Full Text of SB3324 98th General Assembly
SB3324eng 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Insurance Code is amended by | 5 | | changing Sections 121-2.08, 412, 445, 445.1, and 445.4 as | 6 | | follows:
| 7 | | (215 ILCS 5/121-2.08) (from Ch. 73, par. 733-2.08)
| 8 | | Sec. 121-2.08.
Transactions in this State involving | 9 | | contracts of
insurance independently procured directly from an | 10 | | unauthorized insurer by issued to one or more industrial | 11 | | insureds. | 12 | | (a) As used in this Section: | 13 | | "Exempt commercial purchaser" means exempt commercial | 14 | | purchaser as the term is defined in subsection (1) of Section | 15 | | 445 of this Code. | 16 | | "Home state" means home state as the term is defined in | 17 | | subsection (1) of Section 445 of this Code. | 18 | | "Industrial For purposes of this
Section "industrial | 19 | | insured" means is an insured:
| 20 | | (i) that (a) which procures the insurance of any risk | 21 | | or risks of the kinds specified in Classes 2 and 3 of | 22 | | Section 4 of this Code other than life
and annuity | 23 | | contracts by use of the services of a full-time full time |
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| 1 | | employee who is a qualified risk manager acting
as an | 2 | | insurance manager or buyer or the services of a regularly | 3 | | and
continuously retained qualified insurance consultant | 4 | | who is a qualified risk manager ;
| 5 | | (ii) that procures the insurance directly from an | 6 | | unauthorized insurer without the services of an | 7 | | intermediary insurance producer (b) whose aggregate annual | 8 | | premiums for insurance on all risks, except for
life and | 9 | | accident and health insurance, total at
least $100,000 ; and
| 10 | | (iii) that is an exempt commercial purchaser whose home | 11 | | state is Illinois (c) which either (i) has at least 25 full | 12 | | time employees, (ii) has
gross assets in excess of | 13 | | $3,000,000, or (iii) has annual gross revenues in
excess of | 14 | | $5,000,000 .
| 15 | | "Insurance producer" means insurance producer as the term | 16 | | is defined in Section 500-10 of this Code. | 17 | | "Qualified risk manager" means qualified risk manager as | 18 | | the term is defined in subsection (1) of Section 445 of this | 19 | | Code. | 20 | | "Unauthorized insurer" means unauthorized insurer as the | 21 | | term is defined in subsection (1) of Section 445 of this Code. | 22 | | (b) For contracts of insurance effective January 1, 2015 or | 23 | | later, within 90 days after the effective date of each contract | 24 | | of insurance issued under this Section, the insured shall file | 25 | | a report with the Director by submitting the report to the | 26 | | Surplus Line Association of Illinois in writing or in a |
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| 1 | | computer readable format and provide information as designated | 2 | | by the Surplus Line Association of Illinois. The information in | 3 | | the report shall be substantially similar to that required for | 4 | | surplus line submissions as described in subsection (5) of | 5 | | Section 445 of this Code. Where applicable, the report shall | 6 | | satisfy, with respect to the subject insurance, the reporting | 7 | | requirement of Section 12 of the Fire Investigation Act. | 8 | | (c) For contracts of insurance effective January 1, 2015 or | 9 | | later, within 30 days after filing the report, the insured | 10 | | shall pay to the Director for the use and benefit of the State | 11 | | a sum equal to the gross premium of the contract of insurance | 12 | | multiplied by the surplus line tax rate, as described in | 13 | | paragraph (3) of subsection (a) of Section 445 of this Code, | 14 | | and shall pay the fire marshal tax that would otherwise be due | 15 | | annually in March for insurance subject to tax under Section 12 | 16 | | of the Fire Investigation Act. For contracts of insurance | 17 | | effective January 1, 2015 or later, within 30 days after filing | 18 | | the report, the insured shall pay to the Surplus Line | 19 | | Association of Illinois a countersigning fee that shall be | 20 | | assessed at the same rate charged to members pursuant to | 21 | | subsection (4) of Section 445.1 of this Code. | 22 | | (d) For contracts of insurance effective January 1, 2015 or | 23 | | later, the insured shall withhold the amount of the taxes and | 24 | | countersignature fee from the amount of premium charged by and | 25 | | otherwise payable to the insurer for the insurance. If the | 26 | | insured fails to withhold the tax and countersignature fee from |
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| 1 | | the premium, then the insured shall be liable for the amounts | 2 | | thereof and shall pay the amounts as prescribed in subsection | 3 | | (c) of this Section. | 4 | | (Source: P.A. 90-794, eff. 8-14-98.)
| 5 | | (215 ILCS 5/412) (from Ch. 73, par. 1024)
| 6 | | Sec. 412. Refunds; penalties; collection.
| 7 | | (1)(a) Whenever it appears to
the satisfaction of the | 8 | | Director that because of some mistake of fact,
error in | 9 | | calculation, or erroneous interpretation of a statute of this
| 10 | | or any other state, any authorized company , surplus line | 11 | | producer, or industrial insured has paid to him, pursuant to
| 12 | | any provision of law, taxes, fees, or other charges
in excess | 13 | | of the
amount legally chargeable against it, during the 6 year | 14 | | period
immediately preceding the discovery of such | 15 | | overpayment, he shall have
power to refund to such company , | 16 | | surplus line producer, or industrial insured the amount of the | 17 | | excess or excesses by
applying the amount or amounts thereof | 18 | | toward
the payment of taxes, fees, or other charges already | 19 | | due, or which may
thereafter become due from that company until | 20 | | such excess or excesses have been
fully
refunded, or upon a | 21 | | written request from the authorized company, surplus line | 22 | | producer, or industrial insured, the
Director shall provide a | 23 | | cash refund within
120 days after receipt of the written | 24 | | request if all necessary information has
been filed with the | 25 | | Department in order for it to perform an audit of the
tax |
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| 1 | | report for the transaction or period or annual return for the | 2 | | year in which the overpayment occurred or within 120 days
after | 3 | | the date the Department receives all the necessary information | 4 | | to perform
such audit. The Director shall not provide a cash | 5 | | refund if there are
insufficient funds in the Insurance Premium | 6 | | Tax Refund Fund to provide a cash
refund, if the amount of the | 7 | | overpayment is less than $100, or if the amount of
the | 8 | | overpayment can be fully offset against the taxpayer's | 9 | | estimated liability
for the year following the year of the cash | 10 | | refund request. Any cash refund
shall be paid from the | 11 | | Insurance Premium Tax Refund Fund, a special fund hereby
| 12 | | created in the
State treasury.
