Illinois General Assembly - Full Text of SB3202
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Full Text of SB3202  102nd General Assembly

SB3202 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB3202

 

Introduced 1/14/2022, by Sen. Napoleon Harris, III

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/131.22
215 ILCS 5/132.5  from Ch. 73, par. 744.5
215 ILCS 5/547  from Ch. 73, par. 1065.97

    Amends the Illinois Insurance Code. In provisions concerning confidential treatment of documents, materials, or other information in the possession or control of the Department of Insurance and provisions concerning confidential treatment of information obtained in the course of an examination, provides that the Director of Insurance may only share confidential and privileged documents, material, or information with the Illinois Insurance Guaranty Fund regarding any member company if the Director determines that the member company may be subject to a future delinquency proceeding. Provides that the Director may disclose the information so long as the Fund agrees in writing to hold that information confidential and uses that information to prepare for the possible liquidation of the member company. Provides that access to the information disclosed by the Director to the Fund shall be limited to the Fund's staff and its counsel. Provides that the board of directors of the Fund may have access to the information disclosed by the Director to the Fund once the member company is subject to a delinquency proceeding subject to any terms and conditions established by the Director. In provisions concerning prevention of insolvencies, provides that the Director may disclose specified information to the Fund and the Fund may use that information to prepare for the possible liquidation of a member company subject to specified requirements and restrictions. Effective immediately.


LRB102 23348 BMS 32514 b

 

 

A BILL FOR

 

SB3202LRB102 23348 BMS 32514 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 131.22, 132.5, and 547 as follows:
 
6    (215 ILCS 5/131.22)
7    (Text of Section before amendment by P.A. 102-578)
8    Sec. 131.22. Confidential treatment.
9    (a) Documents, materials, or other information in the
10possession or control of the Department that are obtained by
11or disclosed to the Director or any other person in the course
12of an examination or investigation made pursuant to this
13Article and all information reported or provided to the
14Department pursuant to paragraphs (12) and (13) of Section
15131.5 and Sections 131.13 through 131.21 shall be confidential
16by law and privileged, shall not be subject to the Illinois
17Freedom of Information Act, shall not be subject to subpoena,
18and shall not be subject to discovery or admissible in
19evidence in any private civil action. However, the Director is
20authorized to use the documents, materials, or other
21information in the furtherance of any regulatory or legal
22action brought as a part of the Director's official duties.
23The Director shall not otherwise make the documents,

 

 

SB3202- 2 -LRB102 23348 BMS 32514 b

1materials, or other information public without the prior
2written consent of the company to which it pertains unless the
3Director, after giving the company and its affiliates who
4would be affected thereby prior written notice and an
5opportunity to be heard, determines that the interest of
6policyholders, shareholders, or the public shall be served by
7the publication thereof, in which event the Director may
8publish all or any part in such manner as may be deemed
9appropriate.
10    (b) Neither the Director nor any person who received
11documents, materials, or other information while acting under
12the authority of the Director or with whom such documents,
13materials, or other information are shared pursuant to this
14Article shall be permitted or required to testify in any
15private civil action concerning any confidential documents,
16materials, or information subject to subsection (a) of this
17Section.
18    (c) In order to assist in the performance of the
19Director's duties, the Director:
20        (1) may share documents, materials, or other
21    information, including the confidential and privileged
22    documents, materials, or information subject to subsection
23    (a) of this Section, with other state, federal, and
24    international regulatory agencies, with the NAIC and its
25    affiliates and subsidiaries, and with third-party
26    consultants, and with state, federal, and international

 

 

