101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB5528

 

Introduced , by Rep. Thaddeus Jones

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/131.8  from Ch. 73, par. 743.8
215 ILCS 5/131.22  from Ch. 73, par. 743.22
215 ILCS 5/131.9a rep.

    Amends the Illinois Insurance Code. In provisions requiring the Director of Insurance to approve specified acquisitions of control, provides that the Director shall deny the acquisition if the competence, experience, and integrity of those persons who would control the operation are such that it would not (rather than would) be in the best interests of specified individuals. In provisions concerning confidential treatment of certain information, excludes information submitted pursuant to specified provisions concerning mergers and acquisitions that is not personal financial information. Repeals duplicative provisions concerning exemptions. Effective immediately.


LRB101 15678 BMS 65033 b

 

 

A BILL FOR

 

HB5528LRB101 15678 BMS 65033 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 131.8 and 131.22 as follows:
 
6    (215 ILCS 5/131.8)  (from Ch. 73, par. 743.8)
7    Sec. 131.8. (1) After the statement required by Section
8131.5 has been filed, the Director shall approve any merger,
9consolidation or other acquisition of control referred to in
10Section 131.4 unless the Director finds that:
11        (a) after the change of control, the domestic company
12    referred to in Section 131.4 would not be able to satisfy
13    the requirements for the issuance of a license to write the
14    line or lines of insurance for which it is presently
15    licensed;
16        (b) the effect of the merger, consolidation or other
17    acquisition of control would be substantially to lessen
18    competition in insurance in this State or tend to create a
19    monopoly therein. In applying the competitive standard in
20    this paragraph:
21            (i) the informational requirements of subsection
22        (3)(a) and the standards of subsection (4)(b) of
23        Section 131.12a shall apply,

 

 

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1            (ii) the merger or other acquisition shall not be
2        found substantially to lessen competition in insurance
3        in this State or tend to create a monopoly therein if
4        the Director finds that any of the situations meeting
5        the criteria provided by subsection (4)(c) of Section
6        131.12a exist, and
7            (iii) the Director may condition the approval of
8        the merger or other acquisition on the removal of the
9        basis of disapproval within a specified period of time;
10        (c) the financial condition of any acquiring party is
11    such as might jeopardize the financial stability of the
12    domestic company or jeopardize the interests of its
13    policyholders;
14        (d) the plans or proposals which the acquiring party
15    has to liquidate the domestic company, sell its assets or
16    consolidate or merge it with any person, or to make any
17    other material change in its business or corporate
18    structure or management, are unfair and unreasonable to
19    policyholders of such company and not in the public
20    interest; or
21        (e) the competence, experience and integrity of those
22    persons who would control the operation of the domestic
23    company are such that it would not be in the best interests
24    of policyholders of such company and of the insurance
25    buying public to permit the merger, consolidation or other
26    acquisition of control.

 

 

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1    (2) The Director may hold a public hearing on any merger,
2consolidation or other acquisition of control referred to in
3Section 131.4 if the Director determines that the statement
4filed as required by Section 131.5 does not demonstrate
5compliance with the standards referred to in subsection (1), of
6this Section, or if he determines that such acquisition of
7control is likely to be hazardous or prejudicial to the
8insurance buying public.
9    (3) The public hearing referred to in subsection (2) must
10be held within 60 days after the statement required by Section
11131.5 is filed, and at least 20 days' notice thereof must be
12given by the Director to the person filing the statement and to
13the domestic company. Not less than 7 days' notice of such
14hearing must be given by the person filing the statement to
15such other persons as may be designated by the Director and by
16the company to its shareholders. The Director must make a
17determination within 60 days after the conclusion of the
18hearing. At the hearing, the person filing the statement, the
19domestic company, any person to whom notice of the hearing was
20sent, and any other person whose interests may be affected
21thereby has the right to present evidence, examine and
22cross-examine witnesses, and offer oral and written arguments
23and in connection therewith is entitled to conduct discovery
24proceedings in the same manner as is presently allowed in the
25Circuit Courts of this State. All discovery proceedings must be
26concluded not later than 3 days prior to the commencement of

 

 

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1the public hearing.
2    (4) If the proposed acquisition of control will require the
3approval of more than one state insurance commissioner, the
4public hearing referred to in subsection (2) of this Section
5may be held on a consolidated basis upon request of the person
6filing the statement referred to in Section 131.5 of this Code.
7Such person shall file the statement referred to in Section
8131.5 of this Code with the National Association of Insurance
9Commissioners (NAIC) within 5 days after making the request for
10a public hearing. A commissioner may opt out of a consolidated
11hearing and shall provide notice to the applicant of the opt
12out within 10 days after the receipt of the statement referred
13to in Section 131.5 of this Code. A hearing conducted on a
14consolidated basis shall be public and shall be held within the
15United States before the commissioners of the states in which
16the companies are domiciled. Such commissioners shall hear and
17receive evidence. A commissioner may attend such hearing in
18person or by telecommunication.
19    (5) In connection with a change of control of a domestic
20company, any determination by the Director that the person
21acquiring control of the company shall be required to maintain
22or restore the capital of the company to the level required by
23the laws and regulations of this State shall be made not later
24than 60 days after the filing of the statement required by
25Section 131.5 of this Code.
26(Source: P.A. 98-609, eff. 1-1-14.)
 

