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90_HB1266enr
215 ILCS 5/123 from Ch. 73, par. 735
Amends the Illinois Insurance Code. Provides for
substituted service of process upon unauthorized foreign or
alien companies that have issued policies of reinsurance.
Applies to arbitration proceedings. Requires the foreign or
alien company to post a bond before filing a pleading in
actions brought against the company. Effective immediately.
LRB9003865JSgc
HB1266 Enrolled LRB9003865JSgc
1 AN ACT to amend the Illinois Insurance Code by changing
2 Section 123.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Insurance Code is amended by
6 changing Section 123 as follows:
7 (215 ILCS 5/123) (from Ch. 73, par. 735)
8 Sec. 123. Service of process upon an unauthorized foreign
9 or alien company.
10 (1) The purpose of this Section is to subject
11 unauthorized foreign and alien companies to the jurisdiction
12 of courts of this State in actions by or on behalf of
13 insureds, reinsureds, or beneficiaries under insurance or
14 reinsurance contracts. The Legislature declares that it is a
15 subject of concern that many residents of this State or
16 corporations authorized to do business in this State hold
17 policies of insurance or reinsurance issued by companies not
18 authorized to do business in this State, thus presenting to
19 such residents or corporations authorized to do business in
20 this State the often insuperable obstacle of resorting to
21 distant forums for the purpose of asserting legal rights
22 under such policies. In furtherance of such State interest,
23 the Legislature herein provides a method of substituted
24 service of process upon such companies and declares that in
25 so doing it exercises its power to protect its residents and
26 corporations authorized to do business in this State and to
27 define, for the purpose of this statute, what constitutes
28 doing business in this State, and also exercises powers and
29 privileges available to the State by virtue of Public Law 15,
30 79th Congress of the United States, Chapter 20, 1st. Sess.,
31 S. 340, as amended, which declares that the business of
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1 insurance and every person engaged therein shall be subject
2 to the laws of the several states.
3 (2) Any of the following acts in this State, effected by
4 mail or otherwise, by an unauthorized foreign or alien
5 company: (a) the issuance or delivery of contracts of
6 insurance or reinsurance to residents of this State or to
7 corporations authorized to do business therein, (b) the
8 solicitation of applications for such contracts, (c) the
9 collection of premiums, membership fees, assessments or other
10 considerations for such contracts, or (d) any other
11 transaction of business, is equivalent to and shall
12 constitute an appointment by such company, of the Director
13 and his or her successor or successors in office, to be its
14 true and lawful attorney upon whom may be served all lawful
15 process in any action or proceeding against it, arising out
16 of such policy or contract of insurance or reinsurance, and
17 the acts shall be a signification of its agreement that any
18 such process against it which is so served shall be of the
19 same legal force and validity as if served upon the company.
20 (3) Service of such process shall be made by delivering
21 and leaving with the Director a copy thereof and the payment
22 to the Director of the fee prescribed by this Code. The
23 Director shall keep a record of all process so served upon
24 him or her. Such process shall be sufficient service upon
25 such foreign or alien company provided notice of such service
26 and a copy of the process are, within 10 days thereafter,
27 sent by certified or registered mail by the plaintiff's
28 attorney of record to the defendant at the last known
29 principal place of business of the defendant, and the
30 defendant's receipt and the plaintiff's attorney's affidavit
31 of compliance herewith are filed with the Clerk of the Court
32 in which such action is pending on or before the return date
33 of the process or within such further time as the court may
34 allow.
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1 (4) Service of process in any such action against any
2 such company shall in addition to the mode hereinabove
3 described be valid and legal if served upon any person within
4 this State who, in this State on behalf of such company, is
5 (a) soliciting insurance or reinsurance, or
6 (b) making, issuing, or delivering any policies or
7 contracts of insurance or reinsurance, or
8 (c) collecting or receiving any premium, membership
9 fee, assessment or other consideration for insurance or
10 reinsurance, or
11 (d) in any manner aiding or assisting in doing any
12 of the things enumerated in clauses (a), (b), or (c) of
13 this subsection; and a copy of such process is within 10
14 days thereafter sent by certified or registered mail by
15 the plaintiff's attorney of record to the defendant at
16 the last known principal place of business of the
17 defendant and the defendant's receipt and the plaintiff's
18 attorney's affidavit of compliance herewith are filed
19 with the clerk of the court in which such action is
20 pending on or before the return date of the process or
21 within such further time as the court may allow.
