Full Text of HB5251 100th General Assembly
HB5251enr 100TH 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 531.02, 531.03, 531.05, 531.06, 531.07, | 6 | | 531.08, 531.09, 531.10, 531.11, 531.12, 531.13, 531.14, and | 7 | | 531.19 and by adding Section 531.20 as follows:
| 8 | | (215 ILCS 5/531.02) (from Ch. 73, par. 1065.80-2)
| 9 | | Sec. 531.02. Purpose. The purpose of this Article is to | 10 | | protect,
subject to certain limitations, the persons specified | 11 | | in paragraph (1) of
Section 531.03 against failure
in the | 12 | | performance of contractual obligations, under life , or health
| 13 | | insurance policies , and annuity policies, plans, or contracts | 14 | | and health or medical care service
contracts specified in | 15 | | paragraph (2) of Section 531.03, due to the
impairment or | 16 | | insolvency of the
member insurer issuing such policies , plans, | 17 | | or contracts. To provide this protection,
(1) an association of | 18 | | member insurers is created to enable the guaranty of payment
of | 19 | | benefits and of continuation of coverages, (2) members of the | 20 | | Association
are subject to assessment to provide funds to carry | 21 | | out the purpose of this
Article, and (3) the Association is | 22 | | authorized to assist the Director, in
the prescribed manner, in | 23 | | the detection and prevention of member insurer impairments
or |
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| 1 | | insolvencies.
| 2 | | (Source: P.A. 86-753.)
| 3 | | (215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
| 4 | | Sec. 531.03. Coverage and limitations.
| 5 | | (1) This Article shall provide
coverage for the policies | 6 | | and contracts specified in subsection paragraph (2) of this
| 7 | | Section:
| 8 | | (a) to persons who, regardless of where they reside | 9 | | (except for
non-resident certificate holders under group | 10 | | policies or contracts), are the
beneficiaries, assignees | 11 | | or payees , including health care providers rendering | 12 | | services covered under a health insurance policy or | 13 | | certificate, of the persons covered under paragraph (b) of | 14 | | this subsection subparagraph
(1)(b) , and
| 15 | | (b) to persons who are owners of or certificate holders | 16 | | or enrollees under the policies or contracts (other than | 17 | | unallocated annuity contracts and structured settlement | 18 | | annuities) and in each case who: | 19 | | (i) are residents; or | 20 | | (ii) are not residents, but only under all of the | 21 | | following conditions: | 22 | | (A) the member insurer that issued the | 23 | | policies or contracts is domiciled in this State; | 24 | | (B) the states in which the persons reside have | 25 | | associations similar to the Association created by |
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| 1 | | this Article; | 2 | | (C) the persons are not eligible for coverage | 3 | | by an association in any other state due to the | 4 | | fact that the insurer or health maintenance | 5 | | organization was not licensed in that state at the | 6 | | time specified in that state's guaranty | 7 | | association law. | 8 | | (c) For unallocated annuity contracts specified in | 9 | | subsection (2), paragraphs (a) and (b) of this subsection | 10 | | (1) shall not apply and this Article shall (except as | 11 | | provided in paragraphs (e) and (f) of this subsection) | 12 | | provide coverage to: | 13 | | (i) persons who are the owners of the unallocated | 14 | | annuity contracts if the contracts are issued to or in | 15 | | connection with a specific benefit plan whose plan | 16 | | sponsor has its principal place of business in this | 17 | | State; and | 18 | | (ii) persons who are owners of unallocated annuity | 19 | | contracts issued to or in connection with government | 20 | | lotteries if the owners are residents. | 21 | | (d) For structured settlement annuities specified in | 22 | | subsection (2), paragraphs (a) and (b) of this subsection | 23 | | (1) shall not apply and this Article shall (except as | 24 | | provided in paragraphs (e) and (f) of this subsection) | 25 | | provide coverage to a person who is a payee under a | 26 | | structured settlement annuity (or beneficiary of a payee if |
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| 1 | | the payee is deceased), if the payee: | 2 | | (i) is a resident, regardless of where the contract | 3 | | owner resides; or | 4 | | (ii) is not a resident, but only under both of the | 5 | | following conditions: | 6 | | (A) with regard to residency: | 7 | | (I) the contract owner of the structured | 8 | | settlement annuity is a resident; or | 9 | | (II) the contract owner of the structured | 10 | | settlement annuity is not a resident but the | 11 | | insurer that issued the structured settlement | 12 | | annuity is domiciled in this State and the | 13 | | state in which the contract owner resides has | 14 | | an association similar to the Association | 15 | | created by this Article; and | 16 | | (B) neither the payee or beneficiary nor the | 17 | | contract owner is eligible for coverage by the | 18 | | association of the state in which the payee or | 19 | | contract owner resides. | 20 | | (e) This Article shall not provide coverage to: | 21 | | (i) a person who is a payee or beneficiary of a | 22 | | contract owner resident of this State if the payee or | 23 | | beneficiary is afforded any coverage by the | 24 | | association of another state; or | 25 | | (ii) a person covered under paragraph (c) of this | 26 | | subsection (1), if any coverage is provided by the |
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| 1 | | association of another state to that person. | 2 | | (f) This Article is intended to provide coverage to a | 3 | | person who is a resident of this State and, in special | 4 | | circumstances, to a nonresident. In order to avoid | 5 | | duplicate coverage, if a person who would otherwise receive | 6 | | coverage under this Article is provided coverage under the | 7 | | laws of any other state, then the person shall not be | 8 | | provided coverage under this Article. In determining the | 9 | | application of the provisions of this paragraph in | 10 | | situations where a person could be covered by the | 11 | | association of more than one state, whether as an owner, | 12 | | payee, enrollee, beneficiary, or assignee, this Article | 13 | | shall be construed in conjunction with other state laws to | 14 | | result in coverage by only one association.
| 15 | | (2)(a) This Article shall provide coverage to the persons
| 16 | | specified in subsection paragraph (1) of this Section for | 17 | | policies or contracts of direct, (i)
nongroup life insurance , | 18 | | health insurance (that, for the purposes of this Article, | 19 | | includes health maintenance organization subscriber contracts | 20 | | and certificates) , annuities annuity and
supplemental | 21 | | policies, or contracts to any of these , (ii) for
certificates | 22 | | under direct group policies or contracts, (iii) for unallocated
| 23 | | annuity contracts and (iv) for contracts to furnish
health care | 24 | | services and subscription certificates for medical or health
| 25 | | care services issued by persons licensed to transact insurance | 26 | | business
in this State under this the Illinois Insurance Code.
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| 1 | | Annuity contracts and certificates under group annuity | 2 | | contracts include
but are not limited to guaranteed investment | 3 | | contracts, deposit
administration contracts, unallocated | 4 | | funding agreements, allocated funding
agreements, structured | 5 | | settlement agreements, lottery contracts
and any immediate or | 6 | | deferred annuity contracts.
| 7 | | (b) Except as otherwise provided in paragraph (c) of this | 8 | | subsection, this This Article shall not provide coverage for:
| 9 | | (i) that portion of a policy or contract not guaranteed | 10 | | by the member insurer, or under which the risk is borne by | 11 | | the policy or contract owner;
| 12 | | (ii) any such policy or contract or part thereof | 13 | | assumed by the impaired
or insolvent insurer under a | 14 | | contract of reinsurance, other than reinsurance
for which | 15 | | assumption certificates have been issued;
| 16 | | (iii) any portion of a policy or contract to the extent | 17 | | that the rate of interest on which it is based or the | 18 | | interest rate, crediting rate, or similar factor is | 19 | | determined by use of an index or other external reference | 20 | | stated in the policy or contract employed in calculating | 21 | | returns or changes in value:
| 22 | | (A) averaged over the period of 4 years prior to | 23 | | the date on which the member insurer becomes an | 24 | | impaired or insolvent insurer under this Article, | 25 | | whichever is earlier, exceeds the rate of interest | 26 | | determined by subtracting 2 percentage points from |
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| 1 | | Moody's Corporate Bond Yield Average averaged for that | 2 | | same 4-year period or for such lesser period if the | 3 | | policy or contract was issued less than 4 years before | 4 | | the member insurer becomes an impaired or insolvent | 5 | | insurer under this Article, whichever is earlier; and
| 6 | | (B) on and after the date on which the member | 7 | | insurer becomes an impaired or insolvent insurer under | 8 | | this Article, whichever is earlier, exceeds the rate of | 9 | | interest determined by subtracting 3 percentage points | 10 | | from Moody's Corporate Bond Yield Average as most | 11 | | recently available;
| 12 | | (iv) any unallocated annuity contract issued to or in | 13 | | connection with a benefit plan protected under the federal | 14 | | Pension Benefit Guaranty Corporation, regardless of | 15 | | whether the federal Pension Benefit Guaranty Corporation | 16 | | has yet become liable to make any payments with respect to | 17 | | the benefit plan;
| 18 | | (v) any portion of any unallocated annuity contract | 19 | | which is not issued
to or in connection with a specific | 20 | | employee, union or association of
natural persons benefit | 21 | | plan or a government lottery;
| 22 | | (vi) an obligation that does not arise under the | 23 | | express written terms of the policy or contract issued by | 24 | | the member insurer to the enrollee, certificate holder, | 25 | | contract owner , or policy owner, including without | 26 | | limitation: |
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| 1 | | (A) a claim based on marketing materials; | 2 | | (B) a claim based on side letters, riders, or other | 3 | | documents that were issued by the member insurer | 4 | | without meeting applicable policy or contract form | 5 | | filing or approval requirements; | 6 | | (C) a misrepresentation of or regarding policy or | 7 | | contract benefits; | 8 | | (D) an extra-contractual claim; or | 9 | | (E) a claim for penalties or consequential or | 10 | | incidental damages;
| 11 | | (vii) any stop-loss insurance, as defined in clause (b) | 12 | | of Class 1 or
clause (a) of Class 2 of Section 4, and | 13 | | further defined in subsection (d) of
Section 352;
| 14 | | (viii) any policy or contract providing any hospital, | 15 | | medical, prescription drug, or other health care benefits | 16 | | pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 | 17 | | of Title 42 of the United States Code (commonly known as | 18 | | Medicare Part C & D) , Subchapter XIX, Chapter 7 of Title 42 | 19 | | of the United States Code (commonly known as Medicaid), or | 20 | | any regulations issued pursuant thereto; | 21 | | (ix) any portion of a policy or contract to the extent | 22 | | that the assessments required by Section 531.09 of this | 23 | | Code with respect to the policy or contract are preempted | 24 | | or otherwise not permitted by federal or State law; | 25 | | (x) any portion of a policy or contract issued to a | 26 | | plan or program of an employer, association, or other |
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| 1 | | person to provide life, health, or annuity benefits to its | 2 | | employees, members, or others to the extent that the plan | 3 | | or program is self-funded or uninsured, including, but not | 4 | | limited to, benefits payable by an employer, association, | 5 | | or other person under: | 6 | | (A) a multiple employer welfare arrangement as | 7 | | defined in 29 U.S.C. Section 1002 1144 ; | 8 | | (B) a minimum premium group insurance plan; | 9 | | (C) a stop-loss group insurance plan; or | 10 | | (D) an administrative services only contract; | 11 | | (xi) any portion of a policy or contract to the extent | 12 | | that it provides for: | 13 | | (A) dividends or experience rating credits; | 14 | | (B) voting rights; or | 15 | | (C) payment of any fees or allowances to any | 16 | | person, including the policy or contract owner, in | 17 | | connection with the service to or administration of the | 18 | | policy or contract; | 19 | | (xii) any policy or contract issued in this State by a | 20 | | member insurer at a time when it was not licensed or did | 21 | | not have a certificate of authority to issue the policy or | 22 | | contract in this State; | 23 | | (xiii) any contractual agreement that establishes the | 24 | | member insurer's obligations to provide a book value | 25 | | accounting guaranty for defined contribution benefit plan | 26 | | participants by reference to a portfolio of assets that is |
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| 1 | | owned by the benefit plan or its trustee, which in each | 2 | | case is not an affiliate of the member insurer; | 3 | | (xiv) any portion of a policy or contract to the extent | 4 | | that it provides for interest or other changes in value to | 5 | | be determined by the use of an index or other external | 6 | | reference stated in the policy or contract, but which have | 7 | | not been credited to the policy or contract, or as to which | 8 | | the policy or contract owner's rights are subject to | 9 | | forfeiture, as of the date the member insurer becomes an | 10 | | impaired or insolvent insurer under this Code, whichever is | 11 | | earlier. If a policy's or contract's interest or changes in | 12 | | value are credited less frequently than annually, then for | 13 | | purposes of determining the values that have been credited | 14 | | and are not subject to forfeiture under this Section, the | 15 | | interest or change in value determined by using the | 16 | | procedures defined in the policy or contract will be | 17 | | credited as if the contractual date of crediting interest | 18 | | or changing values was the date of impairment or | 19 | | insolvency, whichever is earlier, and will not be subject | 20 | | to forfeiture; or
| 21 | | (xv) that portion or part of a variable life insurance | 22 | | or
variable
annuity
contract not guaranteed by a member an | 23 | | insurer.
