215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/525.1) (from Ch. 73, par. 1065.72-1)

Sec. 525.1. Centralized Operations Authorized.) (1) The Industry Placement Facility is authorized, for FAIR Plan purposes only, to issue policies of insurance and endorsements thereto in its own name or a trade name duly adopted for that purpose, and to act on behalf of all participating insurers in connection with said policies and otherwise in any manner necessary to accomplish the purposes of this Article, including but not limited to collection of premiums, issuance of cancellations, and payment of commissions, losses, judgments and expenses.

(2) The participating insurers shall be liable to the Facility as provided in this Article, the Program and any related Articles of Agreement for the expenses and liabilities so incurred by the Facility, and the Governing Committee shall make assessments against the participating insurers as required to meet such expenses and liabilities. In connection with any policy issued by the Facility: (a) the name and percentage participation of each participating insurer shall be made available to the insured upon request to the Facility; (b) service of any notice, proof of loss, legal process or other communication with respect to the policy may and shall be made upon the Facility; and (c) any action by the insured constituting a claim under the policy shall be brought only against the Facility, and the Facility shall be the proper party for all purposes in any action brought under or in connection with any such policy. The foregoing requirements shall be set forth in any policy issued by the Facility and the form and content of any such policy shall be subject to the approval of the Director of Insurance.

(3) The Facility is authorized to assume and cede reinsurance in conformity with the Program.

(4) (a) Each insurer must participate in the writings, expenses, profits and losses of the Facility in the proportion that its premiums written, with respect to each fund, bear to the aggregate premiums written by all insurers, with respect to each said fund, excluding that portion of the premiums written attributable to the operation of the Facility except as otherwise provided in this Section.

(b) The Director of Insurance shall by rule establish procedures for determining the net level of participation required of each insurer, which shall include the following elements:

(i) The designation of one or more contiguous ZIP CODE areas within this State wherein the insurers writing new policies upon risks which they do not insure prior to the effective date of this amendatory Act may receive credit against their obligation for FAIR Plan risks;

(ii) The minimum level of participation required of all insurers regardless of the amount of credit allowed but which in no case shall be less than 50% of that level of participation that would be required as defined in paragraph (a) above;

(iii) A designation of the type of risks for which credit may be allowed, provided that credit shall not apply to commercial risks where the annual premium for the policy exceeds $2,000 for each fixed location;

(iv) The maximum level of participation required of all insurers regardless of the amount of credit allowed.

(c) The procedures for determining levels of participation and all designations, formulas, minima and maxima required by this Section shall be reasonably designed to effect the intent of this Article without exempting any insurer from the participation requirement.

(5) Voting on administrative questions of the Facility shall be weighted in accordance with each insurers' premium written during the second preceding calendar year as disclosed in the reports filed by the insurer with the Director.

(6) The Facility may on its own initiative or at the request of the Director, amend its rules or Program, subject to approval by the Director.

(Source: P.A. 81-1426.)

(215 ILCS 5/525.2) (from Ch. 73, par. 1065.72-2)

Sec. 525.2. Premium financing.

In the event the Industry Placement Facility accepts premium payments from licensed premium financing companies and whenever a financed FAIR Plan insurance contract is cancelled in accordance with Section 521 of the Illinois Insurance Code, the insurer or Industry Placement Facility shall return whatever gross unearned premium is due under the insurance contract to the premium finance company effecting the cancellation for the account of the insured or insureds less the proportionate amount of the commissions paid by it to the producers of such FAIR Plan risk, prorated as to the unearned portion of the premium, which amount such producers shall return to the premium finance company. In the event of cancellation as set forth above the Industry Placement Facility may deduct and retain from the return premium a reasonable amount as a service charge.

(Source: P.A. 77-1561.)

(215 ILCS 5/525.3) (from Ch. 73, par. 1065.72-3)

Sec. 525.3. Approval of Rates. In the event that the Industry Placement Facility proposes to issue policies of insurance or endorsements thereto pursuant to subsection (1) of Section 525.1, the Facility shall file for approval with the Director the proposed rates and supplemental rate information to be used in connection with the issuance of such policies or endorsements. Within 60 days of the filing of the proposed rates, the Director shall enter an order either approving or disapproving, in whole or in part, the rate plan filed. The Director may, upon notice to the Industry Placement Facility, extend the period for entering an order under this Section an additional 30 days. No such policies or endorsements shall be issued until such time as the Director approves the rates to be applied to the policy or endorsement. An order disapproving a rate shall state the grounds for the disapproval and the findings in support thereof.

(Source: P.A. 81-1426.)

(215 ILCS 5/525.4) (from Ch. 73, par. 1965.72-4)

Sec. 525.4. Application for Coverage of Risks by the Facility. (1) In the event that the Industry Placement Facility proposes to issue policies of insurance or endorsements thereto pursuant to subsection (1) of Section 525.1, the Facility shall require a written application for such policies or endorsements. All applications shall be incorporated into the policy or endorsement for which application was made.

