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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 5/531.10
(215 ILCS 5/531.10) (from Ch. 73, par. 1065.80-10)
Sec. 531.10. Plan of operation. (1)(a) The Association must
submit to the Director a plan of operation and any amendments thereto necessary
or suitable to assure the fair, reasonable, and equitable administration of the
Association. The plan of operation and any amendments thereto become effective
upon approval in writing by the Director.
(b) If the Association fails to submit a suitable plan of operation
within 180 days following the effective date of this Article or if at any time
thereafter the Association fails to submit suitable amendments to the plan, the
Director may, after notice and hearing, adopt and promulgate such reasonable
rules as are necessary or advisable to effectuate the provisions of this Article.
Such rules are in force until modified by the Director or superseded by a plan
submitted by the Association and approved by the Director.
(2) All member insurers must comply with the plan of operation.
(3) The plan of operation must, in addition to requirements enumerated
elsewhere in this Article:
(a) Establish procedures for handling the assets of | |
(b) Establish the amount and method of reimbursing
| | members of the board of directors under Section 531.07;
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(c) Establish regular places and times for meetings
| | of the board of directors;
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(d) Establish procedures for records to be kept of
| | all financial transactions of the Association, its agents, and the board of directors;
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(e) Establish the procedures whereby selections for
| | the board of directors will be made and submitted to the Director;
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(f) Establish any additional procedures for
| | assessments under Section 531.09; and
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(g) Contain additional provisions necessary or proper
| | for the execution of the powers and duties of the Association.
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(4) The plan of operation shall establish a procedure for protest by
any member insurer of assessments made by the Association pursuant to
Section 531.09. Such procedures shall require that:
(a) a member insurer that wishes to protest all or
| | part of an assessment shall pay when due the full amount of the assessment as set forth in the notice provided by the Association. The payment shall be available to meet Association obligations during the pendency of the protest or any subsequent appeal. Payment shall be accompanied by a statement in writing that the payment is made under protest and setting forth a brief statement of the grounds for the protest;
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(b) within 30 days following the payment of an
| | assessment under protest by any protesting member insurer, the Association must notify the member insurer in writing of its determination with respect to the protest unless the Association notifies the member that additional time is required to resolve the issues raised by the protest;
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(c) in the event the Association determines that the
| | protesting member insurer is entitled to a refund, such refund shall be made within 30 days following the date upon which the Association makes its determination;
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(d) the decision of the Association with respect to a
| | protest may be appealed to the Director pursuant to Section 531.11(3);
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(e) in the alternative to rendering a decision with
| | respect to any protest based on a question regarding the assessment base, the Association may refer such protests to the Director for final decision, with or without a recommendation from the Association; and
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(f) interest on any refund due a protesting member
| | insurer shall be paid at the rate actually earned by the Association.
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(5) The plan of operation may provide that any or all powers and duties
of the Association, except those under paragraph (3) of subsection (n)
of Section 531.08 and Section 531.09 are delegated to a corporation,
association or other organization which performs or will perform functions
similar to those of this Association, or its equivalent, in 2 or more states.
Such a corporation, association or organization shall be reimbursed for any
payments made on behalf of the Association and shall be paid for its
performance of any function of the Association. A delegation under this
subsection shall take effect only with the approval of both the Board of
Directors and the Director, and may be made only to a corporation, association
or organization which extends protection not substantially less favorable and
effective than that provided by this Act.
(Source: P.A. 100-687, eff. 8-3-18.)
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215 ILCS 5/531.11
(215 ILCS 5/531.11) (from Ch. 73, par. 1065.80-11)
Sec. 531.11. Duties and powers of the Director. In addition to
the duties and powers enumerated elsewhere in this Article:
(1) The Director must do all of the following:
(a) Upon request of the board of directors, | | provide the Association with a statement of the premiums in the appropriate accounts for each member insurer.
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(b) Notify the board of directors of the
| | existence of an impaired or insolvent insurer not later than 3 days after a determination of impairment or insolvency is made or when the Director receives notice of impairment or insolvency.
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(c) Give notice to an impaired insurer as
| | required by Sections 34 or 60. Notice to the impaired insurer shall constitute notice to its shareholders, if any.
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(d) In any liquidation or rehabilitation
| | proceeding involving a domestic member insurer, be appointed as the liquidator or rehabilitator. If a foreign or alien member insurer is subject to a liquidation proceeding in its domiciliary jurisdiction or state of entry, the Director shall be appointed conservator.