| 24 | | (c) The exclusion from coverage referenced in subdivision | 25 | | (iii) of paragraph (b) of this subsection shall not apply to | 26 | | any portion of a policy or contract, including a rider, that |
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| 1 | | provides long-term care or other health insurance benefits. | 2 | | (3) The benefits for which the Association may become | 3 | | liable shall in
no event exceed the lesser of:
| 4 | | (a) the contractual obligations for which the member | 5 | | insurer is liable or would
have been liable if it were not | 6 | | an impaired or insolvent insurer, or
| 7 | | (b)(i) with respect to any one life, regardless of the | 8 | | number of policies
or
contracts:
| 9 | | (A) $300,000 in life insurance death benefits, but | 10 | | not more than
$100,000 in net cash surrender and net | 11 | | cash withdrawal values for life
insurance;
| 12 | | (B) for in health insurance benefits: | 13 | | (I) $100,000 for coverages not defined as | 14 | | disability income insurance or health benefit | 15 | | plans basic hospital, medical, and surgical | 16 | | insurance or major medical insurance or long-term | 17 | | care insurance, including any net cash surrender | 18 | | and net cash withdrawal values; | 19 | | (II) $300,000 for disability income insurance | 20 | | and $300,000 for long-term care insurance as | 21 | | defined in Section 351A-1 of this Code ; and | 22 | | (III) $500,000 for health benefit plans basic | 23 | | hospital medical and surgical insurance or major | 24 | | medical insurance ;
| 25 | | (C) $250,000 in the present value of annuity | 26 | | benefits, including net cash surrender and net cash |
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| 1 | | withdrawal values; | 2 | | (ii) with respect to each individual participating in a | 3 | | governmental retirement benefit plan established under | 4 | | Section Sections 401, 403(b), or 457 of the U.S. Internal | 5 | | Revenue Code covered by an unallocated annuity contract or | 6 | | the beneficiaries of each such individual if deceased, in | 7 | | the aggregate, $250,000 in present value annuity benefits, | 8 | | including net cash surrender and net cash withdrawal | 9 | | values; | 10 | | (iii) with respect to each payee of a structured | 11 | | settlement annuity or beneficiary or beneficiaries of the | 12 | | payee if deceased, $250,000 in present value annuity | 13 | | benefits, in the aggregate, including net cash surrender | 14 | | and net cash withdrawal values, if any; or | 15 | | (iv) with respect to either (1) one contract owner | 16 | | provided coverage under subparagraph (ii) of paragraph (c) | 17 | | of subsection (1) of this Section or (2) one plan sponsor | 18 | | whose plans own directly or in trust one or more | 19 | | unallocated annuity contracts not included in subparagraph | 20 | | (ii) of paragraph (b) of this subsection, $5,000,000 in | 21 | | benefits, irrespective of the number of contracts with | 22 | | respect to the contract owner or plan sponsor. However, in | 23 | | the case where one or more unallocated annuity contracts | 24 | | are covered contracts under this Article and are owned by a | 25 | | trust or other entity for the benefit of 2 or more plan | 26 | | sponsors, coverage shall be afforded by the Association if |
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| 1 | | the largest interest in the trust or entity owning the | 2 | | contract or contracts is held by a plan sponsor whose | 3 | | principal place of business is in this State. In no event | 4 | | shall the Association be obligated to cover more than | 5 | | $5,000,000 in benefits with respect to all these | 6 | | unallocated contracts. | 7 | | In no event shall the Association be obligated to cover | 8 | | more than (1) an aggregate of $300,000 in benefits with respect | 9 | | to any one life under subparagraphs (i), (ii), and (iii) of | 10 | | this paragraph (b) except with respect to benefits for health | 11 | | benefit plans basic hospital, medical, and surgical insurance | 12 | | and major medical insurance under item (B) of subparagraph (i) | 13 | | of this paragraph (b), in which case the aggregate liability of | 14 | | the Association shall not exceed $500,000 with respect to any | 15 | | one individual or (2) with respect to one owner of multiple | 16 | | nongroup policies of life insurance, whether the policy or | 17 | | contract owner is an individual, firm, corporation, or other | 18 | | person and whether the persons insured are officers, managers, | 19 | | employees, or other persons, $5,000,000 in benefits, | 20 | | regardless of the number of policies and contracts held by the | 21 | | owner. | 22 | | The limitations set forth in this subsection are | 23 | | limitations on the benefits for which the Association is | 24 | | obligated before taking into account either its subrogation and | 25 | | assignment rights or the extent to which those benefits could | 26 | | be provided out of the assets of the impaired or insolvent |
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| 1 | | insurer attributable to covered policies. The costs of the | 2 | | Association's obligations under this Article may be met by the | 3 | | use of assets attributable to covered policies or reimbursed to | 4 | | the Association pursuant to its subrogation and assignment | 5 | | rights.
| 6 | | For purposes of this Article, benefits provided by a | 7 | | long-term care rider to a life insurance policy or annuity | 8 | | contract shall be considered the same type of benefits as the | 9 | | base life insurance policy or annuity contract to which it | 10 | | relates. | 11 | | (4) In performing its obligations to provide coverage under | 12 | | Section 531.08 of this Code, the Association shall not be | 13 | | required to guarantee, assume, reinsure, reissue, or perform or | 14 | | cause to be guaranteed, assumed, reinsured, reissued, or | 15 | | performed the contractual obligations of the insolvent or | 16 | | impaired insurer under a covered policy or contract that do not | 17 | | materially affect the economic values or economic benefits of | 18 | | the covered policy or contract. | 19 | | (Source: P.A. 96-1450, eff. 8-20-10; revised 10-5-17.)
| 20 | | (215 ILCS 5/531.05) (from Ch. 73, par. 1065.80-5)
| 21 | | Sec. 531.05. Definitions. As used in this Act:
| 22 | | "Account" means either of the 2 3 accounts created under | 23 | | Section
531.06.
| 24 | | "Association" means the Illinois Life and Health Insurance
| 25 | | Guaranty Association created under Section 531.06.
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| 1 | | "Authorized assessment" or the term "authorized" when used | 2 | | in the context of assessments means a resolution by the Board | 3 | | of Directors has been passed whereby an assessment shall be | 4 | | called immediately or in the future from member insurers for a | 5 | | specified amount. An assessment is authorized when the | 6 | | resolution is passed. | 7 | | "Benefit plan" means a specific employee, union, or | 8 | | association of natural persons benefit plan. | 9 | | "Called assessment" or the term "called" when used in the | 10 | | context of assessments means that a notice has been issued by | 11 | | the Association to member insurers requiring that an authorized | 12 | | assessment be paid within the time frame set forth within the | 13 | | notice. An authorized assessment becomes a called assessment | 14 | | when notice is mailed by the Association to member insurers. | 15 | | "Director" means the Director of Insurance of this State.
| 16 | | "Contractual obligation" means any obligation under a | 17 | | policy or
contract or certificate under a group policy or | 18 | | contract, or portion
thereof for which coverage is provided | 19 | | under Section 531.03.
| 20 | | "Covered person" means any person who is entitled to the
| 21 | | protection of the Association as described in Section 531.02.
| 22 | | "Covered contract" or "covered policy" means any policy or | 23 | | contract within the scope
of this Article under Section 531.03.
| 24 | | "Extra-contractual claims" shall include , but are not | 25 | | limited to, claims relating to bad faith in the payment of | 26 | | claims, punitive or exemplary damages, or attorneys' fees and |
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| 1 | | costs. | 2 | | "Health benefit plan" means any hospital or medical expense | 3 | | policy or certificate or
health maintenance organization | 4 | | subscriber contract or any other similar health
contract. | 5 | | "Health benefit plan" does not include: | 6 | | (1) accident only insurance; | 7 | | (2) credit insurance; | 8 | | (3) dental only insurance; | 9 | | (4) vision only insurance; | 10 | | (5) Medicare supplement insurance; | 11 | | (6) benefits for long-term care, home health care, | 12 | | community-based care, or any
combination thereof; | 13 | | (7) disability income insurance; | 14 | | (8) coverage for on-site medical clinics; or | 15 | | (9) specified disease, hospital confinement indemnity, | 16 | | or limited benefit health
insurance if the types of | 17 | | coverage do not provide coordination of benefits and
are | 18 | | provided under separate policies or certificates. | 19 | | "Impaired insurer" means (A) a member insurer which, after | 20 | | the effective date of this amendatory Act of the 96th General | 21 | | Assembly, is not an insolvent insurer, and is placed under an | 22 | | order of rehabilitation or conservation by a court of competent | 23 | | jurisdiction or (B) a member insurer deemed by the Director | 24 | | after the effective date of this amendatory Act of the 96th | 25 | | General Assembly to be potentially unable to fulfill its | 26 | | contractual obligations and not an insolvent insurer.
