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90_SB0659ham001
LRB9000419JSgcam04
1 AMENDMENT TO SENATE BILL 659
2 AMENDMENT NO. . Amend Senate Bill 659 on page 1 by
3 replacing lines 1 and 2 with the following:
4 "AN ACT concerning insurance, amending a named Act."; and
5 on page 7 by replacing lines 23 and 24 with the following:
6 "Section 15. The Illinois Insurance Code is amended by
7 changing Sections 534.3, 534.4, 538.4, 545, and 546 as
8 follows:
9 (215 ILCS 5/534.3) (from Ch. 73, par. 1065.84-3)
10 Sec. 534.3. Covered claim; unearned premium defined.
11 (a) "Covered claim" means an unpaid claim for a loss
12 arising out of and within the coverage of an insurance policy
13 to which this Article applies and which is in force at the
14 time of the occurrence giving rise to the unpaid claim,
15 including claims presented during any extended discovery
16 period which was purchased from the company before the entry
17 of a liquidation order or which is purchased or obtained from
18 the liquidator after the entry of a liquidation order, made
19 by a person insured under such policy or by a person
20 suffering injury or damage for which a person insured under
21 such policy is legally liable, and for unearned premium, if:
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1 (i) The company issuing the policy becomes an
2 insolvent company as defined in Section 534.4 after the
3 effective date of this Article; and
4 (ii) The claimant or insured is a resident of this
5 State at the time of the insured occurrence, or the
6 property from which a first party claim for damage to
7 property arises is permanently located in this State or,
8 in the case of an unearned premium claim, the
9 policyholder is a resident of this State at the time the
10 policy was issued; provided, that for entities other than
11 an individual, the residence of a claimant, insured, or
12 policyholder is the state in which its principal place of
13 business is located at the time of the insured event.
14 (b) "Covered claim" does not include:
15 (i) any amount in excess of the applicable limits
16 of liability provided by an insurance policy to which
17 this Article applies; nor
18 (ii) any claim for punitive or exemplary damages;
19 nor
20 (iii) any first party claim by an insured who is an
21 affiliate of the insolvent company; nor
22 (iv) any first party or third party claim by or
23 against an insured whose net worth on December 31 of the
24 year next preceding the date the insurer becomes an
25 insolvent insurer exceeds $25,000,000 $50 million;
26 provided that an insured's net worth on such date shall
27 be deemed to include the aggregate net worth of the
28 insured and all of its affiliates as calculated on a
29 consolidated basis. However, this exclusion shall not
30 apply to third party claims against the insured where the
31 insured has applied for or consented to the appointment
32 of a receiver, trustee, or liquidator for all or a
33 substantial part of its assets, filed a voluntary
34 petition in bankruptcy, filed a petition or an answer
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1 seeking a reorganization or arrangement with creditors or
2 to take advantage of any insolvency law, or if an order,
3 judgment, or decree is entered by a court of competent
4 jurisdiction, on the application of a creditor,
5 adjudicating the insured bankrupt or insolvent or
6 approving a petition seeking reorganization of the
7 insured or of all or substantial part of its assets; nor
8 (v) any claim for any amount due any reinsurer,
9 insurer, insurance pool, or underwriting association as
10 subrogated recoveries, reinsurance recoverables,
11 contribution, indemnification or otherwise. No such claim
12 held by a reinsurer, insurer, insurance pool, or
13 underwriting association may be asserted in any legal
14 action against a person insured under a policy issued by
15 an insolvent company other than to the extent such claim
16 exceeds the Fund obligation limitations set forth in
17 Section 537.2 of this Code.
18 (c) "Unearned Premium" means the premium for the
19 unexpired period of a policy which has been terminated prior
20 to the expiration of the period for which premium has been
21 paid and does not mean premium which is returnable to the
22 insured for any other reason.
23 (Source: P.A. 89-97, eff. 7-7-95.)
24 (215 ILCS 5/534.4) (from Ch. 73, par. 1065.84-4)
25 Sec. 534.4. "Insolvent company" means a company
26 organized as a stock company, mutual company, reciprocal or
27 Lloyds (a) which holds a certificate of authority to transact
28 insurance in this State either at the time the policy was
29 issued or when the insured event occurred, or any company
30 which has assumed such policy obligation through merger,
31 consolidation or reinsurance, whether or not such assuming
32 company held a certificate of authority to transact insurance
33 in this State at the time such policy was issued or when the
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1 insured event occurred; and (b) against which a final an
2 Order of Liquidation with a finding of insolvency to which
3 there is no further right of appeal has been entered by a
4 court of competent jurisdiction in the company's State of
5 domicile after the effective date of this Article, and which
6 Order of Liquidation has not been stayed or been the subject
7 of a writ or supersedeas or other comparable order.
8 (Source: P.A. 85-576.)
9 (215 ILCS 5/538.4) (from Ch. 73, par. 1065.88-4)
10 Sec. 538.4. Legal actions by Fund. The Fund may sue or
11 be sued, including taking any legal actions necessary or
12 proper for recovery of any unpaid assessments under Sections
13 537.1 or 537.6. The Fund's power to sue includes, but is not
14 limited to, the power and right to intervene as a party
15 before any court that has jurisdiction over an insolvent
16 insurer when the Fund is a creditor or potential creditor of
17 the insolvent insurer.
