State of Illinois
90th General Assembly
Legislation

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[ Engrossed ][ Enrolled ][ House Amendment 001 ]

90_SB1728

      215 ILCS 5/86             from Ch. 73, par. 698
      215 ILCS 5/98             from Ch. 73, par. 710
      215 ILCS 5/102            from Ch. 73, par. 714
      215 ILCS 5/103            from Ch. 73, par. 715
      215 ILCS 5/144            from Ch. 73, par. 756
          Amends the Illinois Insurance Code.  Removes the limit on
      the amount of insurance a Lloyds may underwrite with  respect
      to any single risk.  Effective immediately.
                                                     LRB9011450JSmg
                                               LRB9011450JSmg
 1        AN  ACT  to amend the Illinois Insurance Code by changing
 2    Sections 86, 98, 102, 103, and 144.
 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 86, 98, 102, 103, and 144 as follows:
 7        (215 ILCS 5/86) (from Ch. 73, par. 698)
 8        Sec. 86. Scope of Article.
 9        (1)  This  Article  applies  to  all   groups   including
10    incorporated   and   individual  unincorporated  underwriters
11    transacting an insurance business in this  State  through  an
12    attorney-in-fact under the name Lloyds or under a Lloyds plan
13    of   operation.     Groups  that  meet  the  requirements  of
14    subsection (3) are referred to in this Code as "Lloyds",  and
15    incorporated  and  individual unincorporated underwriters are
16    referred to as "underwriters".
17        (2)  As used in  this  Code  "Domestic  Lloyds"  means  a
18    Lloyds having its home office in this State; "Foreign Lloyds"
19    means  a  Lloyds  having  its home office in any state of the
20    United States other than this State; and "Alien Lloyds" means
21    a Lloyds  having  its  home  office  or  principal  place  of
22    business in any country other than the United States.
23        (3)  A  domestic Lloyds must: (i) be established pursuant
24    to a statute or written charter; (ii) provide for  governance
25    by  a board of directors or similar body; and (iii) establish
26    and monitor standards of solvency  of  its  underwriters.   A
27    foreign  or  alien  Lloyds must be subject to requirements of
28    its state or country of domicile.  Those requirements must be
29    substantially similar to those required of  domestic  Lloyds.
30    Domestic,  foreign, and alien Lloyd's shall not be subject to
31    Section 144 of this Code.
                            -2-                LRB9011450JSmg
 1    (Source: P.A. 88-535.)
 2        (215 ILCS 5/98) (from Ch. 73, par. 710)
 3        Sec. 98. Verified statement Maximum single risk.
 4        (1)  The net maximum amount of insurance to be assumed by
 5    an underwriter of a domestic Lloyds upon any single risk  for
 6    each kind of insurance shall not exceed ten per centum of the
 7    value  of  the cash and securities deposited in trust by such
 8    underwriter plus the share  of  admitted  assets  other  than
 9    underwriters'  deposits  of  such  Lloyds  belonging  to such
10    underwriter less the share of  liabilities  and  reserves  of
11    such  Lloyds  allocable  to such underwriter, but in no event
12    shall it exceed ten per centum of the value of  the  cash  or
13    securities deposited in trust by such underwriter.
14        (2)  Whenever   the   Director   shall  so  require,  the
15    attorney-in-fact of a domestic Lloyds  shall  file  with  the
16    Director a verified statement setting forth
17             (a)  the  names  and  addresses of all underwriters;
18        and
19             (b)  a  description  of  the  cash  and   securities
20        deposited in trust by each underwriter.;
21             (c)  the maximum amount of insurance assumed by each
22        underwriter  upon  any  single  risk  for  each  kind  of
23        insurance; and
24             (d)  That the maximum amount of insurance assumed or
25        made  upon  any single risk for each kind of insurance by
26        any underwriter does not exceed the limitation set  forth
27        in subsection (1) of this section.
28    (Source: P.A. 88-535.)
29        (215 ILCS 5/102) (from Ch. 73, par. 714)
30        Sec. 102. Restrictions upon foreign Lloyds.
31        (1)  Each  foreign Lloyds authorized to transact business
32    in this State shall
                            -3-                LRB9011450JSmg
 1        (a)  maintain cash and securities, including the deposits
 2    of its  underwriters,  of  a  character  conformable  to  the
 3    requirements  of  Article  VIII  of  this  Code  for domestic
 4    companies, at  least  equal  at  all  times  to  the  minimum
 5    admitted  assets  required  by  this  Article  for a domestic
 6    Lloyds doing the same kind or kinds of business.
 7        (b)  file with the Director an authenticated copy of  its
 8    power  of  attorney  and  an  authenticated copy of the trust
 9    agreement or other agreement under  which  deposits  made  by
10    underwriters are held;
11        (c)  notify  the  Director  forthwith of any amendment to
12    its power of attorney, deposit agreement or  other  documents
13    underlying  its  organization, by filing with the Director an
14    authenticated copy of such document as amended;
15        (d)  notify the Director forthwith of any change  in  its
16    name  or  change  of attorney-in-fact or change of address of
17    its attorney-in-fact.