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| 1 | | "Insolvent insurer" means a member insurer that, after the | 2 | | effective date of this amendatory Act of the 96th General | 3 | | Assembly, is placed under a final order of liquidation by a | 4 | | court of competent jurisdiction with a finding of insolvency.
| 5 | | "Member insurer" means an insurer or health maintenance | 6 | | organization licensed or holding a certificate of authority to | 7 | | transact in this State any kind of insurance or health | 8 | | maintenance organization business for which coverage is | 9 | | provided under Section 531.03 of this Code and includes an | 10 | | insurer or health maintenance organization whose license or | 11 | | certificate of authority in this State may have been suspended, | 12 | | revoked, not renewed, or voluntarily withdrawn or whose | 13 | | certificate of authority may have been suspended pursuant to | 14 | | Section 119 of this Code, but does not include: | 15 | | (1) a hospital or medical service organization, | 16 | | whether profit or nonprofit; | 17 | | (2) (blank); a health maintenance organization; | 18 | | (3) any burial society organized under Article XIX of | 19 | | this Code, any fraternal benefit society organized under | 20 | | Article XVII of this Code, any mutual benefit association | 21 | | organized under Article XVIII of this Code, and any foreign | 22 | | fraternal benefit society licensed under Article VI of this | 23 | | Code or
a fraternal benefit society ; | 24 | | (4) a mandatory State pooling plan; | 25 | | (5) a mutual assessment company or other person that | 26 | | operates on an assessment basis; |
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| 1 | | (6) an insurance exchange; | 2 | | (7) an organization that is permitted to issue | 3 | | charitable gift annuities pursuant to Section 121-2.10 of | 4 | | this Code; | 5 | | (8) any health services plan corporation established | 6 | | pursuant to the Voluntary Health Services Plans Act; | 7 | | (9) any dental service plan corporation established | 8 | | pursuant to the Dental Service Plan Act; or | 9 | | (10) an entity similar to any of the above.
| 10 | | "Moody's Corporate Bond Yield Average" means the Monthly | 11 | | Average
Corporates as published by Moody's Investors Service, | 12 | | Inc., or any successor
thereto. | 13 | | "Owner" of a policy or contract and "policyholder", "policy | 14 | | owner" , and "contract owner" mean the person who is identified | 15 | | as the legal owner under the terms of the policy or contract or | 16 | | who is otherwise vested with legal title to the policy or | 17 | | contract through a valid assignment completed in accordance | 18 | | with the terms of the policy or contract and properly recorded | 19 | | as the owner on the books of the member insurer. The terms | 20 | | owner, contract owner, policyholder, and policy owner do not | 21 | | include persons with a mere beneficial interest in a policy or | 22 | | contract. | 23 | | "Person" means an individual, corporation, limited | 24 | | liability company, partnership, association, governmental body | 25 | | or entity, or voluntary organization. | 26 | | "Plan sponsor" means: |
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| 1 | | (1) the employer in the case of a benefit plan | 2 | | established or maintained by a single employer; | 3 | | (2) the employee organization in the case of a benefit | 4 | | plan established or maintained by an employee | 5 | | organization; or | 6 | | (3) in a case of a benefit plan established or | 7 | | maintained by 2 or more employers or jointly by one or more | 8 | | employers and one or more employee organizations, the | 9 | | association, committee, joint board of trustees, or other | 10 | | similar group of representatives of the parties who | 11 | | establish or maintain the benefit plan. | 12 | | "Premiums" mean amounts or considerations, by whatever | 13 | | name called, received on covered policies or contracts less | 14 | | returned premiums, considerations, and deposits and less | 15 | | dividends and experience credits. | 16 | | "Premiums" does not include: | 17 | | (A) amounts or considerations received for policies or | 18 | | contracts or for the portions of policies or contracts for | 19 | | which coverage is not provided under Section 531.03 of this | 20 | | Code except that assessable premium shall not be reduced on | 21 | | account of the provisions of subparagraph (iii) of | 22 | | paragraph (b) of subsection (2) (a) of Section 531.03 of | 23 | | this Code relating to interest limitations and the | 24 | | provisions of paragraph (b) of subsection (3) of Section | 25 | | 531.03 relating to limitations with respect to one | 26 | | individual, one participant, and one policy owner or |
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| 1 | | contract owner; | 2 | | (B) premiums in excess of $5,000,000 on an unallocated | 3 | | annuity contract not issued under a governmental | 4 | | retirement benefit plan (or its trustee) established under | 5 | | Section 401, 403(b) or 457 of the United States Internal | 6 | | Revenue Code; or | 7 | | (C) with respect to multiple nongroup policies of life | 8 | | insurance owned by one owner, whether the policy owner or | 9 | | contract owner is an individual, firm, corporation, or | 10 | | other person, and whether the persons insured are officers, | 11 | | managers, employees, or other persons, premiums in excess | 12 | | of $5,000,000 with respect to these policies or contracts, | 13 | | regardless of the number of policies or contracts held by | 14 | | the owner.
| 15 | | "Principal place of business" of a plan sponsor or a person | 16 | | other than a natural person means the single state in which the | 17 | | natural persons who establish policy for the direction, | 18 | | control, and coordination of the operations of the entity as a | 19 | | whole primarily exercise that function, determined by the | 20 | | Association in its reasonable judgment by considering the | 21 | | following factors: | 22 | | (A) the state in which the primary executive and | 23 | | administrative headquarters of the entity is located; | 24 | | (B) the state in which the principal office of the | 25 | | chief executive officer of the entity is located; | 26 | | (C) the state in which the board of directors (or |
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| 1 | | similar governing person or persons) of the entity conducts | 2 | | the majority of its meetings; | 3 | | (D) the state in which the executive or management | 4 | | committee of the board of directors (or similar governing | 5 | | person or persons) of the entity conducts the majority of | 6 | | its meetings; | 7 | | (E) the state from which the management of the overall | 8 | | operations of the entity is directed; and | 9 | | (F) in the case of a benefit plan sponsored by | 10 | | affiliated companies comprising a consolidated | 11 | | corporation, the state in which the holding company or | 12 | | controlling affiliate has its principal place of business | 13 | | as determined using the above factors. However, in the case | 14 | | of a plan sponsor, if more than 50% of the participants in | 15 | | the benefit plan are employed in a single state, that state | 16 | | shall be deemed to be the principal place of business of | 17 | | the plan sponsor. | 18 | | The principal place of business of a plan sponsor of a | 19 | | benefit plan described in paragraph (3) of the definition of | 20 | | "plan sponsor" this Section shall be deemed to be the principal | 21 | | place of business of the association, committee, joint board of | 22 | | trustees, or other similar group of representatives of the | 23 | | parties who establish or maintain the benefit plan that, in | 24 | | lieu of a specific or clear designation of a principal place of | 25 | | business, shall be deemed to be the principal place of business | 26 | | of the employer or employee organization that has the largest |
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| 1 | | investment in the benefit plan in question. | 2 | | "Receivership court" means the court in the insolvent or | 3 | | impaired insurer's state having jurisdiction over the | 4 | | conservation, rehabilitation, or liquidation of the member | 5 | | insurer. | 6 | | "Resident" means a person to whom a contractual obligation | 7 | | is owed and who resides in this State on the date of entry of a | 8 | | court order that determines a member insurer to be an impaired | 9 | | insurer or a court order that determines a member insurer to be | 10 | | an insolvent insurer. A person may be a resident of only one | 11 | | state, which in the case of a person other than a natural | 12 | | person shall be its principal place of business. Citizens of | 13 | | the United States that are either (i) residents of foreign | 14 | | countries or (ii) residents of United States possessions, | 15 | | territories, or protectorates that do not have an association | 16 | | similar to the Association created by this Article, shall be | 17 | | deemed residents of the state of domicile of the member insurer | 18 | | that issued the policies or contracts.
| 19 | | "Structured settlement annuity" means an annuity purchased | 20 | | in order to fund periodic payments for a plaintiff or other | 21 | | claimant in payment for or with respect to personal injury | 22 | | suffered by the plaintiff or other claimant. | 23 | | "State" means a state, the District of Columbia, Puerto | 24 | | Rico, and a United States possession, territory, or | 25 | | protectorate. | 26 | | "Supplemental contract" means a written agreement entered |
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| 1 | | into for the distribution of proceeds under a life, health, or | 2 | | annuity policy or a life, health, or annuity contract.
| 3 | | "Unallocated annuity contract" means any annuity contract | 4 | | or group
annuity certificate which is not issued to and owned | 5 | | by an individual,
except to the extent of any annuity benefits | 6 | | guaranteed to an individual by
an insurer under such contract | 7 | | or certificate.
| 8 | | (Source: P.A. 96-1450, eff. 8-20-10.)
| 9 | | (215 ILCS 5/531.06) (from Ch. 73, par. 1065.80-6)
| 10 | | Sec. 531.06. Creation of the Association. There is created | 11 | | a
non-profit legal entity to be known as the Illinois Life and | 12 | | Health
Insurance Guaranty Association. All member insurers are | 13 | | and must remain
members of the Association as a condition of | 14 | | their authority to transact
insurance or a health maintenance | 15 | | organization business in this State. The Association must | 16 | | perform its functions under
the plan of operation established | 17 | | and approved under Section 531.10 and must
exercise its powers | 18 | | through a board of directors established under
Section 531.07. | 19 | | For purposes of administration and assessment, the Association
| 20 | | must maintain 2 accounts:
| 21 | | (1) The life insurance and annuity account, which | 22 | | includes the following
subaccounts:
| 23 | | (a) Life Insurance Account;
| 24 | | (b) Annuity account, which shall include annuity | 25 | | contracts owned by a governmental retirement plan (or |
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| 1 | | its trustee) established under Section 401, 403(b), or | 2 | | 457 of the United States Internal Revenue Code, but | 3 | | shall otherwise exclude unallocated annuities; and
| 4 | | (c) Unallocated annuity account, which shall | 5 | | exclude contracts owned by a governmental retirement | 6 | | benefit plan (or its trustee) established under | 7 | | Section 401, 403(b), or 457 of the United States | 8 | | Internal Revenue Code.
| 9 | | (2) The health insurance account.
| 10 | | The Association shall be supervised by the Director
and is | 11 | | subject to the applicable provisions of the Illinois Insurance
| 12 | | Code. Meetings or records of the Association may be opened to | 13 | | the public upon majority vote of the board of directors of the | 14 | | Association.
| 15 | | (Source: P.A. 95-331, eff. 8-21-07; 96-1450, eff. 8-20-10.)
| 16 | | (215 ILCS 5/531.07) (from Ch. 73, par. 1065.80-7)
| 17 | | Sec. 531.07. Board of Directors.) The board of directors | 18 | | of the
Association consists of not less than 7 nor more than 11 | 19 | | members serving
terms as established in the plan of operation. | 20 | | The insurer members insurers of the board
are to be selected by | 21 | | member insurers subject to the approval of the
Director. In | 22 | | addition, 2 persons who must be public representatives may be | 23 | | appointed by the Director to the board of directors. A public | 24 | | representative may not be an officer, director, or employee of | 25 | | an insurance company or a health maintenance organization or |
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| 1 | | any person engaged in the business of insurance. Vacancies on | 2 | | the board must be filled for the remaining period
of the term | 3 | | in the manner described in the plan of operation.
| 4 | | In approving selections or in appointing members to the | 5 | | board, the
Director must consider, whether all member insurers | 6 | | are
fairly represented.
