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Illinois Compiled Statutes

Information maintained by the Legislative Reference Bureau
Updating the database of the Illinois Compiled Statutes (ILCS) is an ongoing process. Recent laws may not yet be included in the ILCS database, but they are found on this site as Public Acts soon after they become law. For information concerning the relationship between statutes and Public Acts, refer to the Guide.

Because the statute database is maintained primarily for legislative drafting purposes, statutory changes are sometimes included in the statute database before they take effect. If the source note at the end of a Section of the statutes includes a Public Act that has not yet taken effect, the version of the law that is currently in effect may have already been removed from the database and you should refer to that Public Act to see the changes made to the current law.

INSURANCE
(215 ILCS 5/) Illinois Insurance Code.

215 ILCS 5/123C-12

    (215 ILCS 5/123C-12) (from Ch. 73, par. 735C-12)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-12. Legal investments.
    A. The provisions of Article VIII and of Sections 131.2 and 131.3 shall apply to association captive insurance companies.
    B. No pure captive insurance company or industrial insured captive insurance company shall be subject to any restrictions on allowable investments whatever, including those limitations contained in Articles VIII and VIII 1/2; provided, however, that the Director may prohibit or limit any investment or type of investment that threatens the solvency or liquidity of any such company; and provided further that an industrial insured captive insurance company must adhere to the investment policy set forth in its plan of operation as approved from time to time by the Director.
    C. A captive insurance company may make loans to its affiliates with the prior approval of the Director. Each loan must be evidenced by a note approved by the Director. A captive insurance company may not make a loan of the minimum capital and surplus funds required by this Article.
    D. The Director may prohibit or limit an investment that threatens the solvency or liquidity of a captive insurance company.
(Source: P.A. 100-1118, eff. 11-27-18.)

215 ILCS 5/123C-13

    (215 ILCS 5/123C-13) (from Ch. 73, par. 735C-13)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-13. Reinsurance.
    A. Any captive insurance company may provide reinsurance on risks ceded by any other insurer; provided, however, that the risks so assumed are the same as the captive insurance company could legally insure on a direct basis.
    The provisions of Section 174.1 shall not apply to any captive insurance company providing reinsurance.
    B. Subject to the provisions of Article XI, any captive insurance company may cede, and may take credit for in the establishment of reserves, all or any part of its risks. Furthermore, in addition to Section 173.1, any pure or industrial insured captive insurance company may take credit, as either an asset or a deduction from liability, for reinsurance so ceded to the extent:
        (1) The reinsurer satisfies all of the following (a)
    
through (g):
            (a) the principal business of the reinsurer
        
(other than investments in subsidiaries and other investment activities) is to accept reinsurance from captive insurance companies organized under Article VIIC, of which the company accepting the reinsurance directly or indirectly owns, controls, or holds with power to vote more than 80% of the outstanding voting securities if organized as a stock company or more than 80% of the voting control if organized as a mutual company and to provide insurance related services;
            (b) is licensed to transact insurance or
        
reinsurance in its jurisdiction of domicile;
            (c) submits to this State's authority to examine
        
its books and records and agrees to pay the cost thereof;
            (d) files annually with the Director a copy of
        
its most recent audited financial statements;
            (e) maintains a surplus as regards policyholders
        
in an amount that is not less than $20,000,000;
            (f) files with the Department the following:
                (i) evidence of its submission to the
            
jurisdiction of any court of competent jurisdiction in any state of the United States and its agreement to comply with all requirements necessary to give the court jurisdiction and to abide by the final decision of the court or of any appellate court in the event of an appeal; and
                (ii) an instrument designating the Director
            
or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the ceding company;
            (g) has not been the subject of an order of the
        
Director entered after notice and hearing prohibiting the reinsurer from utilizing this paragraph (1); or
        (2) the taking of credit by the captive insurance
    
company has otherwise received the prior approval of the Director.
    C. A captive insurance company shall provide notice to the Director of a reinsurance agreement to which the company becomes a party not later than the 30th day after the date of the execution of the agreement.
    D. A captive insurance company shall provide notice of a termination of a previously filed reinsurance agreement to the Director not later than the 30th day after the date of termination.
    E. Notwithstanding Section 123C-15 of this Code, a captive insurance company, with the Director's approval, may accept risks from and cede risks to or take credit for reserves on risks ceded to:
        (1) a captive reinsurance pool composed only of
    
other captive insurance companies holding a certificate of authority under this Article or a similar law of another jurisdiction; or
        (2) an affiliated captive insurance company
    
holding a certificate of authority under this Article or a similar law of another jurisdiction.
(Source: P.A. 100-1118, eff. 11-27-18.)

