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91_HB0160
LRB9100238JSgc
1 AN ACT to amend the Illinois Insurance Code by adding
2 Article XXA.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Insurance Code is amended by
6 adding Article XXA as follows:
7 (215 ILCS 5/371A-1 new)
8 Sec. 371A-1. Short title. This Article may be cited as
9 the Accident and Health Insurance Rate Law.
10 (215 ILCS 5/371A-5 new)
11 Sec. 371A-1. Purpose of Article. The purpose of this
12 Article is to promote the public welfare by regulating
13 accident and health insurance rates so that they are not
14 excessive, inadequate, or unfairly discriminatory, to
15 authorize the existence and operation of qualified rating
16 organizations and advisory organizations, to require that
17 specified rating services of these rating organizations be
18 generally available to all admitted companies, and to
19 authorize cooperation between companies in rate making and
20 other related matters. It is the express intent of this
21 Article to permit and encourage competition between companies
22 on a sound financial basis to the fullest extent possible,
23 and to establish a mechanism to ensure the provision of
24 adequate accident and health insurance at reasonable rates to
25 the citizens of this State.
26 (215 ILCS 5/371A-10 new)
27 Sec. 371A-10. Definitions. As used in this Article:
28 "Rating organization" means a person, other than an
29 admitted company, who has as his object or purpose the making
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1 of rates, rating plans, or rating systems. Two or more
2 admitted companies that act in concert for the purpose of
3 making rates, rating plans, or rating systems, but do not
4 operate within the specific authorizations contained in
5 Sections 371A-30, 371A-40, and 371-80 shall be deemed to be a
6 rating organization. No single company shall be deemed to be
7 a rating organization.
8 "Advisory organization" means a person, other than an
9 admitted company, who prepares policy forms or makes
10 underwriting rules incident to, but not including, the making
11 of rates, rating plans, or rating systems or who collects and
12 furnishes to admitted companies or rating organizations loss
13 or expense statistics or other statistical information and
14 data and acts in an advisory, as distinguished from a rate
15 making, capacity. No duly authorized attorney at law acting
16 in the usual course of his profession shall be deemed to be
17 an advisory organization.
18 "Member" means a company who participates in or is
19 entitled to participate in the management of a rating,
20 advisory, or other organization.
21 "Subscriber" means a company that is furnished at its
22 request (1) with rates and rating manuals by a rating
23 organization of which it is not a member or (2) with advisory
24 services by an advisory organization of which it is not a
25 member.
26 (215 ILCS 5/371A-15 new)
27 Sec. 371A-15. Scope of Article. The provisions of this
28 Article apply to accident and health insurance.
29 This Article applies to all companies, including stock
30 and mutual companies, Lloyds associations, and reciprocal and
31 interinsurance exchanges that, under any provisions of the
32 laws of this State, write accident and health insurance.
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1 (215 ILCS 5/371A-20 new)
2 Sec. 371A-20. Classes of rates.
3 (a) The rates for accident and health insurance subject
4 to this Article shall not be excessive, inadequate, or
5 unfairly discriminatory.
6 (b) As to all classes of insurance, insurers or rating
7 organizations shall establish and use rates, rating
8 schedules, or rating manuals that allow the insurer to earn a
9 reasonable rate of return on insurance written in this State.
10 A copy of rates, rating schedules, rating manuals, premium
11 credit or discount schedules, and changes thereto shall be
12 filed with the Department as soon as possible following their
13 effective date, but no later than 30 days after that date. A
14 copy of rates, rating schedules, rating manuals, premium
15 credit or discount schedules, and changes thereto, that
16 provide for an increase greater than the increase in the
17 medical care component of the Consumer Price Index for the
18 region or city of the United States having the greatest
19 increase the previous calendar year shall be filed with and
20 approved by the Department prior to their effective date.
21 (c) Upon receiving a rate filing, the Department shall
22 review the rate filing to determine if a rate is excessive,
23 inadequate, or unfairly discriminatory. In making that
24 determination, the Department shall, in accordance with
25 generally accepted and reasonable actuarial techniques,
26 consider all of the following factors:
27 (1) Past loss experience within and without this
28 State.
29 (2) Past expenses both allocated and unallocated.
30 (3) The degree of competition among insurers for
31 the risk insured.
32 (4) Investment income reasonably expected by the
33 insurer, consistent with the insurer's investment
34 practices, from investable premiums anticipated in the
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1 filing, plus any other expected income from currently
2 invested assets representing the amount expected on
3 unearned premium reserves and loss reserves. The
4 Department may promulgate rules utilizing reasonable
5 techniques of actuarial science and economics to specify
6 the manner in which insurers shall calculate investment
7 income attributable to the classes of insurance written
8 in this State and the manner in which that investment
9 income shall be used in the calculation of insurance
10 rates.