| 13 | | (b) Beginning January 1, 2000 and thereafter, the | 14 | | Department shall deposit
a percentage of the amounts collected | 15 | | under Sections 409, 444, and 444.1 of
this
Code into the | 16 | | Insurance Premium Tax Refund Fund. The percentage deposited | 17 | | into
the Insurance Premium Tax Refund Fund shall be the annual | 18 | | percentage. The
annual
percentage shall be calculated as a | 19 | | fraction, the numerator of which shall be
the amount of cash | 20 | | refunds approved by the Director for payment and paid during
| 21 | | the preceding calendar year as a result of overpayment of tax | 22 | | liability under
Sections 121-2.08, 409, 444, and 444.1 , and 445 | 23 | | of this Code and the denominator of which shall
be the amounts | 24 | | collected pursuant to Sections 121-2.08, 409, 444, and 444.1 , | 25 | | and 445 of this Code
during the preceding calendar year. | 26 | | However, if there were no cash refunds
paid in a preceding |
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| 1 | | calendar year, the Department shall deposit 5% of the
amount | 2 | | collected in that preceding calendar year pursuant to Sections | 3 | | 121-2.08, 409, 444,
and 444.1 , and 445 of this Code into the | 4 | | Insurance Premium Tax Refund Fund instead of an
amount | 5 | | calculated by using the annual percentage.
| 6 | | (c) Beginning July 1, 1999, moneys in the Insurance Premium | 7 | | Tax Refund
Fund
shall be expended exclusively for the purpose | 8 | | of paying cash refunds resulting
from overpayment of tax | 9 | | liability under Sections 121-2.08, 409, 444, and 444.1 , and 445 | 10 | | of this
Code
as
determined by the Director pursuant to | 11 | | subsection 1(a) of this Section. Cash
refunds made in | 12 | | accordance with this Section may be made from the Insurance
| 13 | | Premium Tax Refund Fund only to the extent that amounts have | 14 | | been deposited and
retained in the Insurance Premium Tax Refund | 15 | | Fund.
| 16 | | (d) This Section shall constitute an irrevocable and | 17 | | continuing
appropriation from the Insurance Premium Tax Refund | 18 | | Fund for the purpose of
paying cash refunds pursuant to the | 19 | | provisions of this Section.
| 20 | | (2) (a) When any insurance company or any surplus line | 21 | | producer fails to
file any tax return required under Sections | 22 | | 408.1, 409, 444, and 444.1 and 445 of
this Code or Section 12 | 23 | | of the Fire Investigation Act on the date
prescribed, including | 24 | | any extensions, there shall be added as a penalty
$400 or 10% | 25 | | of the amount of such tax, whichever is
greater, for each month
| 26 | | or part of a month of failure to file, the entire penalty not |
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| 1 | | to exceed
$2,000 or 50% of the tax due, whichever is greater.
| 2 | | (b) When any industrial insured or surplus line producer | 3 | | fails to file any tax return or report required under Sections | 4 | | 121-2.08 and 445 of this Code or Section 12 of the Fire | 5 | | Investigation Act on the date prescribed, including any | 6 | | extensions, there shall be added: | 7 | | (i) as a late fee, if the return or report is received | 8 | | at least one day but not more than 7 days after the | 9 | | prescribed due date, $400 or 10% of the tax due, whichever | 10 | | is greater, the entire fee not to exceed $1,000; | 11 | | (ii) as a late fee, if the return or report is received | 12 | | at least 8 days but not more than 14 days after the | 13 | | prescribed due date, $400 or 10% of the tax due, whichever | 14 | | is greater, the entire fee not to exceed $1,500; | 15 | | (iii) as a late fee, if the return or report is | 16 | | received at least 15 days but not more than 21 days after | 17 | | the prescribed due date, $400 or 10% of the tax due, | 18 | | whichever is greater, the entire fee not to exceed $2,000; | 19 | | or | 20 | | (iv) as a penalty, if the return or report is received | 21 | | more than 21 days after the prescribed due date, $400 or | 22 | | 10% of the tax due, whichever is greater, for each month or | 23 | | part of a month of failure to file, the entire penalty not | 24 | | to exceed $2,000 or 50% of the tax due, whichever is | 25 | | greater. | 26 | | A tax return or report shall be deemed received as of the |
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| 1 | | date mailed as evidenced by a postmark, proof of mailing on a | 2 | | recognized United States Postal Service form or a form | 3 | | acceptable to the United States Postal Service or other | 4 | | commercial mail delivery service, or other evidence acceptable | 5 | | to the Director.
| 6 | | (3)(a) When any insurance company or any surplus line | 7 | | producer
fails to pay the full amount due under the provisions | 8 | | of this Section,
Sections 408.1, 409, 444, or 444.1 or 445 of | 9 | | this Code, or Section 12 of the
Fire Investigation Act, there | 10 | | shall be added to the amount due as a penalty
an amount equal | 11 | | to 10% of the deficiency.
