Full Text of HB1577 97th General Assembly
HB1577sam006 97TH GENERAL ASSEMBLY | Sen. William R. Haine Filed: 11/3/2011
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| 1 | | AMENDMENT TO HOUSE BILL 1577
| 2 | | AMENDMENT NO. ______. Amend House Bill 1577, AS AMENDED, by | 3 | | replacing everything after the enacting clause with the | 4 | | following:
| 5 | | "Section 5. The Illinois Insurance Code is amended by | 6 | | changing Sections 35A-15, 445, and 445a as follows:
| 7 | | (215 ILCS 5/35A-15)
| 8 | | Sec. 35A-15. Company action level event.
| 9 | | (a) A company action level event means any of the following | 10 | | events:
| 11 | | (1) The filing of an RBC Report by an insurer that | 12 | | indicates that:
| 13 | | (A) the insurer's total adjusted capital is | 14 | | greater than or equal to its
regulatory action level | 15 | | RBC, but less than its company action level RBC; or
| 16 | | (B) the The insurer, if a life, health, or life and |
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| 1 | | health insurer, has
total adjusted capital that is | 2 | | greater than or equal
to its company action level RBC, | 3 | | but less than the product of its authorized
control | 4 | | level RBC and 2.5 and has a negative trend ; or .
| 5 | | (C) the insurer, if a property and casualty | 6 | | insurer, has total adjusted capital that is greater | 7 | | than or equal
to its company action level RBC, but less | 8 | | than the product of its authorized
control level RBC | 9 | | and 3.0 and triggers the trend test determined in | 10 | | accordance with the trend test calculation included in | 11 | | the property and casualty RBC Instructions.
| 12 | | (2) The notification by the Director to the insurer of | 13 | | an Adjusted RBC
Report that indicates an event described in
| 14 | | paragraph (1),
provided the insurer does not challenge the | 15 | | Adjusted RBC Report under Section
35A-35.
| 16 | | (3) The notification by the Director to the insurer | 17 | | that the Director has,
after a hearing, rejected the | 18 | | insurer's challenge under Section 35A-35 to an
Adjusted RBC | 19 | | Report that indicates the event described in paragraph (1).
| 20 | | (b) In the event of a company action level event, the | 21 | | insurer shall prepare
and submit to the Director an RBC Plan | 22 | | that does
all of the following:
| 23 | | (1) Identifies the conditions that contribute to the
| 24 | | company action level event.
| 25 | | (2) Contains proposed corrective actions that the | 26 | | insurer intends to
take and that are expected to result in |
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| 1 | | the elimination of the company action
level event.
A health | 2 | | organization is not prohibited from
proposing recognition | 3 | | of a parental guarantee or a letter of credit to
eliminate | 4 | | the company action level event; however the Director shall, | 5 | | at his
discretion, determine whether or the extent to which | 6 | | the proposed parental
guarantee or letter of credit is an | 7 | | acceptable part of a satisfactory RBC Plan
or Revised RBC | 8 | | Plan.
| 9 | | (3) Provides projections of the insurer's financial | 10 | | results in the current
year and at least the 4 succeeding | 11 | | years, both in the absence of proposed
corrective actions | 12 | | and giving effect to the proposed corrective actions,
| 13 | | including projections of statutory operating income, net | 14 | | income, capital, and
surplus. The projections for both new | 15 | | and renewal business may include
separate projections for | 16 | | each major line of business and separately identify
each | 17 | | significant income, expense, and benefit component.
| 18 | | (4) Identifies the key assumptions affecting the | 19 | | insurer's projections
and the sensitivity of the | 20 | | projections to the assumptions.
| 21 | | (5) Identifies the quality of, and problems associated | 22 | | with, the insurer's
business including, but not limited to, | 23 | | its assets, anticipated business growth
and associated | 24 | | surplus strain, extraordinary exposure to risk, mix of | 25 | | business,
and use of reinsurance, if any, in each case.