11 (5) The reasonableness of the judgment reflected in
12 the filing.
13 (6) Dividends, savings, or unabsorbed premium
14 deposits allowed or returned to Illinois policyholders,
15 members, or subscribers.
16 (7) The adequacy of loss reserves.
17 (8) The cost of reinsurance.
18 (9) Trend factors, including trends in actual
19 losses per insured unit for the insurer making the
20 filing.
21 (10) A reasonable margin for profit and
22 contingencies.
23 (11) Other relevant factors that impact upon the
24 frequency or severity of claims or upon expenses.
25 (d) In addition to the rate standards provided in
26 subsection (c), a rate may be found by the Department to be
27 excessive, inadequate, or unfairly discriminatory based upon
28 any of the following standards:
29 (1) A rate shall be deemed excessive if it is
30 likely to produce a profit from Illinois business that is
31 unreasonably high in relation to the risk involved in the
32 class of business or if expenses are unreasonably high in
33 relation to services rendered.
34 (2) A rate shall be deemed excessive if, among
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1 other things, the rate structure established by a stock
2 insurance company provides for replenishment of surpluses
3 from premiums, when the replenishment is attributable to
4 investment losses.
5 (3) A rate shall be deemed inadequate if it is
6 clearly insufficient, together with the investment income
7 attributable to it, to sustain projected losses and
8 expenses in the class of business to which it applies.
9 (4) One rate shall be deemed unfairly
10 discriminatory in relation to another in the same class
11 if it fails to clearly and equitably reflect the
12 difference in expected losses and expenses.
13 (5) A rate shall be deemed inadequate as to the
14 premium charged to a risk or group of risks if discounts
15 or credits are allowed that exceed a reasonable
16 reflection of expense savings and reasonably expected
17 loss experience from the risk or group of risks.
18 (6) A rate shall be deemed unfairly discriminatory
19 as to a risk or group of risks if the application of
20 premium discounts or credits among those risks does not
21 bear a reasonable relationship to the expected loss and
22 expense experience among the various risks.
23 (e) In reviewing a rate filing, the Department may
24 require the insurer to provide at the insurer's expense all
25 information necessary to evaluate the condition of the
26 company and the reasonableness of the failure according to
27 the criteria enumerated in this Section.
28 (f) The Department may at any time review a rate, rating
29 schedule, rating manual, rate change, the pertinent records
30 of the insurer, and market conditions. If the Department
31 finds on a preliminary basis that a rate may be excessive,
32 inadequate, or unfairly discriminatory, the Department shall
33 initiate proceedings to disapprove the rate and shall so
34 notify the insurer. If a proposed rate represents an
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1 increase greater than the increase in the medical care
2 component of the Consumer Price Index for the region or city
3 of the United States having the greatest increase in the
4 previous calendar year, the Department shall initiate
5 proceeding to approve or disapprove the rate and shall notify
6 the insurer. Upon being notified, the insurer or rating
7 organization shall, within 60 days, file with the Department
8 all information that, in the belief of the insurer or
9 organization, proves the reasonableness, adequacy, and
10 fairness of the rate or rate change. In these instances and
11 in any administrative proceeding relating to the legality of
12 the rate, the insurer or rating organization shall carry the
13 burden of proof by a preponderance of the evidence to show
14 that the rate is not excessive, inadequate, or unfairly
15 discriminatory. After the Department notifies an insurer
16 that a rate may be excessive, inadequate, or unfairly
17 discriminatory, unless the Department withdraws the
18 notification, the insurer shall not alter the rate except to
19 conform with the Department's notice until the earlier of 120
20 days after the date the notification was provided or 180 days
21 after the date of the implementation of the rate. The
22 Department may disapprove without the 60-day notification any
23 rate increase filed by an insurer within the prohibited time
24 period or during the time that the legality of the increased
25 rate is being contested.
26 (g) If the Department finds that a rate or rate change
27 is excessive, inadequate, or unfairly discriminatory, the
28 Department shall issue an order of disapproval specifying
29 that the insurer file a new rate or rate schedule that
30 responds to the findings of the Department. The Department
31 shall further order that premiums be adjusted reflecting the
32 findings of the Department.
33 (215 ILCS 5/371A-25 new)
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1 Sec. 371A-25. Companies authorized to act in concert.
2 Subject to and in compliance with the provisions of this
3 Article authorizing companies to be members or subscribers of
4 rating or advisory organizations or to engage in joint
5 underwriting or joint reinsurance, 2 or more companies may
6 act in concert with respect to any matters pertaining to the
7 making of rates or rating systems, the preparation or making
8 of insurance policy forms, underwriting rules, surveys,
9 inspections and investigations, the furnishing of loss or
10 expense statistics or other information and data, or the
11 carrying on of research.