(2) Applications for coverage of risks on property which is held in a land trust, except applications for policies described in subsection (b) of Section 143.13, shall disclose all beneficial interests in the property in accordance with "An Act to require disclosure, under certification of perjury, of all beneficial interests in real property held in a land trust, in certain cases", approved September 21, 1973, as amended. Changes, which result in an aggregate of 25%, in beneficial interest in the property subsequent to the verification made in the application shall be reported by the applicant or policy holder to the Facility no later than 10 days after the change in beneficial interest occurs. This shall not apply to transfer of beneficial interest to members of the immediate family including spouse, children and grandchildren and their spouses, parents, sisters and brothers. Changes in beneficial interest which result in an aggregate of less than 25% shall be reported at the time of renewal of the policy. Disclosure of the beneficial interests in such property is deemed material to the application for new coverage or the continuation of existing coverage and failure to disclose all beneficial interests, including any changes therein, renders the contract of insurance voidable at the option of the Facility. Upon being notified of any change in beneficial interest, the Facility shall reevaluate its risk of loss as if the risk were a new application for coverage. When a policy subject to this Section is issued or applied for, the Facility shall give written notice as to the requirements of this Section to the named insured or applicant and all beneficiaries disclosed in the application.

(3) Applications for policies or endorsements covering real property, except applications for policies described in subsection (b) of Section 143.13, shall include the following information:

(a) name and address of the applicant;

(b) name and address of all parties with any financial interest in the property to be insured and the nature and extent of such interest, including mortgages;

(c) all purchases and sales of the property to be insured during the last five years, including all parties involved in such transactions, with their names and addresses;

(d) the value the insured claims for the insurable interest and the method utilized to derive that value;

(e) all income from the property to be insured during the current year and the last calendar and tax years, if known;

(f) occupancy and use during the preceding two years, including percentage of occupancy if a nonowner occupied dwelling, if known;

(g) prior loss history of the applicant and the property to be insured;

(h) all tax liens and other legal encumbrances affecting the property to be insured; and

(i) all violations of building construction and maintenance ordinances concerning the property to be insured which have been cited in a legal notice from an ordinance enforcement authority and which violations have not been certified as remedied by the enforcement authority, and for which an enforcement action is pending.

(4) Within 60 days of receipt of an application submitted pursuant to subsection (3), the Facility shall conduct an on-site inspection of the property to be insured so as to determine the nature of the risk presented and the availability of coverage by the Facility. Any policy or endorsement issued on an application submitted pursuant to subsection (3) may be cancelled by the Facility within 60 days of the issuance thereof.

(Source: P.A. 81-1426.)

(215 ILCS 5/527) (from Ch. 73, par. 1065.74)

Sec. 527. Right to appeal. (1) Any applicant or affected insurer has the right of appeal to the Governing Committee. A decision of the Committee may be appealed to the Director within 30 days after such decision.

(2) All orders or decisions of the Director made pursuant to this Article are subject to judicial review in accordance with the Administrative Review Law.

(Source: P.A. 82-783.)

(215 ILCS 5/528) (from Ch. 73, par. 1065.75)

Sec. 528. Inspection reports.

There is no liability on the part of, and no cause of action against insurers, the Inspection Bureau, the Facility, the Association, the Governing Committee, their agents or employees, or the Director or his authorized representatives, with respect to any inspections required to be undertaken by this Article or for any acts or omissions in connection therewith, or for any statements made in any report and communication concerning the insurability of the property, or in the findings required by the provisions of this Article, or at the hearings conducted in connection with such inspections. The reports and communications of the Inspection Bureau, the Facility, the Association, and the records of the Governing Committee are not considered public documents.

(Source: Laws 1968, p. 15.)

(215 ILCS 5/529) (from Ch. 73, par. 1065.76)

Sec. 529. Illinois Insurance Development Fund.

(a) A trust fund is created to be known as the "Illinois Insurance Development Fund" to be administered by the State Treasurer as a special trust fund. The purpose is to provide financial back-up for the Facility and the Association in order to enable companies to qualify for riot and civil disorder reinsurance under the National Insurance Development Corporation Act of 1968 or any other act of the United States which will similarly provide reinsurance or financial back-up to accomplish the purpose of this Article.

(b) The Fund shall consist of all payments made to the Fund by companies in accordance with the provisions of this Article, any securities acquired by and through use of monies belonging to the Fund, any monies appropriated to the Fund, and any interest and accretions earned on assets of the Fund. The State Treasurer shall have the same power to enforce the collection of the assessments provided hereunder as any other obligation due the State.

(Source: P.A. 76-714.)