| 12 | | (a-5) When any industrial insured or surplus line producer | 13 | | fails to pay the full amount due under the provisions of this | 14 | | Section, Sections 121-2.08 or 445 of this Code, or Section 12 | 15 | | of the Fire Investigation Act on the date prescribed, there | 16 | | shall be added: | 17 | | (i) as a late fee, if the payment is received at least | 18 | | one day but not more than 7 days after the prescribed due | 19 | | date, 10% of the tax due, the entire fee not to exceed | 20 | | $1,000; | 21 | | (ii) as a late fee, if the payment is received at least | 22 | | 8 days but not more than 14 days after the prescribed due | 23 | | date, 10% of the tax due, the entire fee not to exceed | 24 | | $1,500; | 25 | | (iii) as a late fee, if the payment is received at | 26 | | least 15 days but not more than 21 days after the |
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| 1 | | prescribed due date, 10% of the tax due, the entire fee not | 2 | | to exceed $2,000; or | 3 | | (iv) as a penalty, if the return or report is received | 4 | | more than 21 days after the prescribed due date, 10% of the | 5 | | tax due. | 6 | | A tax payment shall be deemed received as of the date | 7 | | mailed as evidenced by a postmark, proof of mailing on a | 8 | | recognized United States Postal Service form or a form | 9 | | acceptable to the United States Postal Service or other | 10 | | commercial mail delivery service, or other evidence acceptable | 11 | | to the Director.
| 12 | | (b) If such failure to pay is determined by the Director to | 13 | | be wilful,
after a hearing under Sections 402 and 403, there | 14 | | shall be added to the tax
as a penalty an amount equal to the | 15 | | greater of 50% of the
deficiency or 10%
of the amount due and | 16 | | unpaid for each month or part of a month that the
deficiency | 17 | | remains unpaid commencing with the date that the amount becomes
| 18 | | due. Such amount shall be in lieu of any determined under | 19 | | paragraph (a) or (a-5) .
| 20 | | (4) Any insurance company , industrial insured, or any | 21 | | surplus line producer that which
fails to pay the full amount | 22 | | due under this Section or Sections 121-2.08, 408.1, 409,
444, | 23 | | 444.1 , or 445 of this Code, or Section 12 of the Fire | 24 | | Investigation
Act is liable, in addition to the tax and any | 25 | | late fees and penalties, for interest
on such deficiency at the | 26 | | rate of 12% per annum, or at such higher adjusted
rates as are |
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| 1 | | or may be established under subsection (b) of Section 6621
of | 2 | | the Internal Revenue Code, from the date that payment of any | 3 | | such tax
was due, determined without regard to any extensions, | 4 | | to the date of payment
of such amount.
| 5 | | (5) The Director, through the Attorney
General, may | 6 | | institute an action in the name of the People of the State
of | 7 | | Illinois, in any court of competent jurisdiction, for the | 8 | | recovery of
the amount of such taxes, fees, and penalties due, | 9 | | and prosecute the same to
final judgment, and take such steps | 10 | | as are necessary to collect the same.
| 11 | | (6) In the event that the certificate of authority of a | 12 | | foreign or
alien company is revoked for any cause or the | 13 | | company withdraws from
this State prior to the renewal date of | 14 | | the certificate of authority as
provided in Section 114, the | 15 | | company may recover the amount of any such
tax paid in advance. | 16 | | Except as provided in this subsection, no
revocation or | 17 | | withdrawal excuses payment of or constitutes grounds for
the | 18 | | recovery of any taxes or penalties imposed by this Code.
| 19 | | (7) When an insurance company or domestic affiliated group | 20 | | fails to pay
the full amount of any fee of $200 or more due | 21 | | under
Section 408 of this Code, there shall be added to the | 22 | | amount due as
a penalty the greater of $100 or an amount equal | 23 | | to 10%
of the deficiency for
each month or part of
a month that | 24 | | the deficiency remains unpaid.
| 25 | | (8) The Department shall have a lien for the taxes, fees, | 26 | | charges, fines, penalties, interest, other charges, or any |
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| 1 | | portion thereof, imposed or assessed pursuant to this Code, | 2 | | upon all the real and personal property of any company or | 3 | | person to whom the assessment or final order has been issued or | 4 | | whenever a tax return is filed without payment of the tax or | 5 | | penalty shown therein to be due, including all such property of | 6 | | the company or person acquired after receipt of the assessment, | 7 | | issuance of the order, or filing of the return. The company or | 8 | | person is liable for the filing fee incurred by the Department | 9 | | for filing the lien and the filing fee incurred by the | 10 | | Department to file the release of that lien. The filing fees | 11 | | shall be paid to the Department in addition to payment of the | 12 | | tax, fee, charge, fine, penalty, interest, other charges, or | 13 | | any portion thereof, included in the amount of the lien. | 14 | | However, where the lien arises because of the issuance of a | 15 | | final order of the Director or tax assessment by the | 16 | | Department, the lien shall not attach and the notice referred | 17 | | to in this Section shall not be filed until all administrative | 18 | | proceedings or proceedings in court for review of the final | 19 | | order or assessment have terminated or the time for the taking | 20 | | thereof has expired without such proceedings being instituted. | 21 | | Upon the granting of Department review after a lien has | 22 | | attached, the lien shall remain in full force except to the | 23 | | extent to which the final assessment may be reduced by a | 24 | | revised final assessment following the rehearing or review. The | 25 | | lien created by the issuance of a final assessment shall | 26 | | terminate, unless a notice of lien is filed, within 3 years |
