[ Search ] [ PDF text ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
| [ Introduced ] | [ Enrolled ] | [ Senate Amendment 001 ] |
92_SB1996eng SB1996 Engrossed LRB9215940JSpc 1 AN ACT concerning insurance. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Insurance Code is amended by 5 changing Section 500-80 as follows: 6 (215 ILCS 5/500-80) 7 Sec. 500-80. Commissions. 8 (a) An insurer or insurance producer may not pay a 9 commission, service fee, brokerage, or other valuable 10 consideration to a person for selling, soliciting, or 11 negotiating insurance in this State if that person is 12 required to be licensed under this Article and is not so 13 licensed at the time of selling, soliciting, or negotiating 14 the insurance. 15 (b) A person may not accept a commission, service fee, 16 brokerage, or other valuable consideration for selling, 17 soliciting, or negotiating insurance in this State if that 18 person is required to be licensed under this Article and is 19 not so licensed. 20 (c) Renewal or other deferred commissions may be paid to 21 a person for selling, soliciting, or negotiating insurance in 22 this State if the person was required to be licensed under 23 this Article at the time of the sale, solicitation, or 24 negotiation and was so licensed at that time. 25 (d) An insurer or insurance producer may pay or assign 26 commissions, service fees, brokerages, or other valuable 27 consideration to an insurance agency or to persons who do not 28 sell, solicit, or negotiate insurance in this State, unless 29 the payment would violate Section 151 of this Code. 30 (e) When an insurance producer or business entity 31 charges any fee or compensation separate from commissions SB1996 Engrossed -2- LRB9215940JSpc 1 deductible from, or directly attributable to, premiums on 2 insurance policies or contracts, it must comply with all of 3 the following: 4 (1) It must provide written disclosure to the 5 consumer or contracting party that clearly specifies the 6 amount or extent of the compensation or fee prior to the 7 delivery of the corresponding policy. A copy of the 8 written disclosure must be maintained by the producer or 9 business entity that collects the compensation or fee for 10 a period of 7 years. 11 (2) If the combined compensation or fee exceeds 10% 12 of a directly attributable premium amount of a 13 corresponding contract or policy, the disclosure must 14 also include the signature of the consumer or contracting 15 party acknowledging the compensation or fee. 16 (3) If an insurance policy or contract is cancelled 17 for any reason within 90 days following the inception 18 date, the producer or business entity shall refund to the 19 consumer a prorated portion of the fee or compensation 20 within 30 days after the producer or business entity 21 receives proper documentation that the corresponding 22 insurance policy or contract has been cancelled. At no 23 time shall a producer or business entity charge the 24 consumer a fee or compensation for cancellation of any 25 insurance policy or contract. 26 (4) If the policy file contains documentation that 27 the producer performed a service corresponding to the 28 applicable coverage or policy and the written disclosure 29 stated that the fees were fully earned, then those fees 30 shall be fully earned at inception of the disclosure's 31 execution.Except as to commissions deductible from32premiums on insurance policies or contracts for33insurance, an insurance producer or business entity does34not have any right to compensation from an insured orSB1996 Engrossed -3- LRB9215940JSpc 1prospective insured for or on account of the transaction2of insurance business unless the right to compensation is3stated on a separate written memorandum that clearly4specifies the amount or extent of the service fee and5that is provided to the applicant or insured before the6performance of the service or the issuance of the policy,7whichever is first. A copy of the memorandum must be8maintained by any producer who collects or receives the9service fee or any portion of the service fee. If the10compensation or service fee exceeds 10% of the premium11amount or potential premium amount of the contract or12policy, the memorandum shall include the signature of the13insured or prospective insured acknowledging the14compensation or service fee.15(f) Any compensation or service fee received on a16contract or policy that is later canceled, within the first17half of the contract or policy period, for any reason must be18returned to the insured by the insurance producer or business19entity at a prorated amount. The prorated amount shall be20based on the length of the term of the policy or contract21compared to the time that contract or policy was in force22such that the amount returned reflects the portion of the23term of the contract or policy during which the contract was24not in force. There shall be no compensation or service fee25assessed or received on a contract or policy by the insurance26producer or business entity for processing such cancellation.27 (Source: P.A. 92-386, eff. 1-1-02.) 28 Section 99. Effective date. This Act takes effect upon 29 becoming law.