(215 ILCS 5/529.1) (from Ch. 73, par. 1065.76-1)

Sec. 529.1. Reimbursement of the Secretary. The Fund shall reimburse the Secretary of the Department of Housing and Urban Development (hereinafter referred to as "the Secretary") under the provisions of Section 1223(a) (1) of the Urban Property Protection and Reinsurance Act of 1968 (hereinafter referred to as "the Act") for losses reinsured by the Secretary and occurring in this State on or after August 1, 1968, provided that the total amount of reimbursement in any one year shall not, in the aggregate, exceed 5% of the aggregate property insurance premiums earned in this State during the preceding calendar year on those lines of insurance reinsured by the Secretary in this State during the calendar year.

(Source: P.A. 76-714.)

(215 ILCS 5/529.2) (from Ch. 73, par. 1065.76-2)

Sec. 529.2. Making of assessments. Whenever the Secretary shall, in accordance with the Act, present to the State a request for reimbursement under the Act, the Fund shall immediately assess all companies which, during the calendar year with respect to which reimbursement is requested by the Secretary, are engaged in writing property insurance in this State. The amount of each such company's assessment shall be calculated by multiplying the amount of the reimbursement requested by the Secretary by a fraction the numerator of which is the company's direct property insurance premiums earned in this State and the denominator of which is the aggregate of such premiums for all companies. Within 30 days following the end of each full calendar quarter, each company shall pay to the Fund an amount equal to one-twelfth of the company's assessment.

(Source: P.A. 76-714.)

(215 ILCS 5/529.3) (from Ch. 73, par. 1065.76-3)

Sec. 529.3. Insolvency. In the event any company fails, by reason of insolvency, to pay any assessment, the Fund shall cause the reimbursement ratios, computed under Section 529.2, to be immediately recalculated, excluding therefrom the amount of the insolvent company's assessment determined by the Director of Insurance to be uncollectible, so that such uncollectible amount is, in effect, assumed and redistributed among the remaining companies.

(Source: P.A. 81-1509.)

(215 ILCS 5/529.4) (from Ch. 73, par. 1065.76-4)

Sec. 529.4. Whenever the fund shall assess insurers in accordance with this Section, each insurer may charge an additional premium on every property insurance policy issued by it insuring property in this state, the effective date of which policy is within the 3 year period commencing 90 days after the date of assessment by the Fund. The amount of the additional premium shall be calculated on the basis of a uniform percentage of the premium on such policies equal to 1/3 of the ratio of the amount of an insurer's assessment to the amount of its direct earned premiums for the calendar year immediately preceding the year in which the assessment is made, such that over the period of 3 years the aggregate of all such additional premium charges by an insurer shall be equal to the amount of the assessment of such insurer. The minimum additional premium charged on a policy may be $1.00 and any other additional premium charged may be rounded to the nearest dollar.

(Source: P.A. 76-714.)

(215 ILCS 5/529.5) (from Ch. 73, par. 1065.76-5)

Sec. 529.5. The Industry Placement Facility shall compile an annual operating report, and publish such report in at least 2 newspapers having widespread circulation in the State, which report shall include:

(1) a description of the origin and purpose of the Illinois Fair Plan and its relationship to the property and casualty insurance industry in Illinois;

(2) a financial statement specifying the amount of profit or loss incurred by the Facility for its financial year; and

(3) a disclosure as to the amount of subsidization per type of policy written by the Facility, which is provided by the property and casualty insurance companies operating in Illinois, if any.

This annual report shall be a matter of public record to be made available to any person requesting a copy from the Facility at a fee not to exceed $10 per copy. A copy shall be available for inspection at the Department of Insurance.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/530) (from Ch. 73, par. 1065.77)

Sec. 530. Powers of the Director.) In addition to any powers conferred upon him by this or any other law, the Director is charged with the authority to supervise the Inspection Bureau, the Facility and the Association. In addition the Director or any person designated by him has the power:

(1) to examine the operation of the Facility and Association through free access to all the books, records, files, papers and documents relating to their operation and may summon, qualify and examine as witnesses all persons having knowledge of such operations including officers, agents or employees thereof;

(2) to do all things necessary to enable the State of Illinois and any insurer participating in any Program approved by the Director to fully participate in any federal program of reinsurance which may be enacted for purposes similar to the purposes of this Article;

(3) to require such reports from insurers concerning risks insured under any Program approved pursuant to this Article as he may deem necessary;

(4) to approve a homeowners policy form(s) for the Industry Placement Program.

(5) To require the Insurance Placement Program to develop marketing programs which will deter urban redlining and other unfairly discriminatory geographic underwriting programs by making readily available basic property insurance.

(6) to permit modification of the Standard Fire Policy issued by the facility for non owner-occupied residences exceeding four units, after the director has conducted a public hearing which establishes that such modifications:

1) will provide for equitable settlements of loss;

2) will discourage arson for profit; and

3) will encourage neighborhood revitalization, while maintaining the interests of the insured and the facility. The Director shall confer with the facility to establish criteria by which it can be determined whether such modification of the Standard Fire Policy is accomplishing its objectives. The Director shall conduct, within two years of any modification of the Standard Fire Policy, a public hearing to determine whether such modification has accomplished the three preceding objectives. In the event that such public hearing does not establish that such objectives are being accomplished, then the Director shall rescind the modification of the Standard Fire Policy, or further modify such policy to accomplish the objectives.

