during the 3 calendar years preceding the year in | ||||||
24 | which the insurer became an impaired or insolvent insurer. | ||||||
25 | If 2 or more assessments are authorized in one calendar | ||||||
26 | year with respect to insurers that become impaired or insolvent |
| |||||||
| |||||||
1 | in different calendar years, the average annual premiums for | ||||||
2 | purposes of the aggregate assessment percentage limitation | ||||||
3 | referenced in subparagraph (a) of this paragraph shall be equal | ||||||
4 | and limited to the higher of the 3-year average annual premiums | ||||||
5 | for the applicable subaccount or account as calculated pursuant | ||||||
6 | to this Section. | ||||||
7 | If the maximum assessment, together with the other assets | ||||||
8 | of the Association in an account, does not provide in one year | ||||||
9 | in either account an amount sufficient to carry out the | ||||||
10 | responsibilities of the Association, the necessary additional | ||||||
11 | funds shall be assessed as soon thereafter as permitted by this | ||||||
12 | Article. | ||||||
13 | (b) The board may provide in the plan of operation a method | ||||||
14 | of allocating funds among claims, whether relating to one or | ||||||
15 | more impaired or insolvent insurers, when the maximum | ||||||
16 | assessment will be insufficient to cover anticipated claims. | ||||||
17 | (c) If the maximum assessment for a subaccount of the life | ||||||
18 | and annuity account in one year does not provide an amount | ||||||
19 | sufficient to carry out the responsibilities of the | ||||||
20 | Association, then pursuant to paragraph (b) of subsection (3), | ||||||
21 | the board shall assess the other subaccounts of the life and | ||||||
22 | annuity account for the necessary additional amount, subject to | ||||||
23 | the maximum stated in paragraph (a) of this subsection. | ||||||
24 | (4) The Association may abate or defer, in whole or in | ||||||
25 | part, the assessment
of a member insurer if, in the opinion of | ||||||
26 | the board, payment of the assessment
would endanger the ability |
| |||||||
| |||||||
1 | of the member insurer to fulfill its contractual
obligations. | ||||||
2 | The total of all assessments upon a member insurer for the
life | ||||||
3 | and annuity
account and for each subaccount thereunder may not | ||||||
4 | in any one calendar
year exceed 2% and for the health account | ||||||
5 | may not in any one calendar
year exceed 2% of such insurer's
| ||||||
6 | average premiums received in this State on the policies and | ||||||
7 | contracts
covered by the account or subaccount during the three | ||||||
8 | calendar years
preceding the year in which the insurer became | ||||||
9 | an impaired or insolvent
insurer. If a one percent assessment | ||||||
10 | for any subaccount of the life and
annuity account in any one | ||||||
11 | year does not provide an amount sufficient to
carry out the | ||||||
12 | responsibilities of the Association, then pursuant to
| ||||||
13 | subsection 3(b), the board shall access all subaccounts of the | ||||||
14 | life and
annuity account for the necessary additional amount, | ||||||
15 | subject to the maximum
stated in this subsection.
| ||||||
16 | (5) In the event an assessment against a member insurer is | ||||||
17 | abated, or deferred,
in whole or in part, because of the | ||||||
18 | limitations set forth in subsection (4) of this
Section the | ||||||
19 | amount by which such assessment is abated or deferred, may be
| ||||||
20 | assessed against the other member insurers in a manner | ||||||
21 | consistent with the
basis for assessments set forth in this | ||||||
22 | Section. If the maximum assessment,
together with the other | ||||||
23 | assets of the Association in either account, does
not provide | ||||||
24 | in any
one year in either account an amount sufficient to carry | ||||||
25 | out the
responsibilities
of the Association, the necessary | ||||||
26 | additional funds may be assessed as soon
thereafter
as |
| |||||||
| |||||||
1 | permitted by this Article.
The board may provide in the plan of | ||||||
2 | operation a method of allocating
funds among claims, whether | ||||||
3 | relating to one or more impaired or insolvent
insurers, when | ||||||
4 | the maximum assessment will be insufficient to cover | ||||||
5 | anticipated
claims.
| ||||||
6 | (6) The board may, by an equitable method as established in | ||||||
7 | the
plan of operation, refund to member insurers, in proportion | ||||||
8 | to the contribution
of each insurer to that account, the amount | ||||||
9 | by which the assets of the account
exceed the amount the board | ||||||
10 | finds is necessary to carry out during the coming
year the | ||||||
11 | obligations of the Association with regard to that account, | ||||||
12 | including
assets accruing from net realized gains and income | ||||||
13 | from investments. A
reasonable amount may be retained in any | ||||||
14 | account to provide funds for the
continuing expenses of the | ||||||
15 | Association and for future losses if refunds are
impractical .
| ||||||
16 | (7) An assessment is deemed to occur on the date upon which | ||||||
17 | the board
votes such assessment. The board may defer calling | ||||||
18 | the payment of the
assessment or may call for payment in one or | ||||||
19 | more installments.
| ||||||
20 | (8) It is proper for any member insurer, in determining its | ||||||
21 | premium
rates and policyowner dividends as to any kind of | ||||||
22 | insurance within the scope of
this Article, to consider the | ||||||
23 | amount reasonably necessary to meet its assessment
obligations | ||||||
24 | under this Article.
| ||||||
25 | (9) The Association must issue to each insurer paying a
| ||||||
26 | Class B assessment
under this Article a certificate of |
| |||||||
| |||||||
1 | contribution,
in a form acceptable to the
Director, for the | ||||||
2 | amount of the assessment so paid. All outstanding certificates
| ||||||
3 | are of equal
dignity and priority without reference to amounts | ||||||
4 | or dates of issue. A certificate
of contribution may be shown | ||||||
5 | by the insurer in its financial statement as an asset
in such | ||||||
6 | form and for such amount, if any, and period of time as the | ||||||
7 | Director
may approve, provided the insurer shall in any event | ||||||
8 | at its option have
the right to show a certificate of | ||||||
9 | contribution as an admitted asset at
percentages of the | ||||||
10 | original face amount for calendar years as follows:
| ||||||
11 | 100% for the calendar year after the year of issuance;
| ||||||
12 | 80% for the second calendar year after the year of | ||||||
13 | issuance;
| ||||||
14 | 60% for the third calendar year after the year of issuance;
| ||||||
15 | 40% for the fourth calendar year after the year of | ||||||
16 | issuance;
| ||||||
17 | 20% for the fifth calendar year after the year of issuance.
| ||||||
18 | (10) The Association may request information of member | ||||||
19 | insurers in order to aid in the exercise of its power under | ||||||
20 | this Section and member insurers shall promptly comply with a | ||||||
21 | request. | ||||||
22 | (Source: P.A. 95-86, eff. 9-25-07 (changed from 1-1-08 by P.A. | ||||||
23 | 95-632).)
| ||||||
24 | (215 ILCS 5/531.10) (from Ch. 73, par. 1065.80-10)
| ||||||
25 | Sec. 531.10.
Plan of Operation.) (1) (a) The Association |
| |||||||
| |||||||
1 | must
submit to the Director a plan of operation and any | ||||||
2 | amendments thereto necessary
or suitable to assure the fair, | ||||||
3 | reasonable, and equitable administration of the
Association. | ||||||
4 | The plan of operation and any amendments thereto become | ||||||
5 | effective
upon approval in writing by the Director.
| ||||||
6 | (b) If the Association fails to submit a suitable plan of | ||||||
7 | operation
within 180 days following the effective date of this | ||||||
8 | Article or if at any time
thereafter the Association fails to | ||||||
9 | submit suitable amendments to the plan, the
Director may, after | ||||||
10 | notice and hearing, adopt and promulgate such reasonable
rules | ||||||
11 | as are necessary or advisable to effectuate the provisions of | ||||||
12 | this Article.
