SB3865eng 102ND GENERAL ASSEMBLY

SB3865 Engrossed LRB102 24242 RJF 33473 b

AN ACT concerning State government.

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

Section 1. Legislative intent. It is the intent of the General Assembly in enacting this amendatory Act of the 102nd General Assembly to make only nonsubstantive changes that remove the dehumanizing term "alien" from all Illinois statutory provisions. No change made by this amendatory Act of the 102nd General Assembly shall be interpreted as to make any substantive change to existing law, including, but not limited to, eligibility for federal programs or benefits that are available to a person who meets the definition of "alien" under State or federal law.

Section 5. The Illinois Notary Public Act is amended by changing Section 2-102 as follows:

(5 ILCS 312/2-102) (from Ch. 102, par. 202-102)

(Text of Section before amendment by P.A. 102-160)

Sec. 2-102. Application. Every applicant for appointment and commission as a notary shall complete an application in a format prescribed by the Secretary of State to be filed with the Secretary of State, stating:

(a) the applicant's official name, as it appears on his or her current driver's license or state-issued identification card;

(b) the county in which the applicant resides or, if the applicant is a resident of a state bordering Illinois, the county in Illinois in which that person's principal place of work or principal place of business is located;

(c) the applicant's residence address, as it appears on his or her current driver's license or state-issued identification card;

(c-5) the applicant's business address if different than the applicant's residence address, if performing notarial acts constitutes any portion of the applicant's job duties;

(d) that the applicant has resided in the State of Illinois for 30 days preceding the application or that the applicant who is a resident of a state bordering Illinois has worked or maintained a business in Illinois for 30 days preceding the application;

(e) that the applicant is a citizen of the United States or a noncitizen an alien lawfully admitted for permanent residence in the United States;

(f) the applicant's date of birth;

(g) that the applicant is able to read and write the English language;

(h) that the applicant has never been the holder of a notary public appointment that was revoked or suspended during the past 10 years;

(i) that the applicant has not been convicted of a felony;

(i-5) that the applicant's signature authorizes the Office of the Secretary of State to conduct a verification to confirm the information provided in the application, including a criminal background check of the applicant, if necessary; and

(j) any other information the Secretary of State deems necessary.

(Source: P.A. 99-112, eff. 1-1-16; 100-809, eff. 1-1-19.)

(Text of Section after amendment by P.A. 102-160)

Sec. 2-102. Application.

(a) Application for notary public commission. Every applicant for appointment and commission as a notary shall complete an application in a format prescribed by the Secretary of State to be filed with the Secretary of State, stating:

(1) the applicant's official name, as it appears on his or her current driver's license or state-issued identification card;

(2) the county in which the applicant resides or, if the applicant is a resident of a state bordering Illinois, the county in Illinois in which that person's principal place of work or principal place of business is located;

(3) the applicant's residence address, as it appears on his or her current driver's license or state-issued identification card;

(4) the applicant's e-mail address;

(5) the applicant's business address if different than the applicant's residence address, if performing notarial acts constitutes any portion of the applicant's job duties;

(6) that the applicant has resided in the State of Illinois for 30 days preceding the application or that the applicant who is a resident of a state bordering Illinois has worked or maintained a business in Illinois for 30 days preceding the application;

(7) that the applicant is a citizen of the United States or lawfully admitted for permanent residence in the United States;

(8) the applicant's date of birth;

(9) that the applicant is proficient in the the English language;

(10) that the applicant has not had a prior application or commission revoked due to a finding or decision by the Secretary of State;

(11) that the applicant has not been convicted of a felony;

(12) that the applicant's signature authorizes the Office of the Secretary of State to conduct a verification to confirm the information provided in the application, including a criminal background check of the applicant, if necessary;

(13) that the applicant has provided satisfactory proof to the Secretary of State that the applicant has successfully completed any required course of study on notarization; and

(14) any other information the Secretary of State deems necessary.

(b) Any notary appointed under subsection (a) shall have the authority to conduct remote notarizations.

(c) Application for electronic notary public commission. An application for an electronic notary public commission must be filed with the Secretary of State in a manner prescribed by the Secretary of State. Every applicant for appointment and commission as an electronic notary public shall complete an application to be filed with the Secretary of State, stating:

(1) all information required to be included in an application for appointment as an electronic notary public, as provided under subsection (a);

(2) that the applicant is commissioned as a notary public under this Act;

(3) the applicant's email address;

(4) that the applicant has provided satisfactory proof to the Secretary of State that the applicant has successfully completed any required course of study on electronic notarization and passed a qualifying examination;

(5) a description of the technology or device that the applicant intends to use to create his or her electronic signature in performing electronic notarial acts;

(6) the electronic signature of the applicant; and

(7) any other information the Secretary of State deems necessary.

(d) Electronic notarial acts. Before an electronic notary public performs an electronic notarial act using audio-video communication, he or she must be granted an electronic notary public commission by the Secretary of State under this Section, and identify the technology that the electronic notary public intends to use, which must be approved by the Secretary of State.

(e) Approval of commission. Upon the applicant's fulfillment of the requirements for a notarial commission or an electronic notary public commission, the Secretary of State shall approve the commission and issue to the applicant a unique commission number.

(f) Rejection of application. The Secretary of State may reject an application for a notarial commission or an electronic notary public commission if the applicant fails to comply with any Section of this Act.

(Source: P.A. 102-160 (See Section 99 of P.A. 102-160 for effective date of P.A. 102-160).)

Section 10. The Illinois TRUST Act is amended by changing Section 10 as follows:

(5 ILCS 805/10)

Sec. 10. Definitions. In this Act:

"Citizenship or immigration status" means all matters regarding citizenship of the United States or any other country or the authority to reside in or otherwise be present in the United States.

"Civil immigration warrant" means any document that is not approved or ordered by a judge that can form the basis for an individual's arrest or detention for a civil immigration enforcement purpose. "Civil immigration warrant" includes Form I-200 "Warrant for the Arrest of Alien", Form I-203 "Order to Detain or Release Alien", Form I-205 "Warrant of Removal/Deportation", Form I-286 "Notice of Custody Determination", any predecessor or successor form, and all warrants, hits, or requests contained in the "Immigration Violator File" of the FBI's National Crime Information Center (NCIC) database. "Civil immigration warrant" does not include any criminal warrant.

"Contact information" means home address, work address, telephone number, electronic mail address, social media information, or any other personal identifying information that could be used as a means to contact an individual.

"Immigration agent" means an agent of federal Immigration and Customs Enforcement, federal Customs and Border Protection, or any similar or successor agency.

"Immigration detainer" means a request to a State or local law enforcement agency to provide notice of release or maintain custody of an individual based on an alleged violation of a civil immigration law, including detainers issued under Sections 1226 or 1357 of Title 8 of the United States Code or 287.7 or 236.1 of Title 8 of the Code of Federal Regulations. "Immigration detainer" includes Form I-247A "Immigration Detainer – Notice of Action" and any predecessor or successor form.

"Law enforcement agency" means an agency of the State or of a unit of local government charged with enforcement of State, county, or municipal laws or with managing custody of detained persons in the State.

"Law enforcement official" means any individual with the power to arrest or detain individuals, including law enforcement officers, corrections officer, and others employed or designated by a law enforcement agency. "Law enforcement official" includes any probation officer.

(Source: P.A. 102-234, eff. 8-2-21.)

Section 15. The Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois is amended by changing Section 605-800 as follows:

(20 ILCS 605/605-800) (was 20 ILCS 605/46.19a in part)

Sec. 605-800. Training grants for skills in critical demand.

(a) Grants to provide training in fields affected by critical demands for certain skills may be made as provided in this Section.

(b) The Director may make grants to eligible employers or to other eligible entities on behalf of employers as authorized in subsection (c) to provide training for employees in fields for which there are critical demands for certain skills. No participating employee may be an unauthorized noncitizen (a person that is not lawfully admitted for permanent residence) alien, as defined in 8 U.S.C. 1324a.

(c) The Director may accept applications for training grant funds and grant requests from: (i) entities sponsoring multi-company eligible employee training projects as defined in subsection (d), including business associations, strategic business partnerships, institutions of secondary or higher education, large manufacturers for supplier network companies, federal Job Training Partnership Act administrative entities or grant recipients, and labor organizations when those projects will address common training needs identified by participating companies; and (ii) individual employers that are undertaking eligible employee training projects as defined in subsection (d), including intermediaries and training agents.

(d) The Director may make grants to eligible applicants as defined in subsection (c) for employee training projects that include, but need not be limited to, one or more of the following:

(1) Training programs in response to new or changing technology being introduced in the workplace.

(2) Job-linked training that offers special skills for career advancement or that is preparatory for, and leads directly to, jobs with definite career potential and long-term job security.

(3) Training necessary to implement total quality management or improvement or both management and improvement systems within the workplace.

(4) Training related to new machinery or equipment.

(5) Training of employees of companies that are expanding into new markets or expanding exports from Illinois.

(6) Basic, remedial, or both basic and remedial training of employees as a prerequisite for other vocational or technical skills training or as a condition for sustained employment.

(7) Self-employment training of the unemployed and underemployed with comprehensive, competency-based instructional programs and services, entrepreneurial education and training initiatives for youth and adult learners in cooperation with the Illinois Institute for Entrepreneurial Education, training and education, conferences, workshops, and best practice information for local program operators of entrepreneurial education and self-employment training programs.

(8) Other training activities or projects, or both training activities and projects, related to the support, development, or evaluation of job training programs, activities, and delivery systems, including training needs assessment and design.

(e) Grants shall be made on the terms and conditions that the Department shall determine. No grant made under subsection (d), however, shall exceed 50% of the direct costs of all approved training programs provided by the employer or the employer's training agent or other entity as defined in subsection (c). Under this Section, allowable costs include, but are not limited to:

(1) Administrative costs of tracking, documenting, reporting, and processing training funds or project costs.

(2) Curriculum development.

(3) Wages and fringe benefits of employees.

(4) Training materials, including scrap product costs.

(5) Trainee travel expenses.

(6) Instructor costs, including wages, fringe benefits, tuition, and travel expenses.

(7) Rent, purchase, or lease of training equipment.

(8) Other usual and customary training costs.

(f) The Department may conduct on-site grant monitoring visits to verify trainee employment dates and wages and to ensure that the grantee's financial management system is structured to provide for accurate, current, and complete disclosure of the financial results of the grant program in accordance with all provisions, terms, and conditions contained in the grant contract. Each applicant must, on request by the Department, provide to the Department a notarized certification signed and dated by a duly authorized representative of the applicant, or that representative's authorized designee, certifying that all participating employees are employed at an Illinois facility and, for each participating employee, stating the employee's name and providing either (i) the employee's social security number or (ii) a statement that the applicant has adequate written verification that the employee is employed at an Illinois facility. The Department may audit the accuracy of submissions. Applicants sponsoring multi-company training grant programs shall obtain information meeting the requirement of this subsection from each participating company and provide it to the Department upon request.

(g) The Director may establish and collect a schedule of charges from subgrantee entities and other system users under federal job-training programs for participating in and utilizing the Department's automated job-training program information systems if the systems and the necessary participation and utilization are requirements of the federal job-training programs. All monies collected pursuant to this subsection shall be deposited into the Federal Workforce Training Fund and may be used, subject to appropriation by the General Assembly, only for the purpose of financing the maintenance and operation of the automated federal job-training information systems.

(Source: P.A. 99-933, eff. 1-27-17.)

Section 20. The Illinois Guaranteed Job Opportunity Act is amended by changing Section 25 as follows:

(20 ILCS 1510/25)

Sec. 25. Program eligibility.

(a) General Rule. An individual is eligible to participate in the job projects assisted under this Act if the individual:

(1) is at least 16 years of age;

(2) has resided in the eligible area for at least 30 days;

(3) has been unemployed for 35 days prior to the determination of employment for job projects assisted under this Act;

(4) is a citizen of the United States, is a national of the United States, is a lawfully admitted permanent resident noncitizen alien, is a lawfully admitted refugee or parolee, or is otherwise authorized by the United States Attorney General to work in the United States; and

(5) is a recipient of assistance under Article IV of the Illinois Public Aid Code.

(b) Limitations.

(1) (Blank).

(2) (Blank).

(3) No individual participating in the job opportunity project assisted under this Act may work in any compensated job other than the job assisted under this Act for more than 20 hours per week.

(4) Individuals participating under this Act shall seek employment during the period of employment assisted under this Act.

(5) Any individual eligible for retirement benefits under the Social Security Act, under any retirement system for Federal Government employees, under the railroad retirement system, under the military retirement system, under a State or local government pension plan or retirement system, or any private pension program is not eligible to receive a job under a job project assisted under this Act.

(Source: P.A. 93-46, eff. 7-1-03.)

Section 25. The Illinois Income Tax Act is amended by changing Section 1501 as follows:

(35 ILCS 5/1501) (from Ch. 120, par. 15-1501)

Sec. 1501. Definitions.

(a) In general. When used in this Act, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof:

(1) Business income. The term "business income" means all income that may be treated as apportionable business income under the Constitution of the United States. Business income is net of the deductions allocable thereto. Such term does not include compensation or the deductions allocable thereto. For each taxable year beginning on or after January 1, 2003, a taxpayer may elect to treat all income other than compensation as business income. This election shall be made in accordance with rules adopted by the Department and, once made, shall be irrevocable.

(1.5) Captive real estate investment trust:

(A) The term "captive real estate investment trust" means a corporation, trust, or association:

(i) that is considered a real estate investment trust for the taxable year under Section 856 of the Internal Revenue Code;

(ii) the certificates of beneficial interest or shares of which are not regularly traded on an established securities market; and

(iii) of which more than 50% of the voting power or value of the beneficial interest or shares, at any time during the last half of the taxable year, is owned or controlled, directly, indirectly, or constructively, by a single corporation.

(B) The term "captive real estate investment trust" does not include:

(i) a real estate investment trust of which more than 50% of the voting power or value of the beneficial interest or shares is owned or controlled, directly, indirectly, or constructively, by:

(a) a real estate investment trust, other than a captive real estate investment trust;

(b) a person who is exempt from taxation under Section 501 of the Internal Revenue Code, and who is not required to treat income received from the real estate investment trust as unrelated business taxable income under Section 512 of the Internal Revenue Code;

(c) a listed Australian property trust, if no more than 50% of the voting power or value of the beneficial interest or shares of that trust, at any time during the last half of the taxable year, is owned or controlled, directly or indirectly, by a single person;

(d) an entity organized as a trust, provided a listed Australian property trust described in subparagraph (c) owns or controls, directly or indirectly, or constructively, 75% or more of the voting power or value of the beneficial interests or shares of such entity; or

(e) an entity that is organized outside of the laws of the United States and that satisfies all of the following criteria:

(1) at least 75% of the entity's total asset value at the close of its taxable year is represented by real estate assets (as defined in Section 856(c)(5)(B) of the Internal Revenue Code, thereby including shares or certificates of beneficial interest in any real estate investment trust), cash and cash equivalents, and U.S. Government securities;

(2) the entity is not subject to tax on amounts that are distributed to its beneficial owners or is exempt from entity-level taxation;

(3) the entity distributes at least 85% of its taxable income (as computed in the jurisdiction in which it is organized) to the holders of its shares or certificates of beneficial interest on an annual basis;

(4) either (i) the shares or beneficial interests of the entity are regularly traded on an established securities market or (ii) not more than 10% of the voting power or value in the entity is held, directly, indirectly, or constructively, by a single entity or individual; and

(5) the entity is organized in a country that has entered into a tax treaty with the United States; or

(ii) during its first taxable year for which it elects to be treated as a real estate investment trust under Section 856(c)(1) of the Internal Revenue Code, a real estate investment trust the certificates of beneficial interest or shares of which are not regularly traded on an established securities market, but only if the certificates of beneficial interest or shares of the real estate investment trust are regularly traded on an established securities market prior to the earlier of the due date (including extensions) for filing its return under this Act for that first taxable year or the date it actually files that return.

(C) For the purposes of this subsection (1.5), the constructive ownership rules prescribed under Section 318(a) of the Internal Revenue Code, as modified by Section 856(d)(5) of the Internal Revenue Code, apply in determining the ownership of stock, assets, or net profits of any person.

(D) For the purposes of this item (1.5), for taxable years ending on or after August 16, 2007, the voting power or value of the beneficial interest or shares of a real estate investment trust does not include any voting power or value of beneficial interest or shares in a real estate investment trust held directly or indirectly in a segregated asset account by a life insurance company (as described in Section 817 of the Internal Revenue Code) to the extent such voting power or value is for the benefit of entities or persons who are either immune from taxation or exempt from taxation under subtitle A of the Internal Revenue Code.

(2) Commercial domicile. The term "commercial domicile" means the principal place from which the trade or business of the taxpayer is directed or managed.

(3) Compensation. The term "compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services.

(4) Corporation. The term "corporation" includes associations, joint-stock companies, insurance companies and cooperatives. Any entity, including a limited liability company formed under the Illinois Limited Liability Company Act, shall be treated as a corporation if it is so classified for federal income tax purposes.

(5) Department. The term "Department" means the Department of Revenue of this State.

(6) Director. The term "Director" means the Director of Revenue of this State.

(7) Fiduciary. The term "fiduciary" means a guardian, trustee, executor, administrator, receiver, or any person acting in any fiduciary capacity for any person.

(8) Financial organization.

(A) The term "financial organization" means any bank, bank holding company, trust company, savings bank, industrial bank, land bank, safe deposit company, private banker, savings and loan association, building and loan association, credit union, currency exchange, cooperative bank, small loan company, sales finance company, investment company, or any person which is owned by a bank or bank holding company. For the purpose of this Section a "person" will include only those persons which a bank holding company may acquire and hold an interest in, directly or indirectly, under the provisions of the Bank Holding Company Act of 1956 (12 U.S.C. 1841, et seq.), except where interests in any person must be disposed of within certain required time limits under the Bank Holding Company Act of 1956.

(B) For purposes of subparagraph (A) of this paragraph, the term "bank" includes (i) any entity that is regulated by the Comptroller of the Currency under the National Bank Act, or by the Federal Reserve Board, or by the Federal Deposit Insurance Corporation and (ii) any federally or State chartered bank operating as a credit card bank.

(C) For purposes of subparagraph (A) of this paragraph, the term "sales finance company" has the meaning provided in the following item (i) or (ii):

(i) A person primarily engaged in one or more of the following businesses: the business of purchasing customer receivables, the business of making loans upon the security of customer receivables, the business of making loans for the express purpose of funding purchases of tangible personal property or services by the borrower, or the business of finance leasing. For purposes of this item (i), "customer receivable" means:

(a) a retail installment contract or retail charge agreement within the meaning of the Sales Finance Agency Act, the Retail Installment Sales Act, or the Motor Vehicle Retail Installment Sales Act;

(b) an installment, charge, credit, or similar contract or agreement arising from the sale of tangible personal property or services in a transaction involving a deferred payment price payable in one or more installments subsequent to the sale; or

(c) the outstanding balance of a contract or agreement described in provisions (a) or (b) of this item (i).

A customer receivable need not provide for payment of interest on deferred payments. A sales finance company may purchase a customer receivable from, or make a loan secured by a customer receivable to, the seller in the original transaction or to a person who purchased the customer receivable directly or indirectly from that seller.

(ii) A corporation meeting each of the following criteria:

(a) the corporation must be a member of an "affiliated group" within the meaning of Section 1504(a) of the Internal Revenue Code, determined without regard to Section 1504(b) of the Internal Revenue Code;

(b) more than 50% of the gross income of the corporation for the taxable year must be interest income derived from qualifying loans. A "qualifying loan" is a loan made to a member of the corporation's affiliated group that originates customer receivables (within the meaning of item (i)) or to whom customer receivables originated by a member of the affiliated group have been transferred, to the extent the average outstanding balance of loans from that corporation to members of its affiliated group during the taxable year do not exceed the limitation amount for that corporation. The "limitation amount" for a corporation is the average outstanding balances during the taxable year of customer receivables (within the meaning of item (i)) originated by all members of the affiliated group. If the average outstanding balances of the loans made by a corporation to members of its affiliated group exceed the limitation amount, the interest income of that corporation from qualifying loans shall be equal to its interest income from loans to members of its affiliated groups times a fraction equal to the limitation amount divided by the average outstanding balances of the loans made by that corporation to members of its affiliated group;

(c) the total of all shareholder's equity (including, without limitation, paid-in capital on common and preferred stock and retained earnings) of the corporation plus the total of all of its loans, advances, and other obligations payable or owed to members of its affiliated group may not exceed 20% of the total assets of the corporation at any time during the tax year; and

(d) more than 50% of all interest-bearing obligations of the affiliated group payable to persons outside the group determined in accordance with generally accepted accounting principles must be obligations of the corporation.

This amendatory Act of the 91st General Assembly is declaratory of existing law.

(D) Subparagraphs (B) and (C) of this paragraph are declaratory of existing law and apply retroactively, for all tax years beginning on or before December 31, 1996, to all original returns, to all amended returns filed no later than 30 days after the effective date of this amendatory Act of 1996, and to all notices issued on or before the effective date of this amendatory Act of 1996 under subsection (a) of Section 903, subsection (a) of Section 904, subsection (e) of Section 909, or Section 912. A taxpayer that is a "financial organization" that engages in any transaction with an affiliate shall be a "financial organization" for all purposes of this Act.

(E) For all tax years beginning on or before December 31, 1996, a taxpayer that falls within the definition of a "financial organization" under subparagraphs (B) or (C) of this paragraph, but who does not fall within the definition of a "financial organization" under the Proposed Regulations issued by the Department of Revenue on July 19, 1996, may irrevocably elect to apply the Proposed Regulations for all of those years as though the Proposed Regulations had been lawfully promulgated, adopted, and in effect for all of those years. For purposes of applying subparagraphs (B) or (C) of this paragraph to all of those years, the election allowed by this subparagraph applies only to the taxpayer making the election and to those members of the taxpayer's unitary business group who are ordinarily required to apportion business income under the same subsection of Section 304 of this Act as the taxpayer making the election. No election allowed by this subparagraph shall be made under a claim filed under subsection (d) of Section 909 more than 30 days after the effective date of this amendatory Act of 1996.

(F) Finance Leases. For purposes of this subsection, a finance lease shall be treated as a loan or other extension of credit, rather than as a lease, regardless of how the transaction is characterized for any other purpose, including the purposes of any regulatory agency to which the lessor is subject. A finance lease is any transaction in the form of a lease in which the lessee is treated as the owner of the leased asset entitled to any deduction for depreciation allowed under Section 167 of the Internal Revenue Code.

(9) Fiscal year. The term "fiscal year" means an accounting period of 12 months ending on the last day of any month other than December.

(9.5) Fixed place of business. The term "fixed place of business" has the same meaning as that term is given in Section 864 of the Internal Revenue Code and the related Treasury regulations.

(10) Includes and including. The terms "includes" and "including" when used in a definition contained in this Act shall not be deemed to exclude other things otherwise within the meaning of the term defined.

(11) Internal Revenue Code. The term "Internal Revenue Code" means the United States Internal Revenue Code of 1954 or any successor law or laws relating to federal income taxes in effect for the taxable year.

(11.5) Investment partnership.

(A) The term "investment partnership" means any entity that is treated as a partnership for federal income tax purposes that meets the following requirements:

(i) no less than 90% of the partnership's cost of its total assets consists of qualifying investment securities, deposits at banks or other financial institutions, and office space and equipment reasonably necessary to carry on its activities as an investment partnership;

(ii) no less than 90% of its gross income consists of interest, dividends, and gains from the sale or exchange of qualifying investment securities; and

(iii) the partnership is not a dealer in qualifying investment securities.

(B) For purposes of this paragraph (11.5), the term "qualifying investment securities" includes all of the following:

(i) common stock, including preferred or debt securities convertible into common stock, and preferred stock;

(ii) bonds, debentures, and other debt securities;

(iii) foreign and domestic currency deposits secured by federal, state, or local governmental agencies;

(iv) mortgage or asset-backed securities secured by federal, state, or local governmental agencies;

(v) repurchase agreements and loan participations;

(vi) foreign currency exchange contracts and forward and futures contracts on foreign currencies;

(vii) stock and bond index securities and futures contracts and other similar financial securities and futures contracts on those securities;

(viii) options for the purchase or sale of any of the securities, currencies, contracts, or financial instruments described in items (i) to (vii), inclusive;

(ix) regulated futures contracts;

(x) commodities (not described in Section 1221(a)(1) of the Internal Revenue Code) or futures, forwards, and options with respect to such commodities, provided, however, that any item of a physical commodity to which title is actually acquired in the partnership's capacity as a dealer in such commodity shall not be a qualifying investment security;

(xi) derivatives; and

(xii) a partnership interest in another partnership that is an investment partnership.

(12) Mathematical error. The term "mathematical error" includes the following types of errors, omissions, or defects in a return filed by a taxpayer which prevents acceptance of the return as filed for processing:

(A) arithmetic errors or incorrect computations on the return or supporting schedules;

(B) entries on the wrong lines;

(C) omission of required supporting forms or schedules or the omission of the information in whole or in part called for thereon; and

(D) an attempt to claim, exclude, deduct, or improperly report, in a manner directly contrary to the provisions of the Act and regulations thereunder any item of income, exemption, deduction, or credit.

(13) Nonbusiness income. The term "nonbusiness income" means all income other than business income or compensation.

(14) Nonresident. The term "nonresident" means a person who is not a resident.

(15) Paid, incurred and accrued. The terms "paid", "incurred" and "accrued" shall be construed according to the method of accounting upon the basis of which the person's base income is computed under this Act.

(16) Partnership and partner. The term "partnership" includes a syndicate, group, pool, joint venture or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this Act, a trust or estate or a corporation; and the term "partner" includes a member in such syndicate, group, pool, joint venture or organization.

The term "partnership" includes any entity, including a limited liability company formed under the Illinois Limited Liability Company Act, classified as a partnership for federal income tax purposes.

The term "partnership" does not include a syndicate, group, pool, joint venture, or other unincorporated organization established for the sole purpose of playing the Illinois State Lottery.

(17) Part-year resident. The term "part-year resident" means an individual who became a resident during the taxable year or ceased to be a resident during the taxable year. Under Section 1501(a)(20)(A)(i) residence commences with presence in this State for other than a temporary or transitory purpose and ceases with absence from this State for other than a temporary or transitory purpose. Under Section 1501(a)(20)(A)(ii) residence commences with the establishment of domicile in this State and ceases with the establishment of domicile in another State.

(18) Person. The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, firm, company, corporation, limited liability company, or fiduciary. For purposes of Section 1301 and 1302 of this Act, a "person" means (i) an individual, (ii) a corporation, (iii) an officer, agent, or employee of a corporation, (iv) a member, agent or employee of a partnership, or (v) a member, manager, employee, officer, director, or agent of a limited liability company who in such capacity commits an offense specified in Section 1301 and 1302.

(18A) Records. The term "records" includes all data maintained by the taxpayer, whether on paper, microfilm, microfiche, or any type of machine-sensible data compilation.

(19) Regulations. The term "regulations" includes rules promulgated and forms prescribed by the Department.

(20) Resident. The term "resident" means:

(A) an individual (i) who is in this State for other than a temporary or transitory purpose during the taxable year; or (ii) who is domiciled in this State but is absent from the State for a temporary or transitory purpose during the taxable year;

(B) The estate of a decedent who at his or her death was domiciled in this State;

(C) A trust created by a will of a decedent who at his death was domiciled in this State; and

(D) An irrevocable trust, the grantor of which was domiciled in this State at the time such trust became irrevocable. For purpose of this subparagraph, a trust shall be considered irrevocable to the extent that the grantor is not treated as the owner thereof under Sections 671 through 678 of the Internal Revenue Code.

(21) Sales. The term "sales" means all gross receipts of the taxpayer not allocated under Sections 301, 302 and 303.

(22) State. The term "state" when applied to a jurisdiction other than this State means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any Territory or Possession of the United States, and any foreign country, or any political subdivision of any of the foregoing. For purposes of the foreign tax credit under Section 601, the term "state" means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States, or any political subdivision of any of the foregoing, effective for tax years ending on or after December 31, 1989.

(23) Taxable year. The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the base income is computed under this Act. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of this Act, the period for which such return is made.

(24) Taxpayer. The term "taxpayer" means any person subject to the tax imposed by this Act.

(25) International banking facility. The term international banking facility shall have the same meaning as is set forth in the Illinois Banking Act or as is set forth in the laws of the United States or regulations of the Board of Governors of the Federal Reserve System.

(26) Income Tax Return Preparer.

(A) The term "income tax return preparer" means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by this Act or any claim for refund of tax imposed by this Act. The preparation of a substantial portion of a return or claim for refund shall be treated as the preparation of that return or claim for refund.

(B) A person is not an income tax return preparer if all he or she does is

(i) furnish typing, reproducing, or other mechanical assistance;

(ii) prepare returns or claims for refunds for the employer by whom he or she is regularly and continuously employed;

(iii) prepare as a fiduciary returns or claims for refunds for any person; or

(iv) prepare claims for refunds for a taxpayer in response to any notice of deficiency issued to that taxpayer or in response to any waiver of restriction after the commencement of an audit of that taxpayer or of another taxpayer if a determination in the audit of the other taxpayer directly or indirectly affects the tax liability of the taxpayer whose claims he or she is preparing.

(27) Unitary business group.

(A) The term "unitary business group" means a group of persons related through common ownership whose business activities are integrated with, dependent upon and contribute to each other. The group will not include those members whose business activity outside the United States is 80% or more of any such member's total business activity; for purposes of this paragraph and clause (a)(3)(B)(ii) of Section 304, business activity within the United States shall be measured by means of the factors ordinarily applicable under subsections (a), (b), (c), (d), or (h) of Section 304 except that, in the case of members ordinarily required to apportion business income by means of the 3 factor formula of property, payroll and sales specified in subsection (a) of Section 304, including the formula as weighted in subsection (h) of Section 304, such members shall not use the sales factor in the computation and the results of the property and payroll factor computations of subsection (a) of Section 304 shall be divided by 2 (by one if either the property or payroll factor has a denominator of zero). The computation required by the preceding sentence shall, in each case, involve the division of the member's property, payroll, or revenue miles in the United States, insurance premiums on property or risk in the United States, or financial organization business income from sources within the United States, as the case may be, by the respective worldwide figures for such items. Common ownership in the case of corporations is the direct or indirect control or ownership of more than 50% of the outstanding voting stock of the persons carrying on unitary business activity. Unitary business activity can ordinarily be illustrated where the activities of the members are: (1) in the same general line (such as manufacturing, wholesaling, retailing of tangible personal property, insurance, transportation or finance); or (2) are steps in a vertically structured enterprise or process (such as the steps involved in the production of natural resources, which might include exploration, mining, refining, and marketing); and, in either instance, the members are functionally integrated through the exercise of strong centralized management (where, for example, authority over such matters as purchasing, financing, tax compliance, product line, personnel, marketing and capital investment is not left to each member).

(B) In no event, for taxable years ending prior to December 31, 2017, shall any unitary business group include members which are ordinarily required to apportion business income under different subsections of Section 304 except that for tax years ending on or after December 31, 1987 this prohibition shall not apply to a holding company that would otherwise be a member of a unitary business group with taxpayers that apportion business income under any of subsections (b), (c), (c-1), or (d) of Section 304. If a unitary business group would, but for the preceding sentence, include members that are ordinarily required to apportion business income under different subsections of Section 304, then for each subsection of Section 304 for which there are two or more members, there shall be a separate unitary business group composed of such members. For purposes of the preceding two sentences, a member is "ordinarily required to apportion business income" under a particular subsection of Section 304 if it would be required to use the apportionment method prescribed by such subsection except for the fact that it derives business income solely from Illinois. As used in this paragraph, for taxable years ending before December 31, 2017, the phrase "United States" means only the 50 states and the District of Columbia, but does not include any territory or possession of the United States or any area over which the United States has asserted jurisdiction or claimed exclusive rights with respect to the exploration for or exploitation of natural resources. For taxable years ending on or after December 31, 2017, the phrase "United States", as used in this paragraph, means only the 50 states, the District of Columbia, and any area over which the United States has asserted jurisdiction or claimed exclusive rights with respect to the exploration for or exploitation of natural resources, but does not include any territory or possession of the United States.

(C) Holding companies.

(i) For purposes of this subparagraph, a "holding company" is a corporation (other than a corporation that is a financial organization under paragraph (8) of this subsection (a) of Section 1501 because it is a bank holding company under the provisions of the Bank Holding Company Act of 1956 (12 U.S.C. 1841, et seq.) or because it is owned by a bank or a bank holding company) that owns a controlling interest in one or more other taxpayers ("controlled taxpayers"); that, during the period that includes the taxable year and the 2 immediately preceding taxable years or, if the corporation was formed during the current or immediately preceding taxable year, the taxable years in which the corporation has been in existence, derived substantially all its gross income from dividends, interest, rents, royalties, fees or other charges received from controlled taxpayers for the provision of services, and gains on the sale or other disposition of interests in controlled taxpayers or in property leased or licensed to controlled taxpayers or used by the taxpayer in providing services to controlled taxpayers; and that incurs no substantial expenses other than expenses (including interest and other costs of borrowing) incurred in connection with the acquisition and holding of interests in controlled taxpayers and in the provision of services to controlled taxpayers or in the leasing or licensing of property to controlled taxpayers.

(ii) The income of a holding company which is a member of more than one unitary business group shall be included in each unitary business group of which it is a member on a pro rata basis, by including in each unitary business group that portion of the base income of the holding company that bears the same proportion to the total base income of the holding company as the gross receipts of the unitary business group bears to the combined gross receipts of all unitary business groups (in both cases without regard to the holding company) or on any other reasonable basis, consistently applied.

(iii) A holding company shall apportion its business income under the subsection of Section 304 used by the other members of its unitary business group. The apportionment factors of a holding company which would be a member of more than one unitary business group shall be included with the apportionment factors of each unitary business group of which it is a member on a pro rata basis using the same method used in clause (ii).

(iv) The provisions of this subparagraph (C) are intended to clarify existing law.

(D) If including the base income and factors of a holding company in more than one unitary business group under subparagraph (C) does not fairly reflect the degree of integration between the holding company and one or more of the unitary business groups, the dependence of the holding company and one or more of the unitary business groups upon each other, or the contributions between the holding company and one or more of the unitary business groups, the holding company may petition the Director, under the procedures provided under Section 304(f), for permission to include all base income and factors of the holding company only with members of a unitary business group apportioning their business income under one subsection of subsections (a), (b), (c), or (d) of Section 304. If the petition is granted, the holding company shall be included in a unitary business group only with persons apportioning their business income under the selected subsection of Section 304 until the Director grants a petition of the holding company either to be included in more than one unitary business group under subparagraph (C) or to include its base income and factors only with members of a unitary business group apportioning their business income under a different subsection of Section 304.

(E) If the unitary business group members' accounting periods differ, the common parent's accounting period or, if there is no common parent, the accounting period of the member that is expected to have, on a recurring basis, the greatest Illinois income tax liability must be used to determine whether to use the apportionment method provided in subsection (a) or subsection (h) of Section 304. The prohibition against membership in a unitary business group for taxpayers ordinarily required to apportion income under different subsections of Section 304 does not apply to taxpayers required to apportion income under subsection (a) and subsection (h) of Section 304. The provisions of this amendatory Act of 1998 apply to tax years ending on or after December 31, 1998.

(28) Subchapter S corporation. The term "Subchapter S corporation" means a corporation for which there is in effect an election under Section 1362 of the Internal Revenue Code, or for which there is a federal election to opt out of the provisions of the Subchapter S Revision Act of 1982 and have applied instead the prior federal Subchapter S rules as in effect on July 1, 1982.

(30) Foreign person. The term "foreign person" means any person who is a nonresident noncitizen alien individual and any nonindividual entity, regardless of where created or organized, whose business activity outside the United States is 80% or more of the entity's total business activity.

(b) Other definitions.

(1) Words denoting number, gender, and so forth, when used in this Act, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof:

(A) Words importing the singular include and apply to several persons, parties or things;

(B) Words importing the plural include the singular; and

(C) Words importing the masculine gender include the feminine as well.

(2) "Company" or "association" as including successors and assigns. The word "company" or "association", when used in reference to a corporation, shall be deemed to embrace the words "successors and assigns of such company or association", and in like manner as if these last-named words, or words of similar import, were expressed.

(3) Other terms. Any term used in any Section of this Act with respect to the application of, or in connection with, the provisions of any other Section of this Act shall have the same meaning as in such other Section.

(Source: P.A. 99-213, eff. 7-31-15; 100-22, eff. 7-6-17.)

Section 30. The Interstate Insurance Receivership Compact Act is amended by changing Section 5 as follows:

(45 ILCS 160/5)

Sec. 5. Ratification of Compact. The State of Illinois ratifies and approves the Interstate Insurance Receivership Compact and enters into that Compact with all other jurisdictions legally joining in it in substantially the following form:

ARTICLE I. PURPOSES

The purposes of this Compact are, through means of joint and cooperative action among the compacting states:

(1) to promote, develop and facilitate orderly, efficient, cost-effective, and uniform insurer receivership laws and operations;

(2) to coordinate interaction between insurer receivership and Guaranty Association operations;

(3) to create the Interstate Insurance Receivership Commission; and

(4) to perform these and such other related functions as may be consistent with the state regulation of the business of insurance pursuant to the McCarran-Ferguson Act.

ARTICLE II. DEFINITIONS

For the purposes of this Compact:

(1) "By-laws" means those by-laws prescribed by the Commission for its governance or for directing or controlling the Commission's actions or conduct.

(2) "Compacting state" means any state which has enacted enabling legislation for this Compact.

(3) "Commission" means the Interstate Insurance Receivership Commission established by this Compact.

(4) "Commissioner" means the chief insurance regulatory official of a state.

(5) "Deputy Receiver" means a person appointed or retained by a Receiver and who is the Receiver's duly authorized representative for administering one or more estates.

(6) "Domiciliary state" means the state in which an insurer is incorporated or organized; or, in the case of a non-domestic an alien insurer, its state of entry; or in the case of an unauthorized insurer not incorporated, organized, or entered in any state, a state where the insurer is engaged in or doing business.

(7) "Estate" means the assets and liabilities of any insurer in receivership.

(8) "Guaranty Association" means an insurance guaranty fund or association or any similar entity now or hereafter created by statute in a compacting state, other than a receivership, to pay or assume, in whole or in part, the contractual claim obligations of insolvent insurers.

(9) "Insurer" means any person or entity that has done, purports to do, is doing, or is licensed to do any insurance or reinsurance business, or is or has been subject to the authority of, or to liquidation, rehabilitation, supervision, conservation, or ancillary receivership by, any Commissioner.

(10) "Member" means the Commissioner of a compacting state or his or her designee, who shall be a person officially connected with the Commissioner and who is wholly or principally employed by the Commissioner.

(11) "Non-compacting state" means a state which has not enacted enabling legislation for this Compact.

(12) "Operating procedures" means procedures promulgated by the Commission implementing a rule, an existing law in a compacting state, or a provision of this Compact.

(13) "Publication" means the act of publishing in the official state publication in a compacting state or in such other publication as may be established by the Commission.

(14) "Receiver" means receiver, liquidator, rehabilitator, conservator, or ancillary receiver as the context requires.

(15) "Receivership" means any liquidation, rehabilitation, conservation, or ancillary receivership proceeding as the context requires.

(16) "Rules" means acts of the Commission, duly promulgated pursuant to Article VII of this Compact, substantially affecting interested parties in addition to the Commission, which shall have the force and effect of law in the compacting states.

(17) "State" means any state, district or territory of the United States of America.

ARTICLE III. ESTABLISHMENT OF THE COMMISSION AND VENUE

(1) The compacting states hereby create and establish an entity known as the Interstate Insurance Receivership Commission.

(2) The Commission is a body corporate of each compacting state.

(3) The Commission is a not-for-profit entity, separate and distinct from the compacting states.

(4) The Commission is solely responsible for its liabilities except as otherwise provided in this Compact.