SB3202- 3 -LRB102 23348 BMS 32514 b

1    law enforcement authorities and regulatory agencies,
2    including members of any supervisory college allowed by
3    this Article, provided that the recipient agrees in
4    writing to maintain the confidentiality and privileged
5    status of the document, material, or other information,
6    and has verified in writing the legal authority to
7    maintain confidentiality;
8        (1.5) notwithstanding paragraph (1) of this subsection
9    (c), may only share confidential and privileged documents,
10    material, or information reported pursuant to Section
11    131.14b with commissioners of states having statutes or
12    regulations substantially similar to subsection (a) of
13    this Section and who have agreed in writing not to
14    disclose such information; and
15        (1.7) notwithstanding paragraph (1) of this subsection
16    (c), may only share confidential and privileged documents,
17    material, or information reported pursuant to Section
18    131.14b with the Illinois Insurance Guaranty Fund
19    regarding any member company defined in Section 534.5 if
20    the Director determines that the member company may be
21    subject to a future delinquency proceeding under Article
22    XIII; the Director may disclose the information described
23    in this subsection so long as the Fund agrees in writing to
24    hold that information confidential, in a manner consistent
25    with this Code, and uses that information to prepare for
26    the possible liquidation of the member company; access to

 

 

SB3202- 4 -LRB102 23348 BMS 32514 b

1    the information disclosed by the Director to the Fund
2    shall be limited to the Fund's staff and its counsel; the
3    board of directors of the Fund may have access to the
4    information disclosed by the Director to the Fund once the
5    member company is subject to a delinquency proceeding
6    under Article XIII subject to any terms and conditions
7    established by the Director; and
8        (2) may receive documents, materials, or information,
9    including otherwise confidential and privileged documents,
10    materials, or information from the NAIC and its affiliates
11    and subsidiaries and from regulatory and law enforcement
12    officials of other foreign or domestic jurisdictions, and
13    shall maintain as confidential or privileged any document,
14    material, or information received with notice or the
15    understanding that it is confidential or privileged under
16    the laws of the jurisdiction that is the source of the
17    document, material, or information; any such documents,
18    materials, or information, while in the Director's
19    possession, shall not be subject to the Illinois Freedom
20    of Information Act and shall not be subject to subpoena.
21    (c-5) Written agreements with the NAIC or third-party
22consultants governing sharing and use of information provided
23pursuant to this Article consistent with this subsection (c)
24shall:
25        (1) specify procedures and protocols regarding the
26    confidentiality and security of information shared with

 

 

SB3202- 5 -LRB102 23348 BMS 32514 b

1    the NAIC and its affiliates and subsidiaries or
2    third-party consultants pursuant to this Article,
3    including procedures and protocols for sharing by the NAIC
4    with other state, federal, or international regulators;
5        (2) specify that ownership of information shared with
6    the NAIC and its affiliates and subsidiaries or
7    third-party consultants pursuant to this Article remains
8    with the Director and the NAIC's or third-party
9    consultant's use of the information is subject to the
10    direction of the Director;
11        (3) require prompt notice to be given to a company
12    whose confidential information in the possession of the
13    NAIC or third-party consultant pursuant to this Article is
14    subject to a request or subpoena for disclosure or
15    production; and
16        (4) require the NAIC and its affiliates and
17    subsidiaries or third-party consultants to consent to
18    intervention by a company in any judicial or
19    administrative action in which the NAIC and its affiliates
20    and subsidiaries or third-party consultants may be
21    required to disclose confidential information about the
22    company shared with the NAIC and its affiliates and
23    subsidiaries or third-party consultants pursuant to this
24    Article.
25    (d) The sharing of documents, materials, or information by
26the Director pursuant to this Article shall not constitute a

 

 

SB3202- 6 -LRB102 23348 BMS 32514 b

1delegation of regulatory authority or rulemaking, and the
2Director is solely responsible for the administration,
3execution, and enforcement of the provisions of this Article.
4    (e) No waiver of any applicable privilege or claim of
5confidentiality in the documents, materials, or information
6shall occur as a result of disclosure to the Director under
7this Section or as a result of sharing as authorized in
8subsection (c) of this Section.
9    (f) Documents, materials, or other information in the
10possession or control of the NAIC or a third-party consultant
11pursuant to this Article shall be confidential by law and
12privileged, shall not be subject to the Illinois Freedom of
13Information Act, shall not be subject to subpoena, and shall
14not be subject to discovery or admissible in evidence in any
15private civil action.
16(Source: P.A. 102-394, eff. 8-16-21.)
 