12 (215 ILCS 5/371A-30 new)
13 Sec. 371A-30. Admitted companies with common ownership
14 or management. With respect to any matters pertaining to the
15 making of rates or rating systems, the preparation or making
16 of insurance policy forms, underwriting rules, surveys,
17 inspections, and investigations, the furnishing of loss or
18 expense statistics or other information and data, or the
19 carrying on of research, 2 or more admitted companies having
20 a common ownership or operating in this State under common
21 management or control are authorized to act in concert the
22 same as if they constituted a single company. Nothing in this
23 Section shall require that such companies so act in concert.
24 (215 ILCS 5/371A-35 new)
25 Sec. 371A-35. Use of rates, rating systems, and policy
26 forms of rating or advisory organizations; agreements to
27 adhere thereto. Members and subscribers of rating or advisory
28 organizations may use the rates, rating systems, underwriting
29 rules, or policy forms of those organizations, either
30 consistently or intermittently, but except as provided in
31 Sections 371A-30 and 371A-80, may not agree with each other,
32 rating organizations, or others to adhere thereto. The fact
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1 that 2 or more admitted companies, whether or not members or
2 subscribers of a rating or advisory organization, use, either
3 consistently or intermittently, the rates or rating systems
4 made or adopted by a rating organization or policy forms
5 prepared by a rating or advisory organization shall not be
6 sufficient in itself to support a finding that an agreement
7 to so adhere exists and may be used only for the purpose of
8 supplementing or explaining direct evidence of the existence
9 of any such agreement.
10 (215 ILCS 5/371A-40 new)
11 Sec. 371A-40. Exchange of information or experience
12 data; consultation with rating organizations and companies.
13 Cooperation among rating organizations or among rating
14 organizations and companies in rate making or in other
15 matters within the scope of this Article is hereby
16 authorized. The Director may review this cooperation and if,
17 after a hearing upon notice to all cooperating parties, he
18 finds that the cooperation is unfair or unreasonable or
19 otherwise inconsistent with the provisions of this Article,
20 he may issue a written order specifying in what respects the
21 cooperation is unfair or unreasonable or otherwise
22 inconsistent with the provisions of this Article and
23 requiring the discontinuance of the cooperation.
24 (215 ILCS 5/371A-45 new)
25 Sec. 371A-45. Joint underwriters and reinsurers; conduct
26 of operation in State; membership or subscription to
27 organization; noncompliance with Article. Upon compliance
28 with the provisions of this Article, a rating organization,
29 advisory organization, and any group, association, or other
30 organization of admitted companies that engages in joint
31 underwriting or joint reinsurance through the organization or
32 by standing agreement among the members of the organization
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1 may conduct operations in this State. With respect to
2 insurance risks or operations in this State, no company may
3 be a member or subscriber of any such organization, group, or
4 association that has not complied with the provisions of this
5 Article.
6 (215 ILCS 5/371A-50 new)
7 Sec. 371A-50. Rating organizations; existing licenses
8 continued.
9 (a) No rating organization may conduct its operations in
10 this State without first filing with the Director a written
11 application for and securing a license to act as a rating
12 organization, however, a license issued to a rating
13 organization pursuant to Section 459 shall continue in effect
14 until the expiration date of that license. A rating
15 organization may make application for and obtain a license as
16 a rating organization if it meets the requirements for
17 license set forth in this Article.
18 (b) A rating organization shall file with its
19 application:
20 (1) a copy of its constitution, its articles of
21 incorporation, agreement, or association, and its
22 by-laws, rules, and regulations governing the conduct of
23 its business, all duly certified by the custodian of the
24 originals thereof;
25 (2) a list of its members and subscribers;
26 (3) the name and address of a resident of this
27 State upon whom notices or orders of the Director or
28 process affecting the rating organization may be served;
29 and
30 (4) a statement of its qualifications as a rating
31 organization.
32 The fee for filing an application for license as a rating
33 organization is $25, payable in advance to the Director.