Such rules are in force until modified by the | ||||||
13 | Director or superseded by a plan
submitted by the Association | ||||||
14 | and approved by the Director.
| ||||||
15 | (2) All member insurers must comply with the plan of | ||||||
16 | operation.
| ||||||
17 | (3) The plan of operation must, in addition to requirements | ||||||
18 | enumerated
elsewhere in this Article:
| ||||||
19 | (a) Establish procedures for handling the assets of the | ||||||
20 | Association;
| ||||||
21 | (b) Establish the amount and method of reimbursing | ||||||
22 | members of the
board of directors under Section 531.07;
| ||||||
23 | (c) Establish regular places and times for meetings of | ||||||
24 | the board
of directors;
| ||||||
25 | (d) Establish procedures for records to be kept of all | ||||||
26 | financial
transactions of the Association, its agents, and |
| |||||||
| |||||||
1 | the board of directors;
| ||||||
2 | (e) Establish the procedures whereby selections for | ||||||
3 | the board
of directors will be made and submitted to the | ||||||
4 | Director;
| ||||||
5 | (f) Establish any additional procedures for | ||||||
6 | assessments under
Section 531.09; and
| ||||||
7 | (g) Contain additional provisions necessary or proper | ||||||
8 | for the execution
of the powers and duties of the | ||||||
9 | Association.
| ||||||
10 | (4) The plan of operation shall establish a procedure for | ||||||
11 | protest by
any member insurer of assessments made by the | ||||||
12 | Association pursuant to
Section 531.09. Such procedures shall | ||||||
13 | require that:
| ||||||
14 | (a) a member insurer that wishes to protest all or part | ||||||
15 | of an assessment shall pay when due the full amount of the | ||||||
16 | assessment as set forth in the notice provided by the | ||||||
17 | Association. The payment shall be available to meet | ||||||
18 | Association obligations during the pendency of the protest | ||||||
19 | or any subsequent appeal. Payment shall be accompanied by a | ||||||
20 | statement in writing that the payment is made under protest | ||||||
21 | and setting forth a brief statement of the grounds for the | ||||||
22 | protest; Any member insurer that wishes to protest all or | ||||||
23 | any part of an
assessment for any year shall first pay the | ||||||
24 | full amount of the assessment
as set forth in the notice | ||||||
25 | provided by the Association. Such payments
shall be | ||||||
26 | accompanied by a statement in writing that the payment is |
| |||||||
| |||||||
1 | made
under protest, setting forth a brief statement of the | ||||||
2 | ground for the
protest. The Association shall hold such | ||||||
3 | payments in a separate interest
bearing account.
| ||||||
4 | (b) within Within 30 days following the payment of an | ||||||
5 | assessment under
protest by any protesting member insurer, | ||||||
6 | the Association must notify the
member insurer in writing | ||||||
7 | of its determination with respect to the protest
unless the | ||||||
8 | Association notifies the member that additional time is | ||||||
9 | required
to resolve the issues raised by the protest ; .
| ||||||
10 | (c) in In the event the Association determines that the | ||||||
11 | protesting member
insurer is entitled to a refund, such | ||||||
12 | refund shall be made within 30
days following the date upon | ||||||
13 | which the Association makes its determination ; .
| ||||||
14 | (d) the The decision of the Association with respect to | ||||||
15 | a protest may be
appealed to the Director pursuant to | ||||||
16 | Section 531.11(3) ; .
| ||||||
17 | (e) in In the alternative to rendering a decision with | ||||||
18 | respect to any
protest based on a question regarding the | ||||||
19 | assessment base, the Association
may refer such protests to | ||||||
20 | the Director for final decision, with or without
a | ||||||
21 | recommendation from the Association ; and .
| ||||||
22 | (f) interest Interest on any refund due a protesting | ||||||
23 | member insurer shall be paid
at the rate actually earned by | ||||||
24 | the Association on the separate account .
| ||||||
25 | (5) The plan of operation may provide that any or all | ||||||
26 | powers and duties
of the Association, except those under |
| |||||||
| |||||||
1 | paragraph (c) of subsection (10)
of Section 531.08 and Section | ||||||
2 | 531.09 are delegated to a corporation,
association or other | ||||||
3 | organization which performs or will perform functions
similar | ||||||
4 | to those of this Association, or its equivalent, in 2 or more | ||||||
5 | states.
Such a corporation, association or organization shall | ||||||
6 | be reimbursed for any
payments made on behalf of the | ||||||
7 | Association and shall be paid for its
performance of any | ||||||
8 | function of the Association. A delegation under this
subsection | ||||||
9 | shall take effect only with the approval of both the Board of
| ||||||
10 | Directors and the Director, and may be made only to a | ||||||
11 | corporation, association
or organization which extends | ||||||
12 | protection not substantially less favorable and
effective than | ||||||
13 | that provided by this Act.
| ||||||
14 | (Source: P.A. 84-1035.)
| ||||||
15 | (215 ILCS 5/531.11) (from Ch. 73, par. 1065.80-11)
| ||||||
16 | Sec. 531.11. Duties and powers of the Director. In addition | ||||||
17 | to
the duties and powers enumerated elsewhere in this Article:
| ||||||
18 | (1) The Director must do all of the following :
| ||||||
19 | (a) Upon request of the board of directors, provide the | ||||||
20 | Association with
a statement of the premiums in the | ||||||
21 | appropriate accounts for each
member insurer.
| ||||||
22 | (b) Notify notify the board of directors of the | ||||||
23 | existence of an impaired or
insolvent
insurer not later | ||||||
24 | than 3 days after a determination of impairment or | ||||||
25 | insolvency
is made or when the Director receives notice of |
| |||||||
| |||||||
1 | impairment or insolvency.
| ||||||
2 | (c) Give give notice to an impaired insurer as required | ||||||
3 | by Sections
34 or 60. Notice to the impaired insurer shall | ||||||
4 | constitute
notice to its shareholders, if any.
| ||||||
5 | (d) In any liquidation or rehabilitation proceeding | ||||||
6 | involving
a domestic insurer, be appointed as the | ||||||
7 | liquidator or rehabilitator. If
a foreign or alien member | ||||||
8 | insurer is subject to a liquidation proceeding
in its | ||||||
9 | domiciliary
jurisdiction or state of entry, the Director | ||||||
10 | shall be appointed conservator.
| ||||||
11 | (2) The Director may suspend or revoke, after notice and | ||||||
12 | hearing,
the certificate of authority to transact insurance in | ||||||
13 | this State of any member
insurer which fails to pay an | ||||||
14 | assessment when due or fails to comply with the
plan
of | ||||||
15 | operation. As an alternative the Director may levy a forfeiture | ||||||
16 | on any
member
insurer which fails to pay an assessment when | ||||||
17 | due. Such forfeiture may not
exceed
5% of the unpaid assessment | ||||||
18 | per month, but no forfeiture may be less than
$100 per month.
| ||||||
19 | (3) Any action of the board of directors or the Association | ||||||
20 | may be
appealed to the Director by any member insurer or any | ||||||
21 | other person
adversely affected by such action if such appeal | ||||||
22 | is taken within 30
days of the action being appealed. Any final | ||||||
23 | action or order of the Director
is subject to judicial review | ||||||
24 | in a court of competent jurisdiction.
| ||||||
25 | (4) The liquidator, rehabilitator, or conservator of any | ||||||
26 | impaired insurer
may notify all interested persons of the |
| |||||||
| |||||||
1 | effect of this Article.
| ||||||
2 | (Source: P.A. 89-97, eff. 7-7-95.)
| ||||||
3 | (215 ILCS 5/531.12) (from Ch. 73, par. 1065.80-12)
| ||||||
4 | Sec. 531.12. Prevention of Insolvencies. To aid in the | ||||||
5 | detection and
prevention of insurer insolvencies or | ||||||
6 | impairments:
| ||||||
7 | (1) It shall be the duty of the Director:
| ||||||
8 | (a) To notify the Commissioners of all other states, | ||||||
9 | territories of the
United States, and the District of Columbia | ||||||
10 | when he takes any of the following
actions against a member | ||||||
11 | insurer:
| ||||||
12 | (i) revocation of license;
| ||||||
13 | (ii) suspension of license;
| ||||||
14 | (iii) makes any formal order except for an order issued | ||||||
15 | pursuant to
Article XII 1/2 of this Code that such company | ||||||
16 | restrict its premium writing,
obtain additional contributions | ||||||
17 | to surplus, withdraw from the State,
reinsure all or any part | ||||||
18 | of its business, or increase capital, surplus or
any other | ||||||
19 | account for the security of policyholders or creditors.
| ||||||
20 | Such notice shall be transmitted to all commissioners
| ||||||
21 | within 30 days following
the action taken or the date on which | ||||||
22 | the action occurs.
| ||||||
23 | (b) To report to the board of directors when he has taken | ||||||
24 | any of the actions
set forth in subparagraph (a) of this | ||||||
25 | paragraph or has received a report
from any other commissioner |
| |||||||
| |||||||
1 | indicating that any such action has been taken
in another | ||||||
2 | state. Such report to the board of directors shall contain all
| ||||||
3 | significant details of the action taken or the report received | ||||||
4 | from another
commissioner.