18        (2)  A foreign Lloyds shall not establish branches  under
19    other or different names or titles.
20        (3)  Each  such  foreign  Lloyds  shall be subject to all
21    limitation of risk provisions imposed by  this  Article  upon
22    domestic Lloyds.
23        (3)(4)  There  shall  be  filed  with the Director by the
24    attorney-in-fact of such foreign Lloyds at the time of filing
25    the annual statement,  or  more  often  if  required  by  the
26    Director, a statement verified by the appropriate official of
27    such Lloyds, setting forth
28        (a)  the  names and addresses of all underwriters of such
29    Lloyds; and
30        (b)  a description of the cash and  securities  deposited
31    in trust by each underwriter.;
32        (c)  the  maximum  amount  of  insurance  assumed by each
33    underwriter upon any single risk for each kind of  insurance;
34    and
                            -4-                LRB9011450JSmg
 1        (d)  that  the  maximum  amount of insurance assumed upon
 2    any single risk for each kind of insurance by any underwriter
 3    does not exceed the limitation provided in this  article  for
 4    individual underwriters of a domestic Lloyds.
 5    (Source: Laws 1959, p. 1431.)
 6        (215 ILCS 5/103) (from Ch. 73, par. 715)
 7        Sec. 103. Alien Lloyds.
 8        (1)  Each alien Lloyds authorized to transact business in
 9    this State shall
10        (a)  maintain  in  this  State  or any other state of the
11    United States  in  which  they  are  authorized  to  transact
12    business,  cash  or  securities of a character conformable to
13    the requirements of Article VIII of this  Code  for  domestic
14    companies  at  least  equal  at  all  times to the minimum of
15    admitted assets required  by  this  Article  for  a  domestic
16    Lloyds doing the same kind or kinds of business;
17        (b)  make  deposits  of  underwriters  in  this  State in
18    accordance  with  the  requirements  imposed  upon   domestic
19    Lloyds;
20        (c)  file  with the Director an authenticated copy of its
21    power of attorney and an  authenticated  copy  of  the  trust
22    agreement  or  other  agreement  under which deposits made by
23    underwriters in this State are held;
24        (d)  notify the Director forthwith of  any  amendment  to
25    its  power  of attorney, deposit agreement or other documents
26    by filing with the Director an  authenticated  copy  of  such
27    document as amended; and
28        (e)  notify  the  Director forthwith of any change in its
29    name or change of attorney-in-fact or change  of  address  of
30    its attorney-in-fact.
31        (2)  An  alien  Lloyds shall not establish branches under
32    other or different names or titles.
33        (3)  Each such alien  Lloyds  shall  be  subject  to  all
                            -5-                LRB9011450JSmg
 1    limitation  of  risk  provisions imposed by this Article upon
 2    domestic Lloyds.
 3        (3)(4)  There shall be filed with  the  Director  by  the
 4    attorney-in-fact  for  such  Lloyds,  who or which shall be a
 5    resident person or corporation of this State, at the time  of
 6    filing the annual statement, or more often if required by the
 7    Director, a verified statement setting forth
 8        (a)  the  names and addresses of all underwriters of such
 9    Lloyds; and
10        (b)  a description of the cash and  securities  deposited
11    in trust by each underwriter.;
12        (c)  the  maximum  amount  of  insurance  assumed by each
13    underwriter upon any single risk for each kind of  insurance;
14    and
15        (d)  that  the  maximum  amount of insurance assumed upon
16    any  single  risk  for  each  kind  of   insurance   by   any
17    underwriters  does  not  exceed  10%  of  such  underwriter's
18    deposit.
19        (4)(5)  Additional  underwriters may join and be included
20    in  any  such  Lloyds  subject   to   such   conditions   and
21    requirements  as  may  from  time  to time be imposed by such
22    Lloyds and upon meeting the  requirements  of  this  section,
23    such  additional  underwriters  who  may  so join such Lloyds
24    shall be bound by the documents on file with the Director  in
25    the  same  manner  as though they had personally executed the
26    same and shall have the same rights, powers and duties as all
27    other  underwriters  of  such  Lloyds.  The  attorney-in-fact
28    authorized  by  the  underwriters  to  act  for  them   shall
29    thereafter   be  the  attorney-in-fact  for  such  additional
30    underwriters to the extent of the power of attorney or  other
31    document   or  authorization  by  such  underwriters  to  the
32    attorney-in-fact.