(Source: P.A. 82-499.)

(215 ILCS 5/530a) (from Ch. 73, par. 1065.77a)

Sec. 530a. The Director of Insurance shall form a task force to review the policy forms and endorsements issued by the Industry Placement Facility on residential property of 5 or more dwelling units. The task force shall consider the coverage, perils and settlement provisions and make their recommendations to the Director by January 15, 1981, on proposed policy forms and endorsements which will provide for equitable settlement of loss, discourage arson for profit and encourage neighborhood revitalization. Any recommendation of the task force shall consider the impact on the continuous goal of depopulation of the Facility.

The Task force shall be comprised of members of the insurance industry, general public and 4 members of the General Assembly, 2 to be appointed by the President of the Senate and 2 by the Speaker of the House with equal representation from the majority and minority parties.

The Director shall hold public hearings on the task force recommendations and promulgate a rule to adopt such policy forms and endorsements as minimum standards for the Industry Placement Facility.

(Source: P.A. 81-1432.)

(215 ILCS 5/Art. XXXIII.5 heading) ARTICLE XXXIII 1/2. LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION

(215 ILCS 5/531.01) (from Ch. 73, par. 1065.80-1)

Sec. 531.01. Title.) This Article is known and may be cited as the Illinois Life and Health Insurance Guaranty Association Law.

(Source: P.A. 81-899.)

(215 ILCS 5/531.01a) (from Ch. 73, par. 1065.80-1a)

Sec. 531.01a. Existing Liability. Any liabilities of the Association for any member company which was an insolvent insurer as defined by this Article prior to January 1, 1986 shall be determined under the law which was in effect at the time the member company became an insolvent insurer as if there had been no amendment to that law. Any liabilities of the Association for a member company which became an insolvent insurer on or after January 1, 1986, shall be determined under the law in effect at the time when the member became an insolvent insurer, notwithstanding any prior law.

On or after January 1, 1986, any assessments made against other member companies to meet Association liabilities shall be made based on the law which was in effect when the member company was an impaired or insolvent insurer as defined by this Article. If different assessment methods are used in any one year, those assessments shall be aggregated for purposes of calculating the aggregate assessment under Sections 531.09 and 531.13.

(Source: P.A. 84-1035.)

(215 ILCS 5/531.02) (from Ch. 73, par. 1065.80-2)

Sec. 531.02. Purpose. The purpose of this Article is to protect, subject to certain limitations, the persons specified in paragraph (1) of Section 531.03 against failure in the performance of contractual obligations, under life, health, and annuity policies, plans, or contracts and health or medical care service contracts specified in paragraph (2) of Section 531.03, due to the impairment or insolvency of the member insurer issuing such policies, plans, or contracts. To provide this protection, (1) an association of member insurers is created to enable the guaranty of payment of benefits and of continuation of coverages, (2) members of the Association are subject to assessment to provide funds to carry out the purpose of this Article, and (3) the Association is authorized to assist the Director, in the prescribed manner, in the detection and prevention of member insurer impairments or insolvencies.

(Source: P.A. 100-687, eff. 8-3-18.)

(215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)

Sec. 531.03. Coverage and limitations.

(1) This Article shall provide coverage for the policies and contracts specified in subsection (2) of this Section:

(a) to persons who, regardless of where they reside (except for non-resident certificate holders under group policies or contracts), are the beneficiaries, assignees or payees, including health care providers rendering services covered under a health insurance policy or certificate, of the persons covered under paragraph (b) of this subsection, and

(b) to persons who are owners of or certificate holders or enrollees under the policies or contracts (other than unallocated annuity contracts and structured settlement annuities) and in each case who:

(i) are residents; or

(ii) are not residents, but only under all of the following conditions:

(A) the member insurer that issued the policies or contracts is domiciled in this State;

(B) the states in which the persons reside have associations similar to the Association created by this Article;

(C) the persons are not eligible for coverage by an association in any other state due to the fact that the insurer or health maintenance organization was not licensed in that state at the time specified in that state's guaranty association law.

(c) For unallocated annuity contracts specified in subsection (2), paragraphs (a) and (b) of this subsection (1) shall not apply and this Article shall (except as provided in paragraphs (e) and (f) of this subsection) provide coverage to:

(i) persons who are the owners of the unallocated annuity contracts if the contracts are issued to or in connection with a specific benefit plan whose plan sponsor has its principal place of business in this State; and

(ii) persons who are owners of unallocated annuity contracts issued to or in connection with government lotteries if the owners are residents.

