Full Text of HB4725 98th General Assembly
HB4725enr 98TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning regulation.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 10. The Illinois Insurance Code is amended by | 5 | | changing Sections 131.16, 131.20a, and 139 and adding Article | 6 | | VIII 1/4 as follows: | 7 | | (215 ILCS 5/Art. VIII 1/4 heading new) | 8 | | ARTICLE VIII 1/4. RISK MANAGEMENT AND | 9 | | OWN RISK AND SOLVENCY ASSESSMENT | 10 | | (215 ILCS 5/129 new) | 11 | | Sec. 129. Short title. This Article may be cited as the | 12 | | Risk Management and Own Risk and Solvency Assessment Law. | 13 | | (215 ILCS 5/129.1 new) | 14 | | Sec. 129.1. Purpose and scope. The purpose of this Article | 15 | | is to provide the requirements for maintaining a risk | 16 | | management framework and completing an own risk and solvency | 17 | | assessment (ORSA) and provide guidance and instructions for | 18 | | filing an ORSA summary report with the Director. | 19 | | The requirements of this Article shall apply to all | 20 | | insurers domiciled in this State unless exempt pursuant to | 21 | | Section 129.7. |
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| 1 | | The General Assembly finds and declares that an ORSA | 2 | | summary report will contain confidential and sensitive | 3 | | information related to an insurer or insurance group's | 4 | | identification of risks material and relevant to the insurer or | 5 | | insurance group filing the report. This information will | 6 | | include proprietary and trade secret information that has the | 7 | | potential for harm and competitive disadvantage to the insurer | 8 | | or insurance group if the information is made public. It is the | 9 | | intent of this General Assembly that the ORSA summary report | 10 | | shall be a confidential document filed with the Director, that | 11 | | the ORSA summary report shall be shared only as stated herein | 12 | | and to assist the Director in the performance of his or her | 13 | | duties, and that in no event shall an ORSA summary report be | 14 | | subject to public disclosure. | 15 | | (215 ILCS 5/129.2 new) | 16 | | Sec. 129.2. Definitions. In this Article: | 17 | | "Insurance group", for the purpose of conducting an ORSA, | 18 | | means those insurers and affiliates included within an | 19 | | insurance holding company system as defined in Section 131.1 of | 20 | | this Code. | 21 | | "Insurer" has the same meaning as set forth in Section 2 of | 22 | | this Code, except that it shall not include agencies, | 23 | | authorities, or instrumentalities of the United States or its | 24 | | possessions or territories, the Commonwealth of Puerto Rico, | 25 | | the District of Columbia, or a state or political subdivision |
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| 1 | | of a state. | 2 | | "Own risk and solvency assessment" or "ORSA" means a | 3 | | confidential internal assessment, appropriate to the nature, | 4 | | scale, and complexity of an insurer or insurance group, | 5 | | conducted by that insurer or insurance group of the material | 6 | | and relevant risks associated with the insurer or insurance | 7 | | group's current business plan, and the sufficiency of capital | 8 | | resources to support those risks. | 9 | | "ORSA Guidance Manual" means the current version of the Own | 10 | | Risk and Solvency Assessment Guidance Manual developed and | 11 | | adopted by the National Association of Insurance Commissioners | 12 | | (NAIC) and as amended from time to time. A change in the ORSA | 13 | | Guidance Manual shall be effective on the January 1 following | 14 | | the calendar year in which the changes have been adopted by the | 15 | | NAIC. | 16 | | "ORSA summary report" means a confidential high-level | 17 | | summary of an insurer or insurance group's ORSA. | 18 | | (215 ILCS 5/129.3 new) | 19 | | Sec. 129.3. Risk management framework. An insurer shall | 20 | | maintain a risk management framework to assist the insurer with | 21 | | identifying, assessing, monitoring, managing, and reporting on | 22 | | its material and relevant risks. The requirement of this | 23 | | Section may be satisfied if the insurance group of which the | 24 | | insurer is a member maintains a risk management framework | 25 | | applicable to the operations of the insurer. |
