Full Text of SB0683 100th General Assembly
SB0683enr 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 adding | 5 | | Section 141b and by changing Sections 205 and 545 as follows: | 6 | | (215 ILCS 5/141b new) | 7 | | Sec. 141b. Third party access to files. Any contract with a | 8 | | third party ("administrator") to provide claim services for a | 9 | | property and casualty company must contain the following | 10 | | provisions: | 11 | | (1) Upon liquidation or rehabilitation of the insurer, | 12 | | the files and any data related thereto become the sole | 13 | | property of the estate. The administrator shall have | 14 | | reasonable access and right to copy files at the | 15 | | administrator's expense. | 16 | | (2) In the event electronic files are used, the | 17 | | administrator must keep all data in such a format that it | 18 | | is easily separated from other data maintained by the | 19 | | administrator and timely transferred to the liquidator | 20 | | upon the entry of an order or liquidation. "Timely | 21 | | transferred", in this context, means the claim file data | 22 | | must be transferred to the liquidator within 10 days after | 23 | | the entry of an order of liquidation. |
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| 1 | | The provisions of this Section shall apply to all contracts | 2 | | entered into after the effective date of this amendatory Act of | 3 | | the 100th General Assembly, and any existing contracts shall | 4 | | have one year to come into compliance with this Section.
| 5 | | (215 ILCS 5/205) (from Ch. 73, par. 817)
| 6 | | Sec. 205. Priority of distribution of general assets.
| 7 | | (1) The priorities of distribution of general assets from | 8 | | the
company's estate is to be as follows:
| 9 | | (a) The costs and expenses of administration , | 10 | | including, but not limited to, the following: | 11 | | (i) The reasonable expenses of the Illinois | 12 | | Insurance Guaranty Fund, the Illinois Life and Health | 13 | | Insurance Guaranty Association, and the Illinois | 14 | | Health Maintenance Organization Guaranty Association | 15 | | and of any similar organization in any other state, | 16 | | including overhead, salaries, and other general | 17 | | administrative expenses allocable to the receivership | 18 | | (administrative and claims handling expenses and | 19 | | expenses in connection with arrangements for ongoing | 20 | | coverage), but excluding expenses incurred in the | 21 | | performance of duties under Section 547 or similar | 22 | | duties under the statute governing a similar | 23 | | organization in another state. For property and | 24 | | casualty insurance guaranty associations that guaranty | 25 | | certain obligations of any member company as defined by |
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| 1 | | Section 534.5, expenses shall include, but not be | 2 | | limited to, loss adjustment expenses, which shall | 3 | | include adjusting and other expenses and defense and | 4 | | cost containment expenses. The expenses of such | 5 | | property and casualty guaranty associations, including | 6 | | the Illinois Insurance Guaranty Fund, shall be | 7 | | reimbursed as prescribed by Section 545, but shall be | 8 | | subordinate to all other costs and expenses of | 9 | | administration, including the expenses reimbursed | 10 | | pursuant to subparagraph (ii) of this paragraph (a). | 11 | | (ii) The expenses expressly approved or ratified | 12 | | by the Director as liquidator or rehabilitator, | 13 | | including, but not limited to, the following: | 14 | | (1) the actual and necessary costs of | 15 | | preserving or recovering the property of the | 16 | | insurer; | 17 | | (2) reasonable compensation for all services | 18 | | rendered on behalf of the administrative | 19 | | supervisor or receiver; | 20 | | (3) any necessary filing fees; | 21 | | (4) the fees and mileage payable to witnesses; | 22 | | (5) unsecured loans obtained by the receiver; | 23 | | and | 24 | | (6) expenses approved by the conservator or | 25 | | rehabilitator of the insurer, if any, incurred in the | 26 | | course of the conservation or rehabilitation that are |
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| 1 | | unpaid at the time of the entry of the order of | 2 | | liquidation. | 3 | | Any unsecured loan falling under item (5) of | 4 | | subparagraph (ii) of this paragraph (a) shall have priority | 5 | | over all other costs and expenses of administration, unless | 6 | | the lender agrees otherwise. Absent agreement to the | 7 | | contrary, all other costs and expenses of administration | 8 | | shall be shared on a pro-rata basis, except for the | 9 | | expenses of property and casualty guaranty associations, | 10 | | which shall have a lower priority pursuant to subparagraph | 11 | | (i) of this paragraph (a). , including the expenses of
the | 12 | | Illinois Insurance Guaranty Fund, the Illinois Life and | 13 | | Health Insurance
Guaranty Association, the Illinois Health | 14 | | Maintenance Organization Guaranty
Association and of any | 15 | | similar organization in any other state
as prescribed in | 16 | | subsection (c) of Section 545.
