Public Act 90-0053 of the 90th General Assembly

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Public Act 90-0053

HB1266 Enrolled                                LRB9003865JSgc

    AN ACT to amend the Illinois Insurance Code  by  changing
Section 123.

    Be  it  enacted  by  the People of the State of Illinois,
represented in the General Assembly:

    Section 5.  The Illinois Insurance  Code  is  amended  by
changing Section 123 as follows:

    (215 ILCS 5/123) (from Ch. 73, par. 735)
    Sec. 123. Service of process upon an unauthorized foreign
or alien company.
    (1)   The   purpose   of   this  Section  is  to  subject
unauthorized foreign and alien companies to the  jurisdiction
of  courts  of  this  State  in  actions  by  or on behalf of
insureds, reinsureds, or  beneficiaries  under  insurance  or
reinsurance  contracts. The Legislature declares that it is a
subject of concern that  many  residents  of  this  State  or
corporations  authorized  to  do  business in this State hold
policies of insurance or reinsurance issued by companies  not
authorized  to  do business in this State, thus presenting to
such residents or corporations authorized to do  business  in
this  State  the  often  insuperable obstacle of resorting to
distant forums for the  purpose  of  asserting  legal  rights
under  such  policies. In furtherance of such State interest,
the Legislature  herein  provides  a  method  of  substituted
service  of  process upon such companies and declares that in
so doing it exercises its power to protect its residents  and
corporations  authorized  to do business in this State and to
define, for the purpose of  this  statute,  what  constitutes
doing  business  in this State, and also exercises powers and
privileges available to the State by virtue of Public Law 15,
79th Congress of the United States, Chapter 20,  1st.  Sess.,
S.  340,  as  amended,  which  declares  that the business of
insurance and every person engaged therein shall  be  subject
to the laws of the several states.
    (2)  Any of the following acts in this State, effected by
mail  or  otherwise,  by  an  unauthorized  foreign  or alien
company:  (a)  the  issuance  or  delivery  of  contracts  of
insurance or reinsurance to residents of  this  State  or  to
corporations  authorized  to  do  business  therein,  (b) the
solicitation of applications  for  such  contracts,  (c)  the
collection of premiums, membership fees, assessments or other
considerations   for   such   contracts,  or  (d)  any  other
transaction  of  business,  is  equivalent   to   and   shall
constitute  an  appointment  by such company, of the Director
and his or her successor or successors in office, to  be  its
true  and  lawful attorney upon whom may be served all lawful
process in any action or proceeding against it,  arising  out
of  such  policy or contract of insurance or reinsurance, and
the acts shall be a signification of its agreement  that  any
such  process  against  it which is so served shall be of the
same legal force and validity as if served upon the company.
    (3)  Service of such process shall be made by  delivering
and  leaving with the Director a copy thereof and the payment
to the Director of the  fee  prescribed  by  this  Code.  The
Director  shall  keep  a record of all process so served upon
him or her. Such process shall  be  sufficient  service  upon
such foreign or alien company provided notice of such service
and  a  copy  of  the process are, within 10 days thereafter,
sent by certified  or  registered  mail  by  the  plaintiff's
attorney  of  record  to  the  defendant  at  the  last known
principal  place  of  business  of  the  defendant,  and  the
defendant's receipt and the plaintiff's attorney's  affidavit
of  compliance herewith are filed with the Clerk of the Court
in which such action is pending on or before the return  date
of  the  process or within such further time as the court may
allow.
    (4)  Service of process in any such  action  against  any
such  company  shall  in  addition  to  the  mode hereinabove
described be valid and legal if served upon any person within
this State who, in this State on behalf of such company, is
         (a)  soliciting insurance or reinsurance, or
         (b)  making, issuing, or delivering any policies  or
    contracts of insurance or reinsurance, or
         (c)  collecting or receiving any premium, membership
    fee,  assessment  or other consideration for insurance or
    reinsurance, or
         (d)  in any manner aiding or assisting in doing  any
    of  the  things enumerated in clauses (a), (b), or (c) of
    this subsection; and a copy of such process is within  10
    days  thereafter  sent by certified or registered mail by
    the plaintiff's attorney of record to  the  defendant  at