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| 1 | | (215 ILCS 5/129.4 new) | 2 | | Sec. 129.4. ORSA requirement. Subject to Section 129.7 of | 3 | | this Code, an insurer, or the insurance group of which the | 4 | | insurer is a member, shall regularly conduct an ORSA consistent | 5 | | with a process comparable to the ORSA Guidance Manual. The ORSA | 6 | | shall be conducted no less than annually but also at any time | 7 | | when there are significant changes to the risk profile of the | 8 | | insurer or the insurance group of which the insurer is a | 9 | | member. | 10 | | (215 ILCS 5/129.5 new) | 11 | | Sec. 129.5. ORSA summary report. | 12 | | (a) Upon the Director's request, and no more than once each | 13 | | year, an insurer shall submit to the Director an ORSA summary | 14 | | report or any combination of reports that together contain the | 15 | | information described in the ORSA Guidance Manual, applicable | 16 | | to the insurer and the insurance group of which it is a member. | 17 | | Notwithstanding any request from the Director, if the insurer | 18 | | is a member of an insurance group, the insurer shall submit the | 19 | | report or reports required by this subsection (a) if the | 20 | | Director is the lead state commissioner of the insurance group | 21 | | as determined by the procedures within the Financial Analysis | 22 | | Handbook adopted by the National Association of Insurance | 23 | | Commissioners. | 24 | | (b) The report or reports shall include a signature of the |
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| 1 | | insurer or insurance group's chief risk officer or other | 2 | | executive having responsibility for the oversight of the | 3 | | insurer's enterprise risk management process attesting to the | 4 | | best of his or her belief and knowledge that the insurer | 5 | | applies the enterprise risk management process described in the | 6 | | ORSA summary report and that a copy of the report has been | 7 | | provided to the insurer's board of directors or the appropriate | 8 | | committee thereof. | 9 | | (c) An insurer may comply with subsection (a) of this | 10 | | Section by providing the most recent and substantially similar | 11 | | report or reports provided by the insurer or another member of | 12 | | an insurance group of which the insurer is a member to the | 13 | | commissioner of another state or to a supervisor or regulator | 14 | | of a foreign jurisdiction, if that report provides information | 15 | | that is comparable to the information described in the ORSA | 16 | | Guidance Manual. Any such report in a language other than | 17 | | English must be accompanied by a translation of that report | 18 | | into the English language. | 19 | | (d) The first filing of the ORSA summary report shall be in | 20 | | 2015. | 21 | | (215 ILCS 5/129.6 new) | 22 | | Sec. 129.6. Contents of ORSA summary report. | 23 | | (a) The ORSA summary report shall be prepared consistent | 24 | | with the ORSA Guidance Manual, subject to the requirements of | 25 | | subsection (b) of this Section. Documentation and supporting |
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| 1 | | information shall be maintained and made available upon | 2 | | examination or upon the request of the Director. | 3 | | (b) The review of the ORSA summary report, and any | 4 | | additional requests for information, shall be made using | 5 | | similar procedures currently used in the analysis and | 6 | | examination of multi-state or global insurers and insurance | 7 | | groups. | 8 | | (215 ILCS 5/129.7 new) | 9 | | Sec. 129.7. Exemption. | 10 | | (a) An insurer shall be exempt from the requirements of | 11 | | this Article if: | 12 | | (1) the insurer has annual direct written and | 13 | | unaffiliated assumed premium, including international | 14 | | direct and assumed premium, but excluding premiums | 15 | | reinsured with the Federal Crop Insurance Corporation and | 16 | | Federal Flood Program, less than $500,000,000; and | 17 | | (2) the insurance group of which the insurer is a | 18 | | member has annual direct written and unaffiliated assumed | 19 | | premium, including international direct and assumed | 20 | | premium, but excluding premiums reinsured with the Federal | 21 | | Crop Insurance Corporation and Federal Flood Program, less | 22 | | than $1,000,000,000. | 23 | | (b) If an insurer qualifies for exemption pursuant to item | 24 | | (1) of subsection (a) of this Section, but the insurance group | 25 | | of which the insurer is a member does not qualify for exemption |