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| 1 | | after the date all proceedings in court for the review of the | 2 | | final assessment have terminated or the time for the taking | 3 | | thereof has expired without such proceedings being instituted, | 4 | | or (in the case of a revised final assessment issued pursuant | 5 | | to a rehearing or review by the Department) within 3 years | 6 | | after the date all proceedings in court for the review of such | 7 | | revised final assessment have terminated or the time for the | 8 | | taking thereof has expired without such proceedings being | 9 | | instituted. Where the lien results from the filing of a tax | 10 | | return without payment of the tax or penalty shown therein to | 11 | | be due, the lien shall terminate, unless a notice of lien is | 12 | | filed, within 3 years after the date when the return is filed | 13 | | with the Department. | 14 | | The time limitation period on the Department's right to | 15 | | file a notice of lien shall not run during any period of time | 16 | | in which the order of any court has the effect of enjoining or | 17 | | restraining the Department from filing such notice of lien. If | 18 | | the Department finds that a company or person is about to | 19 | | depart from the State, to conceal himself or his property, or | 20 | | to do any other act tending to prejudice or to render wholly or | 21 | | partly ineffectual proceedings to collect the amount due and | 22 | | owing to the Department unless such proceedings are brought | 23 | | without delay, or if the Department finds that the collection | 24 | | of the amount due from any company or person will be | 25 | | jeopardized by delay, the Department shall give the company or | 26 | | person notice of such findings and shall make demand for |
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| 1 | | immediate return and payment of the amount, whereupon the | 2 | | amount shall become immediately due and payable. If the company | 3 | | or person, within 5 days after the notice (or within such | 4 | | extension of time as the Department may grant), does not comply | 5 | | with the notice or show to the Department that the findings in | 6 | | the notice are erroneous, the Department may file a notice of | 7 | | jeopardy assessment lien in the office of the recorder of the | 8 | | county in which any property of the company or person may be | 9 | | located and shall notify the company or person of the filing. | 10 | | The jeopardy assessment lien shall have the same scope and | 11 | | effect as the statutory lien provided for in this Section. If | 12 | | the company or person believes that the company or person does | 13 | | not owe some or all of the tax for which the jeopardy | 14 | | assessment lien against the company or person has been filed, | 15 | | or that no jeopardy to the revenue in fact exists, the company | 16 | | or person may protest within 20 days after being notified by | 17 | | the Department of the filing of the jeopardy assessment lien | 18 | | and request a hearing, whereupon the Department shall hold a | 19 | | hearing in conformity with the provisions of this Code and, | 20 | | pursuant thereto, shall notify the company or person of its | 21 | | findings as to whether or not the jeopardy assessment lien will | 22 | | be released. If not, and if the company or person is aggrieved | 23 | | by this decision, the company or person may file an action for | 24 | | judicial review of the final determination of the Department in | 25 | | accordance with the Administrative Review Law. If, pursuant to | 26 | | such hearing (or after an independent determination of the |
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| 1 | | facts by the Department without a hearing), the Department | 2 | | determines that some or all of the amount due covered by the | 3 | | jeopardy assessment lien is not owed by the company or person, | 4 | | or that no jeopardy to the revenue exists, or if on judicial | 5 | | review the final judgment of the court is that the company or | 6 | | person does not owe some or all of the amount due covered by | 7 | | the jeopardy assessment lien against them, or that no jeopardy | 8 | | to the revenue exists, the Department shall release its | 9 | | jeopardy assessment lien to the extent of such finding of | 10 | | nonliability for the amount, or to the extent of such finding | 11 | | of no jeopardy to the revenue. The Department shall also | 12 | | release its jeopardy assessment lien against the company or | 13 | | person whenever the amount due and owing covered by the lien, | 14 | | plus any interest which may be due, are paid and the company or | 15 | | person has paid the Department in cash or by guaranteed | 16 | | remittance an amount representing the filing fee for the lien | 17 | | and the filing fee for the release of that lien. The Department | 18 | | shall file that release of lien with the recorder of the county | 19 | | where that lien was filed. | 20 | | Nothing in this Section shall be construed to give the | 21 | | Department a preference over the rights of any bona fide | 22 | | purchaser, holder of a security interest, mechanics | 23 | | lienholder, mortgagee, or judgment lien creditor arising prior | 24 | | to the filing of a regular notice of lien or a notice of | 25 | | jeopardy assessment lien in the office of the recorder in the | 26 | | county in which the property subject to the lien is located. |
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| 1 | | For purposes of this Section, "bona fide" shall not include any | 2 | | mortgage of real or personal property or any other credit | 3 | | transaction that results in the mortgagee or the holder of the | 4 | | security acting as trustee for unsecured creditors of the | 5 | | company or person mentioned in the notice of lien who executed | 6 | | such chattel or real property mortgage or the document | 7 | | evidencing such credit transaction. The lien shall be inferior | 8 | | to the lien of general taxes, special assessments, and special | 9 | | taxes levied by any political subdivision of this State. In | 10 | | case title to land to be affected by the notice of lien or | 11 | | notice of jeopardy assessment lien is registered under the | 12 | | provisions of the Registered Titles (Torrens) Act, such notice | 13 | | shall be filed in the office of the Registrar of Titles of the | 14 | | county within which the property subject to the lien is | 15 | | situated and shall be entered upon the register of titles as a | 16 | | memorial or charge upon each folium of the register of titles | 17 | | affected by such notice, and the Department shall not have a | 18 | | preference over the rights of any bona fide purchaser, | 19 | | mortgagee, judgment creditor, or other lienholder arising | 20 | | prior to the registration of such notice. The regular lien or | 21 | | jeopardy assessment lien shall not be effective against any | 22 | | purchaser with respect to any item in a retailer's stock in | 23 | | trade purchased from the retailer in the usual course of the | 24 | | retailer's business. | 25 | | (Source: P.A. 98-158, eff. 8-2-13.)
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| 1 | | (215 ILCS 5/445) (from Ch. 73, par. 1057)
| 2 | | Sec. 445. Surplus line.