22 (5) Before any unauthorized foreign or alien company
23 shall file or cause to be filed any pleading in any action or
24 proceeding, including any arbitration, instituted against it,
25 such unauthorized company shall either (1) deposit with the
26 clerk of the court in which such action or proceeding is
27 pending or with the clerk of the court in the jurisdiction in
28 which the arbitration is pending cash or securities or file
29 with such clerk a bond with good and sufficient sureties, to
30 be approved by the court, in an amount to be fixed by the
31 court sufficient to secure the payment of any final judgment
32 which may be rendered in such action, proceeding, or
33 arbitration; or (2) where the unauthorized company continues
34 to transact the business of insurance by issuing new
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1 contracts of insurance or reinsurance, procure a certificate
2 of authority to transact the business of insurance in this
3 State.
4 The court in any action or proceeding, in which service
5 is made in the manner provided in subsections (3) or (4) may,
6 in its discretion, order such postponement as may be
7 necessary to afford the defendant reasonable opportunity to
8 comply with the provisions of this subsection and to defend
9 such action.
10 Nothing in this Section is to be construed to prevent an
11 unauthorized foreign or alien company from filing a motion to
12 quash process or to set aside service thereof made in the
13 manner provided in subsections (3) or (4) on the ground
14 either (a) that such unauthorized company has not done any of
15 the acts enumerated in subsection (2) or (b) that the person
16 on whom service was made pursuant to subsection (4) was not
17 doing any of the acts therein enumerated.
18 (6) In any action against an unauthorized foreign or
19 alien company upon a contract of insurance or reinsurance
20 issued or delivered in this State to a resident thereof or to
21 a corporation authorized to do business therein, if the
22 company has failed for 30 days after demand prior to the
23 commencement of the action to make payment in accordance with
24 the terms of the contract, and it appears to the court that
25 such refusal was vexatious and without reasonable cause, the
26 court may allow to the plaintiff a reasonable attorney fee
27 and include such fee in any judgment that may be rendered in
28 such action. Such fee shall not exceed 12-1/2 per cent of the
29 amount which the court or jury finds the plaintiff is
30 entitled to recover against the insurer, but in no event
31 shall such fee be less than $25. Failure of a company to
32 defend any such action shall be deemed prima facie evidence
33 that its failure to make payment was vexatious and without
34 reasonable cause.
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1 (7) No plaintiff shall be entitled to a judgment by
2 default under this Section until the expiration of 30 days
3 from the date of the filing of the affidavit of compliance.
4 (8) The provisions of this Section shall not apply to
5 any action or proceeding against any unauthorized foreign or
6 alien company arising out of any contract of direct
7 re-insurance or arising out of any contract of insurance
8 (a) effected in accordance with Section 445, or
9 (b) covering ocean marine, aircraft, railway
10 insurance risks, or
11 (c) against legal liability arising out of the
12 ownership, operation or maintenance of any property
13 having a permanent situs outside this State, or
14 (d) against loss of or damage to any property
15 having a permanent situs outside this State,
16 where such contract of insurance contains a provision
17 designating the Director and his or her successor or
18 successors in office or a bona fide resident of Illinois to
19 be the true and lawful attorney of such non-admitted insurer
20 upon whom may be served all lawful process in any action or
21 proceeding arising out of any such contract of insurance or
22 where the insurer enters a general appearance in any such
23 action or proceeding.
24 (9) Nothing in this Section contained shall limit or
25 affect the right to serve any process, notice or demand
26 required or permitted by law to be served upon any company in
27 any other manner now or hereafter permitted by law.
28 (Source: P.A. 86-1154; 86-1156; 86-1475.)
29 Section 99. Effective date. This Act takes effect upon
30 becoming law.