| 17 | | (b) Secured
claims,
including claims for taxes and | 18 | | debts due the federal or any state or local
government, | 19 | | that are secured by liens perfected prior to the
filing of | 20 | | the
complaint.
| 21 | | (c) Claims for wages actually owing to employees for | 22 | | services rendered
within
3 months prior to the date of the | 23 | | filing of the complaint, not exceeding $1,000
to each | 24 | | employee unless there are claims due the federal government | 25 | | under
paragraph (f), then the claims for wages shall have a | 26 | | priority of
distribution immediately following that of |
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| 1 | | federal claims under paragraph (f)
and immediately | 2 | | preceding claims of general creditors under paragraph (g).
| 3 | | (d) Claims by policyholders, beneficiaries, and | 4 | | insureds, under
insurance policies, annuity contracts, and | 5 | | funding agreements,
liability
claims against insureds | 6 | | covered under insurance policies and insurance
contracts | 7 | | issued by the company, claims of obligees (and, subject to | 8 | | the discretion of the
receiver, completion contractors) | 9 | | under surety bonds and surety undertakings (not to include | 10 | | bail bonds, mortgage or financial guaranty, or other forms | 11 | | of insurance offering protection against
investment risk), | 12 | | claims by principals under surety bonds and surety | 13 | | undertakings for wrongful
dissipation of collateral by the | 14 | | insurer or its agents, and claims incurred during any | 15 | | extension of
coverage provided under subsection (5) of | 16 | | Section 193, and claims of the Illinois Insurance
Guaranty | 17 | | Fund, the Illinois Life and Health Insurance Guaranty | 18 | | Association,
the Illinois Health Maintenance Organization | 19 | | Guaranty Association , and any
similar organization in | 20 | | another state
as prescribed in Section 545. For purposes of | 21 | | this Section, "funding
agreement" means an agreement | 22 | | whereby an insurer authorized to write business
under Class | 23 | | 1 of Section 4 of this Code may accept and accumulate funds | 24 | | and
make one or more payments at future dates in amounts | 25 | | that are not based upon
mortality or morbidity | 26 | | contingencies.
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| 1 | | (e) Claims by policyholders, beneficiaries, and | 2 | | insureds, the
allowed
values of which were determined by | 3 | | estimation under paragraph (b) of subsection
(4) of Section | 4 | | 209.
| 5 | | (f) Any other claims due the federal government.
| 6 | | (g) All other claims of general creditors not falling | 7 | | within
any
other
priority under this Section including | 8 | | claims for taxes and debts due any state
or local | 9 | | government which are not secured
claims and claims for
| 10 | | attorneys' fees incurred by the company in contesting its | 11 | | conservation,
rehabilitation, or liquidation.
| 12 | | (h) Claims of guaranty fund certificate holders,
| 13 | | guaranty
capital
shareholders, capital note holders, and | 14 | | surplus note holders.
| 15 | | (i) Proprietary claims of shareholders, members, or | 16 | | other
owners.
| 17 | | Every claim under a written agreement, statute, or rule | 18 | | providing that the
assets in a separate account are not | 19 | | chargeable with the liabilities arising
out of any other | 20 | | business of the insurer shall be satisfied out of the funded
| 21 | | assets in the separate account equal to, but not to exceed, the | 22 | | reserves
maintained in the separate account under the separate | 23 | | account agreement, and to
the extent, if any, the claim is not | 24 | | fully discharged thereby, the remainder
of the claim shall be | 25 | | treated as a priority level (d) claim under paragraph
(d) of | 26 | | this subsection to the extent that reserves have been |
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| 1 | | established in the
insurer's general account pursuant to | 2 | | statute, rule, or the separate account
agreement.