33    (Source: Laws 1959, p. 1431.)
                            -6-                LRB9011450JSmg
 1        (215 ILCS 5/144) (from Ch. 73, par. 756)
 2        Sec. 144. Limitation of risk.
 3        (1) No company authorized to transact any of the kind  of
 4    business  enumerated  in Classes 2 and 3 of Section 4 in this
 5    State may expose itself to any loss on any one risk or hazard
 6    to an amount exceeding 10% of its admitted assets  in  excess
 7    of its liabilities excluding, in the case of a stock company,
 8    its  capital  stock liability. No portion of any such risk or
 9    hazard which has been reinsured in a domestic or an  approved
10    foreign or alien company, in accordance with this Code, shall
11    be  included in determining the limitation of risk prescribed
12    herein.
13        (2)  Any  company  transacting  the  kind   of   business
14    enumerated  in  clause (g) of Class 2 of Section 4 may expose
15    itself to a risk or hazard in excess of the amount prescribed
16    in subsection (1) if it is protected in excess of that amount
17    by the following:
18             (a)  The co-suretyship of such a  company  similarly
19        authorized; or
20             (b)  By  deposit  with it in pledge or conveyance to
21        it in trust for its protection of property; or
22             (c)  By conveyance or mortgage for  its  protection;
23        or
24             (d)  In  case  a  suretyship  obligation was made on
25        behalf or on account of a fiduciary holding property in a
26        trust capacity, by deposit  or  other  disposition  of  a
27        portion  of  the property so held in trust that no future
28        sale, mortgage, pledge or other disposition can  be  made
29        thereof  without  the consent of such company except by a
30        judgment or order of a court of competent jurisdiction.
31        (3)  A company designated  in  subsection  (2)  may  also
32    execute  transportation  or warehouse bonds for United States
33    Internal Revenue taxes to an  amount  equal  to  50%  of  its
34    capital  and  surplus.  When  the  penalty  of the suretyship
                            -7-                LRB9011450JSmg
 1    obligation exceeds the amount of a judgment described therein
 2    as appealed from and thereby secured, or exceeds  the  amount
 3    of  the subject matter in controversy or of the estate in the
 4    custody of the fiduciary for the performance of whose  duties
 5    it  is  conditioned,  the  bond may be executed if the actual
 6    amount of the judgment or the subject matter  in  controversy
 7    or estate not subject to supervision or control of the surety
 8    is  not in excess of such limitation. When the penalty of the
 9    suretyship obligation  executed  for  the  performance  of  a
10    contract  exceeds  the  contract  price,  the latter shall be
11    taken as the basis for estimating the limit  of  risk  within
12    the meaning of this Section.
13        (4)  Whenever  the  ratio of the annual premium volume in
14    proportion  to  the  policyholder  surplus  of  any   company
15    transacting  the  kinds of business authorized in Class 2 and
16    Class 3 of Section 4 when reviewed in  conjunction  with  the
17    kinds and nature of risks insured, the financial condition of
18    the  company  and  its ownership including but not limited to
19    the  liquidity  of  assets,  relationship   of   surplus   to
20    liabilities   and  adequacy  of  outstanding  loss  reserves,
21    creates a condition such that the further assumption of risks
22    might be hazardous to policyholders, creditors or the general
23    public, then the Director may order such company to take  one
24    or more of the following steps:
25             (a)  to reduce the loss exposure by reinsurance;
26             (b)  to  reduce  the  volume  of  new business being
27        accepted;
28             (c)  to suspend the writing of new  business  for  a
29        period not to exceed 3 months;
30             (d)  to  increase and maintain the company's surplus
31        by a contribution to surplus which will raise the surplus
32        for such a period of time and by such an  amount  as  the
33        Director may deem necessary and essential; or
34             (e)  to  reduce  general  or acquisition expenses by
                            -8-                LRB9011450JSmg
 1        specified methods.
 2             (f)  (Blank).
 3        (5)  The provisions of  this  Section  do  not  apply  to
 4    domestic, foreign, and alien Lloyds.
 5        The company may, within 10 days after receipt of an Order
 6    of the Director under this Section, request that the Director
 7    hold a hearing to determine whether the Order of the Director
 8    should  be  modified in any way. A request for a hearing by a
 9    company under this Section stays any Order  of  the  Director
10    entered  under  this  Section until such time as the Director
11    has entered an Order pursuant to the hearing.
12    (Source: P.A. 89-97, eff. 7-7-95.)
13        Section 99.  Effective date.  This Act takes effect  upon
14    becoming law.

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