215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/537.4) (from Ch. 73, par. 1065.87-4)

Sec. 537.4. Fund assumes obligations of insolvent companies. The Fund shall be deemed the insolvent company to the extent of the Fund's obligation for covered claims and to such extent shall have all rights, duties, and obligations of the insolvent company, subject to the limitations provided in this Article, as if the company had not become insolvent, with the exception that the liquidator shall retain the sole right to recover any reinsurance proceeds. The Fund's rights under this Section include, but are not limited to, the right to pursue and retain salvage and subrogation recoveries on paid covered claim obligations to the extent paid by the Fund. The extent of the Fund's subrogation rights and any other rights of reimbursement with respect to its covered claims payments shall not be limited as if the Fund were the insolvent company, but shall be determined independently by taking into account the Fund's rights under Section 546 of this Article.

(Source: P.A. 99-387, eff. 8-17-15.)

(215 ILCS 5/537.6) (from Ch. 73, par. 1065.87-6)

Sec. 537.6. Allocation of claims; assessments. The Fund shall allocate covered claims paid and expenses incurred between the accounts established by Section 535 separately, and assess member companies separately for each account amounts necessary to pay the obligations of the Fund under Section 537.2 subsequent to the entry of an Order of Liquidation against an insolvent company, the expenses of handling covered claims subsequent to such Order of Liquidation and other expenses authorized by this Article. The assessments of each member company shall be in the proportion that the net direct written premiums of the member company for the calendar year immediately preceding the year in which the assessment is levied on the kinds of insurance in the account bears to the net direct written premiums of all member companies for such preceding calendar year on the kinds of insurance in the account. Each member company shall be notified of the assessment not later than 30 days before it is due. Before January 1, 2002, no member company may be assessed in any year on any account an amount greater than 1% of that member company's net direct written premiums on the kinds of insurance in the account for the calendar year preceding the assessment. Beginning January 1, 2002, the amount a member company may be assessed in any year on any account shall be a maximum of 2% of that member company's net direct written premium on the kinds of insurance in the account for the calendar year preceding the assessment. This 2% maximum shall apply regardless of the date of any insolvency that gives rise to the need for the assessment. If the maximum assessment, together with the other assets of the Fund in any account, does not provide, in any one year, in any account, an amount sufficient to make all necessary payments from that account, the funds available shall be paid in the manner determined by the Fund and approved by the Director and the unpaid portion shall be paid as soon thereafter as funds become available. If requested by a member company, the Director may exempt or defer the assessment of any member company, if the assessment would cause the member company's financial impairment.

In addition to the other assessment authority provided in this Section, the board of directors shall also have the assessment authority to pay off a loan as provided in Section 538.3. If a loan is projected to be outstanding for 3 years or more, then the board of directors shall have the authority to increase the assessment to 3% of the net direct written premiums for the previous year until the loan has been paid in full.

(Source: P.A. 101-60, eff. 7-12-19.)

(215 ILCS 5/537.7) (from Ch. 73, par. 1065.87-7)

Sec. 537.7. Investigation of claims; disposition.

(a) The Fund shall investigate claims brought against the Fund and adjust, compromise, settle, and pay covered claims to the extent of the Fund's obligation and deny all other claims.

(b) The Fund shall not be bound by a settlement, release, compromise, waiver, or final judgment executed or entered within 12 months prior to an order of liquidation and shall have the right to assert all defenses available to the Fund including, but not limited to, defenses applicable to determining and enforcing its statutory rights and obligations to any claim. The Fund shall be bound by a settlement, release, compromise, waiver, or final judgment executed or entered more than 12 months prior to an order of liquidation, but only if the claim is a covered claim and the settlement, release, compromise, waiver, or final judgment was not a result of fraud, collusion, default, or failure to defend. In addition, with respect to covered claims arising from a judgment under a decision, verdict, or finding based on the default of the insolvent insurer or its failure to defend, upon application by the Fund, either on its own behalf or on behalf of an insured, the court shall set aside the judgment, order, decision, verdict, or finding, and the Fund shall be permitted to defend against the claim on the merits. The same criteria determining whether the Fund will be bound, as specified in this subsection (b), shall apply to any settlement, release, compromise, waiver, or final judgment entered into by a high net worth insured before the date on which claims by or against that insured became non-exempt for reasons specified in paragraph (iv) of subsection (b) of Section 534.3.

(c) The Fund shall have the right to appoint or approve and to direct legal counsel retained under liability insurance policies for the defense of covered claims as well as the right to appoint or approve and to direct legal counsel and other service providers under any other insurance policies subject to this Article, regardless of any limitations in the policy.

(Source: P.A. 103-113, eff. 6-30-23.)

(215 ILCS 5/537.9) (from Ch. 73, par. 1065.87-9)

Sec. 537.9. The Fund shall handle claims through its employees or through one or more companies or other persons employed as servicing facilities.

(Source: P.A. 85-576.)

(215 ILCS 5/538) (from Ch. 73, par. 1065.88)

Sec. 538. Powers of the Fund. The Fund shall have the powers enumerated in the Sections following this Section and preceding Section 539.

(Source: P.A. 102-396, eff. 8-16-21.)

(215 ILCS 5/538.1) (from Ch. 73, par. 1065.88-1)

Sec. 538.1. The Fund may appear in, defend and appeal any action on a claim brought against it on a covered claim.

(Source: P.A. 77-305.)