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| 1 | | pursuant to item (2) of subsection (a) of this Section, then | 2 | | the ORSA summary report that may be required pursuant to | 3 | | Section 129.5 of this Code shall include every insurer within | 4 | | the insurance group. This requirement may be satisfied by the | 5 | | submission of more than one ORSA summary report for any | 6 | | combination of insurers, provided any combination of reports | 7 | | includes every insurer within the insurance group. | 8 | | (c) If an insurer does not qualify for exemption pursuant | 9 | | to item (1) of subsection (a) of this Section, but the | 10 | | insurance group of which it is a member qualifies for exemption | 11 | | pursuant to item (2) of subsection (a) of this Section, then | 12 | | the only ORSA summary report that may be required pursuant to | 13 | | Section 129.5 shall be the report applicable to that insurer. | 14 | | (d) An insurer that does not qualify for exemption pursuant | 15 | | to subsection (a) of this Section may apply to the Director for | 16 | | a waiver from the requirements of this Article based upon | 17 | | unique circumstances. In deciding whether to grant the | 18 | | insurer's request for waiver, the Director may consider the | 19 | | type and volume of business written, ownership and | 20 | | organizational structure, and any other factor the Director | 21 | | considers relevant to the insurer or insurance group of which | 22 | | the insurer is a member. If the insurer is part of an insurance | 23 | | group with insurers domiciled in more than one state, the | 24 | | Director shall coordinate with the lead state commissioner and | 25 | | with the other domiciliary commissioners in considering | 26 | | whether to grant the insurer's request for a waiver. |
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| 1 | | (e) Notwithstanding the exemptions stated in this Section,
| 2 | | the following provisions shall apply: | 3 | | (1) The Director may require that an insurer maintain a | 4 | | risk management framework, conduct an ORSA, and file an | 5 | | ORSA summary report based on unique circumstances, | 6 | | including, but not limited to, the type and volume of | 7 | | business written, ownership and organizational structure, | 8 | | federal agency requests, and international supervisor | 9 | | requests. | 10 | | (2) The Director may require that an insurer maintain a | 11 | | risk management framework, conduct an ORSA, and file an | 12 | | ORSA summary report if the insurer has risk-based capital | 13 | | for a company action level event as set forth in Section | 14 | | 35A-15 of this Code, meets one or more of the standards of | 15 | | an insurer deemed to be in hazardous financial condition as | 16 | | defined in Section 186.1 of this Code, or otherwise | 17 | | exhibits qualities of a troubled insurer as determined by | 18 | | the Director. | 19 | | (f) If an insurer that qualifies for an exemption pursuant | 20 | | to subsection (a) of this Section subsequently no longer | 21 | | qualifies for that exemption due to changes in premium as | 22 | | reflected in the insurer's most recent annual statement or in | 23 | | the most recent annual statements of the insurers within the | 24 | | insurance group of which the insurer is a member, the insurer | 25 | | shall have one year following the year the threshold is | 26 | | exceeded to comply with the requirements of this Article. |
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| 1 | | (215 ILCS 5/129.8 new) | 2 | | Sec. 129.8. Confidentiality. | 3 | | (a) Documents, materials, or other information, including | 4 | | the ORSA summary report, in the possession or control of the | 5 | | Department that are obtained by, created by, or disclosed to | 6 | | the Director or any other person under this Article, is | 7 | | recognized by this State as being proprietary and to contain | 8 | | trade secrets. All such documents, materials, or other | 9 | | information shall be confidential by law and privileged, shall | 10 | | not be subject to the Freedom of Information Act, shall not be | 11 | | subject to subpoena, and shall not be subject to discovery or | 12 | | admissible in evidence in any private civil action. However, | 13 | | the Director is authorized to use the documents, materials, or | 14 | | other information in the furtherance of any regulatory or legal | 15 | | action brought as a part of the Director's official duties. The | 16 | | Director shall not otherwise make the documents, materials, or | 17 | | other information public without the prior written consent of | 18 | | the insurer. | 19 | | (b) Neither the Director nor any person who received | 20 | | documents, materials, or other ORSA-related information, | 21 | | through examination or otherwise, while acting under the | 22 | | authority of the Director or with whom such documents, | 23 | | materials, or other information are shared pursuant to this | 24 | | Article shall be permitted or required to testify in any | 25 | | private civil action concerning any confidential documents, |