| 26 | | (c) The insurer shall submit the RBC Plan to the Director |
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| 1 | | within 45 days
after the company action
level event occurs or | 2 | | within 45 days after the Director notifies the insurer
that the | 3 | | Director has, after a hearing, rejected its
challenge under | 4 | | Section 35A-35 to an
Adjusted RBC Report.
| 5 | | (d) Within 60 days after an insurer submits an RBC Plan to | 6 | | the
Director, the Director shall notify the insurer whether the | 7 | | RBC Plan shall be
implemented or is, in the judgment of the | 8 | | Director, unsatisfactory. If the
Director determines the RBC | 9 | | Plan is unsatisfactory,
the notification to the insurer shall | 10 | | set forth the reasons for the
determination
and may set forth | 11 | | proposed revisions that will render the RBC Plan satisfactory
| 12 | | in the judgment of the Director. Upon notification from the | 13 | | Director, the
insurer shall prepare a Revised RBC Plan, which | 14 | | may incorporate by reference
any revisions proposed by the | 15 | | Director. The insurer shall submit the Revised
RBC Plan to the | 16 | | Director within 45 days after the Director notifies the insurer
| 17 | | that the RBC Plan is unsatisfactory or within 45 days after the | 18 | | Director
notifies the insurer that the Director has, after a | 19 | | hearing, rejected its
challenge under Section 35A-35 to the | 20 | | determination that the RBC Plan is
unsatisfactory.
| 21 | | (e) In the event the Director notifies an insurer that its
| 22 | | RBC Plan or Revised RBC Plan is unsatisfactory, the Director | 23 | | may, at
the Director's discretion and subject to the insurer's | 24 | | right to a hearing under
Section 35A-35, specify in the | 25 | | notification that the notification constitutes a
regulatory | 26 | | action level event.
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| 1 | | (f) Every domestic insurer that files an RBC Plan or | 2 | | Revised RBC Plan with
the Director shall file a copy of the RBC | 3 | | Plan or Revised RBC Plan with the
chief insurance regulatory | 4 | | official in any state in which the insurer is
authorized to do | 5 | | business if that state has a law substantially similar to the
| 6 | | confidentiality provisions in subsection (a) of Section 35A-50 | 7 | | and if that
official requests in writing a copy of the plan. | 8 | | The insurer shall file a copy
of the
RBC Plan or Revised RBC | 9 | | Plan in that state no later than the later of
15 days after | 10 | | receiving the written request for the copy or
the date on which | 11 | | the RBC Plan or Revised RBC Plan is filed under
subsection (c) | 12 | | or (d) of this Section.
| 13 | | (Source: P.A. 91-549, eff. 8-14-99.)
| 14 | | (215 ILCS 5/445) (from Ch. 73, par. 1057)
| 15 | | Sec. 445. Surplus line.
| 16 | | (1) Definitions. For the purposes of this Section: Surplus | 17 | | line defined; surplus line insurer
requirements. "Surplus line | 18 | | insurance" means insurance on an Illinois risk of
the kinds | 19 | | specified in Classes 2 and 3 of Section 4 of this Code procured
| 20 | | from an unauthorized insurer
after the insurance producer | 21 | | representing the
insured or the surplus line producer is | 22 | | unable, after diligent effort, to
procure said insurance from | 23 | | authorized insurers.