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(2) The Director may suspend or revoke, after notice
| | and hearing, the certificate of authority to transact business in this State of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative the Director may levy a forfeiture on any member insurer which fails to pay an assessment when due. Such forfeiture may not exceed 5% of the unpaid assessment per month, but no forfeiture may be less than $100 per month.
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(3) Any action of the board of directors or the
| | Association may be appealed to the Director by any member insurer or any other person adversely affected by such action if such appeal is taken within 30 days of the action being appealed. Any final action or order of the Director is subject to judicial review in a court of competent jurisdiction.
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(4) The liquidator, rehabilitator, or conservator of
| | any impaired insurer may notify all interested persons of the effect of this Article.
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(Source: P.A. 100-687, eff. 8-3-18.)
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215 ILCS 5/531.12
(215 ILCS 5/531.12) (from Ch. 73, par. 1065.80-12)
Sec. 531.12. Prevention of Insolvencies. To aid in the detection and
prevention of member insurer insolvencies or impairments:
(1) It shall be the duty of the Director:
(a) To notify the Commissioners of all other | | states, territories of the United States, and the District of Columbia when he takes any of the following actions against a member insurer:
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(i) revocation of license;
(ii) suspension of license;
(iii) makes any formal order except for an
| | order issued pursuant to Article XII 1/2 of this Code that such member insurer restrict its premium writing, obtain additional contributions to surplus, withdraw from the State, reinsure all or any part of its business, or increase capital, surplus or any other account for the security of policy owners, contract owners, certificate holders, or creditors.
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Such notice shall be transmitted to all
| | commissioners within 30 days following the action taken or the date on which the action occurs.
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(b) To report to the board of directors when he
| | has taken any of the actions set forth in subparagraph (a) of this paragraph or has received a report from any other commissioner indicating that any such action has been taken in another state. Such report to the board of directors shall contain all significant details of the action taken or the report received from another commissioner.
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(c) To report to the board of directors when the
| | Director has reasonable cause to believe from an examination, whether completed or in process, of any member insurer that the member insurer may be an impaired or insolvent insurer.
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| (d) To furnish to the board of directors the
| | National Association of Insurance Commissioners Insurance Regulatory Information System ratios and listings of companies not included in the ratios developed by the National Association of Insurance Commissioners. The board may use the information contained therein in carrying out its duties and responsibilities under this Section. The report and the information contained therein shall be kept confidential by the board of directors until such time as made public by the Director or other lawful authority.
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| (2) The Director may seek the advice and
| | recommendations of the board of directors concerning any matter affecting his or her duties and responsibilities regarding the financial condition of member insurers and insurers or health maintenance organizations seeking admission to transact business in this State.
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(3) The board of directors may, upon majority vote,
| | make reports and recommendations to the Director upon any matter germane to the liquidation, rehabilitation or conservation of any member insurer and insurers or health maintenance organizations seeking admission to transact business in this State. Such reports and recommendations shall not be considered public documents.
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(4) The board of directors may, upon majority vote,
| | make recommendations to the Director for the detection and prevention of member insurer insolvencies.
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(5) The board of directors shall, at the conclusion
| | of any member insurer insolvency in which the Association was obligated to pay covered claims prepare a report to the Director containing such information as it may have in its possession bearing on the history and causes of such insolvency. The board shall cooperate with the boards of directors of guaranty associations in other states in preparing a report on the history and causes for insolvency of a particular member insurer, and may adopt by reference any report prepared by such other associations.
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(Source: P.A. 100-687, eff. 8-3-18.)
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215 ILCS 5/531.13
(215 ILCS 5/531.13) (from Ch. 73, par. 1065.80-13)
Sec. 531.13. Tax offset. In the event the aggregate Class A, B and C
assessments for all member insurers do not exceed $3,000,000 in any one
calendar year, no member insurer shall receive a tax offset. However, for
any one calendar year before 1998 in which the
total of such assessments exceeds $3,000,000,
the amount in excess of $3,000,000 shall be subject to a tax offset to the
extent of 20% of the amount of such assessment for each of the 5
calendar
years following the year in which such assessment was paid, and ending prior
to January 1, 2003, and each member
insurer may offset the proportionate amount of such excess paid by the member insurer
against its liabilities for the tax imposed by subsections (a) and (b)
of Section 201 of the Illinois
Income Tax Act. The provisions of this Section shall expire and be given no
effect for any tax period commencing on and after January 1, 2003.