17    (Text of Section after amendment by P.A. 102-578)
18    Sec. 131.22. Confidential treatment.
19    (a) Documents, materials, or other information in the
20possession or control of the Department that are obtained by
21or disclosed to the Director or any other person in the course
22of an examination or investigation made pursuant to this
23Article and all information reported or provided to the
24Department pursuant to paragraphs (12) and (13) of Section
25131.5 and Sections 131.13 through 131.21 are recognized by

 

 

SB3202- 7 -LRB102 23348 BMS 32514 b

1this State as being proprietary and to contain trade secrets,
2and shall be confidential by law and privileged, shall not be
3subject to the Illinois Freedom of Information Act, shall not
4be subject to subpoena, and shall not be subject to discovery
5or admissible in evidence in any private civil action.
6However, the Director is authorized to use the documents,
7materials, or other information in the furtherance of any
8regulatory or legal action brought as a part of the Director's
9official duties. The Director shall not otherwise make the
10documents, materials, or other information public without the
11prior written consent of the company to which it pertains
12unless the Director, after giving the company and its
13affiliates who would be affected thereby prior written notice
14and an opportunity to be heard, determines that the interest
15of policyholders, shareholders, or the public shall be served
16by the publication thereof, in which event the Director may
17publish all or any part in such manner as may be deemed
18appropriate.
19    (b) Neither the Director nor any person who received
20documents, materials, or other information while acting under
21the authority of the Director or with whom such documents,
22materials, or other information are shared pursuant to this
23Article shall be permitted or required to testify in any
24private civil action concerning any confidential documents,
25materials, or information subject to subsection (a) of this
26Section.

 

 

SB3202- 8 -LRB102 23348 BMS 32514 b

1    (c) In order to assist in the performance of the
2Director's duties, the Director:
3        (1) may share documents, materials, or other
4    information, including the confidential and privileged
5    documents, materials, or information subject to subsection
6    (a) of this Section, including proprietary and trade
7    secret documents and materials, with other state, federal,
8    and international regulatory agencies, with the NAIC and
9    its affiliates and subsidiaries, and with third-party
10    consultants, and with state, federal, and international
11    law enforcement authorities and regulatory agencies,
12    including members of any supervisory college allowed by
13    this Article, provided that the recipient agrees in
14    writing to maintain the confidentiality and privileged
15    status of the document, material, or other information,
16    and has verified in writing the legal authority to
17    maintain confidentiality;
18        (1.5) notwithstanding paragraph (1) of this subsection
19    (c), may only share confidential and privileged documents,
20    material, or information reported pursuant to subsection
21    (a) of Section 131.14b with commissioners of states having
22    statutes or regulations substantially similar to
23    subsection (a) of this Section and who have agreed in
24    writing not to disclose such information; and
25        (1.7) notwithstanding paragraph (1) of this subsection
26    (c), may only share confidential and privileged documents,

 

 

SB3202- 9 -LRB102 23348 BMS 32514 b

1    material, or information reported pursuant to Section
2    131.14b with the Illinois Insurance Guaranty Fund
3    regarding any member company defined in Section 534.5 if
4    the Director determines that the member company may be
5    subject to a future delinquency proceeding under Article
6    XIII; the Director may disclose the information described
7    in this subsection so long as the Fund agrees in writing to
8    hold that information confidential, in a manner consistent
9    with this Code, and uses that information to prepare for
10    the possible liquidation of the member company; access to
11    the information disclosed by the Director to the Fund
12    shall be limited to the Fund's staff and its counsel; the
13    board of directors of the Fund may have access to the
14    information disclosed by the Director to the Fund once the
15    member company is subject to a delinquency proceeding
16    under Article XIII subject to any terms and conditions
17    established by the Director; and
18        (2) may receive documents, materials, or information,
19    including otherwise confidential and privileged documents,
20    materials, or information, including proprietary and trade
21    secret information, from the NAIC and its affiliates and
22    subsidiaries and from regulatory and law enforcement
23    officials of other foreign or domestic jurisdictions, and
24    shall maintain as confidential or privileged any document,
25    material, or information received with notice or the
26    understanding that it is confidential or privileged under