| 7 | | Members of the board may be reimbursed from the assets of | 8 | | the Association
for expenses incurred by them as members of the | 9 | | board of directors but
members of the board may not otherwise | 10 | | be compensated by the Association for
their services.
| 11 | | (Source: P.A. 96-1450, eff. 8-20-10.)
| 12 | | (215 ILCS 5/531.08) (from Ch. 73, par. 1065.80-8)
| 13 | | Sec. 531.08. Powers and duties of the Association. | 14 | | (a) In addition to
the powers and duties enumerated in | 15 | | other Sections of this Article:
| 16 | | (1) If a member insurer is an impaired insurer, then | 17 | | the Association may, in its discretion and subject to any | 18 | | conditions imposed by the Association that do not impair | 19 | | the contractual obligations of the impaired insurer and | 20 | | that are approved by the Director: | 21 | | (A) guarantee, assume, reissue, or reinsure or | 22 | | cause to be guaranteed, assumed, reissued, or | 23 | | reinsured, any or all of the policies or contracts of | 24 | | the impaired insurer; or | 25 | | (B) provide such money, pledges, loans, notes, |
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| 1 | | guarantees, or other means as are proper to effectuate | 2 | | paragraph (A) and assure payment of the contractual | 3 | | obligations of the impaired insurer pending action | 4 | | under paragraph (A). | 5 | | (2) If a member insurer is an insolvent insurer, then | 6 | | the Association shall, in its discretion, either: | 7 | | (A) guaranty, assume, reissue, or reinsure or | 8 | | cause to be guaranteed, assumed, reissued, or | 9 | | reinsured the policies or contracts of the insolvent | 10 | | insurer or assure payment of the contractual | 11 | | obligations of the insolvent insurer and provide | 12 | | money, pledges, loans, notes, guarantees, or other | 13 | | means reasonably necessary to discharge the | 14 | | Association's duties; or | 15 | | (B) provide benefits and coverages in accordance | 16 | | with the following provisions: | 17 | | (i) with respect to policies and contracts | 18 | | life and health insurance policies and annuities , | 19 | | ensure payment of benefits for premiums identical | 20 | | to the premiums and benefits (except for terms of | 21 | | conversion and renewability) that would have been | 22 | | payable under the policies or contracts of the | 23 | | insolvent insurer for claims incurred: | 24 | | (a) with respect to group policies and | 25 | | contracts, not later than the earlier of the | 26 | | next renewal date under those policies or |
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| 1 | | contracts or 45 days, but in no event less than | 2 | | 30 days, after the date on which the | 3 | | Association becomes obligated with respect to | 4 | | the policies and contracts; | 5 | | (b) with respect to nongroup policies, | 6 | | contracts, and annuities not later than the | 7 | | earlier of the next renewal date (if any) under | 8 | | the policies or contracts or one year, but in | 9 | | no event less than 30 days, from the date on | 10 | | which the Association becomes obligated with | 11 | | respect to the policies or contracts; | 12 | | (ii) make diligent efforts to provide all | 13 | | known insureds , enrollees, or annuitants (for | 14 | | nongroup policies and contracts), or group policy | 15 | | owners or contract owners with respect to group | 16 | | policies and contracts, 30 days notice of the | 17 | | termination (pursuant to subparagraph (i) of this | 18 | | paragraph (B)) of the benefits provided; | 19 | | (iii) with respect to nongroup policies and | 20 | | contracts life and health insurance policies and | 21 | | annuities covered by the Association, make | 22 | | available to each known insured , enrollee, or | 23 | | annuitant, or owner if other than the insured , | 24 | | enrollee, or annuitant, and with respect to an | 25 | | individual formerly an insured , enrollee, or | 26 | | formerly an annuitant under a group policy or |
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| 1 | | contract who is not eligible for replacement group | 2 | | coverage, make available substitute coverage on an | 3 | | individual basis in accordance with the provisions | 4 | | of subsection (b) paragraph (3) , if the insureds , | 5 | | enrollees, or annuitants had a right under law or | 6 | | the terminated policy , contract, or annuity to | 7 | | convert coverage to individual coverage or to | 8 | | continue an individual policy , contract, or | 9 | | annuity in force until a specified age or for a | 10 | | specified time, during which the insurer or health | 11 | | maintenance organization had no right unilaterally | 12 | | to make changes in any provision of the policy , | 13 | | contract, or annuity or had a right only to make | 14 | | changes in premium by class.
| 15 | | (b) In providing the substitute coverage required under | 16 | | subparagraph (iii) of paragraph (B) of item (2) of subsection | 17 | | (a)
of this Section, the Association may offer either to | 18 | | reissue the
terminated coverage or to issue an alternative | 19 | | policy or contract at actuarially justified rates, subject to | 20 | | the prior approval of the Director .
| 21 | | Alternative or reissued policies or contracts shall be | 22 | | offered without requiring
evidence of insurability, and shall | 23 | | not provide for any waiting period or
exclusion that would not | 24 | | have applied under the terminated policy or contract .
| 25 | | The Association may reinsure any alternative or reissued | 26 | | policy or contract .
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| 1 | | Alternative policies or contracts adopted by the | 2 | | Association shall be subject
to the approval of the Director. | 3 | | The Association may adopt alternative
policies or contracts of | 4 | | various types for future issuance insurance without regard to | 5 | | any
particular impairment or insolvency.
| 6 | | Alternative policies or contracts shall contain at least | 7 | | the minimum statutory
provisions required in this State and | 8 | | provide benefits that shall not be
unreasonable in relation to | 9 | | the premium charged. The
Association shall set the premium in | 10 | | accordance with a table of rates which
it shall adopt. The | 11 | | premium shall reflect the amount of insurance to be
provided | 12 | | and the age and class of risk of each insured, but shall not
| 13 | | reflect any changes in the health of the insured after the | 14 | | original policy or contract
was last underwritten.
| 15 | | Any alternative policy or contract issued by the | 16 | | Association shall provide
coverage of a type similar to that of | 17 | | the policy or contract issued by the impaired or
insolvent | 18 | | insurer, as determined by the Association.
| 19 | | (c) If the Association elects to reissue terminated | 20 | | coverage at a
premium rate different from that charged under | 21 | | the terminated policy or contract , the
premium shall be | 22 | | actuarially justified and set by the Association in accordance | 23 | | with the amount of
insurance or coverage provided and the age | 24 | | and class of risk, subject to approval of
the Director or by a | 25 | | court of competent jurisdiction .
| 26 | | (d) The Association's obligations with respect to coverage |
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| 1 | | under any
policy or contract of the impaired or insolvent | 2 | | insurer or under any reissued or
alternative policy or contract | 3 | | shall cease on the date such coverage or policy or contract is
| 4 | | replaced by another similar policy or contract by the | 5 | | policyholder, the insured, the enrollee, or the
Association.
| 6 | | (e) When proceeding under this Section with
respect to any | 7 | | policy or contract carrying guaranteed minimum interest
rates, | 8 | | the Association shall assure the payment or crediting of a rate | 9 | | of
interest consistent with subparagraph (2)(b)(iii)(B) of | 10 | | Section 531.03.
| 11 | | (f) Nonpayment of premiums thirty-one days after the date | 12 | | required under
the terms of any guaranteed, assumed, | 13 | | alternative or reissued policy or
contract or substitute | 14 | | coverage shall terminate the Association's
obligations under | 15 | | such policy , contract, or coverage under this Act with respect | 16 | | to
such policy , contract, or coverage, except with respect to | 17 | | any claims incurred or any
net cash surrender value which may | 18 | | be due in accordance with the provisions of
this Act.
| 19 | | (g) Premiums due for coverage after entry of an order of | 20 | | liquidation of
an insolvent insurer shall belong to and be | 21 | | payable at the direction of the
Association,
and the | 22 | | Association shall be liable for unearned premiums due to policy | 23 | | or
contract owners arising after the entry of such order.
| 24 | | (h) In carrying out its duties under paragraph (2) of | 25 | | subsection (a) of this Section, the Association may: | 26 | | (1) subject to approval by a court in this State, |
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| 1 | | impose permanent policy or contract liens in connection | 2 | | with a guarantee, assumption, or reinsurance agreement if | 3 | | the Association finds that the amounts which can be | 4 | | assessed under this Article are less than the amounts | 5 | | needed to assure full and prompt performance of the | 6 | | Association's duties under this Article or that the | 7 | | economic or financial conditions as they affect member | 8 | | insurers are sufficiently adverse to render the imposition | 9 | | of such permanent policy or contract liens to be in the | 10 | | public interest; or | 11 | | (2) subject to approval by a court in this State, | 12 | | impose temporary moratoriums or liens on payments of cash | 13 | | values and policy loans or any other right to withdraw | 14 | | funds held in conjunction with policies or contracts in | 15 | | addition to any contractual provisions for deferral of cash | 16 | | or policy loan value. In addition, in the event of a | 17 | | temporary moratorium or moratorium charge imposed by the | 18 | | receivership court on payment of cash values or policy | 19 | | loans or on any other right to withdraw funds held in | 20 | | conjunction with policies or contracts, out of the assets | 21 | | of the impaired or insolvent insurer, the Association may | 22 | | defer the payment of cash values, policy loans, or other | 23 | | rights by the Association for the period of the moratorium | 24 | | or moratorium charge imposed by the receivership court, | 25 | | except for claims covered by the Association to be paid in | 26 | | accordance with a hardship procedure established by the |
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| 1 | | liquidator or rehabilitator and approved by the | 2 | | receivership court.
| 3 | | (i) There shall be no liability on the part of and no cause | 4 | | of action
shall arise against the Association or against any | 5 | | transferee from the
Association in connection with the transfer | 6 | | by reinsurance or otherwise of
all or any part of an impaired | 7 | | or insolvent insurer's business by reason of
any action taken | 8 | | or any failure to take any action by the impaired or
insolvent | 9 | | insurer at any time.
| 10 | | (j) If the Association fails to act within a reasonable | 11 | | period of
time as provided in subsection (2) of this Section | 12 | | with respect to an
insolvent insurer, the
Director shall have | 13 | | the powers and duties of the Association under this
Act with | 14 | | regard to such insolvent insurers.
| 15 | | (k) The Association or its designated representatives
may | 16 | | render assistance and advice to the
Director, upon his request, | 17 | | concerning rehabilitation, payment of
claims, continuations of | 18 | | coverage, or the performance of other
contractual obligations | 19 | | of any impaired or insolvent insurer.
| 20 | | (l) The Association shall have standing to appear or | 21 | | intervene before a court or agency in this State with | 22 | | jurisdiction over an impaired or insolvent insurer concerning | 23 | | which the Association is or may become obligated under this | 24 | | Article or with jurisdiction over any person or property | 25 | | against which the Association may have rights through | 26 | | subrogation or otherwise. Standing shall extend to all matters |
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| 1 | | germane to the powers and duties of the Association, including, | 2 | | but not limited to, proposals for reinsuring, reissuing, | 3 | | modifying, or guaranteeing the policies or contracts of the | 4 | | impaired or insolvent insurer and the determination of the | 5 | | policies or contracts and contractual obligations. The | 6 | | Association shall also have the right to appear or intervene | 7 | | before a court or agency in another state with jurisdiction | 8 | | over an impaired or insolvent insurer for which the Association | 9 | | is or may become obligated or with jurisdiction over any person | 10 | | or property against whom the Association may have rights | 11 | | through subrogation or otherwise.