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| 1 | | materials, or information subject to subsection (a) of this | 2 | | Section. | 3 | | (c) In order to assist in the performance of regulatory | 4 | | duties, the Director may: | 5 | | (1) upon request, share documents, materials, or other | 6 | | ORSA-related information, including the confidential and | 7 | | privileged documents, materials, or information subject to | 8 | | subsection (a) of this Section, including proprietary and | 9 | | trade secret documents and materials with other state, | 10 | | federal, and international financial regulatory agencies, | 11 | | including members of any supervisory college as defined in | 12 | | the Section 131.20c of this Code, with the NAIC, and with | 13 | | any third-party consultants designated by the Director, | 14 | | provided that the recipient agrees in writing to maintain | 15 | | the confidentiality and privileged status of the | 16 | | ORSA-related documents, materials, or other information | 17 | | and has verified in writing the legal authority to maintain | 18 | | confidentiality; and | 19 | | (2) receive documents, materials, or other | 20 | | ORSA-related information, including otherwise confidential | 21 | | and privileged documents, materials, or information, | 22 | | including proprietary and trade-secret information or | 23 | | documents, from regulatory officials of other foreign or | 24 | | domestic jurisdictions, including members of any | 25 | | supervisory college as defined in the Section 131.20c of | 26 | | this Code, and from the NAIC, and shall maintain as |
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| 1 | | confidential or privileged any documents, materials, or | 2 | | information received with notice or the understanding that | 3 | | it is confidential or privileged under the laws of the | 4 | | jurisdiction that is the source of the document, material, | 5 | | or information. | 6 | | (d) The Director shall enter into a written agreement with | 7 | | the NAIC or a third-party consultant governing sharing and use | 8 | | of information provided pursuant to this Article, consistent | 9 | | with this Section that shall: | 10 | | (1) specify procedures and protocols regarding the | 11 | | confidentiality and security of information shared with | 12 | | the NAIC or a third-party consultant pursuant to this | 13 | | Article, including procedures and protocols for sharing by | 14 | | the NAIC with other state regulators from states in which | 15 | | the insurance group has domiciled insurers; the agreement | 16 | | shall provide that the recipient agrees in writing to | 17 | | maintain the confidentiality and privileged status of the | 18 | | ORSA-related documents, materials, or other information | 19 | | and has verified in writing the legal authority to maintain | 20 | | confidentiality; | 21 | | (2) specify that ownership of information shared with | 22 | | the NAIC or a third-party consultant pursuant to this | 23 | | Article remains with the Director and the NAIC's or a | 24 | | third-party consultant's use of the information is subject | 25 | | to the direction of the Director; | 26 | | (3) prohibit the NAIC or third-party consultant from |
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| 1 | | storing the information shared pursuant to this Article in | 2 | | a permanent database after the underlying analysis is | 3 | | completed; | 4 | | (4) require prompt notice to be given to an insurer | 5 | | whose confidential information in the possession of the | 6 | | NAIC or a third-party consultant pursuant to this Article | 7 | | is subject to a request or subpoena to the NAIC or a | 8 | | third-party consultant for disclosure or production; | 9 | | (5) require the NAIC or a third-party consultant to | 10 | | consent to intervention by an insurer in any judicial or | 11 | | administrative action in which the NAIC or a third-party | 12 | | consultant may be required to disclose confidential | 13 | | information about the insurer shared with the NAIC or a | 14 | | third-party consultant pursuant to this Article; and | 15 | | (6) in the case of an agreement involving a third-party | 16 | | consultant, provide for the insurer's written consent. | 17 | | (e) The sharing of information and documents by the | 18 | | Director pursuant to this Article shall not constitute a | 19 | | delegation of regulatory authority or rulemaking, and the | 20 | | Director is solely responsible for the administration, | 21 | | execution, and enforcement of the provisions of this Article. | 22 | | (f) No waiver of any applicable privilege or claim of | 23 | | confidentiality in the documents, proprietary and trade-secret | 24 | | materials, or other ORSA-related information shall occur as a | 25 | | result of disclosure of such ORSA-related information or | 26 | | documents to the Director under this Section or as a result of |