| ||||||
5 | (c) To report to the board of directors when the Director | ||||||
6 | has reasonable cause to believe from an examination, whether | ||||||
7 | completed or in process, of any member insurer that the insurer | ||||||
8 | may be an impaired or insolvent insurer. | ||||||
9 | (d) To furnish to the board of directors the National | ||||||
10 | Association of Insurance Commissioners Insurance Regulatory | ||||||
11 | Information System ratios and listings of companies not | ||||||
12 | included in the ratios developed by the National Association of | ||||||
13 | Insurance Commissioners. The board may use the information | ||||||
14 | contained therein in carrying out its duties and | ||||||
15 | responsibilities under this Section. The report and the | ||||||
16 | information contained therein shall be kept confidential by the | ||||||
17 | board of directors until such time as made public by the | ||||||
18 | Director or other lawful authority. | ||||||
19 | (2) The Director may seek the advice and recommendations of | ||||||
20 | the board
of directors concerning any matter affecting his | ||||||
21 | duties and responsibilities
regarding the financial condition | ||||||
22 | of member companies and companies seeking admission
to transact | ||||||
23 | insurance business in this State.
| ||||||
24 | (3) The board of directors may, upon majority vote, make | ||||||
25 | reports and recommendations
to the Director upon any matter | ||||||
26 | germane to the liquidation, rehabilitation
or conservation of |
| |||||||
| |||||||
1 | any member insurer. Such reports
and recommendations shall not | ||||||
2 | be considered public documents.
| ||||||
3 | (4) The board of directors may, upon majority vote, make | ||||||
4 | recommendations
to the Director for the detection and | ||||||
5 | prevention of insurer insolvencies.
| ||||||
6 | (5) The board of directors shall, at the conclusion of any
| ||||||
7 | insurer insolvency
in which the Association was obligated to | ||||||
8 | pay covered claims prepare a report
to the Director containing | ||||||
9 | such information as it may have in its possession
bearing on | ||||||
10 | the history and causes of such insolvency. The board shall | ||||||
11 | cooperate
with the boards of directors of guaranty associations | ||||||
12 | in other states in
preparing a report on the history and causes | ||||||
13 | for insolvency of a particular
insurer, and may adopt by | ||||||
14 | reference any report prepared by such other
associations.
| ||||||
15 | (Source: P.A. 86-753.)
| ||||||
16 | (215 ILCS 5/531.14) (from Ch. 73, par. 1065.80-14)
| ||||||
17 | Sec. 531.14.
Miscellaneous Provisions. ) | ||||||
18 | (1) Nothing in this
Article may be construed to reduce the | ||||||
19 | liability for unpaid assessments of the insured
of an impaired | ||||||
20 | or insolvent insurer operating under a plan with assessment | ||||||
21 | liability.
| ||||||
22 | (2) Records must be kept of all negotiations and meetings | ||||||
23 | in which
the Association or its representatives are involved to | ||||||
24 | discuss the activities of the
Association in carrying out its | ||||||
25 | powers and duties under Section 531.08. Records of such
|
| |||||||
| |||||||
1 | negotiations or meetings may be made public only upon the | ||||||
2 | termination of a
liquidation, rehabilitation, or conservation | ||||||
3 | proceeding involving the impaired
or insolvent insurer, upon | ||||||
4 | the termination of the impairment or insolvency
of the insurer, | ||||||
5 | or upon the order
of a court of competent jurisdiction. Nothing | ||||||
6 | in this paragraph (2) limits the
duty of the Association to | ||||||
7 | render a report of its activities under Section
531.15.
| ||||||
8 | (3) For the purpose of carrying out its obligations under | ||||||
9 | this Article,
the Association is deemed to be a creditor of the | ||||||
10 | impaired or insolvent
insurer to the extent of assets | ||||||
11 | attributable to covered policies reduced by any
amounts to | ||||||
12 | which the Association is entitled as subrogee (under paragraph | ||||||
13 | (8)
of Section 531.08). All assets of the impaired or insolvent | ||||||
14 | insurer
attributable to covered policies must be used to | ||||||
15 | continue all covered policies
and pay all contractual | ||||||
16 | obligations of the impaired insurer as required by this
| ||||||
17 | Article. "Assets attributable to covered policies", as used in | ||||||
18 | this paragraph
(3), is that proportion of the
assets which the | ||||||
19 | reserves that should have been established
for such policies | ||||||
20 | bear to the reserve that should have been
established for all | ||||||
21 | policies of
insurance written by the impaired or insolvent | ||||||
22 | insurer.
| ||||||
23 | (4) (a) Prior to the termination of any liquidation, | ||||||
24 | rehabilitation,
or conservation proceeding, the court may take | ||||||
25 | into consideration the contributions
of the respective | ||||||
26 | parties, including the Association, the shareholders and
|
| |||||||
| |||||||
1 | policyowners of the impaired or insolvent insurer, and any | ||||||
2 | other party with
a bona fide interest,
in making an equitable | ||||||
3 | distribution of the ownership rights of such impaired
or | ||||||
4 | insolvent
insurer. In such a determination, consideration must | ||||||
5 | be given to the welfare of the
policyholders of the continuing | ||||||
6 | or successor insurer.
| ||||||
7 | (b) No distribution to stockholders, if any, of an impaired | ||||||
8 | or insolvent insurer
may be made until and unless the total
| ||||||
9 | amount of valid claims of the Association for funds expended in | ||||||
10 | carrying
out its powers and duties under Section 531.08, with | ||||||
11 | respect to such insurer
have been fully recovered by the | ||||||
12 | Association.
| ||||||
13 | (5) (a) If an order for liquidation or rehabilitation of
an | ||||||
14 | insurer
domiciled in this State has been entered, the receiver | ||||||
15 | appointed under such
order has a right to recover on behalf of | ||||||
16 | the insurer, from any affiliate that
controlled it, the amount | ||||||
17 | of distributions, other than stock dividends paid by
the | ||||||
18 | insurer on its capital stock, made at any time during the 5 | ||||||
19 | years preceding
the petition for liquidation or rehabilitation | ||||||
20 | subject to the limitations of
paragraphs (b) to (d).
| ||||||
21 | (b) No such dividend is recoverable if the insurer shows | ||||||
22 | that when
paid the distribution was lawful and reasonable, and | ||||||
23 | that the insurer did not
know and could not reasonably have | ||||||
24 | known that the distribution might adversely affect
the ability | ||||||
25 | of the insurer to fulfill its contractual obligations.
| ||||||
26 | (c) Any person who as an affiliate that controlled the |
| |||||||
| |||||||
1 | insurer at
the time the distributions were paid is liable up to | ||||||
2 | the amount of distributions
he received. Any person who was an | ||||||
3 | affiliate that controlled the insurer at the
time the | ||||||
4 | distributions were declared, is liable up to the amount of | ||||||
5 | distributions
he would have received if they had been paid | ||||||
6 | immediately. If 2 persons are
liable with respect to the same | ||||||
7 | distributions, they are jointly and severally liable.
| ||||||
8 | (d) The maximum amount recoverable under subsection (5) of | ||||||
9 | this Section is
the amount needed in excess of all other | ||||||
10 | available assets of the insolvent insurer
to pay the | ||||||
11 | contractual obligations of the insolvent insurer.
| ||||||
12 | (e) If any person liable under paragraph (c) of subsection | ||||||
13 | (5) of this
Section is insolvent, all its
affiliates that | ||||||
14 | controlled it at the time the dividend was paid are jointly and
| ||||||
15 | severally liable for any resulting deficiency in the amount | ||||||
16 | recovered from
the insolvent affiliate.
| ||||||
17 | (6) As a creditor of the impaired or insolvent insurer as | ||||||
18 | established in subsection (3) of this Section and consistent | ||||||
19 | with subsection (2) of Section 205 of this Code, the | ||||||
20 | Association and other similar associations shall be entitled to | ||||||
21 | receive a disbursement of assets out of the marshaled assets, | ||||||
22 | from time to time as the assets become available to reimburse | ||||||
23 | it, as a credit against contractual obligations under this | ||||||
24 | Article. If the liquidator has not, within 120 days after a | ||||||
25 | final determination of insolvency of an insurer by the | ||||||
26 | receivership court, made an application to the court for the |
| |||||||
| |||||||
1 | approval of a proposal to disburse assets out of marshaled | ||||||
2 | assets to guaranty associations having obligations because of | ||||||
3 | the insolvency, then the Association shall be entitled to make | ||||||
4 | application to the receivership court for approval of its own | ||||||
5 | proposal to disburse these assets. | ||||||
6 | (Source: P.A. 81-899.)
| ||||||
7 | (215 ILCS 5/531.18) (from Ch. 73, par. 1065.80-18)
| ||||||
8 | Sec. 531.18.