| 12 | | (m)(1) A person receiving benefits under this Article shall | 13 | | be deemed to have assigned the rights under and any causes of | 14 | | action against any person for losses arising under, resulting | 15 | | from, or otherwise relating to the covered policy or contract | 16 | | to the Association to the extent of the benefits received | 17 | | because of this Article, whether the benefits are payments of | 18 | | or on account of contractual obligations, continuation of | 19 | | coverage, or provision of substitute or alternative policies, | 20 | | contracts, or coverages. The Association may require an | 21 | | assignment to it of such rights and cause of action by any | 22 | | enrollee, payee, policy, or contract owner, beneficiary, | 23 | | insured, or annuitant as a condition precedent to the receipt | 24 | | of any right or benefits conferred by this Article upon the | 25 | | person.
| 26 | | (2) The subrogation rights of the Association under this |
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| 1 | | subsection
have the same priority against the assets of the | 2 | | impaired or insolvent insurer as
that possessed by the person | 3 | | entitled to receive benefits under this
Article. | 4 | | (3) In addition to paragraphs (1) and (2), the Association | 5 | | shall have all common law rights of subrogation and any other | 6 | | equitable or legal remedy that would have been available to the | 7 | | impaired or insolvent insurer or owner, beneficiary, enrollee, | 8 | | or payee of a policy or contract with respect to the policy or | 9 | | contracts, including without limitation, in the case of a | 10 | | structured settlement annuity, any rights of the owner, | 11 | | beneficiary, enrollee, or payee of the annuity to the extent of | 12 | | benefits received pursuant to this Article, against a person | 13 | | originally or by succession responsible for the losses arising | 14 | | from the personal injury relating to the annuity or payment | 15 | | therefor, excepting any such person responsible solely by | 16 | | reason of serving as an assignee in respect of a qualified | 17 | | assignment under Internal Revenue Code Section 130. | 18 | | (4) If the preceding provisions of this subsection (m) (l) | 19 | | are invalid or ineffective with respect to any person or claim | 20 | | for any reason, then the amount payable by the Association with | 21 | | respect to the related covered obligations shall be reduced by | 22 | | the amount realized by any other person with respect to the | 23 | | person or claim that is attributable to the policies or | 24 | | contracts , or portion thereof, covered by the Association. | 25 | | (5) If the Association has provided benefits with respect | 26 | | to a covered obligation and a person recovers amounts as to |
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| 1 | | which the Association has rights as described in the preceding | 2 | | paragraphs of this subsection (10), then the person shall pay | 3 | | to the Association the portion of the recovery attributable to | 4 | | the policies or contracts , or portion thereof, covered by the | 5 | | Association.
| 6 | | (n) The Association may:
| 7 | |
(1) Enter into such contracts as are necessary or | 8 | | proper to carry
out the provisions and purposes of this | 9 | | Article.
| 10 | |
(2) Sue or be sued, including taking any legal actions | 11 | | necessary or
proper for recovery of any unpaid assessments | 12 | | under Section 531.09. The
Association shall not be liable | 13 | | for punitive or exemplary damages.
| 14 | |
(3) Borrow money to effect the purposes of this | 15 | | Article. Any notes
or other evidence of indebtedness of the | 16 | | Association not in default are
legal investments for | 17 | | domestic member insurers and may be carried as admitted
| 18 | | assets.
| 19 | |
(4) Employ or retain such persons as are necessary to | 20 | | handle the
financial transactions of the Association, and | 21 | | to perform such other
functions as become necessary or | 22 | | proper under this Article.
| 23 | |
(5) Negotiate and contract with any liquidator, | 24 | | rehabilitator,
conservator, or ancillary receiver to carry | 25 | | out the powers and duties of
the Association.
| 26 | |
(6) Take such legal action as may be necessary to |
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| 1 | | avoid payment of
improper claims.
| 2 | |
(7) Exercise, for the purposes of this Article and to | 3 | | the extent
approved by the Director, the powers of a | 4 | | domestic life insurer, or health
insurer , or health | 5 | | maintenance organization , but in no case may the | 6 | | Association issue insurance policies or
annuity contracts | 7 | | other than those issued to perform the contractual
| 8 | | obligations of the impaired or insolvent insurer.
| 9 | |
(8) Exercise all the rights of the Director under | 10 | | Section 193(4) of
this Code with respect to covered | 11 | | policies after the association becomes
obligated by | 12 | | statute.
| 13 | | (9) Request information from a person seeking coverage | 14 | | from the Association in order to aid the Association in | 15 | | determining its obligations under this Article with | 16 | | respect to the person, and the person shall promptly comply | 17 | | with the request. | 18 | | (9.5) Unless prohibited by law, in accordance with the | 19 | | terms and conditions of the policy or contract, file for | 20 | | actuarially justified rate or premium increases for any | 21 | | policy or contract for which it provides coverage under | 22 | | this Article. | 23 | | (10) Take other necessary or appropriate action to | 24 | | discharge its duties and obligations under this Article or | 25 | | to exercise its powers under this Article.
| 26 | | (o) With respect to covered policies for which the |
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| 1 | | Association becomes
obligated after an entry of an order of | 2 | | liquidation or rehabilitation,
the Association may
elect to | 3 | | succeed to the rights of the insolvent insurer arising after | 4 | | the
date of the order of liquidation or rehabilitation under | 5 | | any contract
of reinsurance to which
the insolvent insurer was | 6 | | a party, to the extent that such contract
provides coverage for | 7 | | losses occurring after the date of the order of
liquidation or | 8 | | rehabilitation. As a condition to making this election,
the | 9 | | Association must pay all unpaid premiums due under the contract | 10 | | for
coverage relating to periods before and after the date of | 11 | | the order of
liquidation or rehabilitation.
| 12 | | (p) A deposit in this State, held pursuant to law or | 13 | | required by the Director for the benefit of creditors, | 14 | | including policy owners or contract owners , not turned over to | 15 | | the domiciliary liquidator upon the entry of a final order of | 16 | | liquidation or order approving a rehabilitation plan of a | 17 | | member an insurer domiciled in this State or in a reciprocal | 18 | | state, pursuant to Article XIII 1/2 of this Code, shall be | 19 | | promptly paid to the Association. The Association shall be | 20 | | entitled to retain a portion of any amount so paid to it equal | 21 | | to the percentage determined by dividing the aggregate amount | 22 | | of policy owners' or contract owners' claims related to that | 23 | | insolvency for which the Association has provided statutory | 24 | | benefits by the aggregate amount of all policy owners' or | 25 | | contract owners' claims in this State related to that | 26 | | insolvency and shall remit to the domiciliary receiver the |
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| 1 | | amount so paid to the Association less the amount retained | 2 | | pursuant to this subsection (p) (13) . Any amount so paid to the | 3 | | Association and retained by it shall be treated as a | 4 | | distribution of estate assets pursuant to applicable State | 5 | | receivership law dealing with early access disbursements. | 6 | | (q) The Board of Directors of the Association shall have | 7 | | discretion and may exercise reasonable business judgment to | 8 | | determine the means by which the Association is to provide the | 9 | | benefits of this Article in an economical and efficient manner. | 10 | | (r) Where the Association has arranged or offered to | 11 | | provide the benefits of this Article to a covered person under | 12 | | a plan or arrangement that fulfills the Association's | 13 | | obligations under this Article, the person shall not be | 14 | | entitled to benefits from the Association in addition to or | 15 | | other than those provided under the plan or arrangement. | 16 | | (s) Venue in a suit against the Association arising under | 17 | | the Article shall be in Cook County. The Association shall not | 18 | | be required to give any appeal bond in an appeal that relates | 19 | | to a cause of action arising under this Article. | 20 | | (t) The Association may join an organization of one or more | 21 | | other State associations of similar purposes to further the | 22 | | purposes and administer the powers and duties of the | 23 | | Association. | 24 | | (u) In carrying out its duties in connection with | 25 | | guaranteeing, assuming, reissuing, or reinsuring policies or | 26 | | contracts under subsections (1) or (2), the Association may , |
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| 1 | | subject to approval of the receivership court, issue substitute | 2 | | coverage for a policy or contract that provides an interest | 3 | | rate, crediting rate, or similar factor determined by use of an | 4 | | index or other external reference stated in the policy or | 5 | | contract employed in calculating returns or changes in value by | 6 | | issuing an alternative policy or contract in accordance with | 7 | | the following provisions: | 8 | | (1) in lieu of the index or other external reference | 9 | | provided for in the original policy or contract, the | 10 | | alternative policy or contract provides for (i) a fixed | 11 | | interest rate, or (ii) payment of dividends with minimum | 12 | | guarantees, or (iii) a different method for calculating | 13 | | interest or changes in value; | 14 | | (2) there is no requirement for evidence of | 15 | | insurability, waiting period, or other exclusion that | 16 | | would not have applied under the replaced policy or | 17 | | contract; and | 18 | | (3) the alternative policy or contract is | 19 | | substantially similar to the replaced policy or contract in | 20 | | all other material terms. | 21 | | (Source: P.A. 96-1450, eff. 8-20-10; 97-333, eff. 8-12-11.)
| 22 | | (215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)
| 23 | | Sec. 531.09. Assessments. | 24 | | (1) For the purpose of providing the funds
necessary to | 25 | | carry out the powers and duties of the Association, the board
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| 1 | | of directors shall assess the member insurers, separately for | 2 | | each account, at such
times and for such amounts as the board | 3 | | finds necessary. Assessments shall
be due not less than 30 days | 4 | | after written notice to the member insurers
and shall accrue | 5 | | interest from the due date at such adjusted rate as is
| 6 | | established under Section 6621 of Chapter 26 of the United | 7 | | States Code and
such interest shall be compounded daily.
| 8 | | (2) There shall be 2 classes of assessments, as follows:
| 9 | | (a) Class A assessments shall be made for the purpose | 10 | | of meeting administrative
costs and other general expenses | 11 | | and examinations conducted under the authority
of the | 12 | | Director under subsection (5) of Section 531.12.
| 13 | | (b) Class B assessments shall be made to the extent | 14 | | necessary to carry
out the powers and duties of the | 15 | | Association under Section 531.08 with regard
to an impaired | 16 | | or insolvent domestic insurer or insolvent foreign or alien | 17 | | insurers.
| 18 | | (3)(a) The amount of any Class A assessment shall be | 19 | | determined at the discretion of the board of directors and such | 20 | | assessments shall be authorized and called on a non-pro rata | 21 | | basis. The amount of any Class B
assessment , except for | 22 | | assessments related to long-term care insurance, shall be | 23 | | allocated for assessment
purposes among the accounts
and | 24 | | subaccounts pursuant to an allocation formula which may be | 25 | | based on
the premiums or reserves of the impaired or insolvent | 26 | | insurer or any other
standard deemed by the board in its sole |
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| 1 | | discretion as being fair and
reasonable under the | 2 | | circumstances.