215 ILCS 5/123C-14

    (215 ILCS 5/123C-14) (from Ch. 73, par. 735C-14)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-14. Rating organizations; memberships; rate or policy filing. No captive insurance company shall be required to join a rating organization. No captive insurance company shall be required to file its premium rates or policy forms with, or to seek approval of such rates or forms from, the Director or any other authority of this State.
(Source: P.A. 85-131.)

215 ILCS 5/123C-15

    (215 ILCS 5/123C-15) (from Ch. 73, par. 735C-15)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-15. Exemption from compulsory associations. No captive insurance company shall be permitted or required to join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this State, nor shall any captive insurance company, nor its insureds nor any claimants against the insureds, nor its parent nor any affiliated company, nor any member organization of its association, receive any benefit from any such plan, pool, association, or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company. Each association captive insurance company and each industrial insured captive insurance company shall inform each insured, in both the application for insurance and in the policy issued to such insured, that (i) the captive insurance company is not subject to all of the insurance laws and regulations of this State, and (ii) state insurance insolvency guaranty funds are not available to such insured for claims arising out of the operations of such captive insurance company.
(Source: P.A. 85-131.)

215 ILCS 5/123C-16

    (215 ILCS 5/123C-16) (from Ch. 73, par. 735C-16)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-16. Tax.
    A. Every captive insurance company organized under the provisions of this Article and doing business in this State shall, for the privilege of doing business in this State, pay to the Director for the State treasury the State tax imposed under Section 409 to the same extent and in the same manner as a domestic insurance company using a tax form prescribed by the Director on or before March 15 of each year.
    B. Domestic captive insurance companies shall be insurance companies subject to the rules now provided for such companies under the Illinois Income Tax Act.
    C. A domestic captive insurance company that has engaged one or more administrative or management service organizations in order to comply with subsection D of Section 123C-2 shall be deemed to meet the requirements of Section 409(4)(a) through (d) provided that the company and such organizations when viewed collectively as a group:
        (a) maintain a place of business in this State; and
        (b) maintain in this State personnel knowledgeable of
    
and responsible for the company's operations, books, records, administration and annual statement; and
        (c) conduct in this State substantially all of the
    
company's underwriting, policy issuing and servicing operations relating to the company's policyholders and certificate holders; and
        (d) comply with the provisions of Section 133(2)
    
with respect to such domestic captive insurance company's books, records, documents, accounts, vouchers and securities.
(Source: P.A. 100-1118, eff. 11-27-18.)

215 ILCS 5/123C-17

    (215 ILCS 5/123C-17) (from Ch. 73, par. 735C-17)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-17. Fees.
    A. The Director shall charge, collect, and give proper acquittances for the payment of the following fees and charges with respect to a captive insurance company:
        1. For filing all documents submitted for the
    
incorporation or organization or certification of a captive insurance company, $2,000.
        2. For filing requests for approval of changes in the
    
elements of a plan of operations, $200.
    B. Except as otherwise provided in subsection A of this Section and in Section 123C-10, the provisions of Section 408 shall apply to captive insurance companies.
    C. Any funds collected from captive insurance companies pursuant to this Section shall be treated in the manner provided in subsection (11) of Section 408.
(Source: P.A. 100-1118, eff. 11-27-18.)

215 ILCS 5/123C-18

    (215 ILCS 5/123C-18) (from Ch. 73, par. 735C-18)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-18. Additional powers, rights, and obligations. In addition to the powers and duties set forth in the other provisions of this Article VIIC and to the extent not inconsistent with the provisions of this Article VIIC:
        A. The provisions of Article XXVI, subsection E of
    
Section 123B-3, subsection A of Section 123B-4, subsection A of Section 123B-8, and Sections 2.1, 131.4 through 131.12, 131.20, 131.20a(2)(except as otherwise provided by subsection B of Section 123C-12), 131.22, 133, 141.1, 141.2, 144.1, 144.2, 147, 148, 149, 154.5, 154.6, 154.7, 154.8, 155, 186.1, 186.2, 401, 401.1, 402, 403, 403A, 407, 407.1, 407.2, 4l2, 415 and subsections (1) and (3) of Section 441 shall apply to captive insurance companies and all those having dealings therewith.
        B. The provisions of subsection (2) of Section 9,
    