| 3 | | (1) Definitions. For the purposes of this Section:
| 4 | | "Affiliate" means, with respect to an insured, any entity | 5 | | that controls, is controlled by, or is under common control | 6 | | with the insured. For the purpose of this definition, an entity | 7 | | has control over another entity if: | 8 | | (A) the entity directly or indirectly or acting through | 9 | | one or more other persons owns, controls, or has the power | 10 | | to vote 25% or more of any class of voting securities of | 11 | | the other entity; or | 12 | | (B) the entity controls in any manner the election of a | 13 | | majority of the directors or trustees of the other entity. | 14 | | "Affiliated group" means any group of entities that are all | 15 | | affiliated. | 16 | | "Authorized insurer" means an insurer that holds a | 17 | | certificate of
authority
issued by the Director but, for the | 18 | | purposes of this Section, does not
include a
domestic surplus | 19 | | line insurer as defined in Section 445a or any
residual market
| 20 | | mechanism. | 21 | | "Exempt commercial purchaser" means any person purchasing | 22 | | commercial insurance that, at the time of placement, meets the | 23 | | following requirements: | 24 | | (A) The person employs or retains a qualified risk | 25 | | manager to negotiate insurance coverage. | 26 | | (B) The person has paid aggregate nationwide |
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| 1 | | commercial property and casualty insurance premiums in | 2 | | excess of $100,000 in the immediately preceding 12 months. | 3 | | (C) The person meets at least one of the following | 4 | | criteria: | 5 | | (I) The person possesses a net worth in excess of | 6 | | $20,000,000, as such amount is adjusted pursuant to the | 7 | | provision in this definition concerning percentage | 8 | | change. | 9 | | (II) The person generates annual revenues in | 10 | | excess of $50,000,000, as such amount is adjusted | 11 | | pursuant to the provision in this definition | 12 | | concerning percentage change. | 13 | | (III) The person employs more than 500 full-time or | 14 | | full-time equivalent employees per individual insured | 15 | | or is a member of an affiliated group employing more | 16 | | than 1,000 employees in the aggregate. | 17 | | (IV) The person is a not-for-profit organization | 18 | | or public entity generating annual budgeted | 19 | | expenditures of at least $30,000,000, as such amount is | 20 | | adjusted pursuant to the provision in this definition | 21 | | concerning percentage change. | 22 | | (V) The person is a municipality with a population | 23 | | in excess of 50,000 persons. | 24 | | Effective on January 1, 2015 and each fifth January 1 | 25 | | occurring thereafter, the amounts in subitems (I), (II), and | 26 | | (IV) of item (C) of this definition shall be adjusted to |
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| 1 | | reflect the percentage change for such 5-year period in the | 2 | | Consumer Price Index for All Urban Consumers published by the | 3 | | Bureau of Labor Statistics of the Department of Labor. | 4 | | "Home state" means the following: | 5 | | (A) With respect to an insured, except as provided in | 6 | | item (B) of this definition: | 7 | | (I) the state in which an insured maintains its | 8 | | principal place of business or, in the case of an | 9 | | individual, the individual's principal residence; or | 10 | | (II) if 100% of the insured risk is located out of | 11 | | the state referred to in subitem (I), the state to | 12 | | which the greatest percentage of the insured's taxable | 13 | | premium for that insurance contract is allocated. | 14 | | (B) If more than one insured from an affiliated group | 15 | | are named insureds on a single surplus line insurance | 16 | | contract, then "home state" means the home state, as | 17 | | determined pursuant to item (A) of this definition, of the | 18 | | member of the affiliated group that has the largest | 19 | | percentage of premium attributed to it under such insurance | 20 | | contract. | 21 | | If more than one insured from a group that is not | 22 | | affiliated are named insureds on a single surplus line | 23 | | insurance contract, then: | 24 | | (I) if individual group members pay 100% of the | 25 | | premium for the insurance from their own funds, "home | 26 | | state" means the home state, as determined pursuant to |
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| 1 | | item (A) of this definition, of each individual group | 2 | | member; each individual group member's coverage under | 3 | | the surplus line insurance contract shall be treated as | 4 | | a separate surplus line contract for the purposes of | 5 | | this Section; | 6 | | (II) otherwise, "home state" means the home state, | 7 | | as determined pursuant to item (A) of this definition, | 8 | | of the group. | 9 | | Nothing in this definition shall be construed to alter the | 10 | | terms of the surplus line insurance contract. | 11 | | "Multi-State risk" means a risk with insured exposures in | 12 | | more than one State. | 13 | | "NAIC" means the National Association of Insurance | 14 | | Commissioners or any successor entity. | 15 | | "Qualified risk manager" means, with respect to a | 16 | | policyholder of commercial insurance, a person who meets all of | 17 | | the following requirements: | 18 | | (A) The person is an employee of, or third-party | 19 | | consultant retained by, the commercial policyholder. | 20 | | (B) The person provides skilled services in loss | 21 | | prevention, loss reduction, or risk and insurance coverage | 22 | | analysis, and purchase of insurance. | 23 | | (C) With regard to the person: | 24 | | (I) the person has: | 25 | | (a) a bachelor's degree or higher from an | 26 | | accredited college or university in risk |
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| 1 | | management, business administration, finance, | 2 | | economics, or any other field determined by the | 3 | | Director or his designee to demonstrate minimum | 4 | | competence in risk management; and | 5 | | (b) the following: | 6 | | (i) three years of experience in risk | 7 | | financing, claims administration, loss | 8 | | prevention, risk and insurance analysis, or | 9 | | purchasing commercial lines of insurance; or | 10 | | (ii) alternatively has: | 11 | | (AA) a designation as a Chartered | 12 | | Property and Casualty Underwriter (in this | 13 | | subparagraph (ii) referred to as "CPCU") | 14 | | issued by the American Institute for | 15 | | CPCU/Insurance Institute of America; | 16 | | (BB) a designation as an Associate in | 17 | | Risk Management (ARM) issued by the | 18 | | American Institute for CPCU/Insurance | 19 | | Institute of America; | 20 | | (CC) a designation as Certified Risk | 21 | | Manager (CRM) issued by the National | 22 | | Alliance for Insurance Education & | 23 | | Research; | 24 | | (DD) a designation as a RIMS Fellow | 25 | | (RF) issued by the Global Risk Management | 26 | | Institute; or |
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| 1 | | (EE) any other designation, | 2 | | certification, or license determined by | 3 | | the Director or his designee to | 4 | | demonstrate minimum competency in risk | 5 | | management; | 6 | | (II) the person has: | 7 | | (a) at least 7 years of experience in risk | 8 | | financing, claims administration, loss prevention, | 9 | | risk and insurance coverage analysis, or | 10 | | purchasing commercial lines of insurance; and | 11 | | (b) has any one of the designations specified | 12 | | in subparagraph (ii) of paragraph (b); | 13 | | (III) the person has at least 10 years of | 14 | | experience in risk financing, claims administration, | 15 | | loss prevention, risk and insurance coverage analysis, | 16 | | or purchasing commercial lines of insurance; or | 17 | | (IV) the person has a graduate degree from an | 18 | | accredited college or university in risk management, | 19 | | business administration, finance, economics, or any | 20 | | other field determined by the Director or his or her | 21 | | designee to demonstrate minimum competence in risk | 22 | | management. | 23 | | "Residual market mechanism" means an association, | 24 | | organization, or other
entity described in Article XXXIII of | 25 | | this Code or Section 7-501 of the
Illinois Vehicle Code or any | 26 | | similar association, organization, or other
entity. |
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| 1 | | "State" means any state of the United States, the District | 2 | | of Columbia, the Commonwealth of Puerto Rico, Guam, the | 3 | | Northern Mariana Islands, the Virgin Islands, and American | 4 | | Samoa. | 5 | | "Surplus line insurance" means insurance on a risk: | 6 | | (A) of the kinds specified in Classes 2 and 3 of | 7 | | Section 4 of this Code; and | 8 | | (B) that is procured from an unauthorized insurer after | 9 | | the insurance producer representing the insured or the | 10 | | surplus line producer is unable, after diligent effort, to | 11 | | procure the insurance from authorized insurers; and | 12 | | (C) where Illinois is the home state of the insured, | 13 | | for policies effective, renewed or extended on July 21, | 14 | | 2011 or later and for multiyear policies upon the policy | 15 | | anniversary that falls on or after July 21, 2011; and | 16 | | (D) that is located in Illinois, for policies effective | 17 | | prior to July 21, 2011. | 18 | | "Unauthorized insurer" means an insurer that does not hold | 19 | | a valid
certificate of authority issued by the Director but, | 20 | | for the purposes of this
Section, shall also include a domestic | 21 | | surplus line insurer as defined in
Section 445a.