Stay of Proceedings - Reopening Default | ||||||
9 | Judgments.)
All proceedings in which the insolvent insurer is a | ||||||
10 | party in any court in this
State shall be stayed 180 60 days | ||||||
11 | from the date an order of liquidation,
rehabilitation, or | ||||||
12 | conservation is final to permit proper legal action by the
| ||||||
13 | Association on any matters germane to its powers or duties. As | ||||||
14 | to a judgment under
any decision, order, verdict, or finding | ||||||
15 | based on default the Association may apply
to have such | ||||||
16 | judgment set aside by the same court that made such judgment | ||||||
17 | and must
be permitted to defend against such suit on the | ||||||
18 | merits.
| ||||||
19 | (Source: P.A. 82-210.)
| ||||||
20 | (215 ILCS 5/537.2) (from Ch. 73, par. 1065.87-2)
| ||||||
21 | Sec. 537.2. Obligation of Fund. The Fund shall be obligated | ||||||
22 | to the
extent of the covered
claims existing prior to the entry | ||||||
23 | of an Order of Liquidation against
an insolvent company and | ||||||
24 | arising within
30 days after the entry of such
Order, or before |
| |||||||
| |||||||
1 | the policy expiration date if less than 30 days after
the entry | ||||||
2 | of such Order, or before the insured replaces the policy or on
| ||||||
3 | request effects cancellation, if he does so within 30 days | ||||||
4 | after the entry
of such Order. If the entry of an Order of | ||||||
5 | Liquidation occurs on or after
October 1, 1975 and before | ||||||
6 | October 1, 1977, such obligations shall not:
(i) exceed | ||||||
7 | $100,000, or (ii)
include any obligation to refund the first | ||||||
8 | $100 of any unearned premium
claim; and if the entry of an | ||||||
9 | Order of Liquidation occurs on or after October
1, 1977 and | ||||||
10 | before January 1, 1988, such obligations shall
not: (i) exceed
| ||||||
11 | $150,000, except that this limitation shall not apply to any | ||||||
12 | workers compensation
claims, or (ii)
include any obligation to | ||||||
13 | refund the first
$100 of any unearned premium claim; and if the | ||||||
14 | entry of an Order of
Liquidation occurs on or after January 1, | ||||||
15 | 1988 and before January 1, 2011 , such obligations shall not:
| ||||||
16 | (i) exceed $300,000, except that this limitation shall not | ||||||
17 | apply to any
workers compensation claims, or (ii) include any | ||||||
18 | obligation to refund the
first $100 of any unearned premium | ||||||
19 | claim or to refund any unearned premium
over $10,000 under any | ||||||
20 | one policy. If the entry of an Order of Liquidation occurs on | ||||||
21 | or after January 1, 2011, then such obligations shall not: (i) | ||||||
22 | exceed $500,000, except that this limitation shall not apply to | ||||||
23 | any workers compensation claims or (ii) include any obligation | ||||||
24 | to refund the first $100 of any unearned premium claim or | ||||||
25 | refund any unearned premium over $10,000 under any one policy. | ||||||
26 | In no event shall the Fund be
obligated to a policyholder or |
| |||||||
| |||||||
1 | claimant in an amount in excess
of the face amount of the | ||||||
2 | policy from which the claim arises.
| ||||||
3 | In no event
shall the Fund be liable for any interest on
| ||||||
4 | any
judgment entered against the insured or the insolvent | ||||||
5 | company, or for any
other
interest claim against the insured or | ||||||
6 | the insolvent company, regardless of
whether the insolvent | ||||||
7 | company would have been obligated to pay such interest
under | ||||||
8 | the terms of its policy. The Fund shall be liable for interest | ||||||
9 | at the
statutory rate on money judgments entered against the | ||||||
10 | Fund until the judgment
is satisfied.
| ||||||
11 | Any obligation of the Fund to defend an insured shall cease | ||||||
12 | upon the
Fund's payment or tender of an amount equal to the | ||||||
13 | lesser of the Fund's
covered claim obligation limit or the | ||||||
14 | applicable policy limit.
| ||||||
15 | (Source: P.A. 92-77, eff. 7-12-01.)
| ||||||
16 | (215 ILCS 5/545) (from Ch. 73, par. 1065.95)
| ||||||
17 | Sec. 545. Effect of paid claims.
| ||||||
18 | (a) Every insured or claimant seeking the
protection of | ||||||
19 | this Article shall cooperate with the Fund to the same
extent | ||||||
20 | as such person would have been required to cooperate with the
| ||||||
21 | insolvent company. The Fund shall have all the rights, duties | ||||||
22 | and
obligations under the policy to the extent of the covered | ||||||
23 | claim payment,
provided the Fund shall have no cause of action | ||||||
24 | against the
insured of the insolvent company for any sums it | ||||||
25 | has paid out except
such causes of action as the insolvent |
| |||||||
| |||||||
1 | company would have had if such
sums had been paid by the | ||||||
2 | insolvent company and except as provided in
paragraph (d) of | ||||||
3 | this Section.
| ||||||
4 | (b) The Fund and any similar organization in another state | ||||||
5 | shall be
recognized as claimants in the liquidation of an | ||||||
6 | insolvent company for any
amounts paid by them on covered | ||||||
7 | claims obligations as determined under this
Article or similar | ||||||
8 | laws in other states and shall receive dividends at the
| ||||||
9 | priority set forth in paragraph (d) of subsection (1) of | ||||||
10 | Section
205 of this
Code ; provided that if, at the time that | ||||||
11 | the Liquidator issues a cut-off notice to the Fund in | ||||||
12 | anticipation of closing the estate, a reserve has been | ||||||
13 | established by the Fund, or any similar organization in another | ||||||
14 | state, for the amount of their future administrative expenses | ||||||
15 | and loss development associated with unpaid reported pending | ||||||
16 | claims, these reserves will be deemed to have been paid as of | ||||||
17 | the date of the notice and payment shall be made accordingly .
| ||||||
18 | The liquidator of an insolvent company shall be bound by
| ||||||
19 | determinations of covered claim eligibility under the Act and | ||||||
20 | by settlements
of claims made by
the Fund or a similar | ||||||
21 | organization in
another state on the receipt of certification | ||||||
22 | of such payments, to the extent
those
determinations or | ||||||
23 | settlements satisfy obligations of the Fund, but the receiver
| ||||||
24 | shall not be bound in any way by those determinations or | ||||||
25 | settlements to the
extent that there remains a claim in the | ||||||
26 | estate for amounts in excess of the
payments by the Fund.
In |
| |||||||
| |||||||
1 | submitting their claim for covered claim payments the Fund and | ||||||
2 | any
similar organization in another state shall not be subject | ||||||
3 | to the
requirements of Sections 208 and 209 of this Code and | ||||||
4 | shall not be affected
by the failure of the person receiving a | ||||||
5 | covered claim payment to file a proof
of claim.
| ||||||
6 | (c) The expenses of the Fund and of any similar
| ||||||
7 | organization in any other state, other than expenses incurred | ||||||
8 | in the
performance of
duties under Section 547 or similar | ||||||
9 | duties under the
statute governing a similar organization in | ||||||
10 | another state, shall
be accorded the same priority as
the | ||||||
11 | liquidator's expenses. The liquidator shall make prompt | ||||||
12 | reimbursement
to the Fund and any similar organization for such | ||||||
13 | expense payments.
| ||||||
14 | (d) The Fund has the right to recover from the following | ||||||
15 | persons the amount
of any covered claims and allocated claims | ||||||
16 | expenses which the Fund paid or
incurred on behalf of such | ||||||
17 | person in satisfaction, in whole or in part, of
liability | ||||||
18 | obligations of such person to any other person:
| ||||||
19 | (i) any insured whose net worth on December 31 of the | ||||||
20 | year next
preceding the date the company becomes an | ||||||
21 | insolvent company exceeds
$25,000,000; provided that an | ||||||
22 | insured's net worth on such date shall be deemed
to include | ||||||
23 | the aggregate net worth of the insured and all of its | ||||||
24 | affiliates
as calculated on a consolidated basis.
| ||||||
25 | (ii) any insured who is an affiliate of the insolvent | ||||||
26 | company.
|
| |||||||
| |||||||
1 | (Source: P.A. 89-206, eff. 7-21-95; 90-499, eff. 8-19-97.)
