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90_SB0659
215 ILCS 5/107.05 from Ch. 73, par. 719.05
215 ILCS 5/107.07 from Ch. 73, par. 719.07
215 ILCS 5/107.12 from Ch. 73, par. 719.12
215 ILCS 5/107.13 from Ch. 73, par. 719.13
215 ILCS 5/107.13a from Ch. 73, par. 719.13a
215 ILCS 5/107.14 from Ch. 73, par. 719.14
215 ILCS 5/107.15b new
215 ILCS 5/107.27 from Ch. 73, par. 719.27
215 ILCS 5/107.23 rep.
Amends the Insurance Exchange Article of the Illinois
Insurance Code. Authorizes the exchange to establish annual
fees for the admission of syndicates and limited syndicates.
Provides that the Director of Insurance shall, rather than
may, be responsible for examining the financial records of
the Exchange and related parties. Requires the Exchange to
file an annual financial statement with the Department of
Insurance. Requires syndicates to file quarterly statements,
actuarial opinions, and audited financial reports with the
Department and the Board. Provides that liquidation expenses
of the Illinois Insurance Exchange Immediate Access
Association and any liquidator shall be paid from the
insolvent syndicate's trust or custodial account. Abolishes
limit on examination fees. Provides that the Board of
Trustees of the exchange may adopt rules. Authorizes the
Department of Insurance to disapprove a rule. Provides that
all rules adopted before the effective date of this
amendatory Act shall be deemed to have been approved.
Effective January 1, 1998.
LRB9000419JSgcA
LRB9000419JSgcA
1 AN ACT to amend the Illinois Insurance Code in relation
2 to insurance exchanges.
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 Sections 107.05, 107.07, 107.12, 107.13, 107.13a,
7 107.14, and 107.27 and adding Section 107.15b as follows:
8 (215 ILCS 5/107.05) (from Ch. 73, par. 719.05)
9 Sec. 107.05. Transaction of business.
10 (a) Reinsurance may shall be provided by and through
11 syndicates.
12 (b) Only Exchange brokers may present insurance business
13 to the Exchange.
14 (c) Syndicates may reinsure risks with syndicates or
15 other persons subject to the rules of the Exchange.
16 (d) The minimum premium for any insurance presented to
17 the Exchange shall be $50,000. For group insurance, the
18 minimum premium requirements must be met separately by each
19 group member. However, if an Exchange broker by affidavit
20 states that after diligent effort he was unable to procure
21 the policies or contracts required to protect the property or
22 risk described in the affidavit from companies authorized to
23 transact business in this State, an insurance policy may be
24 issued through the Exchange for any amount of premium. This
25 subsection shall apply only to direct coverage of Illinois
26 domiciled risks.
27 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
28 (215 ILCS 5/107.07) (from Ch. 73, par. 719.07)
29 Sec. 107.07. Admission. Capitalization:
30 Syndicate - at least $2,000,000.
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1 Subscriber - at least $30,000.
2 Fees: (a) Exchange brokers. An annual fee shall be paid
3 to the Exchange by any person who presents risks to the
4 Exchange. The annual fee established by the Exchange shall
5 not exceed $5,000.
6 (b) The Exchange may establish annual fees for the
7 admission of syndicates, limited syndicates, and subscribers.
8 Standards: The Exchange may establish additional
9 standards for the admission of subscribers and Exchange
10 brokers.
11 Assessments: The Exchange may make assessments of
12 subscribers or syndicates for the expenses of operating the
13 Exchange.
14 (Source: P.A. 81-1047.)
15 (215 ILCS 5/107.12) (from Ch. 73, par. 719.12)
16 Sec. 107.12. Examination of financial records. The
17 Director of Insurance shall be responsible for examining may
18 examine the financial records of the Exchange, syndicates,
19 limited syndicates, subscribers and Exchange brokers. Except
20 as otherwise provided in this Article, the examinations shall
21 be conducted pursuant to Sections 132.1 through 132.7 of this
22 Code.
23 (Source: P.A. 81-1047.)