| 3 | | For purposes of this provision, "separate account | 4 | | policies, contracts, or
agreements" means any policies, | 5 | | contracts, or agreements that provide for
separate accounts as | 6 | | contemplated by Section 245.21.
| 7 | | To the extent that any assets of an insurer, other than | 8 | | those assets properly
allocated to and maintained in a separate | 9 | | account, have been used to fund or
pay any expenses, taxes, or | 10 | | policyholder benefits that are attributable to a
separate | 11 | | account policy, contract, or agreement that should have been | 12 | | paid by a
separate account prior to the commencement of | 13 | | receivership proceedings, then
upon the commencement of | 14 | | receivership proceedings, the separate accounts
that benefited | 15 | | from this payment or funding shall first be used to repay or
| 16 | | reimburse the company's general assets or account for any | 17 | | unreimbursed net sums
due at the commencement of receivership | 18 | | proceedings prior to the application of
the separate account | 19 | | assets to the satisfaction of liabilities or the
corresponding | 20 | | separate account policies, contracts, and agreements.
| 21 | | To the extent, if any, reserves or assets maintained in the | 22 | | separate account
are in excess of the amounts needed to satisfy | 23 | | claims under the separate
account contracts, the excess shall | 24 | | be treated as part of the general assets of
the insurer's | 25 | | estate.
| 26 | | (2) Within 120 days after the issuance of an Order of |
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| 1 | | Liquidation with a
finding of insolvency against a domestic | 2 | | company, the Director shall make
application to the court | 3 | | requesting authority to disburse funds to the
Illinois | 4 | | Insurance Guaranty Fund, the Illinois Life and Health Insurance
| 5 | | Guaranty Association, the Illinois Health Maintenance | 6 | | Organization Guaranty
Association , and similar organizations | 7 | | in other states from time to time out
of the company's | 8 | | marshaled assets as funds
become available in amounts equal to | 9 | | disbursements made by the
Illinois Insurance Guaranty Fund, the | 10 | | Illinois Life and Health Insurance
Guaranty Association, the | 11 | | Illinois Health Maintenance Organization Guaranty
Association , | 12 | | and similar organizations in other states
for covered claims | 13 | | obligations on the presentation of evidence that such
| 14 | | disbursements have been made by the Illinois Insurance
Guaranty | 15 | | Fund, the Illinois Life and Health Insurance Guaranty
| 16 | | Association, the Illinois Health Maintenance Organization | 17 | | Guaranty Association ,
and similar organizations in other | 18 | | states.
| 19 | | The Director shall establish procedures for the ratable | 20 | | allocation and
distribution of disbursements to the Illinois | 21 | | Insurance Guaranty Fund,
the Illinois Life and Health Insurance | 22 | | Guaranty Association, the Illinois
Health Maintenance | 23 | | Organization Guaranty Association , and
similar organizations | 24 | | in other states. In determining the amounts available
for | 25 | | disbursement, the Director shall reserve sufficient assets for | 26 | | the
payment of the expenses of administration described in |
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| 1 | | paragraph (1)(a)
of this Section. All funds available for | 2 | | disbursement after the establishment
of the prescribed reserve | 3 | | shall be promptly distributed. As a condition
to receipt of | 4 | | funds in reimbursement of covered claims obligations,
the | 5 | | Director shall secure from the Illinois Insurance Guaranty | 6 | | Fund,
the Illinois Life and Health Insurance Guaranty | 7 | | Association, the Illinois
Health Maintenance Organization | 8 | | Guaranty Association , and
each similar organization in other | 9 | | states, an agreement to return to the
Director on demand funds | 10 | | previously received as may be required to pay claims
of secured | 11 | | creditors and claims falling within the priorities established
| 12 | | in paragraphs (a), (b), (c), and (d) of subsection (1) of
this | 13 | | Section in accordance
with such priorities.
| 14 | | (3) The changes made in this Section by this amendatory Act | 15 | | of the 100th General Assembly apply to all liquidation,
| 16 | | rehabilitation, or conservation proceedings that are pending | 17 | | on the effective date of this amendatory
Act of the 100th | 18 | | General Assembly and to all future liquidation, | 19 | | rehabilitation, or conservation proceedings. | 20 | | (4) The provisions of this Section are severable under | 21 | | Section 1.31 of
the Statute on Statutes.