| 3 | | (b) Class B assessments against member insurers for each | 4 | | account and
subaccount shall
be in the proportion that the | 5 | | premiums received on business in this State
by each assessed | 6 | | member insurer on policies or contracts covered by
each account | 7 | | or subaccount for the three most recent calendar years
for | 8 | | which information is available preceding the year in which the | 9 | | member insurer
became impaired or insolvent, as the case may | 10 | | be, bears to such premiums
received on business in this State | 11 | | for such calendar years by all assessed
member insurers.
| 12 | | (b-5) The amount of the Class B assessment for long-term | 13 | | care insurance written by the impaired or insolvent insurer | 14 | | shall be allocated according to a methodology included in the | 15 | | plan of operation and approved by the Director. The methodology | 16 | | shall provide for 50% of the assessment to be allocated to | 17 | | accident and health member insurers and 50% to be allocated to | 18 | | life and annuity member insurers. | 19 | | (c) Assessments for funds to meet the requirements of the | 20 | | Association
with respect to an impaired or insolvent insurer | 21 | | shall not be made until
necessary to implement the purposes of | 22 | | this Article. Classification
of assessments
under subsection | 23 | | (2) and computations of assessments under this subsection
shall | 24 | | be made with a reasonable degree of accuracy, recognizing that | 25 | | exact
determinations may not always be possible.
| 26 | | (4) The Association may abate or defer, in whole or in |
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| 1 | | part, the assessment of a member insurer if, in the opinion of | 2 | | the board, payment of the assessment would endanger the ability | 3 | | of the member insurer to fulfill its contractual obligations. | 4 | | In the event an assessment against a member insurer is abated | 5 | | or deferred in whole or in part the amount by which the | 6 | | assessment is abated or deferred may be assessed against the | 7 | | other member insurers in a manner consistent with the basis for | 8 | | assessments set forth in this Section. Once the conditions that | 9 | | caused a deferral have been removed or rectified, the member | 10 | | insurer shall pay all assessments that were deferred pursuant | 11 | | to a repayment plan approved by the Association. | 12 | | (5) (a) Subject to the provisions of subparagraph (ii) of | 13 | | this paragraph, the total of all assessments authorized by the | 14 | | Association with respect to a member insurer for each | 15 | | subaccount of the life insurance and annuity account and for | 16 | | the health account shall not in one calendar year exceed 2% of | 17 | | that member insurer's average annual premiums received in this | 18 | | State on the policies and contracts covered by the subaccount | 19 | | or account during the 3 calendar years preceding the year in | 20 | | which the member insurer became an impaired or insolvent | 21 | | insurer. | 22 | | If 2 or more assessments are authorized in one calendar | 23 | | year with respect to member insurers that become impaired or | 24 | | insolvent in different calendar years, the average annual | 25 | | premiums for purposes of the aggregate assessment percentage | 26 | | limitation referenced in subparagraph (a) of this paragraph |
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| 1 | | shall be equal and limited to the higher of the 3-year average | 2 | | annual premiums for the applicable subaccount or account as | 3 | | calculated pursuant to this Section. | 4 | | If the maximum assessment, together with the other assets | 5 | | of the Association in an account, does not provide in one year | 6 | | in either account an amount sufficient to carry out the | 7 | | responsibilities of the Association, the necessary additional | 8 | | funds shall be assessed as soon thereafter as permitted by this | 9 | | Article. | 10 | | (b) The board may provide in the plan of operation a method | 11 | | of allocating funds among claims, whether relating to one or | 12 | | more impaired or insolvent insurers, when the maximum | 13 | | assessment will be insufficient to cover anticipated claims. | 14 | | (c) If the maximum assessment for a subaccount of the life | 15 | | insurance and annuity account in one year does not provide an | 16 | | amount sufficient to carry out the responsibilities of the | 17 | | Association, then pursuant to paragraph (b) of subsection (3), | 18 | | the board shall assess the other subaccounts of the life | 19 | | insurance and annuity account for the necessary additional | 20 | | amount, subject to the maximum stated in paragraph (a) of this | 21 | | subsection.
| 22 | | (6) The board may, by an equitable method as established in | 23 | | the
plan of operation, refund to member insurers, in proportion | 24 | | to the contribution
of each member insurer to that account, the | 25 | | amount by which the assets of the account
exceed the amount the | 26 | | board finds is necessary to carry out during the coming
year |
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| 1 | | the obligations of the Association with regard to that account, | 2 | | including
assets accruing from net realized gains and income | 3 | | from investments. A
reasonable amount may be retained in any | 4 | | account to provide funds for the
continuing expenses of the | 5 | | Association and for future losses.
| 6 | | (7) An assessment is deemed to occur on the date upon which | 7 | | the board
votes such assessment. The board may defer calling | 8 | | the payment of the
assessment or may call for payment in one or | 9 | | more installments.
| 10 | | (8) It is proper for any member insurer, in determining its | 11 | | premium
rates and policy owner policyowner dividends as to any | 12 | | kind of insurance or health maintenance organization business | 13 | | within the scope of
this Article, to consider the amount | 14 | | reasonably necessary to meet its assessment
obligations under | 15 | | this Article.
| 16 | | (9) The Association must issue to each member insurer | 17 | | paying a
Class B assessment
under this Article a certificate of | 18 | | contribution,
in a form acceptable to the
Director, for the | 19 | | amount of the assessment so paid. All outstanding certificates
| 20 | | are of equal
dignity and priority without reference to amounts | 21 | | or dates of issue. A certificate
of contribution may be shown | 22 | | by the member insurer in its financial statement as an asset
in | 23 | | such form and for such amount, if any, and period of time as | 24 | | the Director
may approve, provided the member insurer shall in | 25 | | any event at its option have
the right to show a certificate of | 26 | | contribution as an admitted asset at
percentages of the |
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| 1 | | original face amount for calendar years as follows:
| 2 | | 100% for the calendar year after the year of issuance;
| 3 | | 80% for the second calendar year after the year of | 4 | | issuance;
| 5 | | 60% for the third calendar year after the year of issuance;
| 6 | | 40% for the fourth calendar year after the year of | 7 | | issuance;
| 8 | | 20% for the fifth calendar year after the year of issuance.
| 9 | | (10) The Association may request information of member | 10 | | insurers in order to aid in the exercise of its power under | 11 | | this Section and member insurers shall promptly comply with a | 12 | | request. | 13 | | (Source: P.A. 95-86, eff. 9-25-07 (changed from 1-1-08 by P.A. | 14 | | 95-632); 96-1450, eff. 8-20-10.)
| 15 | | (215 ILCS 5/531.10) (from Ch. 73, par. 1065.80-10)
| 16 | | Sec. 531.10. Plan of Operation. ) | 17 | | (1)(a) The Association must
submit to the Director a plan | 18 | | of operation and any amendments thereto necessary
or suitable | 19 | | to assure the fair, reasonable, and equitable administration of | 20 | | the
Association. The plan of operation and any amendments | 21 | | thereto become effective
upon approval in writing by the | 22 | | Director.
| 23 | | (b) If the Association fails to submit a suitable plan of | 24 | | operation
within 180 days following the effective date of this | 25 | | Article or if at any time
thereafter the Association fails to |
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| 1 | | submit suitable amendments to the plan, the
Director may, after | 2 | | notice and hearing, adopt and promulgate such reasonable
rules | 3 | | as are necessary or advisable to effectuate the provisions of | 4 | | this Article.
Such rules are in force until modified by the | 5 | | Director or superseded by a plan
submitted by the Association | 6 | | and approved by the Director.
| 7 | | (2) All member insurers must comply with the plan of | 8 | | operation.
| 9 | | (3) The plan of operation must, in addition to requirements | 10 | | enumerated
elsewhere in this Article:
| 11 | | (a) Establish procedures for handling the assets of the | 12 | | Association;
| 13 | | (b) Establish the amount and method of reimbursing | 14 | | members of the
board of directors under Section 531.07;
| 15 | | (c) Establish regular places and times for meetings of | 16 | | the board
of directors;
| 17 | | (d) Establish procedures for records to be kept of all | 18 | | financial
transactions of the Association, its agents, and | 19 | | the board of directors;
| 20 | | (e) Establish the procedures whereby selections for | 21 | | the board
of directors will be made and submitted to the | 22 | | Director;
| 23 | | (f) Establish any additional procedures for | 24 | | assessments under
Section 531.09; and
| 25 | | (g) Contain additional provisions necessary or proper | 26 | | for the execution
of the powers and duties of the |
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| 1 | | Association.
| 2 | | (4) The plan of operation shall establish a procedure for | 3 | | protest by
any member insurer of assessments made by the | 4 | | Association pursuant to
Section 531.09. Such procedures shall | 5 | | require that:
| 6 | | (a) a member insurer that wishes to protest all or part | 7 | | of an assessment shall pay when due the full amount of the | 8 | | assessment as set forth in the notice provided by the | 9 | | Association. The payment shall be available to meet | 10 | | Association obligations during the pendency of the protest | 11 | | or any subsequent appeal. Payment shall be accompanied by a | 12 | | statement in writing that the payment is made under protest | 13 | | and setting forth a brief statement of the grounds for the | 14 | | protest;
| 15 | | (b) within 30 days following the payment of an | 16 | | assessment under
protest by any protesting member insurer, | 17 | | the Association must notify the
member insurer in writing | 18 | | of its determination with respect to the protest
unless the | 19 | | Association notifies the member that additional time is | 20 | | required
to resolve the issues raised by the protest;
| 21 | | (c) in the event the Association determines that the | 22 | | protesting member
insurer is entitled to a refund, such | 23 | | refund shall be made within 30
days following the date upon | 24 | | which the Association makes its determination;
| 25 | | (d) the decision of the Association with respect to a | 26 | | protest may be
appealed to the Director pursuant to Section |
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| 1 | | 531.11(3);
| 2 | | (e) in the alternative to rendering a decision with | 3 | | respect to any
protest based on a question regarding the | 4 | | assessment base, the Association
may refer such protests to | 5 | | the Director for final decision, with or without
a | 6 | | recommendation from the Association; and
| 7 | | (f) interest on any refund due a protesting member | 8 | | insurer shall be paid
at the rate actually earned by the | 9 | | Association.
| 10 | | (5) The plan of operation may provide that any or all | 11 | | powers and duties
of the Association, except those under | 12 | | paragraph (3) (c) of subsection (n) (10)
of Section 531.08 and | 13 | | Section 531.09 are delegated to a corporation,
association or | 14 | | other organization which performs or will perform functions
| 15 | | similar to those of this Association, or its equivalent, in 2 | 16 | | or more states.
Such a corporation, association or organization | 17 | | shall be reimbursed for any
payments made on behalf of the | 18 | | Association and shall be paid for its
performance of any | 19 | | function of the Association. A delegation under this
subsection | 20 | | shall take effect only with the approval of both the Board of
| 21 | | Directors and the Director, and may be made only to a | 22 | | corporation, association
or organization which extends | 23 | | protection not substantially less favorable and
effective than | 24 | | that provided by this Act.
| 25 | | (Source: P.A. 96-1450, eff. 8-20-10.)