Section 11, subsection (2) of Section 12, and Sections 27.1, 28, 28.2, 28.2a, 29, 30, 31, 32, 33, 34, and 35 shall apply to stock captive insurance companies and all those having dealings therewith.
        C. The provisions of subsection (2) of Section 39,
    
Section 41, subsections (1) and (2) of Section 42, and Sections 54, 55, 56, 57, 58, 59, and 60 shall apply to mutual captive insurance companies and all those having dealings therewith.
        D. The Director and each captive insurance company
    
and all those having dealings therewith shall have the authorities, powers, rights, duties and obligations set forth in Section 144 (excluding paragraph (f) of subsection (4) of Section 144); provided, however, that:
            (i) subsection (1) of Section 144 shall not apply
        
to pure captive insurance companies; and
            (ii) the Director may exempt any association
        
captive insurance company and any industrial insured captive insurance company from the requirements of subsection (1) of Section 144, on terms and conditions established by the Director, upon a showing by any such captive insurance company and a determination by the Director that the limitations of subsection (1) of Section 144 are not necessary to protect the interests of policyholders in light of such captive insurance company's financial condition and the nature of the risks insured by such company.
        E. Nothing in this Article or Code shall be deemed to
    
prohibit the by-laws of a captive insurance company from providing for the allocation of underwriting or investment income or loss to the respective accounts of its members, or to prohibit a captive insurance company, if its by-laws so provide and the requirements of this Article are otherwise met, from distributing to a withdrawing member, whether by way of ordinary or liquidating distributions and whether the withdrawal of such member is voluntary or otherwise, on terms and conditions set forth in the by-laws, that member's share of the company's surplus, as well as that portion of the underwriting and investment income allocated to such withdrawing member for the period that such withdrawing member was a member of the mutual company; provided that (i) no such distribution may be made except out of earned, as distinguished from contributed, surplus, (ii) no such distribution shall be made if the surplus of the captive insurance company is less than the original surplus required for the kind or kinds of business authorized to be transacted by such company, or if the payment of such distribution would reduce its surplus to less than the minimum, and (iii) no such distribution shall be made without the approval of the Director if such distribution, together with other such distributions made within the period of 12 consecutive months ending on the date on which the proposed distribution is scheduled for payment or distribution, exceeds the greater of: (i) 10% of the company's surplus as regards policyholders as of the 31st day of December next preceding, or (ii) the net income of the company for the 12-month period ending the 31st day of December next preceding. For the purposes of this subsection, net income includes net realized capital gains in an amount not to exceed 20% of net unrealized capital gains. The right of a member of a captive insurance company to receive distributions under this Section shall be included within the provisions of paragraph (i) of subsection (1) of Section 205 in the event of liquidation or dissolution of such captive insurance company.
(Source: P.A. 100-863, eff. 8-14-18.)

215 ILCS 5/123C-19

    (215 ILCS 5/123C-19) (from Ch. 73, par. 735C-19)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-19. Letters of credit.
    A. Any letter of credit used to meet the requirements set forth in Sections 123C-3 and 123C-4:
        (1) (blank);
        (2) may not be allowed to expire without the prior
    
written approval of the Director and shall provide for 30 days' advance written notice to the Director of the proposed expiration of the letter of credit; and
        (3) must be provided pursuant to arrangements,
    
acceptable to the Director, wherein all funds obtained by the company under the letter of credit are free of claims of any party which may arise on account of the company's resort to the letter of credit.
    B. If letters of credit are used to provide surplus in excess of the amounts required in Section 123C-4:
        (1) the aggregate amount of all such letters of
    
credit shall not exceed the policyholder surplus of the company;
        (2) without the prior written approval of the
    
Director, no such letter of credit may be allowed to expire, in any period of 12 consecutive months ending on the date of such expiration, in an amount greater than the greater of (a) 10% of the company's surplus as regards policyholders as of the 31st day of December next preceding, or (b) the net income of the company for the 12 month period ending the 31st day of December next preceding. For purposes of this Section, net income includes net realized capital gains in an amount not to exceed 20% of net unrealized capital gains; and
        (3) each such letter of credit shall provide for 30
    
days' advance written notice to the Director of the proposed expiration of the letter of credit.
    C. (Blank).
    D. (Blank).
(Source: P.A. 100-1118, eff. 11-27-18.)