| ||||||
2 | Section 10. The Health Maintenance Organization Act is | ||||||
3 | amended by changing Sections 6-4, 6-5, 6-8, 6-9, 6-10, and 6-18 | ||||||
4 | as follows:
| ||||||
5 | (215 ILCS 125/6-4) (from Ch. 111 1/2, par. 1418.4)
| ||||||
6 | Sec. 6-4. Construction. This Article shall be is to be | ||||||
7 | liberally construed to
be for the benefit of the member | ||||||
8 | organizations' enrollees and to
effect the purpose under | ||||||
9 | Section 6-2 which constitutes an aid and guide to
| ||||||
10 | interpretation .
| ||||||
11 | (Source: P.A. 85-20.)
| ||||||
12 | (215 ILCS 125/6-5) (from Ch. 111 1/2, par. 1418.5)
| ||||||
13 | Sec. 6-5. Definitions. As used in this Act:
| ||||||
14 | (1) "Association" means the Illinois Health Maintenance | ||||||
15 | Organization
Guaranty Association created under Section 6-6.
| ||||||
16 | (2) "Director" means the Director of Insurance of this | ||||||
17 | State.
| ||||||
18 | (3) "Contractual obligation" means any obligation of the | ||||||
19 | member
organization under covered
health care plan | ||||||
20 | certificates.
| ||||||
21 | (4) "Covered person" means any enrollee who is entitled to | ||||||
22 | the
protection of the Association as described in Section 6-2.
| ||||||
23 | (5) "Covered health care plan certificate" means any health |
| |||||||
| |||||||
1 | care plan
certificate, contract or other evidence of coverage | ||||||
2 | within the scope
of this Article under Section 6-3.
| ||||||
3 | (6) "Fund" means the fund created under Section 6-6.
| ||||||
4 | (7) "Impaired organization" means a member organization | ||||||
5 | deemed by the
Director after the effective date of this Article | ||||||
6 | to be potentially unable
to fulfill its contractual obligations | ||||||
7 | and not an insolvent organization.
| ||||||
8 | (8) "Insolvent organization" means a member organization | ||||||
9 | which
becomes insolvent and is placed under a final order of | ||||||
10 | liquidation or
rehabilitation by a court of competent | ||||||
11 | jurisdiction.
| ||||||
12 | (9) "Member organization" means any person licensed or who | ||||||
13 | holds a
certificate of authority to transact in this
State any | ||||||
14 | kind of business to which this Article applies under
Section | ||||||
15 | 6-3. For purposes of this Article "member organization" | ||||||
16 | includes
any person whose certificate of authority may have | ||||||
17 | been suspended pursuant
to Section 5-5 of this Act.
| ||||||
18 | (10) "Premiums" means direct gross premiums or | ||||||
19 | subscriptions
received on covered health care plan | ||||||
20 | certificates. "Premiums" does not include amounts or | ||||||
21 | considerations received for policies, contracts, or | ||||||
22 | certificates or for the portions of policies, contracts, or | ||||||
23 | certificates for which coverage is not provided.
| ||||||
24 | (11) "Person" means any individual, corporation, | ||||||
25 | partnership,
association or voluntary organization.
| ||||||
26 | (12) "Resident" means any person who resides in this State |
| |||||||
| |||||||
1 | at the time the
organization is issued a Notice of Impairment | ||||||
2 | by the Director or at the time a
complaint for liquidation or | ||||||
3 | rehabilitation is filed and to whom
contractual obligations are | ||||||
4 | owed. A person may be a resident of only one
state which, in | ||||||
5 | the case of a person other than a natural person, shall be
its | ||||||
6 | principal place of business.
| ||||||
7 | (Source: P.A. 88-297.)
| ||||||
8 | (215 ILCS 125/6-8) (from Ch. 111 1/2, par. 1418.8)
| ||||||
9 | Sec. 6-8. Powers and duties of the Association. In addition | ||||||
10 | to
the powers and duties enumerated in other Sections of this | ||||||
11 | Article, the
Association shall have the powers set forth in | ||||||
12 | this Section.
| ||||||
13 | (1) If a domestic organization is an impaired organization, | ||||||
14 | the Association
may, subject to any conditions imposed by the | ||||||
15 | Association other than
those which impair the contractual | ||||||
16 | obligations of the impaired organization,
and approved by the | ||||||
17 | impaired organization and the Director:
| ||||||
18 | (a) guarantee , assume, or reinsure, or cause to be | ||||||
19 | guaranteed, assumed or
reinsured, any or all of the covered | ||||||
20 | health care plan certificates of
covered persons of the | ||||||
21 | impaired organization;
| ||||||
22 | (b) provide such monies, pledges, notes, guarantees, | ||||||
23 | or other means
as are proper to effectuate paragraph (a), | ||||||
24 | and assure payment of the
contractual obligations of the | ||||||
25 | impaired organization pending action under
paragraph (a); |
| |||||||
| |||||||
1 | and
| ||||||
2 | (c) loan money to the impaired organization.
| ||||||
3 | (2) If a domestic, foreign, or alien organization is an | ||||||
4 | insolvent
organization, the Association shall, subject to the | ||||||
5 | approval of the Director:
| ||||||
6 | (a) guarantee, assume, indemnify or reinsure or cause | ||||||
7 | to be guaranteed,
assumed, indemnified or reinsured the | ||||||
8 | covered health care plan benefits
of covered persons of the | ||||||
9 | insolvent organization; however, in the event
that the | ||||||
10 | Director of Healthcare and Family Services (formerly
| ||||||
11 | Director of the Department of Public Aid)
assigns | ||||||
12 | individuals that are recipients of public aid from an | ||||||
13 | insolvent
organization to another organization, the | ||||||
14 | Director of Healthcare and Family Services shall, before | ||||||
15 | fixing the rates to be paid by the Department of
Healthcare | ||||||
16 | and Family Services
to the transferee organization on | ||||||
17 | account of such individuals,
consult with the Director of | ||||||
18 | the Department of Insurance as to the
reasonableness of | ||||||
19 | such rates in light of the health care needs of such
| ||||||
20 | individuals and the costs of providing health care services | ||||||
21 | to such
individuals;
| ||||||
22 | (b) assure payment of the contractual obligations of | ||||||
23 | the insolvent
organization to covered persons;
| ||||||
24 | (c) make payments to providers of health care, or | ||||||
25 | indemnity payments
to covered persons, so as to assure the | ||||||
26 | continued payment of benefits
substantially similar to |
| |||||||
| |||||||
1 | those provided for under covered health care plan
| ||||||
2 | certificate issued by the insolvent organization to | ||||||
3 | covered persons; and
| ||||||
4 | (d) provide such monies, pledges, notes, guaranties, | ||||||
5 | or other means
as are reasonably necessary to discharge | ||||||
6 | such duties.
| ||||||
7 | This subsection (2) shall not apply when the
Director has | ||||||
8 | determined that the foreign or alien organization's
| ||||||
9 | domiciliary jurisdiction or state of entry provides, by | ||||||
10 | statute, protection
substantially similar to that provided by | ||||||
11 | this Article for residents of
this State and such protection | ||||||
12 | will be provided in a timely manner.
| ||||||
13 | (3) There shall be no liability on the part of and no cause | ||||||
14 | of action
shall arise against the Association or against any | ||||||
15 | transferee from the
Association in connection with the transfer | ||||||
16 | by reinsurance or otherwise of
all or any part of an impaired | ||||||
17 | or insolvent organization's business by
reason of any action | ||||||
18 | taken or any failure to take any action by the
impaired or | ||||||
19 | insolvent organization at any time.
| ||||||
20 | (4) If the Association fails to act within a reasonable | ||||||
21 | period of
time as provided in subsection (2) of this Section | ||||||
22 | with respect to an
insolvent organization, the Director shall | ||||||
23 | have the powers and duties of
the Association under this | ||||||
24 | Article with regard to such insolvent organization.
| ||||||
25 | (5) The Association or its designated representatives may | ||||||
26 | render
assistance and advice to the Director, upon his request, |
| |||||||
| |||||||
1 | concerning
rehabilitation, payment of claims, continuations of | ||||||
2 | coverage, or the
performance of other contractual obligations | ||||||
3 | of any impaired or insolvent
organization.
| ||||||
4 | (6) The Association has standing to appear before any court | ||||||
5 | concerning
all matters germane to the powers and duties of
the | ||||||
6 | Association, including, but not limited to, proposals for | ||||||
7 | reinsuring
or guaranteeing the covered health care plan | ||||||
8 | certificates of the impaired
or insolvent organization and the | ||||||
9 | determination of the covered health care plan
certificates and | ||||||
10 | contractual obligations.