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| 1 | | sharing as authorized in this Article. | 2 | | (g) Documents, materials, or other information in the | 3 | | possession or control of the NAIC or any third-party | 4 | | consultants pursuant to this Article shall be confidential by | 5 | | law and privileged, shall not be subject to the Freedom of | 6 | | Information Act, shall not be subject to subpoena, and shall | 7 | | not be subject to discovery or admissible in evidence in any | 8 | | private civil action. | 9 | | (215 ILCS 5/129.9 new) | 10 | | Sec. 129.9. Sanctions. Any insurer failing, without just | 11 | | cause, to timely file the ORSA summary report as required in | 12 | | this Article shall be required, after notice and hearing, to | 13 | | pay a penalty of $200 for each day's delay, to be recovered by | 14 | | the Director, and the penalty so recovered shall be paid into | 15 | | the General Revenue Fund of this State. The Director may reduce | 16 | | the penalty if the insurer demonstrates to the Director that | 17 | | the imposition of the penalty would constitute a financial | 18 | | hardship to the insurer.
| 19 | | (215 ILCS 5/131.16) (from Ch. 73, par. 743.16)
| 20 | | Sec. 131.16. Reporting material changes or additions; | 21 | | penalty for late
registration statement. | 22 | | (1) Each registered company must keep current the | 23 | | information required to be
included in its registration | 24 | | statement by reporting all material changes
or additions on |
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| 1 | | amendment forms designated by the Director within 15 days
after | 2 | | the end of the month in which it learns of each change or | 3 | | addition,
or within a longer time thereafter as the Director | 4 | | may establish. Any
transaction which has been submitted to the | 5 | | Director pursuant to Section
131.20a need not be reported to | 6 | | the Director under this subsection; except
each registered | 7 | | company must
report all dividends and other distributions to | 8 | | shareholders within 5 15
business days following the | 9 | | declaration , and no less than 10 business days prior to payment | 10 | | thereof .
| 11 | | (2) On or before May 1 each year, each company subject to | 12 | | registration
under this Article shall file a statement in a | 13 | | format as designated by
the Director. This statement shall | 14 | | include information previously included
in an amendment under | 15 | | subsection (1) of this Section, transactions and
agreements
| 16 | | submitted under Section 131.20a, and any other material | 17 | | transactions which
are required to be reported.
| 18 | | (2.5) Any person within an insurance holding company system | 19 | | subject to registration shall be required to provide complete | 20 | | and accurate information to a company where the information is | 21 | | reasonably necessary to enable the company to comply with the | 22 | | provisions of this Article. | 23 | | (3) Any company failing, without just cause, to file any | 24 | | registration
statement, any summary of changes to a | 25 | | registration statement, or any Enterprise Risk Filing or any | 26 | | person within an insurance holding company system who fails to |
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| 1 | | provide complete and accurate information to a company as | 2 | | required in this Code shall be required , after notice and | 3 | | hearing,
to pay a penalty of up to $1,000 for each day's delay, | 4 | | to be
recovered by the Director
of Insurance of the State of | 5 | | Illinois , using the notice and hearing procedure in subsection | 6 | | (2) of Section 403A of this Code, and the penalty so recovered | 7 | | shall
be paid into the General Revenue Fund of the State of | 8 | | Illinois. The maximum
penalty under this section is $50,000. | 9 | | The Director may reduce
the penalty if the company demonstrates | 10 | | to the Director that the imposition
of the penalty would | 11 | | constitute a financial hardship to the company.