(5) Except as otherwise specifically provided in state or federal law in the jurisdiction where the Commission's principal office is located or where the Commission is acting as Receiver, venue is proper and judicial proceedings by or against the Commission shall be brought in a court of competent jurisdiction where the Commission's principal office is located.

ARTICLE IV. POWERS OF THE COMMISSION

The Commission shall have all of the following powers:

(1) To promulgate rules which shall have the force and effect of statutory law and shall be binding in the compacting states to the extent and in the manner provided in this Compact.

(2) To promulgate operating procedures which shall be binding in the compacting states to the extent and in the manner provided in this Compact.

(3) To oversee, supervise, and coordinate the activities of receivers in compacting states.

(4) To act as Receiver of insurers organized under the laws of, engaged in, or doing the business of insurance in a compacting state upon the request of the Commissioner of such state or when grounds for receivership by the Commission exist under Article IX of this Compact.

(5) To act as Deputy Receiver of insurers organized under the laws of, engaged in, or doing the business of insurance in a non-compacting state in accordance with Article IX of this Compact.

(6) To act as ancillary Receiver in a compacting state of an insurer domiciled in a non-compacting state.

(7) To monitor the activities and functions of Guaranty Associations in the compacting states.

(8) To delegate its operating authority or functions; provided, that its rulemaking authority under Article VII of this Compact shall not be delegated.

(9) To bring or prosecute legal proceedings or actions in its name as the Commission, or in the name of the Commission acting as Receiver.

(10) To bring or prosecute legal proceedings or actions as Receiver on behalf of an estate or its policyholders and creditors; provided, that any Guaranty Association's standing to sue or be sued under applicable law shall not be affected.

(11) To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence.

(12) To establish and maintain offices.

(13) To purchase and maintain insurance and bonds.

(14) To borrow, accept, or contract for services of personnel including, but not limited to, members and their staff.

(15) To elect or appoint such officers, attorneys, employees, or agents, and to fix their compensation, define their duties, and determine their qualifications; and to establish the Commission's personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation, and qualifications of personnel.

(16) To accept any and all donations and grants of money, equipment, supplies, materials, and services, and to receive, utilize, and dispose of the same.

(17) To lease, purchase, accept gifts or donations of, or otherwise to own, hold, improve or use, any property, real, personal, or mixed.

(18) To sell, convey, mortgage, pledge, lease, exchange, abandon, or otherwise dispose of any property, real, personal, or mixed.

(19) To enforce compliance with Commission rules, operating procedures, and by-laws.

(20) To provide for dispute resolution among compacting states and Receivers.

(21) To represent and advise compacting states on issues relating to insurers domiciled or doing business in non-compacting jurisdictions, consistent with the purposes of this compact.

(22) To provide advice and training to receivership personnel of compacting states, and to be a resource for compacting states by maintaining a reference library of relevant materials.

(23) To establish a budget and make expenditures.

(24) To borrow money.

(25) To appoint committees including, but not limited to, an industry advisory committee and an executive committee of members.

(26) To provide and receive information relating to receiverships and Guaranty Associations and to cooperate with law enforcement agencies.

(27) To adopt and use a corporate seal.

(28) To perform such other functions as may be necessary or appropriate to achieve the purposes of this Compact as may be consistent with the state regulation of the business of insurance pursuant to the McCarran-Ferguson Act.

ARTICLE V. ORGANIZATION OF THE COMMISSION

Section A. Membership, voting, and by-laws.

(1) A compacting state shall have and be limited to one member. A member shall be qualified to serve in such capacity under or pursuant to the applicable law of the compacting state. A compacting state retains the discretionary right to determine the due election or appointment and qualification of its own Commissioner, and to fill all vacancies of its member.

(2) A member shall be entitled to one vote.

(3) The Commission shall, by a majority of the members, prescribe by-laws to govern its conduct as may be necessary or appropriate to carry out the purposes of the Compact, including, but not limited to:

(a) establishing the fiscal year of the Commission;

(b) providing reasonable standards and procedures:

(i) for the establishment of committees, and (ii) governing any general or specific delegation of any authority or function of the Commission;

(c) providing reasonable procedures for calling and conducting meetings of the Commission and for ensuring reasonable notice of each such meeting;

(d) establishing the titles and responsibilities of the officers of the Commission;

(e) providing reasonable standards and procedures for the establishment of the personnel policies and programs of the Commission. Notwithstanding any civil service or other similar laws of any compacting state, the by-laws shall exclusively govern the personnel policies and programs of the Commission; and

(f) providing a mechanism for winding up the operations of the Commission and the equitable return of any surplus funds that may exist after the dissolution of the Compact after the payment or reserving of all of its debts and obligations, or both.

Section B. Officers and personnel.

(1) The Commission shall, by a majority of the members, elect annually from among its members a chairperson and a vice chairperson, each of whom shall have such authorities and duties as may be specified in the by-laws. The chairperson or, in his or her absence or disability, a member designated in accordance with the by-laws, shall preside at all meetings of the Commission. The officers so elected shall serve without compensation or remuneration from the Commission; provided, that subject to the availability of budgeted funds, the officers shall be reimbursed for any actual and necessary costs and expenses incurred by them in the performance of their duties and responsibilities as officers of the Commission.

(2) The Commission may, by a majority of the members, appoint or retain an executive director for such period, upon such terms and conditions and for such compensation as the Commission may deem appropriate. The executive director shall serve as secretary to the Commission, but shall not be a member of the Commission. The executive director shall hire and supervise such other staff as may be authorized by the Commission.

Section C. Corporate records of the Commission. The Commission shall maintain its corporate books and records in accordance with the by-laws.

Section D. Qualified immunity, defense, and indemnification.

(1) The members, officers, executive director, and employees of the Commission shall be immune from suit and liability, either personally or in their official capacity, for any claim for damage to or loss of property or personal injury or other civil liability caused or arising out of or relating to any actual or alleged act, error, or omission that occurred, or that such person had a reasonable basis for believing occurred within the scope of Commission employment, duties, or responsibilities; provided, that nothing in this paragraph shall be construed to protect any such person from suit or liability, or both, for any damage, loss, injury, or liability caused by the intentional or willful and wanton misconduct of any such person, or to protect the Commission acting as Receiver under Article IX of this Compact.

(2) The Commission shall defend any Commissioner of a compacting state, his or her representatives or employees, or the Commission's representatives or employees in any civil action seeking to impose liability against such person arising out of or relating to any actual or alleged act, error, or omission that occurred within the scope of Commission employment, duties, or responsibilities or that such person had a reasonable basis for believing occurred within the scope of Commission employment, duties, or responsibilities; provided, that the actual or alleged act, error, or omission did not result from gross negligence or intentional wrongdoing on the part of such person.

(3) The Commission shall indemnify and hold the Commissioner of a compacting state, his or her representatives or employees, or the Commission's representatives or employees harmless in the amount of any settlement or judgment obtained against such person arising out of or relating to any actual or alleged act, error, or omission that occurred within the scope of Commission employment, duties, or responsibilities or that such person had a reasonable basis for believing occurred within the scope of Commission employment, duties, or responsibilities; provided, that the actual or alleged act, error, or omission did not result from gross negligence or intentional wrongdoing on the part of such person.

(4) The costs and expenses of defense and indemnification of the Commission acting as Receiver of an estate shall be paid as administrative expenses from the assets of that estate unless such costs and expenses are covered by insurance maintained by the Commission.

ARTICLE VI. MEETINGS AND ACTS OF THE COMMISSION

(1) The Commission shall meet and take such actions as are consistent with the provisions of this Compact.

(2) Except as otherwise provided in this Compact and unless a greater percentage is required by the by-laws, in order to constitute an act of the Commission, such act shall have been taken at a meeting of the Commission and shall have received an affirmative vote of a majority of the members.

(3) Each member of the Commission shall have the right and power to cast a vote to which that compacting state is entitled and to participate in the business and affairs of the Commission. A member shall vote in person and shall not delegate his or her vote to another member. The by-laws may provide for members' participation in meetings by telephone or other means of telecommunication.

(4) The Commission shall meet at least once during each calendar year. The chairperson of the Commission may call additional meetings at any time and, upon the request of a majority of the members, shall call additional meetings.

(5) The Commission's rules shall establish conditions and procedures under which the Commission shall make its information and official records available to the public for inspection or copying. The Commission may exempt from disclosure any information or official records to the extent disclosure would adversely affect personal privacy rights or proprietary interests. In promulgating such rules, the Commission may consider any special circumstances pertaining to insurer insolvencies, but shall be guided by the principles embodied in state and federal freedom of information laws. The Commission may promulgate additional rules under which it may make available to law enforcement agencies records and information otherwise exempt from disclosure and may enter into agreements with law enforcement agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions.

(6) Public notice shall be given of all meetings, and all meetings shall be open to the public, except as set forth in the rules or as otherwise provided in this Compact. The Commission shall promulgate rules consistent with the principles contained in the federal Government in Sunshine Act, 5 U.S.C. Section 552b, as may be amended. The Commission and any of its committees may close a meeting to the public where it determines by two-thirds vote that an open meeting would be likely to:

(a) relate solely to the Commission's internal personnel practices and procedures;

(b) disclose matters specifically exempted from disclosure by statute;

(c) disclose trade secrets or commercial or financial information which is privileged or confidential;

(d) involve accusing any person of a crime or formally censuring any person;

(e) disclose information of a personal nature where disclosure would constitute a clearly unwarranted invasion of personal privacy;

(f) disclose investigatory records compiled for law enforcement purposes;

(g) disclose information contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of the Commission with respect to a regulated entity for the purpose of regulation or supervision of such entity;

(h) disclose information, the premature disclosure of which would significantly endanger the stability of a regulated entity;

(i) specifically relate to the Commission's issuance of a subpoena or its participation in a civil action or proceeding.

(7) For every meeting closed pursuant to paragraph (6), the Commission's chief legal officer shall publicly certify that, in his or her opinion, the meeting may be closed to the public and shall reference each relevant exemptive provision. The Commission shall keep minutes which shall fully and clearly describe all matters discussed in any meeting and shall provide a full and accurate summary of any actions taken and the reasons therefor, including a description of each of the views expressed on any item and the record of any roll call vote (reflected in the vote of each member on the question). All documents considered in connection with any action shall be identified in such minutes.

ARTICLE VII. RULEMAKING FUNCTIONS OF THE COMMISSION

(1) The Commission shall promulgate rules and operating procedures in order to effectively and efficiently achieve the purposes of this Compact; provided, that the Commission shall not promulgate any rules: (i) directly relating to Guaranty Associations including, but not limited to, rules governing coverage, funding, or assessment mechanisms, or (ii) (except pursuant to rules promulgated under Article VII(3) of this Compact) altering the statutory priorities for distributing assets out of an estate.

(2) Rulemaking shall occur pursuant to the criteria set forth in this Article and the rules and operating procedures promulgated pursuant thereto. Such rulemaking shall substantially conform to the principles of the federal Administrative Procedure Act, 5 U.S.C.S. Section 551 et seq. and the Federal Advisory Committee Act, 5 U.S.C.S. app. 2, Section 1 et seq., as may be amended.

(3) Other than the promulgation of such rules as are necessary for the orderly operation of the Commission, the first rule to be considered by the Commission shall be uniform provisions governing insurer receiverships including, but not limited to, provisions requiring compacting states to implement, execute, and administer in a fair, just, effective, and efficient manner rules and operating procedures relating to receiverships. The Commission shall within 3 years of the adoption of this Compact by 2 or more states, promulgate such uniform provisions through the rulemaking process. Such uniform provisions shall become law in all of the compacting states upon legislative enactment in a majority of the compacting states.

(4) All rules and amendments shall become binding as of the date specified in each rule or amendment; provided, that if a compacting state expressly rejects such rule or amendment through legislative enactment as of the expiration of the second full calendar year after such rule is promulgated, such rule or amendment shall have no further force or effect in the rejecting compacting state. If a majority of compacting states reject a rule, then such rule shall have no further force or effect in any compacting state.

(5) When promulgating a rule or operating procedure, the Commission shall:

(a) effect publication of the proposed rulemaking, stating with particularity the text of the rule or operating procedure which is proposed and the reason for the proposed rule or operating procedure;

(b) allow persons to submit written data, facts, opinions and arguments, which information the Commission shall make publicly available;

(c) provide an opportunity for an informal hearing; and

(d) promulgate a final rule or operating procedure and its effective date, if appropriate, based on the rulemaking record.

(6) Not later than 60 days after a rule or operating procedure is promulgated, any interested person may file a petition in a court of competent jurisdiction where the Commission's principal office is located for judicial review of such rule or operating procedure. If the court finds that the Commission's action is not supported by substantial evidence in the rulemaking record, the court shall hold the rule unlawful and set it aside.

ARTICLE VIII. OVERSIGHT AND

DISPUTE RESOLUTION BY THE COMMISSION

Section A. Oversight.

(1) The Commission shall oversee the administration and operations of receiverships in compacting states and shall monitor receiverships being administered in non-compacting states which may significantly affect compacting states.

(2) To aid its monitoring, oversight, and coordination responsibilities, the Commission shall establish operating procedures requiring each member to submit written reports to the Commission as follows:

(a) An initial report to the Commission upon a finding or other official action by the compacting state that grounds exist for receivership of an insurer doing business in more than one state. Thereafter, reports shall be submitted periodically and as otherwise required pursuant to the Commission's operating procedures. The Commission shall be entitled to receive notice of, and shall have standing to appear in, compacting states' receiverships.

(b) An initial report of the status of an insurer within a reasonable time after the initiation of a receivership.

(3) The Commission shall promulgate operating procedures requiring Receivers to submit to the Commission periodic written reports and such additional information and documentation as the Commission may reasonably request. Each compacting state's Receivers shall establish the capability to obtain and provide all such records, data, and information required by the Commission in accordance with the Commission's operating procedures.

(4) Except as to privileged records, data, and information, the laws of any compacting state pertaining to confidentiality or nondisclosure shall not relieve any compacting state Commissioner of the responsibility to disclose any relevant records, data, or information to the Commission; provided, that disclosure to the Commission shall not be deemed to waive or otherwise affect any confidentiality requirement; and further provided, that the Commission shall be subject to the compacting state's laws pertaining to confidentiality and nondisclosure with respect to all such records, data, and information in its possession.

(5) The courts and executive agencies in each compacting state shall enforce this Compact and shall take all actions necessary and appropriate to effectuate the Compact's purposes and intent. In any receivership or other judicial or administrative proceeding in a compacting state pertaining to the subject matter of this Compact which may affect the powers, responsibilities, or actions of the Commission, the Commission shall be entitled to receive all service of process in any such proceeding and shall have standing to intervene in the receivership or proceeding for all purposes.

(6) The Commission shall analyze and correlate records, data, information, and reports received from Receivers and Guaranty Associations and shall make recommendations for improving their performance to the compacting states. The Commission shall include summary information and data regarding its oversight functions in its annual report.

Section B. Dispute resolution.

(1) The Commission shall attempt, upon the request of a member, to resolve any disputes or other issues which are subject to this Compact and which may arise among compacting states and non-compacting states.

(2) The compacting states shall report to the Commission on issues or activities of concern to them and cooperate with and support the Commission in the discharge of its duties and responsibilities.

(3) The Commission shall promulgate an operating procedure providing for binding dispute resolution for disputes among Receivers.

(4) The Commission shall facilitate voluntary dispute resolution for disputes among Guaranty Associations and Receivers.

ARTICLE IX. RECEIVERSHIP FUNCTIONS OF THE COMMISSION

(1) The Commission has authority to act as Receiver of any insurer domiciled, engaged in, or doing business in a compacting state upon the request of the Commissioner of such compacting state or as otherwise provided in this Compact.

(a) The Commission as Receiver shall have all powers and duties pursuant to the receivership laws of the domiciliary state.

(b) The Commission shall maintain accounts of receipts and disbursements of the estates for which it is acting as Receiver, consistent with the accounting practices and procedures set forth in the by-laws.

(c) The Commission shall cause an annual audit of each estate for which it is acting as Receiver, to be conducted by an independent certified public accountant. The costs and expenses of such audit shall be paid as administrative expenses from the assets of the estate. The Commission shall not cause an audit to be conducted of any estate that lacks sufficient assets to conduct such audit.

(d) The Commission as Receiver is authorized to delegate its receivership duties and functions and to effectuate such delegation through contracts with others.

(2) The Commission shall act as Receiver of any insurer domiciled or doing business in a compacting state in the event that the member acting as Receiver in that compacting state fails to comply with duly promulgated Commission rules or operating procedures. The Commission shall notify such member in writing of noncompliance with Commission rules or operating procedures. If the member acting as Receiver fails to remedy such noncompliance within 10 days after receipt of such notification, the Commission may petition the supervising court before which such receivership is pending for an order substituting and appointing the Commission as Receiver of the estate.

(3) The Commission shall not act as Receiver of an estate which appears to lack sufficient assets to fund such receivership unless the compacting state makes provisions for the payment of the estate's administrative expenses satisfactory to the Commission.

(4) The Commission may act as Deputy Receiver for any insurer domiciled or doing business in a non-compacting state in accordance with such state's laws upon request of that non-compacting state's Commissioner and approval of the Commission.

(5) With respect to receiverships pending in a compacting state on the effective date of the enactment of this Compact by the compacting state:

(a) the Commission may act as Receiver of an insurer upon the request of that compacting state's member and approval of the Commission; and

(b) the Commission shall oversee, monitor, and coordinate the activities of all receiverships pending in that compacting state regardless whether the Commission is acting as Receiver of estates in such state.

ARTICLE X. FINANCE

(1) The Commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization.

(2) Except as otherwise provided in this Compact or by act of the Commission, the costs and expenses of each compacting state shall be the sole and exclusive responsibility of the respective compacting state. The Commission may pay or provide for actual and necessary costs and expenses for attendance of its members at official meetings of the Commission or its designated committees.

(3) The Commission shall levy on and collect an annual assessment from each compacting state and each insurer authorized to do business in a compacting state, and writing direct insurance, to cover the cost of the internal operations and activities of the Commission and its staff in a total amount sufficient to cover the Commission's annual budget.

(a) The aggregate annual assessment amount shall be allocated 75% to insurers, hereinafter referred to as the "insurers' portion", and 25% to compacting states, hereinafter referred to as the "compacting states' portion". The insurer portion shall be allocated to each insurer by the percentage derived from a fraction, the numerator of which shall be the gross direct written premium received on that insurer's business in all compacting states and the denominator of which shall be the gross direct written premium received by all insurers on business in all compacting states. The compacting states' portion shall be allocated to each compacting state by the percentage derived from a fraction, the numerator of which shall be the gross direct written premium received by all insurers on business in that compacting state and the denominator shall be the gross direct written premium received on all insurers on business in all compacting states. A compacting state's portion shall be funded as designated by that state's legislature. In no event shall an insurer's assessment be less than $50 or more than $25,000; provided, that affiliated insurers' combined assessments shall not exceed $50,000. Upon the request of an insurer, the Commission may exempt or defer the assessment of any insurer if such assessment would cause the insurer's financial impairment.

(b) These assessments shall not be used to pay any costs or expenses incurred by the Commission and its staff acting as Receiver of estates. Such costs and expenses shall be paid as administrative expenses from the assets of the estates as provided by law, except as otherwise provided in this Compact.

(c) An insurer authorized to do business in a compacting state shall timely pay assessments to the Commission. Failure to pay such assessments shall not be grounds for the revocation, suspension, or denial of an insurer's authority to do business, but shall subject the insurer to suit by the Commission for recovery of any assessment due, attorneys' fees, and costs, together with interest from the date the assessment is due at a rate of 10% per annum, and to civil forfeiture in an amount to be determined by the Commissioner of that compacting state in which the insurer received the greatest premium in the year next preceding the first year for which the insurer shall be delinquent in payment of assessments.

(4) The Commission shall be reimbursed in the following manner for the costs and expenses incurred by the Commission and its staff acting as Receiver of estates to the extent that an insurer's assets may be insufficient for the effective administration of its estate:

(a) if the insurer is domiciled in a compacting state, the estate shall be closed unless that compacting state makes provisions for reimbursing the Commission; and

(b) if the insurer is unauthorized to do business in a compacting state or if the insurer is domiciled in a non-compacting state and subject to ancillary receivership, then the Commission and such state shall make provisions for reimbursing the Commission prior to the Commission becoming Receiver of such insurer.

(5) To fund the cost of the initial operations of the Commission until its first annual budget is adopted and related assessments have been made, contributions from compacting states and others may be accepted and a one time assessment on insurers doing a direct insurance business in the compacting states may be made not to exceed $450 per insurer.

(6) The Commission's adopted budget for a fiscal year shall not be approved until it has been subject to notice and comment as set forth in Article VII of this Compact. The budget shall determine the amount of the annual assessment. The Commission may accumulate a net worth not to exceed 30% of its then annual cost of operation to provide for contingencies and events not contemplated. These accumulated funds shall be held separately and shall not be used for any other purpose. The Commission's budget may include a provision for a contribution to the Commission's net worth.

(7) The Commission shall be exempt from all taxation in and by the compacting states.

(8) The Commission shall not pledge the credit of any compacting state, except by and with the appropriate legal authority of that compacting state.

(9) The Commission shall keep complete and accurate accounts of all its internal receipts (including grants and donations) and disbursements of all funds, other than receivership assets, under its control. The internal financial accounts of the Commission shall be subject to the accounting procedures established under its by-laws. The financial accounts and reports including the system of internal controls and procedures of the Commission shall be audited annually by an independent certified public accountant. Upon the determination of the Commission, but no less frequently than every 3 years, the review of such independent auditor shall include a management and performance audit of the Commission. The report of such independent audit shall be made available to the public and shall be included in and become part of the annual report of the Commission to the Governors and legislatures of the compacting states. The Commission's internal accounts, any workpapers related to any internal audit, and any workpapers related to the independent audit, shall be confidential; provided, that such materials shall be made available: (i) in compliance with the order of any court of competent jurisdiction; (ii) pursuant to such reasonable rules as the Commission shall promulgate; and (iii) to any Commissioner, Governor of a compacting state, or their duly authorized representatives.

(10) No compacting state shall have any claim to or ownership of any property held by or vested in the Commission or the Commission acting as Receiver or to any other Commission funds held pursuant to the provisions of this Compact.

ARTICLE XI. COMPACTING STATES, EFFECTIVE DATE, AND AMENDMENT

(1) Any state is eligible to become a compacting state.

(2) The Compact shall become effective and binding upon legislative enactment of the Compact into law by 2 compacting states. Thereafter, it shall become effective and binding as to any other compacting state upon enactment of the Compact into law by that state.

(3) Amendments to the Compact may be proposed by the Commission for enactment by the compacting states. No amendment shall become effective and binding upon the Commission and the compacting states unless and until it is enacted into law by unanimous consent of the compacting states.

ARTICLE XII. WITHDRAWAL, DEFAULT, AND TERMINATION

Section A. Withdrawal.

(1) Once effective, the Compact shall continue in force and remain binding upon each and every compacting state; provided, that a compacting state may withdraw from the Compact ("withdrawing state") by enacting a statute specifically repealing the statute which enacted the Compact into law.

(2) The effective date of withdrawal is the effective date of the repeal; provided, that the repeal shall not apply to any receiverships, for which the Commission is acting as Receiver, pending on the date of the repeal except by mutual agreement of the Commission and the withdrawing state.

(3) The withdrawing state shall immediately notify the Chairperson of the Commission in writing upon the introduction of legislation repealing this Compact in the withdrawing state.

(4) The Commission shall notify the other compacting states of the withdrawing state's intent to withdraw within 60 days of its receipt thereof.

(5) The withdrawing state is responsible for all assessments, obligations, and liabilities incurred through the effective date of withdrawal, including any obligations, the performance of which extend beyond the effective date of withdrawal, except to the extent those obligations may have been released or relinquished by mutual agreement of the Commission and the withdrawing state. Notwithstanding the foregoing, the withdrawing state is responsible for the costs and expenses of its estates subject to this Compact pending on the date of repeal; the Commission and the other estates subject to this Compact shall not bear any costs and expenses related to the withdrawing state's estates unless otherwise mutually agreed upon between the Commission and the withdrawing state.

(6) Reinstatement following withdrawal of any compacting state shall occur upon the withdrawing state reenacting the Compact or upon such later date as determined by the Commission.

Section B. Default.

(1) If the Commission determines that any compacting state has at any time defaulted ("defaulting state") in the performance of any of its obligations or responsibilities under this Compact, the by-laws, or duly promulgated rules, all rights, privileges, and benefits conferred by this Compact and any agreements entered into pursuant to this Compact shall be suspended from the effective date of default as fixed by the Commission. The grounds for default include, but are not limited to, failure of a compacting state to perform such obligations or responsibilities and any other grounds designated in Commission rules. The Commission shall immediately notify the defaulting state in writing of the defaulting state's suspension pending a cure of the default. The Commission shall stipulate the conditions and the time period within which the defaulting state must cure its default. If the defaulting state fails to cure the default within the time period specified by the Commission, the defaulting state shall be terminated from the Compact upon an affirmative vote of a majority of the compacting states and all rights, privileges, and benefits conferred by this Compact shall be terminated from the effective date of termination.

(2) Within 60 days of the effective date of termination of a defaulting state, the Commission shall notify the Governor and the Majority and Minority Leaders of the defaulting state's legislature of such termination.

(3) The termination of a defaulting state shall apply to all receiverships, for which the Commission is acting as Receiver, pending on the effective date of termination except by mutual agreement of the Commission and the defaulting state.

(4) The defaulting state is responsible for all assessments, obligations, and liabilities incurred through the effective date of termination and is responsible for the costs and expenses relating to its estates subject to this Compact pending on the date of the termination. The Commission and the other estates subject to this Compact shall not bear any costs or expenses relating the defaulting state's estates unless otherwise mutually agreed upon between the Commission and the defaulting state.

(5) Reinstatement following termination of any compacting state requires both a reenactment of the Compact by the defaulting state and the approval of the Commission pursuant to the rules.

Section C. Dissolution of Compact.

(1) The Compact dissolves effective upon the date of the withdrawal or the termination by default of the compacting state which reduces membership in the Compact to one compacting state.

(2) Upon the dissolution of this Compact, the Compact becomes null and void and shall be of no further force or effect, and the business and affairs of the Commission shall be wound up and any surplus funds shall be distributed in accordance with the by-laws.

ARTICLE XIII. SEVERABILITY AND CONSTRUCTION

(1) The provisions of this Compact shall be severable, and if any phrase, clause, sentence, or provision is deemed unenforceable, the remaining provisions of the Compact shall be enforceable.

(2) The provisions of this Compact shall be liberally construed to effectuate its purposes.

ARTICLE XIV. BINDING EFFECT OF COMPACT AND OTHER LAWS

Section A. Other laws.

(1) Nothing herein prevents the enforcement of any other law of a compacting state that is not inconsistent with this Compact.

(2) All compacting states' laws conflicting with this Compact are superseded to the extent of the conflict.

Section B. Binding effect of this Compact.

(1) All lawful actions of the Commission, including all rules and operating procedures promulgated by the Commission, are binding upon the compacting states.

(2) All agreements between the Commission and the compacting states are binding in accordance with their terms.

(3) Upon the request of a party to a conflict over meaning or interpretation of Commission actions, and upon a majority vote of the compacting states, the Commission may issue advisory opinions regarding such meaning or interpretation.

(4) In the event any provision of this Compact exceeds the constitutional limits imposed on the legislature of any compacting state, the obligations, duties, powers, or jurisdiction sought to be conferred by such provision upon the Commission shall be ineffective and such obligations, duties, powers or jurisdiction shall remain in the compacting state and shall be exercised by the agency thereof to which such obligations, duties, powers, or jurisdiction are delegated by law in effect at the time this Compact becomes effective.

(Source: P.A. 95-331, eff. 8-21-07.)

Section 35. The Interstate Insurance Product Regulation Compact is amended by changing Section 10 as follows:

(45 ILCS 162/10)

Sec. 10. Ratification. The State of Illinois ratifies, approves, and adopts the following interstate compact:

Article I. PURPOSES

The purposes of this Compact are, through means of joint and cooperative action among the Compacting States:

1. To promote and protect the interest of consumers of individual and group annuity, life insurance, disability income and long-term care insurance products;

2. To develop uniform standards for insurance products covered under the Compact;

3. To establish a central clearinghouse to receive and provide prompt review of insurance products covered under the Compact and, in certain cases, advertisements related thereto, submitted by insurers authorized to do business in one or more Compacting States;

4. To give appropriate regulatory approval to those product filings and advertisements satisfying the applicable uniform standard;

5. To improve coordination of regulatory resources and expertise between state insurance departments regarding the setting of uniform standards and review of insurance products covered under the Compact;

6. To create the Interstate Insurance Product Regulation Commission; and

7. To perform these and such other related functions as may be consistent with the state regulation of the business of insurance.

Article II. DEFINITIONS

For purposes of this Compact:

1. "Advertisement" means any material designed to create public interest in a Product, or induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain a policy, as more specifically defined in the Rules and Operating Procedures of the Commission.

2. "Bylaws" mean those bylaws established by the Commission for its governance, or for directing or controlling the Commission's actions or conduct.

3. "Compacting State" means any State which has enacted this Compact legislation and which has not withdrawn pursuant to Article XIV, Section 1, or been terminated pursuant to Article XIV, Section 2.

4. "Commission" means the "Interstate Insurance Product Regulation Commission" established by this Compact.

5. "Commissioner" means the chief insurance regulatory official of a State including, but not limited to commissioner, superintendent, director or administrator.

6. "Domiciliary State" means the state in which an Insurer is incorporated or organized; or, in the case of a non-domestic an alien Insurer, its state of entry.

7. "Insurer" means any entity licensed by a State to issue contracts of insurance for any of the lines of insurance covered by this Act.

8. "Member" means the person chosen by a Compacting State as its representative to the Commission, or his or her designee.

9. "Non-compacting State" means any State which is not at the time a Compacting State.

10. "Operating Procedures" mean procedures promulgated by the Commission implementing a Rule, Uniform Standard or a provision of this Compact.

11. "Product" means the form of a policy or contract, including any application, endorsement, or related form which is attached to and made a part of the policy or contract, and any evidence of coverage or certificate, for an individual or group annuity, life insurance, disability income or long-term care insurance product that an Insurer is authorized to issue.

12. "Rule" means a statement of general or particular applicability and future effect promulgated by the Commission, including a Uniform Standard developed pursuant to Article VII of this Compact, designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of the Commission, which shall have the force and effect of law in the Compacting States.

13. "State" means any state, district or territory of the United States of America.

14. "Third-Party Filer" means an entity that submits a Product filing to the Commission on behalf of an Insurer.

15. "Uniform Standard" means a standard adopted by the Commission for a Product line, pursuant to Article VII of this Compact, and shall include all of the Product requirements in aggregate; provided, that each Uniform Standard shall be construed, whether express or implied, to prohibit the use of any inconsistent, misleading or ambiguous provisions in a Product and the form of the Product made available to the public shall not be unfair, inequitable or against public policy as determined by the Commission.

Article III. ESTABLISHMENT OF THE COMMISSION AND VENUE

1. The Compacting States hereby create and establish a joint public agency known as the "Interstate Insurance Product Regulation Commission." Pursuant to Article IV, the Commission will have the power to develop Uniform Standards for Product lines, receive and provide prompt review of Products filed therewith, and give approval to those Product filings satisfying applicable Uniform Standards; provided, it is not intended for the Commission to be the exclusive entity for receipt and review of insurance product filings. Nothing herein shall prohibit any Insurer from filing its product in any State wherein the Insurer is licensed to conduct the business of insurance; and any such filing shall be subject to the laws of the State where filed.

2. The Commission is a body corporate and politic, and an instrumentality of the Compacting States.

3. The Commission is solely responsible for its liabilities except as otherwise specifically provided in this Compact.

4. Venue is proper and judicial proceedings by or against the Commission shall be brought solely and exclusively in a Court of competent jurisdiction where the principal office of the Commission is located.

Article IV. POWERS OF THE COMMISSION

The Commission shall have the following powers:

1. To promulgate Rules, pursuant to Article VII of this Compact, which shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in this Compact;

2. To exercise its rule-making authority and establish reasonable Uniform Standards for Products covered under the Compact, and Advertisement related thereto, which shall have the force and effect of law and shall be binding in the Compacting States, but only for those Products filed with the Commission, provided, that a Compacting State shall have the right to opt out of such Uniform Standard pursuant to Article VII, to the extent and in the manner provided in this Compact, and, provided further, that any Uniform Standard established by the Commission for long-term care insurance products may provide the same or greater protections for consumers as, but shall not provide less than, those protections set forth in the National Association of Insurance Commissioners' Long-Term Care Insurance Model Act and Long-Term Care Insurance Model Regulation, respectively, adopted as of 2001. The Commission shall consider whether any subsequent amendments to the NAIC Long-Term Care Insurance Model Act or Long-Term Care Insurance Model Regulation adopted by the NAIC require amending of the Uniform Standards established by the Commission for long-term care insurance products;

3. To receive and review in an expeditious manner Products filed with the Commission, and rate filings for disability income and long-term care insurance Products, and give approval of those Products and rate filings that satisfy the applicable Uniform Standard, where such approval shall have the force and effect of law and be binding on the Compacting States to the extent and in the manner provided in the Compact;

4. To receive and review in an expeditious manner Advertisement relating to long-term care insurance products for which Uniform Standards have been adopted by the Commission, and give approval to all Advertisement that satisfies the applicable Uniform Standard. For any product covered under this Compact, other than long-term care insurance products, the Commission shall have the authority to require an insurer to submit all or any part of its Advertisement with respect to that product for review or approval prior to use, if the Commission determines that the nature of the product is such that an Advertisement of the product could have the capacity or tendency to mislead the public. The actions of Commission as provided in this section shall have the force and effect of law and shall be binding in the Compacting States to the extent and in the manner provided in the Compact;

5. To exercise its rule-making authority and designate Products and Advertisement that may be subject to a self-certification process without the need for prior approval by the Commission.

6. To promulgate Operating Procedures, pursuant to Article VII of this Compact, which shall be binding in the Compacting States to the extent and in the manner provided in this Compact;

7. To bring and prosecute legal proceedings or actions in its name as the Commission; provided, that the standing of any state insurance department to sue or be sued under applicable law shall not be affected;

8. To issue subpoenas requiring the attendance and testimony of witnesses and the production of evidence;

9. To establish and maintain offices;

10. To purchase and maintain insurance and bonds;

11. To borrow, accept or contract for services of personnel, including, but not limited to, employees of a Compacting State;

12. To hire employees, professionals or specialists, and elect or appoint officers, and to fix their compensation, define their duties and give them appropriate authority to carry out the purposes of the Compact, and determine their qualifications; and to establish the Commission's personnel policies and programs relating to, among other things, conflicts of interest, rates of compensation and qualifications of personnel;

13. To accept any and all appropriate donations and grants of money, equipment, supplies, materials and services, and to receive, utilize and dispose of the same; provided that at all times the Commission shall strive to avoid any appearance of impropriety;

14. To lease, purchase, accept appropriate gifts or donations of, or otherwise to own, hold, improve or use, any property, real, personal or mixed; provided that at all times the Commission shall strive to avoid any appearance of impropriety;

15. To sell, convey, mortgage, pledge, lease, exchange, abandon or otherwise dispose of any property, real, personal or mixed;

16. To remit filing fees to Compacting States as may be set forth in the Bylaws, Rules or Operating Procedures;

17. To enforce compliance by Compacting States with Rules, Uniform Standards, Operating Procedures and Bylaws;

18. To provide for dispute resolution among Compacting States;

19. To advise Compacting States on issues relating to Insurers domiciled or doing business in Non-compacting jurisdictions, consistent with the purposes of this Compact;

20. To provide advice and training to those personnel in state insurance departments responsible for product review, and to be a resource for state insurance departments;

21. To establish a budget and make expenditures;

22. To borrow money;

23. To appoint committees, including advisory committees comprising Members, state insurance regulators, state legislators or their representatives, insurance industry and consumer representatives, and such other interested persons as may be designated in the Bylaws;

24. To provide and receive information from, and to cooperate with law enforcement agencies;

25. To adopt and use a corporate seal; and

26. To perform such other functions as may be necessary or appropriate to achieve the purposes of this Compact consistent with the state regulation of the business of insurance.

Article V. ORGANIZATION OF THE COMMISSION

1. Membership, Voting and Bylaws.

a. Each Compacting State shall have and be limited to one Member. Each Member shall be qualified to serve in that capacity pursuant to applicable law of the Compacting State. Any Member may be removed or suspended from office as provided by the law of the State from which he or she shall be appointed. Any vacancy occurring in the Commission shall be filled in accordance with the laws of the Compacting State wherein the vacancy exists. Nothing herein shall be construed to affect the manner in which a Compacting State determines the election or appointment and qualification of its own Commissioner.

b. Each Member shall be entitled to one vote and shall have an opportunity to participate in the governance of the Commission in accordance with the Bylaws. Notwithstanding any provision herein to the contrary, no action of the Commission with respect to the promulgation of a Uniform Standard shall be effective unless two-thirds (2/3) of the Members vote in favor thereof.

c. The Commission shall, by a majority of the Members, prescribe Bylaws to govern its conduct as may be necessary or appropriate to carry out the purposes, and exercise the powers, of the Compact, including, but not limited to:

i. establishing the fiscal year of the Commission;

ii. providing reasonable procedures for appointing and electing members, as well as holding meetings, of the Management Committee;

iii. providing reasonable standards and procedures: (i) for the establishment and meetings of other committees, and (ii) governing any general or specific delegation of any authority or function of the Commission;

iv. providing reasonable procedures for calling and conducting meetings of the Commission that consists of a majority of Commission members, ensuring reasonable advance notice of each such meeting, and providing for the right of citizens to attend each such meeting with enumerated exceptions designed to protect the public's interest, the privacy of individuals, and insurers' proprietary information, including trade secrets. The Commission may meet in camera only after a majority of the entire membership votes to close a meeting en toto or in part. As soon as practicable, the Commission must make public (i) a copy of the vote to close the meeting revealing the vote of each Member with no proxy votes allowed, and (ii) votes taken during such meeting;

v. establishing the titles, duties and authority and reasonable procedures for the election of the officers of the Commission;

vi. providing reasonable standards and procedures for the establishment of the personnel policies and programs of the Commission. Notwithstanding any civil service or other similar laws of any Compacting State, the Bylaws shall exclusively govern the personnel policies and programs of the Commission;

vii. promulgating a code of ethics to address permissible and prohibited activities of commission members and employees; and

viii. providing a mechanism for winding up the operations of the Commission and the equitable disposition of any surplus funds that may exist after the termination of the Compact after the payment and/or reserving of all of its debts and obligations.

d. The Commission shall publish its bylaws in a convenient form and file a copy thereof and a copy of any amendment thereto, with the appropriate agency or officer in each of the Compacting States.

2. Management Committee, Officers and Personnel.

a. A Management Committee comprising no more than fourteen (14) members shall be established as follows:

(i) One (1) member from each of the six (6) Compacting States with the largest premium volume for individual and group annuities, life, disability income and long-term care insurance products, determined from the records of the NAIC for the prior year;

(ii) Four (4) members from those Compacting States with at least two percent (2%) of the market based on the premium volume described above, other than the six (6) Compacting States with the largest premium volume, selected on a rotating basis as provided in the Bylaws, and;

(iii) Four (4) members from those Compacting States with less than two percent (2%) of the market, based on the premium volume described above, with one (1) selected from each of the four (4) zone regions of the NAIC as provided in the Bylaws.

b. The Management Committee shall have such authority and duties as may be set forth in the Bylaws, including but not limited to:

i. managing the affairs of the Commission in a manner consistent with the Bylaws and purposes of the Commission;

ii. establishing and overseeing an organizational structure within, and appropriate procedures for, the Commission to provide for the creation of Uniform Standards and other Rules, receipt and review of product filings, administrative and technical support functions, review of decisions regarding the disapproval of a product filing, and the review of elections made by a Compacting State to opt out of a Uniform Standard; provided that a Uniform Standard shall not be submitted to the Compacting States for adoption unless approved by two-thirds (2/3) of the members of the Management Committee;

iii. overseeing the offices of the Commission; and

iv. planning, implementing, and coordinating communications and activities with other state, federal and local government organizations in order to advance the goals of the Commission.

c. The Commission shall elect annually officers from the Management Committee, with each having such authority and duties, as may be specified in the Bylaws.

d. The Management Committee may, subject to the approval of the Commission, appoint or retain an executive director for such period, upon such terms and conditions and for such compensation as the Commission may deem appropriate. The executive director shall serve as secretary to the Commission, but shall not be a Member of the Commission. The executive director shall hire and supervise such other staff as may be authorized by the Commission.