| 24 | | "Affiliate" means, with respect to an insured, any entity | 25 | | that controls, is controlled by, or is under common control |
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| 1 | | with the insured. For the purpose of this definition, an entity | 2 | | has control over another entity if: | 3 | | (A) the entity directly or indirectly or acting through | 4 | | one or more other persons owns, controls, or has the power | 5 | | to vote 25% or more of any class of voting securities of | 6 | | the other entity; or | 7 | | (B) the entity controls in any manner the election of a | 8 | | majority of the directors or trustees of the other entity. | 9 | | "Affiliated group" means any group of entities that are all | 10 | | affiliated. | 11 | | "Authorized insurer" means an insurer that holds a | 12 | | certificate of
authority
issued by the Director but, for the | 13 | | purposes of this Section, does not
include a
domestic surplus | 14 | | line insurer as defined in Section 445a or any
residual market
| 15 | | mechanism. | 16 | | "Exempt commercial purchaser" means any person purchasing | 17 | | commercial insurance that, at the time of placement, meets the | 18 | | following requirements: | 19 | | (A) The person employs or retains a qualified risk | 20 | | manager to negotiate insurance coverage. | 21 | | (B) The person has paid aggregate nationwide | 22 | | commercial property and casualty insurance premiums in | 23 | | excess of $100,000 in the immediately preceding 12 months. | 24 | | (C) The person meets at least one of the following | 25 | | criteria: | 26 | | (I) The person possesses a net worth in excess of |
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| 1 | | $20,000,000, as such amount is adjusted pursuant to the | 2 | | provision in this definition concerning percentage | 3 | | change. | 4 | | (II) The person generates annual revenues in | 5 | | excess of $50,000,000, as such amount is adjusted | 6 | | pursuant to the provision in this definition | 7 | | concerning percentage change. | 8 | | (III) The person employs more than 500 full-time or | 9 | | full-time equivalent employees per individual insured | 10 | | or is a member of an affiliated group employing more | 11 | | than 1,000 employees in the aggregate. | 12 | | (IV) The person is a not-for-profit organization | 13 | | or public entity generating annual budgeted | 14 | | expenditures of at least $30,000,000, as such amount is | 15 | | adjusted pursuant to the provision in this definition | 16 | | concerning percentage change. | 17 | | (V) The person is a municipality with a population | 18 | | in excess of 50,000 persons. | 19 | | Effective on January 1, 2015 and each fifth January 1 | 20 | | occurring thereafter, the amounts in subitems (I), (II), and | 21 | | (IV) of item (C) of this definition shall be adjusted to | 22 | | reflect the percentage change for such 5-year period in the | 23 | | Consumer Price Index for All Urban Consumers published by the | 24 | | Bureau of Labor Statistics of the Department of Labor. | 25 | | "Home state" means the following: | 26 | | (A) With respect to an insured, except as provided in |
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| 1 | | item (B) of this definition: | 2 | | (I) the State in which an insured maintains its | 3 | | principal place of business or, in the case of an | 4 | | individual, the individual's principal residence; or | 5 | | (II) if 100% of the insured risk is located out of | 6 | | the State referred to in subitem (I), the State to | 7 | | which the greatest percentage of the insured's taxable | 8 | | premium for that insurance contract is allocated. | 9 | | (B) If more than one insured from an affiliated group | 10 | | are named insureds on a single surplus line insurance | 11 | | contract, then "home State" means the home State, as | 12 | | determined pursuant to item (A) of this definition, of the | 13 | | member of the affiliated group that has the largest | 14 | | percentage of premium attributed to it under such insurance | 15 | | contract. | 16 | | "Multi-State risk" means a risk with insured exposures in | 17 | | more than one State. | 18 | | "NAIC" means the National Association of Insurance | 19 | | Commissioners or any successor entity. | 20 | | "Qualified risk manager" means, with respect to a | 21 | | policyholder of commercial insurance, a person who meets all of | 22 | | the following requirements: | 23 | | (A) The person is an employee of, or third-party | 24 | | consultant retained by, the commercial policyholder. | 25 | | (B) The person provides skilled services in loss | 26 | | prevention, loss reduction, or risk and insurance coverage |