(d) For structured settlement annuities specified in subsection (2), paragraphs (a) and (b) of this subsection (1) shall not apply and this Article shall (except as provided in paragraphs (e) and (f) of this subsection) provide coverage to a person who is a payee under a structured settlement annuity (or beneficiary of a payee if the payee is deceased), if the payee:

(i) is a resident, regardless of where the contract owner resides; or

(ii) is not a resident, but only under both of the following conditions:

(A) with regard to residency:

(I) the contract owner of the structured settlement annuity is a resident; or

(II) the contract owner of the structured settlement annuity is not a resident but the insurer that issued the structured settlement annuity is domiciled in this State and the state in which the contract owner resides has an association similar to the Association created by this Article; and

(B) neither the payee or beneficiary nor the contract owner is eligible for coverage by the association of the state in which the payee or contract owner resides.

(e) This Article shall not provide coverage to:

(i) a person who is a payee or beneficiary of a contract owner resident of this State if the payee or beneficiary is afforded any coverage by the association of another state; or

(ii) a person covered under paragraph (c) of this subsection (1), if any coverage is provided by the association of another state to that person.

(f) This Article is intended to provide coverage to a person who is a resident of this State and, in special circumstances, to a nonresident. In order to avoid duplicate coverage, if a person who would otherwise receive coverage under this Article is provided coverage under the laws of any other state, then the person shall not be provided coverage under this Article. In determining the application of the provisions of this paragraph in situations where a person could be covered by the association of more than one state, whether as an owner, payee, enrollee, beneficiary, or assignee, this Article shall be construed in conjunction with other state laws to result in coverage by only one association.

(2)(a) This Article shall provide coverage to the persons specified in subsection (1) of this Section for policies or contracts of direct, (i) nongroup life insurance, health insurance (that, for the purposes of this Article, includes health maintenance organization subscriber contracts and certificates), annuities and supplemental contracts to any of these, (ii) for certificates under direct group policies or contracts, (iii) for unallocated annuity contracts and (iv) for contracts to furnish health care services and subscription certificates for medical or health care services issued by persons licensed to transact insurance business in this State under this Code. Annuity contracts and certificates under group annuity contracts include but are not limited to guaranteed investment contracts, deposit administration contracts, unallocated funding agreements, allocated funding agreements, structured settlement agreements, lottery contracts and any immediate or deferred annuity contracts.

(b) Except as otherwise provided in paragraph (c) of this subsection, this Article shall not provide coverage for:

(i) that portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner;

(ii) any such policy or contract or part thereof assumed by the impaired or insolvent insurer under a contract of reinsurance, other than reinsurance for which assumption certificates have been issued;

(iii) any portion of a policy or contract to the extent that the rate of interest on which it is based or the interest rate, crediting rate, or similar factor is determined by use of an index or other external reference stated in the policy or contract employed in calculating returns or changes in value:

(A) averaged over the period of 4 years prior to the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 2 percentage points from Moody's Corporate Bond Yield Average averaged for that same 4-year period or for such lesser period if the policy or contract was issued less than 4 years before the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier; and

(B) on and after the date on which the member insurer becomes an impaired or insolvent insurer under this Article, whichever is earlier, exceeds the rate of interest determined by subtracting 3 percentage points from Moody's Corporate Bond Yield Average as most recently available;

(iv) any unallocated annuity contract issued to or in connection with a benefit plan protected under the federal Pension Benefit Guaranty Corporation, regardless of whether the federal Pension Benefit Guaranty Corporation has yet become liable to make any payments with respect to the benefit plan;

(v) any portion of any unallocated annuity contract which is not issued to or in connection with a specific employee, union or association of natural persons benefit plan or a government lottery;

(vi) an obligation that does not arise under the express written terms of the policy or contract issued by the member insurer to the enrollee, certificate holder, contract owner, or policy owner, including without limitation:

(A) a claim based on marketing materials;

(B) a claim based on side letters, riders, or other documents that were issued by the member insurer without meeting applicable policy or contract form filing or approval requirements;

(C) a misrepresentation of or regarding policy or contract benefits;

(D) an extra-contractual claim; or

(E) a claim for penalties or consequential or incidental damages;

(vii) any stop-loss insurance, as defined in clause (b) of Class 1 or clause (a) of Class 2 of Section 4, and further defined in subsection (d) of Section 352;

(viii) any policy or contract providing any hospital, medical, prescription drug, or other health care benefits pursuant to Part C or Part D of Subchapter XVIII, Chapter 7 of Title 42 of the United States Code (commonly known as Medicare Part C & D), Subchapter XIX, Chapter 7 of Title 42 of the United States Code (commonly known as Medicaid), or any regulations issued pursuant thereto;

(ix) any portion of a policy or contract to the extent that the assessments required by Section 531.09 of this Code with respect to the policy or contract are preempted or otherwise not permitted by federal or State law;

(x) any portion of a policy or contract issued to a plan or program of an employer, association, or other person to provide life, health, or annuity benefits to its employees, members, or others to the extent that the plan or program is self-funded or uninsured, including, but not limited to, benefits payable by an employer, association, or other person under:

(A) a multiple employer welfare arrangement as defined in 29 U.S.C. Section 1002;

(B) a minimum premium group insurance plan;

(C) a stop-loss group insurance plan; or

(D) an administrative services only contract;