3. Legislative and Advisory Committees.

a. A legislative committee comprising state legislators or their designees shall be established to monitor the operations of, and make recommendations to, the Commission, including the Management Committee; provided that the manner of selection and term of any legislative committee member shall be as set forth in the Bylaws. Prior to the adoption by the Commission of any Uniform Standard, revision to the Bylaws, annual budget or other significant matter as may be provided in the Bylaws, the Management Committee shall consult with and report to the legislative committee.

b. The Commission shall establish two (2) advisory committees, one of which shall comprise consumer representatives independent of the insurance industry, and the other comprising insurance industry representatives.

c. The Commission may establish additional advisory committees as its Bylaws may provide for the carrying out of its functions.

4. Corporate Records of the Commission. The Commission shall maintain its corporate books and records in accordance with the Bylaws.

5. Qualified Immunity, Defense and Indemnification.

a. The Members, officers, executive director, employees and representatives of the Commission shall be immune from suit and liability, either personally or in their official capacity, for any claim for damage to or loss of property or personal injury or other civil liability caused by or arising out of any actual or alleged act, error or omission that occurred, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities; provided, that nothing in this paragraph shall be construed to protect any such person from suit and/or liability for any damage, loss, injury or liability caused by the intentional or willful and wanton misconduct of that person.

b. The Commission shall defend any Member, officer, executive director, employee or representative of the Commission in any civil action seeking to impose liability arising out of any actual or alleged act, error or omission that occurred within the scope of Commission employment, duties or responsibilities, or that the person against whom the claim is made had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities; provided, that nothing herein shall be construed to prohibit that person from retaining his or her own counsel; and provided further, that the actual or alleged act, error or omission did not result from that person's intentional or willful and wanton misconduct.

c. The Commission shall indemnify and hold harmless any Member, officer, executive director, employee or representative of the Commission for the amount of any settlement or judgment obtained against that person arising out of any actual or alleged act, error or omission that occurred within the scope of Commission employment, duties or responsibilities, or that such person had a reasonable basis for believing occurred within the scope of Commission employment, duties or responsibilities, provided, that the actual or alleged act, error or omission did not result from the intentional or willful and wanton misconduct of that person.

Article VI. MEETINGS AND ACTS OF THE COMMISSION

1. The Commission shall meet and take such actions as are consistent with the provisions of this Compact and the Bylaws.

2. Each Member of the Commission shall have the right and power to cast a vote to which that Compacting State is entitled and to participate in the business and affairs of the Commission. A Member shall vote in person or by such other means as provided in the Bylaws. The Bylaws may provide for Members' participation in meetings by telephone or other means of communication.

3. The Commission shall meet at least once during each calendar year. Additional meetings shall be held as set forth in the Bylaws.

Article VII. RULES & OPERATING PROCEDURES: RULEMAKING

FUNCTIONS OF THE COMMISSION AND OPTING OUT OF UNIFORM

STANDARDS

1. Rulemaking Authority. The Commission shall promulgate reasonable Rules, including Uniform Standards, and Operating Procedures in order to effectively and efficiently achieve the purposes of this Compact. Notwithstanding the foregoing, in the event the Commission exercises its rulemaking authority in a manner that is beyond the scope of the purposes of this Act, or the powers granted hereunder, then such an action by the Commission shall be invalid and have no force and effect.

2. Rulemaking Procedure. Rules and Operating Procedures shall be made pursuant to a rulemaking process that conforms to the Model State Administrative Procedure Act of 1981 as amended, as may be appropriate to the operations of the Commission. Before the Commission adopts a Uniform Standard, the Commission shall give written notice to the relevant state legislative committee(s) in each Compacting State responsible for insurance issues of its intention to adopt the Uniform Standard. The Commission in adopting a Uniform Standard shall consider fully all submitted materials and issue a concise explanation of its decision.

3. Effective Date and Opt Out of a Uniform Standard. A Uniform Standard shall become effective ninety (90) days after its promulgation by the Commission or such later date as the Commission may determine; provided, however, that a Compacting State may opt out of a Uniform Standard as provided in this Article. "Opt out" shall be defined as any action by a Compacting State to decline to adopt or participate in a promulgated Uniform Standard. All other Rules and Operating Procedures, and amendments thereto, shall become effective as of the date specified in each Rule, Operating Procedure or amendment.

4. Opt Out Procedure. A Compacting State may opt out of a Uniform Standard, either by legislation or regulation duly promulgated by the Insurance Department under the Compacting State's Administrative Procedure Act. If a Compacting State elects to opt out of a Uniform Standard by regulation, it must (a) give written notice to the Commission no later than ten (10) business days after the Uniform Standard is promulgated, or at the time the State becomes a Compacting State and (b) find that the Uniform Standard does not provide reasonable protections to the citizens of the State, given the conditions in the State. The Commissioner shall make specific findings of fact and conclusions of law, based on a preponderance of the evidence, detailing the conditions in the State which warrant a departure from the Uniform Standard and determining that the Uniform Standard would not reasonably protect the citizens of the State. The Commissioner must consider and balance the following factors and find that the conditions in the State and needs of the citizens of the State outweigh: (i) the intent of the legislature to participate in, and the benefits of, an interstate agreement to establish national uniform consumer protections for the Products subject to this Act; and (ii) the presumption that a Uniform Standard adopted by the Commission provides reasonable protections to consumers of the relevant Product.

Notwithstanding the foregoing, a Compacting State may, at the time of its enactment of this Compact, prospectively opt out of all Uniform Standards involving long-term care insurance products by expressly providing for such opt out in the enacted Compact, and such an opt out shall not be treated as a material variance in the offer or acceptance of any State to participate in this Compact. Such an opt out shall be effective at the time of enactment of this Compact by the Compacting State and shall apply to all existing Uniform Standards involving long-term care insurance products and those subsequently promulgated.

5. Effect of Opt Out. If a Compacting State elects to opt out of a Uniform Standard, the Uniform Standard shall remain applicable in the Compacting State electing to opt out until such time the opt out legislation is enacted into law or the regulation opting out becomes effective.

Once the opt out of a Uniform Standard by a Compacting State becomes effective as provided under the laws of that State, the Uniform Standard shall have no further force and effect in that State unless and until the legislation or regulation implementing the opt out is repealed or otherwise becomes ineffective under the laws of the State. If a Compacting State opts out of a Uniform Standard after the Uniform Standard has been made effective in that State, the opt out shall have the same prospective effect as provided under Article XIV for withdrawals.

6. Stay of Uniform Standard. If a Compacting State has formally initiated the process of opting out of a Uniform Standard by regulation, and while the regulatory opt out is pending, the Compacting State may petition the Commission, at least fifteen (15) days before the effective date of the Uniform Standard, to stay the effectiveness of the Uniform Standard in that State. The Commission may grant a stay if it determines the regulatory opt out is being pursued in a reasonable manner and there is a likelihood of success. If a stay is granted or extended by the Commission, the stay or extension thereof may postpone the effective date by up to ninety (90) days, unless affirmatively extended by the Commission; provided, a stay may not be permitted to remain in effect for more than one (1) year unless the Compacting State can show extraordinary circumstances which warrant a continuance of the stay, including, but not limited to, the existence of a legal challenge which prevents the Compacting State from opting out. A stay may be terminated by the Commission upon notice that the rulemaking process has been terminated.

7. Not later than thirty (30) days after a Rule or Operating Procedure is promulgated, any person may file a petition for judicial review of the Rule or Operating Procedure; provided, that the filing of such a petition shall not stay or otherwise prevent the Rule or Operating Procedure from becoming effective unless the court finds that the petitioner has a substantial likelihood of success. The court shall give deference to the actions of the Commission consistent with applicable law and shall not find the Rule or Operating Procedure to be unlawful if the Rule or Operating Procedure represents a reasonable exercise of the Commission's authority.

Article VIII. COMMISSION RECORDS AND ENFORCEMENT

1. The Commission shall promulgate Rules establishing conditions and procedures for public inspection and copying of its information and official records, except such information and records involving the privacy of individuals and insurers' trade secrets. The Commission may promulgate additional Rules under which it may make available to federal and state agencies, including law enforcement agencies, records and information otherwise exempt from disclosure, and may enter into agreements with such agencies to receive or exchange information or records subject to nondisclosure and confidentiality provisions.

2. Except as to privileged records, data and information, the laws of any Compacting State pertaining to confidentiality or nondisclosure shall not relieve any Compacting State Commissioner of the duty to disclose any relevant records, data or information to the Commission; provided, that disclosure to the Commission shall not be deemed to waive or otherwise affect any confidentiality requirement; and further provided, that, except as otherwise expressly provided in this Act, the Commission shall not be subject to the Compacting State's laws pertaining to confidentiality and nondisclosure with respect to records, data and information in its possession. Confidential information of the Commission shall remain confidential after such information is provided to any Commissioner.

3. The Commission shall monitor Compacting States for compliance with duly adopted Bylaws, Rules, including Uniform Standards, and Operating Procedures. The Commission shall notify any non-complying Compacting State in writing of its noncompliance with Commission Bylaws, Rules or Operating Procedures. If a non-complying Compacting State fails to remedy its noncompliance within the time specified in the notice of noncompliance, the Compacting State shall be deemed to be in default as set forth in Article XIV.

4. The Commissioner of any State in which an Insurer is authorized to do business, or is conducting the business of insurance, shall continue to exercise his or her authority to oversee the market regulation of the activities of the Insurer in accordance with the provisions of the State's law. The Commissioner's enforcement of compliance with the Compact is governed by the following provisions:

a. With respect to the Commissioner's market regulation of a Product or Advertisement that is approved or certified to the Commission, the content of the Product or Advertisement shall not constitute a violation of the provisions, standards or requirements of the Compact except upon a final order of the Commission, issued at the request of a Commissioner after prior notice to the Insurer and an opportunity for hearing before the Commission.

b. Before a Commissioner may bring an action for violation of any provision, standard or requirement of the Compact relating to the content of an Advertisement not approved or certified to the Commission, the Commission, or an authorized Commission officer or employee, must authorize the action. However, authorization pursuant to this Paragraph does not require notice to the Insurer, opportunity for hearing or disclosure of requests for authorization or records of the Commission's action on such requests.

Article IX. DISPUTE RESOLUTION

The Commission shall attempt, upon the request of a Member, to resolve any disputes or other issues that are subject to this Compact and which may arise between two or more Compacting States, or between Compacting States and Non-compacting States, and the Commission shall promulgate an Operating Procedure providing for resolution of such disputes.

Article X. PRODUCT FILING AND APPROVAL

1. Insurers and Third-Party Filers seeking to have a Product approved by the Commission shall file the Product with, and pay applicable filing fees to, the Commission. Nothing in this Act shall be construed to restrict or otherwise prevent an insurer from filing its Product with the insurance department in any State wherein the insurer is licensed to conduct the business of insurance, and such filing shall be subject to the laws of the States where filed.

2. The Commission shall establish appropriate filing and review processes and procedures pursuant to Commission Rules and Operating Procedures. Notwithstanding any provision herein to the contrary, the Commission shall promulgate Rules to establish conditions and procedures under which the Commission will provide public access to Product filing information. In establishing such Rules, the Commission shall consider the interests of the public in having access to such information, as well as protection of personal medical and financial information and trade secrets, that may be contained in a Product filing or supporting information.

3. Any Product approved by the Commission may be sold or otherwise issued in those Compacting States for which the Insurer is legally authorized to do business.

Article XI. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS

1. Not later than thirty (30) days after the Commission has given notice of a disapproved Product or Advertisement filed with the Commission, the Insurer or Third Party Filer whose filing was disapproved may appeal the determination to a review panel appointed by the Commission. The Commission shall promulgate Rules to establish procedures for appointing such review panels and provide for notice and hearing. An allegation that the Commission, in disapproving a Product or Advertisement filed with the Commission, acted arbitrarily, capriciously, or in a manner that is an abuse of discretion or otherwise not in accordance with the law, is subject to judicial review in accordance with Article III, section 5.

2. The Commission shall have authority to monitor, review and reconsider Products and Advertisement subsequent to their filing or approval upon a finding that the product does not meet the relevant Uniform Standard. Where appropriate, the Commission may withdraw or modify its approval after proper notice and hearing, subject to the appeal process in section 1 above.

Article XII. FINANCE

1. The Commission shall pay or provide for the payment of the reasonable expenses of its establishment and organization. To fund the cost of its initial operations, the Commission may accept contributions and other forms of funding from the National Association of Insurance Commissioners, Compacting States and other sources. Contributions and other forms of funding from other sources shall be of such a nature that the independence of the Commission concerning the performance of its duties shall not be compromised.

2. The Commission shall collect a filing fee from each Insurer and Third Party Filer filing a product with the Commission to cover the cost of the operations and activities of the Commission and its staff in a total amount sufficient to cover the Commission's annual budget.

3. The Commission's budget for a fiscal year shall not be approved until it has been subject to notice and comment as set forth in Article VII of this Compact.

4. The Commission shall be exempt from all taxation in and by the Compacting States.

5. The Commission shall not pledge the credit of any Compacting State, except by and with the appropriate legal authority of that Compacting State.

6. The Commission shall keep complete and accurate accounts of all its internal receipts, including grants and donations, and disbursements of all funds under its control. The internal financial accounts of the Commission shall be subject to the accounting procedures established under its Bylaws. The financial accounts and reports including the system of internal controls and procedures of the Commission shall be audited annually by an independent certified public accountant. Upon the determination of the Commission, but no less frequently than every three (3) years, the review of the independent auditor shall include a management and performance audit of the Commission. The Commission shall make an Annual Report to the Governor and legislature of the Compacting States, which shall include a report of the independent audit. The Commission's internal accounts shall not be confidential and such materials may be shared with the Commissioner of any Compacting State upon request, provided, however, that any work papers related to any internal or independent audit and any information regarding the privacy of individuals and insurers' proprietary information, including trade secrets, shall remain confidential.

7. No Compacting State shall have any claim to or ownership of any property held by or vested in the Commission or to any Commission funds held pursuant to the provisions of this Compact.

Article XIII. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT

1. Any State is eligible to become a Compacting State.

2. The Compact shall become effective and binding upon legislative enactment of the Compact into law by two Compacting States; provided, the Commission shall become effective for purposes of adopting Uniform Standards for, reviewing, and giving approval or disapproval of, Products filed with the Commission that satisfy applicable Uniform Standards only after twenty-six (26) States are Compacting States or, alternatively, by States representing greater than forty percent (40%) of the premium volume for life insurance, annuity, disability income and long-term care insurance products, based on records of the NAIC for the prior year. Thereafter, it shall become effective and binding as to any other Compacting State upon enactment of the Compact into law by that State.

3. Amendments to the Compact may be proposed by the Commission for enactment by the Compacting States. No amendment shall become effective and binding upon the Commission and the Compacting States unless and until all Compacting States enact the amendment into law.

Article XIV. WITHDRAWAL, DEFAULT AND TERMINATION

1. Withdrawal.

a. Once effective, the Compact shall continue in force and remain binding upon each and every Compacting State; provided, that a Compacting State may withdraw from the Compact ("Withdrawing State") by enacting a statute specifically repealing the statute which enacted the Compact into law.

b. The effective date of withdrawal is the effective date of the repealing statute. However, the withdrawal shall not apply to any product filings approved or self-certified, or any Advertisement of such products, on the date the repealing statute becomes effective, except by mutual agreement of the Commission and the Withdrawing State unless the approval is rescinded by the Withdrawing State as provided in subsection e. of this section.

c. The Commissioner of the Withdrawing State shall immediately notify the Management Committee in writing upon the introduction of legislation repealing this Compact in the Withdrawing State.

d. The Commission shall notify the other Compacting States of the introduction of such legislation within ten (10) days after its receipt of notice thereof.

e. The Withdrawing State is responsible for all obligations, duties and liabilities incurred through the effective date of withdrawal, including any obligations, the performance of which extend beyond the effective date of withdrawal, except to the extent those obligations may have been released or relinquished by mutual agreement of the Commission and the Withdrawing State. The Commission's approval of Products and Advertisement prior to the effective date of withdrawal shall continue to be effective and be given full force and effect in the Withdrawing State, unless formally rescinded by the Withdrawing State in the same manner as provided by the laws of the Withdrawing State for the prospective disapproval of products or advertisement previously approved under state law.

f. Reinstatement following withdrawal of any Compacting State shall occur upon the effective date of the Withdrawing State reenacting the Compact.

2. Default.

a. If the Commission determines that any Compacting State has at any time defaulted ("Defaulting State") in the performance of any of its obligations or responsibilities under this Compact, the Bylaws or duly promulgated Rules or Operating Procedures, then, after notice and hearing as set forth in the Bylaws, all rights, privileges and benefits conferred by this Compact on the Defaulting State shall be suspended from the effective date of default as fixed by the Commission. The grounds for default include, but are not limited to, failure of a Compacting State to perform its obligations or responsibilities, and any other grounds designated in Commission Rules. The Commission shall immediately notify the Defaulting State in writing of the Defaulting State's suspension pending a cure of the default. The Commission shall stipulate the conditions and the time period within which the Defaulting State must cure its default. If the Defaulting State fails to cure the default within the time period specified by the Commission, the Defaulting State shall be terminated from the Compact and all rights, privileges and benefits conferred by this Compact shall be terminated from the effective date of termination.

b. Product approvals by the Commission or product self-certifications, or any Advertisement in connection with such product, that are in force on the effective date of termination shall remain in force in the Defaulting State in the same manner as if the Defaulting State had withdrawn voluntarily pursuant to paragraph 1 of this Article.

c. Reinstatement following termination of any Compacting State requires a reenactment of the Compact.

3. Dissolution of Compact.

a. The Compact dissolves effective upon the date of the withdrawal or default of the Compacting State which reduces membership in the Compact to one Compacting State.

b. Upon the dissolution of this Compact, the Compact becomes null and void and shall be of no further force or effect, and the business and affairs of the Commission shall be wound up and any surplus funds shall be distributed in accordance with the Bylaws.

Article XV. SEVERABILITY AND CONSTRUCTION

1. The provisions of this Compact shall be severable; and if any phrase, clause, sentence or provision is deemed unenforceable, the remaining provisions of the Compact shall be enforceable.

2. The provisions of this Compact shall be liberally construed to effectuate its purposes.

Article XVI. BINDING EFFECT OF COMPACT AND OTHER LAWS

1. Other Laws.

a. Nothing herein prevents the enforcement of any other law of a Compacting State, except as provided in paragraph b of this Article.

b. For any Product approved or certified to the Commission, the Rules, Uniform Standards and any other requirements of the Commission shall constitute the exclusive provisions applicable to the content, approval and certification of such Products. For Advertisement that is subject to the Commission's authority, any Rule, Uniform Standard or other requirement of the Commission which governs the content of the Advertisement shall constitute the exclusive provision that a Commissioner may apply to the content of the Advertisement. Notwithstanding the foregoing, no action taken by the Commission shall abrogate or restrict: (i) the access of any person to state courts; (ii) remedies available under state law related to breach of contract, tort, or other laws not specifically directed to the content of the Product; (iii) state law relating to the construction of insurance contracts; or (iv) the authority of the attorney general of the state, including but not limited to maintaining any actions or proceedings, as authorized by law.

c. All insurance products filed with individual States shall be subject to the laws of those States.

2. Binding Effect of this Compact.

a. All lawful actions of the Commission, including all Rules and Operating Procedures promulgated by the Commission, are binding upon the Compacting States.

b. All agreements between the Commission and the Compacting States are binding in accordance with their terms.

c. Upon the request of a party to a conflict over the meaning or interpretation of Commission actions, and upon a majority vote of the Compacting States, the Commission may issue advisory opinions regarding the meaning or interpretation in dispute.

d. In the event any provision of this Compact exceeds the constitutional limits imposed on the legislature of any Compacting State, the obligations, duties, powers or jurisdiction sought to be conferred by that provision upon the Commission shall be ineffective as to that Compacting State, and those obligations, duties, powers or jurisdiction shall remain in the Compacting State and shall be exercised by the agency thereof to which those obligations, duties, powers or jurisdiction are delegated by law in effect at the time this Compact becomes effective.

(Source: P.A. 96-1481, eff. 11-29-10.)

Section 40. The Counties Code is amended by changing Section 3-12007 as follows:

(55 ILCS 5/3-12007) (from Ch. 34, par. 3-12007)

Sec. 3-12007. Proposed rules for classified service. (a) The Director of Personnel shall prepare and submit to the commission proposed rules for the classified service. The director shall give at least 10 days' notice to the heads of all departments or agencies affected and they shall be given an opportunity, upon their request, to appear before the commission to express their views thereon before action is taken by the commission.

(b) The rules, as adopted pursuant to subsection (a) of Section 3-12005 shall provide for:

(1) preparation, maintenance and revision of a position classification plan for all positions in the classified service, based upon the similarity of duties performed and responsibilities assumed, so that the same qualifications may reasonably be required and the same schedule of pay may be applied to all positions in the same class. Each position authorized by the Board shall be allocated by the director to the proper class and assigned to the appropriate pay range for that class.

(2) promotion which shall give appropriate consideration to the applicant's qualifications, record of performance, seniority, and conduct. Vacancies shall be filled by promotion whenever practicable and in the best interest of the county service, and preference may be given to employees within the department in which the vacancy occurs.

(3) open competitive examinations to determine the relative fitness of applicants for the respective competitive positions.

(4) competitive selection of employees for all classes in the classified service.

(5) establishment of lists of eligibles for appointment and promotion, upon which lists shall be placed the names of successful candidates in the order of their relative excellence in the respective examinations. The duration of eligible lists for initial appointment shall be for no more than one year unless extended by the director for not more than one additional year; lists of eligibles for promotion shall be maintained for as long as the tests on which they are based are considered valid by the director.

(6) certification by the director to the appointing authorities of not more than the top 5 names from the list of eligibles for a single vacancy.

(7) rejection of candidates who do not comply with reasonable job requirements in regard to such factors as age, physical condition, training and experience, or who are addicted to alcohol or narcotics or have been guilty of infamous or disgraceful conduct or are illegal noncitizens aliens.

(8) periods of probationary employment. During the initial probation period following appointment any employee may be discharged or demoted without charges or hearing except that any applicant or employee, regardless of status, who has reason to believe that he/she has been discriminated against because of religious opinions or affiliation, or race, sex, or national origin in any personnel action may appeal to the commission in accordance with the provisions of this Division or in appropriate rules established by the commission pursuant to subsection (a) of Section 3-12005.

(9) provisional employment without competitive examinations when there is no appropriate eligible list available. No person hired as a provisional employee shall continue on the county payroll longer than 6 months per calendar year nor shall successive provisional appointments be allowed.

(10) transfer from a position in one department to a position in another department involving similar qualifications, duties, responsibilities and salary.

(11) procedures for authorized reinstatement within one year of persons who resign in good standing.

(12) layoff by reason of lack of funds or work or abolition of the position, or material changes in duties or organization, and for the layoff of nontenured employees first, and for the reemployment of permanent employees so laid off, giving consideration in both layoff and reemployment to performance record and seniority in service.

(13) keeping records of performance of all employees in the classified service.

(14) suspension, demotion or dismissal of an employee for misconduct, inefficiency, incompetence, insubordination, malfeasance or other unfitness to render effective service and for the investigation and hearing of appeals of any employee recommended for suspension, demotion or dismissal by a department head for any of the foregoing reasons.

(15) establishment of a plan for resolving employee grievances and complaints, including an appeals procedure.

(16) hours of work, holidays and attendance regulations, and for annual, sick and special leaves of absence, with or without pay, or at reduced pay.

(17) development of employee morale, safety and training programs.

(18) establishment of a period of probation, the length of which shall be determined by the complexity of the work involved, but which shall not exceed one year without special written approval from the commission.

(19) such other rules, not inconsistent with this Division, as may be proper and necessary for its enforcement.

(Source: P.A. 86-962.)

Section 45. The Illinois Municipal Code is amended by changing Section 11-74.2-14 as follows:

(65 ILCS 5/11-74.2-14) (from Ch. 24, par. 11-74.2-14)

Sec. 11-74.2-14. The corporate authorities may at any time transfer and sell the fee simple title, or any lesser estate that they acquired to all or any part of the real property within the redevelopment area. No such sale shall be inconsistent with the provisions of paragraph (e) of Section 11-74.2-8.

Such sales and transfers may be made to:

(1) Any individual, association or corporation, organized under the laws of this State or of any other State or country, which may legally make such investments in this State, including foreign and non-domestic alien insurance companies, as defined in Section 2 of the "Illinois Insurance Code"; or

(2) Any body politic and corporate, public corporation or private individual, corporation, association or interest empowered by law to acquire, develop and use such real property for such uses, public or private, as are in accordance with the final redevelopment plan.

To provide that the real property sold by the corporate authorities is used in accordance with the final redevelopment plan, the corporate authorities shall inquire into and satisfy themselves concerning the financial ability of the purchaser to complete the redevelopment in accordance with the redevelopment plan and shall require the purchaser to execute in writing such undertakings as the corporate authorities may deem necessary to obligate the purchaser to:

(1) Use the land for the purposes designated in the approved plan;

(2) Commence and complete the building of the improvements or the renovation of the property within the periods of time which the corporate authorities fix as reasonable; and

(3) Comply with such other conditions as are necessary to carry out the purposes of the final redevelopment plan.

Any redevelopment area may be sold either as an entirety or in such parcels as the corporate authorities may select. It is not necessary that title be acquired to all real property within the redevelopment area before the sale of a part thereof may be made as provided in this Section. All real property sold shall be sold at its use value which may be less than its acquisition cost. For purposes of this Division, use value represents the value at which the corporate authorities determine that such land should be made available in order that it may be developed or redeveloped for the purposes specified in the final redevelopment plan.

(Source: P.A. 81-3.)

Section 50. The Metropolitan Water Reclamation District Act is amended by changing Section 11.15 as follows:

(70 ILCS 2605/11.15) (from Ch. 42, par. 331.15)

Sec. 11.15. No person shall be employed upon contracts for work to be done by any such sanitary district unless he or she is a citizen of the United States, a national of the United States under Section 1401 of Title 8 of the United States Code, a person an alien lawfully admitted for permanent residence under Section 1101 of Title 8 of the United States Code, an individual who has been granted asylum under Section 1158 of Title 8 of the United States Code, or an individual who is otherwise legally authorized to work in the United States.

(Source: P.A. 98-280, eff. 8-9-13; 99-231, eff. 8-3-15.)

Section 55. The Board of Higher Education Act is amended by changing Section 9.16 as follows:

(110 ILCS 205/9.16) (from Ch. 144, par. 189.16)

Sec. 9.16. Underrepresentation of certain groups in higher education. To require public institutions of higher education to develop and implement methods and strategies to increase the participation of minorities, women and individuals with disabilities who are traditionally underrepresented in education programs and activities. For the purpose of this Section, minorities shall mean persons who are citizens of the United States or lawful permanent resident noncitizens aliens of the United States and who are any of the following:

(1) American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment).

(2) Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam).

(3) Black or African American (a person having origins in any of the black racial groups of Africa).

(4) Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race).

(5) Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands).

The Board shall adopt any rules necessary to administer this Section. The Board shall also do the following:

(a) require all public institutions of higher education to develop and submit plans for the implementation of this Section;

(b) conduct periodic review of public institutions of higher education to determine compliance with this Section; and if the Board finds that a public institution of higher education is not in compliance with this Section, it shall notify the institution of steps to take to attain compliance;

(c) provide advice and counsel pursuant to this Section;

(d) conduct studies of the effectiveness of methods and strategies designed to increase participation of students in education programs and activities in which minorities, women and individuals with disabilities are traditionally underrepresented, and monitor the success of students in such education programs and activities;

(e) encourage minority student recruitment and retention in colleges and universities. In implementing this paragraph, the Board shall undertake but need not be limited to the following: the establishment of guidelines and plans for public institutions of higher education for minority student recruitment and retention, the review and monitoring of minority student programs implemented at public institutions of higher education to determine their compliance with any guidelines and plans so established, the determination of the effectiveness and funding requirements of minority student programs at public institutions of higher education, the dissemination of successful programs as models, and the encouragement of cooperative partnerships between community colleges and local school attendance centers which are experiencing difficulties in enrolling minority students in four-year colleges and universities;

(f) mandate all public institutions of higher education to submit data and information essential to determine compliance with this Section. The Board shall prescribe the format and the date for submission of this data and any other education equity data; and

(g) report to the General Assembly and the Governor annually with a description of the plans submitted by each public institution of higher education for implementation of this Section, including financial data relating to the most recent fiscal year expenditures for specific minority programs, the effectiveness of such plans and programs and the effectiveness of the methods and strategies developed by the Board in meeting the purposes of this Section, the degree of compliance with this Section by each public institution of higher education as determined by the Board pursuant to its periodic review responsibilities, and the findings made by the Board in conducting its studies and monitoring student success as required by paragraph d) of this Section. With respect to each public institution of higher education such report also shall include, but need not be limited to, information with respect to each institution's minority program budget allocations; minority student admission, retention and graduation statistics; admission, retention, and graduation statistics of all students who are the first in their immediate family to attend an institution of higher education; number of financial assistance awards to undergraduate and graduate minority students; and minority faculty representation. This paragraph shall not be construed to prohibit the Board from making, preparing or issuing additional surveys or studies with respect to minority education in Illinois.

(Source: P.A. 102-465, eff. 1-1-22.)

Section 60. The Dental Student Grant Act is amended by changing Section 3.06 as follows:

(110 ILCS 925/3.06) (from Ch. 144, par. 1503.06)

Sec. 3.06. "Eligible dental student" means a person who meets all of the following qualifications:

(a) That the individual is a resident of this State and a citizen or lawful permanent resident noncitizen alien of the United States;

(b) That the individual has been accepted in a dental school located in Illinois;

(c) That the individual exhibits financial need as determined by the Department;

(d) That the individual has earned an educational diploma at an institution of education located in this State or has been a resident of the State for no less than 3 years prior to applying for the grant;

(e) That the individual is a member of a racial minority as defined in Section 3.07; and

(f) That the individual meets other qualifications which shall be established by the Department.

(Source: P.A. 87-665.)

Section 65. The Diversifying Higher Education Faculty in Illinois Act is amended by changing Sections 2 and 7 as follows:

(110 ILCS 930/2) (from Ch. 144, par. 2302)

Sec. 2. Definitions. As used in this Act, unless the context otherwise requires:

"Board" means the Board of Higher Education.

"DFI" means the Diversifying Higher Education Faculty in Illinois Program of financial assistance to minorities who are traditionally underrepresented as participants in postsecondary education. The program shall assist them in pursuing a graduate or professional degree and shall also assist program graduates to find employment at an Illinois institution of higher education, including a community college, in a faculty or staff position.

"Program Board" means the entity created to administer the grant program authorized by this Act.

"Qualified institution of higher education" means a qualifying publicly or privately operated educational institution located within Illinois (i) that offers instruction leading toward or prerequisite to an academic or professional degree beyond the baccalaureate degree, excluding theological schools, and (ii) that is authorized to operate in the State of Illinois.

"Racial minority" means a person who is a citizen of the United States or a lawful permanent resident noncitizen alien of the United States and who is any of the following:

(1) American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment).

(2) Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam).

(3) Black or African American (a person having origins in any of the black racial groups of Africa).

(4) Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race).

(5) Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands).

(Source: P.A. 102-465, eff. 1-1-22.)

(110 ILCS 930/7) (from Ch. 144, par. 2307)

Sec. 7. Eligibility for DFI grants. An individual is eligible for an award under the provisions of this Act when the Program Board finds:

(a) That the individual is a resident of this State and a citizen or lawful permanent resident noncitizen alien of the United States;

(b) That the individual is a member of a racial minority as defined under the terms of this Act;

(c) That the individual has earned any educational diploma at an institution of education located in this State, or is a resident of the State for no less than three years prior to applying for the grant, and the individual must hold a baccalaureate degree from an institution of higher learning;

(d) That the individual's financial resources are such that, in the absence of a DFI grant, the individual will be prevented from pursuing a graduate or professional degree at a qualified institution of higher education of his or her choice;

(e) That the individual has above average academic ability to pursue a graduate or professional degree; and

(f) That the individual meets other qualifications which shall be established by the Program Board.

Grant funds shall be awarded only to those persons pursuing a graduate or professional degree program at a qualified institution of higher education.

The Board shall by rule promulgate, pursuant to the Illinois Administrative Procedure Act, precise standards to be used by the Program Board to determine whether a program applicant has above average academic ability to pursue a graduate or professional degree.

(Source: P.A. 93-862, eff. 8-4-04.)

Section 70. The Higher Education Student Assistance Act is amended by changing Sections 65.50 and 65.110 as follows:

(110 ILCS 947/65.50)

Sec. 65.50. Teacher training full-time undergraduate scholarships.

(a) Five hundred new scholarships shall be provided each year for qualified high school students or high school graduates who desire to pursue full-time undergraduate studies in teacher education at public or private universities or colleges and community colleges in this State. The Commission, in accordance with rules and regulations promulgated for this program, shall provide funding and shall designate each year's new recipients from among those applicants who qualify for consideration by showing:

(1) that he or she is a resident of this State and a citizen or a lawful permanent resident noncitizen alien of the United States;

(2) that he or she has successfully completed the program of instruction at an approved high school or is a student in good standing at such a school and is engaged in a program that will be completed by the end of the academic year, and in either event that his or her cumulative grade average was or is in the upper 1/4 of the high school class;

(3) that he or she has superior capacity to profit by a higher education; and

(4) that he or she agrees to teach in Illinois schools in accordance with subsection (b).

No rule or regulation promulgated by the State Board of Education prior to the effective date of this amendatory Act of 1993 pursuant to the exercise of any right, power, duty, responsibility or matter of pending business transferred from the State Board of Education to the Commission under this Section shall be affected thereby, and all such rules and regulations shall become the rules and regulations of the Commission until modified or changed by the Commission in accordance with law.

If in any year the number of qualified applicants exceeds the number of scholarships to be awarded, the Commission shall give priority in awarding scholarships to students in financial need. The Commission shall consider factors such as the applicant's family income, the size of the applicant's family and the number of other children in the applicant's family attending college in determining the financial need of the individual.

Unless otherwise indicated, these scholarships shall be good for a period of up to 4 years while the recipient is enrolled for residence credit at a public or private university or college or at a community college. The scholarship shall cover tuition, fees and a stipend of $1,500 per year. For purposes of calculating scholarship awards for recipients attending private universities or colleges, tuition and fees for students at private colleges and universities shall not exceed the average tuition and fees for students at 4-year public colleges and universities for the academic year in which the scholarship is made.

(b) Upon graduation from or termination of enrollment in a teacher education program, any person who accepted a scholarship under the undergraduate scholarship program continued by this Section, including persons whose graduation or termination of enrollment occurred prior to the effective date of this amendatory Act of 1993, shall teach in any school in this State for at least 4 of the 7 years immediately following his or her graduation or termination. If the recipient spends up to 4 years in military service before or after he or she graduates, the period of military service shall be excluded from the computation of that 7 year period. A recipient who is enrolled full-time in an academic program leading to a graduate degree in education shall have the period of graduate study excluded from the computation of that 7 year period.

Any person who fails to fulfill the teaching requirement shall pay to the Commission an amount equal to one-fourth of the scholarship received for each unfulfilled year of the 4-year teaching requirement, together with interest at 8% per year on that amount. However, this obligation to repay does not apply when the failure to fulfill the teaching requirement results from involuntarily leaving the profession due to a decrease in the number of teachers employed by the school board or a discontinuation of a type of teaching service under Section 24-12 of the School Code or from the death or adjudication as incompetent of the person holding the scholarship. No claim for repayment may be filed against the estate of such a decedent or incompetent.

Each person applying for such a scholarship shall be provided with a copy of this subsection at the time he or she applies for the benefits of such scholarship.

(c) This Section is substantially the same as Sections 30-14.5 and 30-14.6 of the School Code, which are repealed by this amendatory Act of 1993, and shall be construed as a continuation of the teacher training undergraduate scholarship program established by that prior law, and not as a new or different teacher training undergraduate scholarship program. The State Board of Education shall transfer to the Commission, as the successor to the State Board of Education for all purposes of administering and implementing the provisions of this Section, all books, accounts, records, papers, documents, contracts, agreements, and pending business in any way relating to the teacher training undergraduate scholarship program continued under this Section, and all scholarships at any time awarded under that program by, and all applications for any such scholarship at any time made to, the State Board of Education shall be unaffected by the transfer to the Commission of all responsibility for the administration and implementation of the teacher training undergraduate scholarship program continued under this Section. The State Board of Education shall furnish to the Commission such other information as the Commission may request to assist it in administering this Section.

(Source: P.A. 88-228.)

(110 ILCS 947/65.110)

Sec. 65.110. Post-Master of Social Work School Social Work Professional Educator License scholarship.

(a) Subject to appropriation, beginning with awards for the 2022-2023 academic year, the Commission shall award annually up to 250 Post-Master of Social Work School Social Work Professional Educator License scholarships to a person who:

(1) holds a valid Illinois-licensed clinical social work license or social work license;

(2) has obtained a master's degree in social work from an approved program;

(3) is a United States citizen or eligible noncitizen; and

(4) submits an application to the Commission for such scholarship and agrees to take courses to obtain an Illinois Professional Educator License with an endorsement in School Social Work.

(b) If an appropriation for this Section for a given fiscal year is insufficient to provide scholarships to all qualified applicants, the Commission shall allocate the appropriation in accordance with this subsection (b). If funds are insufficient to provide all qualified applicants with a scholarship as authorized by this Section, the Commission shall allocate the available scholarship funds for that fiscal year to qualified applicants who submit a complete application on or before a date specified by the Commission, based on the following order of priority:

(1) firstly, to students who received a scholarship under this Section in the prior academic year and who remain eligible for a scholarship under this Section;

(2) secondly, to new, qualified applicants who are members of a racial minority, as defined in subsection (c); and

(3) finally, to other new, qualified applicants in accordance with this Section.

(c) Scholarships awarded under this Section shall be issued pursuant to rules adopted by the Commission. In awarding scholarships, the Commission shall give priority to those applicants who are members of a racial minority. Racial minorities are underrepresented as school social workers in elementary and secondary schools in this State, and the General Assembly finds that it is in the interest of this State to provide them with priority consideration for programs that encourage their participation in this field and thereby foster a profession that is more reflective of the diversity of Illinois students and the parents they will serve. A more reflective workforce in school social work allows improved outcomes for students and a better utilization of services. Therefore, the Commission shall give priority to those applicants who are members of a racial minority. In this subsection (c), "racial minority" means a person who is a citizen of the United States or a lawful permanent resident noncitizen alien of the United States and who is:

(1) Black (a person having origins in any of the black racial groups in Africa);

(2) Hispanic (a person of Spanish or Portuguese culture with origins in Mexico, South or Central America, or the Caribbean Islands, regardless of race);

(3) Asian American (a person having origins in any of the original peoples of the Far East, Southeast Asia, the Indian Subcontinent, or the Pacific Islands); or

(4) American Indian or Alaskan Native (a person having origins in any of the original peoples of North America).

(d) Each scholarship shall be applied to the payment of tuition and mandatory fees at the University of Illinois, Southern Illinois University, Chicago State University, Eastern Illinois University, Governors State University, Illinois State University, Northeastern Illinois University, Northern Illinois University, and Western Illinois University. Each scholarship may be applied to pay tuition and mandatory fees required to obtain an Illinois Professional Educator License with an endorsement in School Social Work.