 

 

SB3202- 10 -LRB102 23348 BMS 32514 b

1    the laws of the jurisdiction that is the source of the
2    document, material, or information; any such documents,
3    materials, or information, while in the Director's
4    possession, shall not be subject to the Illinois Freedom
5    of Information Act and shall not be subject to subpoena.
6        (blank).
7    (c-5) Written agreements with the NAIC or third-party
8consultants governing sharing and use of information provided
9pursuant to this Article consistent with subsection (c) shall:
10        (1) specify procedures and protocols regarding the
11    confidentiality and security of information shared with
12    the NAIC and its affiliates and subsidiaries or
13    third-party consultants pursuant to this Article,
14    including procedures and protocols for sharing by the NAIC
15    with other state, federal, or international regulators;
16    the agreement shall provide that the recipient agrees in
17    writing to maintain the confidentiality and privileged
18    status of the documents, materials, or other information
19    and has verified in writing the legal authority to
20    maintain such confidentiality;
21        (2) specify that ownership of information shared with
22    the NAIC and its affiliates and subsidiaries or
23    third-party consultants pursuant to this Article remains
24    with the Director and the NAIC's or third-party
25    consultant's use of the information is subject to the
26    direction of the Director;

 

 

SB3202- 11 -LRB102 23348 BMS 32514 b

1        (3) require prompt notice to be given to a company
2    whose confidential information in the possession of the
3    NAIC or third-party consultant pursuant to this Article is
4    subject to a request or subpoena for disclosure or
5    production;
6        (4) require the NAIC and its affiliates and
7    subsidiaries or third-party consultants to consent to
8    intervention by a company in any judicial or
9    administrative action in which the NAIC and its affiliates
10    and subsidiaries or third-party consultants may be
11    required to disclose confidential information about the
12    company shared with the NAIC and its affiliates and
13    subsidiaries or third-party consultants pursuant to this
14    Article; and
15        (5) excluding documents, material, or information
16    reported pursuant to subsection (c) of Section 131.14b,
17    prohibit the NAIC or third-party consultant from storing
18    the information shared pursuant to this Code in a
19    permanent database after the underlying analysis is
20    completed.
21    (d) The sharing of documents, materials, or information by
22the Director pursuant to this Article shall not constitute a
23delegation of regulatory authority or rulemaking, and the
24Director is solely responsible for the administration,
25execution, and enforcement of the provisions of this Article.
26    (e) No waiver of any applicable privilege or claim of

 

 

SB3202- 12 -LRB102 23348 BMS 32514 b

1confidentiality in the documents, materials, or information
2shall occur as a result of disclosure to the Director under
3this Section or as a result of sharing as authorized in
4subsection (c) of this Section.
5    (f) Documents, materials, or other information in the
6possession or control of the NAIC or third-party consultant
7pursuant to this Article shall be confidential by law and
8privileged, shall not be subject to the Illinois Freedom of
9Information Act, shall not be subject to subpoena, and shall
10not be subject to discovery or admissible in evidence in any
11private civil action.
12(Source: P.A. 102-394, eff. 8-16-21; 102-578, eff. 7-1-22 (See
13Section 5 of P.A. 102-672 for effective date of P.A. 102-578);
14revised 12-1-21.)
 