(xi) any portion of a policy or contract to the extent that it provides for:

(A) dividends or experience rating credits;

(B) voting rights; or

(C) payment of any fees or allowances to any person, including the policy or contract owner, in connection with the service to or administration of the policy or contract;

(xii) any policy or contract issued in this State by a member insurer at a time when it was not licensed or did not have a certificate of authority to issue the policy or contract in this State;

(xiii) any contractual agreement that establishes the member insurer's obligations to provide a book value accounting guaranty for defined contribution benefit plan participants by reference to a portfolio of assets that is owned by the benefit plan or its trustee, which in each case is not an affiliate of the member insurer;

(xiv) any portion of a policy or contract to the extent that it provides for interest or other changes in value to be determined by the use of an index or other external reference stated in the policy or contract, but which have not been credited to the policy or contract, or as to which the policy or contract owner's rights are subject to forfeiture, as of the date the member insurer becomes an impaired or insolvent insurer under this Code, whichever is earlier. If a policy's or contract's interest or changes in value are credited less frequently than annually, then for purposes of determining the values that have been credited and are not subject to forfeiture under this Section, the interest or change in value determined by using the procedures defined in the policy or contract will be credited as if the contractual date of crediting interest or changing values was the date of impairment or insolvency, whichever is earlier, and will not be subject to forfeiture; or

(xv) that portion or part of a variable life insurance or variable annuity contract not guaranteed by a member insurer.

(c) The exclusion from coverage referenced in subdivision (iii) of paragraph (b) of this subsection shall not apply to any portion of a policy or contract, including a rider, that provides long-term care or other health insurance benefits.

(3) The benefits for which the Association may become liable shall in no event exceed the lesser of:

(a) the contractual obligations for which the member insurer is liable or would have been liable if it were not an impaired or insolvent insurer, or

(b)(i) with respect to any one life, regardless of the number of policies or contracts:

(A) $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance;

(B) for health insurance benefits:

(I) $100,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values;

(II) $300,000 for disability income insurance and $300,000 for long-term care insurance; and

(III) $500,000 for health benefit plans;

(C) $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values;

(ii) with respect to each individual participating in a governmental retirement benefit plan established under Section 401, 403(b), or 457 of the U.S. Internal Revenue Code covered by an unallocated annuity contract or the beneficiaries of each such individual if deceased, in the aggregate, $250,000 in present value annuity benefits, including net cash surrender and net cash withdrawal values;

(iii) with respect to each payee of a structured settlement annuity or beneficiary or beneficiaries of the payee if deceased, $250,000 in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values, if any; or

(iv) with respect to either (1) one contract owner provided coverage under subparagraph (ii) of paragraph (c) of subsection (1) of this Section or (2) one plan sponsor whose plans own directly or in trust one or more unallocated annuity contracts not included in subparagraph (ii) of paragraph (b) of this subsection, $5,000,000 in benefits, irrespective of the number of contracts with respect to the contract owner or plan sponsor. However, in the case where one or more unallocated annuity contracts are covered contracts under this Article and are owned by a trust or other entity for the benefit of 2 or more plan sponsors, coverage shall be afforded by the Association if the largest interest in the trust or entity owning the contract or contracts is held by a plan sponsor whose principal place of business is in this State. In no event shall the Association be obligated to cover more than $5,000,000 in benefits with respect to all these unallocated contracts.

In no event shall the Association be obligated to cover more than (1) an aggregate of $300,000 in benefits with respect to any one life under subparagraphs (i), (ii), and (iii) of this paragraph (b) except with respect to benefits for health benefit plans under item (B) of subparagraph (i) of this paragraph (b), in which case the aggregate liability of the Association shall not exceed $500,000 with respect to any one individual or (2) with respect to one owner of multiple nongroup policies of life insurance, whether the policy or contract owner is an individual, firm, corporation, or other person and whether the persons insured are officers, managers, employees, or other persons, $5,000,000 in benefits, regardless of the number of policies and contracts held by the owner.

The limitations set forth in this subsection are limitations on the benefits for which the Association is obligated before taking into account either its subrogation and assignment rights or the extent to which those benefits could be provided out of the assets of the impaired or insolvent insurer attributable to covered policies. The costs of the Association's obligations under this Article may be met by the use of assets attributable to covered policies or reimbursed to the Association pursuant to its subrogation and assignment rights.

For purposes of this Article, benefits provided by a long-term care rider to a life insurance policy or annuity contract shall be considered the same type of benefits as the base life insurance policy or annuity contract to which it relates.

(4) In performing its obligations to provide coverage under Section 531.08 of this Code, the Association shall not be required to guarantee, assume, reinsure, reissue, or perform or cause to be guaranteed, assumed, reinsured, reissued, or performed the contractual obligations of the insolvent or impaired insurer under a covered policy or contract that do not materially affect the economic values or economic benefits of the covered policy or contract.

(Source: P.A. 100-687, eff. 8-3-18; 100-863, eff. 8-14-18.)