(e) The Commission shall make tuition and fee payments directly to the qualified institution of higher learning that the applicant attends.

(f) Any person who has accepted a scholarship under this Section must, within one year after graduation or termination of enrollment in a Post-Master of Social Work Professional Education License with an endorsement in School Social Work program, begin working as a school social worker at a public or nonpublic not-for-profit preschool, elementary school, or secondary school located in this State for at least 2 of the 5 years immediately following that graduation or termination, excluding, however, from the computation of that 5-year period: (i) any time up to 3 years spent in the military service, whether such service occurs before or after the person graduates; (ii) the time that person is a person with a temporary total disability for a period of time not to exceed 3 years, as established by the sworn affidavit of a qualified physician; and (iii) the time that person is seeking and unable to find full-time employment as a school social worker at a State public or nonpublic not-for-profit preschool, elementary school, or secondary school.

(g) If a recipient of a scholarship under this Section fails to fulfill the work obligation set forth in subsection (f), the Commission shall require the recipient to repay the amount of the scholarships received, prorated according to the fraction of the obligation not completed, at a rate of interest equal to 5%, and, if applicable, reasonable collection fees. The Commission is authorized to establish rules relating to its collection activities for repayment of scholarships under this Section. All repayments collected under this Section shall be forwarded to the State Comptroller for deposit into this State's General Revenue Fund.

A recipient of a scholarship under this Section is not considered to be in violation of the failure to fulfill the work obligation under subsection (f) if the recipient (i) enrolls on a full-time basis as a graduate student in a course of study related to the field of social work at a qualified Illinois institution of higher learning; (ii) is serving, not in excess of 3 years, as a member of the armed services of the United States; (iii) is a person with a temporary total disability for a period of time not to exceed 3 years, as established by the sworn affidavit of a qualified physician; (iv) is seeking and unable to find full-time employment as a school social worker at an Illinois public or nonpublic not-for-profit preschool, elementary school, or secondary school that satisfies the criteria set forth in subsection (f) and is able to provide evidence of that fact; or (v) becomes a person with a permanent total disability, as established by the sworn affidavit of a qualified physician.

(Source: P.A. 102-621, eff. 1-1-22.)

Section 75. The Mental Health Graduate Education Scholarship Act is amended by changing Section 20 as follows:

(110 ILCS 952/20)

Sec. 20. Scholarships.

(a) Beginning with the fall term of the 2009-2010 academic year, the Department, in accordance with rules adopted by it for this program, shall provide scholarships to individuals selected from among those applicants who qualify for consideration by showing all of the following:

(1) That the individual has been a resident of this State for at least one year prior to application and is a citizen or a lawful permanent resident noncitizen alien of the United States.

(2) That the individual enrolled in or accepted into a mental health graduate program at an approved institution.

(3) That the individual agrees to meet the mental health employment obligation.

(b) If in any year the number of qualified applicants exceeds the number of scholarships to be awarded, the Department shall, in consultation with the Advisory Council, consider the following factors in granting priority in awarding scholarships:

(1) Financial need, as shown on a standardized financial needs assessment form used by an approved institution.

(2) A student's merit, as shown through his or her grade point average, class rank, and other academic and extracurricular activities.

The Department may add to and further define these merit criteria by rule.

(c) Unless otherwise indicated, scholarships shall be awarded to recipients at approved institutions for a period of up to 2 years if the recipient is enrolled in a master's degree program and up to 4 years if the recipient is enrolled in a doctoral degree program.

(Source: P.A. 96-672, eff. 8-25-09.)

Section 80. The Nursing Education Scholarship Law is amended by changing Sections 5 and 6.5 as follows:

(110 ILCS 975/5) (from Ch. 144, par. 2755)

Sec. 5. Nursing education scholarships. Beginning with the fall term of the 2004-2005 academic year, the Department, in accordance with rules and regulations promulgated by it for this program, shall provide scholarships to individuals selected from among those applicants who qualify for consideration by showing:

(1) that he or she has been a resident of this State for at least one year prior to application, and is a citizen or a lawful permanent resident noncitizen alien of the United States;

(2) that he or she is enrolled in or accepted for admission to an associate degree in nursing program, hospital-based diploma in nursing program, baccalaureate degree in nursing program, graduate degree in nursing program, or practical nursing program at an approved institution; and

(3) that he or she agrees to meet the nursing employment obligation.

If in any year the number of qualified applicants exceeds the number of scholarships to be awarded, the Department shall, in consultation with the Illinois Nursing Workforce Center Advisory Board, consider the following factors in granting priority in awarding scholarships:

(A) Financial need, as shown on a standardized financial needs assessment form used by an approved institution, of students who will pursue their education on a full-time or close to full-time basis and who already have a certificate in practical nursing, a diploma in nursing, or an associate degree in nursing and are pursuing a higher degree.

(B) A student's status as a registered nurse who is pursuing a graduate degree in nursing to pursue employment in an approved institution that educates licensed practical nurses and that educates registered nurses in undergraduate and graduate nursing programs.

(C) A student's merit, as shown through his or her grade point average, class rank, and other academic and extracurricular activities. The Department may add to and further define these merit criteria by rule.

Unless otherwise indicated, scholarships shall be awarded to recipients at approved institutions for a period of up to 2 years if the recipient is enrolled in an associate degree in nursing program, up to 3 years if the recipient is enrolled in a hospital-based diploma in nursing program, up to 4 years if the recipient is enrolled in a baccalaureate degree in nursing program, up to 5 years if the recipient is enrolled in a graduate degree in nursing program, and up to one year if the recipient is enrolled in a certificate in practical nursing program. At least 40% of the scholarships awarded shall be for recipients who are pursuing baccalaureate degrees in nursing, 30% of the scholarships awarded shall be for recipients who are pursuing associate degrees in nursing or a diploma in nursing, 10% of the scholarships awarded shall be for recipients who are pursuing a certificate in practical nursing, and 20% of the scholarships awarded shall be for recipients who are pursuing a graduate degree in nursing.

Beginning with the fall term of the 2021-2022 academic year and continuing through the 2024-2025 academic year, subject to appropriation from the Hospital Licensure Fund, in addition to any other funds available to the Department for such scholarships, the Department may award a total of $500,000 annually in scholarships under this Section.

(Source: P.A. 102-641, eff. 8-27-21.)

(110 ILCS 975/6.5)

Sec. 6.5. Nurse educator scholarships.

(a) Beginning with the fall term of the 2009-2010 academic year, the Department shall provide scholarships to individuals selected from among those applicants who qualify for consideration by showing the following:

(1) that he or she has been a resident of this State for at least one year prior to application and is a citizen or a lawful permanent resident noncitizen alien of the United States;

(2) that he or she is enrolled in or accepted for admission to a graduate degree in nursing program at an approved institution; and

(3) that he or she agrees to meet the nurse educator employment obligation.

(b) If in any year the number of qualified applicants exceeds the number of scholarships to be awarded under this Section, the Department shall, in consultation with the Illinois Nursing Workforce Center Advisory Board, consider the following factors in granting priority in awarding scholarships:

(1) Financial need, as shown on a standardized financial needs assessment form used by an approved institution, of students who will pursue their education on a full-time or close to full-time basis and who already have a diploma in nursing and are pursuing a higher degree.

(2) A student's status as a registered nurse who is pursuing a graduate degree in nursing to pursue employment in an approved institution that educates licensed practical nurses and that educates registered nurses in undergraduate and graduate nursing programs.

(3) A student's merit, as shown through his or her grade point average, class rank, experience as a nurse, including supervisory experience, experience as a nurse in the United States military, and other academic and extracurricular activities.

(c) Unless otherwise indicated, scholarships under this Section shall be awarded to recipients at approved institutions for a period of up to 3 years.

(d) Within 12 months after graduation from a graduate degree in nursing program for nurse educators, any recipient who accepted a scholarship under this Section shall begin meeting the required nurse educator employment obligation. In order to defer his or her continuous employment obligation, a recipient must request the deferment in writing from the Department. A recipient shall receive a deferment if he or she notifies the Department, within 30 days after enlisting, that he or she is spending up to 4 years in military service. A recipient shall receive a deferment if he or she notifies the Department, within 30 days after enrolling, that he or she is enrolled in an academic program leading to a graduate degree in nursing. The recipient must begin meeting the required nurse educator employment obligation no later than 6 months after the end of the deferment or deferments.

Any person who fails to fulfill the nurse educator employment obligation shall pay to the Department an amount equal to the amount of scholarship funds received per year for each unfulfilled year of the nurse educator employment obligation, together with interest at 7% per year on the unpaid balance. Payment must begin within 6 months following the date of the occurrence initiating the repayment. All repayments must be completed within 6 years from the date of the occurrence initiating the repayment. However, this repayment obligation may be deferred and re-evaluated every 6 months when the failure to fulfill the nurse educator employment obligation results from involuntarily leaving the profession due to a decrease in the number of nurses employed in this State or when the failure to fulfill the nurse educator employment obligation results from total and permanent disability. The repayment obligation shall be excused if the failure to fulfill the nurse educator employment obligation results from the death or adjudication as incompetent of the person holding the scholarship. No claim for repayment may be filed against the estate of such a decedent or incompetent.

The Department may allow a nurse educator employment obligation fulfillment alternative if the nurse educator scholarship recipient is unsuccessful in finding work as a nurse educator. The Department shall maintain a database of all available nurse educator positions in this State.

(e) Each person applying for a scholarship under this Section must be provided with a copy of this Section at the time of application for the benefits of this scholarship.

(f) Rulemaking authority to implement this amendatory Act of the 96th General Assembly, if any, is conditioned on the rules being adopted in accordance with all provisions of the Illinois Administrative Procedure Act and all rules and procedures of the Joint Committee on Administrative Rules; any purported rule not so adopted, for whatever reason, is unauthorized.

(Source: P.A. 100-513, eff. 1-1-18.)

Section 85. The Residential Mortgage License Act of 1987 is amended by changing Section 1-4 as follows:

(205 ILCS 635/1-4)

Sec. 1-4. Definitions. The following words and phrases have the meanings given to them in this Section:

(a) "Residential real property" or "residential real estate" shall mean any real property located in Illinois, upon which is constructed or intended to be constructed a dwelling. Those terms include a manufactured home as defined in subdivision (53) of Section 9-102 of the Uniform Commercial Code which is real property as defined in Section 5-35 of the Conveyance and Encumbrance of Manufactured Homes as Real Property and Severance Act.

(b) "Making a residential mortgage loan" or "funding a residential mortgage loan" shall mean for compensation or gain, either directly or indirectly, advancing funds or making a commitment to advance funds to a loan applicant for a residential mortgage loan.

(c) "Soliciting, processing, placing, or negotiating a residential mortgage loan" shall mean for compensation or gain, either directly or indirectly, accepting or offering to accept an application for a residential mortgage loan, assisting or offering to assist in the processing of an application for a residential mortgage loan on behalf of a borrower, or negotiating or offering to negotiate the terms or conditions of a residential mortgage loan with a lender on behalf of a borrower including, but not limited to, the submission of credit packages for the approval of lenders, the preparation of residential mortgage loan closing documents, including a closing in the name of a broker.

(d) "Exempt person or entity" shall mean the following:

(1) (i) Any banking organization or foreign banking corporation licensed by the Illinois Commissioner of Banks and Real Estate or the United States Comptroller of the Currency to transact business in this State; (ii) any national bank, federally chartered savings and loan association, federal savings bank, federal credit union; (iii) (blank); (iv) any bank, savings and loan association, savings bank, or credit union organized under the laws of this or any other state; (v) any Illinois Consumer Installment Loan Act licensee; (vi) any insurance company authorized to transact business in this State; (vii) any entity engaged solely in commercial mortgage lending; (viii) any service corporation of a savings and loan association or savings bank organized under the laws of this State or the service corporation of a federally chartered savings and loan association or savings bank having its principal place of business in this State, other than a service corporation licensed or entitled to reciprocity under the Real Estate License Act of 2000; or (ix) any first tier subsidiary of a bank, the charter of which is issued under the Illinois Banking Act by the Illinois Commissioner of Banks and Real Estate, or the first tier subsidiary of a bank chartered by the United States Comptroller of the Currency and that has its principal place of business in this State, provided that the first tier subsidiary is regularly examined by the Illinois Commissioner of Banks and Real Estate or the Comptroller of the Currency, or a consumer compliance examination is regularly conducted by the Federal Reserve Board.

(1.5) Any employee of a person or entity mentioned in item (1) of this subsection, when acting for such person or entity, or any registered mortgage loan originator when acting for an entity described in subsection (tt) of this Section.

(1.8) Any person or entity that does not originate mortgage loans in the ordinary course of business, but makes or acquires residential mortgage loans with his or her own funds for his or her or its own investment without intent to make, acquire, or resell more than 3 residential mortgage loans in any one calendar year.

(2) (Blank).

(2.1) A bona fide nonprofit organization.

(2.2) An employee of a bona fide nonprofit organization when acting on behalf of that organization.

(3) Any person employed by a licensee to assist in the performance of the residential mortgage licensee's activities regulated by this Act who is compensated in any manner by only one licensee.

(4) (Blank).

(5) Any individual, corporation, partnership, or other entity that originates, services, or brokers residential mortgage loans, as these activities are defined in this Act, and who or which receives no compensation for those activities, subject to the Commissioner's regulations and the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 and the rules promulgated under that Act with regard to the nature and amount of compensation.

(6) (Blank).

(7) Any entity engaged solely in providing loan processing services through the sponsoring of individuals acting pursuant to subsection (d) of Section 7-1A of this Act.

(e) "Licensee" or "residential mortgage licensee" shall mean a person, partnership, association, corporation, or any other entity who or which is licensed pursuant to this Act to engage in the activities regulated by this Act.

(f) "Mortgage loan" "residential mortgage loan" or "home mortgage loan" shall mean any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling as defined in Section 103(v) of the federal Truth in Lending Act, or residential real estate upon which is constructed or intended to be constructed a dwelling.

(g) "Lender" shall mean any person, partnership, association, corporation, or any other entity who either lends or invests money in residential mortgage loans.

(h) "Ultimate equitable owner" shall mean a person who, directly or indirectly, owns or controls an ownership interest in a corporation, foreign corporation, non-domestic alien business organization, trust, or any other form of business organization regardless of whether the person owns or controls the ownership interest through one or more persons or one or more proxies, powers of attorney, nominees, corporations, associations, partnerships, trusts, joint stock companies, or other entities or devices, or any combination thereof.

(i) "Residential mortgage financing transaction" shall mean the negotiation, acquisition, sale, or arrangement for or the offer to negotiate, acquire, sell, or arrange for, a residential mortgage loan or residential mortgage loan commitment.

(j) "Personal residence address" shall mean a street address and shall not include a post office box number.

(k) "Residential mortgage loan commitment" shall mean a contract for residential mortgage loan financing.

(l) "Party to a residential mortgage financing transaction" shall mean a borrower, lender, or loan broker in a residential mortgage financing transaction.

(m) "Payments" shall mean payment of all or any of the following: principal, interest and escrow reserves for taxes, insurance and other related reserves, and reimbursement for lender advances.

(n) "Commissioner" shall mean the Commissioner of Banks and Real Estate, except that, beginning on April 6, 2009 (the effective date of Public Act 95-1047), all references in this Act to the Commissioner of Banks and Real Estate are deemed, in appropriate contexts, to be references to the Secretary of Financial and Professional Regulation, or his or her designee, including the Director of the Division of Banking of the Department of Financial and Professional Regulation.

(n-1) "Director" shall mean the Director of the Division of Banking of the Department of Financial and Professional Regulation, except that, beginning on July 31, 2009 (the effective date of Public Act 96-112), all references in this Act to the Director are deemed, in appropriate contexts, to be the Secretary of Financial and Professional Regulation, or his or her designee, including the Director of the Division of Banking of the Department of Financial and Professional Regulation.

(o) "Loan brokering", "brokering", or "brokerage service" shall mean the act of helping to obtain from another entity, for a borrower, a loan secured by residential real estate situated in Illinois or assisting a borrower in obtaining a loan secured by residential real estate situated in Illinois in return for consideration to be paid by either the borrower or the lender including, but not limited to, contracting for the delivery of residential mortgage loans to a third party lender and soliciting, processing, placing, or negotiating residential mortgage loans.

(p) "Loan broker" or "broker" shall mean a person, partnership, association, corporation, or limited liability company, other than those persons, partnerships, associations, corporations, or limited liability companies exempted from licensing pursuant to Section 1-4, subsection (d), of this Act, who performs the activities described in subsections (c), (o), and (yy) of this Section.

(q) "Servicing" shall mean the collection or remittance for or the right or obligation to collect or remit for any lender, noteowner, noteholder, or for a licensee's own account, of payments, interests, principal, and trust items such as hazard insurance and taxes on a residential mortgage loan in accordance with the terms of the residential mortgage loan; and includes loan payment follow-up, delinquency loan follow-up, loan analysis and any notifications to the borrower that are necessary to enable the borrower to keep the loan current and in good standing. "Servicing" includes management of third-party entities acting on behalf of a residential mortgage licensee for the collection of delinquent payments and the use by such third-party entities of said licensee's servicing records or information, including their use in foreclosure.

(r) "Full service office" shall mean an office, provided by the licensee and not subleased from the licensee's employees, and staff in Illinois reasonably adequate to handle efficiently communications, questions, and other matters relating to any application for, or an existing home mortgage secured by residential real estate situated in Illinois with respect to which the licensee is brokering, funding originating, purchasing, or servicing. The management and operation of each full service office must include observance of good business practices such as proper signage; adequate, organized, and accurate books and records; ample phone lines, hours of business, staff training and supervision, and provision for a mechanism to resolve consumer inquiries, complaints, and problems. The Commissioner shall issue regulations with regard to these requirements and shall include an evaluation of compliance with this Section in his or her periodic examination of each licensee.

(s) "Purchasing" shall mean the purchase of conventional or government-insured mortgage loans secured by residential real estate situated in Illinois from either the lender or from the secondary market.

(t) "Borrower" shall mean the person or persons who seek the services of a loan broker, originator, or lender.

(u) "Originating" shall mean the issuing of commitments for and funding of residential mortgage loans.

(v) "Loan brokerage agreement" shall mean a written agreement in which a broker or loan broker agrees to do either of the following:

(1) obtain a residential mortgage loan for the borrower or assist the borrower in obtaining a residential mortgage loan; or

(2) consider making a residential mortgage loan to the borrower.

(w) "Advertisement" shall mean the attempt by publication, dissemination, or circulation to induce, directly or indirectly, any person to enter into a residential mortgage loan agreement or residential mortgage loan brokerage agreement relative to a mortgage secured by residential real estate situated in Illinois.

(x) (Blank).

(y) "Government-insured mortgage loan" shall mean any mortgage loan made on the security of residential real estate insured by the Department of Housing and Urban Development or Farmers Home Loan Administration, or guaranteed by the Veterans Administration.

(z) "Annual audit" shall mean a certified audit of the licensee's books and records and systems of internal control performed by a certified public accountant in accordance with generally accepted accounting principles and generally accepted auditing standards.

(aa) "Financial institution" shall mean a savings and loan association, savings bank, credit union, or a bank organized under the laws of Illinois or a savings and loan association, savings bank, credit union or a bank organized under the laws of the United States and headquartered in Illinois.

(bb) "Escrow agent" shall mean a third party, individual or entity charged with the fiduciary obligation for holding escrow funds on a residential mortgage loan pending final payout of those funds in accordance with the terms of the residential mortgage loan.

(cc) "Net worth" shall have the meaning ascribed thereto in Section 3-5 of this Act.

(dd) "Affiliate" shall mean:

(1) any entity that directly controls or is controlled by the licensee and any other company that is directly affecting activities regulated by this Act that is controlled by the company that controls the licensee;

(2) any entity:

(A) that is controlled, directly or indirectly, by a trust or otherwise, by or for the benefit of shareholders who beneficially or otherwise control, directly or indirectly, by trust or otherwise, the licensee or any company that controls the licensee; or

(B) a majority of the directors or trustees of which constitute a majority of the persons holding any such office with the licensee or any company that controls the licensee;

(3) any company, including a real estate investment trust, that is sponsored and advised on a contractual basis by the licensee or any subsidiary or affiliate of the licensee.

(ee) "First tier subsidiary" shall be defined by regulation incorporating the comparable definitions used by the Office of the Comptroller of the Currency and the Illinois Commissioner of Banks and Real Estate.

(ff) "Gross delinquency rate" means the quotient determined by dividing (1) the sum of (i) the number of government-insured residential mortgage loans funded or purchased by a licensee in the preceding calendar year that are delinquent and (ii) the number of conventional residential mortgage loans funded or purchased by the licensee in the preceding calendar year that are delinquent by (2) the sum of (i) the number of government-insured residential mortgage loans funded or purchased by the licensee in the preceding calendar year and (ii) the number of conventional residential mortgage loans funded or purchased by the licensee in the preceding calendar year.

(gg) "Delinquency rate factor" means the factor set by rule of the Commissioner that is multiplied by the average gross delinquency rate of licensees, determined annually for the immediately preceding calendar year, for the purpose of determining which licensees shall be examined by the Commissioner pursuant to subsection (b) of Section 4-8 of this Act.

(hh) (Blank).

(ii) "Confidential supervisory information" means any report of examination, visitation, or investigation prepared by the Commissioner under this Act, any report of examination visitation, or investigation prepared by the state regulatory authority of another state that examines a licensee, any document or record prepared or obtained in connection with or relating to any examination, visitation, or investigation, and any record prepared or obtained by the Commissioner to the extent that the record summarizes or contains information derived from any report, document, or record described in this subsection. "Confidential supervisory information" does not include any information or record routinely prepared by a licensee and maintained in the ordinary course of business or any information or record that is required to be made publicly available pursuant to State or federal law or rule.

(jj) "Mortgage loan originator" means an individual who for compensation or gain or in the expectation of compensation or gain:

(i) takes a residential mortgage loan application; or

(ii) offers or negotiates terms of a residential mortgage loan.

"Mortgage loan originator" includes an individual engaged in loan modification activities as defined in subsection (yy) of this Section. A mortgage loan originator engaged in loan modification activities shall report those activities to the Department of Financial and Professional Regulation in the manner provided by the Department; however, the Department shall not impose a fee for reporting, nor require any additional qualifications to engage in those activities beyond those provided pursuant to this Act for mortgage loan originators.

"Mortgage loan originator" does not include an individual engaged solely as a loan processor or underwriter except as otherwise provided in subsection (d) of Section 7-1A of this Act.

"Mortgage loan originator" does not include a person or entity that only performs real estate brokerage activities and is licensed in accordance with the Real Estate License Act of 2000, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator, or by any agent of that lender, mortgage broker, or other mortgage loan originator.

"Mortgage loan originator" does not include a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11, United States Code.

(kk) "Depository institution" has the same meaning as in Section 3 of the Federal Deposit Insurance Act, and includes any credit union.

(ll) "Dwelling" means a residential structure or mobile home which contains one to 4 family housing units, or individual units of condominiums or cooperatives.

(mm) "Immediate family member" means a spouse, child, sibling, parent, grandparent, or grandchild, and includes step-parents, step-children, step-siblings, or adoptive relationships.

(nn) "Individual" means a natural person.

(oo) "Loan processor or underwriter" means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person licensed, or exempt from licensing, under this Act. "Clerical or support duties" includes subsequent to the receipt of an application:

(i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and

(ii) communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that the communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms. An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.

(pp) "Nationwide Multistate Licensing System and Registry" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators.

(qq) "Nontraditional mortgage product" means any mortgage product other than a 30-year fixed rate mortgage.

(rr) "Person" means a natural person, corporation, company, limited liability company, partnership, or association.

(ss) "Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including:

(1) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

(2) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

(3) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing with respect to any such transaction;

(4) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; or

(5) offering to engage in any activity, or act in any capacity, described in this subsection (ss).

(tt) "Registered mortgage loan originator" means any individual that:

(1) meets the definition of mortgage loan originator and is an employee of:

(A) a depository institution;

(B) a subsidiary that is:

(i) owned and controlled by a depository institution; and

(ii) regulated by a federal banking agency; or

(C) an institution regulated by the Farm Credit Administration; and

(2) is registered with, and maintains a unique identifier through, the Nationwide Multistate Licensing System and Registry.

(uu) "Unique identifier" means a number or other identifier assigned by protocols established by the Nationwide Multistate Licensing System and Registry.

(vv) "Residential mortgage license" means a license issued pursuant to Section 1-3, 2-2, or 2-6 of this Act.

(ww) "Mortgage loan originator license" means a license issued pursuant to Section 7-1A, 7-3, or 7-6 of this Act.

(xx) "Secretary" means the Secretary of the Department of Financial and Professional Regulation, or a person authorized by the Secretary or by this Act to act in the Secretary's stead.

(yy) "Loan modification" means, for compensation or gain, either directly or indirectly offering or negotiating on behalf of a borrower or homeowner to adjust the terms of a residential mortgage loan in a manner not provided for in the original or previously modified mortgage loan.

(zz) "Short sale facilitation" means, for compensation or gain, either directly or indirectly offering or negotiating on behalf of a borrower or homeowner to facilitate the sale of residential real estate subject to one or more residential mortgage loans or debts constituting liens on the property in which the proceeds from selling the residential real estate will fall short of the amount owed and the lien holders are contacted to agree to release their lien on the residential real estate and accept less than the full amount owed on the debt.

(aaa) "Bona fide nonprofit organization" means an organization that is described in Section 501(c)(3) of the Internal Revenue Code, is exempt from federal income tax under Section 501(a) of the Internal Revenue Code, does not operate in a commercial context, and does all of the following:

(1) Promotes affordable housing or provides home ownership education or similar services.

(2) Conducts its activities in a manner that serves public or charitable purposes.

(3) Receives funding and revenue and charges fees in a manner that does not create an incentive for itself or its employees to act other than in the best interests of its clients.

(4) Compensates its employees in a manner that does not create an incentive for its employees to act other than in the best interests of its clients.

(5) Provides to, or identifies for, the borrower residential mortgage loans with terms favorable to the borrower and comparable to residential mortgage loans and housing assistance provided under government housing assistance programs.

The Commissioner may define by rule and regulation any terms used in this Act for the efficient and clear administration of this Act.

(Source: P.A. 100-783, eff. 8-10-18; 100-851, eff. 8-14-18; 100-1153, eff. 12-19-18; 101-81, eff. 7-12-19.)

Section 90. The Illinois Insurance Code is amended by changing Sections 2, 35A-5, 37, and 58 and the heading of Article III.5 and Sections 60a, 60b, 60c, 60d, 60e, 60f, 60g, 60h, 60i, 60j, 63, 86, 87, 88, 103, 104, and 105 and the heading of Article VI and Sections 108, 109, 110, 111, 112, 113, 113.1, 114, 115, 116, 117, 118, 119, 120, 123, 123.1, 123.3, 123C-8, 126.1, 126.12, 126.25, 131.13, 132.3, 133, 136, 141a, 144, 144.1, 146, 148, 154.5, 156, 156.1, 157, 161, 162, 163, 164, 166, 169, 170, 173.1, 179A-5, and 179E-5 and the heading of Article XII and Sections 180, 185.1, 188, 188.1, 197, 201, 223, 241, 292.1, 302.1, 308.1, 309.1, 310.1, 357.29, 370, 404, 408, 412, 413, 415, 444, 444.1, 445, 448, 451, 531.09, 531.11, 534.5, 543.1, and 1103 as follows:

(215 ILCS 5/2) (from Ch. 73, par. 614)

Sec. 2. General definitions.

In this Code, unless the context otherwise requires,

(a) "Director" means the Director of Insurance.

(b) "Department" means the Department of Insurance.

(c) "State" or "State of the United States" includes the District of Columbia and a territory or possession of the United States.

(d) "Country" or "Foreign Country" includes a state, province or political subdivision thereof.

(e) "Company" means an insurance or surety company and shall be deemed to include a corporation, company, partnership, association, society, order, individual or aggregation of individuals engaging in or proposing or attempting to engage in any kind of insurance or surety business, including the exchanging of reciprocal or inter-insurance contracts between individuals, partnerships and corporations.

(f) "Domestic Company" means a company incorporated or organized under the laws of this State.

(g) "Foreign Company" means a company incorporated or organized under the laws of any state of the United States other than this State.

(h) "Non-domestic Alien Company" means a company incorporated or organized under the laws of any country other than the United States.

(i) "Mutual Legal Reserve Life Company" means a mutual life company issuing contracts without contingent liability on the policyholder.

(j) "Assessment Legal Reserve Life Company" means a life company issuing contracts providing for contingent liability on the policyholder.

(k) "Reciprocal" includes Inter-Insurance Exchange.

(l) "Person" includes an individual, aggregation of individuals, corporation, association and partnership.

(m) Personal pronouns include all genders, the singular includes the plural and the plural includes the singular.

(n) "Policy" means an insurance policy or contract and includes certificates of fraternal benefit societies, assessment companies, mutual benefit associations, and burial societies.

(o) "Policyholder" means a holder of an insurance policy or contract and includes holders of certificates of fraternal benefit societies, assessment companies, mutual benefit associations, and burial societies.

(p) "Articles of Incorporation" means the basic instrument of an incorporated company and all amendments thereto and includes "Charter," "Articles of Organization," "Articles of Reorganization," "Articles of Association," and "Deed of Settlement."

(q) "Officer" when used to refer to an officer of a company includes an attorney-in-fact for a reciprocal or Lloyds.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/35A-5)

Sec. 35A-5. Definitions. As used in this Article, the terms listed in this Section have the meaning given herein.

"Adjusted RBC Report" means an RBC Report that has been adjusted by the Director in accordance with subsection (f) of Section 35A-10.

"Authorized control level RBC" means the number determined under the risk-based capital formula in accordance with the RBC Instructions.

"Company action level RBC" means the product of 2.0 and the insurer's authorized control level RBC.

"Corrective Order" means an order issued by the Director in accordance with Article XII 1/2 specifying corrective actions that the Director determines are required.

"Domestic insurer" means any insurance company domiciled in this State under Article II, Article III, Article III 1/2, or Article IV or a health organization as defined by this Article, except this shall include only those health maintenance organizations that are "domestic companies" in accordance with Section 5-3 of the Health Maintenance Organization Act and only those limited health service organizations that are "domestic companies" in accordance with Section 4003 of the Limited Health Service Organization Act.

"Fraternal benefit society" means any insurance company licensed under Article XVII of this Code.

"Foreign insurer" means any foreign or non-domestic alien insurance company licensed under Article VI that is not domiciled in this State and any health maintenance organization that is not a "domestic company" in accordance with Section 5-3 of the Health Maintenance Organization Act and any limited health service organization that is not a "domestic company" in accordance with Section 4003 of the Limited Health Service Organization Act.

"Health organization" means an entity operating under a certificate of authority issued pursuant to the Health Maintenance Organization Act, the Dental Service Plan Act, the Limited Health Service Organization Act, or the Voluntary Health Services Plans Act, unless the entity is otherwise defined as a "life, health, or life and health insurer" pursuant to this Act.

"Life, health, or life and health insurer" means an insurance company that has authority to transact the kinds of insurance described in either or both clause (a) or clause (b) of Class 1 of Section 4 or a licensed property and casualty insurer writing only accident and health insurance.

"Mandatory control level RBC" means the product of 0.70 and the insurer's authorized control level RBC.

"NAIC" means the National Association of Insurance Commissioners.

"Negative trend" means, with respect to a life, health, or life and health insurer or a fraternal benefit society, a negative trend over a period of time, as determined in accordance with the trend test calculation included in the Life or Fraternal RBC Instructions.

"Property and casualty insurer" means an insurance company that has authority to transact the kinds of insurance in either or both Class 2 or Class 3 of Section 4 or a licensed insurer writing only insurance authorized under clause (c) of Class 1, but does not include monoline mortgage guaranty insurers, financial guaranty insurers, and title insurers.

"RBC" means risk-based capital.

"RBC Instructions" means the RBC Report including risk-based capital instructions adopted by the NAIC as those instructions may be amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC.

"RBC level" means an insurer's company action level RBC, regulatory action level RBC, authorized control level RBC, or mandatory control level RBC.

"RBC Plan" means a comprehensive financial plan containing the elements specified in subsection (b) of Section 35A-15.

"RBC Report" means the risk-based capital report required under Section 35A-10.

"Receivership" means conservation, rehabilitation, or liquidation under Article XIII.

"Regulatory action level RBC" means the product of 1.5 and the insurer's authorized control level RBC.

"Revised RBC Plan" means an RBC Plan rejected by the Director and revised by the insurer with or without the Director's recommendations.

"Total adjusted capital" means the sum of (1) an insurer's statutory capital and surplus and (2) any other items that the RBC Instructions may provide.

(Source: P.A. 98-157, eff. 8-2-13.)

(215 ILCS 5/37) (from Ch. 73, par. 649)

(Section scheduled to be repealed on January 1, 2027)

Sec. 37. Name. The corporate name of any company organized under this Article shall contain the word "Mutual" and shall not be the same as, or deceptively similar to, the name of any domestic company, or of any foreign or non-domestic alien company authorized to transact business in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/58) (from Ch. 73, par. 670)

(Section scheduled to be repealed on January 1, 2027)

Sec. 58. Governmental agencies and corporations may be members. Any government or governmental agency, state or political subdivision thereof, public or private corporation, board, association, estate, trustee or fiduciary in this State or elsewhere, may make application, enter into agreements for and hold policies or contracts in or with, and be a member of, any domestic, foreign or non-domestic alien mutual company subject to the provisions of this Code. Any officer, representative, trustee, receiver or legal representative of any such member or policyholder, shall be recognized as acting for or on its behalf for the purpose of such contract or membership, but shall not be personally liable upon such contract by reason of acting in such representative capacity.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/Art. III.5 heading)

ARTICLE III 1/2. NON-DOMESTIC ALIEN COMPANIES

(215 ILCS 5/60a) (from Ch. 73, par. 672a)

Sec. 60a. Non-domestic Alien companies; Illinois State of entry.

(1) A non-domestic An alien company may use Illinois as a state of entry to transact insurance in the United States by obtaining a certificate of authority pursuant to Section 111 and maintaining in this State a deposit of assets in trust in accordance with the provisions of Section 60b.

(2) A United States branch of a non-domestic an alien company that uses Illinois as a state of entry to transact insurance in the United States shall be considered a domestic company, and as such shall be subject to all applicable provisions of this Code. Transactions between the United States branch and the home office of a non-domestic an alien company shall not be subject to the provisions of Section 131.20 and subsection (1) of Section 131.20a, but remittances of profits of the United States branch to the home office of a non-domestic an alien company shall be considered dividends subject to the requirements of subsection (2) of Section 131.20a.

(Source: P.A. 89-97, eff. 7-7-95.)

(215 ILCS 5/60b) (from Ch. 73, par. 672b)

Sec. 60b. Non-domestic Alien companies; Illinois trusteed assets.

(1) A non-domestic An alien company may not use Illinois as a state of entry to transact insurance in the United States unless it maintains in this State a deposit of assets in trust for the benefit of policyholders in the United States, which assets shall be its "Trusteed Assets". The United States branch of a non-domestic an alien company shall maintain Trusteed Assets at least equal to (a) the sum of (i) its minimum capital and surplus, and (ii) the amount of its liabilities to policyholders, net of reinsurance for which credit is allowed pursuant to Article XI, as reflected in its most recent financial statement on file with the Director, minus (b) the sum of (i) the amount of all of its general state deposits (including all interest accrued and due and payable to the holder of the deposit), (ii) the amount of its special state deposits (including all interest accrued and due and payable to the holder of the deposit), (iii) the amount of its reinsurance recoverable on paid losses (where such reinsurance is the type for which credit would be allowed pursuant to Article XI), (iv) the amounts of its notes and bills receivable, taken for premiums; (v) with respect to a company authorized to write the kinds of insurance specified in Classes 2 and 3 of Section 4 of this Code, the amount of its agents' balances and uncollected premiums; and (vi) the amount of its funds held by or deposited with reinsureds.

(2) Only those assets that qualify as authorized investments as provided in Article VIII (and in Sections 131.2 and 131.3) shall be included in a non-domestic an alien company's Trusteed Assets.

(Source: P.A. 88-45; 89-97, eff. 7-7-95.)

(215 ILCS 5/60c) (from Ch. 73, par. 672c)

Sec. 60c. Requirements and contents of trust agreement. Trust agreements governing Trusteed Assets required by Section 60b shall satisfy the following conditions:

(1) Legal title to the Trusteed Assets shall be vested in the trustee or trustees, and their successors lawfully appointed, in trust for the benefit and security of policyholders of the non-domestic alien company in the United States.

(2) The agreement shall provide for substitution of a new trustee or trustees, subject to the Director's approval.

(3) All Trusteed Assets shall at all times be maintained as a trust fund separate and distinct from all other assets.

(4) The trustee or trustees shall maintain a record at all times sufficient to identify the assets of the trust.

(5) Withdrawal of or from the Trusteed Assets shall be made only as provided in Section 60d.

(Source: P.A. 85-1373.)

(215 ILCS 5/60d) (from Ch. 73, par. 672d)

Sec. 60d. Withdrawal of Trusteed Assets. (1) The trust agreement shall provide that no withdrawals of Trusteed Assets shall be made by the non-domestic alien company or permitted by the trustee or trustees without the prior approval of the Director, except as follows:

(a) Any or all income, earnings, dividends, or interest accumulations of the Trusteed Assets may be paid over to the United States branch of the non-domestic alien company upon request of the company or its manager, provided that no withdrawal shall be made that reduces the Trusteed Assets below the amount required by Section 60b.

(b) For the purpose of substituting other assets authorized for investment by Article VIII and at least equal in value (as reflected in the most recent financial statement on file with the Director) to those being withdrawn, if such withdrawal is requested in writing by the non-domestic alien company's (i) United States manager or (ii) other United States representative pursuant to general or specific written authority previously given or delegated by the non-domestic alien company's board of directors or other similar governing body, and a copy of such authority has been filed with the trustee or trustees.

(c) For the purpose of making deposits required by law in any state for the protection of the non-domestic alien company's policyholders in the United States. The trustee or trustees shall transfer any assets so withdrawn, and in the amount so required to be deposited in the other state, directly to the depository required to receive such deposit in such other state.

(d) For the payment of obligations due from the United States branch of the non-domestic alien company to policyholders in the United States, provided that no withdrawal shall be made that reduces the Trusteed Assets below the amount required by Section 60b.

(e) For the purpose of withdrawing any amount of the Trusteed Assets in excess of the amount required by Section 60b, as determined by the non-domestic alien company's then most current annual statement on file with the Director.

(f) For the purpose of transferring the Trusteed Assets to an appointed liquidator, conservator, or rehabilitator pursuant to the order of a court of competent jurisdiction.

(2) If at any time the non-domestic alien company becomes insolvent, or if its Trusteed Assets are less than required under Section 60b, the Director shall in writing order the trustee to suspend the right of the non-domestic alien company or any other person to withdraw assets as otherwise authorized under paragraphs (a), (b), (c), (d) and (e) of subsection (1); and the trustee shall comply with such order until otherwise ordered by the Director.

(Source: P.A. 85-1373.)

(215 ILCS 5/60e) (from Ch. 73, par. 672e)

Sec. 60e. Domestication of Non-domestic Alien Company; definitions. As used in Sections 60e through 60i:

(1) "Domestication" means the reorganization of the United States branch of a non-domestic an alien company as the result of which a domestic company shall succeed to all the business and assets and assume all the liabilities of the United States branch of the non-domestic alien company.

(2) "United States branch" means the business unit through which business is transacted within the United States by a non-domestic an alien company and the assets and liabilities of such insurer within the United States pertaining to such business.

(3) "Domestic Company" means a stock or mutual insurer incorporated under the laws of this State.

(Source: P.A. 85-1373.)

(215 ILCS 5/60f) (from Ch. 73, par. 672f)

Sec. 60f. Domestication procedure. (1) Upon compliance with Sections 60e through 60i, any non-domestic alien company authorized to do business in this State may, with the prior written approval of the Director, domesticate its United States branch by entering into an agreement in writing with a domestic company providing for the acquisition by the domestic company of all of the assets and the assumption of all of the liabilities of the United States branch.