(215 ILCS 5/538.2) (from Ch. 73, par. 1065.88-2)

Sec. 538.2. The Fund may employ or retain such persons as are necessary to handle claims, provide policy benefits and services, and perform other duties of the Fund.

(Source: P.A. 103-113, eff. 6-30-23.)

(215 ILCS 5/538.3) (from Ch. 73, par. 1065.88-3)

Sec. 538.3. The Fund may borrow an amount of money necessary to effect the purposes of this Article in accord with the plan of operation. The board of directors shall have the authority to pledge all or an appropriate portion of future assessments as necessary to secure a loan that may be needed to pay covered claims. Until all loans secured by assessments are fully satisfied, the board of directors shall assess the maximum allowable under Section 537.6.

(Source: P.A. 101-60, eff. 7-12-19.)

(215 ILCS 5/538.4) (from Ch. 73, par. 1065.88-4)

Sec. 538.4. Legal actions by Fund. The Fund may sue or be sued, including, but not limited to, taking any legal actions necessary or proper for recovery of: (i) any unpaid assessments under Section 537.1 or 537.6; (ii) any amounts due to the Fund for salvage and subrogation under Section 537.4 or from insurers described in subsection (a) of Section 546; or (iii) any amounts due from an insured pursuant to subsections (a) and (d) of Section 545. The Fund's power to sue includes, but is not limited to, the power and right to intervene as a party before any court that has jurisdiction over an insolvent insurer when the Fund is a creditor or potential creditor of the insolvent insurer.

(Source: P.A. 101-60, eff. 7-12-19.)

(215 ILCS 5/538.5) (from Ch. 73, par. 1065.88-5)

Sec. 538.5. The Fund may negotiate and become a party to such contracts as are necessary to carry out the purposes of this Article.

(Source: P.A. 82-210.)

(215 ILCS 5/538.7) (from Ch. 73, par. 1065.88-7)

Sec. 538.7. (a) The Fund may perform such other acts as are necessary or proper to effectuate the purposes of this Article.

(b) The Fund may contract with the Office of Special Deputy Receiver or any other person or organizations authorized by law to carry out the duties of the Director in her or his capacity as a receiver under Article XIII of this Code. The power of the Fund to contract with these persons or entities includes, but is not limited to, providing consulting services and claims administration services that assist with these persons or entities in the performance of their respective statutory and legal functions provided by law. The Fund may only exercise the authority to contract pursuant to this subsection upon the board of director's written determination that the provisioning of such services will advance the purposes set forth in Section 532. Any contract the Fund may enter into to provide services pursuant to this subsection shall be subordinate and subject to the Fund's statutory obligations to timely pay covered claims and avoid financial loss to claimants or policyholders described in this Article.

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.)

(215 ILCS 5/538.8) (from Ch. 73, par. 1065.88-8)

Sec. 538.8. (a) If, at any time, the board of directors finds that the assets of the Fund in any account exceed the liabilities and expected costs and expenses of that account, the Fund may refund that amount of assets of the account which exceed such liabilities, expenses and costs to the member companies in such a manner as is determined by the board of directors.

(b) If, at any time, the Fund receives monies as reimbursement from the estate of an insolvent company, the Fund shall distribute those monies in accordance with the procedures established in the plan of operation.

(Source: P.A. 85-576.)

(215 ILCS 5/538.9)

Sec. 538.9. Action regarding insolvent company records.

(a) In this Section, "claims information" includes files, records, and electronic data.

(b) The Fund may bring an action against any third-party administrator, agent, attorney, or other representative of the insolvent insurer to obtain custody and control of all claims information related to an insolvent company that are appropriate or necessary for the Fund or a similar association in other states to carry out its duties under this Article. In such an action, the Fund shall have the absolute right through emergency equitable relief to obtain custody and control of such claims information in possession of such third-party administrator, agent, attorney or other representative of the insolvent insurer, regardless of where that claims information may be physically located. In bringing an action under this Section, the Fund shall not be subject to any defense, lien (possessory or otherwise), or other legal or equitable ground whatsoever for refusal to surrender such claims information that might be asserted against the liquidator of the insolvent insurers. To the extent that litigation is required for the Fund to obtain custody and control of the claims information requested and it results in the relinquishment of claims information to the Fund after refusal to provide that information in response to a written demand, the court shall award the Fund its costs, expenses, and reasonable attorney's fees incurred in bringing the action. This Section shall have the same effect on the rights and remedies that the custodian of such claims information may have against the insolvent insurers, so long as these rights and remedies do not conflict with the rights of the Fund to custody and control of the claims information under this Article.

(Source: P.A. 101-60, eff. 7-12-19.)

(215 ILCS 5/539) (from Ch. 73, par. 1065.89)

Sec. 539. Plan of operation. (a) The Fund shall 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 Fund. The plan of operation and any amendments thereto shall become effective upon approval in writing by the Director.

(b) If the Fund fails to submit a suitable plan of operation within 90 days following the effective date of this Article or if at any time thereafter the Fund fails to submit suitable amendments to the plan of operation, the Director shall, after notice and hearing pursuant to Sections 401, 402 and 403 of this Code, adopt and promulgate such reasonable rules as are necessary or advisable to effectuate the provisions of this Article. Such rules shall continue in force until modified by the Director or superseded by a plan of operation submitted by the Fund and approved by the Director.

(c) All member companies must comply with the plan of operation.

(Source: P.A. 82-210.)