(Source: P.A. 100-687, eff. 8-3-18.)
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215 ILCS 5/531.14
(215 ILCS 5/531.14) (from Ch. 73, par. 1065.80-14)
Sec. 531.14. Miscellaneous provisions. (1) Nothing in this
Article may be construed to reduce the liability for unpaid assessments of the insured
of an impaired or insolvent insurer operating under a plan with assessment liability.
(2) Records must be kept of all negotiations and meetings in which
the Association or its representatives are involved to discuss the activities of the
Association in carrying out its powers and duties under Section 531.08. Records of such
negotiations or meetings may be made public only upon the termination of a
liquidation, rehabilitation, or conservation proceeding involving the impaired
or insolvent insurer, upon the termination of the impairment or insolvency
of the insurer, or upon the order
of a court of competent jurisdiction. Nothing in this paragraph (2) limits the
duty of the Association to render a report of its activities under Section
531.15.
(3) For the purpose of carrying out its obligations under this Article,
the Association is deemed to be a creditor of the impaired or insolvent
insurer to the extent of assets attributable to covered policies or contracts reduced by any
amounts to which the Association is entitled as subrogee (under subsection (m)
of Section 531.08). All assets of the impaired or insolvent insurer
attributable to covered policies or contracts must be used to continue all covered policies
and pay all contractual obligations of the impaired insurer as required by this
Article. "Assets attributable to covered policies or contracts", as used in this paragraph
(3), is that proportion of the
assets which the reserves that should have been established
for such policies or contracts bear to the reserve that should have been
established for all policies of
insurance or health benefit plans written by the impaired or insolvent insurer.
(4) (a) Prior to the termination of any liquidation, rehabilitation,
or conservation proceeding, the court may take into consideration the contributions
of the respective parties, including the Association, the shareholders, contract owners, certificate holders, enrollees, and policy owners
of the impaired or insolvent insurer, and any other party with
a bona fide interest,
in making an equitable distribution of the ownership rights of such impaired
or insolvent
insurer. In such a determination, consideration must be given to the welfare of the
policy owners, contract owners, certificate holders, and enrollees of the continuing or successor insurer.
(b) No distribution to stockholders, if any, of an impaired or insolvent insurer
may be made until and unless the total
amount of valid claims of the Association for funds expended with interest in carrying
out its powers and duties under Section 531.08, with respect to such member insurer
have been fully recovered by the Association.
(5) (a) If an order for liquidation or rehabilitation of
a member insurer
domiciled in this State has been entered, the receiver appointed under such
order has a right to recover on behalf of the member insurer, from any affiliate that
controlled it, the amount of distributions, other than stock dividends paid by
the member insurer on its capital stock, made at any time during the 5 years preceding
the petition for liquidation or rehabilitation subject to the limitations of
paragraphs (b) to (d).
(b) No such dividend is recoverable if the member insurer shows that when
paid the distribution was lawful and reasonable, and that the member insurer did not
know and could not reasonably have known that the distribution might adversely affect
the ability of the member insurer to fulfill its contractual obligations.
(c) Any person who as an affiliate that controlled the member insurer at
the time the distributions were paid is liable up to the amount of distributions
he received. Any person who was an affiliate that controlled the member insurer at the
time the distributions were declared, is liable up to the amount of distributions
he would have received if they had been paid immediately. If 2 persons are
liable with respect to the same distributions, they are jointly and severally liable.
(d) The maximum amount recoverable under subsection (5) of this Section is
the amount needed in excess of all other available assets of the insolvent insurer
to pay the contractual obligations of the insolvent insurer.
(e) If any person liable under paragraph (c) of subsection (5) of this
Section is insolvent, all its
affiliates that controlled it at the time the dividend was paid are jointly and
severally liable for any resulting deficiency in the amount recovered from
the insolvent affiliate.
(6) As a creditor of the impaired or insolvent insurer as established in subsection (3) of this Section and consistent with subsection (2) of Section 205 of this Code, the Association and other similar associations shall be entitled to receive a disbursement of assets out of the marshaled assets, from time to time as the assets become available to reimburse it, as a credit against contractual obligations under this Article. If the liquidator has not, within 120 days after a final determination of insolvency of a member insurer by the receivership court, made an application to the court for the approval of a proposal to disburse assets out of marshaled assets to guaranty associations having obligations because of the insolvency, then the Association shall be entitled to make application to the receivership court for approval of its own proposal to disburse these assets. (Source: P.A. 100-687, eff. 8-3-18.)