 

 

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1    (215 ILCS 5/131.22)  (from Ch. 73, par. 743.22)
2    Sec. 131.22. Confidential treatment.
3    (a) Documents, materials, or other information in the
4possession or control of the Department that are obtained by or
5disclosed to the Director or any other person in the course of
6an examination or investigation made pursuant to this Article
7and all information reported pursuant to this Article, with the
8exception of information submitted pursuant to Section 131.5
9through Section 131.10 that is not personal financial
10information, shall be confidential by law and privileged, shall
11not be subject to the Illinois Freedom of Information Act,
12shall not be subject to subpoena, and shall not be subject to
13discovery or admissible in evidence in any private civil
14action. However, the Director is authorized to use the
15documents, materials, or other information in the furtherance
16of any regulatory or legal action brought as a part of the
17Director's official duties. The Director shall not otherwise
18make the documents, materials, or other information public
19without the prior written consent of the company to which it
20pertains unless the Director, after giving the company and its
21affiliates who would be affected thereby prior written notice
22and an opportunity to be heard, determines that the interest of
23policyholders, shareholders, or the public shall be served by
24the publication thereof, in which event the Director may
25publish all or any part in such manner as may be deemed

 

 

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1appropriate.
2    (b) Neither the Director nor any person who received
3documents, materials, or other information while acting under
4the authority of the Director or with whom such documents,
5materials, or other information are shared pursuant to this
6Article shall be permitted or required to testify in any
7private civil action concerning any confidential documents,
8materials, or information subject to subsection (a) of this
9Section.
10    (c) In order to assist in the performance of the Director's
11duties, the Director:
12        (1) may share documents, materials, or other
13    information, including the confidential and privileged
14    documents, materials, or information subject to subsection
15    (a) of this Section, with other state, federal, and
16    international regulatory agencies, with the NAIC and its
17    affiliates and subsidiaries, and with state, federal, and
18    international law enforcement authorities, including
19    members of any supervisory college allowed by this Article,
20    provided that the recipient agrees in writing to maintain
21    the confidentiality and privileged status of the document,
22    material, or other information, and has verified in writing
23    the legal authority to maintain confidentiality;
24        (1.5) notwithstanding paragraph (1) of this subsection
25    (c), may only share confidential and privileged documents,
26    material, or information reported pursuant to Section

 

 

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1    131.14b with commissioners of states having statutes or
2    regulations substantially similar to subsection (a) of
3    this Section and who have agreed in writing not to disclose
4    such information;
5        (2) may receive documents, materials, or information,
6    including otherwise confidential and privileged documents,
7    materials, or information from the NAIC and its affiliates
8    and subsidiaries and from regulatory and law enforcement
9    officials of other foreign or domestic jurisdictions, and
10    shall maintain as confidential or privileged any document,
11    material, or information received with notice or the
12    understanding that it is confidential or privileged under
13    the laws of the jurisdiction that is the source of the
14    document, material, or information; any such documents,
15    materials, or information, while in the Director's
16    possession, shall not be subject to the Illinois Freedom of
17    Information Act and shall not be subject to subpoena; and
18        (3) shall enter into written agreements with the NAIC
19    governing sharing and use of information provided pursuant
20    to this Article consistent with this subsection (c) that
21    shall (i) specify procedures and protocols regarding the
22    confidentiality and security of information shared with
23    the NAIC and its affiliates and subsidiaries pursuant to
24    this Article, including procedures and protocols for
25    sharing by the NAIC with other state, federal, or
26    international regulators; (ii) specify that ownership of

 

 

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1    information shared with the NAIC and its affiliates and
2    subsidiaries pursuant to this Article remains with the
3    Director and the NAIC's use of the information is subject
4    to the direction of the Director; (iii) require prompt
5    notice to be given to a company whose confidential
6    information in the possession of the NAIC pursuant to this
7    Article is subject to a request or subpoena to the NAIC for
8    disclosure or production; and (iv) require the NAIC and its
9    affiliates and subsidiaries to consent to intervention by a
10    company in any judicial or administrative action in which
11    the NAIC and its affiliates and subsidiaries may be
12    required to disclose confidential information about the
13    company shared with the NAIC and its affiliates and
14    subsidiaries pursuant to this Article.
15    (d) The sharing of documents, materials, or information by
16the Director pursuant to this Article shall not constitute a
17delegation of regulatory authority or rulemaking, and the
18Director is solely responsible for the administration,
19execution, and enforcement of the provisions of this Article.
20    (e) No waiver of any applicable privilege or claim of
21confidentiality in the documents, materials, or information
22shall occur as a result of disclosure to the Director under
23this Section or as a result of sharing as authorized in
24subsection (c) of this Section.
25    (f) Documents, materials, or other information in the
26possession or control of the NAIC pursuant to this Article

 

 

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1shall be confidential by law and privileged, shall not be
2subject to the Illinois Freedom of Information Act, shall not
3be subject to subpoena, and shall not be subject to discovery
4or admissible in evidence in any private civil action.
5(Source: P.A. 98-609, eff. 1-1-14.)
 
6    (215 ILCS 5/131.9a rep.)
7    Section 10. The Illinois Insurance Code is amended by
8repealing Section 131.9a.
 
9    Section 99. Effective date. This Act takes effect upon
10becoming law.