(215 ILCS 5/511.112)
(from Ch. 73, par. 1065.58-112)
(Section scheduled to be repealed on January 1, 2027)
Fiduciary accounts and duties.
(a) Administrators shall
hold in a fiduciary capacity all contributions and premiums received or
collected on behalf of a plan sponsor or insurer. Such funds shall not be
used as general operating funds of the administrator. All contributions
and premiums received or collected by the administrator from residents of
this State, which the Administrator holds more than 15 days or deposits
into an account which is not under the control of the plan sponsor or insurer,
shall be placed in a special fiduciary account, which account shall
be designated an "Administrator
Trust Fund Account" ("ATF"). All resident and quasi-resident licensees
required to maintain an ATF pursuant to this Section shall maintain such
ATF with one or more financial institutions located within the State of
Illinois and subject to jurisdiction of the Illinois courts. Funds
belonging to 2 or more plans may be
held in the same ATF, provided the administrator's records clearly indicate
the funds belonging to each plan. Checks drawn on the ATF shall indicate
on their face that they are drawn on the ATF of the administrator.
(b) The administrator may make the following disbursements from the ATF:
(1) contributions and premiums due insurers or other
persons providing life, accident and health coverage for a plan;
(2) return contributions and premiums to a plan or
(3) commissions or administrative fees due to the
administrator when earned pursuant to written agreement; and
(4) transfers into the CASA of the administrator.
(c) For each plan where an ATF is required, the balance in the ATF shall
at all times be the amount deposited plus accrued interest, if any, less
authorized disbursements. If the balance at the financial institution with
respect to the ATF is less than the amount deposited plus accrued interest,
if any, less authorized disbursements, the administrator shall be deemed
to have misappropriated fiduciary funds and to have acted in a financially
(d) If the ATF is interest bearing or income producing, the full nature
of the account must first be disclosed to the plan sponsors or insurers
on whose behalf the funds are or will be held. The administrator
must secure written consent and authorization from the plan sponsors or
insurers for the investment of the money and disposition of the interest
or earnings. No investment shall be made which assumes any risk other than
the risk that the obligor shall not pay the principal when due.
The use of specialized techniques or strategies which incur additional
risks to generate higher returns or to extend maturities is not permitted.
Such techniques would include, but not be limited to, the following: Use
of financial futures or options, buying on margins and pledging of ATF balances.
(e) Administrators may place ATF funds in interest bearing or income
producing investments and retain the interest or income thereon, providing
the administrator obtains the prior written authorization of the plan
sponsors or insurers on whose behalf the funds are to be held. In addition
to savings and checking accounts, an administrator may invest in the following:
(1) direct obligations of the United States of
America or U.S. Government agency securities with maturities of not more than one year;
(2) certificates of deposit, with a maturity of not
more than one year, issued by financial institutions which are insured by the Federal Deposit Insurance Corporation (FDIC) or Federal Savings and Loan Insurance Corporation (FSLIC), so long as any such deposit does not exceed the maximum level of insurance protection provided to certificates of deposits held by such institutions;
(3) repurchase agreements with financial institutions
or government securities dealers recognized as primary dealers by the Federal Reserve System provided:
(A) the value of the repurchase agreement is
collateralized with assets which are allowable investments for ATF funds; and
(B) the collateral has a market value at the time
the repurchase agreement is entered into at least equal to the value of the repurchase agreement; and
(C) the repurchase agreement does not exceed 30
(4) commercial paper, provided the commercial paper
is rated at least P-1 by Moody's Investors Service, Inc. or at least A-1 by Standard & Poor's Corporation;
(5) money market funds, provided the money market
fund invests exclusively in assets which are allowable investments pursuant to (1) through (4) above for ATF funds;
(6) each investment transaction must be made in the
name of the administrator's ATF. The administrator must maintain evidence of any such investments. Each investment transaction must flow through the administrator's ATF.
(f) The administrator shall hold in a fiduciary capacity all moneys which
the administrator receives to pay claims and claim adjustment expenses.
All resident and quasi-resident licensees shall
place all such money for claims and claim adjustment
expenses for residents of this State, whether received from a plan sponsor
or insurer or from the ATF of the administrator, in a special fiduciary
account in a financial institution located in this State. The account shall
be designated a "Claims Administration Service Account" ("CASA"). Funds
belonging to 2 or more plans may be held in the same CASA, provided the
administrator's records clearly indicate the funds belonging to each plan.
Checks drawn on the CASA shall indicate on their face that they are drawn
on the CASA of the administrator.
(g) No deposit shall be made into a CASA and no disbursement shall be
made from a CASA except for claims and claims adjustment expenses. For
each plan where a CASA is required, the balance in the CASA shall at all
times be the amount deposited less claims and claims adjustment expenses paid.
If the CASA balance is less than such amount, the administrator shall be
deemed to have misappropriated fiduciary funds and to have acted in a
financially irresponsible manner.
(h)(1) Administrators shall maintain detailed books and records which
reflect all transactions involving the receipt and disbursement of:
(i) contributions and premiums received on behalf of
a plan sponsor or insurer; and
(ii) claims and claim adjustment expenses received
and paid on behalf of a plan sponsor or insurer.
(2) The detailed preparation, journalizing and posting of such books and
records must be maintained on a timely basis and all journal entries for
receipts and disbursements shall be supported by evidential matter, which
must be referenced in the journal entry so that it may be traced for
verification. Administrators shall prepare and maintain monthly financial
institution account reconciliations of any ATF and CASA established by the
administrator. The minimum detail required shall be as follows:
(i) The sources, amounts and dates of any moneys
received and deposited by the administrator.
(ii) The date and person to whom a disbursement is
made. If the amount disbursed does not agree with the amount billed or authorized, the administrator shall prepare a written record as to the reason.
(iii) A description of the disbursement in such
detail to identify the source document substantiating the purpose of the disbursement.
(i) Failure to maintain accurately and timely the books and records required
above shall be deemed untrustworthy, hazardous or injurious to participants
in the plan or the public and financially irresponsible.
(j) This Section shall not apply to nonresident administrators who are
subject to substantially similar requirements in their state of domicile.
(Source: P.A. 84-1431