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| 1 | | (215 ILCS 5/531.11) (from Ch. 73, par. 1065.80-11)
| 2 | | Sec. 531.11. Duties and powers of the Director. In addition | 3 | | to
the duties and powers enumerated elsewhere in this Article:
| 4 | | (1) The Director must do all of the following:
| 5 | | (a) Upon request of the board of directors, provide the | 6 | | Association with
a statement of the premiums in the | 7 | | appropriate accounts for each
member insurer.
| 8 | | (b) Notify the board of directors of the existence of | 9 | | an impaired or
insolvent
insurer not later than 3 days | 10 | | after a determination of impairment or insolvency
is made | 11 | | or when the Director receives notice of impairment or | 12 | | insolvency.
| 13 | | (c) Give notice to an impaired insurer as required by | 14 | | Sections
34 or 60. Notice to the impaired insurer shall | 15 | | constitute
notice to its shareholders, if any.
| 16 | | (d) In any liquidation or rehabilitation proceeding | 17 | | involving
a domestic member insurer, be appointed as the | 18 | | liquidator or rehabilitator. If
a foreign or alien member | 19 | | insurer is subject to a liquidation proceeding
in its | 20 | | domiciliary
jurisdiction or state of entry, the Director | 21 | | shall be appointed conservator.
| 22 | | (2) The Director may suspend or revoke, after notice and | 23 | | hearing,
the certificate of authority to transact business | 24 | | insurance in this State of any member
insurer which fails to | 25 | | pay an assessment when due or fails to comply with the
plan
of | 26 | | operation. As an alternative the Director may levy a forfeiture |
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| 1 | | on any
member
insurer which fails to pay an assessment when | 2 | | due. Such forfeiture may not
exceed
5% of the unpaid assessment | 3 | | per month, but no forfeiture may be less than
$100 per month.
| 4 | | (3) Any action of the board of directors or the Association | 5 | | may be
appealed to the Director by any member insurer or any | 6 | | other person
adversely affected by such action if such appeal | 7 | | is taken within 30
days of the action being appealed. Any final | 8 | | action or order of the Director
is subject to judicial review | 9 | | in a court of competent jurisdiction.
| 10 | | (4) The liquidator, rehabilitator, or conservator of any | 11 | | impaired insurer
may notify all interested persons of the | 12 | | effect of this Article.
| 13 | | (Source: P.A. 96-1450, eff. 8-20-10.)
| 14 | | (215 ILCS 5/531.12) (from Ch. 73, par. 1065.80-12)
| 15 | | Sec. 531.12. Prevention of Insolvencies. To aid in the | 16 | | detection and
prevention of member insurer insolvencies or | 17 | | impairments:
| 18 | | (1) It shall be the duty of the Director:
| 19 | | (a) To notify the Commissioners of all other states, | 20 | | territories of the
United States, and the District of | 21 | | Columbia when he takes any of the following
actions against | 22 | | a member insurer:
| 23 | | (i) revocation of license;
| 24 | | (ii) suspension of license;
| 25 | | (iii) makes any formal order except for an order |
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| 1 | | issued pursuant to
Article XII 1/2 of this Code that | 2 | | such member insurer company restrict its premium | 3 | | writing,
obtain additional contributions to surplus, | 4 | | withdraw from the State,
reinsure all or any part of | 5 | | its business, or increase capital, surplus or
any other | 6 | | account for the security of policy owners, contract | 7 | | owners, certificate holders, policyholders or | 8 | | creditors.
| 9 | | Such notice shall be transmitted to all commissioners
| 10 | | within 30 days following
the action taken or the date on | 11 | | which the action occurs.
| 12 | | (b) To report to the board of directors when he has | 13 | | taken any of the actions
set forth in subparagraph (a) of | 14 | | this paragraph or has received a report
from any other | 15 | | commissioner indicating that any such action has been taken
| 16 | | in another state. Such report to the board of directors | 17 | | shall contain all
significant details of the action taken | 18 | | or the report received from another
commissioner.
| 19 | | (c) To report to the board of directors when the | 20 | | Director has reasonable cause to believe from an | 21 | | examination, whether completed or in process, of any member | 22 | | insurer that the member insurer may be an impaired or | 23 | | insolvent insurer. | 24 | | (d) To furnish to the board of directors the National | 25 | | Association of Insurance Commissioners Insurance | 26 | | Regulatory Information System ratios and listings of |
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| 1 | | companies not included in the ratios developed by the | 2 | | National Association of Insurance Commissioners. The board | 3 | | may use the information contained therein in carrying out | 4 | | its duties and responsibilities under this Section. The | 5 | | report and the information contained therein shall be kept | 6 | | confidential by the board of directors until such time as | 7 | | made public by the Director or other lawful authority. | 8 | | (2) The Director may seek the advice and recommendations of | 9 | | the board
of directors concerning any matter affecting his or | 10 | | her duties and responsibilities
regarding the financial | 11 | | condition of member insurers companies and insurers or health | 12 | | maintenance organizations companies seeking admission
to | 13 | | transact insurance business in this State.
| 14 | | (3) The board of directors may, upon majority vote, make | 15 | | reports and recommendations
to the Director upon any matter | 16 | | germane to the liquidation, rehabilitation
or conservation of | 17 | | any member insurer and insurers or health maintenance | 18 | | organizations seeking admission to transact business in this | 19 | | State . Such reports
and recommendations shall not be considered | 20 | | public documents.
| 21 | | (4) The board of directors may, upon majority vote, make | 22 | | recommendations
to the Director for the detection and | 23 | | prevention of member insurer insolvencies.
| 24 | | (5) The board of directors shall, at the conclusion of any
| 25 | | member insurer insolvency
in which the Association was | 26 | | obligated to pay covered claims prepare a report
to the |
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| 1 | | Director containing such information as it may have in its | 2 | | possession
bearing on the history and causes of such | 3 | | insolvency. The board shall cooperate
with the boards of | 4 | | directors of guaranty associations in other states in
preparing | 5 | | a report on the history and causes for insolvency of a | 6 | | particular member
insurer, and may adopt by reference any | 7 | | report prepared by such other
associations.
| 8 | | (Source: P.A. 96-1450, eff. 8-20-10.)
| 9 | | (215 ILCS 5/531.13) (from Ch. 73, par. 1065.80-13)
| 10 | | Sec. 531.13. Tax offset. In the event the aggregate Class | 11 | | A, B and C
assessments for all member insurers do not exceed | 12 | | $3,000,000 in any one
calendar year, no member insurer shall | 13 | | receive a tax offset. However, for
any one calendar year before | 14 | | 1998 in which the
total of such assessments exceeds $3,000,000,
| 15 | | the amount in excess of $3,000,000 shall be subject to a tax | 16 | | offset to the
extent of 20% of the amount of such assessment | 17 | | for each of the 5
calendar
years following the year in which | 18 | | such assessment was paid, and ending prior
to January 1, 2003, | 19 | | and each member
insurer may offset the proportionate amount of | 20 | | such excess paid by the member insurer
against its liabilities | 21 | | for the tax imposed by subsections (a) and (b)
of Section 201 | 22 | | of the Illinois
Income Tax Act. The provisions of this Section | 23 | | shall expire and be given no
effect for any tax period | 24 | | commencing on and after January 1, 2003.
| 25 | | (Source: P.A. 93-29, eff. 6-20-03.)
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| 1 | | (215 ILCS 5/531.14) (from Ch. 73, par. 1065.80-14)
| 2 | | Sec. 531.14. Miscellaneous Provisions. | 3 | | (1) Nothing in this
Article may be construed to reduce the | 4 | | liability for unpaid assessments of the insured
of an impaired | 5 | | or insolvent insurer operating under a plan with assessment | 6 | | liability.
| 7 | | (2) Records must be kept of all negotiations and meetings | 8 | | in which
the Association or its representatives are involved to | 9 | | discuss the activities of the
Association in carrying out its | 10 | | powers and duties under Section 531.08. Records of such
| 11 | | negotiations or meetings may be made public only upon the | 12 | | termination of a
liquidation, rehabilitation, or conservation | 13 | | proceeding involving the impaired
or insolvent insurer, upon | 14 | | the termination of the impairment or insolvency
of the insurer, | 15 | | or upon the order
of a court of competent jurisdiction. Nothing | 16 | | in this paragraph (2) limits the
duty of the Association to | 17 | | render a report of its activities under Section
531.15.
| 18 | | (3) For the purpose of carrying out its obligations under | 19 | | this Article,
the Association is deemed to be a creditor of the | 20 | | impaired or insolvent
insurer to the extent of assets | 21 | | attributable to covered policies or contracts reduced by any
| 22 | | amounts to which the Association is entitled as subrogee (under | 23 | | subsection (m) paragraph (8)
of Section 531.08). All assets of | 24 | | the impaired or insolvent insurer
attributable to covered | 25 | | policies or contracts must be used to continue all covered |
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| 1 | | policies
and pay all contractual obligations of the impaired | 2 | | insurer as required by this
Article. "Assets attributable to | 3 | | covered policies or contracts ", as used in this paragraph
(3), | 4 | | is that proportion of the
assets which the reserves that should | 5 | | have been established
for such policies or contracts bear to | 6 | | the reserve that should have been
established for all policies | 7 | | of
insurance or health benefit plans written by the impaired or | 8 | | insolvent insurer.
| 9 | | (4) (a) Prior to the termination of any liquidation, | 10 | | rehabilitation,
or conservation proceeding, the court may take | 11 | | into consideration the contributions
of the respective | 12 | | parties, including the Association, the shareholders , contract | 13 | | owners, certificate holders, enrollees, and policy owners
| 14 | | policyowners of the impaired or insolvent insurer, and any | 15 | | other party with
a bona fide interest,
in making an equitable | 16 | | distribution of the ownership rights of such impaired
or | 17 | | insolvent
insurer. In such a determination, consideration must | 18 | | be given to the welfare of the
policy owners, contract owners, | 19 | | certificate holders, and enrollees policyholders of the | 20 | | continuing or successor insurer.
| 21 | | (b) No distribution to stockholders, if any, of an impaired | 22 | | or insolvent insurer
may be made until and unless the total
| 23 | | amount of valid claims of the Association for funds expended | 24 | | with interest in carrying
out its powers and duties under | 25 | | Section 531.08, with respect to such member insurer
have been | 26 | | fully recovered by the Association.