| 22 | | (Source: P.A. 92-65, eff. 7-12-01; 92-875, eff. 1-3-03.)
| 23 | | (215 ILCS 5/545) (from Ch. 73, par. 1065.95)
| 24 | | Sec. 545. Effect of paid claims.
| 25 | | (a) Every insured or claimant seeking the
protection of |
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| 1 | | this Article shall cooperate with the Fund to the same
extent | 2 | | as such person would have been required to cooperate with the
| 3 | | insolvent company. The Fund shall have all the rights, duties | 4 | | and
obligations under the policy to the extent of the covered | 5 | | claim payment,
provided the Fund shall have no cause of action | 6 | | against the
insured of the insolvent company for any sums it | 7 | | has paid out except
such causes of action as the insolvent | 8 | | company would have had if such
sums had been paid by the | 9 | | insolvent company and except as provided in
paragraph (d) of | 10 | | this Section.
| 11 | | (b) The Fund and any similar organization in another state | 12 | | shall be
recognized as claimants in the liquidation of an | 13 | | insolvent company for any
amounts paid by them on covered | 14 | | claims obligations as determined under this
Article or similar | 15 | | laws in other states and shall receive dividends at the
| 16 | | priority set forth in paragraph (d) of subsection (1) of | 17 | | Section
205 of this
Code; provided that if, at the time that | 18 | | the liquidator Liquidator issues a cut-off notice to the Fund | 19 | | in anticipation of closing the estate, a reserve has been | 20 | | established by the Fund, or any similar organization in another | 21 | | state, for the amount of their future administrative expenses | 22 | | and loss development associated with unpaid reported pending | 23 | | claims, these reserves will be deemed to have been paid as of | 24 | | the date of the notice and payment shall be made accordingly.
| 25 | | The liquidator of an insolvent company shall be bound by
| 26 | | determinations of covered claim eligibility under the Act and |
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| 1 | | by settlements
of claims made by
the Fund or a similar | 2 | | organization in
another state on the receipt of certification | 3 | | of such payments, to the extent
those
determinations or | 4 | | settlements satisfy obligations of the Fund, but the receiver
| 5 | | shall not be bound in any way by those determinations or | 6 | | settlements to the
extent that there remains a claim in the | 7 | | estate for amounts in excess of the
payments by the Fund.
In | 8 | | submitting their claim for covered claim payments the Fund and | 9 | | any
similar organization in another state shall not be subject | 10 | | to the
requirements of Sections 208 and 209 of this Code and | 11 | | shall not be affected
by the failure of the person receiving a | 12 | | covered claim payment to file a proof
of claim.
| 13 | | (c) The expenses of the Fund and of any similar
| 14 | | organization in any other state, other than expenses incurred | 15 | | in the
performance of
duties under Section 547 or similar | 16 | | duties under the
statute governing a similar organization in | 17 | | another state, shall
be accorded the same priority over all | 18 | | claims
against the estate, except as provided for in paragraph | 19 | | (a) of subsection (1) of
Section 205 of this Code as
the | 20 | | liquidator's expenses . The liquidator shall make prompt | 21 | | reimbursement
to the Fund and any similar organization for such | 22 | | expense payments.
| 23 | | (d) The Fund has the right to recover from the following | 24 | | persons the amount
of any covered claims and allocated claims | 25 | | expenses which the Fund paid or
incurred on behalf of such | 26 | | person in satisfaction, in whole or in part, of
liability |
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| 1 | | obligations of such person to any other person:
| 2 | | (i) any insured whose net worth on December 31 of the | 3 | | year next
preceding the date the company becomes an | 4 | | insolvent company exceeds
$25,000,000; provided that an | 5 | | insured's net worth on such date shall be deemed
to include | 6 | | the aggregate net worth of the insured and all of its | 7 | | affiliates
as calculated on a consolidated basis.
| 8 | | (ii) any insured who is an affiliate of the insolvent | 9 | | company.
| 10 | | (Source: P.A. 96-1450, eff. 8-20-10.)
| 11 | | Section 99. Effective date. This Act takes effect upon | 12 | | becoming law.
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