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215 ILCS 5/531.15
(215 ILCS 5/531.15) (from Ch. 73, par. 1065.80-15)
Sec. 531.15.
Examination of the Association - Annual Report.
The
Association shall be subject to examination and regulation by the Director.
The board of directors must submit to the Director, not later than the
first day of the fifth month following the end of the Association's fiscal
year, a financial report for such fiscal year in a
form acceptable to the Director and a report of its
activities during such fiscal year.
(Source: P.A. 86-753.)
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215 ILCS 5/531.16
(215 ILCS 5/531.16) (from Ch. 73, par. 1065.80-16)
Sec. 531.16.
Tax Exemptions.) The Association is exempt from payment of
all fees and all taxes levied by this State or any of its subdivisions, except taxes
levied on real property.
(Source: P.A. 81-899.)
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215 ILCS 5/531.17
(215 ILCS 5/531.17) (from Ch. 73, par. 1065.80-17)
Sec. 531.17.
Immunity.) There is no liability on the part of and
no cause of action of any nature may arise against any member insurer or its agents
or employees, the Association or its agents or employees, members of the board of
directors, or the Director or his representatives, for any action taken by them
in the performance of their powers and duties under this Article.
(Source: P.A. 81-899.)
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215 ILCS 5/531.18
(215 ILCS 5/531.18) (from Ch. 73, par. 1065.80-18)
Sec. 531.18. Stay of Proceedings - Reopening Default Judgments.)
All proceedings in which the insolvent insurer is a party in any court in this
State shall be stayed 180 days from the date an order of liquidation,
rehabilitation, or conservation is final to permit proper legal action by the
Association on any matters germane to its powers or duties. As to a judgment under
any decision, order, verdict, or finding based on default the Association may apply
to have such judgment set aside by the same court that made such judgment and must
be permitted to defend against such suit on the merits.
(Source: P.A. 96-1450, eff. 8-20-10.)
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215 ILCS 5/531.19
(215 ILCS 5/531.19) (from Ch. 73, par. 1065.80-19)
Sec. 531.19. Prohibited advertisement of action of the Insurance Guaranty
Association in sale of insurance.
(a) No person, including a member insurer,
agent
or affiliate of a member insurer shall make, publish, disseminate, circulate,
or place before the public, or cause directly or indirectly, to be made,
published, disseminated, circulated or placed before the public, in any
newspaper, magazine or other publication, or in the form of a notice, circular,
pamphlet, letter or poster, or over any radio station or television station,
or in any other way, any advertisement, announcement or statement, written or
oral, which
uses the existence of the Insurance Guaranty Association of this State for
the purpose of sales, solicitation or inducement to purchase any form of
insurance or other coverage covered by this Article; provided, however, that this Section
shall not apply to the Illinois Life and Health Guaranty Association or
any other entity which does not sell or solicit insurance or coverage by a health maintenance organization.
(b) Within 180 days of August 16,
1993, the Association shall prepare a summary document describing the general
purposes and current limitations of this Article and complying with subsection
(c). This document shall be submitted to the Director for approval. Sixty
days after receiving approval, no member insurer may deliver a policy or contract
described in subparagraph (a) of paragraph (2) of Section 531.03 and not
excluded under subparagraph (b) of that Section to a policy owner,
contract owner, certificate holder, or enrollee unless the document is delivered to the policy owner, contract owner, certificate
holder, or enrollee prior to or at the time of delivery of the policy or contract. The document should also be available upon request
by
a policy owner, contract owner, certificate holder, or enrollee. The distribution, delivery, or contents or interpretation of
this document shall not mean that either the policy or the contract or the policy owner, contract owner, certificate
holder, or enrollee thereof would be covered in the event of the impairment or insolvency of
a member insurer. The description document shall be revised by the Association
as amendments to this Article may require. Failure to receive this document
does not give the policy owner, contract owner, certificate holder, enrollee, or insured
any greater rights than those stated in this Article.