| 22 | | (1.5) Procuring surplus line insurance; surplus line | 23 | | insurer requirements. | 24 | | (a) Insurance producers may procure surplus line | 25 | | insurance only if licensed
as a surplus line producer under | 26 | | this Section. |
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| 1 | | (b) Licensed surplus line producers may procure | 2 | | surplus line
insurance from an unauthorized insurer | 3 | | domiciled in the United States only if the insurer:
| 4 | | (i) is permitted in its domiciliary jurisdiction | 5 | | to write the type of insurance involved; and | 6 | |
(ii) has, based upon information available to the | 7 | | surplus
line producer,
a policyholders surplus of not | 8 | | less than $15,000,000
determined in
accordance with | 9 | | the laws of its domiciliary jurisdiction;
and
| 10 | |
(iii) has standards of solvency and management | 11 | | that are adequate
for the protection of policyholders.
| 12 | |
Where an unauthorized insurer does not meet the
| 13 | | standards set forth
in (ii) and (iii) above, a surplus line | 14 | | producer may, if necessary, procure
insurance from that | 15 | | insurer only if prior written warning of
such fact or
| 16 | | condition is given to the insured by the insurance producer | 17 | | or surplus line
producer.
| 18 | | (c) Licensed surplus line producers may procure | 19 | | surplus line insurance from an unauthorized insurer | 20 | | domiciled outside of the United States only if the insurer | 21 | | meets the standards for unauthorized insurers domiciled in | 22 | | the United States in paragraph (b) of this subsection (1.5) | 23 | | or is listed on the Quarterly Listing of Alien Insurers | 24 | | maintained by the International Insurers Department of the | 25 | | NAIC. The Director shall make the Quarterly Listing of | 26 | | Alien Insurers available to surplus line producers without |
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| 1 | | charge. | 2 | | (d) Insurance producers shall not procure from an
| 3 | | unauthorized insurer an insurance policy: | 4 | | (i) that is designed to satisfy the
proof of | 5 | | financial responsibility and insurance requirements in | 6 | | any
Illinois law where the law requires that the proof | 7 | | of
insurance is issued by an authorized insurer or | 8 | | residual market
mechanism; | 9 | | (ii) that covers the risk of accidental injury to | 10 | | employees arising
out of and in the course of | 11 | | employment according to the provisions of the
Workers' | 12 | | Compensation Act; or | 13 | | (iii) that insures any Illinois personal lines | 14 | | risk, as defined in
subsection (a), (b), or (c) of | 15 | | Section 143.13 of this Code, that is eligible
for | 16 | | residual market mechanism coverage, unless the insured | 17 | | or prospective
insured requests limits of liability | 18 | | greater than the limits provided by the
residual market | 19 | | mechanism. In the course of making a diligent effort to
| 20 | | procure insurance from authorized insurers, an | 21 | | insurance producer shall not be
required to submit a | 22 | | risk to a residual market mechanism when the risk is | 23 | | not
eligible for coverage or exceeds the limits | 24 | | available in the residual market
mechanism. | 25 | | Where there is an insurance policy issued by an
| 26 | | authorized insurer or residual market mechanism
insuring a |
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| 1 | | risk described in item (i), (ii), or (iii)
above, nothing | 2 | | in this paragraph shall be construed
to prohibit a surplus | 3 | | line producer from procuring
from an unauthorized insurer a | 4 | | policy insuring the
risk on an excess or umbrella basis | 5 | | where the excess
or umbrella policy is written over one or | 6 | | more
underlying policies.
| 7 | | (e) Licensed surplus line producers may procure | 8 | | surplus line insurance from an unauthorized insurer for an | 9 | | exempt commercial purchaser without making the required | 10 | | diligent effort to procure the insurance from authorized | 11 | | insurers if: | 12 | | (i) the producer has disclosed to the exempt | 13 | | commercial purchaser that such insurance may or may not | 14 | | be available from authorized insurers that may provide | 15 | | greater protection with more regulatory oversight; and | 16 | | (ii) the exempt commercial purchaser has | 17 | | subsequently in writing requested the producer to | 18 | | procure such insurance 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 payment of an annual license fee of $400.
| 23 | | A surplus line producer so licensed shall keep a separate
| 24 | | account of
the business transacted thereunder for 7 years from | 25 | | the policy effective date which shall be open at all times to | 26 | | the
inspection of the Director or his representative.