    the  last  known  principal  place  of  business  of  the
    defendant and the defendant's receipt and the plaintiff's
    attorney's  affidavit  of  compliance  herewith are filed
    with the clerk of the  court  in  which  such  action  is
    pending  on  or  before the return date of the process or
    within such further time as the court may allow.
    (5)  Before any unauthorized  foreign  or  alien  company
shall file or cause to be filed any pleading in any action or
proceeding, including any arbitration, instituted against it,
such  unauthorized  company shall either (1) deposit with the
clerk of the court in which  such  action  or  proceeding  is
pending or with the clerk of the court in the jurisdiction in
which  the  arbitration is pending cash or securities or file
with such clerk a bond with good and sufficient sureties,  to
be  approved  by  the  court, in an amount to be fixed by the
court sufficient to secure the payment of any final  judgment
which   may  be  rendered  in  such  action,  proceeding,  or
arbitration; or (2) where the unauthorized company  continues
to   transact  the  business  of  insurance  by  issuing  new
contracts of insurance or reinsurance, procure a  certificate
of  authority  to  transact the business of insurance in this
State.
    The court in any action or proceeding, in  which  service
is made in the manner provided in subsections (3) or (4) may,
in   its  discretion,  order  such  postponement  as  may  be
necessary to afford the defendant reasonable  opportunity  to
comply  with  the provisions of this subsection and to defend
such action.
    Nothing in this Section is to be construed to prevent  an
unauthorized foreign or alien company from filing a motion to
quash  process  or  to  set aside service thereof made in the
manner provided in subsections  (3)  or  (4)  on  the  ground
either (a) that such unauthorized company has not done any of
the  acts enumerated in subsection (2) or (b) that the person
on whom service was made pursuant to subsection (4)  was  not
doing any of the acts therein enumerated.
    (6)  In  any  action  against  an unauthorized foreign or
alien company upon a contract  of  insurance  or  reinsurance
issued or delivered in this State to a resident thereof or to
a  corporation  authorized  to  do  business  therein, if the
company has failed for 30 days  after  demand  prior  to  the
commencement of the action to make payment in accordance with
the  terms  of the contract, and it appears to the court that
such refusal was vexatious and without reasonable cause,  the
court  may  allow  to the plaintiff a reasonable attorney fee
and include such fee in any judgment that may be rendered  in
such action. Such fee shall not exceed 12-1/2 per cent of the
amount  which  the  court  or  jury  finds  the  plaintiff is
entitled to recover against the  insurer,  but  in  no  event
shall  such  fee  be  less  than $25. Failure of a company to
defend any such action shall be deemed prima  facie  evidence
that  its  failure  to make payment was vexatious and without
reasonable cause.
    (7)  No plaintiff shall be  entitled  to  a  judgment  by
default  under  this  Section until the expiration of 30 days
from the date of the filing of the affidavit of compliance.
    (8)  The provisions of this Section shall  not  apply  to
any  action or proceeding against any unauthorized foreign or
alien  company  arising  out  of  any  contract   of   direct
re-insurance or arising out of any contract of insurance
         (a)  effected in accordance with Section 445, or
         (b)  covering   ocean   marine,   aircraft,  railway
    insurance risks, or
         (c)  against legal  liability  arising  out  of  the
    ownership,  operation  or  maintenance  of  any  property
    having a permanent situs outside this State, or
         (d)  against  loss  of  or  damage  to  any property
    having a permanent situs outside this State,
where  such  contract  of  insurance  contains  a   provision
designating   the  Director  and  his  or  her  successor  or
successors in office or a bona fide resident of  Illinois  to
be  the true and lawful attorney of such non-admitted insurer
upon whom may be served all lawful process in any  action  or
proceeding  arising  out of any such contract of insurance or
where the insurer enters a general  appearance  in  any  such
action or proceeding.
    (9)  Nothing  in  this  Section  contained shall limit or
affect the right to  serve  any  process,  notice  or  demand
required or permitted by law to be served upon any company in
any other manner now or hereafter permitted by law.
(Source: P.A. 86-1154; 86-1156; 86-1475.)

    Section  99.  Effective date.  This Act takes effect upon
becoming law.

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