18 (Source: P.A. 89-97, eff. 7-7-95.)
19 (215 ILCS 5/545) (from Ch. 73, par. 1065.95)
20 Sec. 545. Effect of paid claims.
21 (a) Every insured or claimant seeking the protection of
22 this Article shall cooperate with the Fund to the same extent
23 as such person would have been required to cooperate with the
24 insolvent company. The Fund shall have all the rights, duties
25 and obligations under the policy to the extent of the covered
26 claim payment, provided the Fund shall have no cause of
27 action against the insured of the insolvent company for any
28 sums it has paid out except such causes of action as the
29 insolvent company would have had if such sums had been paid
30 by the insolvent company and except as provided in paragraph
31 (d) of this Section.
32 (b) The Fund and any similar organization in another
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1 state shall be recognized as claimants in the liquidation of
2 an insolvent company for any amounts paid by them on covered
3 claims obligations as determined under this Article or
4 similar laws in other states and shall receive dividends at
5 the priority set forth in paragraph (d) of subsection (1) of
6 Section 205 of this Code. The liquidator of an insolvent
7 company shall be bound by determinations of covered claim
8 eligibility under the Act and by settlements of claims made
9 the amounts of covered claim payments by the Fund or a
10 similar organization in another state on the receipt of
11 certification of such payments, to the extent those
12 determinations or settlements satisfy obligations of the
13 Fund, but the receiver shall not be bound in any way by those
14 determinations or settlements to the extent that there
15 remains a claim in the estate for amounts in excess of the
16 payments by the Fund. In submitting their claim for covered
17 claim payments the Fund and any similar organization in
18 another state shall not be subject to the requirements of
19 Sections 208 and 209 of this Code and shall not be affected
20 by the failure of the person receiving a covered claim
21 payment to file a proof of claim.
22 (c) The expenses of the Fund and of any similar
23 organization in any other state, other than expenses incurred
24 in the performance of duties under Section 547 or similar
25 duties under the statute governing a similar organization in
26 another state, shall be accorded the same priority as the
27 liquidator's expenses. The liquidator shall make prompt
28 reimbursement to the Fund and any similar organization for
29 such expense payments.
30 (d) The Fund has the right to recover from the following
31 persons the amount of any covered claims and allocated claims
32 expenses which the Fund paid or incurred on behalf of such
33 person in satisfaction, in whole or in part, of liability
34 obligations of such person to any other person:
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1 (i) any insured whose net worth on December 31 of
2 the year next preceding the date the company becomes an
3 insolvent company exceeds $25,000,000 $50 million;
4 provided that an insured's net worth on such date shall
5 be deemed to include the aggregate net worth of the
6 insured and all of its affiliates as calculated on a
7 consolidated basis.
8 (ii) any insured who is an affiliate of the
9 insolvent company.
10 (Source: P.A. 89-206, eff. 7-21-95.)
11 (215 ILCS 5/546) (from Ch. 73, par. 1065.96)
12 Sec. 546. Other insurance. Non-duplication of recovery.
13 (a) An insured or claimant shall be required first to
14 exhaust all coverage provided by any other insurance policy,
15 regardless of whether or not such other insurance policy was
16 written by a member company, if the claim under such other
17 policy arises from the same facts, injury, or loss that gave
18 rise to the covered claim against the Fund. The Fund's
19 obligation under Section 537.2 shall be reduced by the amount
20 recovered or recoverable, whichever is greater, under such
21 other insurance policy. Where such other insurance policy
22 provides uninsured or underinsured motorist coverage, the
23 amount recoverable shall be deemed to be the full applicable
24 limits of such coverage. To the extent that the Fund's
25 obligation under Section 537.2 is reduced by application of
26 this Section, the liability of the person insured by the
27 insolvent insurer's policy for the claim shall be reduced in
28 the same amount. Any insured or claimant having a covered
29 claim against the Fund shall be required first to exhaust his
30 rights under any provision in any other insurance policy
31 which may be applicable to the claim, whether or not the
32 insurance policy was written by a member company. Any amount
33 payable on a covered claim under this Article shall be
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1 reduced by the amount of such recovery under such insurance
2 policy.
3 (b) Any insured or claimant having a claim which may be
4 recovered under more than one insurance guaranty fund or its
5 equivalent shall seek recovery first from the Fund of the
6 place of residence of the insured except that if it is a
7 first party claim for damage to property with a permanent
8 location, he shall first seek recovery from the Fund of the
9 location of the property; if it is a workers' compensation
10 claim, he shall first seek recovery from the Fund of the
11 residence of the claimant. Any recovery under this Article
12 shall be reduced by the amount of the recovery from any other
13 insurance guaranty fund or its equivalent.
14 (Source: P.A. 89-97, eff. 7-7-95.)
15 Section 99. Effective date. This Section and Section 15
16 of this Act take effect upon becoming law. Sections 5 and 10
17 of this Act take effect on January 1, 1998.".