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| 1 | | No later than July 21, 2012, the State of Illinois shall | 2 | | participate in the national insurance producer database of the | 3 | | NAIC, or any other equivalent uniform national database, for | 4 | | the licensure of surplus line producers and the renewal of such | 5 | | licenses.
| 6 | | (3) Taxes and reports.
| 7 | | (a) Surplus line tax and penalty for late payment. The | 8 | | surplus line tax rate for a surplus line insurance policy | 9 | | or contract is determined as follows: | 10 | | (i) 3% for policies or contracts with an effective | 11 | | date prior to July 1, 2003; | 12 | | (ii) 3.5% for policies or contracts with an | 13 | | effective date of July 1, 2003 or later.
| 14 | | A surplus line producer shall file with the Director on | 15 | | or
before
February 1 and August 1 of each year a report in | 16 | | the form prescribed by the
Director on all surplus line | 17 | | insurance procured from unauthorized insurers and | 18 | | submitted to the Surplus Line Association of Illinois
| 19 | | during the preceding
6 month period ending December 31 or | 20 | | June 30
respectively, and on the filing of such report | 21 | | shall pay to the Director
for the use and benefit of the | 22 | | State a sum equal to the surplus line tax rate multiplied | 23 | | by the
gross
premiums less returned premiums upon all | 24 | | surplus line insurance submitted to the Surplus Line | 25 | | Association of Illinois during the preceding 6 months.
| 26 | | Any surplus line producer who fails to pay the full |
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| 1 | | amount due under this
subsection is liable, in addition to | 2 | | the amount due, for such late fee,
penalty , and interest | 3 | | charges as are provided for under Section 412 of
this Code. | 4 | | The Director, through the
Attorney General, may
institute | 5 | | an action in the name of the People of the State of | 6 | | Illinois, in
any court of competent jurisdiction, for the | 7 | | recovery of the amount of such
taxes , late fees, interest, | 8 | | and penalties due, and prosecute the same to final | 9 | | judgment, and take
such steps as are necessary to collect | 10 | | the same.
| 11 | | (b) Fire Marshal Tax.
Each surplus line producer shall | 12 | | file with the Director on or before
March 31 of each year a | 13 | | report in the form prescribed by the Director on all
fire | 14 | | insurance procured from unauthorized insurers and | 15 | | submitted to the Surplus Line Association of Illinois | 16 | | subject to tax under
Section 12 of the Fire Investigation
| 17 | | Act
and shall pay to the Director the fire marshal tax | 18 | | required thereunder.
| 19 | | (c) Taxes and fees charged to insured. The taxes | 20 | | imposed under this
subsection and the countersigning fees | 21 | | charged by the Surplus Line
Association of Illinois may be | 22 | | charged to and collected from surplus line
insureds.
| 23 | | (4) (Blank).
| 24 | | (5) Submission of documents to Surplus Line Association of | 25 | | Illinois.
A surplus line producer shall submit every insurance | 26 | | contract
issued
under his or her license to the Surplus Line |
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| 1 | | Association of Illinois for
recording and countersignature. | 2 | | The submission and countersignature may be
effected through | 3 | | electronic means. The submission shall set
forth:
| 4 | | (a) the name of the insured;
| 5 | | (b) the description and location of the insured | 6 | | property or
risk;
| 7 | | (c) the amount insured;
| 8 | | (d) the gross premiums charged or returned;
| 9 | | (e) the name of the unauthorized insurer from whom | 10 | | coverage has been procured;
| 11 | | (f) the kind or kinds of insurance procured; and
| 12 | | (g) amount of premium subject to tax required by | 13 | | Section 12 of the Fire
Investigation Act.
| 14 | | Proposals, endorsements, and other documents which are
| 15 | | incidental to the insurance but which do not affect the premium
| 16 | | charged
are exempted from filing and countersignature.
| 17 | | The submission of insuring contracts
to the Surplus Line | 18 | | Association of
Illinois constitutes a certification by the | 19 | | surplus line producer or by the
insurance producer who | 20 | | presented the risk to the surplus line producer for
placement | 21 | | as a surplus line risk that
after diligent effort the required | 22 | | insurance could not be procured from
authorized insurers and | 23 | | that
such procurement was otherwise in accordance with the | 24 | | surplus line law.
| 25 | | (6) Countersignature required. It shall be unlawful for an | 26 | | insurance
producer to deliver any unauthorized insurer
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| 1 | | contract unless such
insurance contract is countersigned by the | 2 | | Surplus Line Association of
Illinois.
| 3 | | (7) Inspection of records. A surplus line producer shall
| 4 | | maintain
separate records of the business transacted under his | 5 | | or her license for 7 years from the policy effective date ,
| 6 | | including complete copies of surplus line insurance contracts | 7 | | maintained on
paper or by electronic means, which
records shall | 8 | | be open at all times for inspection by the Director and by
the | 9 | | Surplus Line Association of Illinois.
| 10 | | (8) Violations and penalties. The Director may suspend or | 11 | | revoke or
refuse to renew a surplus line producer license for | 12 | | any violation of this Code.
In addition to or in lieu of | 13 | | suspension or revocation, the Director may
subject a surplus | 14 | | line producer
to a civil penalty of up to $2,000 for each cause | 15 | | for suspension
or
revocation. Such penalty is enforceable under | 16 | | subsection (5) of Section
403A of this Code.
| 17 | | (9) Director may declare insurer ineligible. If the
| 18 | | Director determines
that the further assumption of risks might | 19 | | be hazardous to the
policyholders of an unauthorized insurer, | 20 | | the Director may
order the
Surplus Line Association of
Illinois | 21 | | not to countersign insurance contracts evidencing insurance in
| 22 | | such insurer and order surplus line producers to cease
| 23 | | procuring insurance
from such insurer.
| 24 | | (10) Service of process upon Director. Insurance contracts
| 25 | | delivered under this Section from unauthorized insurers, other | 26 | | than domestic
surplus line insurers as defined in Section 445a,
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| 1 | | shall contain a
provision designating the
Director and his | 2 | | successors in office the true and lawful attorney of the
| 3 | | insurer upon whom may be served all lawful process in any
| 4 | | action, suit or
proceeding arising out of such insurance.
| 5 | | Service of process made upon the Director to be valid hereunder | 6 | | must state
the name of the insured, the name of the | 7 | | unauthorized insurer
and identify
the contract of insurance. | 8 | | The Director at his option is authorized to
forward a copy of | 9 | | the process to the Surplus Line Association of Illinois
for | 10 | | delivery to the unauthorized insurer or the Director may | 11 | | deliver the process to the
unauthorized insurer by other means | 12 | | which he considers to be
reasonably
prompt and certain.