24 (215 ILCS 5/107.13) (from Ch. 73, par. 719.13)
25 Sec. 107.13. Annual statement. The Department shall by
26 rule may require an annual statement from the Exchange, which
27 shall be an aggregate of all syndicate's and limited
28 syndicate's financial records for the year ending December 31
29 immediately preceding. The statement shall be filed with the
30 Department by March 1 of each year. The rule shall specify
31 the format.
32 (Source: P.A. 81-1047.)
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1 (215 ILCS 5/107.13a) (from Ch. 73, par. 719.13a)
2 Sec. 107.13a. (a) Periodic filings Annual Statement of
3 syndicates.
4 (a) Every syndicate doing business on the Exchange shall
5 file with the Board and with the Director of Insurance by
6 March 1st in each year a financial statement for the year
7 ending December 31st immediately preceding on forms
8 prescribed by the Director Board, which shall conform
9 substantially to the form of statement adopted by the
10 National Association of Insurance Commissioners and in use on
11 the effective date the statement is filed of this amendatory
12 Act of 1981. In the preparation of such annual statement,
13 each syndicate shall compute the combined amount earned
14 during the year from investment income and from underwriting
15 income on the basis of the accounting method incorporated in
16 the underwriting and investment exhibit of such annual
17 statement. The Board shall have power to make such
18 modifications and additions in this form as it may deem
19 desirable or necessary to ascertain the condition and affairs
20 of the syndicate. The Board shall have authority to extend
21 the time for filing any statement by any syndicate for
22 reasons which the Board considers good and sufficient. Such
23 statement shall be verified by oaths of the president and
24 secretary of the syndicate, or, in their absence, by 2 other
25 principal officers. In addition, any syndicate transacting
26 business on the Exchange may be required by the Board, when
27 it considers such action to be necessary and appropriate for
28 the protection of policyholders, creditors, subscribers or
29 claimants, to file, within 60 days after mailing to the
30 syndicate of a notice that such is required, a supplemental
31 summary statement as of the last day of any calendar month
32 occurring during the 100 days next preceding the mailing of
33 such notice designed by the Board on forms prescribed and
34 furnished by the Board. No syndicate shall be required to
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1 file more than 4 supplemental summary statements during any
2 consecutive 12-month period. The Board may require
3 supplemental summary statements to be certified by an
4 independent actuary deemed competent by the Board or by an
5 independent certified public accountant.
6 (b) Within 45 days after the end of each quarter, each
7 syndicate shall file with the Director and with the Board
8 quarterly financial statements that conform substantially to
9 the quarterly statement form adopted by the N.A.I.C.
10 (c) By March 1 of each year, each syndicate shall file
11 with the Director and the Board a certification of loss
12 reserves signed by a fellow or associate of the Casualty
13 Actuary Society, to be followed on or before June 1 of that
14 year by a detailed report prepared by such actuary.
15 (d) By June 1 of each year, each syndicate shall file
16 with the Director and with the Board an annual audited
17 financial report certified by an independent certified public
18 accountant.
19 (e) Each syndicate doing business on the Exchange shall
20 file with the Director and the Board by May 1 of each year an
21 annual Form B Registration Statement in accordance with
22 Sections 131.14 and 131.15 of this Code.
23 (b) For the information of the public generally, the
24 Board shall cause an abstract of the information contained in
25 the annual statement to be made available to the public as
26 soon as practicable after filing with the Exchange, by
27 printing such abstracts in pamphlet tabular form for free
28 general distribution by the Exchange, or by such other
29 publication in the City of Chicago as may be reasonably
30 necessary more fully to inform the public of the financial
31 condition of syndicates transacting business on the Exchange.
32 (Source: P.A. 83-1362.)
33 (215 ILCS 5/107.14) (from Ch. 73, par. 719.14)
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1 Sec. 107.14. Examination Fees. A fee of the lesser of
2 $5,000,000 or 0.1% of the net premium written by the Exchange
3 in the year this amendatory Act of 1993 takes effect and
4 thereafter 0.2% of the net premium written by the Exchange
5 each year shall be paid by the Exchange to the Department for
6 deposit in the Insurance Financial Regulation Fund. No other
7 charge for examination of the Exchange, syndicates, limited
8 syndicates, subscribers, or Exchange brokers shall be made.