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1 (215 ILCS 5/371A-55 new)
2 Sec. 371A-55. Evidence prerequisite to license. To
3 obtain and retain a license, a rating organization shall
4 provide satisfactory evidence to the Director that it will:
5 (1) permit any admitted company to become a member of or
6 a subscriber to the rating organization at a reasonable cost
7 and without discrimination, or to withdraw therefrom;
8 (2) neither have nor adopt any rule or exact any
9 agreement, the effect of which would be to require any member
10 or subscriber as a condition to membership or subscribership,
11 to adhere to its rates, rating plans, rating systems,
12 underwriting rules, or policy forms;
13 (3) neither adopt any rule nor exact any agreement the
14 effect of which would be to prohibit or regulate the payment
15 of dividends, savings, or unabsorbed premium deposits allowed
16 or returned by companies to their policyholders, members, or
17 subscribers;
18 (4) neither practice nor sanction any plan or act of
19 boycott, coercion, or intimidation;
20 (5) neither enter into nor sanction any contract or act
21 by which any person is restrained from lawfully engaging in
22 the insurance business; and
23 (6) notify the Director promptly of every change in its
24 constitution, its articles of incorporation, agreement, or
25 association, its by-laws, rules, and regulations governing
26 the conduct of its business, its list of members and
27 subscribers, and the name and address of the resident of this
28 State designated by it upon whom notices or orders of the
29 Director or process affecting the organization may be served.
30
31 (215 ILCS 5/371A-60 new)
32 Sec. 371A-60. Examination of application and
33 investigation of applicant; issuance of license.
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1 (a) The Director shall examine each application for
2 license to act as a rating organization and and may make such
3 further investigation of the applicant, its affairs, and its
4 proposed plan of business as he deems desirable.
5 (b) The Director shall issue the license applied for
6 within 60 days after the application is filed with him if
7 from the examination and investigation he is satisfied that:
8 (1) the business reputation of the applicant and
9 its officers is good;
10 (2) the facilities of the applicant are adequate to
11 enable it to furnish the services it proposes to furnish;
12 and
13 (3) the applicant and its proposed plan of
14 operation conform to the requirements of this Article.
15 Otherwise, but only after hearing upon notice, the
16 Director shall in writing deny the application and notify the
17 applicant of his decision and his reasons therefor.
18 (c) Licenses issued pursuant to this Section shall
19 remain in effect until revoked as provided in this Article.
20 (215 ILCS 5/371A-65 new)
21 Sec. 371A-65. Rules governing eligibility for
22 membership. Subject to the approval of the Director a
23 licensed rating organization may make reasonable rules
24 governing eligibility for membership.
25 (215 ILCS 5/371A-70 new)
26 Sec. 371A-70. Companies with common ownership or
27 management. If 2 or more companies having a common ownership
28 or operating in this State under common management are
29 admitted for the classes or types of insurance for which a
30 rating organization is licensed to make rates, the rating
31 organization may require as a condition to membership or
32 subscribership of one or more that all such companies shall
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1 become members or subscribers.
2 (215 ILCS 5/371A-75 new)
3 Sec. 371A-75. Advisory organization.
4 (a) No advisory organization shall conduct its
5 operations in this State unless and until it has filed with
6 the Director:
7 (1) a copy of its constitution, its articles of
8 incorporation, agreement, or association, and its
9 by-laws, rules, and regulations governing its activities,
10 all duly certified by the custodian of the originals
11 thereof;
12 (2) a list of its members and subscribers; and
13 (3) the name and address of a resident of this
14 State upon whom notices or orders of the Director or
15 process may be served.
16 (b) An advisory organization shall notify the Director
17 promptly of every change in its constitution, its articles of
18 incorporation, agreement, or association, its by-laws, rules,
19 and regulations governing the conduct of its business, its
20 list of members and subscribers, and the name and address of
21 the resident of this State designated by it upon whom notices
22 or orders of the Director or process affecting the
23 organization may be served.
24 (c) An advisory organization may not engage in any
25 unfair or unreasonable practice with respect to its
26 activities.
27 (215 ILCS 5/371A-80 new)
28 Sec. 371A-80. Joint underwriting and joint reinsurance.
29 (a) A group, association, or other organization of
30 companies that engages in joint underwriting or joint
31 reinsurance through the group, association, or organization
32 or by standing agreement among the members thereof shall file
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1 with the Director:
2 (1) a copy of its constitution, its articles of
3 incorporation, agreement, or association, and its
4 by-laws, rules, and regulations governing its business,
5 all duly certified by the custodian of the originals
6 thereof;
7 (2) a list of its members; and
8 (3) the name and address of a resident of this
9 State upon whom notices or orders of the Director or
10 process affecting the group, association, or organization
11 may be served.
12 (b) A group, association, or other organization that
13 engages in joint underwriting or joint reinsurance shall
14 notify the Director promptly of every change in its
15 constitution, its articles of incorporation, agreement, or
16 association, its by-laws, rules, and regulations governing
17 the conduct of its business, its list of members, and the
18 name and address of the resident of this State designated by
19 it upon whom notices or orders of the Director or process
20 affecting the group, association or organization may be
21 served.
