Public Act 90-0053 of the 90th General Assembly
Public Act 90-0053
HB1266 Enrolled LRB9003865JSgc
AN ACT to amend the Illinois Insurance Code by changing
Section 123.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Section 123 as follows:
(215 ILCS 5/123) (from Ch. 73, par. 735)
Sec. 123. Service of process upon an unauthorized foreign
or alien company.
(1) The purpose of this Section is to subject
unauthorized foreign and alien companies to the jurisdiction
of courts of this State in actions by or on behalf of
insureds, reinsureds, or beneficiaries under insurance or
reinsurance contracts. The Legislature declares that it is a
subject of concern that many residents of this State or
corporations authorized to do business in this State hold
policies of insurance or reinsurance issued by companies not
authorized to do business in this State, thus presenting to
such residents or corporations authorized to do business in
this State the often insuperable obstacle of resorting to
distant forums for the purpose of asserting legal rights
under such policies. In furtherance of such State interest,
the Legislature herein provides a method of substituted
service of process upon such companies and declares that in
so doing it exercises its power to protect its residents and
corporations authorized to do business in this State and to
define, for the purpose of this statute, what constitutes
doing business in this State, and also exercises powers and
privileges available to the State by virtue of Public Law 15,
79th Congress of the United States, Chapter 20, 1st. Sess.,
S. 340, as amended, which declares that the business of
insurance and every person engaged therein shall be subject
to the laws of the several states.
(2) Any of the following acts in this State, effected by
mail or otherwise, by an unauthorized foreign or alien
company: (a) the issuance or delivery of contracts of
insurance or reinsurance to residents of this State or to
corporations authorized to do business therein, (b) the
solicitation of applications for such contracts, (c) the
collection of premiums, membership fees, assessments or other
considerations for such contracts, or (d) any other
transaction of business, is equivalent to and shall
constitute an appointment by such company, of the Director
and his or her successor or successors in office, to be its
true and lawful attorney upon whom may be served all lawful
process in any action or proceeding against it, arising out
of such policy or contract of insurance or reinsurance, and
the acts shall be a signification of its agreement that any
such process against it which is so served shall be of the
same legal force and validity as if served upon the company.
(3) Service of such process shall be made by delivering
and leaving with the Director a copy thereof and the payment
to the Director of the fee prescribed by this Code. The
Director shall keep a record of all process so served upon
him or her. Such process shall be sufficient service upon
such foreign or alien company provided notice of such service
and a copy of the process are, within 10 days thereafter,
sent by certified or registered mail by the plaintiff's
attorney of record to the defendant at the last known
principal place of business of the defendant, and the
defendant's receipt and the plaintiff's attorney's affidavit
of compliance herewith are filed with the Clerk of the Court
in which such action is pending on or before the return date
of the process or within such further time as the court may
allow.
(4) Service of process in any such action against any
such company shall in addition to the mode hereinabove
described be valid and legal if served upon any person within
this State who, in this State on behalf of such company, is
(a) soliciting insurance or reinsurance, or
(b) making, issuing, or delivering any policies or
contracts of insurance or reinsurance, or
(c) collecting or receiving any premium, membership
fee, assessment or other consideration for insurance or
reinsurance, or
(d) in any manner aiding or assisting in doing any
of the things enumerated in clauses (a), (b), or (c) of
this subsection; and a copy of such process is within 10
days thereafter sent by certified or registered mail by
the plaintiff's attorney of record to the defendant at
the last known principal place of business of the
defendant and the defendant's receipt and the plaintiff's
attorney's affidavit of compliance herewith are filed
with the clerk of the court in which such action is
pending on or before the return date of the process or
within such further time as the court may allow.
(5) Before any unauthorized foreign or alien company
shall file or cause to be filed any pleading in any action or
proceeding, including any arbitration, instituted against it,
such unauthorized company shall either (1) deposit with the
clerk of the court in which such action or proceeding is
pending or with the clerk of the court in the jurisdiction in
which the arbitration is pending cash or securities or file
with such clerk a bond with good and sufficient sureties, to
be approved by the court, in an amount to be fixed by the
court sufficient to secure the payment of any final judgment
which may be rendered in such action, proceeding, or
arbitration; or (2) where the unauthorized company continues
to transact the business of insurance by issuing new
contracts of insurance or reinsurance, procure a certificate
of authority to transact the business of insurance in this
State.
The court in any action or proceeding, in which service
is made in the manner provided in subsections (3) or (4) may,
in its discretion, order such postponement as may be
necessary to afford the defendant reasonable opportunity to
comply with the provisions of this subsection and to defend
such action.
Nothing in this Section is to be construed to prevent an
unauthorized foreign or alien company from filing a motion to
quash process or to set aside service thereof made in the
manner provided in subsections (3) or (4) on the ground
either (a) that such unauthorized company has not done any of
the acts enumerated in subsection (2) or (b) that the person
on whom service was made pursuant to subsection (4) was not
doing any of the acts therein enumerated.
(6) In any action against an unauthorized foreign or
alien company upon a contract of insurance or reinsurance
issued or delivered in this State to a resident thereof or to
a corporation authorized to do business therein, if the
company has failed for 30 days after demand prior to the
commencement of the action to make payment in accordance with
the terms of the contract, and it appears to the court that
such refusal was vexatious and without reasonable cause, the
court may allow to the plaintiff a reasonable attorney fee
and include such fee in any judgment that may be rendered in
such action. Such fee shall not exceed 12-1/2 per cent of the
amount which the court or jury finds the plaintiff is
entitled to recover against the insurer, but in no event
shall such fee be less than $25. Failure of a company to
defend any such action shall be deemed prima facie evidence
that its failure to make payment was vexatious and without
reasonable cause.
(7) No plaintiff shall be entitled to a judgment by
default under this Section until the expiration of 30 days
from the date of the filing of the affidavit of compliance.
(8) The provisions of this Section shall not apply to
any action or proceeding against any unauthorized foreign or
alien company arising out of any contract of direct
re-insurance or arising out of any contract of insurance
(a) effected in accordance with Section 445, or
(b) covering ocean marine, aircraft, railway
insurance risks, or
(c) against legal liability arising out of the
ownership, operation or maintenance of any property
having a permanent situs outside this State, or
(d) against loss of or damage to any property
having a permanent situs outside this State,
where such contract of insurance contains a provision
designating the Director and his or her successor or
successors in office or a bona fide resident of Illinois to
be the true and lawful attorney of such non-admitted insurer
upon whom may be served all lawful process in any action or
proceeding arising out of any such contract of insurance or
where the insurer enters a general appearance in any such
action or proceeding.
(9) Nothing in this Section contained shall limit or
affect the right to serve any process, notice or demand
required or permitted by law to be served upon any company in
any other manner now or hereafter permitted by law.
(Source: P.A. 86-1154; 86-1156; 86-1475.)
Section 99. Effective date. This Act takes effect upon
becoming law.