| 12 | | (Source: P.A. 98-609, eff. 1-1-14.)
| 13 | | (215 ILCS 5/131.20a) (from Ch. 73, par. 743.20a)
| 14 | | Sec. 131.20a. Prior notification of transactions; | 15 | | dividends and
distributions. | 16 | | (1) (a) The following transactions listed in items (i) | 17 | | through (vii) involving a domestic
company and any person in | 18 | | its insurance holding company system, including amendments or | 19 | | modifications (other than termination) of affiliate agreements | 20 | | previously filed pursuant to this Section, which are subject to | 21 | | any materiality standards contained in this Section, may not be | 22 | | entered
into unless the company has notified the Director in | 23 | | writing of its
intention to enter into such transaction at | 24 | | least 30 days prior thereto, or
such shorter period as the | 25 | | Director may permit, and the Director has not
disapproved it |
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| 1 | | within such period. The notice for amendments or modifications | 2 | | (other than termination) shall include the reasons for the | 3 | | change and the financial impact on the domestic company. | 4 | | Informal notice shall be reported, within 30 days after a | 5 | | termination of a previously filed agreement, to the Director | 6 | | for determination of the type of filing required, if any.
| 7 | | (i) Sales, purchases, exchanges of assets, loans or | 8 | | extensions of credit,
guarantees, investments, or any | 9 | | other transaction, except dividends, that involves the
| 10 | | transfer of assets from or liabilities to a company (A) | 11 | | equal to or exceeding the
lesser of 3% of the
company's | 12 | | admitted assets or 25% of its surplus as regards
| 13 | | policyholders as
of the 31st day of December next preceding | 14 | | or (B) that is proposed when the
domestic
company is not | 15 | | eligible to declare and pay a dividend or other | 16 | | distribution
pursuant to the provisions of Section 27.
| 17 | | (ii) Loans or extensions of credit to any person that | 18 | | is not an
affiliate (A) that involve the lesser of 3% of | 19 | | the company's
admitted assets
or 25% of the company's | 20 | | surplus, each as of the 31st day of December next
| 21 | | preceding, made with the agreement or understanding that | 22 | | the proceeds of
such transactions, in whole or in | 23 | | substantial part, are to be used to make
loans or | 24 | | extensions of credit to, to purchase assets of, or to make
| 25 | | investments in, any affiliate of the company making such | 26 | | loans or extensions of
credit or (B) that are proposed when |
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| 1 | | the domestic company is not eligible to
declare and
pay a | 2 | | dividend or other distribution pursuant to the provisions | 3 | | of
Section 27.
| 4 | | (iii) Reinsurance agreements or modifications thereto, | 5 | | including all reinsurance pooling agreements, reinsurance | 6 | | agreements in which the reinsurance premium or a change in | 7 | | the company's liabilities, or the projected reinsurance | 8 | | premium or a change in the company's liabilities in any of | 9 | | the next 3 years, equals or exceeds 5% of the company's | 10 | | surplus as regards policyholders, as of the 31st day of | 11 | | December next preceding, including those
agreements that | 12 | | may require as consideration the transfer of assets from a | 13 | | company to a nonaffiliate, if an agreement or understanding | 14 | | exists between the
company and nonaffiliate that any | 15 | | portion of those assets will be transferred
to one or more | 16 | | affiliates of the company.
| 17 | | (iv) All management agreements; service contracts, | 18 | | other than agency contracts; tax allocation agreements;
| 19 | | all reinsurance allocation agreements related to
| 20 | | reinsurance agreements required to be filed under this
| 21 | | Section; and all cost-sharing
arrangements.