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| 1 | | analysis, and purchase of insurance. | 2 | | (C) With regard to the person: | 3 | | (I) the person has: | 4 | | (a) a bachelor's degree or higher from an | 5 | | accredited college or university in risk | 6 | | management, business administration, finance, | 7 | | economics, or any other field determined by the | 8 | | Director or his designee to demonstrate minimum | 9 | | competence in risk management; and | 10 | | (b) the following: | 11 | | (i) three years of experience in risk | 12 | | financing, claims administration, loss | 13 | | prevention, risk and insurance analysis, or | 14 | | purchasing commercial lines of insurance; or | 15 | | (ii) alternatively has: | 16 | | (AA) a designation as a Chartered | 17 | | Property and Casualty Underwriter (in this | 18 | | subparagraph (ii) referred to as "CPCU") | 19 | | issued by the American Institute for | 20 | | CPCU/Insurance Institute of America; | 21 | | (BB) a designation as an Associate in | 22 | | Risk Management (ARM) issued by the | 23 | | American Institute for CPCU/Insurance | 24 | | Institute of America; | 25 | | (CC) a designation as Certified Risk | 26 | | Manager (CRM) issued by the National |
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| 1 | | Alliance for Insurance Education & | 2 | | Research; | 3 | | (DD) a designation as a RIMS Fellow | 4 | | (RF) issued by the Global Risk Management | 5 | | Institute; or | 6 | | (EE) any other designation, | 7 | | certification, or license determined by | 8 | | the Director or his designee to | 9 | | demonstrate minimum competency in risk | 10 | | management; | 11 | | (II) the person has: | 12 | | (a) at least 7 years of experience in risk | 13 | | financing, claims administration, loss prevention, | 14 | | risk and insurance coverage analysis, or | 15 | | purchasing commercial lines of insurance; and | 16 | | (b) has any one of the designations specified | 17 | | in subparagraph (ii) of paragraph (b); | 18 | | (III) the person has at least 10 years of | 19 | | experience in risk financing, claims administration, | 20 | | loss prevention, risk and insurance coverage analysis, | 21 | | or purchasing commercial lines of insurance; or | 22 | | (IV) the person has a graduate degree from an | 23 | | accredited college or university in risk management, | 24 | | business administration, finance, economics, or any | 25 | | other field determined by the Director or his or her | 26 | | designee to demonstrate minimum competence in risk |
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| 1 | | management. | 2 | | "Residual market mechanism" means an association, | 3 | | organization, or other
entity described in Article XXXIII of | 4 | | this Code or Section 7-501 of the
Illinois Vehicle Code or any | 5 | | similar association, organization, or other
entity. | 6 | | "State" means any State of the United States, the District | 7 | | of Columbia, the Commonwealth of Puerto Rico, Guam, the | 8 | | Northern Mariana Islands, the Virgin Islands, and American | 9 | | Samoa. | 10 | | "Surplus line insurance" means insurance on a risk: | 11 | | (A) of the kinds specified in Classes 2 and 3 of | 12 | | Section 4 of this Code; and | 13 | | (B) that is procured from an unauthorized insurer after | 14 | | the insurance producer representing the insured or the | 15 | | surplus line producer is unable, after diligent effort, to | 16 | | procure the insurance from authorized insurers; and | 17 | | (C) where Illinois is the home state of the insured, | 18 | | for policies effective, renewed or extended on July 21, | 19 | | 2011 or later and for multiyear policies upon the policy | 20 | | anniversary that falls on or after July 21, 2011; and | 21 | | (D) that is located in Illinois, for policies effective | 22 | | prior to July 21, 2011. | 23 | | "Unauthorized insurer" means an insurer that does not hold | 24 | | a valid
certificate of authority issued by the Director but, | 25 | | for the purposes of this
Section, shall also include a domestic | 26 | | surplus line insurer as defined in
Section 445a.
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| 1 | | (1.5) Procuring surplus line insurance; surplus line | 2 | | insurer requirements. | 3 | | (a) Insurance producers may procure surplus line insurance | 4 | | only if licensed
as a surplus line producer under this Section . | 5 | | (b) Licensed surplus line producers and may procure surplus | 6 | | line that
insurance only from an unauthorized insurer domiciled | 7 | | in the United States only if the insurer :
| 8 | | (i) is permitted in its domiciliary jurisdiction to | 9 | | write the type of insurance involved; and
| 10 | | (ii) has, (a) that based upon information available to | 11 | | the surplus
line producer ,
has a policyholders surplus of | 12 | | not less than $15,000,000
determined in
accordance with the | 13 | | laws of its domiciliary jurisdiction accounting rules that | 14 | | are applicable to
authorized insurers ;
and
| 15 | | (iii) (b) that has standards of solvency and management | 16 | | that are adequate
for the protection of policyholders . ; and
| 17 | | Where (c) where an unauthorized insurer does not meet the
| 18 | | standards set forth
in (ii) (a) and (iii) (b) above, a surplus | 19 | | line producer may, if necessary, procure
insurance from that | 20 | | insurer only if prior written warning of
such fact or
condition | 21 | | is given to the insured by the insurance producer or surplus | 22 | | line
producer.