22 (c) A group, association, or organization that engages
23 in joint underwriting or joint reinsurance may not engage in
24 any unfair or unreasonable practice with respect to such
25 activities.
26 (215 ILCS 5/371A-85 new)
27 Sec. 371A-85. Maintenance of records; compliance with
28 Section.
29 (a) A company, rating organization or advisory
30 organization, and a group, association, or other organization
31 of companies that engages in joint underwriting or joint
32 reinsurance shall maintain reasonable records, of its
33 experience or the experience of its members and of the data,
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1 statistics, or information collected or used by it in
2 connection with the rates, rating plans, rating systems,
3 underwriting rules, policy forms, surveys, or inspections
4 made or used by it so that the records will be available at
5 all reasonable times to enable the Director to determine
6 whether the organization, company, group, or association and,
7 in the case of a company or rating organization, every rate,
8 rating plan, and rating system made or used by it complies
9 with the provisions of this Article. The maintenance of these
10 records in the office of a licensed rating organization of
11 which a company is a member or subscriber is sufficient
12 compliance with this Section for any company maintaining
13 membership or subscribership in the organization to the
14 extent that the company uses the rates, rating plans, or
15 rating systems of the organization. The records must be made
16 available for examination or inspection by the Director at
17 any time upon reasonable notice.
18 (b) The Director shall adopt, and may modify, reasonable
19 rules and statistical plans that each company must use in the
20 recording and reporting of its loss and countrywide expense
21 experience in order that the experience of all companies may
22 be made available at least annually in such form and detail
23 as may be necessary to aid the Director in determining
24 whether rates comply with this Article. The rules and
25 statistical plans may also provide for the recording and
26 reporting of expense experience items that are specially
27 applicable to this State and are not susceptible of
28 determination by a prorating of countrywide expense
29 experience.
30 (c) In adopting the rules and plans, the Director shall
31 give due consideration to the rating systems in use in this
32 State and, in order that the rules and plans may be as
33 uniform as is possible among the several states, to the rules
34 and to the form of the plans used for rating systems in other
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1 states. No company shall be required to record or report its
2 loss experience on a classification basis that is
3 inconsistent with the rating system used by it.
4 (d) The Director may designate one or more rating
5 organizations or other agencies to assist him in gathering
6 and making compilations of loss and expense experience. The
7 compilations must be made available, subject to reasonable
8 rules adopted by the Director, to companies and rating
9 organizations.
10 (215 ILCS 5/371A-90 new)
11 Sec. 371A-90. Report of loss and expense data.
12 (a) The Department shall promulgate rules that require an
13 insurer licensed to write accident and health insurance in
14 the State to record and report its loss and expense
15 experience and other data as may be necessary to determine
16 whether rates are fair and appropriate. The Department may
17 designate one or more rating service organizations or
18 advisory organizations to gather and compile the loss and
19 expense experience and data. The Department shall require an
20 insurer licensed to write accident and health insurance in
21 this State to submit a report, on a form furnished by the
22 Department, showing its direct writings in this State and the
23 United States.
24 (b) The report must include all of the following data,
25 both specific to this State and also to the United States, by
26 the type of insurance for the previous year ending on the
27 31st day of December:
28 (1) Direct premiums written.
29 (2) Direct premiums earned.
30 (3) Net investment income, including net realized
31 capital gains and losses, using appropriate estimates
32 where necessary.
33 (4) Incurred claims, developed as the sum of the
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1 following (the report must include data for each of the
2 following categories used to develop the sum of incurred
3 claims):
4 (A) dollar amount of claims closed with
5 payment; plus
6 (B) reserves for reported claims at the end of
7 the current year; minus
8 (C) reserves for reported claims at the end of
9 the previous year; plus
10 (D) reserves for incurred but not reported
11 claims at the end of the current year; minus
12 (E) reserves for incurred but not reported
13 claims at the end of the previous year; plus
14 (F) loss adjustment expenses for claims
15 closed; plus
16 (G) reserves for Loss Adjustment Expense at
17 the end of the current year; minus
18 (H) reserves for Loss Adjustment Expense at
19 the end of the previous year.
20 (5) Actual incurred expenses allocated separately
21 to loss adjustment, commissions, other acquisition costs,
22 advertising, general office expenses, taxes, licenses and
23 fees, and all other expenses.
24 (6) Net underwriting gain or loss.
25 (7) Net operation gain or loss, including net
26 investment income.
27 (8) The number and dollar amount of claims closed
28 with payment, by year incurred and the amount reserved
29 for them.
30 (9) The number of claims closed without payment and
31 the dollar amount reserved for those claims.
32 (10) Federal income tax recoverable.