(2) The acquisition of assets and assumption of liabilities of the United States branch by the domestic company shall be effected by filing with the Director an instrument of transfer and assumption in form satisfactory to the Director and executed by the non-domestic alien company and the domestic company.

(Source: P.A. 85-1373.)

(215 ILCS 5/60g) (from Ch. 73, par. 672g)

Sec. 60g. Domestication agreement; authorization; execution. (1) The domestication agreement referred to in Section 60f shall be authorized, adopted, approved, signed, and acknowledged by the non-domestic alien company in accordance with the laws of the country under which it is organized.

(2) In the case of a domestic company, the domestication agreement shall be approved, adopted, and authorized by its board of directors and executed by its president or any vice president and attested by its secretary or assistant secretary under its corporate seal.

(Source: P.A. 85-1373.)

(215 ILCS 5/60h) (from Ch. 73, par. 672h)

Sec. 60h. Director's approval of domestication agreement. An executed counterpart of the domestication agreement, together with certified copies of the corporate proceedings of the domestic company and the non-domestic alien company, approving, adopting and authorizing the execution of the domestication agreement, shall be submitted to the Director for approval. The Director shall thereupon consider the agreement, and, if the Director finds that the same is in accordance with the provisions hereof and that the interests of policyholders of the United States branch of the non-domestic alien insurer and of the domestic company are not materially adversely affected, the Director shall approve the domestication agreement and authorize the consummation thereof in compliance with the provisions of Section 60i. The Director shall approve or disapprove the domestication agreement within 60 days after it is submitted to the Director.

(Source: P.A. 85-1373.)

(215 ILCS 5/60i) (from Ch. 73, par. 672i)

Sec. 60i. Consummation of domestication; transfer of assets and deposits. (1) Upon the filing with the Director of a certified copy of the instrument of transfer and assumption pursuant to which a domestic company succeeds to the business and assets of the United States branch of a non-domestic an alien company and assumes all its liabilities, the domestication of the United States branch shall be deemed to be effective; and thereupon all the rights, franchises, and interests of the United States branch in and to every species of property, real, personal, and mixed, and things in actions thereunder belonging shall be deemed as transferred to and vested in the domestic company, and simultaneously therewith the domestic company shall be deemed to have assumed all of the liabilities of the United States branch. The domestic company shall be considered as having the age as the oldest of the 2 parties to the domestication agreement for purposes of complying with the requirements of laws relating to age of company.

(2) All deposits of the United States branch held by the Director, or by state officers or other state regulatory agencies pursuant to requirements of state laws, shall be deemed to be held as security for the satisfaction by the domestic company of all liabilities to policyholders within the United States assumed from the United States branch; and such deposits shall be deemed to be assets of the domestic company and shall be reported as such in the annual financial statements and other reports which the domestic company may be required to file. Upon the ultimate release by any such state officer or agency of any such deposits, the securities and cash constituting such released deposit shall be delivered and paid over to the domestic company as the lawful successor in interest to the United States branch.

(3) Contemporaneously with the consummation of the domestication of the United States branch, the Director shall direct the trustee, if any, of the U. S. branch's Trusteed Assets to transfer and deliver to the domestic company all assets, if any, held by such trustee.

(Source: P.A. 85-1373.)

(215 ILCS 5/60j) (from Ch. 73, par. 672j)

Sec. 60j. Trustees of non-domestic alien companies. (1) The directors of a non-domestic an alien company may appoint citizens or corporations of the United States as its trustees to hold funds and assets in trust for the benefit of the policyholders and creditors of the company in the United States. A certified copy of the record of such appointment and of the deed of trust, approved by the Director, shall be filed with him.

(2) The Director may examine such trustee and any officers and agents, books and papers thereof, with respect to the affairs of such non-domestic alien company in the same manner as he may examine officers, agents, books, papers and affairs of companies.

(3) The funds and assets so held by such trustees shall, with the deposits otherwise made by the United States branch of the non-domestic alien company in the United States together with loans in connection with its policies to policyholders, and all other funds and assets held by the United States branch of the non-domestic alien company in the United States, constitute the assets of the company for the purpose of making its financial statements required by this Code. For purposes of making financial statements required by this Code, the liabilities of a non-domestic an alien company shall be limited to only those liabilities incurred in connection with its United States business.

(4) In applying the risk limitations as provided in Section 144 or any limit on premium volume, the Director shall calculate such limitations based solely on the non-domestic alien company's assets in the United States that, pursuant to subsection (3) of this Section, constitute the assets of the company for purposes of making its financial statements required by this Code and its surplus as regards policyholders as reflected in the most recent financial statement on file with the Director.

(Source: P.A. 85-1373.)

(215 ILCS 5/63) (from Ch. 73, par. 675)

(Section scheduled to be repealed on January 1, 2027)

Sec. 63. Name. The name or designation under which contracts are to be exchanged shall include the words "Reciprocal" or "Inter-Insurance Exchange" or be supplemented by the following words immediately below the name or designation under which such contracts are exchanged: "A Reciprocal" or "An Inter-Insurance Exchange." Such name or designation shall not be the same as or deceptively similar to the name or designation adopted by any other domestic company or any foreign or non-domestic alien company authorized to transact business in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/86) (from Ch. 73, par. 698)

(Section scheduled to be repealed on January 1, 2027)

Sec. 86. Scope of Article.

(1) This Article applies to all groups including incorporated and individual unincorporated underwriters transacting an insurance business in this State through an attorney-in-fact under the name Lloyds or under a Lloyds plan of operation. Groups that meet the requirements of subsection (3) are referred to in this Code as "Lloyds", and incorporated and individual unincorporated underwriters are referred to as "underwriters".

(2) As used in this Code:

"Domestic Lloyds" means a Lloyds having its home office in this State.

"Foreign Lloyds" means a Lloyds having its home office in any state of the United States other than this State.

"Non-domestic Alien Lloyds" means a Lloyds having its home office or principal place of business in any country other than the United States.

(3) A domestic Lloyds must: (i) be established pursuant to a statute or written charter; (ii) provide for governance by a board of directors or similar body; and (iii) establish and monitor standards of solvency of its underwriters. A foreign or non-domestic alien Lloyds must be subject to requirements of its state or country of domicile. Those requirements must be substantially similar to those required of domestic Lloyds. Domestic, foreign, and non-domestic alien Lloyds shall not be subject to Section 144 of this Code.

(4) All foreign and non-domestic alien entities and individuals transacting an insurance business as domestic, foreign, or non-domestic alien Lloyds shall notify the Director and the Secretary of State under the provisions of this Article, shall be regulated exclusively by the Director, and shall not be required to obtain a certificate of authority from the Secretary of State pursuant to any other law of this State so long as they solely transact business as a domestic, foreign, or non-domestic alien Lloyds. Upon notification, the Secretary of State may require submission of additional information to determine whether a foreign or non-domestic alien individual or entity is transacting business solely as a domestic, foreign, or non-domestic alien Lloyds.

(Source: P.A. 100-863, eff. 8-14-18.)

(215 ILCS 5/87) (from Ch. 73, par. 699)

(Section scheduled to be repealed on January 1, 2027)

Sec. 87. Certificate of authority. It shall be unlawful for any domestic, foreign or non-domestic alien Lloyds to transact business in this State unless it has first obtained and has in force a certificate of authority issued by the Director. All certificates of authority issued under the provisions of this Article shall terminate on the thirtieth day of June next following the date of issuance and may be renewed upon compliance with this Code.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/88) (from Ch. 73, par. 700)

(Section scheduled to be repealed on January 1, 2027)

Sec. 88. Name. The name of any Lloyds authorized to transact business under this Article shall not be the same as, or deceptively similar to, the name of any domestic company or of any foreign or non-domestic alien company authorized to transact business in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/103) (from Ch. 73, par. 715)

(Section scheduled to be repealed on January 1, 2027)

Sec. 103. Non-domestic Alien Lloyds.

(1) Each non-domestic alien Lloyds authorized to transact business in this State shall

(a) maintain in this State or any other state of the United States in which they are authorized to transact business, cash or securities of a character conformable to the requirements of Article VIII of this Code for domestic companies at least equal at all times to the minimum of admitted assets required by this Article for a domestic Lloyds doing the same kind or kinds of business;

(b) make deposits of underwriters in this State in accordance with the requirements imposed upon domestic Lloyds;

(c) file with the Director an authenticated copy of its power of attorney and an authenticated copy of the trust agreement or other agreement under which deposits made by underwriters in this State are held;

(d) notify the Director forthwith of any amendment to its power of attorney, deposit agreement or other documents by filing with the Director an authenticated copy of such document as amended; and

(e) notify the Director forthwith of any change in its name or change of attorney-in-fact or change of address of its attorney-in-fact.

(2) A non-domestic An alien Lloyds shall not establish branches under other or different names or titles.

(3) There shall be filed with the Director by the attorney-in-fact for such Lloyds, who or which shall be a resident person or corporation of this State, at the time of filing the annual statement, or more often if required by the Director, a verified statement setting forth

(a) the names and addresses of all underwriters of such Lloyds; and

(b) a description of the cash and securities deposited in trust by each underwriter.

(4) Additional underwriters may join and be included in any such Lloyds subject to such conditions and requirements as may from time to time be imposed by such Lloyds and upon meeting the requirements of this Section, such additional underwriters who may so join such Lloyds shall be bound by the documents on file with the Director in the same manner as though they had personally executed the same and shall have the same rights, powers and duties as all other underwriters of such Lloyds. The attorney-in-fact authorized by the underwriters to act for them shall thereafter be the attorney-in-fact for such additional underwriters to the extent of the power of attorney or other document or authorization by such underwriters to the attorney-in-fact.

(Source: P.A. 90-794, eff. 8-14-98.)

(215 ILCS 5/104) (from Ch. 73, par. 716)

(Section scheduled to be repealed on January 1, 2027)

Sec. 104. Policy forms. Every policy issued in this State by any domestic, foreign or non-domestic alien Lloyds shall have printed upon its face and back the name of such Lloyds, the name and address of its attorney-in-fact in this State or agent for service of process in this State, and in type not smaller than ten point the words "Not Incorporated."

(Source: Laws 1937, p. 696.)

(215 ILCS 5/105) (from Ch. 73, par. 717)

(Section scheduled to be repealed on January 1, 2027)

Sec. 105. Director as agent; service of process.

(1) The attorney-in-fact of every Lloyds transacting business in this State shall file with the Director a duly executed instrument whereby such Lloyds shall appoint and constitute the Director, his successor or successors in office, the true and lawful agent of such Lloyds upon whom all lawful process in any action or legal proceeding against such Lloyds may be served, and shall agree that any lawful process against such Lloyds which may be served upon said agent shall be of the same force and validity as if served upon the attorney-in-fact, and that the authority thereof shall continue in force irrevocably so long as any liability of such Lloyds in this State shall remain outstanding.

(2) In any suit instituted against any domestic, foreign or non-domestic alien Lloyds transacting business in this State, it shall not be necessary to name the underwriters as parties defendant, but such Lloyds may be named as the party defendant in any such suit and service may be had upon all the underwriters by service upon the last appointed attorney-in-fact or by service upon the Director, and not otherwise. Any such suit may be brought in the county in which the cause of action arises or in which the claimant resides. When such process is served upon the Director as agent to accept service, duplicate copies of such process shall be delivered to him and he shall immediately forward one copy of each such process to the last appointed attorney-in-fact by certified or registered mail, postage prepaid, giving the day and hour of such service.

(Source: P.A. 88-535.)

(215 ILCS 5/Art. VI heading)

ARTICLE VI. FOREIGN OR NON-DOMESTIC ALIEN COMPANIES

(Article scheduled to be repealed on January 1, 2027)

(215 ILCS 5/108) (from Ch. 73, par. 720)

(Section scheduled to be repealed on January 1, 2027)

Sec. 108. Companies that may be admitted to do business.

(1) Upon complying with the provisions of this Article, a foreign or non-domestic alien company organized as a stock company, mutual company, reciprocal, Lloyds or fraternal benefit society may be admitted to transact in this State the kind or kinds of business which a domestic company similarly organized may be authorized to transact under this Code. Any certificate of authority issued to a non-domestic an alien Lloyds shall be subject to all of the provisions of Section 103.

(2) No foreign or non-domestic alien mutual benefit society or burial society shall hereafter be admitted to transact business in this State.

(3) No foreign or non-domestic alien company shall transact in this State any insurance business not classified under Section 4.

(Source: P.A. 82-498.)

(215 ILCS 5/109) (from Ch. 73, par. 721)

(Section scheduled to be repealed on January 1, 2027)

Sec. 109. Application for certificate of authority.

(1) A foreign or non-domestic alien company in order to procure a certificate of authority to transact business in this State shall make application therefor to the Director. The application shall set forth:

(a) the name of the company, and the state or country under the laws of which it is organized or authorized;

(b) the title of the Act under or by which it was incorporated or organized, the date of its incorporation or organization and, if a corporation, the period of its duration;

(c) the class or classes of insurance business, as provided in Section 4, in which it proposes to engage in this State, and the kinds of insurances in each class it proposes to write in this State;

(d) if a life company, that it is not engaged in any state in practices which, if engaged in in this State, would constitute a violation of Section 237;

(e) whether or not it was authorized to transact business in this State during any part of the 3-year period prior to its application and, if so, for what period;

(f) whether or not it survives or was formed by a merger, consolidation, reorganization, or reincorporation effected within 3 years prior to its application and, if so, whether and for what period or periods any of the companies that are parties to the merger, consolidation, reorganization, or reincorporation were authorized to transact business in this State within the 3-year period prior to its application; and

(g) such additional information as the Director may require to enable the Director to determine whether the company is entitled to a certificate of authority to transact business in this State and to determine and assess the taxes, fees and charges payable as in this Code prescribed.

(2) Such application shall be made on forms prescribed and furnished by the Director and shall be executed by the company by its president or a vice-president or executive officer corresponding thereto, and verified by such officer, and if a corporation, the corporate seal shall be thereto affixed, attested by its secretary or other proper officer.

(Source: P.A. 90-655, eff. 7-30-98.)

(215 ILCS 5/110) (from Ch. 73, par. 722)

(Section scheduled to be repealed on January 1, 2027)

Sec. 110. Delivery to director of application and documents. There shall be delivered to the Director

(a) the application of the company for a certificate of authority;

(b) a copy of its articles of incorporation or articles of association as amended, duly certified by the proper officer of the state or country under whose laws the company is organized or incorporated, or if a reciprocal or Lloyds the power of attorney of the attorney-in-fact;

(c) if a non-domestic an alien company, a copy of the appointment and authority of its United States manager, certified by a proper officer of the company;

(d) a copy of its by-laws or regulations, and if a fraternal benefit society, a copy of its constitution, certified by its secretary or officer corresponding thereto;

(e) the instrument authorizing service of process on the Director required by section 112;

(f) a statement of its financial condition and business as of the end of the preceding calendar year complying as to form, content and verification with the requirements of this Code for annual statements, or a financial statement as of such later date as the Director may require;

(g) a copy of the last report of examination certified to by an insurance commissioner or other proper supervisory official; and

(h) a certificate from the proper official of the state or country wherein it is incorporated or organized that it is duly incorporated or organized and is authorized to write the kind or kinds of insurance which it proposes to write in this State.

(Source: Laws 1965, p. 422.)

(215 ILCS 5/111) (from Ch. 73, par. 723)

(Section scheduled to be repealed on January 1, 2027)

Sec. 111. Conditions of issuance of certificate of authority.

(1) Before a certificate of authority to transact business in this State is issued to a foreign or non-domestic alien company, such company shall satisfy the Director that:

(a) the company is duly organized under the laws of the state or country under whose laws it professes to be organized and authorized to do the business it is transacting or proposes to transact;

(b) its name is not the same as, or deceptively similar to, the name of any domestic company, or of any foreign or non-domestic alien company authorized to transact business in this State;

(c) if a company transacting business of the kind or kinds enumerated in Class 1 of Section 4, it is not engaging in practices in any state which if engaged in this State, would constitute a violation of Section 237; and it is not transacting any kinds of business other than those enumerated in Class 1 of Section 4;

(d) if a stock company, it has a paid up capital and surplus at least equal to the capital and original surplus required by this Code for a domestic company doing the same kind or kinds of business or, if a mutual company or reciprocal, it has a surplus and provision for contingent liability of policyholders, at least equal to the original surplus and provision for contingent liability of policyholders required for a similar domestic company doing the same kind or kinds of business, or, if a fraternal benefit society, it meets the requirements prescribed in this Code for the organization of a domestic company or society, or if a Lloyds it meets the requirements of Article V;

(e) its funds are invested in accordance with the laws of its domicile; and

(f) in the case of a stock company its minimum capital and surplus and required reserves, or in the case of a mutual company or a reciprocal proposing to issue policies without contingent liability, its minimum surplus and required reserves, or in the case of any other company, all its funds, are invested in securities or property which afford a degree of financial security equal to that required for similar domestic companies, provided that this clause shall not be construed as requiring the application of limitations relating either to the kind or amount of securities prescribed by this Code for the investments of domestic companies.

(2) In determining whether a non-domestic an alien company complies with the provisions of subsection (1) of this section the Director shall consider only business transacted in the United States, only the assets described in Section 60j and only liabilities in connection with its United States business.

(3) Before a certificate of authority is issued to a foreign or non-domestic alien company, other than a Lloyds, it shall deposit with the Director securities which are authorized investments for similar domestic companies under Section 126.11A(1), 126.11A(2), 126.24A(1), or 126.24A(2) of the amount, if any, required of a domestic company similarly organized and doing the same kind or kinds of business; or in lieu of such deposit such foreign or non-domestic alien company shall satisfy the Director that it has on deposit with an official of a state of the United States or a depositary designated or authorized for such purpose by such official, authorized by the law of such state to accept such deposit, securities of at least a like amount, for the benefit and security of all creditors, policyholders and policy obligations of such company.

(4) Before issuing a certificate of authority to a foreign or non-domestic alien company, the Director may cause an examination to be made of the condition and affairs of such company.

(Source: P.A. 90-418, eff. 8-15-97; 90-794, eff. 8-14-98.)

(215 ILCS 5/112) (from Ch. 73, par. 724)

(Section scheduled to be repealed on January 1, 2027)

Sec. 112. Service of process - Director as attorney.

(1) Every foreign or non-domestic alien company desiring to transact business in this State shall file with the Director a duly executed instrument whereby the company shall appoint and constitute the Director and his successor or successors in office the true and lawful attorney of such company upon whom all lawful process in any action or legal proceeding against it may be served and shall agree that any such lawful process against it which may be served upon its said attorney as provided in this section shall be of the same force and validity as if served upon the company and that the authority thereof shall continue in force irrevocably so long as any liability of the company in the State shall remain outstanding.

(2) Process authorized by such instrument or by any similar instrument heretofore executed shall be served by delivering to and leaving with the Director duplicate copies of such process with payment of the fee prescribed by this Code, and the service thereof upon such attorney shall be deemed service upon the company. The Director shall forthwith forward one copy of each such process by certified or registered mail prepaid to the company, or in the case of a non-domestic an alien company, to the United States Manager or last appointed United States general agent of the company, giving the day and the hour of such service. Service of such process shall not be complete until the copy thereof has been so mailed and received by the company, and the certified receipt or registry receipt shall be prima facie evidence of the completion of such service. Service of process on a reciprocal or Lloyds shall be governed by sections 77 and 105 respectively.

(Source: P.A. 83-598.)

(215 ILCS 5/113) (from Ch. 73, par. 725)

(Section scheduled to be repealed on January 1, 2027)

Sec. 113. When certificate of authority to issue. When a foreign or non-domestic alien company has complied with the requirements of this Article and all other requirements imposed on such company by existing laws and has paid the taxes, fees and charges imposed by law, and the operational history of the company when reviewed in conjunction with its loss experience, the kinds and nature of risks insured, the financial condition of the company and its ownership and the ratio of annual premium volume to incurred acquisition expenses and to its policyholders' surplus indicates a condition such that the expanded operation of the company in this State will not create a condition which might be hazardous to its policyholders, creditors or the general public, the Director must file in his office the documents delivered to him and must issue to the company a certificate of authority to transact in this State the kind or kinds of business specified therein. Such certificate shall expire on the 30th day of June of the calendar year succeeding the calendar year in which such certificate is issued.

(Source: P.A. 77-1513.)

(215 ILCS 5/113.1) (from Ch. 73, par. 725.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 113.1. Effect of acceptance of certificate of authority.

(1) No foreign or non-domestic alien company which accepts a certificate of authority or renewal certificate of authority to transact in this State any insurance business as described in Section 4 of this Code shall transfer by sale, contribution, merger, consolidation, reinsurance or otherwise, its direct policy obligations under insurance contracts with Illinois policyholders unless:

a. the transfer is made to a company authorized to transact in this State the type of insurance business transferred; or

b. the transferring company gives 30 days prior written notice to each policyholder to be transferred stating that the insurance contract and the company's liabilities thereunder are to be transferred to a specified insurer which is not subject to regulation by the Illinois Insurance Department or the administrative requirements of the Illinois Insurance Code; and

c. the unauthorized company to which the insurance business is to be transferred makes and maintains a special deposit with the Director for the protection and benefit of all Illinois policyholders of such unauthorized company, in assets acceptable to the Director and having a fair market value not less than the required statutory reserves for the Illinois insurance business to be transferred.

(2) Any and all transfers resulting in the violation of this Section shall be construed as a violation of all applicable provisions of Article VII of this Code; including, but not limited to, Section 121-4 providing for liability to insureds for claims or insured losses not honored by the unauthorized insurer.

(3) Unless permitted by and obtained in compliance with this Section, or specifically authorized by another provision of this Code, it shall be unlawful for any unauthorized company to obtain as direct insurer any insurance contracts written in this State.

(Source: P.A. 86-753.)

(215 ILCS 5/114) (from Ch. 73, par. 726)

(Section scheduled to be repealed on January 1, 2027)

Sec. 114. Renewal of certificate of authority.

(1) The Director shall renew for one year the certificate of authority of a foreign or non-domestic alien company on the first day of July of the calendar year following the calendar year in which it is admitted to transact business in this State and annually thereafter, without application by the company, upon payment of the annual privilege tax imposed by this Code, if any, provided the Director is satisfied that

(a) none of the facts specified in this article as grounds for revoking a certificate of authority exists; and

(b) the company is complying with the conditions for admission in respect to capital, contingent liability, the investment of its assets or the maintenance of deposits in this or another state and maintains the surplus which similar domestic companies transacting the same kind or kinds of business are required to maintain.

(2) Except in case of nonpayment of taxes, the Director shall give notice of his intention to refuse to renew the certificate of authority of a foreign or non-domestic alien company and the grounds therefor at least twenty days before the end of the term for which the existing certificate was issued, and, the company shall be given an opportunity for a hearing before the end of such term.

(3) In the event that a company admitted to transact business in this State prior to the effective date of this Code has been and is transacting in this State or in any other state or country the kind or kinds of business enumerated in Class 1 of Section 4 and in addition thereto any of the kinds of business not enumerated in such class, the Director may for a period of three years renew annually its certificate of authority to transact such kinds of business. At the end of such three year period or at the end of any extended period as herein provided for, the Director may extend the period during which the certificate of authority of such company may be renewed annually, upon a showing by the company at a hearing before the Director that

(a) it has made reasonable progress in the discontinuance of kinds of business other than those enumerated in Class 1 of Section 4; and

(b) complete and immediate discontinuance of such kinds of business would result in undue loss to the company and the policyholders would suffer materially thereby; or

(c) there are other reasons for such extension deemed by the Director to be good and sufficient. The extension herein provided for shall be for such period as the Director may deem proper on the showing made, but the total of such extended periods shall not exceed three years.

(Source: P.A. 82-498.)

(215 ILCS 5/115) (from Ch. 73, par. 727)

(Section scheduled to be repealed on January 1, 2027)

Sec. 115. Amended certificate of authority.

(1) In the event that a foreign or non-domestic alien company authorized to transact business in this State changes its name or desires to transact in this State a kind or kinds of business other than those it is then authorized to transact, it shall file with the Director an application for an amended certificate of authority.

(2) Such application shall comply as to form and manner of execution with the requirements of this Article for an original application and shall set forth the name of the company, the respects in which the company desires its certificate of authority amended, and such other information as is necessary or appropriate to enable the Director to determine whether such an amended certificate of authority should be issued.

(3) The Director shall issue such amended certificate if he is satisfied that

(a) the company might lawfully be authorized to transact the kind or kinds of business it desires to transact if application for such authority were made in an original application; and

(b) the conditions provided for in Section 111 are complied with.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/116) (from Ch. 73, par. 728)

(Section scheduled to be repealed on January 1, 2027)

Sec. 116. Amendments to articles of incorporation. Whenever the articles of incorporation or articles of association of a foreign or non-domestic alien company authorized to transact business in this State shall be amended, such company shall, within thirty days after the effective date of such amendment, file with the Director a copy thereof duly authenticated by the proper officer of the state or country under the laws of which such company is organized. The filing of such copy shall not of itself enlarge the authority of the company in the transaction of business in this State, nor authorize such company to transact business in this State under any other name than the name set forth in its certificate of authority.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/117) (from Ch. 73, par. 729)

(Section scheduled to be repealed on January 1, 2027)

Sec. 117. Merger or consolidation.

(1) Whenever a foreign or non-domestic alien company authorized to transact business in this State shall be the surviving company of a statutory merger permitted by the laws of the state or country under which it is organized, and such merger is not subject to the provisions of Article X; it shall forthwith file with the Director

(a) copies of the agreement and certificate of merger duly authenticated by the proper officer of the state or country under the laws of which such statutory merger was effected; and

(b) if any of the companies party to such merger were not admitted to transact business in this State, a statement of the financial condition and business of each of such companies, as of the end of the preceding calendar year complying as to form, content and verification with the requirements of this Code for annual statements, or a financial statement as of such later date as the Director may require.

(2) It shall not be necessary for such surviving company to procure a new certificate of authority to transact business in this State nor an amended certificate unless the name of such company be changed thereby or unless the company desires to transact in this State a kind or kinds of business other than those which it is then authorized to transact.

(3) Whenever a foreign or non-domestic alien company authorized to transact business in this State shall be a party to a statutory merger and such company shall not be the surviving company, or if such foreign or non-domestic alien company shall be a party to a consolidation, then the certificate of authority of such foreign or non-domestic alien company shall terminate upon such merger or consolidation, and the surviving company, if not previously authorized to transact business in this State, or the new company, in the case of consolidation, shall be subject to the same requirements for admission to transact business in this State as any other foreign or non-domestic alien company.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/118) (from Ch. 73, par. 730)

(Section scheduled to be repealed on January 1, 2027)

Sec. 118. Withdrawal from the State.

(1) Any foreign or non-domestic alien company admitted to do business in this State may withdraw from this State by filing with the Director a statement of withdrawal, signed and verified by a president, vice-president or an executive officer corresponding thereto, or in the case of a reciprocal or Lloyds, by the attorney-in-fact, and setting forth

(a) that the company surrenders its authority to transact business in this State and returns for cancellation its certificate of authority;

(b) except in the case of a reciprocal or Lloyds, that the withdrawal of the company from this State has been duly authorized by the board of directors, trustees or other governing body of such company; and

(c) a postoffice address to which the Director may mail a copy of any process against the withdrawing company that may be served upon him.

(2) Upon the filing of such statement together with its certificate of authority with the Director and payment of any taxes or charges that may be due, the Director shall cancel the certificate of authority and return the cancelled certificate to the company. The authority of the company to transact business in this State shall thereupon cease.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/119) (from Ch. 73, par. 731)

(Section scheduled to be repealed on January 1, 2027)

Sec. 119. Revocation and suspension of certificate of authority.

(1) The Director may revoke or suspend the certificate of authority of a foreign or non-domestic alien company or may by order require such insurance company to pay to the people of the State of Illinois a penalty in a sum not exceeding $500, and upon the failure of such insurance company to pay such penalty within 20 days after the mailing of such order, postage prepaid, certified or registered, and addressed to the last known place of business of such insurance company, unless such order is stayed by an order of a court of competent jurisdiction, the Director of Insurance may revoke or suspend the license of such insurance company for any period of time up to, but not exceeding a period of, 2 years whenever he finds that such company

(a) is insolvent;

(b) fails to comply with the requirements for admission in respect to capital, contingent liability, the investment of its assets or the maintenance of deposits in this or another state or fails to maintain the surplus which similar domestic companies transacting the same kind or kinds of business are required to maintain;

(c) is in such a financial condition that its further transaction of business in this State would be hazardous to policyholders and creditors in this State and to the public;

(d) has refused or neglected to pay a valid final judgment against such company within 30 days after the rendition of such judgment;

(e) has violated any law of this State or has in this State violated its charter or exceeded its corporate powers;

(f) has refused to submit its books, papers, accounts, records, or affairs to the reasonable inspection or examination of the Director, his actuaries, deputies or examiners;

(g) has an officer who has refused upon reasonable demand to be examined under oath touching its affairs;

(h) fails to file its annual statement within 30 days after the date when it is required by law to file such statement;

(i) fails to file with the Director a copy of an amendment to its charter or articles of association within 30 days after the effective date of such amendment;

(j) fails to file with the Director copies of the agreement and certificate of merger and the financial statements of the merged companies, if required, within 30 days after the effective date of the merger;

(k) fails to pay any fees, taxes or charges prescribed by this Code within 30 days after they are due and payable; provided, however, that in case of objection or legal contest the company shall not be required to pay the tax until 30 days after final disposition of the objection or legal contest.

(l) fails to file any report or reports for the purpose of enabling the Director to compute the taxes to be paid by such company within 30 days after the date when it is required by law to file such report or reports;

(m) has had its corporate existence dissolved or its certificate of authority revoked in the state in which it was organized; or

(n) has had all its risks reinsured in their entirety in another company.

(2) Except for the grounds stated in clauses (a), (c) or (k) of subsection (1) of this section the Director shall not revoke or suspend the certificate of authority of a foreign or non-domestic alien company until he has given the company at least twenty days' notice of the revocation or suspension and of the grounds therefor and has afforded the company an opportunity for a hearing.

(Source: P.A. 83-598.)

(215 ILCS 5/120) (from Ch. 73, par. 732)

(Section scheduled to be repealed on January 1, 2027)

Sec. 120. Withdrawal of deposits. When a foreign or non-domestic alien company has withdrawn from this State or has had its certificate of authority to transact business in this State revoked and such company desires to withdraw any deposit made in this State pursuant to this Code, the Director shall upon the application of the company and at its expense, give notice of such intention to the insurance commissioner or other proper supervisory official of each state or country where it appears from information on file with the Director, the company is authorized to transact business, and shall publish notice of such intention in a newspaper of general circulation in this State once a week for four consecutive weeks. After such notice and publication the Director shall deliver to such company or its assigns the securities so deposited when he is satisfied upon examination and investigation made by him, or under his authority, and upon the oaths of the president and secretary or other chief officers of the company that all debts and liabilities of every kind due and to become due which the deposit was made to secure have been paid or otherwise extinguished.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/123) (from Ch. 73, par. 735)

Sec. 123. Service of process upon an unauthorized foreign or non-domestic alien company.

(1) The purpose of this Section is to subject unauthorized foreign and non-domestic 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 non-domestic 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 non-domestic 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 non-domestic 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 non-domestic 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 non-domestic 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 non-domestic alien company arising out of any contract of direct 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. 90-53, eff. 7-3-97.)

(215 ILCS 5/123.1) (from Ch. 73, par. 735.1)

Sec. 123.1. Service of process upon unauthorized insurers for false advertising.

(1) (a) The purpose of this Act is to subject to the jurisdiction of the Director of Insurance of this State and to the jurisdiction of the courts of this State insurers not authorized to transact business in this State which place in or send into this State any false advertising designed to induce residents of this State to purchase insurance from insurers not authorized to transact business in this State. The Legislature declares it is in the interest of the citizens of this State who purchase insurance from insurers which solicit insurance business in this State in the manner set forth in the preceding sentence that such insurers be subject to the provisions of this Act. In furtherance of such state interest, the Legislature herein provides a method of substituted service of process upon such insurers and declares that in so doing, it exercises its power to protect its residents 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 Session, S. 340, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states; the authority provided herein to be in addition to any existing powers of this State.

(b) The provisions of this Section shall be liberally construed.

(2) No unauthorized foreign or non-domestic alien insurer of the kind described in subsection (1) shall make, issue, circulate or cause to be made, issued or circulated, to residents of this State any estimate, illustration, circular, pamphlet, or letter, or cause to be made in any newspaper, magazine or other publication or over any radio or television station, any announcement or statement to such residents misrepresenting its financial condition or the terms of any contracts issued or to be issued or the benefits or advantages promised thereby, or the dividends or share of the surplus to be received thereon in violation of Article XXVI, and whenever the Director shall have reason to believe that any such insurer is engaging in such unlawful advertising, it shall be his duty to give notice of such fact by certified or registered mail to such insurer and to the insurance supervisory official of the domiciliary state of such insurer. For the purpose of this Section the domiciliary state of a non-domestic an alien insurer shall be deemed to be the state of entry or the state of the principal office in the United States.

(3) If after thirty days following the giving of the notice mentioned in subsection (2) such insurer has failed to cease making, issuing, or circulating such false misrepresentations or causing the same to be made, issued or circulated in this State, and if the Director has reason to believe that a proceeding by him in respect to such matters would be to the interest of the public, and that such insurer is issuing or delivering contracts of insurance to residents of this State or collecting premiums on such contracts or doing any of the acts enumerated in subsection (4), he shall take action against such insurer under Article XXVI.

(4) (a) Any of the following acts in this State, effected by mail or otherwise, by any such unauthorized foreign or non-domestic alien insurer:

(i) the issuance or delivery of contracts or insurance to residents of this State; or

(ii) the solicitation of applications for such contracts; or

(iii) the collection of premiums, membership fees, assessments or other considerations for such contracts; or

(iv) any other transaction of insurance business;

is equivalent to and shall constitute an appointment by such insurer of the Director and his successor or successors in office, to be its true and lawful attorney, upon whom may be served all statements of charges, notices and lawful process in any proceeding instituted in respect to the misrepresentations set forth in subsection (2) hereof under the provisions of Article XXVI, or in any action, suit or proceeding for the recovery of any penalty therein provided, and any such act shall be signification of its agreement that such service of statement of charges, notices or process is of the same legal force and validity as personal service of such statement of charges, notices or process in this State, upon such insurer.

(b) Service of a statement of charges and notices under Article XXVI shall be made by any deputy or employee of the Department of Insurance delivering to and leaving with the Director or some person in apparent charge of his office, two copies thereof. Service of process issued by any court in any action, suit or proceeding to collect any penalty under Article XXVI provided, shall be made by delivering and leaving with the Director, or some person in apparent charge of his office, two copies thereof. The Director shall forthwith cause to be mailed by certified or registered mail one of the copies of such statement of charges, notices or process to the defendant at its last known principal place of business, and shall keep a record of all statements of charges, notices and process so served. Such service of statement of charges, notices or process shall be sufficient provided they shall have been so mailed and the defendant's receipt or receipt issued by the post office with which the letter is certified or registered, showing the name of the sender of the letter and the name and address of the person to whom the letter is addressed, and the affidavit of the person mailing such letter showing a compliance herewith are filed with the Director in the case of any statement of charges or notices, or with the clerk of the court in which such action is pending in the case of any process, on or before the date the defendant is required to appear or within such further time as may be allowed.

(c) Service of statement of charges, notices and process in any such proceeding, action or suit shall in addition to the manner provided in paragraph (b) of this subsection be valid if served upon any person within this State who on behalf of such insurer is

(i) soliciting insurance; or

(ii) making, issuing or delivering any policies or contracts of insurance; or

(iii) collecting or receiving in this State any premium, membership fee, assessment or other consideration for insurance; or

(iv) in any manner aiding or assisting in doing any of the things enumerated in clauses (i), (ii) or (iii) of this paragraph;

and a copy of such statement of charges, notices or process is sent within ten days thereafter by certified or registered mail by or on behalf of the Director to the defendant at the last known principal place of business of the defendant, and the defendant's receipt, or the receipt issued by the post office with which the letter is certified or registered, showing the name of the sender of the letter, the name and address of the person to whom the letter is addressed, and the affidavit of the person mailing the same showing a compliance herewith, are filed with the Director in the case of any statement of charges or notices, or with the clerk of the court in which such action is pending in the case of any process, on or before the date the defendant is required to appear or within such further time as the court may allow.

(d) No cease or desist order or judgment by default under this section shall be entered until the expiration of thirty days from the date of the filing of the affidavit of compliance.

(e) Service of process and notice under the provisions of this section shall be in addition to all other methods of service provided by law, and nothing in this section shall limit or prohibit the right to serve any statement of charges, notices or process upon any insurer in any other manner now or hereafter permitted by law.

(5) When used in this Act, "residents" shall mean and include person, partnership or corporation, domestic, non-domestic, alien or foreign.

(Source: P.A. 83-598.)

(215 ILCS 5/123.3) (from Ch. 73, par. 735.3)

Sec. 123.3. Insurance Sales by Companies in Hazardous Financial Condition Prohibited. Notwithstanding any other provision of this Code, no unauthorized foreign or non-domestic alien company officer, director, trustee, agent or employee of such company may renew, issue, or deliver or cause to be renewed, issued or delivered any policy, contract, or certificate of insurance for which a premium is charged or collected if the Director of Insurance has found that such company is in a hazardous financial condition and such officer, director, trustee, agent or employee is aware of such finding.

If upon request of the Director, such company officer, director, trustee or employee is unable or unwilling to submit to the Director a copy of such unauthorized company's most recent financial statement, such unwillingness or inability shall be deemed prima facie evidence of a hazardous financial condition.

However, a finding of hazardous financial condition does not prevent the issuance or renewal of a policy when an insured or owner exercises an option granted to him under an existing policy to obtain new, renewed or converted insurance coverage.

Any company officer, director, trustee, agent, or employee of such company violating this Section shall be guilty of a Class A misdemeanor.

(Source: P.A. 85-1139.)

(215 ILCS 5/123C-8) (from Ch. 73, par. 735C-8)

(Section scheduled to be repealed on January 1, 2027)

Sec. 123C-8. Merger, consolidation, plans of exchange and reorganization.

A. The provisions of Article X shall apply to captive insurance companies; provided, however, that:

(1) if the surviving or new company is to be a domestic captive insurance company,

(a) the Director shall, in determining whether such company meets the requirements set forth in paragraph (b) of subsection (2) of Section 162, refer only to the provisions of this Article VIIC and the other provisions of Article X;

(b) the Director shall, in determining whether such company meets the requirements of Sections 123C-3 and 123C-4, take into account the capital and surplus of the company to be merged into the domestic captive insurance company or the companies to be consolidated into the domestic captive insurance company (but any approval by the Director of such merger or consolidation shall be contingent upon the receipt of such capital and surplus by the domestic captive insurance company and satisfactory evidence thereof being presented to the Director);

(c) notwithstanding the provisions of paragraph (c) of subsection (1) of Section 166, such surviving or new company shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by this Article VIIC (and not by the entire Code); and

(2) in the event that such merger or consolidation is to be effected in conjunction with the formation and licensing of a new domestic captive insurance company in this State, the Director shall follow procedures for the contemporaneous and expeditious review of the materials presented to the Director for his approval of such formation, licensing and merger or consolidation.

B. (1) Any domestic, foreign or non-domestic alien stock company, mutual company, or reciprocal company, authorized or which may be authorized to do business in this State, may reorganize as a domestic captive insurance company under the laws of this State, by complying with the provisions of Article XII. Domestic companies are hereby authorized to reorganize as domestic captive insurance companies.

(2) In the event that such reorganization is to be effected in conjunction with the formation and licensing of a new captive insurance company in this State, the Director shall follow procedures for the contemporaneous and expeditious review of the materials presented to the Director for his approval of such formation, licensing and reorganization.

(Source: P.A. 85-131.)