(215 ILCS 5/531.04) (from Ch. 73, par. 1065.80-4)

Sec. 531.04. Construction. This Article shall be construed to effect the purpose under Section 531.02.

(Source: P.A. 96-1450, eff. 8-20-10.)

(215 ILCS 5/531.05) (from Ch. 73, par. 1065.80-5)

Sec. 531.05. Definitions. As used in this Act:

"Account" means either of the 2 accounts created under Section 531.06.

"Association" means the Illinois Life and Health Insurance Guaranty Association created under Section 531.06.

"Authorized assessment" or the term "authorized" when used in the context of assessments means a resolution by the Board of Directors has been passed whereby an assessment shall be called immediately or in the future from member insurers for a specified amount. An assessment is authorized when the resolution is passed.

"Benefit plan" means a specific employee, union, or association of natural persons benefit plan.

"Called assessment" or the term "called" when used in the context of assessments means that a notice has been issued by the Association to member insurers requiring that an authorized assessment be paid within the time frame set forth within the notice. An authorized assessment becomes a called assessment when notice is mailed by the Association to member insurers.

"Director" means the Director of Insurance of this State.

"Contractual obligation" means any obligation under a policy or contract or certificate under a group policy or contract, or portion thereof for which coverage is provided under Section 531.03.

"Covered person" means any person who is entitled to the protection of the Association as described in Section 531.02.

"Covered contract" or "covered policy" means any policy or contract within the scope of this Article under Section 531.03.

"Extra-contractual claims" shall include, but are not limited to, claims relating to bad faith in the payment of claims, punitive or exemplary damages, or attorneys' fees and costs.

"Health benefit plan" means any hospital or medical expense policy or certificate or health maintenance organization subscriber contract or any other similar health contract. "Health benefit plan" does not include:

(1) accident only insurance;

(2) credit insurance;

(3) dental only insurance;

(4) vision only insurance;

(5) Medicare supplement insurance;

(6) benefits for long-term care, home health care, community-based care, or any combination thereof;

(7) disability income insurance;

(8) coverage for on-site medical clinics; or

(9) specified disease, hospital confinement indemnity, or limited benefit health insurance if the types of coverage do not provide coordination of benefits and are provided under separate policies or certificates.

"Impaired insurer" means (A) a member insurer which, after the effective date of this amendatory Act of the 96th General Assembly, is not an insolvent insurer, and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction or (B) a member insurer deemed by the Director after the effective date of this amendatory Act of the 96th General Assembly to be potentially unable to fulfill its contractual obligations and not an insolvent insurer.

"Insolvent insurer" means a member insurer that, after the effective date of this amendatory Act of the 96th General Assembly, is placed under a final order of liquidation by a court of competent jurisdiction with a finding of insolvency.

"Member insurer" means an insurer or health maintenance organization licensed or holding a certificate of authority to transact in this State any kind of insurance or health maintenance organization business for which coverage is provided under Section 531.03 of this Code and includes an insurer or health maintenance organization whose license or certificate of authority in this State may have been suspended, revoked, not renewed, or voluntarily withdrawn or whose certificate of authority may have been suspended pursuant to Section 119 of this Code, but does not include:

(1) a hospital or medical service organization, whether profit or nonprofit;

(2) (blank);

(3) any burial society organized under Article XIX of this Code, any fraternal benefit society organized under Article XVII of this Code, any mutual benefit association organized under Article XVIII of this Code, and any foreign fraternal benefit society licensed under Article VI of this Code;

(4) a mandatory State pooling plan;

(5) a mutual assessment company or other person that operates on an assessment basis;

(6) an insurance exchange;

(7) an organization that is permitted to issue charitable gift annuities pursuant to Section 121-2.10 of this Code;

(8) any health services plan corporation established pursuant to the Voluntary Health Services Plans Act;

(9) any dental service plan corporation established pursuant to the Dental Service Plan Act; or

(10) an entity similar to any of the above.

"Moody's Corporate Bond Yield Average" means the Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto.

"Owner" of a policy or contract and "policyholder", "policy owner", and "contract owner" mean the person who is identified as the legal owner under the terms of the policy or contract or who is otherwise vested with legal title to the policy or contract through a valid assignment completed in accordance with the terms of the policy or contract and properly recorded as the owner on the books of the member insurer. The terms owner, contract owner, policyholder, and policy owner do not include persons with a mere beneficial interest in a policy or contract.

"Person" means an individual, corporation, limited liability company, partnership, association, governmental body or entity, or voluntary organization.

"Plan sponsor" means:

(1) the employer in the case of a benefit plan established or maintained by a single employer;

(2) the employee organization in the case of a benefit plan established or maintained by an employee organization; or

(3) in a case of a benefit plan established or maintained by 2 or more employers or jointly by one or more employers and one or more employee organizations, the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan.

"Premiums" mean amounts or considerations, by whatever name called, received on covered policies or contracts less returned premiums, considerations, and deposits and less dividends and experience credits.

