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Public Act 91-0292
HB0812 Enrolled LRB9101344JSpc
AN ACT to amend the Illinois Insurance Code by changing
Section 123B-4.
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 123B-4 as follows:
(215 ILCS 5/123B-4) (from Ch. 73, par. 735B-4)
Sec. 123B-4. Risk retention groups not organized in this
State. Any risk retention group organized and licensed in a
state other than this State and seeking to do business as a
risk retention group in this State shall comply with the laws
of this State as follows:
A. Notice of operations and designation of the Director
as agent.
Before offering insurance in this State, a risk retention
group shall submit to the Director on a form approved by the
Director:
(1) a statement identifying the state or states in
which the risk retention group is organized and licensed
as a liability insurance company, its date of
organization, its principal place of business, and such
other information, including information on its
membership, as the Director may require to verify that
the risk retention group is qualified under subsection
(11) of Section 123B-2 of this Article;
(2) a copy of its plan of operations or a
feasibility study and revisions of such plan or study
submitted to its state of domicile; provided, however,
that the provision relating to the submission of a plan
of operation or a feasibility study shall not apply with
respect to any line or classification of liability
insurance which (a) was defined in the Product Liability
Risk Retention Act of 1981 before October 27, 1986, and
(b) was offered before such date by any risk retention
group which had been organized and operating for not less
than 3 years before such date; and
(3) a statement of registration which designates
the Director as its agent for the purpose of receiving
service of legal documents or process, together with a
filing fee of $100 payable to the Director.
B. Financial condition. Any risk retention group doing
business in this State shall submit to the Director:
(1) a copy of the group's financial statement
submitted to the state in which the risk retention group
is organized and licensed, which shall be certified by an
independent public accountant and contain a statement of
opinion on loss and loss adjustment expense reserves made
by a member of the American Academy of Actuaries or a
qualified loss reserve specialist (under criteria
established by the National Association of Insurance
Commissioners);
(2) a copy of each examination of the risk
retention group as certified by the public official
conducting the examination;
(3) upon request by the Director, a copy of any
audit performed with respect to the risk retention group;
and
(4) such information as may be required to verify
its continuing qualification as a risk retention group
under subsection (11) of Section 123B-2.
C. Taxation.
(1) Each risk retention group shall be liable for
the payment of premium taxes and taxes on premiums of
direct business for risks resident or located within this
State, and shall report to the Director the net premiums
written for risks resident or located within this State.
Such risk retention group shall be subject to taxation,
and any applicable fines and penalties related thereto,
on the same basis as a foreign admitted insurer.
(2) To the extent licensed insurance producers are
utilized pursuant to Section 123B-11, they shall report
to the Director the premiums for direct business for
risks resident or located within this State which such
licensees have placed with or on behalf of a risk
retention group not organized in this State.
(3) To the extent that licensed insurance producers
are utilized pursuant to Section 123B-11, each such
producer shall keep a complete and separate record of all
policies procured from each such risk retention group,
which record shall be open to examination by the
Director, as provided in Section 506.1 of this Code.
These records shall, for each policy and each kind of
insurance provided thereunder, include the following:
(a) the limit of the liability;
(b) the time period covered;
(c) the effective date;
(d) the name of the risk retention group which
issued the policy;
(e) the gross premium charged; and
(f) the amount of return premiums, if any.
D. Compliance With unfair claims practices provisions.
Any risk retention group, its agents and representatives
shall be subject to the unfair claims practices provisions of
Sections 154.5 through 154.8 of this Code.
E. Deceptive, false, or fraudulent practices. Any risk
retention group shall comply with the laws of this State
regarding deceptive, false, or fraudulent acts or practices.
However, if the Director seeks an injunction regarding such
conduct, the injunction must be obtained from a court of
competent jurisdiction.
F. Examination regarding financial condition. Any risk
retention group must submit to an examination by the Director
to determine its financial condition if the commissioner of
insurance of the jurisdiction in which the group is organized
and licensed has not initiated an examination or does not
initiate an examination within 60 days after a request by the
Director. Any such examination shall be coordinated to avoid
unjustified repetition and conducted in an expeditious manner
and in accordance with the National Association of Insurance
Commissioners' Examiner Handbook.
G. Notice to purchasers. Every application form for
insurance from a risk retention group and the front page and
declaration page of every policy issued by a risk retention
group shall contain in 10 point type the following notice:
"NOTICE
This policy is issued by your risk retention group. Your
risk retention group is not subject to all of the insurance
laws and regulations of your state. State insurance
insolvency guaranty fund protection is not available for your
risk retention group".
H. Prohibited acts regarding solicitation or sale. The
following acts by a risk retention group are hereby
prohibited:
(1) the solicitation or sale of insurance by a risk
retention group to any person who is not eligible for
membership in such group; and
(2) the solicitation or sale of insurance by, or
operation of, a risk retention group that is in a
hazardous financial condition or is financially impaired.
I. Prohibition on ownership by an insurance company. No
risk retention group shall be allowed to do business in this
State if an insurance company is directly or indirectly a
member or owner of such risk retention group, other than in
the case of a risk retention group all of whose members are
insurance companies.
J. Prohibited coverage. No risk retention group may
offer insurance policy coverage prohibited by Articles IX or
XI of this Code or declared unlawful by the Illinois Supreme
Court; provided however, a risk retention group organized and
licensed in a state other than this State that selects the
law of this State to govern the validity, construction, or
enforceability of policies issued by it is permitted to
provide coverage under policies issued by it for penalties in
the nature of compensatory damages including, without
limitation, punitive damages and the multiplied portion of
multiple damages, so long as coverage of those penalties is
not prohibited by the law of the state under which the risk
retention group is organized.
K. Delinquency proceedings. A risk retention group not
organized in this State and doing business in this State
shall comply with a lawful order issued in a voluntary
dissolution proceeding or in a conservation, rehabilitation,
liquidation, or other delinquency proceeding commenced by the
Director or by another state insurance commissioner if there
has been a finding of financial impairment after an
examination under subsection F of Section 123B-4 of this
Article.
L. Compliance with injunctive relief. A risk retention
group shall comply with an injunctive order issued in another
state by a court of competent jurisdiction or by a United
States District Court based on a finding of financial
impairment or hazardous financial condition.
M. Penalties. A risk retention group that violates any
provision of this Article will be subject to fines and
penalties applicable to licensed insurers generally,
including revocation of its license or the right to do
business in this State, or both.
N. Operations prior to August 3, 1987. In addition to
complying with the requirements of this Section, any risk
retention group operating in this State prior to August 3,
1987, shall within 30 days after such effective date comply
with the provisions of subsection A of this Section.
(Source: P.A. 87-1090.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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