(215 ILCS 5/126.1)

Sec. 126.1. Purpose and scope.

A. Purpose. The purpose of this Article is to protect the interests of insureds by promoting insurer solvency and financial strength. This will be accomplished through the application of investment standards that facilitate a reasonable balance of the following objectives:

(1) To preserve principal;

(2) To assure reasonable diversification as to type of investment, issuer and credit quality; and

(3) To allow insurers to allocate investments in a manner consistent with principles of prudent investment management to achieve an adequate return so that obligations to insureds are adequately met and financial strength is sufficient to cover reasonably foreseeable contingencies.

B. Scope. This Article shall apply only to investments and investment practices of domestic insurers and United States branches of non-domestic alien insurers entered through this State. This Article shall not apply to separate accounts of an insurer except to the extent that the provisions of Article XIV 1/2 so provide.

(Source: P.A. 90-418, eff. 8-15-97.)

(215 ILCS 5/126.12)

Sec. 126.12. Insurer investment pools.

A. An insurer may acquire investments in investment pools that:

(1) Invest only in:

(a) Obligations that are rated 1 or 2 by the SVO or have an equivalent of an SVO 1 or 2 rating (or, in the absence of a 1 or 2 rating or equivalent rating, the issuer has outstanding obligations with an SVO 1 or 2 or equivalent rating) by a nationally recognized statistical rating organization recognized by the SVO and have:

(i) A remaining maturity of 397 days or less or a put that entitles the holder to receive the principal amount of the obligation which put may be exercised through maturity at specified intervals not exceeding 397 days; or

(ii) A remaining maturity of 3 years or less and a floating interest rate that resets no less frequently than quarterly on the basis of a current short-term index (federal funds, prime rate, treasury bills, London InterBank Offered Rate (LIBOR) or commercial paper) and is subject to no maximum limit, if the obligations do not have an interest rate that varies inversely to market interest rate changes;

(b) Government money market mutual funds or class one money market mutual funds; or

(c) Securities lending, repurchase, and reverse repurchase transactions that meet all the requirements of Section 126.16, except the quantitative limitations of Section 126.16D; or

(2) Invest only in investments which an insurer may acquire under this Article, if the insurer's proportionate interest in the amount invested in these investments when combined with amount of such investments made directly or indirectly through an investment subsidiary or other insurer investment pool permitted under this subsection A(2) does not exceed the applicable limits of this Article for such investments.

B. For an investment in an investment pool to be qualified under this Article, the investment pool shall not:

(1) Acquire securities issued, assumed, guaranteed or insured by the insurer or an affiliate of the insurer;

(2) Borrow or incur any indebtedness for borrowed money, except for securities lending and reverse repurchase transactions that meet the requirements of Section 126.16 except the quantitative limitations of Section 126.16D; or

(3) Acquire an investment if, as a result of such transaction, the aggregate value of securities then loaned or sold to, purchased from or invested in any one business entity under this Section would exceed 10% of the total assets of the investment pool.

C. The limitations of Section 126.10A shall not apply to an insurer's investment in an investment pool, however an insurer shall not acquire an investment in an investment pool under this Section if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this Section:

(1) In all investment pools investing in investments permitted under subsection A(2) of this Section would exceed 25% of its admitted assets; or

(2) In all investment pools would exceed 35% of its admitted assets.

D. For an investment in an investment pool to be qualified under this Article, the manager of the investment pool shall:

(1) Be organized under the laws of the United States or a state and designated as the pool manager in a pooling agreement;

(2) Be the insurer, an affiliated insurer or a business entity affiliated with the insurer, a qualified bank, a business entity registered under the Investment Advisers Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended or, in the case of a reciprocal insurer or interinsurance exchange, its attorney-in-fact, or in the case of a United States branch of a non-domestic an alien insurer, its United States manager or an affiliate or subsidiary of its United States manager;

(3) Be responsible for the compilation and maintenance of detailed accounting records setting forth:

(a) The cash receipts and disbursements reflecting each participant's proportionate investment in the investment pool;

(b) A complete description of all underlying assets of the investment pool (including amount, interest rate, maturity date (if any) and other appropriate designations); and

(c) Other records which, on a daily basis, allow third parties to verify each participant's investment in the investment pool; and

(4) Maintain the assets of the investment pool in one or more accounts, in the name of or on behalf of the investment pool, under a custody agreement with a qualified bank. The custody agreement shall:

(a) State and recognize the claims and rights of each participant;

(b) Acknowledge that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of its investments in the investment pool; and

(c) Contain an agreement that the underlying assets of the investment pool shall not be commingled with the general assets of the custodian qualified bank or any other person.

E. The pooling agreement for each investment pool shall be in writing and shall provide that:

(1) An insurer and its affiliated insurers or, in the case of an investment pool investing solely in investments permitted under subsection A(1) of this Section, the insurer and its subsidiaries, affiliates or any pension or profit sharing plan of the insurer, its subsidiaries and affiliates or, in the case of a United States branch of a non-domestic an alien insurer, affiliates or subsidiaries of its United States manager, shall, at all times, hold 100% of the interests in the investment pool;

(2) The underlying assets of the investment pool shall not be commingled with the general assets of the pool manager or any other person;

(3) In proportion to the aggregate amount of each pool participant's interest in the investment pool:

(a) Each participant owns an undivided interest in the underlying assets of the investment pool; and

(b) The underlying assets of the investment pool are held solely for the benefit of each participant;

(4) A participant, or in the event of the participant's insolvency, bankruptcy or receivership, its trustee, receiver or other successor-in-interest, may withdraw all or any portion of its investment from the investment pool under the terms of the pooling agreement;

(5) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds shall occur within a reasonable and customary period thereafter not to exceed 10 business days. Distributions under this paragraph shall be calculated in each case net of all then applicable fees and expenses of the investment pool. The pooling agreement shall provide that the pool manager shall distribute to a participant, at the discretion of the pool manager:

(a) In cash, the then fair market value of the participant's pro rata share of each underlying asset of the investment pool;

(b) In kind, a pro rata share of each underlying asset; or

(c) In a combination of cash and in kind distributions, a pro rata share in each underlying asset; and

(6) The pool manager shall make the records of the investment pool available for inspection by the Director.

F. Except for the formation of the investment pool, transactions and between a domestic insurer and an affiliated insurer investment pool shall not be subject to the requirements of Section 131.20a of this Code.

(Source: P.A. 100-201, eff. 8-18-17.)

(215 ILCS 5/126.25)

Sec. 126.25. Insurer investment pools.

A. An insurer may acquire investments in investment pools that:

(1) Invest only in:

(a) Obligations that are rated 1 or 2 by the SVO or have an equivalent of an SVO 1 or 2 rating (or, in the absence of a 1 or 2 rating or equivalent rating, the issuer has outstanding obligations with an SVO 1 or 2 or equivalent rating) by a nationally recognized statistical rating organization recognized by the SVO and have:

(i) A remaining maturity of 397 days or less or a put that entitles the holder to receive the principal amount of the obligation which put may be exercised through maturity at specified intervals not exceeding 397 days; or

(ii) A remaining maturity of 3 years or less and a floating interest rate that resets no less frequently than quarterly on the basis of a current short-term index (federal funds, prime rate, treasury bills, London InterBank Offered Rate (LIBOR) or commercial paper) and is subject to no maximum limit, if the obligations do not have an interest rate that varies inversely to market interest rate changes;

(b) Government money market mutual funds or class one money market mutual funds; or

(c) Securities lending, repurchase, and reverse repurchase, transactions that meet all the requirements of Section 126.29, except the quantitative limitations of Section 126.29D; or

(2) Invest only in investments which an insurer may acquire under this Article, if the insurer's proportionate interest in the amount invested in these investments when combined with amounts of such investments made directly or indirectly through an investment subsidiary or other insurer investment pool permitted under this subsection A(2) does not exceed the applicable limits of this Article for such investments.

B. For an investment in an investment pool to be qualified under this Article, the investment pool shall not:

(1) Acquire securities issued, assumed, guaranteed, or insured by the insurer or an affiliate of the insurer;

(2) Borrow or incur any indebtedness for borrowed money, except for securities lending and reverse repurchase transactions that meet the requirements of Section 126.29 except the quantitative limitations of Section 126.29D; or

(3) Acquire an investment if, as a result of such transaction, the aggregate value of securities then loaned or sold to, purchased from or invested in any one business entity under this Section would exceed 10% of the total assets of the investment pool.

C. The limitations of Section 126.23A shall not apply to an insurer's investment in an investment pool, however an insurer shall not acquire an investment in an investment pool under this Section if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this Section:

(1) In all investment pools investing in investments permitted under subsection A(2) of this Section would exceed 25% of its admitted assets; or

(2) In all investment pools would exceed 40% of its admitted assets.

D. For an investment in an investment pool to be qualified under this Article, the manager of the investment pool shall:

(1) Be organized under the laws of the United States or a state and designated as the pool manager in a pooling agreement;

(2) Be the insurer, an affiliated insurer or a business entity affiliated with the insurer, a qualified bank, a business entity registered under the Investment Advisers Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended or, in the case of a reciprocal insurer or interinsurance exchange, its attorney-in-fact, or in the case of a United States branch of a non-domestic an alien insurer, its United States manager or an affiliate or subsidiary of its United States manager;

(3) Be responsible for the compilation and maintenance of detailed accounting records setting forth:

(a) The cash receipts and disbursements reflecting each participant's proportionate investment in the investment pool;

(b) A complete description of all underlying assets of the investment pool (including amount, interest rate, maturity date (if any) and other appropriate designations); and

(c) Other records which, on a daily basis, allow third parties to verify each participant's investment in the investment pool; and

(4) Maintain the assets of the investment pool in one or more accounts, in the name of or on behalf of the investment pool, under a custody agreement with a qualified bank. The custody agreement shall:

(a) State and recognize the claims and rights of each participant;

(b) Acknowledge that the underlying assets of the investment pool are held solely for the benefit of each participant in proportion to the aggregate amount of its investments in the investment pool; and

(c) Contain an agreement that the underlying assets of the investment pool shall not be commingled with the general assets of the custodian qualified bank or any other person.

E. The pooling agreement for each investment pool shall be in writing and shall provide that:

(1) An insurer and its affiliated insurers or, in the case of an investment pool investing solely in investments permitted under subsection A(1) of this Section, the insurer and its subsidiaries, affiliates or any pension or profit sharing plan of the insurer, its subsidiaries and affiliates or, in the case of a United States branch of a non-domestic an alien insurer, affiliates or subsidiaries of its United States manager, shall, at all times, hold 100% of the interests in the investment pool;

(2) The underlying assets of the investment pool shall not be commingled with the general assets of the pool manager or any other person;

(3) In proportion to the aggregate amount of each pool participant's interest in the investment pool:

(a) Each participant owns an undivided interest in the underlying assets of the investment pool; and

(b) The underlying assets of the investment pool are held solely for the benefit of each participant;

(4) A participant, or in the event of the participant's insolvency, bankruptcy or receivership, its trustee, receiver or other successor-in-interest, may withdraw all or any portion of its investment from the investment pool under the terms of the pooling agreement;

(5) Withdrawals may be made on demand without penalty or other assessment on any business day, but settlement of funds shall occur within a reasonable and customary period thereafter not to exceed 10 business days. Distributions under this paragraph shall be calculated in each case net of all then applicable fees and expenses of the investment pool. The pooling agreement shall provide that the pool manager shall distribute to a participant, at the discretion of the pool manager:

(a) In cash, the then fair market value of the participant's pro rata share of each underlying asset of the investment pool;

(b) In kind, a pro rata share of each underlying asset; or

(c) In a combination of cash and in kind distributions, a pro rata share in each underlying asset; and

(6) The pool manager shall make the records of the investment pool available for inspection by the Director.

F. Except for the formation of the investment pool, transactions between a domestic insurer and an affiliated insurer investment pool shall not be subject to the requirements of Section 131.20a of this Code.

(Source: P.A. 100-201, eff. 8-18-17.)

(215 ILCS 5/131.13) (from Ch. 73, par. 743.13)

Sec. 131.13. Registration of companies. Every company which is authorized to do business in this State and which is a member of an insurance holding company system must register with the Director, except a foreign or non-domestic alien company subject to registration requirements and standards adopted by statute or regulation in the jurisdiction of its domicile which are substantially similar to those contained in this section and Sections 131.14 through 131.20a. Any company which is subject to registration under this section must register within 60 days after the effective date of this Article or 15 days after it becomes subject to registration, whichever is later, unless the Director for good cause shown extends the time for registration, and then within such extended time. The Director may require any authorized company which is a member of a holding company system which is not subject to registration under this section to furnish a copy of the registration statement or other information filed by such company with the insurance regulatory authority of its domiciliary jurisdiction.

(Source: P.A. 98-609, eff. 1-1-14.)

(215 ILCS 5/132.3) (from Ch. 73, par. 744.3)

Sec. 132.3. Authority, scope, and scheduling of examinations.

(a) The Director or any of his examiners may conduct an examination of any company as often as the Director, in his sole discretion, deems appropriate, but shall, at a minimum, conduct an examination of every insurer authorized or licensed in this State not less frequently than once every 5 years. In scheduling and determining the nature, scope, and frequency of the examinations, the Director shall consider the results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, reports of independent certified public accountants and other criteria set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners and in effect when the Director exercises discretion under this subsection.

(b) For purposes of completing an examination of any company, the Director may examine or investigate any person, or the business of any person, insofar as the examination or investigation is, in the sole discretion of the Director, necessary or material to the examination of the company.

(c) In lieu of an examination of any foreign or non-domestic alien insurer authorized or licensed in this State, the Director may accept an examination report on the company as prepared by the insurance department for the company's state of domicile or port-of-entry state until January 1, 1994. Thereafter, those reports may only be accepted if (1) the insurance department was at the time of the examination accredited under the National Association of Insurance Commissioners' Financial Regulation Standards and Accreditation Program, (2) the examination is performed under the supervision of an accredited insurance department or with the participation of one or more examiners who are employed by an accredited state insurance department, and who, after a review of the examination work papers and report, state under oath that the examination was performed in a manner consistent with the standards and procedures required by their insurance department, or (3) the Director otherwise determines that the examination was performed in a manner substantially similar to the standards and procedures required by Sections 132.1 through 132.6 of this Code.

(Source: P.A. 89-97, eff. 7-7-95.)

(215 ILCS 5/133) (from Ch. 73, par. 745)

Sec. 133. Books, records, accounts and vouchers.

(1) Every domestic company shall keep its books, records, documents, accounts and vouchers in such manner that its financial condition, affairs and operations can be ascertained and so that its financial statements filed with the Director can be readily verified and its compliance with the law determined and may cause any or all such books, records, documents, accounts and vouchers to be photographed or reproduced on film. Any such photographs, microphotographs, optical imaging, or film reproductions of any original books, records, documents, accounts and vouchers shall for all purposes be considered the same as the originals thereof and a transcript, exemplification or certified copy of any such photograph, microphotograph, optical imaging, or film reproduction shall for all purposes be deemed to be a transcript, exemplification or certified copy of the original. Any original so reproduced may thereafter be disposed of or destroyed if provision is made for preserving and examining such reproductions.

(2) All such original books, records, documents, accounts and vouchers, or such reproductions thereof, of the home office of any domestic company or of any principal United States office of a foreign or non-domestic alien company located in this State shall be preserved and kept available in this State for the purpose of examination and until authority to destroy or otherwise dispose of such records is secured from the Director. Such original records may, however, be kept and maintained outside this State if, according to a plan adopted by the company's board of directors and approved by the Director, it maintains suitable records in lieu thereof. Every domestic company shall keep its securities within the State of Illinois except where:

(a) on deposit with other states of the United States of America, or political subdivision thereof; or

(b) on deposit with foreign countries where the company is licensed to transact an insurance business; or

(c) where requisite for the normal transaction of the company's business and approved by the Director.

(3) Any domestic company may maintain with a corporation, qualified to administer trusts in this State under the Corporate Fiduciary Act and that has an office in this State at which the account is maintained, for its securities, a limited agency, custodial or depository account, or other type of account for the safekeeping of those securities, collecting the income from those securities and providing supportive accounting services relating to such safekeeping and collection, provided, the domestic company maintains full investment discretion over those securities. Such a corporation in safekeeping such securities shall have all the powers, rights, duties and responsibilities as it has for holding securities in its fiduciary accounts under the Securities in Fiduciary Accounts Act.

(4) Any director, officer, agent or employee of any company who destroys any such books, records or documents without the authority of the Director in violation of this section or who fails to keep the books, records, documents, accounts and vouchers required by this section shall be guilty of a business offense and shall be fined not more than $5000.00.

(Source: P.A. 88-364; 89-437, eff. 12-15-95.)

(215 ILCS 5/136) (from Ch. 73, par. 748)

Sec. 136. Annual statement.

(1) Every company authorized to do business in this State or accredited by this State shall submit to the Director by March 1st in each year its financial statement for the year ending December 31st immediately preceding in such manner and in such form as prescribed by the Director, which shall conform substantially to the form of statement adopted by the National Association of Insurance Commissioners. Unless the Director provides otherwise, the annual statement is to be prepared in accordance with the annual statement instructions and the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners. The Director shall have power to make such modifications and additions in this form as he may deem desirable or necessary to ascertain the condition and affairs of the company. The Director shall have authority to extend the time for filing any statement by any company for reasons which he considers good and sufficient. In every statement the admitted assets shall be shown at the actual values as of the last day of the preceding year, in accordance with Section 126.7. The statement shall be verified by oaths of the president and secretary of the company or, in their absence, by 2 other principal officers. In addition, any company may be required by the Director, when he considers that action to be necessary and appropriate for the protection of policyholders, creditors, shareholders, or claimants, to file, within 60 days after mailing to the company a notice that such is required, a supplemental summary statement as of the last day of any calendar month occurring during the 100 days next preceding the mailing of such notice designated by him on forms prescribed and furnished by the Director. The Director may require supplemental summary statements to be certified by an independent actuary deemed competent by the Director or by an independent certified public accountant.

(2) The statement of a non-domestic an alien company shall embrace only its condition and transactions in the United States and shall be verified by the oaths of its resident manager or principal representative in the United States, except that in the case of any life company organized under the laws of Canada or any province thereof, the statement may be verified by the oaths of any of its principal officers designated for that purpose by its board of directors.

(3) For the information of the public generally the Director shall cause an abstract of the information contained in the annual statement to be made available to the public as soon as practicable after filing with the Department, by printing those abstracts in pamphlet tabular form for free general distribution by the Department, or by such other publication in the city of Springfield or in the city of Chicago as may be reasonably necessary more fully to inform the public of the financial condition of companies transacting business in this State.

(4) Each domestic, foreign, and non-domestic alien insurer authorized to do business in this State or accredited by this State shall participate in the National Association of Insurance Commissioners' Insurance Regulatory Information System, including the payment of all fees and charges of the system. Each company shall, on or before March 1 of each year, file with the National Association of Insurance Commissioners a copy of its annual financial statement along with any additional filings prescribed by the Director for the preceding year. The statement filed with the National Association of Insurance Commissioners shall be in the same format and scope as that required by this Code and shall include a signed jurat page and actuarial certification. Any amendments and addendums to the annual statement shall also be filed with the National Association of Insurance Commissioners. Each company shall also file with the National Association of Insurance Commissioners annual and quarterly financial statement information in computer readable format as required by the Insurance Regulatory Information System. Failure of a company to file financial statement information in computer readable format shall subject the company to the provisions of Section 139.

(5) All financial analysis ratios and examination synopsis concerning insurance companies that are submitted to the Director by the National Association of Insurance Commissioners' Insurance Regulatory Information System are confidential and may not be disclosed by the Director.

(6) Every property and casualty insurance company doing business in this State, unless otherwise exempted by the Director, shall annually submit the opinion of an appointed actuary entitled "Statement of Actuarial Opinion". This opinion shall be filed in accordance with the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions.

(a) Every property and casualty insurance company domiciled in this State that is required to submit a Statement of Actuarial Opinion shall annually submit an Actuarial Opinion Summary, written by the company's appointed actuary. This Actuarial Opinion Summary shall be filed in accordance with the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions and shall be considered as a document supporting the Actuarial Opinion required in this subsection (6). Each foreign and non-domestic alien property and casualty company authorized to do business in this State shall provide the Actuarial Opinion Summary upon request.

(b) An Actuarial Report and underlying workpapers as required by the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions shall be prepared to support each Actuarial Opinion. If the insurance company fails to provide a supporting Actuarial Report or workpapers at the request of the Director or the Director determines that the supporting Actuarial Report or workpapers provided by the insurance company is otherwise unacceptable to the Director, the Director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting Actuarial Report or workpapers.

(c) The appointed actuary shall not be liable for damages to any person (other than the insurance company and the Director) for any act, error, omission, decision, or conduct with respect to the actuary's opinion, except in cases of fraud or willful misconduct on the part of the appointed actuary.

(d) The Statement of Actuarial Opinion shall be provided with the Annual Statement in accordance with the appropriate National Association of Insurance Commissioners Property and Casualty Annual Statement Instructions and shall be treated as a public document. Documents, materials, or other information in the possession or control of the Director that are considered an Actuarial Report, workpapers, or Actuarial Opinion Summary provided in support of the opinion, and any other material provided by the company to the Director in connection with the Actuarial Report, workpapers or Actuarial Opinion Summary, must be given confidential treatment, are not subject to subpoena, and may not be made public by the Director or any other persons. This paragraph (d) shall not be construed to limit the Director's authority to release the documents to the Actuarial Board for Counseling and Discipline (ABCD), so long as the material is required for the purpose of professional disciplinary proceedings and that the ABCD establishes procedures satisfactory to the Director for preserving the confidentiality of the documents, nor shall this paragraph (d) be construed to limit the Director's authority to use the documents, materials or other information in furtherance of any regulatory or legal action brought as part of the Director's official duties. Neither the Director nor any person who received documents, materials, or other information while acting under the authority of the Director shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to this subsection (6). Except where another provision of this Code expressly prohibits a disclosure of confidential information to the specific officials or organizations described in this subsection, the Director may:

(i) share documents, materials, or other information, including the confidential and privileged documents, materials or information subject to this paragraph (d) with the insurance department of any other state or country or with law enforcement officials of this or any other state or agency of the federal government at any time, as long as the agency or office receiving the document, material, or other information agrees in writing to hold it confidential and in a manner consistent with this Code;

(ii) receive documents, materials, or information, including otherwise confidential and privileged documents, materials, or information, from the National Association of Insurance Commissioners and its affiliates and subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and

(iii) enter into agreements governing sharing and use of information consistent with paragraph (d).

(e) No waiver of any applicable privilege or claim of confidentiality in the documents, materials or information shall occur as a result of disclosure to the Director under this Section or as a result of sharing as authorized in subparagraphs (i), (ii), and (iii) of paragraph (d) of subsection (6) of this Section. All 2008 Annual Statements, which are filed in 2009, and all subsequent Annual Statement filings shall be done in accordance with subsection (6) of this Section.

(Source: P.A. 96-145, eff. 8-7-09; 97-486, eff. 1-1-12.)

(215 ILCS 5/141a) (from Ch. 73, par. 753a)

Sec. 141a. Managing general agents and retrospective compensation agreements.

(a) As used in this Section, the following terms have the following meanings:

"Actuary" means a person who is a member in good standing of the American Academy of Actuaries.

"Gross direct written premium" means direct premium including policy and membership fees, net of returns and cancellations, and prior to any cessions.

"Insurer" means any person duly licensed in this State as an insurance company pursuant to Articles II, III, III 1/2, IV, V, VI, and XVII of this Code.

"Managing general agent" means any person, firm, association, or corporation, either separately or together with affiliates, that:

(1) manages all or part of the insurance business of an insurer (including the management of a separate division, department, or underwriting office), and

(2) acts as an agent for the insurer whether known as a managing general agent, manager, or other similar term, and

(3) with or without the authority produces, directly or indirectly, and underwrites:

(A) within any one calendar quarter, an amount of gross direct written premium equal to or more than 5% of the policyholders' surplus as reported in the insurer's last annual statement, or

(B) within any one calendar year, an amount of gross direct written premium equal to or more than 8% of the policyholders' surplus as reported in the insurer's last annual statement, and either

(4) has the authority to bind the company in settlement of individual claims in amounts in excess of $500, or

(5) has the authority to negotiate reinsurance on behalf of the insurer.

Notwithstanding the provisions of items (1) through (5), the following persons shall not be considered to be managing general agents for the purposes of this Code:

(1) An employee of the insurer;

(2) A U.S. manager of the United States branch of a non-domestic an alien insurer;

(3) An underwriting manager who, pursuant to a contract meeting the standards of Section 141.1 manages all or part of the insurance operations of the insurer, is affiliated with the insurer, subject to Article VIII 1/2, and whose compensation is not based on the volume of premiums written;

(4) The attorney or the attorney in fact authorized and acting for or on behalf of the subscriber policyholders of a reciprocal or inter-insurance exchange, under the terms of the subscription agreement, power of attorney, or policy of insurance or the attorney in fact for any Lloyds organization licensed in this State.

"Retrospective compensation agreement" means any arrangement, agreement, or contract having as its purpose the actual or constructive retention by the insurer of a fixed proportion of the gross premiums, with the balance of the premiums, retained actually or constructively by the agent or the producer of the business, who assumes to pay therefrom all losses, all subordinate commission, loss adjustment expenses, and his profit, if any, with other provisions of the arrangement, agreement, or contract being auxiliary or incidental to that purpose.

"Underwrite" means to accept or reject risk on behalf of the insurer.

(b) Licensure of managing general agents.

(1) No person, firm, association, or corporation shall act in the capacity of a managing general agent with respect to risks located in this State for an insurer licensed in this State unless the person is a licensed producer or a registered firm in this State under Article XXXI of this Code or a licensed third party administrator in this State under Article XXXI 1/4 of this Code.

(2) No person, firm, association, or corporation shall act in the capacity of a managing general agent with respect to risks located outside this State for an insurer domiciled in this State unless the person is a licensed producer or a registered firm in this State under Article XXXI of this Code or a licensed third party administrator in this State under Article XXXI 1/4 of this Code.

(3) The managing general agent must provide a surety bond for the benefit of the insurer in an amount equal to the greater of $100,000 or 5% of the gross direct written premium underwritten by the managing general agent on behalf of the insurer. The bond shall provide for a discovery period and prior notification of cancellation in accordance with the rules of the Department unless otherwise approved in writing by the Director.

(4) The managing general agent must maintain an errors and omissions policy for the benefit of the insurer with coverage in an amount equal to the greater of $1,000,000 or 5% of the gross direct written premium underwritten by the managing general agent on behalf of the insurer.

(5) Evidence of the existence of the bond and the errors and omissions policy must be made available to the Director upon his request.

(c) No person, firm, association, or corporation acting in the capacity of a managing general agent shall place business with an insurer unless there is in force a written contract between the parties that sets forth the responsibilities of each party, that, if both parties share responsibility for a particular function, specifies the division of responsibility, and that contains the following minimum provisions:

(1) The insurer may terminate the contract for cause upon written notice to the managing general agent. The insurer may suspend the underwriting authority of the managing general agent during the pendency of any dispute regarding the cause for termination.

(2) The managing general agent shall render accounts to the insurer detailing all transactions and remit all funds due under the contract to the insurer on not less than a monthly basis.

(3) All funds collected for the account of an insurer shall be held by the managing general agent in a fiduciary capacity in a bank that is a federally or State chartered bank and that is a member of the Federal Deposit Insurance Corporation. This account shall be used for all payments on behalf of the insurer; however, the managing general agent shall not have authority to draw on any other accounts of the insurer. The managing general agent may retain no more than 3 months estimated claims payments and allocated loss adjustment expenses.

(4) Separate records of business written by the managing general agent will be maintained. The insurer shall have access to and the right to copy all accounts and records related to its business in a form usable by the insurer, and the Director shall have access to all books, bank accounts, and records of the managing general agent in a form usable to the Director.

(5) The contract may not be assigned in whole or part by the managing general agent.

(6) The managing general agent shall provide to the company audited financial statements required under paragraph (1) of subsection (d).

(7) That appropriate underwriting guidelines be followed, which guidelines shall stipulate the following:

(A) the maximum annual premium volume;

(B) the basis of the rates to be charged;

(C) the types of risks that may be written;

(D) maximum limits of liability;

(E) applicable exclusions;

(F) territorial limitations;

(G) policy cancellation provisions; and

(H) the maximum policy period.

(8) The insurer shall have the right to: (i) cancel or nonrenew any policy of insurance subject to applicable laws and regulations concerning those actions; and (ii) require cancellation of any subproducer's contract after appropriate notice.

(9) If the contract permits the managing general agent to settle claims on behalf of the insurer:

(A) all claims must be reported to the company in a timely manner.

(B) a copy of the claim file must be sent to the insurer at its request or as soon as it becomes known that the claim:

(i) has the potential to exceed an amount determined by the company;

(ii) involves a coverage dispute;

(iii) may exceed the managing general agent's claims settlement authority;

(iv) is open for more than 6 months; or

(v) is closed by payment of an amount set by the company.

(C) all claim files will be the joint property of the insurer and the managing general agent. However, upon an order of liquidation of the insurer, the files shall become the sole property of the insurer or its estate; the managing general agent shall have reasonable access to and the right to copy the files on a timely basis.

(D) any settlement authority granted to the managing general agent may be terminated for cause upon the insurer's written notice to the managing general agent or upon the termination of the contract. The insurer may suspend the settlement authority during the pendency of any dispute regarding the cause for termination.

(10) Where electronic claims files are in existence, the contract must address the timely transmission of the data.

(11) If the contract provides for a sharing of interim profits by the managing general agent and the managing general agent has the authority to determine the amount of the interim profits by establishing loss reserves, controlling claim payments, or by any other manner, interim profits will not be paid to the managing general agent until one year after they are earned for property insurance business and until 5 years after they are earned on casualty business and in either case, not until the profits have been verified.

(12) The managing general agent shall not:

(A) Bind reinsurance or retrocessions on behalf of the insurer, except that the managing general agent may bind facultative reinsurance contracts under obligatory facultative agreements if the contract with the insurer contains reinsurance underwriting guidelines including, for both reinsurance assumed and ceded, a list of reinsurers with which automatic agreements are in effect, the coverages and amounts or percentages that may be reinsured, and commission schedules.

(B) Appoint any producer without assuring that the producer is lawfully licensed to transact the type of insurance for which he is appointed.

(C) Without prior approval of the insurer, pay or commit the insurer to pay a claim over a specified amount, net of reinsurance, that shall not exceed 1% of the insurer's policyholders' surplus as of December 31 of the last completed calendar year.

(D) Collect any payment from a reinsurer or commit the insurer to any claim settlement with a reinsurer without prior approval of the insurer. If prior approval is given, a report must be promptly forwarded to the insurer.

(E) Permit its subproducer to serve on its board of directors.

(F) Employ an individual who is also employed by the insurer.

(13) The contract may not be written for a term of greater than 5 years.

(d) Insurers shall have the following duties:

(1) The insurer shall have on file the managing general agent's audited financial statements as of the end of the most recent fiscal year prepared in accordance with Generally Accepted Accounting Principles. The insurer shall notify the Director if the auditor's opinion on those statements is other than an unqualified opinion. That notice shall be given to the Director within 10 days of receiving the audited financial statements or becoming aware that such opinion has been given.

(2) If a managing general agent establishes loss reserves, the insurer shall annually obtain the opinion of an actuary attesting to the adequacy of loss reserves established for losses incurred and outstanding on business produced by the managing general agent, in addition to any other required loss reserve certification.

(3) The insurer shall periodically (at least semiannually) conduct an on-site review of the underwriting and claims processing operations of the managing general agent.

(4) Binding authority for all reinsurance contracts or participation in insurance or reinsurance syndicates shall rest with an officer of the insurer, who shall not be affiliated with the managing general agent.

(5) Within 30 days of entering into or terminating a contract with a managing general agent, the insurer shall provide written notification of the appointment or termination to the Director. Notices of appointment of a managing general agent shall include a statement of duties that the applicant is expected to perform on behalf of the insurer, the lines of insurance for which the applicant is to be authorized to act, and any other information the Director may request.

(6) An insurer shall review its books and records each quarter to determine if any producer has become a managing general agent. If the insurer determines that a producer has become a managing general agent, the insurer shall promptly notify the producer and the Director of that determination, and the insurer and producer must fully comply with the provisions of this Section within 30 days of the notification.

(7) The insurer shall file any managing general agent contract for the Director's approval within 45 days after the contract becomes subject to this Section. Failure of the Director to disapprove the contract within 45 days shall constitute approval thereof. Upon expiration of the contract, the insurer shall submit the replacement contract for approval. Contracts filed under this Section shall be exempt from filing under Sections 141, 141.1 and 131.20a.

(8) An insurer shall not appoint to its board of directors an officer, director, employee, or controlling shareholder of its managing general agents. This provision shall not apply to relationships governed by Article VIII 1/2 of this Code.

(e) The acts of a managing general agent are considered to be the acts of the insurer on whose behalf it is acting. A managing general agent may be examined in the same manner as an insurer.

(f) Retrospective compensation agreements for business written under Section 4 of this Code in Illinois and outside of Illinois by an insurer domiciled in this State must be filed for approval. The standards for approval shall be as set forth under Section 141 of this Code.

(g) Unless specifically required by the Director, the provisions of this Section shall not apply to arrangements between a managing general agent not underwriting any risks located in Illinois and a foreign insurer domiciled in an NAIC accredited state that has adopted legislation substantially similar to the NAIC Managing General Agents Model Act. "NAIC accredited state" means a state or territory of the United States having an insurance regulatory agency that maintains an accredited status granted by the National Association of Insurance Commissioners.

(h) If the Director determines that a managing general agent has not materially complied with this Section or any regulation or order promulgated hereunder, after notice and opportunity to be heard, the Director may order a penalty in an amount not exceeding $100,000 for each separate violation and may order the revocation or suspension of the producer's license. If it is found that because of the material noncompliance the insurer has suffered any loss or damage, the Director may maintain a civil action brought by or on behalf of the insurer and its policyholders and creditors for recovery of compensatory damages for the benefit of the insurer and its policyholders and creditors or other appropriate relief. This subsection (h) shall not be construed to prevent any other person from taking civil action against a managing general agent.

(i) If an Order of Rehabilitation or Liquidation is entered under Article XIII and the receiver appointed under that Order determines that the managing general agent or any other person has not materially complied with this Section or any regulation or Order promulgated hereunder and the insurer suffered any loss or damage therefrom, the receiver may maintain a civil action for recovery of damages or other appropriate sanctions for the benefit of the insurer.

Any decision, determination, or order of the Director under this subsection shall be subject to judicial review under the Administrative Review Law.

Nothing contained in this subsection shall affect the right of the Director to impose any other penalties provided for in this Code.

Nothing contained in this subsection is intended to or shall in any manner limit or restrict the rights of policyholders, claimants, and auditors.

(j) A domestic company shall not during any calendar year write, through a managing general agent or managing general agents, premiums in an amount equal to or greater than its capital and surplus as of the preceding December 31st unless the domestic company requests in writing the Director's permission to do so and the Director has either approved the request or has not disapproved the request within 45 days after the Director received the request.

No domestic company with less than $5,000,000 of capital and surplus may write any business through a managing general agent unless the domestic company requests in writing the Director's permission to do so and the Director has either approved the request or has not disapproved the request within 45 days after the Director received the request.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/144) (from Ch. 73, par. 756)

Sec. 144. Limitation of risk.

(1) No company authorized to transact any of the kind of business enumerated in Classes 2 and 3 of Section 4 in this State may expose itself to any loss on any one risk or hazard to an amount exceeding 10% of its admitted assets in excess of its liabilities excluding, in the case of a stock company, its capital stock liability. No portion of any such risk or hazard which has been reinsured in a domestic or an approved foreign or non-domestic alien company, in accordance with this Code, shall be included in determining the limitation of risk prescribed herein.

(2) Any company transacting the kind of business enumerated in clause (g) of Class 2 of Section 4 may expose itself to a risk or hazard in excess of the amount prescribed in subsection (1) if it is protected in excess of that amount by the following:

(a) The co-suretyship of such a company similarly authorized; or

(b) By deposit with it in pledge or conveyance to it in trust for its protection of property; or

(c) By conveyance or mortgage for its protection; or

(d) In case a suretyship obligation was made on behalf or on account of a fiduciary holding property in a trust capacity, by deposit or other disposition of a portion of the property so held in trust that no future sale, mortgage, pledge or other disposition can be made thereof without the consent of such company except by a judgment or order of a court of competent jurisdiction.

(3) A company designated in subsection (2) may also execute transportation or warehouse bonds for United States Internal Revenue taxes to an amount equal to 50% of its capital and surplus. When the penalty of the suretyship obligation exceeds the amount of a judgment described therein as appealed from and thereby secured, or exceeds the amount of the subject matter in controversy or of the estate in the custody of the fiduciary for the performance of whose duties it is conditioned, the bond may be executed if the actual amount of the judgment or the subject matter in controversy or estate not subject to supervision or control of the surety is not in excess of such limitation. When the penalty of the suretyship obligation executed for the performance of a contract exceeds the contract price, the latter shall be taken as the basis for estimating the limit of risk within the meaning of this Section.

(4) Whenever the ratio of the annual premium volume in proportion to the policyholder surplus of any company transacting the kinds of business authorized in Class 2 and Class 3 of Section 4 when reviewed in conjunction with the kinds and nature of risks insured, the financial condition of the company and its ownership including but not limited to the liquidity of assets, relationship of surplus to liabilities and adequacy of outstanding loss reserves, creates a condition such that the further assumption of risks might be hazardous to policyholders, creditors or the general public, then the Director may order such company to take one or more of the following steps:

(a) to reduce the loss exposure by reinsurance;

(b) to reduce the volume of new business being accepted;

(c) to suspend the writing of new business for a period not to exceed 3 months;

(d) to increase and maintain the company's surplus by a contribution to surplus which will raise the surplus for such a period of time and by such an amount as the Director may deem necessary and essential; or

(e) to reduce general or acquisition expenses by specified methods.

(f) (Blank).

(5) The provisions of this Section do not apply to domestic, foreign, and non-domestic alien Lloyds.

The company may, within 10 days after receipt of an Order of the Director under this Section, request that the Director hold a hearing to determine whether the Order of the Director should be modified in any way. A request for a hearing by a company under this Section stays any Order of the Director entered under this Section until such time as the Director has entered an Order pursuant to the hearing.

(Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)

(215 ILCS 5/144.1) (from Ch. 73, par. 756.1)

Sec. 144.1. Insurance Sales by Insolvent or Impaired Companies Prohibited.) (1) Unless allowed by the Director, no foreign or non-domestic alien company officer, director, trustee, agent, or employee of such company may renew, issue or deliver or cause to be renewed, issued or delivered, any policy, contract or certificate of insurance in this State, nor may any domestic company, officer, director, trustee, agent or employee of such company renew, issue or deliver or cause to be renewed, issued or delivered, any policy, contract or certificate of insurance, for which a premium is charged or collected, when the company writing such insurance is insolvent or impaired and the fact of such insolvency or impairment is known to the company officer, director, trustee, agent or employee of such company. A company is impaired when its assets are less than its capital, minimum required surplus and all liabilities.

However, the existence of an impairment does not prevent the issuance or renewal of a policy when an insured or owner exercises an option granted to him under an existing policy to obtain new, renewed or converted insurance coverage.

(2) Any company officer, director, trustee, agent, or employee of such company violating this Section shall be guilty of a Class A misdemeanor.

(Source: P.A. 82-498.)

(215 ILCS 5/146) (from Ch. 73, par. 758)

Sec. 146. Withdrawal of deposits.

(1) The Director shall at any time upon request release to a company any portion of its deposit which is not required as a compliance with the conditions of this Code.