| 22 | | (v) Direct or indirect acquisitions or investments in a | 23 | | person that controls the company, or in an affiliate of the | 24 | | company, in an amount which, together with its present | 25 | | holdings in such investments, exceeds 2.5% of the company's | 26 | | surplus as regards policyholders. Direct or indirect |
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| 1 | | acquisitions or investments in subsidiaries acquired | 2 | | pursuant to Section 131.2 of this Article (or authorized | 3 | | under any other Section of this Code), or in non-subsidiary | 4 | | insurance affiliates that are subject to the provisions of | 5 | | this Article, are exempt from this requirement. | 6 | | (vi) Any series of the previously described | 7 | | transactions that are
substantially similar to each other, | 8 | | that take place within any 180 day period,
and that in | 9 | | total are equal to or exceed the lesser of 3% of the | 10 | | domestic
company's
admitted assets or 25% of its | 11 | | policyholders surplus, as of the 31st day of the
December | 12 | | next preceding.
| 13 | | (vii) Any other material transaction that the
Director | 14 | | by rule determines
might render the company's surplus as | 15 | | regards policyholders
unreasonable in
relation to the | 16 | | company's outstanding liabilities and inadequate to its
| 17 | | financial needs or may otherwise adversely affect the | 18 | | interests of the
company's policyholders or shareholders.
| 19 | | Nothing herein contained shall be deemed to authorize or | 20 | | permit any
transactions that, in the case of a company not a | 21 | | member of the same holding
company system, would be otherwise | 22 | | contrary to law.
| 23 | | (b) Any transaction or contract otherwise described in | 24 | | paragraph (a) of this
subsection that is between a domestic | 25 | | company and any person that is not its
affiliate and that | 26 | | precedes or follows within 180 days or is concurrent with a
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| 1 | | similar transaction between that nonaffiliate and an affiliate | 2 | | of the domestic
company and that involves amounts that are | 3 | | equal to or exceed the lesser of 3%
of the domestic company's | 4 | | admitted assets or 25% of its surplus as regards
policyholders | 5 | | at the end of the prior year may not be entered into unless the
| 6 | | company has notified the Director in writing of its intention | 7 | | to enter into the
transaction at least 30 days prior thereto or | 8 | | such shorter period as the
Director may permit, and the | 9 | | Director has not disapproved it within such
period.
| 10 | | (c) A company may not enter into transactions which are | 11 | | part of
a plan
or series of like transactions with any person | 12 | | within the holding company
system if the purpose of those | 13 | | separate transactions is to avoid the
statutory threshold | 14 | | amount and thus avoid the review that would occur
otherwise. If | 15 | | the Director determines that such separate transactions were
| 16 | | entered into for such purpose, he may
exercise his authority | 17 | | under subsection (2) of Section 131.24.
| 18 | | (d) The Director, in reviewing transactions pursuant to | 19 | | paragraph (a),
shall consider whether the transactions comply | 20 | | with the standards set forth in
Section 131.20 and whether they | 21 | | may adversely affect the interests of
policyholders.
| 22 | | (e) The Director shall be notified within 30 days of any | 23 | | investment of the
domestic company in any one corporation if | 24 | | the total investment in that
corporation by the insurance | 25 | | holding company system exceeds 10% of that
corporation's voting | 26 | | securities.
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| 1 | | (f) Except for those transactions subject to approval
under | 2 | | other
Sections
of this Code,
any such transaction or agreements | 3 | | which are not disapproved by the
Director may be effective as | 4 | | of the date set forth in the notice required
under this | 5 | | Section.
| 6 | | (g) If a domestic company enters into a transaction | 7 | | described in this
subsection without having given the required | 8 | | notification, the Director , using the notice and hearing | 9 | | procedure in subsection (2) of Section 403A of this Code, may
| 10 | | cause the company to pay a civil forfeiture of not more than | 11 | | $250,000. Each
transaction so entered shall be considered a | 12 | | separate offense.