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| 1 | | (5) (a) If an order for liquidation or rehabilitation of
a | 2 | | member an insurer
domiciled in this State has been entered, the | 3 | | receiver appointed under such
order has a right to recover on | 4 | | behalf of the member insurer, from any affiliate that
| 5 | | controlled it, the amount of distributions, other than stock | 6 | | dividends paid by
the member insurer on its capital stock, made | 7 | | at any time during the 5 years preceding
the petition for | 8 | | liquidation or rehabilitation subject to the limitations of
| 9 | | paragraphs (b) to (d).
| 10 | | (b) No such dividend is recoverable if the member insurer | 11 | | shows that when
paid the distribution was lawful and | 12 | | reasonable, and that the member insurer did not
know and could | 13 | | not reasonably have known that the distribution might adversely | 14 | | affect
the ability of the member insurer to fulfill its | 15 | | contractual obligations.
| 16 | | (c) Any person who as an affiliate that controlled the | 17 | | member insurer at
the time the distributions were paid is | 18 | | liable up to the amount of distributions
he received. Any | 19 | | person who was an affiliate that controlled the member insurer | 20 | | at the
time the distributions were declared, is liable up to | 21 | | the amount of distributions
he would have received if they had | 22 | | been paid immediately. If 2 persons are
liable with respect to | 23 | | the same distributions, they are jointly and severally liable.
| 24 | | (d) The maximum amount recoverable under subsection (5) of | 25 | | this Section is
the amount needed in excess of all other | 26 | | available assets of the insolvent insurer
to pay the |
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| 1 | | contractual obligations of the insolvent insurer.
| 2 | | (e) If any person liable under paragraph (c) of subsection | 3 | | (5) of this
Section is insolvent, all its
affiliates that | 4 | | controlled it at the time the dividend was paid are jointly and
| 5 | | severally liable for any resulting deficiency in the amount | 6 | | recovered from
the insolvent affiliate.
| 7 | | (6) As a creditor of the impaired or insolvent insurer as | 8 | | established in subsection (3) of this Section and consistent | 9 | | with subsection (2) of Section 205 of this Code, the | 10 | | Association and other similar associations shall be entitled to | 11 | | receive a disbursement of assets out of the marshaled assets, | 12 | | from time to time as the assets become available to reimburse | 13 | | it, as a credit against contractual obligations under this | 14 | | Article. If the liquidator has not, within 120 days after a | 15 | | final determination of insolvency of a member an insurer by the | 16 | | receivership court, made an application to the court for the | 17 | | approval of a proposal to disburse assets out of marshaled | 18 | | assets to guaranty associations having obligations because of | 19 | | the insolvency, then the Association shall be entitled to make | 20 | | application to the receivership court for approval of its own | 21 | | proposal to disburse these assets. | 22 | | (Source: P.A. 96-1450, eff. 8-20-10.)
| 23 | | (215 ILCS 5/531.19) (from Ch. 73, par. 1065.80-19)
| 24 | | Sec. 531.19.
Prohibited advertisement of action of the | 25 | | Insurance Guaranty
Association in sale of insurance.
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| 1 | | (a) No person, including a member an insurer,
agent
or | 2 | | affiliate of a member an insurer shall make, publish, | 3 | | disseminate, circulate,
or place before the public, or cause | 4 | | directly or indirectly, to be made,
published, disseminated, | 5 | | circulated or placed before the public, in any
newspaper, | 6 | | magazine or other publication, or in the form of a notice, | 7 | | circular,
pamphlet, letter or poster, or over any radio station | 8 | | or television station,
or in any other way, any advertisement, | 9 | | announcement or statement, written or
oral, which
uses the | 10 | | existence of the Insurance Guaranty Association of this State | 11 | | for
the purpose of sales, solicitation or inducement to | 12 | | purchase any form of
insurance or other coverage covered by | 13 | | this Article; provided, however, that this Section
shall not | 14 | | apply to the Illinois Life and Health Guaranty Association or
| 15 | | any other entity which does not sell or solicit insurance or | 16 | | coverage by a health maintenance organization .
| 17 | | (b) Within 180 days of August 16,
1993, the Association | 18 | | shall prepare a summary document describing the general
| 19 | | purposes and current limitations of this Article and complying | 20 | | with subsection
(c). This document shall be submitted to the | 21 | | Director for approval. Sixty
days after receiving approval, no | 22 | | member insurer may deliver a policy or contract
described in | 23 | | subparagraph (a) of paragraph (2) of Section 531.03 and not
| 24 | | excluded under subparagraph (b) of that Section to a policy | 25 | | owner, or
contract owner, certificate holder , or enrollee | 26 | | unless the document is delivered to the policy owner, or |
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| 1 | | contract owner, certificate
holder , or enrollee prior to or at | 2 | | the time of delivery of the policy or contract. The document | 3 | | should also be available upon request
by
a policy owner, | 4 | | contract owner, certificate holder, or enrollee policyholder . | 5 | | The distribution, delivery, or contents or interpretation of
| 6 | | this document shall not mean that either the policy or the | 7 | | contract or the policy owner, contract owner, certificate
| 8 | | holder , or enrollee thereof would be covered in the event of | 9 | | the impairment or insolvency of
a member insurer. The | 10 | | description document shall be revised by the Association
as | 11 | | amendments to this Article may require. Failure to receive this | 12 | | document
does not give the policy owner policyholder , contract | 13 | | owner holder , certificate holder, enrollee, or insured
any | 14 | | greater rights than those stated in this Article.
| 15 | | (c) The document prepared under subsection (b) shall | 16 | | contain a clear and
conspicuous disclaimer on its face. The | 17 | | Director shall promulgate a rule
establishing the form and | 18 | | content of the disclaimer. The disclaimer shall:
| 19 | | (1) State the name and address of the Life and Health | 20 | | Insurance Guaranty
Association and of the Department.
| 21 | | (2) Prominently warn the policy owner, or contract | 22 | | owner, certificate holder , or enrollee that the Life and
| 23 | | Health Insurance Guaranty Association may not cover the | 24 | | policy or contract or, if coverage
is available, it will be | 25 | | subject to substantial limitations and exclusions and
| 26 | | conditioned on continued residence in the State.
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| 1 | | (3) State that the member insurer and its agents are | 2 | | prohibited by law from using
the existence of the Life and | 3 | | Health Insurance Guaranty Association for the
purpose of | 4 | | sales, solicitation, or inducement to purchase any form of
| 5 | | insurance or health maintenance organization coverage .
| 6 | | (4) Emphasize that the policy owner, or contract owner, | 7 | | certificate holder , or enrollee should not rely on
coverage | 8 | | under the Life and Health Insurance Guaranty Association | 9 | | when
selecting an insurer or health maintenance | 10 | | organization .
| 11 | | (5) Provide other information as directed by the | 12 | | Director.
| 13 | | (d) (Blank).
| 14 | | (Source: P.A. 88-364; 88-627, eff. 9-9-94; 89-97, eff. 7-7-95.)
| 15 | | (215 ILCS 5/531.20 new) | 16 | | Sec. 531.20. Merger of Illinois Health Maintenance | 17 | | Organization Guaranty Association with and into the Illinois | 18 | | Life and Health Insurance Guaranty Association. In order to | 19 | | provide for the merger of the Illinois Health Maintenance | 20 | | Organization Guaranty Association with and into the Illinois | 21 | | Life and Health Insurance Guaranty Association, the following | 22 | | shall apply: | 23 | | (1) The Illinois Health Maintenance Organization | 24 | | Guaranty Association is merged with and into the Illinois | 25 | | Life and Health Insurance Guaranty Association, which |
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| 1 | | shall then continue to be known as the Illinois Life and | 2 | | Health Insurance Guaranty Association. | 3 | | (2) All premerger rights, powers, privileges, assets, | 4 | | property, duties, debts, obligations, and liabilities of | 5 | | each association related to a liquidated member shall | 6 | | remain with the members of the respective association prior | 7 | | to merger and subject to the laws in effect at the time the | 8 | | order of liquidation was entered with respect to the | 9 | | liquidated member, but shall be administered by the | 10 | | Illinois Life and Health Insurance Guaranty Association. | 11 | | The Illinois Life and Health Insurance Guaranty | 12 | | Association shall adopt changes to its plan of operation | 13 | | which reasonably accomplish this. | 14 | | (3) Subject to paragraph (2), the Illinois Life and | 15 | | Health Insurance Guaranty Association shall succeed, | 16 | | without other transfer, to all the rights, powers, | 17 | | privileges, assets, and property of the Illinois Health | 18 | | Maintenance Organization Guaranty Association and shall be | 19 | | subject to all duties, debts, obligations, and liabilities | 20 | | of the Illinois Health Maintenance Organization that exist | 21 | | as of the date of the merger of the Illinois Health | 22 | | Maintenance Organization Guaranty Association into the | 23 | | Illinois Life and Health Insurance Guaranty Association. | 24 | | Without limiting the generality of the foregoing, the | 25 | | Illinois Life and Health Insurance Guaranty Association | 26 | | shall succeed to (A) all collected, uncollected, or |
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| 1 | | unbilled assessments of the Illinois Health Maintenance | 2 | | Organization Guaranty Association, (B) all cash, bank | 3 | | accounts, accrued interest, and tangible property of the | 4 | | Illinois Health Maintenance Organization Guaranty | 5 | | Association, (C) all rights, powers, privileges, duties, | 6 | | and obligations of the Illinois Health Maintenance | 7 | | Organization Guaranty Association under any of its | 8 | | contracts or commitments, and (D) all subrogations, | 9 | | assignments, and creditor rights and interests of the | 10 | | Illinois Health Maintenance Organization Guaranty | 11 | | Association. | 12 | | (4) All rights of creditors and all liens upon the | 13 | | property of the Illinois Health Maintenance Organization | 14 | | Guaranty Association shall be preserved unimpaired, | 15 | | provided that the liens upon property of the Illinois | 16 | | Health Maintenance Organization Guaranty Association shall | 17 | | be limited to the property affected thereby immediately | 18 | | prior to the effective date of this amendatory Act of the | 19 | | 100th General Assembly. | 20 | | (5) Any action or proceeding pending by or against the | 21 | | Illinois Health Maintenance Organization Guaranty | 22 | | Association may be prosecuted to judgment. | 23 | | (6) Notwithstanding any other provision to the | 24 | | contrary in this Article: | 25 | | (A) It is the intent of this Section to preserve | 26 | | only the rights, powers, privileges, assets, property, |
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| 1 | | debts, obligations, and liabilities of the Illinois | 2 | | Health Maintenance Organization Guaranty Association | 3 | | as they existed on the date of its merger into the | 4 | | Illinois Life and Health Insurance Guaranty | 5 | | Association, and not to provide contract owners, | 6 | | certificate holders, enrollees and policy owners, or | 7 | | their respective payees, beneficiaries, or assignees, | 8 | | with duplicative or new rights, powers, privileges, | 9 | | assets, or property. | 10 | | (B) Accordingly, no contract owner, certificate | 11 | | holder, enrollee and policy owner, and no contract | 12 | | owner's, certificate holder's, enrollee's or policy | 13 | | owner's payee, beneficiary, or assignee, shall be | 14 | | entitled to (i) a recovery from the Illinois Life and | 15 | | Health Insurance Guaranty Association that is | 16 | | duplicative of a previous recovery from the Illinois | 17 | | Health Maintenance Organization Guaranty Association | 18 | | or (ii) a recovery from the Illinois Life and Health | 19 | | Insurance Guaranty Association on account of a claim | 20 | | against the Illinois Health Maintenance Organization | 21 | | Guaranty Association where the Illinois Life and | 22 | | Health Insurance Guaranty Association is liable with | 23 | | respect to a claim under the same policy or contract | 24 | | under this Article. | 25 | | (215 ILCS 125/Art. VI rep.) |
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| 1 | | Section 10. The Health Maintenance Organization Act is | 2 | | amended by repealing Article VI.
| 3 | | Section 99. Effective date. This Act takes effect upon | 4 | | becoming law.
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