(c) The document prepared under subsection (b) shall contain a clear and
conspicuous disclaimer on its face. The Director shall promulgate a rule
establishing the form and content of the disclaimer. The disclaimer shall:
(1) State the name and address of the Life and Health | | Insurance Guaranty Association and of the Department.
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(2) Prominently warn the policy owner, contract
| | owner, certificate holder, or enrollee that the Life and Health Insurance Guaranty Association may not cover the policy or contract or, if coverage is available, it will be subject to substantial limitations and exclusions and conditioned on continued residence in the State.
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(3) State that the member insurer and its agents are
| | prohibited by law from using the existence of the Life and Health Insurance Guaranty Association for the purpose of sales, solicitation, or inducement to purchase any form of insurance or health maintenance organization coverage.
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(4) Emphasize that the policy owner, contract owner,
| | certificate holder, or enrollee should not rely on coverage under the Life and Health Insurance Guaranty Association when selecting an insurer or health maintenance organization.
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(5) Provide other information as directed by the
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(d) (Blank).
(Source: P.A. 100-687, eff. 8-3-18.)
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215 ILCS 5/531.20 (215 ILCS 5/531.20) Sec. 531.20. Merger of Illinois Health Maintenance Organization Guaranty Association with and into the Illinois Life and Health Insurance Guaranty Association. In order to provide for the merger of the Illinois Health Maintenance Organization Guaranty Association with and into the Illinois Life and Health Insurance Guaranty Association, the following shall apply: (1) The Illinois Health Maintenance Organization | | Guaranty Association is merged with and into the Illinois Life and Health Insurance Guaranty Association, which shall then continue to be known as the Illinois Life and Health Insurance Guaranty Association.
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| (2) All premerger rights, powers, privileges,
| | assets, property, duties, debts, obligations, and liabilities of each association related to a liquidated member shall remain with the members of the respective association prior to merger and subject to the laws in effect at the time the order of liquidation was entered with respect to the liquidated member, but shall be administered by the Illinois Life and Health Insurance Guaranty Association. The Illinois Life and Health Insurance Guaranty Association shall adopt changes to its plan of operation which reasonably accomplish this.
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| (3) Subject to paragraph (2), the Illinois Life and
| | Health Insurance Guaranty Association shall succeed, without other transfer, to all the rights, powers, privileges, assets, and property of the Illinois Health Maintenance Organization Guaranty Association and shall be subject to all duties, debts, obligations, and liabilities of the Illinois Health Maintenance Organization that exist as of the date of the merger of the Illinois Health Maintenance Organization Guaranty Association into the Illinois Life and Health Insurance Guaranty Association. Without limiting the generality of the foregoing, the Illinois Life and Health Insurance Guaranty Association shall succeed to (A) all collected, uncollected, or unbilled assessments of the Illinois Health Maintenance Organization Guaranty Association, (B) all cash, bank accounts, accrued interest, and tangible property of the Illinois Health Maintenance Organization Guaranty Association, (C) all rights, powers, privileges, duties, and obligations of the Illinois Health Maintenance Organization Guaranty Association under any of its contracts or commitments, and (D) all subrogations, assignments, and creditor rights and interests of the Illinois Health Maintenance Organization Guaranty Association.
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| (4) All rights of creditors and all liens upon the
| | property of the Illinois Health Maintenance Organization Guaranty Association shall be preserved unimpaired, provided that the liens upon property of the Illinois Health Maintenance Organization Guaranty Association shall be limited to the property affected thereby immediately prior to the effective date of this amendatory Act of the 100th General Assembly.
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| (5) Any action or proceeding pending by or against
| | the Illinois Health Maintenance Organization Guaranty Association may be prosecuted to judgment.
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| (6) Notwithstanding any other provision to the
| | contrary in this Article:
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| (A) It is the intent of this Section to preserve
| | only the rights, powers, privileges, assets, property, debts, obligations, and liabilities of the Illinois Health Maintenance Organization Guaranty Association as they existed on the date of its merger into the Illinois Life and Health Insurance Guaranty Association, and not to provide contract owners, certificate holders, enrollees and policy owners, or their respective payees, beneficiaries, or assignees, with duplicative or new rights, powers, privileges, assets, or property.