33 (11) Any other information requested by the
34 Department.
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1 (c) For the first year only in which the insurer is
2 required to file this report, the data required by paragraphs
3 (1) through (7) of subsection (b) must include the previous
4 calendar year and each of the preceding 4 calendar years.
5 (d) It is the duty of the Department to annually compile
6 and review all reports submitted by insurers pursuant to this
7 Section to determine the appropriateness of premium rates for
8 accident and health insurance in this State. The
9 Department's findings and the filings shall be published,
10 provided to the General Assembly, and made available to any
11 interested insured or citizen. If the Department finds at
12 any time that any rate is no longer fair or appropriate, it
13 shall issue an order withdrawing its approval. The order
14 shall specify reasons for withdrawal of approval, shall be
15 furnished to each affected insurer and rating organization,
16 and shall be effective in not less than 30 days after its
17 issuance unless an affected insurer meets the burden of
18 showing that the rate is in fact fair and appropriate.
19 (f) An insurance company shall file all of the
20 information required under this Section with the Department
21 as a prerequisite to obtaining permission to write coverage,
22 to continue to do business, or to file for rate increases.
23 (g) An insurer that fails to comply with the terms of
24 this Section shall pay a civil penalty of a fine of $10,000
25 and thereafter a fine of $200 daily until it complies with
26 this Section.
27 (215 ILCS 5/371A-95 new)
28 Sec. 371A-95. Examination of rating and advisory
29 organizations, joint underwriters, and reinsurers; acceptance
30 of report from another state; compliance with Article.
31 (a) At least once every 5 years and may as often as may
32 be reasonable and necessary, the Director shall make or cause
33 to be made an examination of each licensed rating
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1 organization. The Director may, as often as may be
2 reasonable and necessary, make or cause to be made an
3 examination of any advisory organization or group,
4 association, or other organization of companies that engages
5 in joint underwriting or joint reinsurance.
6 (b) Instead of making an examination, the Director may
7 accept the report of an examination made by the insurance
8 supervisory official of another state.
9 (c) In examining any organization, group or association
10 pursuant to this Section, the Director shall ascertain
11 whether the organization, group, or association and, in the
12 case of a rating organization, any rate or rating system made
13 or used by it complies with this Article.
14 (215 ILCS 5/371A-100 new)
15 Sec. 371A-100. Examination of Admitted companies; rate
16 overcharge refunds.
17 (a) A company found to have failed or refused to refund
18 any overcharges as determined pursuant to Section 371A-20
19 shall pay a penalty to the Department of Insurance of $100
20 per day for each such violation. A refusal to refund
21 overcharges to any one policyholder is a violation under this
22 Article and additional refusals shall be considered
23 additional violations under this Article.
24 (b) Continued refusal by a company to refund
25 policyholder overcharges after an Order of the Director to so
26 refund under this Article may subject a company to suspension
27 of its certificate of authority until it has complied with
28 the Order of the Director and refunded the overcharges.
29 (215 ILCS 5/371A-105 new)
30 Sec. 371A-105. Examination of officers, managers,
31 agents, and employees; exhibition of books. The officers,
32 managers, agents, and employees of any organization, group,
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1 association, or company subject to this Article may be
2 examined at any time under oath and shall exhibit all books,
3 records, accounts, documents, or agreements governing its
4 methods of operation, together with all data, statistics and
5 information of every kind and character collected or
6 considered by the organization, group, association, or
7 company in the conduct of the operations to which the
8 examination relates.
9 (215 ILCS 5/371A-110 new)
10 Sec. 371A-110. Payment of cost of examination. The
11 reasonable cost of any examination authorized by this Article
12 shall be paid by the organization, group, association, or
13 company to be examined.
14 (215 ILCS 5/371A-115 new)
15 Sec. 371A-115. Noncompliance of rate, rating plan or
16 system; notice by Director. If after examination of a
17 company, rating organization, advisory organization, or
18 group, association, or other organization of companies that
19 engages in joint underwriting or joint reinsurance the
20 Director has good cause to believe that the company, rating
21 or advisory organization, group, or association or any rate,
22 rating plan, or rating system made or used by the company,
23 rating or advisory organization, group, or association does
24 not comply with the requirements and standards of this
25 Article, he shall, unless he has good cause to believe the
26 noncompliance is wilful, give notice in writing to the
27 company, rating or advisory organization, group, or
28 association stating to the extent possible the manner in
29 which the noncompliance is alleged to exist and specifying a
30 reasonable time of not fewer than 10 days within which the
31 noncompliance may be corrected.