| 23 | | (c) Licensed surplus line producers may procure surplus | 24 | | line insurance from an unauthorized insurer domiciled outside | 25 | | of the United States only if the insurer is listed on the | 26 | | Quarterly Listing of Alien Insurers maintained by the |
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| 1 | | International Insurers Department of the NAIC. The Director | 2 | | shall make the Quarterly Listing of Alien Insurers available to | 3 | | surplus line producers without charge. | 4 | | (d) Insurance producers shall not procure from an
| 5 | | unauthorized insurer an insurance policy: | 6 | | (i) that is designed to satisfy the
proof of financial | 7 | | responsibility and insurance requirements in any
Illinois | 8 | | law where the law requires that the proof of
insurance is | 9 | | issued by an authorized insurer or residual market
| 10 | | mechanism; | 11 | | (ii) that covers the risk of accidental injury to | 12 | | employees arising
out of and in the course of employment | 13 | | according to the provisions of the
Workers' Compensation | 14 | | Act; or | 15 | | (iii) that insures any Illinois personal lines risk, as | 16 | | defined in
subsection (a), (b), or (c) of Section 143.13 of | 17 | | this Code, that is eligible
for residual market mechanism | 18 | | coverage, unless the insured or prospective
insured | 19 | | requests limits of liability greater than the limits | 20 | | provided by the
residual market mechanism. In the course of | 21 | | making a diligent effort to
procure insurance from | 22 | | authorized insurers, an insurance producer shall not be
| 23 | | required to submit a risk to a residual market mechanism | 24 | | when the risk is not
eligible for coverage or exceeds the | 25 | | limits available in the residual market
mechanism. | 26 | | Where there is an insurance policy issued by an
authorized |
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| 1 | | insurer or residual market mechanism
insuring a risk described | 2 | | in item (i), (ii), or (iii)
above, nothing in this paragraph | 3 | | shall be construed
to prohibit a surplus line producer from | 4 | | procuring
from an unauthorized insurer a policy insuring the
| 5 | | risk on an excess or umbrella basis where the excess
or | 6 | | umbrella policy is written over one or more
underlying | 7 | | policies.
| 8 | | (e) Licensed surplus line producers may procure surplus | 9 | | line insurance from an unauthorized insurer for an exempt | 10 | | commercial purchaser without making the required diligent | 11 | | effort to procure the insurance from authorized insurers if: | 12 | | (i) the producer has disclosed to the exempt commercial | 13 | | purchaser that such insurance may or may not be available | 14 | | from authorized insurers that may provide greater | 15 | | protection with more regulatory oversight; and | 16 | | (ii) the exempt commercial purchaser has subsequently | 17 | | in writing requested the producer to procure such insurance | 18 | | from an unauthorized insurer. | 19 | | (2) Surplus line producer; license. Any licensed producer | 20 | | who is a
resident of this State, or any nonresident who | 21 | | qualifies under Section
500-40, may be licensed as a surplus | 22 | | line producer upon :
(a) completing a prelicensing course of | 23 | | study. The
course provided for by this Section shall be | 24 | | conducted
under rules and
regulations prescribed by the | 25 | | Director. The Director may administer the
course or may make | 26 | | arrangements, including contracting with
an outside
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| 1 | | educational service, for administering the course and
| 2 | | collecting the non-refundable application fee provided for in | 3 | | this subsection.