15    (215 ILCS 5/132.5)  (from Ch. 73, par. 744.5)
16    Sec. 132.5. Examination reports.
17    (a) General description. All examination reports shall be
18comprised of only facts appearing upon the books, records, or
19other documents of the company, its agents, or other persons
20examined or as ascertained from the testimony of its officers,
21agents, or other persons examined concerning its affairs and
22the conclusions and recommendations as the examiners find
23reasonably warranted from those facts.
24    (b) Filing of examination report. No later than 60 days
25following completion of the examination, the examiner in

 

 

SB3202- 13 -LRB102 23348 BMS 32514 b

1charge shall file with the Department a verified written
2report of examination under oath. Upon receipt of the verified
3report, the Department shall transmit the report to the
4company examined, together with a notice that affords the
5company examined a reasonable opportunity of not more than 30
6days to make a written submission or rebuttal with respect to
7any matters contained in the examination report.
8    (c) Adoption of the report on examination. Within 30 days
9of the end of the period allowed for the receipt of written
10submissions or rebuttals, the Director shall fully consider
11and review the report, together with any written submissions
12or rebuttals and any relevant portions of the examiners work
13papers and enter an order:
14        (1) Adopting the examination report as filed or with
15    modification or corrections. If the examination report
16    reveals that the company is operating in violation of any
17    law, regulation, or prior order of the Director, the
18    Director may order the company to take any action the
19    Director considers necessary and appropriate to cure the
20    violation.
21        (2) Rejecting the examination report with directions
22    to the examiners to reopen the examination for purposes of
23    obtaining additional data, documentation, or information
24    and refiling under subsection (b).
25        (3) Calling for an investigatory hearing with no less
26    than 20 days notice to the company for purposes of

 

 

SB3202- 14 -LRB102 23348 BMS 32514 b

1    obtaining additional documentation, data, information, and
2    testimony.
3    (d) Order and procedures. All orders entered under
4paragraph (1) of subsection (c) shall be accompanied by
5findings and conclusions resulting from the Director's
6consideration and review of the examination report, relevant
7examiner work papers, and any written submissions or
8rebuttals. The order shall be considered a final
9administrative decision and may be appealed in accordance with
10the Administrative Review Law. The order shall be served upon
11the company by certified mail, together with a copy of the
12adopted examination report. Within 30 days of the issuance of
13the adopted report, the company shall file affidavits executed
14by each of its directors stating under oath that they have
15received a copy of the adopted report and related orders.
16    Any hearing conducted under paragraph (3) of subsection
17(c) by the Director or an authorized representative shall be
18conducted as a nonadversarial confidential investigatory
19proceeding as necessary for the resolution of any
20inconsistencies, discrepancies, or disputed issues apparent
21upon the face of the filed examination report or raised by or
22as a result of the Director's review of relevant work papers or
23by the written submission or rebuttal of the company. Within
2420 days of the conclusion of any hearing, the Director shall
25enter an order under paragraph (1) of subsection (c).
26    The Director shall not appoint an examiner as an

 

 

SB3202- 15 -LRB102 23348 BMS 32514 b

1authorized representative to conduct the hearing. The hearing
2shall proceed expeditiously with discovery by the company
3limited to the examiner's work papers that tend to
4substantiate any assertions set forth in any written
5submission or rebuttal. The Director or his representative may
6issue subpoenas for the attendance of any witnesses or the
7production of any documents deemed relevant to the
8investigation, whether under the control of the Department,
9the company, or other persons. The documents produced shall be
10included in the record, and testimony taken by the Director or
11his representative shall be under oath and preserved for the
12record. Nothing contained in this Section shall require the
13Department to disclose any information or records that would
14indicate or show the existence or content of any investigation
15or activity of a criminal justice agency.
16    The hearing shall proceed with the Director or his
17representative posing questions to the persons subpoenaed.
18Thereafter the company and the Department may present
19testimony relevant to the investigation. Cross-examination
20shall be conducted only by the Director or his representative.
21The company and the Department shall be permitted to make
22closing statements and may be represented by counsel of their
23choice.
24    (e) Publication and use. Upon the adoption of the
25examination report under paragraph (1) of subsection (c), the
26Director shall continue to hold the content of the examination