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1 (215 ILCS 5/371A-120 new)
2 Sec. 371A-120. Hearing; notice; hearing not to include
3 additional subjects. If the Director has good cause to
4 believe noncompliance to be wilful or if, within the period
5 prescribed by the Director in the notice required by Section
6 371A-115, the company, rating or advisory organization,
7 group, or association does not make the changes necessary to
8 correct the noncompliance specified by the Director or
9 establish to the satisfaction of the Director that the
10 specified noncompliance does not exist, then the Director may
11 hold a public hearing regarding the noncompliance. Within a
12 reasonable period of time, which shall be not less than 10
13 days before the date of the hearing, the Director shall mail
14 written notice specifying the matters to be considered at the
15 hearing to the company, rating or advisory organization,
16 group, or association. If no notice has been given as
17 provided in Section 371A-115, the notice shall state to the
18 extent possible in what manner the noncompliance is alleged
19 to exist. The hearing shall not include any additional
20 subjects not specified in the notices required by Section
21 371A-115 or this Section.
22 (215 ILCS 5/371A-125 new)
23 Sec. 371A-125. Issuance of Orders; suspension or
24 revocation of certificate of authority or license.
25 (a) If after a hearing pursuant to Section 371A-120, the
26 Director finds that a rate, rating plan, or rating system
27 violates the provisions of this Article, he may issue an
28 order to the company or rating organization specifying in
29 what respects the violation exists and stating when, within a
30 reasonable period of time, the further use of the rate or
31 rating system by the company or rating organization in
32 contracts of insurance made thereafter shall be prohibited.
33 (b) If after a hearing pursuant to Section 371A-120, the
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1 Director finds that a company, rating organization, advisory
2 organization, or a group, association, or other organization
3 of companies that engages in joint underwriting or joint
4 reinsurance is in violation of the provisions of the Article
5 other than the provisions dealing with rates, rating plans,
6 or rating systems, he may issue an order to the company,
7 rating or advisory organization, group, or association
8 specifying in what respects the violation exists and
9 requiring compliance within a reasonable time thereafter.
10 (c) If after a hearing pursuant to Section 371A-120, the
11 Director finds that a violation of any of the provisions of
12 this Article by a company or rating organization was wilful,
13 he may suspend or revoke, in whole or in part, the
14 certificate of authority of the company or the license of the
15 rating organization.
16 (d) If after a hearing pursuant to Section 371A-120, the
17 Director finds that a rating organization has wilfully
18 engaged in any fraudulent or dishonest act or practices, he
19 may suspend or revoke, in whole or in part, the license of
20 the organization in addition to any other penalty provided in
21 this Code.
22 (215 ILCS 5/371A-130 new)
23 Sec. 371A-130. Failure to comply with Order; suspension
24 or revocation of license or certificate. In addition to other
25 penalties provided in this Code, the Director may suspend or
26 revoke, in whole or in part, the license of any rating
27 organization or the certificate of authority of any company
28 that fails to comply, within the time specified by the order
29 or any extension thereof that the Director may grant, with an
30 order of the Director lawfully made by him pursuant to
31 Section 371A-125 and not reversed or modified pursuant to
32 Section 371A-135.
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1 (215 ILCS 5/371A-135 new)
2 Sec. 371A-135. Conduct or proceedings; powers of
3 Director; judicial review.
4 (a) Except as otherwise provided in this Code, all
5 administrative proceedings in connection with the denial,
6 suspension, or revocation of a license or certificate of
7 authority under this Article shall be conducted in accordance
8 with the provisions of Sections 401, 402, 403, and 405 of
9 this Code.
10 (b) All orders or decisions of the Director under this
11 Article are subject to judicial review under the
12 Administrative Review Law.
13 (215 ILCS 5/371A-140 new)
14 Sec. 371A-140. Rebates prohibited; exclusion of
15 commissions, dividends. An insurance producer may not
16 knowingly charge, demand, or receive a premium for any policy
17 of insurance except in accordance with the provisions of this
18 Article. A company, employee of a company, and an insurance
19 producer may not pay, allow, or give, directly or indirectly,
20 as an inducement to insurance or after insurance has been
21 effected, any rebate, discount, abatement, credit, or
22 reduction of the premium named in a policy of insurance or
23 any special favor or advantage in the dividends or other
24 benefits to accrue thereon, or any valuable consideration or
25 inducement whatever, not specified in the policy of
26 insurance, except to the extent provided for in an applicable
27 filing. An insured named in a policy of insurance and any
28 employee of the insured may not knowingly receive or accept,
29 directly or indirectly, any rebate, discount, abatement,
30 credit or reduction of premium, or any such special favor or
31 advantage or valuable consideration or inducement. Nothing in
32 this Section shall be construed as prohibiting the payment of
33 commissions or other compensation to duly licensed insurance
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1 producers nor as prohibiting any company from allowing or
2 returning to its participating policyholders, members, or
3 subscribers dividends, savings, or unabsorbed premium
4 deposits.