"Premiums" does not include:

(A) amounts or considerations received for policies or contracts or for the portions of policies or contracts for which coverage is not provided under Section 531.03 of this Code except that assessable premium shall not be reduced on account of the provisions of subparagraph (iii) of paragraph (b) of subsection (2) of Section 531.03 of this Code relating to interest limitations and the provisions of paragraph (b) of subsection (3) of Section 531.03 relating to limitations with respect to one individual, one participant, and one policy owner or contract owner;

(B) premiums in excess of $5,000,000 on an unallocated annuity contract not issued under a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b) or 457 of the United States Internal Revenue Code; or

(C) with respect to multiple nongroup policies of life insurance owned by one owner, whether the policy owner or contract owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers, employees, or other persons, premiums in excess of $5,000,000 with respect to these policies or contracts, regardless of the number of policies or contracts held by the owner.

"Principal place of business" of a plan sponsor or a person other than a natural person means the single state in which the natural persons who establish policy for the direction, control, and coordination of the operations of the entity as a whole primarily exercise that function, determined by the Association in its reasonable judgment by considering the following factors:

(A) the state in which the primary executive and administrative headquarters of the entity is located;

(B) the state in which the principal office of the chief executive officer of the entity is located;

(C) the state in which the board of directors (or similar governing person or persons) of the entity conducts the majority of its meetings;

(D) the state in which the executive or management committee of the board of directors (or similar governing person or persons) of the entity conducts the majority of its meetings;

(E) the state from which the management of the overall operations of the entity is directed; and

(F) in the case of a benefit plan sponsored by affiliated companies comprising a consolidated corporation, the state in which the holding company or controlling affiliate has its principal place of business as determined using the above factors. However, in the case of a plan sponsor, if more than 50% of the participants in the benefit plan are employed in a single state, that state shall be deemed to be the principal place of business of the plan sponsor.

The principal place of business of a plan sponsor of a benefit plan described in paragraph (3) of the definition of "plan sponsor" shall be deemed to be the principal place of business of the association, committee, joint board of trustees, or other similar group of representatives of the parties who establish or maintain the benefit plan that, in lieu of a specific or clear designation of a principal place of business, shall be deemed to be the principal place of business of the employer or employee organization that has the largest investment in the benefit plan in question.

"Receivership court" means the court in the insolvent or impaired insurer's state having jurisdiction over the conservation, rehabilitation, or liquidation of the member insurer.

"Resident" means a person to whom a contractual obligation is owed and who resides in this State on the date of entry of a court order that determines a member insurer to be an impaired insurer or a court order that determines a member insurer to be an insolvent insurer. A person may be a resident of only one state, which in the case of a person other than a natural person shall be its principal place of business. Citizens of the United States that are either (i) residents of foreign countries or (ii) residents of United States possessions, territories, or protectorates that do not have an association similar to the Association created by this Article, shall be deemed residents of the state of domicile of the member insurer that issued the policies or contracts.

"Structured settlement annuity" means an annuity purchased in order to fund periodic payments for a plaintiff or other claimant in payment for or with respect to personal injury suffered by the plaintiff or other claimant.

"State" means a state, the District of Columbia, Puerto Rico, and a United States possession, territory, or protectorate.

"Supplemental contract" means a written agreement entered into for the distribution of proceeds under a life, health, or annuity policy or a life, health, or annuity contract.

"Unallocated annuity contract" means any annuity contract or group annuity certificate which is not issued to and owned by an individual, except to the extent of any annuity benefits guaranteed to an individual by an insurer under such contract or certificate.

(Source: P.A. 100-687, eff. 8-3-18.)

(215 ILCS 5/531.06) (from Ch. 73, par. 1065.80-6)

Sec. 531.06. Creation of the Association. There is created a non-profit legal entity to be known as the Illinois Life and Health Insurance Guaranty Association. All member insurers are and must remain members of the Association as a condition of their authority to transact insurance or a health maintenance organization business in this State. The Association must perform its functions under the plan of operation established and approved under Section 531.10 and must exercise its powers through a board of directors established under Section 531.07. For purposes of administration and assessment, the Association must maintain 2 accounts:

(1) The life insurance and annuity account, which includes the following subaccounts:

(a) Life Insurance Account;

(b) Annuity account, which shall include annuity contracts owned by a governmental retirement plan (or its trustee) established under Section 401, 403(b), or 457 of the United States Internal Revenue Code, but shall otherwise exclude unallocated annuities; and

(c) Unallocated annuity account, which shall exclude contracts owned by a governmental retirement benefit plan (or its trustee) established under Section 401, 403(b), or 457 of the United States Internal Revenue Code.

(2) The health account.

The Association shall be supervised by the Director and is subject to the applicable provisions of the Illinois Insurance Code. Meetings or records of the Association may be opened to the public upon majority vote of the board of directors of the Association.

(Source: P.A. 100-687, eff. 8-3-18.)