| ||||||
11 | (7) (a) Any person receiving benefits under this Article is | ||||||
12 | deemed
to have assigned the rights under the covered health | ||||||
13 | care plan
certificates to the Association to the extent of the | ||||||
14 | benefits received
because of this Article whether the benefits | ||||||
15 | are payments of contractual
obligations or continuation of | ||||||
16 | coverage. The Association may require an
assignment to it of | ||||||
17 | such rights by any payee, enrollee or beneficiary as a
| ||||||
18 | condition precedent to the receipt of any rights or benefits | ||||||
19 | conferred by
this Article upon such person. The Association is | ||||||
20 | subrogated to these
rights against the assets of any insolvent | ||||||
21 | organization and against any
other party who may be liable to | ||||||
22 | such payee, enrollee or beneficiary.
| ||||||
23 | (b) The subrogation rights of the Association under this | ||||||
24 | subsection
have the same priority against the assets of the | ||||||
25 | insolvent organization as
that possessed by the person entitled | ||||||
26 | to receive benefits under this
Article.
|
| |||||||
| |||||||
1 | (8) (a) The contractual obligations of the insolvent | ||||||
2 | organization for
which the Association becomes or may become | ||||||
3 | liable are as great as but no
greater than the contractual | ||||||
4 | obligations of the insolvent organization would
have been in | ||||||
5 | the absence of an insolvency unless such obligations are
| ||||||
6 | reduced as permitted by subsection (3), but the aggregate | ||||||
7 | liability of the
Association shall not exceed $300,000 with | ||||||
8 | respect to any one natural person.
| ||||||
9 | (b) Furthermore, the Association shall not be required to | ||||||
10 | pay, and shall
have no liability to, any provider of health | ||||||
11 | care services to an enrollee:
| ||||||
12 | (i) if such provider, or his or its affiliates or | ||||||
13 | members of his
immediate family, at any time within the one | ||||||
14 | year prior to the date of the
issuance of the first order, | ||||||
15 | by a court of competent jurisdiction, of
conservation, | ||||||
16 | rehabilitation or liquidation pertaining to the health
| ||||||
17 | maintenance organization:
| ||||||
18 | (A) was a securityholder of such organization (but | ||||||
19 | excluding any
securityholder holding an equity | ||||||
20 | interest of 5% or less);
| ||||||
21 | (B) exercised control over the organization by | ||||||
22 | means such as serving as
an officer or director, | ||||||
23 | through a management agreement or as a principal
member | ||||||
24 | of a not-for-profit organization;
| ||||||
25 | (C) had a representative serving by virtue or his | ||||||
26 | or her official
position as a representative of such |
| |||||||
| |||||||
1 | provider on the board of any entity
which exercised | ||||||
2 | control over the organization;
| ||||||
3 | (D) received provider payments made by such | ||||||
4 | organization pursuant to a
contract which was not a | ||||||
5 | product of arms-length bargaining; or
| ||||||
6 | (E) received distributions other than for | ||||||
7 | physician services from a
not-for-profit organization | ||||||
8 | on account of such provider's status as a
member of | ||||||
9 | such organization.
| ||||||
10 | For purposes of this subparagraph (i), the terms | ||||||
11 | "affiliate," "person,"
"control" and "securityholder" | ||||||
12 | shall have the meanings ascribed to such
terms in Section | ||||||
13 | 131.1 of the Illinois Insurance Code; or
| ||||||
14 | (ii) if and to the extent such a provider has agreed by | ||||||
15 | contract not
to seek payment from the enrollee for services | ||||||
16 | provided to such enrollee
or if, and to the extent, as a | ||||||
17 | matter of law such provider may not seek
payment from the | ||||||
18 | enrollee for services provided to such enrollee.
| ||||||
19 | (iii) related to any policy, contract, or certificate | ||||||
20 | providing any hospital, medical, prescription drug, or | ||||||
21 | other health care benefits pursuant to Part C or Part D of | ||||||
22 | Subchapter XVIII, Chapter 7 of Title 42 of the United | ||||||
23 | States Code (commonly known as Medicare Part C & D) or any | ||||||
24 | regulations issued pursuant thereto; or | ||||||
25 | (iv) for any portion of a policy, contract, or | ||||||
26 | certificate to the extent that the assessments required by |
| |||||||
| |||||||
1 | this Article with respect to the policy or contract are | ||||||
2 | preempted or otherwise not permitted by federal or State | ||||||
3 | law; or | ||||||
4 | (v) for any obligation that does not arise under the | ||||||
5 | express written terms of the policy or contract issued by | ||||||
6 | the organization to the contract owner or policy owner, | ||||||
7 | including without limitation: | ||||||
8 | (A) claims based on marketing materials; | ||||||
9 | (B) claims based on side letters, riders, or other | ||||||
10 | documents that were issued by the insurer without | ||||||
11 | meeting applicable policy form filing or approval | ||||||
12 | requirements; | ||||||
13 | (C) misrepresentations of or regarding policy | ||||||
14 | benefits; | ||||||
15 | (D) extra-contractual claims; or | ||||||
16 | (E) claims for penalties or consequential or | ||||||
17 | incidental damages. | ||||||
18 | (c) In no event shall the Association be required to pay | ||||||
19 | any provider
participating in the insolvent organization
any | ||||||
20 | amount for in-plan services rendered by such provider prior to | ||||||
21 | the
insolvency of the organization in excess of (1) the amount
| ||||||
22 | provided by a capitation contract between a physician provider | ||||||
23 | and the
insolvent organization for such services; or (2) the
| ||||||
24 | amounts provided by contract between a hospital provider and | ||||||
25 | the Department of Healthcare and Family Services (formerly
| ||||||
26 | Department of
Public Aid) for similar services to recipients of |
| |||||||
| |||||||
1 | public aid; or (3) in the
event neither (1) nor (2) above is | ||||||
2 | applicable, then the amounts paid under
the Medicare area | ||||||
3 | prevailing rate for the area where the services were
provided, | ||||||
4 | or if no such rate exists with respect to such services, then | ||||||
5 | 80%
of the usual and customary rates established by the Health | ||||||
6 | Insurance
Association of America. The payments required to be | ||||||
7 | made by the Association
under this Section shall constitute | ||||||
8 | full and complete payment for such
provider services to the | ||||||
9 | enrollee.
| ||||||
10 | (d) The Association shall not be required to pay more than | ||||||
11 | an
aggregate of $300,000 for any organization which is declared | ||||||
12 | to be
insolvent prior to July 1, 1987, and such funds shall be | ||||||
13 | distributed first
to enrollees who are not public aid | ||||||
14 | recipients pursuant to a plan
recommended by the Association | ||||||
15 | and approved by the Director and the court
having jurisdiction | ||||||
16 | over the liquidation.
| ||||||
17 | (9) The Association may:
| ||||||
18 | (a) Enter into such contracts as are necessary or | ||||||
19 | proper to carry
out the provisions and purposes of this | ||||||
20 | Article.
| ||||||
21 | (b) Sue or be sued, including taking any legal actions | ||||||
22 | necessary or
proper for recovery of any unpaid assessments | ||||||
23 | under Section 6-9. The
Association shall not be liable for | ||||||
24 | punitive or exemplary damages.
| ||||||
25 | (c) Borrow money to effect the purposes of this | ||||||
26 | Article. Any notes
or other evidence of indebtedness of the |
| |||||||
| |||||||
1 | Association not in default are
legal investments for | ||||||
2 | domestic organizations and may be carried as admitted
| ||||||
3 | assets.
| ||||||
4 | (d) Employ or retain such persons as are necessary to | ||||||
5 | handle the
financial transactions of the Association, and | ||||||
6 | to perform such other
functions as become necessary or | ||||||
7 | proper under this Article.
| ||||||
8 | (e) Negotiate and contract with any liquidator, | ||||||
9 | rehabilitator,
conservator, or ancillary receiver to carry | ||||||
10 | out the powers and duties of
the Association.
| ||||||
11 | (f) Take such legal action as may be necessary to avoid | ||||||
12 | payment of
improper claims.
| ||||||
13 | (g) Exercise, for the purposes of this Article and to | ||||||
14 | the extent
approved by the Director, the powers of a | ||||||
15 | domestic
organization, but in no case may the Association | ||||||
16 | issue evidence of coverage
other than that issued to | ||||||
17 | perform the contractual
obligations of the impaired or | ||||||
18 | insolvent organization.
| ||||||
19 | (h) Exercise all the rights of the Director under | ||||||
20 | Section 193(4) of
the Illinois Insurance Code with respect | ||||||
21 | to covered health care plan
certificates after the | ||||||
22 | association becomes obligated by statute.