| 13 | | (2) No domestic company subject to registration under | 14 | | Section 131.13 may
pay any extraordinary dividend or make any | 15 | | other extraordinary distribution
to its shareholders until: | 16 | | (a) 30 days after the Director has received
notice of the | 17 | | declaration thereof and has not within such period
disapproved | 18 | | the payment, or (b) the Director approves such payment within
| 19 | | the 30-day period. For purposes of this subsection, an | 20 | | extraordinary
dividend or distribution is any dividend or | 21 | | distribution of cash or other
property whose fair market value, | 22 | | together with that of other dividends or
distributions, made | 23 | | within the period of 12 consecutive months ending on the
date | 24 | | on which the proposed dividend is scheduled for payment or
| 25 | | distribution exceeds the greater of: (a) 10% of the company's
| 26 | | surplus as regards policyholders as of the 31st day of December |
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| 1 | | next
preceding, or (b) the net income of the company for the | 2 | | 12-month period ending the 31st day
of December next preceding, | 3 | | but does not include pro rata distributions of
any class of the | 4 | | company's own securities.
| 5 | | Notwithstanding any other provision of law, the company may | 6 | | declare an
extraordinary dividend or distribution which is | 7 | | conditional upon the
Director's approval, and such a | 8 | | declaration confers no rights upon
security holders until: (a) | 9 | | the Director has approved the payment of the
dividend or | 10 | | distribution, or (b) the Director has not disapproved the
| 11 | | payment within the 30-day period referred to above.
| 12 | | (Source: P.A. 98-609, eff. 1-1-14.)
| 13 | | (215 ILCS 5/139) (from Ch. 73, par. 751)
| 14 | | Sec. 139. Penalties for late or false annual statement.
| 15 | | (1) Any company failing, without just cause, to file its | 16 | | financial
statements as required in this Code shall be | 17 | | required, after notice and
hearing, to pay a penalty of up to | 18 | | $1,000 for each day's delay, to
be recovered by
the Director of | 19 | | Insurance of the State of Illinois using the notice and hearing | 20 | | procedure in subsection (2) of Section 403A of this Code, and | 21 | | the penalty so
recovered shall be paid into the General Revenue | 22 | | fund of the State of
Illinois. The Director may reduce the | 23 | | penalty if the company demonstrates
to the Director that the | 24 | | imposition of the penalty would constitute a financial
hardship | 25 | | to the company.
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| 1 | | Any statement which is not materially complete when filed
| 2 | | shall
not be considered to have been properly filed until those | 3 | | deficiencies
which make the filing incomplete have been | 4 | | corrected and filed.
| 5 | | (2) Any director, officer, agent or employee of any | 6 | | company, who
subscribes to, makes or concurs in making or | 7 | | publishing any annual or other
statement required by law, | 8 | | knowing the same to contain any material
statement which is | 9 | | false shall, after notice and hearing, be guilty of a
business | 10 | | offense and shall be fined not more than $50,000.
| 11 | | The penalty shall be paid into the General Revenue fund of | 12 | | the State of
Illinois.
| 13 | | (Source: P.A. 88-364.)
| 14 | | Section 97. Severability. The provisions of this Act are | 15 | | severable under Section 1.31 of the Statute on Statutes.
| 16 | | Section 99. Effective date. This Act takes effect July 1, | 17 | | 2015.
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INDEX
| 2 | |
Statutes amended in order of appearance
| | 3 | | 5 ILCS 140/7.5 | | | 4 | | 215 ILCS 5/Art. VIII 1/4 | 5 | | heading new | | | 6 | | 215 ILCS 5/129 new | | | 7 | | 215 ILCS 5/129.1 new | | | 8 | | 215 ILCS 5/129.2 new | | | 9 | | 215 ILCS 5/129.3 new | | | 10 | | 215 ILCS 5/129.4 new | | | 11 | | 215 ILCS 5/129.5 new | | | 12 | | 215 ILCS 5/129.6 new | | | 13 | | 215 ILCS 5/129.7 new | | | 14 | | 215 ILCS 5/129.8 new | | | 15 | | 215 ILCS 5/129.9 new | | | 16 | | 215 ILCS 5/131.16 | from Ch. 73, par. 743.16 | | 17 | | 215 ILCS 5/131.20a | from Ch. 73, par. 743.20a | | 18 | | 215 ILCS 5/139 | from Ch. 73, par. 751 |
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