9 (Source: P.A. 88-364.)
10 (215 ILCS 5/107.15b new)
11 Sec. 15b. Board rulemaking authority.
12 (a) The Board has the authority to adopt such rules as
13 it deems necessary to carry out its duties under this Article
14 and to maintain a well-regulated marketplace.
15 (b) A rule or modification to an existing rule adopted
16 by the Board after the effective date of this amendatory Act
17 of 1997 shall be filed with the Director not less than 30
18 days before the proposed effective date of the rule or
19 modification. The Director, upon written order, may
20 disapprove the rule or modification, in whole or in part,
21 upon a finding that the rule or modification would cause the
22 exchange to be operated in a manner that would be hazardous
23 to the public or its policyholders.
24 (c) An order by the Director disapproving a rule or
25 modification shall be deemed to be a final administrative
26 decision and shall be subject to judicial review pursuant to
27 the provisions of the Administrative Review Law.
28 (d) All rules and any modifications thereto adopted by
29 the Board before the effective date of this amendatory Act of
30 1997 shall be deemed to have been approved by the Director.
31 (215 ILCS 5/107.27) (from Ch. 73, par. 719.27)
32 Sec. 107.27. Syndicate trust account; certificates of
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1 guaranty.
2 (a) In addition to any other requirements imposed by
3 this Article the Board may require each syndicate to maintain
4 a trust or custodial account in such amounts as the Board may
5 determine by rule; provided that, except by special order of
6 the Board, no syndicate may be required to maintain in the
7 trust or custodial account an amount in excess of 50% of the
8 amount of its surplus as regards policyholders as shown by
9 its most recent audited report. Any trust or custodial
10 account so established shall be for the benefit of all
11 policyholders and claimants of the syndicate for losses
12 arising out of and within the coverage of insurance risks or
13 obligations underwritten by the syndicate. Upon entry of an
14 Order of Liquidation against a syndicate all amounts in the
15 trust or custodial account shall be immediately transferred
16 to the Association created under Section 107.26 to be used to
17 investigate, negotiate, and satisfy the syndicate's
18 outstanding insurance obligations. Expenses of the
19 Association or the Liquidator in performing these functions
20 may be paid from the insolvent syndicate's trust or custodial
21 account upon application to and approval by the Liquidation
22 Court. The Board shall provide by rule for the establishment
23 and maintenance of such trust or custodial accounts including
24 the investment of funds held in such accounts. Any amounts
25 deposited into a trust or custodial account required to be
26 maintained by this Section shall be an asset of the
27 syndicate.
28 (b) The Board shall determine limitations on the amount
29 of insurance or reinsurance written or assumed by a syndicate
30 under subsection (c) of Section 107.10. In addition to the
31 capitalization requirement under Section 107.07 a syndicate
32 may proportionately increase its ratio of net premiums to
33 capitalization, pursuant to rules adopted by the Board, by
34 providing security in the form of certificates of guaranty or
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1 in the form of direct obligations of a member bank of the
2 Federal Reserve System. Any such certificate of guaranty or
3 bank obligation shall be for the benefit of all policyholders
4 and claimants of the syndicate for losses arising out of and
5 within the coverage of insurance risks or obligations
6 underwritten by the syndicate. Upon entry of an Order of
7 Liquidation against a syndicate, amounts payable under
8 certificates of guaranty or bank obligations shall
9 immediately be paid to the Association created under Section
10 107.26 to be used to satisfy the syndicate's outstanding
11 insurance obligations. The Board by rule shall establish the
12 form and amounts of such certificates or obligations and
13 standards for determining the security necessary to ensure
14 performance under them. The Board may provide for different
15 limitations by line or in the aggregate based on the
16 existence or non-existence of certificates of guaranty or
17 bank obligations and the type of security backing such
18 certificates or obligations.
19 (Source: P.A. 89-97, eff. 7-7-95; 89-206, eff. 7-21-95.)
20 (215 ILCS 5/107.23 rep.)
21 Section 10. The Illinois Insurance Code is amended by
22 repealing Section 107.23.
23 Section 99. Effective date. This Act takes effect
24 January 1, 1998.