| 13 | | (10.5) Insurance contracts delivered under this Section | 14 | | from unauthorized insurers, other than domestic surplus line | 15 | | insurers as defined in Section 445a, shall have stamped or | 16 | | imprinted on the first page thereof in not less than 12-pt. | 17 | | bold face type the following legend: "Notice to Policyholder: | 18 | | This contract is issued, pursuant to Section 445 of the | 19 | | Illinois Insurance Code, by a company not authorized and | 20 | | licensed to transact business in Illinois and as such is not | 21 | | covered by the Illinois Insurance Guaranty Fund." Insurance | 22 | | contracts delivered under this Section from domestic surplus | 23 | | line insurers as defined in Section 445a shall have stamped or | 24 | | imprinted on the first page thereof in not less than 12-pt. | 25 | | bold face type the following legend: "Notice to Policyholder: | 26 | | This contract is issued by a domestic surplus line insurer, as |
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| 1 | | defined in Section 445a of the Illinois Insurance Code, | 2 | | pursuant to Section 445, and as such is not covered by the | 3 | | Illinois Insurance Guaranty Fund."
| 4 | | (11) The Illinois Surplus Line law does not apply to | 5 | | insurance of
property and operations of railroads or aircraft | 6 | | engaged in interstate or
foreign commerce, insurance of | 7 | | vessels, crafts or hulls, cargoes, marine
builder's risks, | 8 | | marine protection and indemnity, or other risks including
| 9 | | strikes and war risks insured under ocean or wet marine forms | 10 | | of policies.
| 11 | | (12) Surplus line insurance procured under this Section, | 12 | | including
insurance procured from a domestic surplus line | 13 | | insurer, is not subject
to the provisions of the Illinois | 14 | | Insurance Code other than Sections 123,
123.1, 401, 401.1, 402, | 15 | | 403, 403A, 408, 412, 445, 445.1, 445.2, 445.3,
445.4, and all | 16 | | of the provisions of Article XXXI to the extent that the
| 17 | | provisions of Article XXXI are not inconsistent with the terms | 18 | | of this Act.
| 19 | | (Source: P.A. 97-955, eff. 8-14-12.)
| 20 | | (215 ILCS 5/445.1) (from Ch. 73, par. 1057.1)
| 21 | | Sec. 445.1. Surplus Line Association of Illinois. There is | 22 | | hereby created a
non-profit association to be known as the | 23 | | Surplus Line Association of
Illinois. All surplus line | 24 | | producers shall be and must remain individual
members of the | 25 | | Association as a condition of their holding a license as a
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| 1 | | surplus line producer in this State. The Association must | 2 | | perform its
functions under the plan of operation established | 3 | | and approved under
Section 445.3 and must exercise its powers | 4 | | through a board of directors
established under Section 445.2 of | 5 | | this Code. The Association shall be
supervised by the Director | 6 | | and is subject to the applicable provisions of
the Illinois | 7 | | Insurance Code. The Association shall be authorized and have | 8 | | the
duty to:
| 9 | | (1) receive, record and countersign all surplus line | 10 | | insurance
contracts which surplus line producers are required | 11 | | to file with the
Association under subsection (5) of Section | 12 | | 445;
| 13 | | (2) prepare monthly reports for the Director on surplus | 14 | | line insurance
procured by its members during the preceding | 15 | | month in such form and
providing such information as the | 16 | | Director may prescribe;
| 17 | | (3) prepare and deliver to the Director and, at the | 18 | | discretion of the Director, to each licensee and to the | 19 | | Director the reports
of surplus line business prescribed in | 20 | | subsection (3) of Section 445;
| 21 | | (4) assess its members for costs of operations in | 22 | | accordance with a
schedule adopted by the Board of Directors of | 23 | | the Association and
approved by the Director;
| 24 | | (5) employ and retain such persons as are necessary to | 25 | | carry out the
duties of the Association;
| 26 | | (6) borrow money as necessary to effect the purposes of the |
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| 1 | | Association;
| 2 | | (7) enter contracts as necessary to effect the purposes of | 3 | | the Association;
| 4 | | (8) perform such other acts as will facilitate and | 5 | | encourage compliance
by its members with the surplus line law | 6 | | of this State and rules
promulgated thereunder; and
| 7 | | (9) provide such other services to its members as are | 8 | | incidental or
related to the purposes of the Association. | 9 | | Nothing in this Act shall be
construed as giving the | 10 | | Association any discretionary authority to enforce
this Act or | 11 | | to withhold countersignature of insurance contracts which meet
| 12 | | the requirements of subsection (5) of Section 445.
| 13 | | (Source: P.A. 83-1300.)
| 14 | | (215 ILCS 5/445.4) (from Ch. 73, par. 1057.4)
| 15 | | Sec. 445.4. Examination. The Director shall, at such times | 16 | | as he deems
necessary, make or cause to be made an examination | 17 | | of the Association.
The reasonable cost of any such examination | 18 | | shall be paid by the Association
upon presentation to it by the | 19 | | Director of a detailed account of such cost.
During the course | 20 | | of such examination, the directors, officers, members, agents | 21 | | and
employees of the Association may be examined under oath | 22 | | regarding the operation
of the Association and shall make | 23 | | available all books, records, accounts,
documents and | 24 | | agreements pertaining thereto. The Director shall furnish
a | 25 | | copy of the examination report to the Association. Within 20 |
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| 1 | | days after
receipt of the report, the Association may request a | 2 | | hearing on the report
or any facts or recommendations therein. | 3 | | If the Director finds the Association
or any of its members to | 4 | | be in violation of this Act, he may issue an order
requiring | 5 | | discontinuance of such violation. The Association shall | 6 | | annually provide for an independent financial audit of the | 7 | | books and records of the Association by a certified public | 8 | | accountant and shall provide a copy of the audit report to the | 9 | | Director.
| 10 | | (Source: P.A. 83-1300.)
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