5 (215 ILCS 5/371A-145 new)
6 Sec. 371A-145. Information not to be wilfully withheld.
7 No person, company, or organization shall wilfully withhold
8 information from, or knowingly give false or misleading
9 information to, the Director or to any rating organization,
10 advisory organization, company, or group, association, or
11 other organization of companies that will affect the rates,
12 rating systems, or premiums for the classes of insurance
13 subject to this Article.
14 (215 ILCS 5/371A-150 new)
15 Sec. 371A-150. Failure to comply with final order of
16 Director; penalty.
17 (a) A person, company, organization, group, or
18 association that fails to comply with a final order of the
19 Director under this Article shall be liable to the State in
20 an amount not exceeding $50, but if the failure is wilful he
21 or it shall be liable to the State in an amount not exceeding
22 $5,000 for such failure. The Director shall collect the
23 amount so payable and may bring an action in the name of the
24 people of the State of Illinois to enforce collection. These
25 penalties may be in addition to any other penalties provided
26 by law.
27 (b) A wilful violation of the provisions of this Article
28 by any person is a misdemeanor.
29 (215 ILCS 5/371A-155 new)
30 Sec. 371A-155. Payment of dividends not prohibited or
31 regulated; plan for payment not rating system. Nothing in
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1 this Article shall be construed to prohibit or regulate the
2 payment of dividends, savings, or unabsorbed premium deposits
3 allowed or returned by companies to their policyholders,
4 members, or subscribers. A plan for the payment of dividends,
5 savings, or unabsorbed premium deposits allowed or returned
6 by companies to their policyholders, members or subscribers
7 shall not be deemed a rating plan or system.
8 (215 ILCS 5/371A-160 new)
9 Sec. 371A-160. Acts done by authority of Article not
10 violation of other laws. No act done, action taken, or
11 agreement made pursuant to the authority conferred by this
12 Article shall constitute a violation of or grounds for
13 prosecution or civil proceedings under any other law of this
14 State heretofore or hereafter enacted which does not
15 specifically refer to insurance.
16 (215 ILCS 5/371A-165 new)
17 Sec. 371A-165. Submission of rates, rating plans, and
18 rating manuals. The Director may require submission of copies
19 of the rates, rating schedules, and rating manuals of a
20 company as he deems necessary and proper. The submission of
21 rates, rating schedules, and rating manuals to the Director
22 by a licensed rating organization of which a company is a
23 member or subscriber is sufficient compliance with this
24 Section for any company maintaining membership or
25 subscribership in the organization, to the extent that the
26 company uses the rates, rating schedules, and rating manuals
27 of the organization. Submission to the Director by a company
28 or rating organization within a reasonable time after the
29 date that the rates, rating schedules, or rating manuals
30 become effective shall be deemed sufficient compliance with
31 the requirements of this Section.
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1 Section 99. Effective date. This Act takes effect
2 January 1, 2000.
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1 INDEX
2 Statutes amended in order of appearance
3 215 ILCS 5/371A-1 new
4 215 ILCS 5/371A-5 new
5 215 ILCS 5/371A-10 new
6 215 ILCS 5/371A-15 new
7 215 ILCS 5/371A-20 new
8 215 ILCS 5/371A-25 new
9 215 ILCS 5/371A-30 new
10 215 ILCS 5/371A-35 new
11 215 ILCS 5/371A-40 new
12 215 ILCS 5/371A-45 new
13 215 ILCS 5/371A-50 new
14 215 ILCS 5/371A-55 new
15 215 ILCS 5/371A-60 new
16 215 ILCS 5/371A-65 new
17 215 ILCS 5/371A-70 new
18 215 ILCS 5/371A-75 new
19 215 ILCS 5/371A-80 new
20 215 ILCS 5/371A-85 new
21 215 ILCS 5/371A-90 new
22 215 ILCS 5/371A-95 new
23 215 ILCS 5/371A-100 new
24 215 ILCS 5/371A-105 new
25 215 ILCS 5/371A-110 new
26 215 ILCS 5/371A-115 new
27 215 ILCS 5/371A-120 new
28 215 ILCS 5/371A-125 new
29 215 ILCS 5/371A-130 new
30 215 ILCS 5/371A-135 new
31 215 ILCS 5/371A-140 new
32 215 ILCS 5/371A-145 new
33 215 ILCS 5/371A-150 new
34 215 ILCS 5/371A-155 new
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1 215 ILCS 5/371A-160 new
2 215 ILCS 5/371A-165 new