(2) When all of the business of a company has been reinsured in accordance with this Code and the assets thereof by contract assigned to another company, the Director may deliver to the reinsured company or to its assigns under the contract of reinsurance after one year from the effective date of such reinsurance contract, all the securities deposited by the reinsured company upon compliance with the following conditions:

(a) The reinsuring company under the reinsurance contract has assumed all liabilities of every kind due and to become due which the deposit of the reinsured company was made to secure or adequate provision has been made therefor;

(b) The said reinsuring company shall have and maintain a deposit in this State or with the department or official charged with the duty of supervising the business of insurance in the state where it is incorporated or, if a non-domestic an alien company, where it is entered, in securities authorized by this Code as lawful investments of the company and in an amount and value not less than the deposit formerly required of the reinsured company by this Code; and

(c) The deposit of the said reinsuring company shall be such that it will subsist for the security of all the obligations of the reinsuring company.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/148) (from Ch. 73, par. 760)

Sec. 148. Contents of advertisements as to financial condition.

(1) No company authorized to do business in this State shall cause to be inserted in any newspaper, periodical, magazine or other publication, any advertisement purporting to set forth in figures its financial standing unless the figures exhibited in such advertisement correspond to the figures contained in the next preceding verified statement made to the Director and unless there is set forth either

(a) the total amount of the capital actually paid in, the total value of the admitted assets owned, the total amount of the liabilities, including therein the reserves required by law and the amount of the net surplus of assets over liabilities actually available for the payment of losses and claims and held for the protection of policyholders; or

(b) the capital paid in or the surplus, separately or combined.

(2) No non-domestic alien company authorized to do business in this State shall cause to be inserted in any newspaper, periodical or magazine any advertisement purporting to set forth in figures its financial standing, unless the figures exhibited in such advertisement correspond to the figures contained in the next preceding verified statement made to the Director by the United States Branch of such company and unless there is set forth the total amount of the capital and assets held by its United States Branch, the total amount of its liabilities, including therein the reserves required by law and the total amount of the net surplus of assets over all liabilities actually available for the payment of losses and claims and held for the protection of its policyholders in the United States; provided that any life company organized under the laws of the Dominion of Canada or any province thereof may use in its advertising a statement of its total business and condition in all countries if such statement is accompanied by a statement showing the amount of its total assets and total liabilities in the United States, corresponding to the figures contained in the next preceding statement of such company filed with the Director.

(3) Any company violating any provision of this section, and any officer or director thereof knowingly participating in or abetting such violation, shall be guilty of a business offense and shall be required to pay a penalty of not less than five hundred dollars nor more than one thousand dollars, to be recovered in the name of the People of the State of Illinois by the State's Attorney of the county in which the violation occurs and the penalty so recovered shall be paid into the county treasury.

(Source: P.A. 77-2699.)

(215 ILCS 5/154.5) (from Ch. 73, par. 766.5)

Sec. 154.5. Improper Claims Practices) It is an improper claims practice for any domestic, foreign or non-domestic alien company transacting business in this State to commit any of the acts contained in Section 154.6 if:

(a) it is committed knowingly in violation of this Act or any rules promulgated hereunder; or

(b) It has been committed with such frequency to indicate a persistent tendency to engage in that type of conduct.

(Source: P.A. 80-926.)

(215 ILCS 5/156) (from Ch. 73, par. 768)

Sec. 156. Merger and consolidation permitted.

(a) Upon complying with the provisions of this article, any domestic company, except a Lloyds, is hereby authorized and empowered to merge or consolidate with any domestic company or with any foreign or non-domestic alien company, except a Lloyds if the surviving company meets the requirements for authorization to engage in the insurance business in this state and, if such merger or consolidation is authorized by the laws of the state or country under which such foreign or non-domestic alien company is incorporated or organized.

(b) The Director may permit the formation of a domestic stock company that is established for the sole purpose of merging or consolidating with an existing stock company simultaneously with the effectiveness of a division authorized by this Code. Upon request of the dividing company, the Director may waive the requirements of Section 131.8 of this Code. Each domestic stock company formed under this subsection shall be deemed to exist before a merger and division under this Section becomes effective, but solely for the purpose of being a party to such merger and division. The Director shall not require that such domestic stock company be licensed to transact insurance business in this state before such merger and division. All insurance policies, annuities, or reinsurance agreements allocated to such domestic stock company shall become the obligation of the domestic stock company that survives the merger simultaneously with the effectiveness of the merger and division. The plan of merger or consolidation shall be deemed to have been authorized and approved by such domestic stock company if the dividing company authorized and approved such plan. The certificate of merger shall state that it was approved by the domestic stock company formed under this subsection.

(Source: P.A. 100-1118, eff. 11-27-18.)

(215 ILCS 5/156.1) (from Ch. 73, par. 768.1)

Sec. 156.1. Acquisition by exchange of stock permitted. Any domestic stock insurance company may adopt a plan of exchange of the outstanding stock of its stockholders for the consideration herein designated to be paid or provided by a corporation which acquires such stock, in the manner provided in this Article.

The plan of exchange may provide that the acquiring corporation, as consideration for the stock of the domestic corporation, (1) transfer shares of its stock, or (2) transfer other securities issued by it, or (3) pay cash therefor, or (4) pay or provide other consideration, or (5) pay or provide any combination of the foregoing types of consideration.

"Acquiring corporation", as used in this Article, means any stock insurance corporation incorporated under this Code or under prior laws of this State relating to the incorporation of domestic insurance corporations; any stock corporation incorporated under the "Business Corporation Act of 1983" or under prior laws of this State authorizing the establishment of business corporations; and any foreign or non-domestic alien stock corporation qualified to do business in Illinois and registered by the corporation department; and any foreign or non-domestic alien stock insurance company authorized to do business in Illinois.

(Source: P.A. 83-1362.)

(215 ILCS 5/157) (from Ch. 73, par. 769)

Sec. 157. Powers of company not enlarged.

Nothing in this article contained shall be construed to authorize any company to engage in any kind of insurance business not authorized by its articles of incorporation nor to authorize any foreign or non-domestic alien company to engage in any kind of insurance business in this State not covered by its certificate of authority to do business in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/161) (from Ch. 73, par. 773)

Sec. 161. Approval and execution of agreement or plan of exchange by foreign or non-domestic alien company.

In the event that a foreign or non-domestic alien company is a party to the agreement of merger or consolidation or plan of exchange, the agreement or plan shall be executed by the proper officers of such foreign or non-domestic alien company when they are duly authorized thereto by such action on the part of the directors, shareholders, members, or policyholders of such foreign or non-domestic alien company as may be required by the laws of the domiciliary state or country of such foreign or non-domestic alien company.

(Source: Laws 1967, p. 2406.)

(215 ILCS 5/162) (from Ch. 73, par. 774)

Sec. 162. Certificate of Merger or Consolidation or Plan of Exchange and Certificate of Approval.

(1) Upon the execution of an agreement of merger or consolidation or plan of exchange, there shall be delivered to the Director:

(a) two duplicate originals of the agreement or plan;

(b) affidavits of officers of each of the companies setting forth the facts necessary to show that all requirements of law with respect to notices to persons entitled to vote have been complied with;

(c) certificates of the secretaries or assistant secretaries or corresponding officers of each of the companies, in case of a merger or consolidation, or of the company to be acquired in case of a plan of exchange, certifying to the number of shares, if any, outstanding, the number of shares voted for and against such agreement or plan, and further in the case of a merger or consolidation (1) the number of policyholders represented at the meeting at which the agreement was considered, and (2) the number of votes cast by policyholders for and against such agreement or (3) in the case of a fraternal benefit society, the number of delegates of the supreme legislative or governing body, and the number of votes cast by the delegates for and against the agreement;

(d) the certificates required by Section 171;

(e) if the surviving or new company is a domestic company and any foreign or non-domestic alien company is a party to the merger or consolidation and the laws of the state or country under which such foreign or non-domestic alien company is incorporated require approval of the merger or consolidation by an official of such state or country, a certificate of approval of such official; and

(f) in case of consolidation where the new company is a foreign or non-domestic alien company, an instrument appointing the Director and his or her successor or successors in office, the attorney of such company for service of process, containing the same provisions and having the same effect as the instrument required of a foreign or non-domestic alien company in order to be admitted to transact business in this State.

In addition, the Director shall be provided, in substantially the same form, the information required under Article VIII 1/2 of this Code.

(2) In case the surviving or new company is a domestic company, if the Director finds that:

(a) the agreement of merger or consolidation is in accordance with the provisions of this Article and not inconsistent with the laws and the Constitutions of this State and the United States;

(b) the surviving or new company has complied with all applicable provisions of this Code;

(c) no reasonable objection exists to such merger or consolidation; and

(d) the standards established under Article VIII 1/2 are satisfied;

he or she shall approve the agreement. The provisions of any law with reference to age limits and medical examination shall be inoperative in so far as agreements of merger or consolidation are concerned. If the agreement of merger or consolidation be approved by the Director, he or she shall file the affidavits and certificates and one of the duplicate originals of the agreement in his or her office, endorse upon the other duplicate original his or her approval thereof, and deliver it, together with a certificate of merger or consolidation, as the case may be, to the surviving or new company. In the case of a consolidation, the Director shall also issue a certificate of authority to the new company.

(3) In case the surviving or new company is a foreign or non-domestic alien company, if the Director finds that:

(a) the agreement of merger or consolidation is in accordance with the provisions of this Article and not inconsistent with the laws and the Constitutions of this State and the United States;

(b) the agreement of merger or consolidation provides for the assumption by the new or surviving company of all the liabilities and obligations of the companies parties to the merger or consolidation and otherwise affords proper protection for creditors and policyholders and that such provisions are not inconsistent with the laws of the state or country of incorporation of such new or surviving company;

(c) the surviving or new company has complied with all applicable provisions of this Code;

(d) no reasonable objection exists to such merger or consolidation; and

(e) the standards established under Article VIII 1/2 are satisfied;

he or she shall approve the agreement. If the agreement be approved by the Director, he or she shall file the affidavits and certificates and one of the duplicate originals of the agreement in his or her office, endorse upon the other duplicate original his or her approval thereof, and deliver it, together with a certificate of approval of the merger or consolidation, as the case may be, to the surviving or new company.

(4) In the case of a plan of exchange, if the Director finds that the parties to the exchange have established that:

(a) the plan, if effective, will not tend adversely to affect the financial stability or management of any domestic company which is a party thereto or the general capacity or intention to continue the safe and prudent transaction of the insurance business of such domestic company or companies;

(b) the interests of the policyholders and shareholders of each domestic insurance company which is a party to the plan are protected;

(c) the competence, experience and integrity of those persons who would control the operation of the domestic company are such as to be in the best interests of the policyholders of such company to permit such exchange;

(d) the terms and conditions of the plan are fair and reasonable; and

(e) the standards established under Article VIII 1/2 are satisfied;

he or she shall approve the plan of exchange. If the plan of exchange be approved by the Director, he or she shall file the affidavits and certificates and one of the duplicate originals of the plan of exchange in his or her office, endorse upon the other duplicate original his or her approval thereof, and deliver it, together with a certificate of approval of the plan of exchange to the domestic company.

(5) If the Director refuses to approve the agreement of merger or consolidation, or plan of exchange, notice of such refusal, assigning the reasons therefor, shall be given in writing by the Director to each of the companies party thereto, within 60 days from the date of the delivery of such agreements or plan to him or her, and he or she shall grant any of such companies a hearing upon request. The hearing shall be held within 30 days of the Director's receipt of request for hearing. All persons to whom it is proposed to issue securities in such agreements or exchange shall have a right to appear. Within 30 days after the close of the hearing the Director shall approve or disapprove or place conditions precedent upon his or her approval of the merger or consolidation or plan by issuing a written order stating his or her determination and the reasons therefor.

(Source: P.A. 90-381, eff. 8-14-97.)

(215 ILCS 5/163) (from Ch. 73, par. 775)

Sec. 163. Date merger or consolidation or plan of exchange effected.

(1) If the surviving or new company is a domestic company, the merger or consolidation is effected upon the issuance of the certificate of merger or the certificate of consolidation, as the case may be.

(2) If the surviving or new company is a foreign or non-domestic alien company and the Director has issued a certificate of approval of the merger or consolidation, the date upon which the merger or consolidation is effected shall be determined by the laws of the state or country of incorporation or organization of the surviving or new company. However, the merger or consolidation shall in no event become effective in this State until a certificate of merger or consolidation, as the case may be, or other evidence that the merger or consolidation is effected is issued by the proper official of the state or country of incorporation or organization of the surviving or new company and is filed with and approved by the Director.

(3) Notice of adoption of the plan and the approval thereof by the Director shall be delivered or mailed to each shareholder of record of the domestic insurance company to be acquired who was entitled to vote thereon and an affidavit of the secretary or assistant secretary of such company or of an officer of the company's transfer agent that such notice was given shall be filed with the Director. The plan shall become effective 10 days after receipt of the affidavit by the Director. A plan of exchange may be abandoned pursuant to any provisions for abandonment contained therein at any time, provided that notice of such abandonment shall be delivered or mailed to each such stockholder and filed with the Director prior to the termination of such 10 day period.

(Source: Laws 1967, p. 2406.)

(215 ILCS 5/164) (from Ch. 73, par. 776)

Sec. 164. Removal of property of domestic, merged or consolidated company from this State.

(1) If the surviving or new company shall be a foreign or non-domestic alien company, no property of the domestic merged or consolidated company shall be removed from this State by reason of such merger or consolidation, prior to, nor shall title to such property vest in the surviving or new company until, the merger or consolidation shall become effective in this State as provided in section 163.

(2) Any director or officer of any domestic company removing or permitting the removal of any property of company from this State in violation of this section, shall be guilty of a Class A misdemeanor.

(Source: P.A. 77-2699.)

(215 ILCS 5/166) (from Ch. 73, par. 778)

Sec. 166. Effect of merger or consolidation.

(1) If the surviving or new company is a domestic company, when such merger or consolidation has been effected

(a) the several companies parties to the agreement of merger or consolidation shall be a single company, which, in the case of a merger, shall be that company designated in the agreement of merger as the surviving company, and in the case of a consolidation, shall be the new company provided for in the agreement of consolidation;

(b) the separate existence of all of the companies parties to the agreement of merger or consolidation, except the surviving company in the case of a merger, shall cease;

(c) such surviving or new company shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by this Code;

(d) such surviving or new company shall thereupon and thereafter possess all the rights, privileges, immunities, powers and franchises of a public as well as of a private nature, of each of the companies so merged or consolidated; and all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares, assessments payable from members or policyholders, and all other choses in action and all and every other interest of, or belonging to or due to, each of the companies so merged or consolidated shall be deemed to be transferred to and vested in such surviving or new company without further act or deed; and the title to any real estate, or any interest therein, under the laws of this State vested in any of such companies shall not revert or be in any way impaired by reason of such merger or consolidation;

(e) such surviving or new company shall thenceforth be responsible and liable for all the liabilities and obligations of each of the companies so merged or consolidated; any claim existing or action or proceeding pending by or against any of such companies may be prosecuted to judgment as if such merger or consolidation had not taken place, or such surviving or new company may be substituted in its place; neither the rights of creditors nor any liens upon the property of any of such companies shall be impaired by such merger or consolidation, but such liens shall be limited to the property upon which they were liens immediately prior to the time of such merger or consolidation, unless otherwise provided in the agreement of merger or consolidation; and

(f) in case of a merger, the articles of incorporation of the surviving company shall be supplanted and superseded to the extent, if any, that any provision or provisions of such articles shall be restated in the agreement of merger as provided in section 158, and such articles of incorporation, shall be deemed to be thereby and to that extent amended; in case of a consolidation, the statements set forth in the agreement of consolidation as provided in section 158 shall be deemed to be articles of incorporation of the new company formed by such consolidation.

(2) If the surviving or new company is a foreign or non-domestic alien company, when such merger or consolidation has become effective in this State

(a) the effect of the merger or consolidation shall be determined by the law of the state of incorporation or organization of such company;

(b) the separate existence of all domestic companies parties to the plan of merger or consolidation shall cease;

(c) all property, real, personal, and mixed, and all debts due on whatever account including subscriptions to shares, assessments payable from members or policyholders and all other choses in action and all and every other interest of or belonging to and due to each of the companies so merged or consolidated shall be taken and deemed to be transferred to and vested in such surviving or new company without further act or deed, and the title to any real estate, or any interest therein, shall not revert or be in any way impaired by reason of such merger or consolidation.

(3) In the event of a merger or consolidation under this article, the surviving company or the consolidated company shall be considered as having the age of the oldest company which is a party to such merger or consolidation for the purpose of complying with requirements of the laws relating to age of company.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/169) (from Ch. 73, par. 781)

Sec. 169. Rights of dissenting shareholders and policyholders of foreign or non-domestic alien company.

The rights of any dissenting shareholder, member or policyholder of any foreign or non-domestic alien company party to a merger or consolidation, shall be those afforded to such shareholder, member, or policyholder by the laws of the domiciliary state or country of such foreign or non-domestic alien company.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/170) (from Ch. 73, par. 782)

Sec. 170. Transfer of deposits.

(1) If the surviving or new company shall be a foreign or non-domestic alien company and the laws of the state or country under which such surviving or new company is incorporated or organized shall require the maintenance with any official of such State or country of a deposit of the legal reserve on any policies, then the Director is authorized to deliver to the proper custodian of such deposits of such state or country any deposits theretofore made with the Director pertaining to policies of any of the merged or consolidated companies. If the surviving or new company shall be a domestic company into which has been merged or consolidated a foreign or non-domestic alien company incorporated or organized in a state or country the laws of which require the maintenance with an official of a deposit of the legal reserve on any policies, then the Director is hereby authorized to receive from such official any deposit theretofore made with such official pertaining to the policies of any of the merged or consolidated companies.

(2) Any surviving or new company shall, within 60 days after the transfer of such deposit, notify the holder of every policy secured by such transferred deposit, that the transfer has been made. The president or vice-president and secretary or assistant secretary of such company, or the executive officers corresponding thereto, shall within 30 days thereafter, file with the Director an affidavit of the fact that due notice to policyholders, as provided for herein, has been given. If a surviving or new company shall be a foreign or non-domestic alien company, the Director shall require from such company, before transferring any deposit to any official of the state or country under the laws of which such foreign or non-domestic alien company is incorporated or organized, a written agreement that notice of such transfer will be given to policyholders and that an affidavit with regard to such notice will be furnished to the Director as in this section provided.

(3) In the event any deposit is to be maintained in this State by reason of this section, the amount thereof from time to time for each such policy shall be at least equal to the amount which would be required in the state where such deposit was theretofore maintained under the provisions of the law of such state in effect on the date the merger or consolidation was effected. The deposits so maintained in this State shall consist of securities of the kinds authorized for investment by Article VIII of this Code.

(Source: Laws 1959, p. 1431.)

(215 ILCS 5/173.1) (from Ch. 73, par. 785.1)

(Text of Section before amendment by P.A. 102-578)

Sec. 173.1. Credit allowed a domestic ceding insurer.

(1) Except as otherwise provided under Article VIII 1/2 of this Code and related provisions of the Illinois Administrative Code, credit for reinsurance shall be allowed a domestic ceding insurer as either an admitted asset or a deduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of paragraph (A) or (B) or (B-5) or (C) or (C-5) or (D) of this subsection (1). Credit shall be allowed under paragraph (A), (B), or (B-5) of this subsection (1) only as respects cessions of those kinds or classes of business in which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile, or in the case of a U.S. branch of a non-domestic an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under paragraph (B-5) or (C) of this subsection (1) only if the applicable requirements of paragraph (E) of this subsection (1) have been satisfied.

(A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is authorized in this State to transact the types of insurance ceded and has at least $5,000,000 in capital and surplus.

(B) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this State. An accredited reinsurer is one that:

(1) files with the Director evidence of its submission to this State's jurisdiction;

(2) submits to this State's authority to examine its books and records;

(3) is licensed to transact insurance or reinsurance in at least one state, or in the case of a U.S. branch of a non-domestic an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state;

(4) files annually with the Director a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and

(5) maintains a surplus as regards policyholders in an amount that is not less than $20,000,000 and whose accreditation has been approved by the Director.

(B-5)(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a U.S. branch of a non-domestic an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this Code and the assuming insurer or U.S. branch of a non-domestic an alien assuming insurer:

(a) maintains a surplus as regards policyholders in an amount not less than $20,000,000; and

(b) submits to the authority of this State to examine its books and records.

(2) The requirement of item (a) of subparagraph (1) of paragraph (B-5) of this subsection (1) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

(C)(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in paragraph (B) of subsection (3) of this Section, for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report to the Director information substantially the same as that required to be reported on the NAIC annual and quarterly financial statement by authorized insurers and any other financial information that the Director deems necessary to determine the financial condition of the assuming insurer and the sufficiency of the trust fund. The assuming insurer shall provide or make the information available to the ceding insurer. The assuming insurer may decline to release trade secrets or commercially sensitive information that would qualify as exempt from disclosure under the Freedom of Information Act. The Director shall also make the information publicly available, subject only to such reasonable objections as might be raised to a request pursuant to the Freedom of Information Act, as determined by the Director. The assuming insurer shall submit to examination of its books and records by the Director and bear the expense of examination.

(2)(a) Credit for reinsurance shall not be granted under this subsection unless the form of the trust and any amendments to the trust have been approved by:

(i) the regulatory official of the state where the trust is domiciled; or

(ii) the regulatory official of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.

(b) The form of the trust and any trust amendments also shall be filed with the regulatory official of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer's United States policyholders and ceding insurees and their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the Director.

(c) The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February 28 of each year the trustee of the trust shall report to the Director in writing the balance of the trust and a list of the trust's investments at the preceding year-end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the next following December 31.

No later than February 28 of each year, the assuming insurer's chief executive officer or chief financial officer shall certify to the Director that the trust fund contains funds in an amount not less than the assuming insurer's liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers, and in addition, a trusteed surplus of no less than $20,000,000. In the event that item (a-5) of subparagraph (3) of this paragraph (C) applies to the trust, the assuming insurer's chief executive officer or chief financial officer shall then certify to the Director that the trust fund contains funds in an amount not less than the assuming insurer's liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers and, in addition, a reduced trusteed surplus of not less than the amount that has been authorized by the regulatory authority having principal regulatory oversight of the trust.

(d) No later than February 28 of each year, an assuming insurer that maintains a trust fund in accordance with this paragraph (C) shall provide or make available, if requested by a beneficiary under the trust fund, the following information to the assuming insurer's U.S. ceding insurers or their assigns and successors in interest:

(i) a copy of the form of the trust agreement and any trust amendments to the trust agreement pertaining to the trust fund;

(ii) a copy of the annual and quarterly financial information, and its most recent audited financial statement provided to the Director by the assuming insurer, including any exhibits and schedules thereto;

(iii) any financial information provided to the Director by the assuming insurer that the Director has deemed necessary to determine the financial condition of the assuming insurer and the sufficiency of the trust fund;

(iv) a copy of any annual and quarterly financial information provided to the Director by the trustee of the trust fund maintained by the assuming insurer, including any exhibits and schedules thereto;

(v) a copy of the information required to be reported by the trustee of the trust to the Director under the provisions of this paragraph (C); and

(vi) a written certification that the trust fund consists of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers and, in addition, a trusteed surplus of not less than $20,000,000.

(3) The following requirements apply to the following categories of assuming insurer:

(a) The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers, and in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000, except as provided in item (a-5) of this subparagraph (3).

(a-5) At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least 3 full years, the Director with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of U.S. ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than 30% of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers covered by the trust.

(b)(i) In the case of a group including incorporated and individual unincorporated underwriters:

(I) for reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters' several liabilities attributable to business ceded by U.S. domiciled ceding insurers to any member of the group;

(II) for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992 and not amended or renewed after that date, notwithstanding the other provisions of this Act, the trust shall consist of a trusteed account in an amount not less than the group's several insurance and reinsurance liabilities attributable to business written in the United States; and

(III) in addition to these trusts, the group shall maintain in trust a trusteed surplus of which not less than $100,000,000 shall be held jointly for the benefit of the U.S. domiciled ceding insurers of any member of the group for all years of account.

(ii) The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members.

(iii) Within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the Director an annual certification by the group's domiciliary regulator of the solvency of each underwriter member, or if a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the group.

(c) In the case of a group of incorporated insurers under common administration, the group shall:

(i) have continuously transacted an insurance business outside the United States for at least 3 years immediately before making application for accreditation;

(ii) maintain aggregate policyholders' surplus of not less than $10,000,000,000;

(iii) maintain a trust in an amount not less than the group's several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;

(iv) in addition, maintain a joint trusteed surplus of which not less than $100,000,000 shall be held jointly for the benefit of the United States ceding insurers of any member of the group as additional security for these liabilities; and

(v) within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, make available to the Director an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.

(C-5) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the Director as a reinsurer in this State and secures its obligations in accordance with the requirements of this paragraph (C-5).

(1) In order to be eligible for certification, the assuming insurer shall meet the following requirements:

(a) the assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the Director pursuant to subparagraph (3) of this paragraph (C-5);

(b) the assuming insurer must maintain minimum capital and surplus, or its equivalent, in an amount not less than $250,000,000 or such greater amount as determined by the Director pursuant to regulation; this requirement may also be satisfied by an association, including incorporated and individual unincorporated underwriters, having minimum capital and surplus equivalents (net of liabilities) of at least $250,000,000 and a central fund containing a balance of at least $250,000,000;

(c) the assuming insurer must maintain financial strength ratings from 2 or more rating agencies deemed acceptable by the Director; these ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information; each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association, including incorporated and individual unincorporated underwriters, that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating; these financial strength ratings shall be one factor used by the Director in determining the rating that is assigned to the assuming insurer; acceptable rating agencies include the following:

(i) Standard & Poor's;

(ii) Moody's Investors Service;

(iii) Fitch Ratings;

(iv) A.M. Best Company; or

(v) any other nationally recognized statistical rating organization;

(d) the assuming insurer must agree to submit to the jurisdiction of this State, appoint the Director as its agent for service of process in this State, and agree to provide security for 100% of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers if it resists enforcement of a final U.S. judgment; and

(e) the assuming insurer must agree to meet applicable information filing requirements as determined by the Director, both with respect to an initial application for certification and on an ongoing basis.

(2) An association, including incorporated and individual unincorporated underwriters, may be a certified reinsurer. In order to be eligible for certification, in addition to satisfying the requirements of subparagraph (1) of this paragraph (C-5):

(a) the association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents (net of liabilities) of the association and its members, which shall include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in the amounts specified in item (b) of subparagraph (1) of this paragraph (C-5);

(b) the incorporated members of the association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and

(c) within 90 days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the Director an annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association.

(3) The Director shall create and publish a list of qualified jurisdictions, under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the Director as a certified reinsurer.

(a) In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the Director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the U.S. A qualified jurisdiction must agree in writing to share information and cooperate with the Director with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction may not be recognized as a qualified jurisdiction if the Director has determined that the jurisdiction does not adequately and promptly enforce final U.S. judgments and arbitration awards. The costs and expenses associated with the Director's review and evaluation of the domiciliary jurisdictions of non-U.S. assuming insurers shall be borne by the certified reinsurer or reinsurers domiciled in such jurisdiction.

(b) Additional factors to be considered in determining whether to recognize a qualified jurisdiction include, but are not limited to, the following:

(i) the framework under which the assuming insurer is regulated;

(ii) the structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;

(iii) the substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;

(iv) the form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used;

(v) the domiciliary regulator's willingness to cooperate with U.S. regulators in general and the Director in particular;

(vi) the history of performance by assuming insurers in the domiciliary jurisdiction;

(vii) any documented evidence of substantial problems with the enforcement of final U.S. judgments in the domiciliary jurisdiction; and

(viii) any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or its successor organization.

(c) If, upon conducting an evaluation under this paragraph with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the Director determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the Director shall publish notice and evidence of such recognition in an appropriate manner. The Director may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified.

(d) The Director shall consider the list of qualified jurisdictions through the NAIC committee process in determining qualified jurisdictions. If the Director approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, then the Director shall provide thoroughly documented justification in accordance with criteria to be developed under regulations.

(e) U.S. jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions.

(f) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, then the Director may suspend the reinsurer's certification indefinitely, in lieu of revocation.

(4) If an applicant for certification has been certified as a reinsurer in an NAIC accredited jurisdiction, then the Director may defer to that jurisdiction's certification and to the rating assigned by that jurisdiction if the assuming insurer submits a properly executed Form CR-1 and such additional information as the Director requires. Such assuming insurer shall be considered to be a certified reinsurer in this State but only upon the Director's assignment of an Illinois rating, which shall be made based on the requirements of subparagraph (5) of this paragraph (C-5). The following shall apply:

(a) Any change in the certified reinsurer's status or rating in the other jurisdiction shall apply automatically in Illinois as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the Director of any change in its status or rating within 10 days after receiving notice of the change.

(b) The Director may withdraw recognition of the other jurisdiction's rating at any time and assign a new rating in accordance with subparagraph (5) of this paragraph (C-5).

(c) The Director may withdraw recognition of the other jurisdiction's certification at any time with written notice to the certified reinsurer. Unless the Director suspends or revokes the certified reinsurer's certification in accordance with item (c) of subparagraph (9) of this paragraph (C-5), the certified reinsurer's certification shall remain in good standing in Illinois for a period of 3 months, which shall be extended if additional time is necessary to consider the assuming insurer's application for certification in Illinois.

(5) The Director shall assign a rating to each certified reinsurer pursuant to rules adopted by the Department. Factors that shall be considered as part of the evaluation process include the following:

(a) The certified reinsurer's financial strength rating from an acceptable rating agency. Financial strength ratings shall be classified according to the following ratings categories:

(i) Ratings Category "Secure - 1" corresponds to the highest level of rating given by a rating agency, including, but not limited to, A.M. Best Company rating A++; Standard & Poor's rating AAA; Moody's Investors Service rating Aaa; and Fitch Ratings rating AAA.

(ii) Ratings Category "Secure - 2" corresponds to the second-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A+; Standard & Poor's rating AA+, AA, or AA-; Moody's Investors Service ratings Aa1, Aa2, or Aa3; and Fitch Ratings ratings AA+, AA, or AA-.

(iii) Ratings Category "Secure - 3" corresponds to the third-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A; Standard & Poor's ratings A+ or A; Moody's Investors Service ratings A1 or A2; and Fitch Ratings ratings A+ or A.

(iv) Ratings Category "Secure - 4" corresponds to the fourth-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A-; Standard & Poor's rating A-; Moody's Investors Service rating A3; and Fitch Ratings rating A-.

(v) Ratings Category "Secure - 5" corresponds to the fifth-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company ratings B++ or B+; Standard & Poor's ratings BBB+, BBB, or BBB-; Moody's Investors Service ratings Baa1, Baa2, or Baa3; and Fitch Ratings ratings BBB+, BBB, or BBB-.

(vi) Ratings Category "Vulnerable - 6" corresponds to a level of rating given by a rating agency, other than those described in subitems (i) through (v) of this item (a), including, but not limited to, A.M. Best Company rating B, B-, C++, C+, C, C-, D, E, or F; Standard & Poor's ratings BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, or R; Moody's Investors Service ratings Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, or C; and Fitch Ratings ratings BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, or D.

A failure to obtain or maintain at least 2 financial strength ratings from acceptable rating agencies shall result in loss of eligibility for certification.

(b) The business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations.

(c) For certified reinsurers domiciled in the U.S., a review of the most recent applicable NAIC Annual Statement Blank, either Schedule F (for property and casualty reinsurers) or Schedule S (for life and health reinsurers).

(d) For certified reinsurers not domiciled in the U.S., a review annually of Form CR-F (for property and casualty reinsurers) or Form CR-S (for life and health reinsurers).

(e) The reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership.

(f) Regulatory actions against the certified reinsurer.

(g) The report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in item (h) of this subparagraph (5).

(h) For certified reinsurers not domiciled in the U.S., audited financial statements (audited Generally Accepted Accounting Principles (U.S. GAAP) basis statement if available, audited International Financial Reporting Standards (IFRS) basis statements are allowed but must include an audited footnote reconciling equity and net income to U.S. GAAP basis or, with the permission of the Director, audited IFRS basis statements with reconciliation to U.S. GAAP basis certified by an officer of the company), regulatory filings, and actuarial opinion (as filed with the non-U.S. jurisdiction supervisor). Upon the initial application for certification, the Director shall consider the audited financial statements filed with its non-U.S. jurisdiction supervisor for the 3 years immediately preceding the date of the initial application for certification.

(i) The liquidation priority of obligations to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding.

(j) A certified reinsurer's participation in any solvent scheme of arrangement, or similar procedure, that involves U.S. ceding insurers. The Director shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement.

The maximum rating that a certified reinsurer may be assigned shall correspond to its financial strength rating, which shall be determined according to subitems (i) through (vi) of item (a) of this subparagraph (5). The Director shall use the lowest financial strength rating received from an acceptable rating agency in establishing the maximum rating of a certified reinsurer.

(6) Based on the analysis conducted under item (e) of subparagraph (5) of this paragraph (C-5) of a certified reinsurer's reputation for prompt payment of claims, the Director may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to U.S. ceding insurers, provided that the Director shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level under item (a) of subparagraph (8) of this paragraph (C-5) if the Director finds that:

(a) more than 15% of the certified reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more that are not in dispute and that exceed $100,000 for each cedent; or

(b) the aggregate amount of reinsurance recoverables on paid losses that are not in dispute that are overdue by 90 days or more exceeds $50,000,000.

(7) The Director shall post notice on the Department's website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The Director may not take final action on the application until at least 30 days after posting the notice required by this subparagraph. The Director shall publish a list of all certified reinsurers and their ratings.

(8) A certified reinsurer shall secure obligations assumed from U.S. ceding insurers under this subsection (1) at a level consistent with its rating.

(a) The amount of security required in order for full credit to be allowed shall correspond with the applicable ratings category:

Secure - 1: 0%.

Secure - 2: 10%.

Secure - 3: 20%.

Secure - 4: 50%.

Secure - 5: 75%.

Vulnerable - 6: 100%.

(b) Nothing in this subparagraph (8) shall prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this Section.

(c) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the Director and consistent with the provisions of subsection (2) of this Section, or in a multibeneficiary trust in accordance with paragraph (C) of this subsection (1), except as otherwise provided in this subparagraph (8).

(d) If a certified reinsurer maintains a trust to fully secure its obligations subject to paragraph (C) of this subsection (1), and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, then the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other U.S. jurisdictions and for its obligations subject to paragraph (C) of this subsection (1). It shall be a condition to the grant of certification under this paragraph (C-5) that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the Director with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account. The certified reinsurer shall also provide or make available, if requested by a beneficiary under a trust, all the information that is required to be provided under the requirements of item (d) of subparagraph (2) of paragraph (C) of this subsection (1) to the certified reinsurer's U.S. ceding insurers or their assigns and successors in interest. The assuming insurer may decline to release trade secrets or commercially sensitive information that would qualify as exempt from disclosure under the Freedom of Information Act.

(e) The minimum trusteed surplus requirements provided in paragraph (C) of this subsection (1) are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that such trust shall maintain a minimum trusteed surplus of $10,000,000.

(f) With respect to obligations incurred by a certified reinsurer under this subsection (1), if the security is insufficient, then the Director may reduce the allowable credit by an amount proportionate to the deficiency and may impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.

(9)(a) In the case of a downgrade by a rating agency or other disqualifying circumstance, the Director shall by written notice assign a new rating to the certified reinsurer in accordance with the requirements of subparagraph (5) of this paragraph (C-5).

(b) If the rating of a certified reinsurer is upgraded by the Director, then the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the Director shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the Director, then the Director shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer.

(c) The Director may suspend, revoke, or otherwise modify a certified reinsurer's certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this Section or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the Director to reconsider the certified reinsurer's ability or willingness to meet its contractual obligations. In seeking to suspend, revoke, or otherwise modify a certified reinsurer's certification, the Director shall follow the procedures provided in paragraph (G) of this subsection (1).

(d) For purposes of this subsection (1), a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure 100% of its obligations.

(i) As used in this item (d), the term "terminated" refers to revocation, suspension, voluntary surrender and inactive status.

(ii) If the Director continues to assign a higher rating as permitted by other provisions of this Section, then this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.

(e) Upon revocation of the certification of a certified reinsurer by the Director, the assuming insurer shall be required to post security in accordance with subsection (2) of this Section in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust, then the Director may allow additional credit equal to the ceding insurer's pro rata share of the funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration.

(f) Notwithstanding the change of a certified reinsurer's rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of 3 months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the Director to be at high risk of uncollectibility.

(10) A certified reinsurer that ceases to assume new business in this State may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection (1), and the Director shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.

(11) Credit for reinsurance under this paragraph (C-5) shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer.

(12) The Director shall comply with all reporting and notification requirements that may be established by the NAIC with respect to certified reinsurers and qualified jurisdictions.

(D) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of paragraph (A), (B), or (C) of this subsection (1) but only with respect to the insurance of risks located in jurisdictions where that reinsurance is required by applicable law or regulation of that jurisdiction.

(E) If the assuming insurer is not licensed to transact insurance in this State or an accredited or certified reinsurer in this State, the credit permitted by paragraphs (B-5) and (C) of this subsection (1) shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:

(1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of the court or of any appellate court in the event of an appeal; and

(2) to designate the Director or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the ceding company.

This provision is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if an obligation to arbitrate is created in the agreement.

(F) If the assuming insurer does not meet the requirements of paragraph (A) or (B) of this subsection (1), the credit permitted by paragraph (C) of this subsection (1) shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:

(1) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by subparagraph (3) of paragraph (C) of this subsection (1) or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the state official with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the state official with regulatory oversight all of the assets of the trust fund.

(2) The assets shall be distributed by and claims shall be filed with and valued by the state official with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies.

(3) If the state official with regulatory oversight determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the U.S. ceding insurers of the grantor of the trust, the assets or part thereof shall be returned by the state official with regulatory oversight to the trustee for distribution in accordance with the trust agreement.

(4) The grantor shall waive any rights otherwise available to it under U.S. law that are inconsistent with the provision.

(G) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, then the Director may suspend or revoke the reinsurer's accreditation or certification.

(1) The Director must give the reinsurer notice and opportunity for hearing. The suspension or revocation may not take effect until after the Director's order on hearing, unless:

(a) the reinsurer waives its right to hearing;

(b) the Director's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subparagraph (4) of paragraph (C-5) of this subsection (1); or

(c) the Director finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the Director's action.

(2) While a reinsurer's accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (2) of this Section. If a reinsurer's accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation, except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (2) of this Section.

(H) The following provisions shall apply concerning concentration of risk:

(1) A ceding insurer shall take steps to manage its reinsurance recoverable proportionate to its own book of business. A domestic ceding insurer shall notify the Director within 30 days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds 50% of the domestic ceding insurer's last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(2) A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the Director within 30 days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than 20% of the ceding insurer's gross written premium in the prior calendar year, or after it has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(2) Credit for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of subsection (1) of this Section shall be allowed in an amount not exceeding the assets or liabilities carried by the ceding insurer. The credit shall not exceed the amount of funds held by or held in trust for the ceding insurer under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution, as defined in paragraph (B) of subsection (3) of this Section. This security may be in the form of:

(A) Cash.

(B) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office that conform to the requirements of Article VIII of this Code that are not issued by an affiliate of either the assuming or ceding company.

(C) Clean, irrevocable, unconditional, letters of credit issued or confirmed by a qualified United States financial institution, as defined in paragraph (A) of subsection (3) of this Section. The letters of credit shall be effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding company on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance (or confirmation) shall, notwithstanding the issuing (or confirming) institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs.

(D) Any other form of security acceptable to the Director.

(3)(A) For purposes of paragraph (C) of subsection (2) of this Section, a "qualified United States financial institution" means an institution that:

(1) is organized or, in the case of a U.S. office of a foreign banking organization, licensed under the laws of the United States or any state thereof;

(2) is regulated, supervised, and examined by U.S. federal or state authorities having regulatory authority over banks and trust companies;

(3) has been designated by either the Director or the Securities Valuation Office of the National Association of Insurance Commissioners as meeting such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Director; and

(4) is not affiliated with the assuming company.

