100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB3451

 

Introduced 2/16/2018, by Sen. Antonio Muņoz

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Insurance Industry Innovation Act. Creates the Innovation Division in the Department of Insurance. Provides that a covered entity may submit a petition to the Department to request to enter into an enforceable compliance agreement. Provides that the Director of Insurance shall complete a review of the petition and notify the covered entity of the Department's determination. Provides the specific factors the Department shall use in determining whether or not to approve a petition. Provides the specific requirements of an enforceable compliance agreement. Provides that the Department shall submit an annual report to the General Assembly beginning July 1, 2019 regarding the aggregate impact of enforceable compliance agreements. Provides that the Department shall establish the cost of each petition. Provides that the Director may adopt rules as necessary to implement the Act. Provides that the Act shall be repealed on January 1, 2024. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Insurance Industry Innovation Act.
 
6    Section 5. Definitions. In this Act:
7    "Covered entity" means an entity that offers or intends to
8offer an insurance innovation by submitting a petition to the
9Department of Insurance.
10    "Department" means the Department of Insurance.
11    "Director" means the Director of Insurance.
12    "Enforceable compliance agreement" means a contractual
13agreement described in subsection (a) of Section 20.
14    "Innovation Division" means the Innovation Division in the
15Department of Insurance.
16    "Insurance innovation" means an innovative service or
17product that is or may be subject to regulation by the
18Department of Insurance.
 
19    Section 10. Innovation Division. The Department shall
20establish an Innovation Division to promote insurance product
21innovations and to assist a covered person whose petition has
22been approved under Section 20.
 

 

 

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1    Section 15. Petition to the Department.
2    (a) A covered entity may submit a petition to the
3Department through the Innovation Division, in such form and in
4such manner as the Innovation Division may require, to request
5to enter into an enforceable compliance agreement containing a
6modification or waiver of Department rule or State law under
7which the Department has rulemaking authority with respect to
8the covered entity or an insurance innovation the covered
9entity offers or intends to offer.
10    (b) A petition submitted under this Section shall:
11        (1) include an alternative compliance strategy that
12    proposes a method to achieve the public policy goals of the
13    Department rule or State law; and
14        (2) demonstrate that under the alternative compliance
15    strategy, the insurance innovation:
16            (A) would serve the public interest;
17            (B) improves access to insurance products or
18        services; and
19            (C) does not present systemic risk to the State and
20        promotes consumer protection.
21    (c) One or more covered entities that offers or intends to
22offer similar innovations may jointly submit a petition under
23this Section.
24    (d) No later than 30 days after receiving a petition, the
25Department shall publish the petition on the Department's

 

 

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1website and provide a 60-day period for public notice and
2comment.
3    The Department may waive the notice and comment period if
4the Department determines that the covered entity submitting
5the petition is similarly situated to another covered entity
6that has been granted approval of an identical petition
7pursuant to this Section.
8     The Department shall maintain the confidentiality of any
9non-publicly available data or information in any petition
10submitted under this Section. The Department shall give
11reasonable consideration to maintaining the confidentiality of
12data or information identified by the covered person in the
13petition submitted under this Section as non-publicly
14available data or information.
 
15    Section 20. Department determination of petition.
16    (a) No later than 30 days after the end of the comment
17period pursuant to subsection (d) of Section 15 or, if the
18comment period was waived, not later than 60 days after receipt
19of a petition under Section 15, the Director shall complete a
20review of the petition and notify the covered entity, in
21writing, of the Department's determination of the petition.
22    (b) If the covered entity submitting the petition
23demonstrates to the Department that the alternative compliance
24strategy meets the requirements of paragraph (2) in subsection
25(b) of Section 15, the Department may approve the petition. If

 

 

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1the petition is approved, the Department shall enter into an
2enforceable compliance agreement with the covered entity in
3accordance with the requirements of Section 25.
4    (c) The Department shall not approve a petition for a
5waiver of Department rule or State law concerning:
6        (1) assets, deposits, investments, capital, surplus,
7    or other solvency requirements applicable to insurance
8    companies;
9        (2) required participation in an assigned risk plan,
10    market, or guaranty fund;
11        (3) a law or regulation required for the Department to
12    maintain its accreditation by the National Association of
13    Insurance Commissioners, unless the law or regulation
14    permits variances, waivers, or no action letters; or
15        (4) application of any taxes or fees.
16    (d) If the covered entity submitting the petition fails to
17demonstrate to the Department that the alternative compliance
18strategy meets the requirements of paragraph (2) of subsection
19(b) of Section 15, the Department shall deny the petition. If
20the Department denies a petition, the Director shall provide
21the covered entity with a written notice explaining the reason
22for denying the petition.
 
23    Section 25. Enforceable compliance agreement.
24    (a) If the Department approves a petition under Section 15,
25the covered entity shall enter into an enforceable compliance

 

 

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1agreement with the Department.
2    (b) Any compliance agreement entered into by the Department
3and a covered entity shall, at a minimum, include:
4        (1) the terms under which the covered entity may
5    develop or offer the approved insurance innovation to the
6    public and any requirements of the covered entity and the
7    Department with respect to the insurance innovation;
8        (2) procedures for modifying the terms of the
9    agreement;
10        (3) consequences for failure to comply with the terms
11    of the agreement;
12        (4) a compliance examination process that occurs at
13    least annually;
14        (5) a termination date for the agreement that is at
15    least one year after the date on which the agreement is
16    entered into;
17        (6) procedures for extending the termination date;
18        (7) procedures for judicial review; and
19        (8) procedures for maintaining the confidentiality of
20    any information disclosed to the Department in making the
21    agreement.
22    (c) If a covered entity and the Department enter into an
23enforceable compliance agreement, another agency may not
24commence an enforcement action against the covered entity with
25respect to the insurance innovation that is the subject of the
26enforceable compliance agreement.

 

 

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1    (d) Notwithstanding subsection (c), the State may commence
2an enforcement action against a covered entity with respect to
3an insurance innovation that is the subject of an enforceable
4compliance agreement if, in an action brought by the State in a
5court of competent jurisdiction, the court determines that the
6Department's action was arbitrary and capricious and the
7insurance innovation has substantially harmed consumers within
8the State.
9    (e) A covered entity may elect to arbitrate an action
10initiated by another person relating to a financial innovation
11that is the subject of the enforceable compliance agreement.
 
12    Section 30. Report to the General Assembly. No later than
13July 1, 2019 and every July 1 thereafter, the Department shall
14submit to the General Assembly a report on the aggregate impact
15of enforceable compliance agreements entered into under this
16Act that shall include:
17        (1) the number and characteristics of the agreements;
18        (2) the most innovative and least burdensome tools that
19    the Innovation Division has implemented for achieving
20    regulatory ends;
21        (3) the existing State laws, rules, or practices that
22    the Department identifies as the most burdensome to
23    innovation in developing or providing insurance products
24    and services, that adversely affect competition in the
25    insurance industry, or that restrict improvements for

 

 

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1    consumers of insurance products or services; and
2        (4) recommendations for reducing, consolidating, or
3    eliminating regulations.
 
4    Section 35. Funding. The Department, by rule, shall
5establish the cost of each application for petition.
 
6    Section 40. Rulemaking authority. The Director may adopt
7reasonable rules as necessary to implement the purposes and
8provisions of this Act.
 
9    Section 45. Repeal. This Act is repealed on January 1,
102024.
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.