Any
charges assessed
by the Director or the | 4 | | educational service for administering
the course
shall be paid | 5 | | directly by the individual applicants. Each applicant
required | 6 | | to take the course shall enclose with the application a | 7 | | non-refundable
$20
application
fee payable to the Director plus | 8 | | a separate course
administration fee. An applicant who fails to | 9 | | appear for the
course as scheduled, or appears but fails to | 10 | | complete the
course, shall not be
entitled to any refund, and | 11 | | shall be required to submit a new request to
attend the course | 12 | | together with all the requisite fees before being rescheduled
| 13 | | for another course at a later date; and
(b) payment of an | 14 | | annual license fee of $400 ; and
(c) procurement of the surety | 15 | | bond required in subsection (4) of this
Section .
| 16 | | A surplus line producer so licensed shall keep a separate
| 17 | | account of
the business transacted thereunder which shall be | 18 | | open at all times to the
inspection of the Director or his | 19 | | representative.
| 20 | | No later than July 21, 2012, the State of Illinois shall | 21 | | participate in the national insurance producer database of the | 22 | | NAIC, or any other equivalent uniform national database, for | 23 | | the licensure of surplus line producers and the renewal of such | 24 | | licenses. | 25 | | The prelicensing course of study requirement in (a) above
| 26 | | shall not apply to insurance
producers who were licensed under |
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| 1 | | the Illinois surplus line law on or before
January 1, 2002.
| 2 | | (3) Taxes and reports.
| 3 | | (a) Surplus line tax and penalty for late payment.
| 4 | | The surplus line tax rate for a surplus line insurance | 5 | | policy or contract is determined as follows: | 6 | | (i) 3% for policies or contracts with an effective | 7 | | date prior to July 1, 2003; | 8 | | (ii) 3.5% for policies or contracts with an | 9 | | effective date of July 1, 2003 or later.
| 10 | | A surplus line producer shall file with the Director on | 11 | | or
before
February 1 and August 1 of each year a report in | 12 | | the form prescribed by the
Director on all surplus line | 13 | | insurance procured from unauthorized insurers
during the | 14 | | preceding
6 month period ending December 31 or June 30
| 15 | | respectively, and on the filing of such report shall pay to | 16 | | the Director
for the use and benefit of the State a sum | 17 | | equal to the surplus line tax rate multiplied by 3.5% of | 18 | | the
gross
premiums less returned premiums upon all surplus | 19 | | line insurance submitted to the Surplus Line Association of | 20 | | Illinois procured
or cancelled during the preceding 6 | 21 | | months.
| 22 | | Any surplus line producer who fails to pay the full | 23 | | amount due under this
subsection is liable, in addition to | 24 | | the amount due, for such
penalty and interest charges as | 25 | | are provided for under Section 412 of
this Code. The | 26 | | Director, through the
Attorney General, may
institute an |
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| 1 | | action in the name of the People of the State of Illinois, | 2 | | in
any court of competent jurisdiction, for the recovery of | 3 | | the amount of such
taxes and penalties due, and prosecute | 4 | | the same to final judgment, and take
such steps as are | 5 | | necessary to collect the same.
| 6 | | (b) Fire Marshal Tax.
| 7 | | Each surplus line producer shall file with the Director | 8 | | on or before
March 31 of each year a report in the form | 9 | | prescribed by the Director on all
fire insurance procured | 10 | | from unauthorized insurers and submitted to the Surplus | 11 | | Line Association of Illinois subject to tax under
Section | 12 | | 12 of the Fire Investigation
Act
and shall pay to the | 13 | | Director the fire marshal tax required thereunder.
| 14 | | (c) Taxes and fees charged to insured. The taxes | 15 | | imposed under this
subsection and the countersigning fees | 16 | | charged by the Surplus Line
Association of Illinois may be | 17 | | charged to and collected from surplus line
insureds.
| 18 | | (4) (Blank). Bond. Each surplus line producer, as a | 19 | | condition to receiving a
surplus line producer's license, shall | 20 | | execute and deliver to the Director
a surety bond to the People | 21 | | of the State in the penal sum of $20,000, with
a surety which | 22 | | is authorized to transact business in this State,
conditioned | 23 | | that the surplus line producer will pay to the Director the | 24 | | tax,
interest and penalties levied under subsection (3) of this | 25 | | Section.
| 26 | | (5) Submission of documents to Surplus Line Association of |
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| 1 | | Illinois.