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| (B) Accordingly, no contract owner, certificate
| | holder, enrollee and policy owner, and no contract owner's, certificate holder's, enrollee's or policy owner's payee, beneficiary, or assignee, shall be entitled to (i) a recovery from the Illinois Life and Health Insurance Guaranty Association that is duplicative of a previous recovery from the Illinois Health Maintenance Organization Guaranty Association or (ii) a recovery from the Illinois Life and Health Insurance Guaranty Association on account of a claim against the Illinois Health Maintenance Organization Guaranty Association where the Illinois Life and Health Insurance Guaranty Association is liable with respect to a claim under the same policy or contract under this Article.
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(Source: P.A. 100-687, eff. 8-3-18.)
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215 ILCS 5/Art. XXXIV
(215 ILCS 5/Art. XXXIV heading)
ARTICLE XXXIV.
ILLINOIS INSURANCE GUARANTY FUND
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215 ILCS 5/532
(215 ILCS 5/532) (from Ch. 73, par. 1065.82)
Sec. 532. Purpose. (a) The purpose of this Article is to provide a mechanism
for the payment of covered claims under certain insurance policies, to
avoid excessive delay in payment of covered claims, to avoid financial loss to claimants or policyholders
because of the entry of an Order of Liquidation against an insolvent
company, including through services offered to the Director in her or his capacity as receiver under Article XIII of this Code that relate to covered claims, to provide a Fund to assess among member companies the costs of such protection and maintain the continuity and self-sufficient operation of the Fund, and to offset the costs associated with maintaining the Fund's continuity and self-sufficient operations when practical by providing assistance and services to the Director in her or his capacity as receiver under Article XIII of this Code as described in this Section.
(b) The purpose of this Article is also to provide a mechanism for the Fund to participate in and facilitate the process by which the assets of an insolvent company are marshaled and distributed pursuant to Article XIII of this Code beyond reimbursing the cost of covered claims. This subsection (b) is inoperative 5 years after the effective date of this amendatory Act of the 102nd General Assembly. (Source: P.A. 102-396, eff. 8-16-21.)
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215 ILCS 5/533
(215 ILCS 5/533) (from Ch. 73, par. 1065.83)
Sec. 533. Scope. This Article applies to all of the kinds of insurance
written on a direct basis which are included in Class 2 and
Class 3 of Section 4 of this Code, except that
it shall not apply to:
(a) accident and health insurance written under clause (a) of Class 2, or
(b) mortgage guaranty or other financial guaranty written as
suretyship obligations or insurance under clause (g), clause (h)
or clause (i) of Class 2 or otherwise, or
(c) fidelity or surety bonds, or any other bonding obligations other
than employee fidelity bonds, or
(d) marine insurance other than inland marine insurance, written under
clause (d) of Class 3, or
(e) insurance of warranties or service contracts, including insurance that
provides for the
repair, replacement, or service of goods or property or indemnification for
repair, replacement, or service for the operational or structural failure of
the goods or property due to a defect in materials, workmanship, or normal wear
and tear or provides reimbursement for the liability incurred by the issuer of
agreements or service contracts that provide these benefits, or
(f) any claim servicing agreement or insurance policy which contains a
retrospective rating or other premium adjustment agreement under which
premiums are substantially equal to the losses and loss expenses covered
under the policy or any policy providing retroactive insurance of known loss, or
(g) any insurance which is provided, guaranteed or reinsured pursuant to
the Federal Crop Insurance Program or the National Flood Insurance Program,
including flood insurance written by National Flood Insurance Program
Write Your Own Companies.
(Source: P.A. 103-113, eff. 6-30-23.)
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215 ILCS 5/534
(215 ILCS 5/534) (from Ch. 73, par. 1065.84)
Sec. 534. Definitions. For the purposes of this Article, unless the
context requires otherwise, the words and phrases defined in Sections 534.1
through 534.9 have the meanings set forth in those Sections.
(Source: P.A. 103-113, eff. 6-30-23.)
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215 ILCS 5/534.1
(215 ILCS 5/534.1) (from Ch. 73, par. 1065.84-1)
Sec. 534.1.
"Fund" means the Illinois Insurance Guaranty Fund created by this
Article.
(Source: P.A. 77-305.)
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215 ILCS 5/534.2
(215 ILCS 5/534.2) (from Ch. 73, par. 1065.84-2)
Sec. 534.2.
"Director" means the Director of Insurance of the State of Illinois.
(Source: P.A. 77-305.)
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215 ILCS 5/534.3
(215 ILCS 5/534.3) (from Ch. 73, par. 1065.84-3)
Sec. 534.3. Covered claim; unearned premium defined.