| ||||||
23 | (i) Request information from a person seeking coverage | ||||||
24 | from the Association in order to aid the Association in | ||||||
25 | determining its obligations under this Article with | ||||||
26 | respect to the person and the person shall promptly comply |
| |||||||
| |||||||
1 | with the request. | ||||||
2 | (j) Take other necessary or appropriate action to | ||||||
3 | discharge its duties and obligations under this Article or | ||||||
4 | to exercise its powers under this Article. | ||||||
5 | (10) The obligations of the Association under this Article | ||||||
6 | shall not
relieve any reinsurer, insurer or other person of its | ||||||
7 | obligations to the
insolvent organization (or its conservator, | ||||||
8 | rehabilitator, liquidator or
similar official) or its | ||||||
9 | enrollees, including without limitation any
reinsurer, insurer | ||||||
10 | or other person liable to the insolvent insurer (or its
| ||||||
11 | conservator, rehabilitator, liquidator or similar official) or | ||||||
12 | its
enrollees under any contract of reinsurance, any contract | ||||||
13 | providing stop
loss coverage or similar coverage or any health | ||||||
14 | care contract. With
respect to covered health care plan | ||||||
15 | certificates for which the
Association becomes obligated after | ||||||
16 | an entry of an order of liquidation
or rehabilitation, the | ||||||
17 | Association may elect to succeed to the rights of
the insolvent | ||||||
18 | organization arising after the date of the order of
liquidation | ||||||
19 | or rehabilitation under any contract of reinsurance, any
| ||||||
20 | contract providing stop loss coverage or similar coverages or | ||||||
21 | any health
care service contract to which the insolvent | ||||||
22 | organization was a party, on
the terms set forth under such | ||||||
23 | contract, to the extent that such contract
provides coverage | ||||||
24 | for health care services provided after the date of the
order | ||||||
25 | of liquidation or rehabilitation. As a condition to making this
| ||||||
26 | election, the Association must pay premiums for coverage |
| |||||||
| |||||||
1 | relating to
periods after the date of the order of liquidation | ||||||
2 | or rehabilitation.
| ||||||
3 | (11) The Association shall be entitled to collect premiums | ||||||
4 | due under or with
respect to covered health care certificates | ||||||
5 | for a period from the date on which
the domestic, foreign, or | ||||||
6 | alien organization became an insolvent organization
until the | ||||||
7 | Association no longer has obligations under subsection (2) of
| ||||||
8 | this Section with respect to such certificates. The | ||||||
9 | Association's
obligations under subsection (2) of this Section | ||||||
10 | with respect to
any covered health care plan certificates shall | ||||||
11 | terminate in the event that
all such premiums due under or with | ||||||
12 | respect to such covered health care plan
certificates are not | ||||||
13 | paid to the Association (i) within 30 days of the
Association's | ||||||
14 | demand therefor, or (ii) in the event that such certificates
| ||||||
15 | provide for a longer grace period for payment of premiums after | ||||||
16 | notice of
non-payment or demand therefor, within the lesser of | ||||||
17 | (A) the period provided
for in such certificates or (B) 60 | ||||||
18 | days.
| ||||||
19 | (12) The Board of Directors of the Association shall have | ||||||
20 | discretion and may exercise reasonable business judgment to | ||||||
21 | determine the means by which the Association is to provide the | ||||||
22 | benefits of this Article in an economical and efficient manner. | ||||||
23 | (13) Where the Association has arranged or offered to | ||||||
24 | provide the benefits of this Article to a covered person under | ||||||
25 | a plan or arrangement that fulfills the Association's | ||||||
26 | obligations under this Article, the person shall not be |
| |||||||
| |||||||
1 | entitled to benefits from the Association in addition to or | ||||||
2 | other than those provided under the plan or arrangement. | ||||||
3 | (14) Venue in a suit against the Association arising under | ||||||
4 | the Article shall be in Cook County. The Association shall not | ||||||
5 | be required to give any appeal bond in an appeal that relates | ||||||
6 | to a cause of action arising under this Article. | ||||||
7 | (Source: P.A. 95-331, eff. 8-21-07.)
| ||||||
8 | (215 ILCS 125/6-9) (from Ch. 111 1/2, par. 1418.9)
| ||||||
9 | Sec. 6-9. Assessments. (1) For the purpose of providing the | ||||||
10 | funds
necessary to carry out the powers and duties of the | ||||||
11 | Association, the board
of directors shall assess the member | ||||||
12 | organizations, at such
times and for such amounts as the board | ||||||
13 | finds necessary. Assessments shall
be due not less than 30 days | ||||||
14 | after written notice to the member organizations
and shall | ||||||
15 | accrue interest from the due date at such adjusted rate as is
| ||||||
16 | established under Section 531.09 of the Illinois Insurance Code | ||||||
17 | and
such interest shall be compounded daily.
| ||||||
18 | (2) There shall be 2 classes of assessments, as follows:
| ||||||
19 | (a) Class A assessments shall be made for the purpose of | ||||||
20 | meeting
administrative costs and other general expenses and | ||||||
21 | examinations conducted
under the authority of the Director | ||||||
22 | under subsection (5) of Section 6-12.
| ||||||
23 | (b) Class B assessments shall be made to the extent | ||||||
24 | necessary to carry
out the powers and duties of the Association | ||||||
25 | under Section 6-8 with regard
to an impaired or insolvent |
| |||||||
| |||||||
1 | domestic organization or insolvent foreign or
alien | ||||||
2 | organizations.
| ||||||
3 | (3) (a) The amount of any Class A assessment shall be | ||||||
4 | determined by the
Board and may be made on a non-pro rata | ||||||
5 | basis.
| ||||||
6 | (b) Class B assessments against member organizations shall
| ||||||
7 | be in the proportion that the premiums received on health | ||||||
8 | maintenance
organization business in this State
by each | ||||||
9 | assessed member organization on covered health care plan | ||||||
10 | certificates for
the calendar year preceding the assessment | ||||||
11 | bears to such premiums received
on health maintenance | ||||||
12 | organization business in this State for the calendar
year | ||||||
13 | preceding the assessment by all assessed member organizations.
| ||||||
14 | (c) Assessments to meet the requirements of the Association
| ||||||
15 | with respect to an impaired or insolvent organization shall not | ||||||
16 | be made until
necessary to implement the purposes of this | ||||||
17 | Article. Classification
of assessments under subsection (2) | ||||||
18 | and computations of assessments under
this subsection shall be | ||||||
19 | made with a reasonable degree of accuracy,
recognizing that | ||||||
20 | exact determinations may not always be possible.
| ||||||
21 | (4) (a) The Association may abate or defer, in whole or in | ||||||
22 | part, the
assessment of a member organization if, in the | ||||||
23 | opinion of the board,
payment of the assessment would endanger | ||||||
24 | the ability of the member
organization to fulfill its | ||||||
25 | contractual obligations.
| ||||||
26 | (b) The total of all assessments upon a member organization
|
| |||||||
| |||||||
1 | may not in any one calendar year exceed 2% of such | ||||||
2 | organization's premiums
in this State during the calendar year | ||||||
3 | preceding the assessment on the
covered health care plan | ||||||
4 | certificates.
| ||||||
5 | (5) In the event an assessment against a member | ||||||
6 | organization is abated,
or deferred, in whole or in part, | ||||||
7 | because of the limitations set forth in
subsection (4) of this | ||||||
8 | Section, the amount by which such assessment is
abated or | ||||||
9 | deferred, may be assessed against the other member | ||||||
10 | organizations
in a manner consistent with the basis for | ||||||
11 | assessments set forth in this
Section. If the maximum | ||||||
12 | assessment, together with the other assets of the
Association, | ||||||
13 | does not provide in any one year an amount sufficient to carry
| ||||||
14 | out the responsibilities of the Association, the necessary | ||||||
15 | additional funds
may be assessed as soon thereafter as | ||||||
16 | permitted by this Article.
| ||||||
17 | (6) The board may, by an equitable method as established in | ||||||
18 | the
plan of operation, refund to member organizations, in | ||||||
19 | proportion to the
contribution of each organization, the amount | ||||||
20 | by which the assets of the fund
exceed the amount the board | ||||||
21 | finds is necessary to carry out during the coming
year the | ||||||
22 | obligations of the Association, including
assets accruing from | ||||||
23 | net realized gains and income from investments. A
reasonable | ||||||
24 | amount may be retained in the fund to provide moneys for the
| ||||||
25 | continuing expenses of the Association and for future losses if | ||||||
26 | refunds are
impractical .