A surplus line producer shall submit every insurance | 2 | | contract
issued
under his or her license to the Surplus Line | 3 | | Association of Illinois for
recording and countersignature. | 4 | | The submission and countersignature may be
effected through | 5 | | electronic means. The submission shall set
forth:
| 6 | | (a) the name of the insured;
| 7 | | (b) the description and location of the insured | 8 | | property or
risk;
| 9 | | (c) the amount insured;
| 10 | | (d) the gross premiums charged or returned;
| 11 | | (e) the name of the unauthorized insurer from whom | 12 | | coverage has been procured;
| 13 | | (f) the kind or kinds of insurance procured; and
| 14 | | (g) amount of premium subject to tax required by | 15 | | Section 12 of the Fire
Investigation Act.
| 16 | | Proposals, endorsements, and other documents which are
| 17 | | incidental to the insurance but which do not affect the premium
| 18 | | charged
are exempted from filing and countersignature.
| 19 | | The submission of insuring contracts
to the Surplus Line | 20 | | Association of
Illinois constitutes a certification by the | 21 | | surplus line producer or by the
insurance producer who | 22 | | presented the risk to the surplus line producer for
placement | 23 | | as a surplus line risk that
after diligent effort the required | 24 | | insurance could not be procured from
authorized insurers and | 25 | | that
such procurement was otherwise in accordance with the | 26 | | surplus line law.
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| 1 | | (6) Countersignature required. It shall be unlawful for an | 2 | | insurance
producer to deliver any unauthorized insurer
| 3 | | contract unless such
insurance contract is countersigned by the | 4 | | Surplus Line Association of
Illinois.
| 5 | | (7) Inspection of records. A surplus line producer shall
| 6 | | maintain
separate records of the business transacted under his | 7 | | or her license,
including complete copies of surplus line | 8 | | insurance contracts maintained on
paper or by electronic means, | 9 | | which
records shall be open at all times for inspection by the | 10 | | Director and by
the Surplus Line Association of Illinois.
| 11 | | (8) Violations and penalties. The Director may suspend or | 12 | | revoke or
refuse to renew a surplus line producer license for | 13 | | any violation of this Code.
In addition to or in lieu of | 14 | | suspension or revocation, the Director may
subject a surplus | 15 | | line producer
to a civil penalty of up to $2,000 for each cause | 16 | | for suspension
or
revocation. Such penalty is enforceable under | 17 | | subsection (5) of Section
403A of this Code.
| 18 | | (9) Director may declare insurer ineligible. If the
| 19 | | Director determines
that the further assumption of risks might | 20 | | be hazardous to the
policyholders of an unauthorized insurer, | 21 | | the Director may
order the
Surplus Line Association of
Illinois | 22 | | not to countersign insurance contracts evidencing insurance in
| 23 | | such insurer and order surplus line producers to cease
| 24 | | procuring insurance
from such insurer.
| 25 | | (10) Service of process upon Director. Insurance contracts
| 26 | | delivered under this Section from unauthorized insurers, other |
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| 1 | | than domestic
surplus line insurers as defined in Section 445a,
| 2 | | shall contain a
provision designating the
Director and his | 3 | | successors in office the true and lawful attorney of the
| 4 | | insurer upon whom may be served all lawful process in any
| 5 | | action, suit or
proceeding arising out of such insurance.
| 6 | | Service of process made upon the Director to be valid hereunder | 7 | | must state
the name of the insured, the name of the | 8 | | unauthorized insurer
and identify
the contract of insurance. | 9 | | The Director at his option is authorized to
forward a copy of | 10 | | the process to the Surplus Line Association of Illinois
for | 11 | | delivery to the unauthorized insurer or the Director may | 12 | | deliver the process to the
unauthorized insurer by other means | 13 | | which he considers to be
reasonably
prompt and certain.