(a) "Covered claim" means an unpaid claim for a loss
arising out of and within the
coverage of an insurance policy to which this Article applies and which
is in force at the time of the occurrence giving rise to the unpaid
claim, including claims presented during any extended discovery period
which was purchased from the company before the entry of a liquidation
order or which is purchased or obtained from the liquidator after the entry
of a liquidation order, made by a person insured under such policy or by a
person
suffering injury or damage for which a person insured under such policy
is legally liable, and for unearned premium, if:
(i) The company issuing, assuming, or being allocated | | the policy becomes an insolvent company as defined in Section 534.4 after the effective date of this Article; and
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(ii) The claimant or insured is a resident of this
| | State at the time of the insured occurrence, or the property from which a first party claim for damage to property arises is permanently located in this State or, in the case of an unearned premium claim, the policyholder is a resident of this State at the time the policy was issued; provided, that for entities other than an individual, the residence of a claimant, insured, or policyholder is the state in which its principal place of business is located at the time of the insured event.
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(b) "Covered claim" does not include:
(i) any amount in excess of the applicable limits of
| | liability provided by an insurance policy to which this Article applies; nor
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(ii) any claim for punitive or exemplary damages or
| | fines and penalties paid to government authorities; nor
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(iii) any first party claim by an insured who is an
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(iv) any first party or third party claim by or
| | against an insured whose net worth on December 31 of the year next preceding the date the insurer becomes an insolvent insurer exceeds $25,000,000; provided that an insured's net worth on such date shall be deemed to include the aggregate net worth of the insured and all of its affiliates as calculated on a consolidated basis. However, this exclusion shall not apply to third party claims against the insured where the insured has applied for or consented to the appointment of a receiver, trustee, or liquidator for all or a substantial part of its assets, filed a voluntary petition in bankruptcy, filed a petition or an answer seeking a reorganization or arrangement with creditors or to take advantage of any insolvency law, or if an order, judgment, or decree is entered by a court of competent jurisdiction, on the application of a creditor, adjudicating the insured bankrupt or insolvent or approving a petition seeking reorganization of the insured or of all or substantial part of its assets; nor
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(v) any claim for any amount due any reinsurer,
| | insurer, insurance pool, or underwriting association as subrogated recoveries, reinsurance recoverables, contribution, indemnification or otherwise. No such claim held by a reinsurer, insurer, insurance pool, or underwriting association may be asserted in any legal action against a person insured under a policy issued by an insolvent company other than to the extent such claim exceeds the Fund obligation limitations set forth in Section 537.2 of this Code.
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(c) "Unearned Premium" means the premium for the unexpired period of a
policy which has been terminated prior to the expiration of the period for
which premium has been paid and does not mean premium which is returnable
to the insured for any other reason.
(Source: P.A. 101-60, eff. 7-12-19; 102-558, eff. 8-20-21.)
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215 ILCS 5/534.4
(215 ILCS 5/534.4) (from Ch. 73, par. 1065.84-4)
Sec. 534.4.
"Insolvent company" means a company
organized as a stock company, mutual company, reciprocal or Lloyds (a)
which holds a certificate of authority to transact insurance
in this State either at the time the policy was issued or when
the insured event occurred, or any company which has assumed or has been allocated
such policy obligation through merger, division, insurance business transfer, consolidation, or
reinsurance, whether or not such assuming company held a
certificate of authority to transact insurance in this State
at the time such policy was issued or when the insured event occurred; and (b)
against which a final Order of Liquidation with a finding of
insolvency to which there is no further right of appeal has been entered by
a court of competent jurisdiction in the company's State of domicile after the
effective date of this Article.
(Source: P.A. 103-75, eff. 6-9-23.)
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215 ILCS 5/534.5
(215 ILCS 5/534.5) (from Ch. 73, par. 1065.84-5)
Sec. 534.5.
Member company.
"Member Company" means any insurance
company organized as a
stock company, mutual company, reciprocal or Lloyds, which holds a certificate
of authority to transact
any kind of insurance in this State to
which this Article applies, and which is either:
(a) a domestic insurance company formed before or after the
effective date of this Article; or
(b) a foreign or alien insurance company.