|
| |||||||
| |||||||
1 | (7) An assessment is deemed to occur on the date upon which | ||||||
2 | the board
votes such assessment. The board may defer calling | ||||||
3 | the payment of the
assessment or may call for payment in one or | ||||||
4 | more installments.
| ||||||
5 | (8) It is proper for any member organization, in | ||||||
6 | determining its rates
to consider the amount reasonably | ||||||
7 | necessary to meet its assessment
obligations under this | ||||||
8 | Article.
| ||||||
9 | (9) The Association must issue to each organization paying | ||||||
10 | a
Class B assessment under this Article a certificate of | ||||||
11 | contribution,
in a form prescribed by the Director, for the | ||||||
12 | amount of the assessment so
paid. All outstanding certificates | ||||||
13 | are of equal dignity and priority
without reference to amounts | ||||||
14 | or dates of issue. A certificate of
contribution may be shown | ||||||
15 | by the organization in its financial statement as
an admitted | ||||||
16 | asset in such form and for such amount, if any, and period of
| ||||||
17 | time as the Director may approve, provided the organization | ||||||
18 | shall in any
event at its option have the right to show a | ||||||
19 | certificate of contribution as
an asset at percentages of the | ||||||
20 | original face amount for calendar years as follows:
| ||||||
21 | 100% for the calendar year after the year of issuance;
| ||||||
22 | 80% for the second calendar year after the year of | ||||||
23 | issuance;
| ||||||
24 | 60% for the third calendar year after the year of issuance;
| ||||||
25 | 40% for the fourth calendar year after the year of | ||||||
26 | issuance;
|
| |||||||
| |||||||
1 | 20% for the fifth calendar year after the year of issuance.
| ||||||
2 | (10) The Association may request information of member | ||||||
3 | organizations in order to aid in the exercise of its power | ||||||
4 | under this Section and member organizations shall promptly | ||||||
5 | comply with a request. | ||||||
6 | (Source: P.A. 85-20.)
| ||||||
7 | (215 ILCS 125/6-10) (from Ch. 111 1/2, par. 1418.10)
| ||||||
8 | Sec. 6-10. Plan of Operation. (1) (a) The Association must
| ||||||
9 | submit to the Director a plan of operation and any amendments | ||||||
10 | thereto necessary
or suitable to assure the fair, reasonable, | ||||||
11 | and equitable administration of the
Association. The plan of | ||||||
12 | operation and any amendments thereto become effective
upon | ||||||
13 | approval in writing by the Director.
| ||||||
14 | (b) If the Association fails to submit a suitable plan of | ||||||
15 | operation
within 90 days following the effective date of this | ||||||
16 | Article or if at any time
thereafter the Association fails to | ||||||
17 | submit suitable amendments to the plan, the
Director may, after | ||||||
18 | notice and hearing, adopt and promulgate such reasonable
rules | ||||||
19 | as are necessary or advisable to effectuate the provisions of | ||||||
20 | this
Article. Such rules are in force until modified by the | ||||||
21 | Director or
superseded by a plan submitted by the Association | ||||||
22 | and approved by the Director.
| ||||||
23 | (2) All member organizations must comply with the plan of | ||||||
24 | operation.
| ||||||
25 | (3) The plan of operation must, in addition to requirements |
| |||||||
| |||||||
1 | enumerated
elsewhere in this Article:
| ||||||
2 | (a) Establish procedures for handling the assets of the | ||||||
3 | Association;
| ||||||
4 | (b) Establish the amount and method of reimbursing members | ||||||
5 | of the
board of directors under Section 6-7;
| ||||||
6 | (c) Establish regular places and times for meetings of the | ||||||
7 | board
of directors;
| ||||||
8 | (d) Establish procedures for records to be kept of all | ||||||
9 | financial
transactions of the Association, its agents, and the | ||||||
10 | board of directors;
| ||||||
11 | (e) Establish the procedures whereby selections for the | ||||||
12 | board
of directors will be made and submitted to the Director;
| ||||||
13 | (f) Establish any additional procedures for assessments | ||||||
14 | under
Section 6-9; and
| ||||||
15 | (g) Contain additional provisions necessary or proper for | ||||||
16 | the execution
of the powers and duties of the Association.
| ||||||
17 | (4) The plan of operation shall establish a procedure for | ||||||
18 | protest by
any member organization of assessments made by the | ||||||
19 | Association pursuant to
Section 6-9. Such procedures shall | ||||||
20 | require that:
| ||||||
21 | (a) A member organization that wishes to protest all or | ||||||
22 | part of an assessment shall pay when due the full amount of the | ||||||
23 | assessment as set forth in the notice provided by the | ||||||
24 | Association. The payment shall be available to meet Association | ||||||
25 | obligations during the pendency of the protest or any | ||||||
26 | subsequent appeal. Payment shall be accompanied by a statement |
| |||||||
| |||||||
1 | in writing that the payment is made under protest and setting | ||||||
2 | forth a brief statement of the grounds for the protest. Any | ||||||
3 | member organization that wishes to protest all or any part of | ||||||
4 | an
assessment for any year shall first pay the full amount of | ||||||
5 | the assessment
as set forth in the notice provided by the | ||||||
6 | Association. Such payments
shall be accompanied by a statement | ||||||
7 | in writing that the payment is made
under protest, setting | ||||||
8 | forth a brief statement of the ground for the
protest. The | ||||||
9 | Association shall hold such payments in a separate interest
| ||||||
10 | bearing account.
| ||||||
11 | (b) Within 30 days following the payment of an assessment | ||||||
12 | under
protest by any protesting member organization, the | ||||||
13 | Association must notify the
member organization in writing of | ||||||
14 | its determination with respect to the protest
unless the | ||||||
15 | Association notifies the member that additional time is | ||||||
16 | required
to resolve the issues raised by the protest.
| ||||||
17 | (c) In the event the Association determines that the | ||||||
18 | protesting member
organization is entitled to a refund, such | ||||||
19 | refund shall be made within 30
days following the date upon | ||||||
20 | which the Association makes its determination.
| ||||||
21 | (d) The decision of the Association with respect to a | ||||||
22 | protest may be
appealed to the Director pursuant to subsection | ||||||
23 | (3) of Section 6-11.
| ||||||
24 | (e) In the alternative to rendering a decision with respect | ||||||
25 | to any
protest based on a question regarding the assessment | ||||||
26 | base, the Association
may refer such protests to the Director |
| |||||||
| |||||||
1 | for final decision, with or without
a recommendation from the | ||||||
2 | Association.
| ||||||
3 | (f) Interest on any refund due a protesting member | ||||||
4 | organization shall be
paid at the rate actually earned by the | ||||||
5 | Association on the separate account .
| ||||||
6 | (5) The plan of operation may provide that any or all | ||||||
7 | powers and duties
of the Association, except those under | ||||||
8 | paragraph (c) of subsection (10)
of Section 6-8 and Section 6-9 | ||||||
9 | are delegated to a corporation, association
or other | ||||||
10 | organization which performs or will perform functions similar | ||||||
11 | to
those of this Association, or its equivalent, in 2 or more | ||||||
12 | states. Such
a corporation, association or organization shall | ||||||
13 | be reimbursed for any payments
made on behalf of the | ||||||
14 | Association and shall be paid for its performance
of any | ||||||
15 | function of the Association. A delegation under this subsection
| ||||||
16 | shall take effect only with the approval of both the Board of | ||||||
17 | Directors
and the Director, and may be made only to a | ||||||
18 | corporation, association or
organization which extends | ||||||
19 | protection not substantially
less favorable and effective than | ||||||
20 | that provided by this Article.
| ||||||
21 | (Source: P.A. 85-20.)
| ||||||
22 | (215 ILCS 125/6-18) (from Ch. 111 1/2, par. 1418.18)
| ||||||
23 | Sec. 6-18. Stay of Proceedings - Reopening Default | ||||||
24 | Judgments. All proceedings in which the insolvent organization | ||||||
25 | is a party in any court
in this State shall be stayed 180 60 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1 | days from the date an order of
liquidation, rehabilitation, or | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2 | conservation is final to permit proper
legal action by the | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3 | Association on any matters germane to its powers or
duties. As | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4 | to a judgment under any decision, order, verdict, or finding
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5 | based on default the Association may apply to have such | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6 | judgment set aside
by the same court that made such judgment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
7 | and must be permitted to defend
against such suit on the | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8 | merits.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9 | (Source: P.A. 85-20.)
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10 | Section 99. Effective date. This Act takes effect upon | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
11 | becoming law.
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