| 14 | | (10.5) Insurance contracts delivered under this Section | 15 | | from unauthorized insurers, other than domestic surplus line | 16 | | insurers as defined in Section 445a, shall have stamped or | 17 | | imprinted on the first page thereof in not less than 12-pt. | 18 | | bold face type the following legend: "Notice to Policyholder: | 19 | | This contract is issued, pursuant to Section 445 of the | 20 | | Illinois Insurance Code, by a company not authorized and | 21 | | licensed to transact business in Illinois and as such is not | 22 | | covered by the Illinois Insurance Guaranty Fund." Insurance | 23 | | contracts delivered under this Section from domestic surplus | 24 | | line insurers as defined in Section 445a shall have stamped or | 25 | | imprinted on the first page thereof in not less than 12-pt. | 26 | | bold face type the following legend: "Notice to Policyholder: |
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| 1 | | This contract is issued by a domestic surplus line insurer, as | 2 | | defined in Section 445a of the Illinois Insurance Code, | 3 | | pursuant to Section 445, and as such is not covered by the | 4 | | Illinois Insurance Guaranty Fund."
| 5 | | (11) The Illinois Surplus Line law does not apply to | 6 | | insurance of
property and operations of railroads or aircraft | 7 | | engaged in interstate or
foreign commerce, insurance of | 8 | | vessels, crafts or hulls, cargoes, marine
builder's risks, | 9 | | marine protection and indemnity, or other risks including
| 10 | | strikes and war risks insured under ocean or wet marine forms | 11 | | of policies.
| 12 | | (12) Surplus line insurance procured under this Section, | 13 | | including
insurance procured from a domestic surplus line | 14 | | insurer, is not subject
to the provisions of the Illinois | 15 | | Insurance Code other than Sections 123,
123.1, 401, 401.1, 402, | 16 | | 403, 403A, 408, 412, 445, 445.1, 445.2, 445.3,
445.4, and all | 17 | | of the provisions of Article XXXI to the extent that the
| 18 | | provisions of Article XXXI are not inconsistent with the terms | 19 | | of this Act.
| 20 | | (Source: P.A. 92-386, eff. 1-1-02; 93-29, eff. 6-20-03; 93-32, | 21 | | eff. 7-1-03; 93-876, eff. 8-6-04.)
| 22 | | (215 ILCS 5/445a)
| 23 | | Sec. 445a. Domestic surplus line insurer.
| 24 | | (a) A domestic insurer possessing
policyholder surplus of | 25 | | at least $15,000,000 may pursuant to a resolution by
its board |
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| 1 | | of directors, and with the written approval of the Director, be
| 2 | | designated as a "domestic surplus line insurer".
| 3 | | (b) A domestic surplus line insurer may only insure in this | 4 | | State an
Illinois risk only if procured from a surplus line | 5 | | producer pursuant to Section 445 of
this Code.
| 6 | | (c) A domestic surplus line insurer must agree not to issue | 7 | | a policy
designed to satisfy the financial responsibility | 8 | | requirements of the Illinois
Vehicle Code, the Workers' | 9 | | Compensation Act, or the Workers' Occupational
Diseases Act. A | 10 | | domestic surplus line insurer is not subject to the provisions
| 11 | | of Articles XXXIII, XXXIII 1/2, XXXIV, XXXVIIIA, Section 468, | 12 | | or Section
478.1 of this Code.
| 13 | | (d) For the purposes of the federal Nonadmitted and | 14 | | Reinsurance Reform Act of 2010 (15 USC 8201 et seq.), a | 15 | | domestic surplus line insurer shall be considered a nonadmitted | 16 | | insurer, as the term is defined in the Act, with respect to | 17 | | risks insured in this State. | 18 | | (Source: P.A. 90-794, eff. 8-14-98.)
| 19 | | Section 97. Severability. The provisions of this Act are | 20 | | severable under Section 1.31 of the Statute on Statutes. | 21 | | Section 99. Effective date. This Act takes effect upon | 22 | | becoming law.".
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