An insurance company shall cease to be a member company effective on the
day following the termination or expiration of its license to transact the
kinds of insurance to which this Article applies; provided, however, that the
insurance company shall remain liable as a member company for any and all
obligations, including obligations for assessments levied before the
termination or expiration of the insurance company's license and assessments
levied after the termination or expiration, based on any insolvency as to which
the determination of insolvency by a court of competent jurisdiction occurs
before the termination or expiration of the insurance company's license.
(Source: P.A. 89-97, eff. 7-7-95.)
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215 ILCS 5/534.6
(215 ILCS 5/534.6) (from Ch. 73, par. 1065.84-6)
Sec. 534.6.
"Net direct written premiums" means direct gross premiums
written in this State on insurance policies to which this Article applies, less return
premiums thereon and dividends paid or credited to policyholders on such
direct business. "Net direct written premiums" does not include premiums on
contracts of reinsurance or other contracts between insurers or reinsurers.
(Source: P.A. 85-576.)
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215 ILCS 5/534.7
(215 ILCS 5/534.7) (from Ch. 73, par. 1065.84-7)
Sec. 534.7.
Affiliate.
An "affiliate" of a specified person means a
person who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with the specified person on
December 31 of the year next
preceding the date the insolvent company became an
insolvent company.
(Source: P.A. 89-97, eff. 7-7-95.)
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215 ILCS 5/534.8
(215 ILCS 5/534.8) (from Ch. 73, par. 1065.84-8)
Sec. 534.8.
"Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person, whether through the ownership of voting securities, the holding of
proxies, by contract other than a commercial contract for goods or
nonmanagement services, or otherwise, unless the power is solely the result
of an official position with or corporate office held by the person.
Control shall be presumed to exist if any person, directly or indirectly,
owns, controls, holds with the power to vote, or holds proxies
representing, 10% or more of the voting securities or voting power of any
other person. This presumption may be rebutted by a showing that control
does not exist in fact.
(Source: P.A. 85-576.)
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215 ILCS 5/534.9 (215 ILCS 5/534.9) Sec. 534.9. Cybersecurity insurance. "Cybersecurity insurance" means a type of insurance under Class 2 of Section 4 of this Code that involves first-party and third-party coverage, in a policy or endorsement, written on a direct, admitted basis to cover losses and loss mitigation arising out of or relating to data privacy breaches, unauthorized information network security intrusions, computer viruses, ransomware, cyber extortion, identity theft, and similar exposures.
(Source: P.A. 103-113, eff. 6-30-23.) |
215 ILCS 5/535
(215 ILCS 5/535) (from Ch. 73, par. 1065.85)
Sec. 535.
Creation of the Fund.
There is created a nonprofit
unincorporated legal entity to be known as the Illinois Insurance
Guaranty Fund. All member companies as defined in Section 534.5 shall be and
remain members of the Fund as a condition of their authority to transact
business in this State. The Fund shall perform its functions under a
plan of operation established and approved under Section 539 and shall
exercise its powers through a board of directors established under
Section 536. For purposes of administration and assessment, the Fund
shall be divided into 2 separate accounts: (a) the automobile insurance
account; and (b) the account for all other insurance to which this
Article applies, including Workers' Compensation.
(Source: P.A. 85-576.)
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215 ILCS 5/536
(215 ILCS 5/536) (from Ch. 73, par. 1065.86)
Sec. 536. Board of Directors. (a) The board of directors of the Fund shall consist of not less than 5
nor more than 10 persons, with one public member appointed by the Director, serving terms as established in the plan of
operation. The public member shall be a resident of this State, and he or she shall either (1) be a licensed and certified public accountant under the laws of this State or (2) have earned, and maintain in good standing, the Chartered Property and Casualty Underwriter (CPCU) designation from the American Institute for Chartered Property Casualty Underwriters. The plan of operation shall provide that the board of directors
be elected on the basis of one vote for each member company of the Fund. If
more than one company of a group of wholly owned or controlled companies is a
member company of the Fund only one vote will be allowed for the entire
group. The members of the board of directors shall be elected by member companies
subject to the approval of the Director. Vacancies on the board of
directors shall be filled for the remaining period of the term by the board
of directors, subject to the approval of the
Director.
(b) In approving elections to the board of directors, the Director shall consider
among other things whether all member companies are fairly represented.
(c) Members of the board of directors shall receive no compensation, but may be
reimbursed from the assets of the Fund for expenses incurred by them as
members of the board of directors.
(Source: P.A. 98-202, eff. 1-1-14.)
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