 

 

SB3202- 16 -LRB102 23348 BMS 32514 b

1report as private and confidential information for a period of
235 days, except to the extent provided in subsection (b).
3Thereafter, the Director may open the report for public
4inspection so long as no court of competent jurisdiction has
5stayed its publication.
6    Nothing contained in this Code shall prevent or be
7construed as prohibiting the Director from disclosing the
8content of an examination report, preliminary examination
9report or results, or any matter relating thereto, to the
10insurance department of any other state or country or to law
11enforcement officials of this or any other state or agency of
12the federal government at any time, so long as the agency or
13office receiving the report or matters relating thereto agrees
14in writing to hold it confidential and in a manner consistent
15with this Code.
16    In the event the Director determines that regulatory
17action is appropriate as a result of any examination, he may
18initiate any proceedings or actions as provided by law.
19    (f) Confidentiality of ancillary information. All working
20papers, recorded information, documents, and copies thereof
21produced by, obtained by, or disclosed to the Director or any
22other person in the course of any examination must be given
23confidential treatment, are not subject to subpoena, and may
24not be made public by the Director or any other persons, except
25to the extent provided in subsection (e). Access may also be
26granted to the National Association of Insurance

 

 

SB3202- 17 -LRB102 23348 BMS 32514 b

1Commissioners. Those parties must agree in writing before
2receiving the information to provide to it the same
3confidential treatment as required by this Section, unless the
4prior written consent of the company to which it pertains has
5been obtained.
6    This subsection (f) applies to market conduct examinations
7described in Section 132 of this Code.
8    (g) Disclosure. Nothing contained in this Code shall
9prevent or be construed as prohibiting the Director from
10disclosing the information described in subsections (e) and
11(f) to the Illinois Insurance Guaranty Fund regarding any
12member company defined in Section 534.5 if the Director
13determines that the member company may be subject to a future
14delinquency proceeding under Article XIII. The Director may
15disclose the information described in this subsection so long
16as the Fund agrees in writing to hold that information
17confidential, in a manner consistent with this Code, and uses
18that information to prepare for the possible liquidation of
19the member company. Access to the information disclosed by the
20Director to the Fund shall be limited to the Fund's staff and
21its counsel. The Board of Directors of the Fund may have access
22to the information disclosed by the Director to the Fund once
23the member company is subject to a delinquency proceeding
24under Article XIII subject to any terms and conditions
25established by the Director.
26(Source: P.A. 100-475, eff. 1-1-18.)
 

 

 

SB3202- 18 -LRB102 23348 BMS 32514 b

1    (215 ILCS 5/547)  (from Ch. 73, par. 1065.97)
2    Sec. 547. Prevention of insolvencies. To aid in the
3detection and prevention of company insolvencies:
4    (a) The board of directors may, upon majority vote, make
5recommendations to the Director on matters pertaining to
6regulation for solvency.
7    (b) The board of directors may prepare a report on the
8history and causes of any company insolvency in which the Fund
9was obligated to pay covered claims, based on the information
10available to the Fund, and submit such report to the Director.
11    (c) The Director may disclose to the Fund the information
12described in subsection (g) of Section 132.5 as well as the
13information described in subsection (c) of Section 131.22, and
14the Fund may use that information to prepare for the possible
15liquidation of a member company subject to the requirements
16and restrictions set forth in Section 132.5.
17(Source: P.A. 85-576.)
 
18    Section 95. No acceleration or delay. Where this Act makes
19changes in a statute that is represented in this Act by text
20that is not yet or no longer in effect (for example, a Section
21represented by multiple versions), the use of that text does
22not accelerate or delay the taking effect of (i) the changes
23made by this Act or (ii) provisions derived from any other
24Public Act.
 

 

 

SB3202- 19 -LRB102 23348 BMS 32514 b

1    Section 99. Effective date. This Act takes effect upon
2becoming law.