(B) A "qualified United States financial institution" means, for purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that:

(1) is organized or, in the case of the U.S. branch or agency office of a foreign banking organization, licensed under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers;

(2) is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies; and

(3) is not affiliated with the assuming company, however, if the subject of the reinsurance contract is insurance written pursuant to Section 155.51 of this Code, the financial institution may be affiliated with the assuming company with the prior approval of the Director.

(C) Except as set forth in subparagraph (11) of paragraph (C-5) of subsection (1) of this Section as to cessions by certified reinsurers, this amendatory Act of the 100th General Assembly shall apply to all cessions after the effective date of this amendatory Act of the 100th General Assembly under reinsurance agreements that have an inception, anniversary, or renewal date not less than 6 months after the effective date of this amendatory Act of the 100th General Assembly.

(D) The Department shall adopt rules implementing the provisions of this Article.

(Source: P.A. 100-1118, eff. 11-27-18.)

(Text of Section after amendment by P.A. 102-578)

Sec. 173.1. Credit allowed a domestic ceding insurer.

(1) Except as otherwise provided under Article VIII 1/2 of this Code and related provisions of the Illinois Administrative Code, credit for reinsurance shall be allowed a domestic ceding insurer as either an admitted asset or a deduction from liability on account of reinsurance ceded only when the reinsurer meets the requirements of paragraph (A), (B), (B-5), (C), (C-5), (C-10), or (D) of this subsection (1). Credit shall be allowed under paragraph (A), (B), or (B-5) of this subsection (1) only as respects cessions of those kinds or classes of business in which the assuming insurer is licensed or otherwise permitted to write or assume in its state of domicile, or in the case of a U.S. branch of a non-domestic an alien assuming insurer, in the state through which it is entered and licensed to transact insurance or reinsurance. Credit shall be allowed under paragraph (B-5) or (C) of this subsection (1) only if the applicable requirements of paragraph (E) of this subsection (1) have been satisfied.

(A) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is authorized in this State to transact the types of insurance ceded and has at least $5,000,000 in capital and surplus.

(B) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is accredited as a reinsurer in this State. An accredited reinsurer is one that:

(1) files with the Director evidence of its submission to this State's jurisdiction;

(2) submits to this State's authority to examine its books and records;

(3) is licensed to transact insurance or reinsurance in at least one state, or in the case of a U.S. branch of a non-domestic an alien assuming insurer is entered through and licensed to transact insurance or reinsurance in at least one state;

(4) files annually with the Director a copy of its annual statement filed with the insurance department of its state of domicile and a copy of its most recent audited financial statement; and

(5) maintains a surplus as regards policyholders in an amount that is not less than $20,000,000 and whose accreditation has been approved by the Director.

(B-5)(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that is domiciled in, or in the case of a U.S. branch of a non-domestic an alien assuming insurer is entered through, a state that employs standards regarding credit for reinsurance substantially similar to those applicable under this Code and the assuming insurer or U.S. branch of a non-domestic an alien assuming insurer:

(a) maintains a surplus as regards policyholders in an amount not less than $20,000,000; and

(b) submits to the authority of this State to examine its books and records.

(2) The requirement of item (a) of subparagraph (1) of paragraph (B-5) of this subsection (1) does not apply to reinsurance ceded and assumed pursuant to pooling arrangements among insurers in the same holding company system.

(C)(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that maintains a trust fund in a qualified United States financial institution, as defined in paragraph (B) of subsection (3) of this Section, for the payment of the valid claims of its United States policyholders and ceding insurers, their assigns and successors in interest. The assuming insurer shall report to the Director information substantially the same as that required to be reported on the NAIC annual and quarterly financial statement by authorized insurers and any other financial information that the Director deems necessary to determine the financial condition of the assuming insurer and the sufficiency of the trust fund. The assuming insurer shall provide or make the information available to the ceding insurer. The assuming insurer may decline to release trade secrets or commercially sensitive information that would qualify as exempt from disclosure under the Freedom of Information Act. The Director shall also make the information publicly available, subject only to such reasonable objections as might be raised to a request pursuant to the Freedom of Information Act, as determined by the Director. The assuming insurer shall submit to examination of its books and records by the Director and bear the expense of examination.

(2)(a) Credit for reinsurance shall not be granted under this subsection unless the form of the trust and any amendments to the trust have been approved by:

(i) the regulatory official of the state where the trust is domiciled; or

(ii) the regulatory official of another state who, pursuant to the terms of the trust instrument, has accepted principal regulatory oversight of the trust.

(b) The form of the trust and any trust amendments also shall be filed with the regulatory official of every state in which the ceding insurer beneficiaries of the trust are domiciled. The trust instrument shall provide that contested claims shall be valid and enforceable upon the final order of any court of competent jurisdiction in the United States. The trust shall vest legal title to its assets in its trustees for the benefit of the assuming insurer's United States policyholders and ceding insurees and their assigns and successors in interest. The trust and the assuming insurer shall be subject to examination as determined by the Director.

(c) The trust shall remain in effect for as long as the assuming insurer has outstanding obligations due under the reinsurance agreements subject to the trust. No later than February 28 of each year the trustee of the trust shall report to the Director in writing the balance of the trust and a list of the trust's investments at the preceding year-end and shall certify the date of termination of the trust, if so planned, or certify that the trust will not expire prior to the next following December 31.

No later than February 28 of each year, the assuming insurer's chief executive officer or chief financial officer shall certify to the Director that the trust fund contains funds in an amount not less than the assuming insurer's liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers, and in addition, a trusteed surplus of no less than $20,000,000. In the event that item (a-5) of subparagraph (3) of this paragraph (C) applies to the trust, the assuming insurer's chief executive officer or chief financial officer shall then certify to the Director that the trust fund contains funds in an amount not less than the assuming insurer's liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers and, in addition, a reduced trusteed surplus of not less than the amount that has been authorized by the regulatory authority having principal regulatory oversight of the trust.

(d) No later than February 28 of each year, an assuming insurer that maintains a trust fund in accordance with this paragraph (C) shall provide or make available, if requested by a beneficiary under the trust fund, the following information to the assuming insurer's U.S. ceding insurers or their assigns and successors in interest:

(i) a copy of the form of the trust agreement and any trust amendments to the trust agreement pertaining to the trust fund;

(ii) a copy of the annual and quarterly financial information, and its most recent audited financial statement provided to the Director by the assuming insurer, including any exhibits and schedules thereto;

(iii) any financial information provided to the Director by the assuming insurer that the Director has deemed necessary to determine the financial condition of the assuming insurer and the sufficiency of the trust fund;

(iv) a copy of any annual and quarterly financial information provided to the Director by the trustee of the trust fund maintained by the assuming insurer, including any exhibits and schedules thereto;

(v) a copy of the information required to be reported by the trustee of the trust to the Director under the provisions of this paragraph (C); and

(vi) a written certification that the trust fund consists of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance liabilities (as reported to the assuming insurer by its cedent) attributable to reinsurance ceded by U.S. ceding insurers and, in addition, a trusteed surplus of not less than $20,000,000.

(3) The following requirements apply to the following categories of assuming insurer:

(a) The trust fund for a single assuming insurer shall consist of funds in trust in an amount not less than the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers, and in addition, the assuming insurer shall maintain a trusteed surplus of not less than $20,000,000, except as provided in item (a-5) of this subparagraph (3).

(a-5) At any time after the assuming insurer has permanently discontinued underwriting new business secured by the trust for at least 3 full years, the Director with principal regulatory oversight of the trust may authorize a reduction in the required trusteed surplus, but only after a finding, based on an assessment of the risk, that the new required surplus level is adequate for the protection of U.S. ceding insurers, policyholders, and claimants in light of reasonably foreseeable adverse loss development. The risk assessment may involve an actuarial review, including an independent analysis of reserves and cash flows, and shall consider all material risk factors, including, when applicable, the lines of business involved, the stability of the incurred loss estimates, and the effect of the surplus requirements on the assuming insurer's liquidity or solvency. The minimum required trusteed surplus may not be reduced to an amount less than 30% of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers covered by the trust.

(b)(i) In the case of a group including incorporated and individual unincorporated underwriters:

(I) for reinsurance ceded under reinsurance agreements with an inception, amendment, or renewal date on or after January 1, 1993, the trust shall consist of a trusteed account in an amount not less than the respective underwriters' several liabilities attributable to business ceded by U.S. domiciled ceding insurers to any member of the group;

(II) for reinsurance ceded under reinsurance agreements with an inception date on or before December 31, 1992 and not amended or renewed after that date, notwithstanding the other provisions of this Act, the trust shall consist of a trusteed account in an amount not less than the group's several insurance and reinsurance liabilities attributable to business written in the United States; and

(III) in addition to these trusts, the group shall maintain in trust a trusteed surplus of which not less than $100,000,000 shall be held jointly for the benefit of the U.S. domiciled ceding insurers of any member of the group for all years of account.

(ii) The incorporated members of the group shall not be engaged in any business other than underwriting as a member of the group and shall be subject to the same level of solvency regulation and control by the group's domiciliary regulator as are the unincorporated members.

(iii) Within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, the group shall provide to the Director an annual certification by the group's domiciliary regulator of the solvency of each underwriter member, or if a certification is unavailable, financial statements prepared by independent public accountants of each underwriter member of the group.

(c) In the case of a group of incorporated insurers under common administration, the group shall:

(i) have continuously transacted an insurance business outside the United States for at least 3 years immediately before making application for accreditation;

(ii) maintain aggregate policyholders' surplus of not less than $10,000,000,000;

(iii) maintain a trust in an amount not less than the group's several liabilities attributable to business ceded by United States domiciled ceding insurers to any member of the group pursuant to reinsurance contracts issued in the name of the group;

(iv) in addition, maintain a joint trusteed surplus of which not less than $100,000,000 shall be held jointly for the benefit of the United States ceding insurers of any member of the group as additional security for these liabilities; and

(v) within 90 days after its financial statements are due to be filed with the group's domiciliary regulator, make available to the Director an annual certification of each underwriter member's solvency by the member's domiciliary regulator and financial statements of each underwriter member of the group prepared by its independent public accountant.

(C-5) Credit shall be allowed when the reinsurance is ceded to an assuming insurer that has been certified by the Director as a reinsurer in this State and secures its obligations in accordance with the requirements of this paragraph (C-5).

(1) In order to be eligible for certification, the assuming insurer shall meet the following requirements:

(a) the assuming insurer must be domiciled and licensed to transact insurance or reinsurance in a qualified jurisdiction, as determined by the Director pursuant to subparagraph (3) of this paragraph (C-5);

(b) the assuming insurer must maintain minimum capital and surplus, or its equivalent, in an amount not less than $250,000,000 or such greater amount as determined by the Director pursuant to regulation; this requirement may also be satisfied by an association, including incorporated and individual unincorporated underwriters, having minimum capital and surplus equivalents (net of liabilities) of at least $250,000,000 and a central fund containing a balance of at least $250,000,000;

(c) the assuming insurer must maintain financial strength ratings from 2 or more rating agencies deemed acceptable by the Director; these ratings shall be based on interactive communication between the rating agency and the assuming insurer and shall not be based solely on publicly available information; each certified reinsurer shall be rated on a legal entity basis, with due consideration being given to the group rating where appropriate, except that an association, including incorporated and individual unincorporated underwriters, that has been approved to do business as a single certified reinsurer may be evaluated on the basis of its group rating; these financial strength ratings shall be one factor used by the Director in determining the rating that is assigned to the assuming insurer; acceptable rating agencies include the following:

(i) Standard & Poor's;

(ii) Moody's Investors Service;

(iii) Fitch Ratings;

(iv) A.M. Best Company; or

(v) any other nationally recognized statistical rating organization;

(d) the assuming insurer must agree to submit to the jurisdiction of this State, appoint the Director as its agent for service of process in this State, and agree to provide security for 100% of the assuming insurer's liabilities attributable to reinsurance ceded by U.S. ceding insurers if it resists enforcement of a final U.S. judgment; and

(e) the assuming insurer must agree to meet applicable information filing requirements as determined by the Director, both with respect to an initial application for certification and on an ongoing basis.

(2) An association, including incorporated and individual unincorporated underwriters, may be a certified reinsurer. In order to be eligible for certification, in addition to satisfying the requirements of subparagraph (1) of this paragraph (C-5):

(a) the association shall satisfy its minimum capital and surplus requirements through the capital and surplus equivalents (net of liabilities) of the association and its members, which shall include a joint central fund that may be applied to any unsatisfied obligation of the association or any of its members, in the amounts specified in item (b) of subparagraph (1) of this paragraph (C-5);

(b) the incorporated members of the association shall not be engaged in any business other than underwriting as a member of the association and shall be subject to the same level of regulation and solvency control by the association's domiciliary regulator as are the unincorporated members; and

(c) within 90 days after its financial statements are due to be filed with the association's domiciliary regulator, the association shall provide to the Director an annual certification by the association's domiciliary regulator of the solvency of each underwriter member; or if a certification is unavailable, financial statements, prepared by independent public accountants, of each underwriter member of the association.

(3) The Director shall create and publish a list of qualified jurisdictions, under which an assuming insurer licensed and domiciled in such jurisdiction is eligible to be considered for certification by the Director as a certified reinsurer.

(a) In order to determine whether the domiciliary jurisdiction of a non-U.S. assuming insurer is eligible to be recognized as a qualified jurisdiction, the Director shall evaluate the appropriateness and effectiveness of the reinsurance supervisory system of the jurisdiction, both initially and on an ongoing basis, and consider the rights, benefits, and extent of reciprocal recognition afforded by the non-U.S. jurisdiction to reinsurers licensed and domiciled in the U.S. A qualified jurisdiction must agree in writing to share information and cooperate with the Director with respect to all certified reinsurers domiciled within that jurisdiction. A jurisdiction may not be recognized as a qualified jurisdiction if the Director has determined that the jurisdiction does not adequately and promptly enforce final U.S. judgments and arbitration awards. The costs and expenses associated with the Director's review and evaluation of the domiciliary jurisdictions of non-U.S. assuming insurers shall be borne by the certified reinsurer or reinsurers domiciled in such jurisdiction.

(b) Additional factors to be considered in determining whether to recognize a qualified jurisdiction include, but are not limited to, the following:

(i) the framework under which the assuming insurer is regulated;

(ii) the structure and authority of the domiciliary regulator with regard to solvency regulation requirements and financial surveillance;

(iii) the substance of financial and operating standards for assuming insurers in the domiciliary jurisdiction;

(iv) the form and substance of financial reports required to be filed or made publicly available by reinsurers in the domiciliary jurisdiction and the accounting principles used;

(v) the domiciliary regulator's willingness to cooperate with U.S. regulators in general and the Director in particular;

(vi) the history of performance by assuming insurers in the domiciliary jurisdiction;

(vii) any documented evidence of substantial problems with the enforcement of final U.S. judgments in the domiciliary jurisdiction; and

(viii) any relevant international standards or guidance with respect to mutual recognition of reinsurance supervision adopted by the International Association of Insurance Supervisors or its successor organization.

(c) If, upon conducting an evaluation under this paragraph with respect to the reinsurance supervisory system of any non-U.S. assuming insurer, the Director determines that the jurisdiction qualifies to be recognized as a qualified jurisdiction, the Director shall publish notice and evidence of such recognition in an appropriate manner. The Director may establish a procedure to withdraw recognition of those jurisdictions that are no longer qualified.

(d) The Director shall consider the list of qualified jurisdictions through the NAIC committee process in determining qualified jurisdictions. If the Director approves a jurisdiction as qualified that does not appear on the list of qualified jurisdictions, then the Director shall provide thoroughly documented justification in accordance with criteria to be developed under regulations.

(e) U.S. jurisdictions that meet the requirement for accreditation under the NAIC financial standards and accreditation program shall be recognized as qualified jurisdictions.

(f) If a certified reinsurer's domiciliary jurisdiction ceases to be a qualified jurisdiction, then the Director may suspend the reinsurer's certification indefinitely, in lieu of revocation.

(4) If an applicant for certification has been certified as a reinsurer in an NAIC accredited jurisdiction, then the Director may defer to that jurisdiction's certification and to the rating assigned by that jurisdiction if the assuming insurer submits a properly executed Form CR-1 and such additional information as the Director requires. Such assuming insurer shall be considered to be a certified reinsurer in this State but only upon the Director's assignment of an Illinois rating, which shall be made based on the requirements of subparagraph (5) of this paragraph (C-5). The following shall apply:

(a) Any change in the certified reinsurer's status or rating in the other jurisdiction shall apply automatically in Illinois as of the date it takes effect in the other jurisdiction. The certified reinsurer shall notify the Director of any change in its status or rating within 10 days after receiving notice of the change.

(b) The Director may withdraw recognition of the other jurisdiction's rating at any time and assign a new rating in accordance with subparagraph (5) of this paragraph (C-5).

(c) The Director may withdraw recognition of the other jurisdiction's certification at any time with written notice to the certified reinsurer. Unless the Director suspends or revokes the certified reinsurer's certification in accordance with item (c) of subparagraph (9) of this paragraph (C-5), the certified reinsurer's certification shall remain in good standing in Illinois for a period of 3 months, which shall be extended if additional time is necessary to consider the assuming insurer's application for certification in Illinois.

(5) The Director shall assign a rating to each certified reinsurer pursuant to rules adopted by the Department. Factors that shall be considered as part of the evaluation process include the following:

(a) The certified reinsurer's financial strength rating from an acceptable rating agency. Financial strength ratings shall be classified according to the following ratings categories:

(i) Ratings Category "Secure - 1" corresponds to the highest level of rating given by a rating agency, including, but not limited to, A.M. Best Company rating A++; Standard & Poor's rating AAA; Moody's Investors Service rating Aaa; and Fitch Ratings rating AAA.

(ii) Ratings Category "Secure - 2" corresponds to the second-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A+; Standard & Poor's rating AA+, AA, or AA-; Moody's Investors Service ratings Aa1, Aa2, or Aa3; and Fitch Ratings ratings AA+, AA, or AA-.

(iii) Ratings Category "Secure - 3" corresponds to the third-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A; Standard & Poor's ratings A+ or A; Moody's Investors Service ratings A1 or A2; and Fitch Ratings ratings A+ or A.

(iv) Ratings Category "Secure - 4" corresponds to the fourth-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company rating A-; Standard & Poor's rating A-; Moody's Investors Service rating A3; and Fitch Ratings rating A-.

(v) Ratings Category "Secure - 5" corresponds to the fifth-highest level of rating or group of ratings given by a rating agency, including, but not limited to, A.M. Best Company ratings B++ or B+; Standard & Poor's ratings BBB+, BBB, or BBB-; Moody's Investors Service ratings Baa1, Baa2, or Baa3; and Fitch Ratings ratings BBB+, BBB, or BBB-.

(vi) Ratings Category "Vulnerable - 6" corresponds to a level of rating given by a rating agency, other than those described in subitems (i) through (v) of this item (a), including, but not limited to, A.M. Best Company rating B, B-, C++, C+, C, C-, D, E, or F; Standard & Poor's ratings BB+, BB, BB-, B+, B, B-, CCC, CC, C, D, or R; Moody's Investors Service ratings Ba1, Ba2, Ba3, B1, B2, B3, Caa, Ca, or C; and Fitch Ratings ratings BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC-, or D.

A failure to obtain or maintain at least 2 financial strength ratings from acceptable rating agencies shall result in loss of eligibility for certification.

(b) The business practices of the certified reinsurer in dealing with its ceding insurers, including its record of compliance with reinsurance contractual terms and obligations.

(c) For certified reinsurers domiciled in the U.S., a review of the most recent applicable NAIC Annual Statement Blank, either Schedule F (for property and casualty reinsurers) or Schedule S (for life and health reinsurers).

(d) For certified reinsurers not domiciled in the U.S., a review annually of Form CR-F (for property and casualty reinsurers) or Form CR-S (for life and health reinsurers).

(e) The reputation of the certified reinsurer for prompt payment of claims under reinsurance agreements, based on an analysis of ceding insurers' Schedule F reporting of overdue reinsurance recoverables, including the proportion of obligations that are more than 90 days past due or are in dispute, with specific attention given to obligations payable to companies that are in administrative supervision or receivership.

(f) Regulatory actions against the certified reinsurer.

(g) The report of the independent auditor on the financial statements of the insurance enterprise, on the basis described in item (h) of this subparagraph (5).

(h) For certified reinsurers not domiciled in the U.S., audited financial statements (audited Generally Accepted Accounting Principles (U.S. GAAP) basis statement if available, audited International Financial Reporting Standards (IFRS) basis statements are allowed but must include an audited footnote reconciling equity and net income to U.S. GAAP basis or, with the permission of the Director, audited IFRS basis statements with reconciliation to U.S. GAAP basis certified by an officer of the company), regulatory filings, and actuarial opinion (as filed with the non-U.S. jurisdiction supervisor). Upon the initial application for certification, the Director shall consider the audited financial statements filed with its non-U.S. jurisdiction supervisor for the 3 years immediately preceding the date of the initial application for certification.

(i) The liquidation priority of obligations to a ceding insurer in the certified reinsurer's domiciliary jurisdiction in the context of an insolvency proceeding.

(j) A certified reinsurer's participation in any solvent scheme of arrangement, or similar procedure, that involves U.S. ceding insurers. The Director shall receive prior notice from a certified reinsurer that proposes participation by the certified reinsurer in a solvent scheme of arrangement.

The maximum rating that a certified reinsurer may be assigned shall correspond to its financial strength rating, which shall be determined according to subitems (i) through (vi) of item (a) of this subparagraph (5). The Director shall use the lowest financial strength rating received from an acceptable rating agency in establishing the maximum rating of a certified reinsurer.

(6) Based on the analysis conducted under item (e) of subparagraph (5) of this paragraph (C-5) of a certified reinsurer's reputation for prompt payment of claims, the Director may make appropriate adjustments in the security the certified reinsurer is required to post to protect its liabilities to U.S. ceding insurers, provided that the Director shall, at a minimum, increase the security the certified reinsurer is required to post by one rating level under item (a) of subparagraph (8) of this paragraph (C-5) if the Director finds that:

(a) more than 15% of the certified reinsurer's ceding insurance clients have overdue reinsurance recoverables on paid losses of 90 days or more that are not in dispute and that exceed $100,000 for each cedent; or

(b) the aggregate amount of reinsurance recoverables on paid losses that are not in dispute that are overdue by 90 days or more exceeds $50,000,000.

(7) The Director shall post notice on the Department's website promptly upon receipt of any application for certification, including instructions on how members of the public may respond to the application. The Director may not take final action on the application until at least 30 days after posting the notice required by this subparagraph. The Director shall publish a list of all certified reinsurers and their ratings.

(8) A certified reinsurer shall secure obligations assumed from U.S. ceding insurers under this subsection (1) at a level consistent with its rating.

(a) The amount of security required in order for full credit to be allowed shall correspond with the applicable ratings category:

Secure - 1: 0%.

Secure - 2: 10%.

Secure - 3: 20%.

Secure - 4: 50%.

Secure - 5: 75%.

Vulnerable - 6: 100%.

(b) Nothing in this subparagraph (8) shall prohibit the parties to a reinsurance agreement from agreeing to provisions establishing security requirements that exceed the minimum security requirements established for certified reinsurers under this Section.

(c) In order for a domestic ceding insurer to qualify for full financial statement credit for reinsurance ceded to a certified reinsurer, the certified reinsurer shall maintain security in a form acceptable to the Director and consistent with the provisions of subsection (2) of this Section, or in a multibeneficiary trust in accordance with paragraph (C) of this subsection (1), except as otherwise provided in this subparagraph (8).

(d) If a certified reinsurer maintains a trust to fully secure its obligations subject to paragraph (C) of this subsection (1), and chooses to secure its obligations incurred as a certified reinsurer in the form of a multibeneficiary trust, then the certified reinsurer shall maintain separate trust accounts for its obligations incurred under reinsurance agreements issued or renewed as a certified reinsurer with reduced security as permitted by this subsection or comparable laws of other U.S. jurisdictions and for its obligations subject to paragraph (C) of this subsection (1). It shall be a condition to the grant of certification under this paragraph (C-5) that the certified reinsurer shall have bound itself, by the language of the trust and agreement with the Director with principal regulatory oversight of each such trust account, to fund, upon termination of any such trust account, out of the remaining surplus of such trust any deficiency of any other such trust account. The certified reinsurer shall also provide or make available, if requested by a beneficiary under a trust, all the information that is required to be provided under the requirements of item (d) of subparagraph (2) of paragraph (C) of this subsection (1) to the certified reinsurer's U.S. ceding insurers or their assigns and successors in interest. The assuming insurer may decline to release trade secrets or commercially sensitive information that would qualify as exempt from disclosure under the Freedom of Information Act.

(e) The minimum trusteed surplus requirements provided in paragraph (C) of this subsection (1) are not applicable with respect to a multibeneficiary trust maintained by a certified reinsurer for the purpose of securing obligations incurred under this subsection, except that such trust shall maintain a minimum trusteed surplus of $10,000,000.

(f) With respect to obligations incurred by a certified reinsurer under this subsection (1), if the security is insufficient, then the Director may reduce the allowable credit by an amount proportionate to the deficiency and may impose further reductions in allowable credit upon finding that there is a material risk that the certified reinsurer's obligations will not be paid in full when due.

(9)(a) In the case of a downgrade by a rating agency or other disqualifying circumstance, the Director shall by written notice assign a new rating to the certified reinsurer in accordance with the requirements of subparagraph (5) of this paragraph (C-5).

(b) If the rating of a certified reinsurer is upgraded by the Director, then the certified reinsurer may meet the security requirements applicable to its new rating on a prospective basis, but the Director shall require the certified reinsurer to post security under the previously applicable security requirements as to all contracts in force on or before the effective date of the upgraded rating. If the rating of a certified reinsurer is downgraded by the Director, then the Director shall require the certified reinsurer to meet the security requirements applicable to its new rating for all business it has assumed as a certified reinsurer.

(c) The Director may suspend, revoke, or otherwise modify a certified reinsurer's certification at any time if the certified reinsurer fails to meet its obligations or security requirements under this Section or if other financial or operating results of the certified reinsurer, or documented significant delays in payment by the certified reinsurer, lead the Director to reconsider the certified reinsurer's ability or willingness to meet its contractual obligations. In seeking to suspend, revoke, or otherwise modify a certified reinsurer's certification, the Director shall follow the procedures provided in paragraph (G) of this subsection (1).

(d) For purposes of this subsection (1), a certified reinsurer whose certification has been terminated for any reason shall be treated as a certified reinsurer required to secure 100% of its obligations.

(i) As used in this item (d), the term "terminated" refers to revocation, suspension, voluntary surrender and inactive status.

(ii) If the Director continues to assign a higher rating as permitted by other provisions of this Section, then this requirement does not apply to a certified reinsurer in inactive status or to a reinsurer whose certification has been suspended.

(e) Upon revocation of the certification of a certified reinsurer by the Director, the assuming insurer shall be required to post security in accordance with subsection (2) of this Section in order for the ceding insurer to continue to take credit for reinsurance ceded to the assuming insurer. If funds continue to be held in trust, then the Director may allow additional credit equal to the ceding insurer's pro rata share of the funds, discounted to reflect the risk of uncollectibility and anticipated expenses of trust administration.

(f) Notwithstanding the change of a certified reinsurer's rating or revocation of its certification, a domestic insurer that has ceded reinsurance to that certified reinsurer may not be denied credit for reinsurance for a period of 3 months for all reinsurance ceded to that certified reinsurer, unless the reinsurance is found by the Director to be at high risk of uncollectibility.

(10) A certified reinsurer that ceases to assume new business in this State may request to maintain its certification in inactive status in order to continue to qualify for a reduction in security for its in-force business. An inactive certified reinsurer shall continue to comply with all applicable requirements of this subsection (1), and the Director shall assign a rating that takes into account, if relevant, the reasons why the reinsurer is not assuming new business.

(11) Credit for reinsurance under this paragraph (C-5) shall apply only to reinsurance contracts entered into or renewed on or after the effective date of the certification of the assuming insurer.

(12) The Director shall comply with all reporting and notification requirements that may be established by the NAIC with respect to certified reinsurers and qualified jurisdictions.

(C-10)(1) Credit shall be allowed when the reinsurance is ceded to an assuming insurer meeting each of the conditions set forth in this subparagraph.

(a) The assuming insurer must have its head office in or be domiciled in, as applicable, and be licensed in a reciprocal jurisdiction. As used in this paragraph (C-10), "reciprocal jurisdiction" means a jurisdiction that meets one of the following:

(i) a non-U.S. jurisdiction that is subject to an in-force covered agreement with the United States, each within its legal authority, or, in the case of a covered agreement between the United States and European Union, is a member state of the European Union; as used in this subitem, "covered agreement" means an agreement entered into pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (31 U.S.C. 313 and 314) that is currently in effect or in a period of provisional application and addresses the elimination, under specified conditions, of collateral requirements as a condition for entering into any reinsurance agreement with a ceding insurer domiciled in this State or for allowing the ceding insurer to recognize credit for reinsurance;

(ii) a U.S. jurisdiction that meets the requirements for accreditation under the NAIC financial standards and accreditation program; or

(iii) a qualified jurisdiction, as determined by the Director pursuant to subparagraph (3) of paragraph (C-5) of subsection (1) of this Section, that is not otherwise described in subitem (i) or (ii) of this item and that meets certain additional requirements, consistent with the terms and conditions of in-force covered agreements, as specified by the Department by rule.

(b) The assuming insurer must have and maintain, on an ongoing basis, minimum capital and surplus, or its equivalent, calculated according to the methodology of its domiciliary jurisdiction, in an amount to be set forth by rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, minimum capital and surplus equivalents (net of liabilities) calculated according to the methodology applicable in its domiciliary jurisdiction and a central fund containing a balance in amounts to be set forth by rule.

(c) The assuming insurer must have and maintain, on an ongoing basis, a minimum solvency or capital ratio, as applicable, that will be set forth by rule. If the assuming insurer is an association, including incorporated and individual unincorporated underwriters, it must have and maintain, on an ongoing basis, a minimum solvency or capital ratio in the reciprocal jurisdiction where the assuming insurer has its head office or is domiciled, as applicable, and is also licensed.

(d) The assuming insurer must provide adequate assurance to the Director, in a form specified by the Department by rule, as follows:

(i) the assuming insurer must provide prompt written notice and explanation to the Director if it falls below the minimum requirements set forth in items (b) or (c) of this subparagraph or if any regulatory action is taken against it for serious noncompliance with applicable law;

(ii) the assuming insurer must consent in writing to the jurisdiction of the courts of this State and to the appointment of the Director as agent for service of process; the Director may require that consent for service of process be provided to the Director and included in each reinsurance agreement; nothing in this subitem (ii) shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree to alternative dispute resolution mechanisms, except to the extent such agreements are unenforceable under applicable insolvency or delinquency laws;

(iii) the assuming insurer must consent in writing to pay all final judgments obtained by a ceding insurer or its legal successor, whenever enforcement is sought, that have been declared enforceable in the jurisdiction where the judgment was obtained;

(iv) each reinsurance agreement must include a provision requiring the assuming insurer to provide security in an amount equal to 100% of the assuming insurer's liabilities attributable to reinsurance ceded pursuant to that agreement if the assuming insurer resists enforcement of a final judgment that is enforceable under the law of the jurisdiction in which it was obtained or a properly enforceable arbitration award, whether obtained by the ceding insurer or by its legal successor on behalf of its resolution estate; and

(v) the assuming insurer must confirm that it is not presently participating in any solvent scheme of arrangement which involves this State's ceding insurers and agree to notify the ceding insurer and the Director and to provide security in an amount equal to 100% of the assuming insurer's liabilities to the ceding insurer if the assuming insurer enters into such a solvent scheme of arrangement; the security shall be in a form consistent with the provisions of paragraph (C-5) of subsection (1) and subsection (2) and as specified by the Department by rule.

(e) If requested by the Director, the assuming insurer or its legal successor must provide, on behalf of itself and any legal predecessors, certain documentation to the Director, as specified by the Department by rule.

(f) The assuming insurer must maintain a practice of prompt payment of claims under reinsurance agreements pursuant to criteria set forth by rule.

(g) The assuming insurer's supervisory authority must confirm to the Director on an annual basis, as of the preceding December 31 or at the annual date otherwise statutorily reported to the reciprocal jurisdiction, that the assuming insurer complied with the requirements set forth in items (b) and (c) of this subparagraph.

(h) Nothing in this subparagraph precludes an assuming insurer from providing the Director with information on a voluntary basis.

(2) The Director shall timely create and publish a list of reciprocal jurisdictions.

(a) The Director's list shall include any reciprocal jurisdiction as defined under subitems (i) and (ii) of item (a) of subparagraph (1) of this paragraph, and shall consider any other reciprocal jurisdiction included on the list of reciprocal jurisdictions published through the NAIC committee process. The Director may approve a jurisdiction that does not appear on the NAIC list of reciprocal jurisdictions in accordance with criteria to be developed by rules adopted by the Department.

(b) The Director may remove a jurisdiction from the list of reciprocal jurisdictions upon a determination that the jurisdiction no longer meets the requirements of a reciprocal jurisdiction in accordance with a process set forth in rules adopted by the Department, except that the Director shall not remove from the list a reciprocal jurisdiction as defined under subitems (i) and (ii) of item (a) of subparagraph (1) of this paragraph. If otherwise allowed pursuant to this Section, credit for reinsurance ceded to an assuming insurer that has its home office or is domiciled in that jurisdiction shall be allowed upon removal of a reciprocal jurisdiction from this list.

(3) The Director shall timely create and publish a list of assuming insurers that have satisfied the conditions set forth in this paragraph and to which cessions shall be granted credit in accordance with this paragraph. The Director may add an assuming insurer to the list if a NAIC-accredited jurisdiction has added the assuming insurer to a list of assuming insurers or if, upon initial eligibility, the assuming insurer submits the information to the Director as required under item (d) of subparagraph (1) of this paragraph and complies with any additional requirements that the Department may impose by rule except to the extent that they conflict with an applicable covered agreement.

(4) If the Director determines that an assuming insurer no longer meets one or more of the requirements under this paragraph, the Director may revoke or suspend the eligibility of the assuming insurer for recognition under this paragraph in accordance with procedures set forth by rule.

(a) While an assuming insurer's eligibility is suspended, no reinsurance agreement issued, amended, or renewed after the effective date of the suspension qualifies for credit except to the extent that the assuming insurer's obligations under the contract are secured in accordance with subsection (2).

(b) If an assuming insurer's eligibility is revoked, no credit for reinsurance may be granted after the effective date of the revocation with respect to any reinsurance agreements entered into by the assuming insurer, including reinsurance agreements entered into before the date of revocation, except to the extent that the assuming insurer's obligations under the contract are secured in a form acceptable to the Director and consistent with the provisions of subsection (2).

(5) If subject to a legal process of rehabilitation, liquidation, or conservation, as applicable, the ceding insurer or its representative may seek and, if determined appropriate by the court in which the proceedings are pending, may obtain an order requiring that the assuming insurer post security for all outstanding ceded liabilities.

(6) Nothing in this paragraph shall limit or in any way alter the capacity of parties to a reinsurance agreement to agree on requirements for security or other terms in that reinsurance agreement except as expressly prohibited by this Section or other applicable law or regulation.

(7) Credit may be taken under this paragraph only for reinsurance agreements entered into, amended, or renewed on or after the effective date of this amendatory Act of the 102nd General Assembly and only with respect to losses incurred and reserves reported on or after the later of:

(i) the date on which the assuming insurer has met all eligibility requirements pursuant to subparagraph (1) of this paragraph; and

(ii) the effective date of the new reinsurance agreement, amendment, or renewal.

This subparagraph does not alter or impair a ceding insurer's right to take credit for reinsurance, to the extent that credit is not available under this paragraph, as long as the reinsurance qualifies for credit under any other applicable provision of this Section.

(8) Nothing in this paragraph shall authorize an assuming insurer to withdraw or reduce the security provided under any reinsurance agreement except as permitted by the terms of the agreement.

(9) Nothing in this paragraph shall limit or in any way alter the capacity of parties to any reinsurance agreement to renegotiate the agreement.

(D) Credit shall be allowed when the reinsurance is ceded to an assuming insurer not meeting the requirements of paragraph (A), (B), (B-5), (C), (C-5), or (C-10) of this subsection (1) but only with respect to the insurance of risks located in jurisdictions where that reinsurance is required by applicable law or regulation of that jurisdiction.

(E) If the assuming insurer is not licensed to transact insurance in this State or an accredited or certified reinsurer in this State, the credit permitted by paragraphs (B-5) and (C) of this subsection (1) shall not be allowed unless the assuming insurer agrees in the reinsurance agreements:

(1) that in the event of the failure of the assuming insurer to perform its obligations under the terms of the reinsurance agreement, the assuming insurer, at the request of the ceding insurer, shall submit to the jurisdiction of any court of competent jurisdiction in any state of the United States, will comply with all requirements necessary to give the court jurisdiction, and will abide by the final decision of the court or of any appellate court in the event of an appeal; and

(2) to designate the Director or a designated attorney as its true and lawful attorney upon whom may be served any lawful process in any action, suit, or proceeding instituted by or on behalf of the ceding company.

This provision is not intended to conflict with or override the obligation of the parties to a reinsurance agreement to arbitrate their disputes, if an obligation to arbitrate is created in the agreement.

(F) If the assuming insurer does not meet the requirements of paragraph (A), (B), (B-5), or (C-10) of this subsection (1), the credit permitted by paragraph (C) or (C-5) of this subsection (1) shall not be allowed unless the assuming insurer agrees in the trust agreements to the following conditions:

(1) Notwithstanding any other provisions in the trust instrument, if the trust fund is inadequate because it contains an amount less than the amount required by subparagraph (3) of paragraph (C) of this subsection (1) or if the grantor of the trust has been declared insolvent or placed into receivership, rehabilitation, liquidation, or similar proceedings under the laws of its state or country of domicile, the trustee shall comply with an order of the state official with regulatory oversight over the trust or with an order of a court of competent jurisdiction directing the trustee to transfer to the state official with regulatory oversight all of the assets of the trust fund.

(2) The assets shall be distributed by and claims shall be filed with and valued by the state official with regulatory oversight in accordance with the laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic insurance companies.

(3) If the state official with regulatory oversight determines that the assets of the trust fund or any part thereof are not necessary to satisfy the claims of the U.S. ceding insurers of the grantor of the trust, the assets or part thereof shall be returned by the state official with regulatory oversight to the trustee for distribution in accordance with the trust agreement.

(4) The grantor shall waive any rights otherwise available to it under U.S. law that are inconsistent with the provision.

(G) If an accredited or certified reinsurer ceases to meet the requirements for accreditation or certification, then the Director may suspend or revoke the reinsurer's accreditation or certification.

(1) The Director must give the reinsurer notice and opportunity for hearing. The suspension or revocation may not take effect until after the Director's order on hearing, unless:

(a) the reinsurer waives its right to hearing;

(b) the Director's order is based on regulatory action by the reinsurer's domiciliary jurisdiction or the voluntary surrender or termination of the reinsurer's eligibility to transact insurance or reinsurance business in its domiciliary jurisdiction or in the primary certifying state of the reinsurer under subparagraph (4) of paragraph (C-5) of this subsection (1); or

(c) the Director finds that an emergency requires immediate action and a court of competent jurisdiction has not stayed the Director's action.

(2) While a reinsurer's accreditation or certification is suspended, no reinsurance contract issued or renewed after the effective date of the suspension qualifies for credit except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (2) of this Section. If a reinsurer's accreditation or certification is revoked, no credit for reinsurance may be granted after the effective date of the revocation, except to the extent that the reinsurer's obligations under the contract are secured in accordance with subsection (2) of this Section.

(H) The following provisions shall apply concerning concentration of risk:

(1) A ceding insurer shall take steps to manage its reinsurance recoverable proportionate to its own book of business. A domestic ceding insurer shall notify the Director within 30 days after reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, exceeds 50% of the domestic ceding insurer's last reported surplus to policyholders, or after it is determined that reinsurance recoverables from any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(2) A ceding insurer shall take steps to diversify its reinsurance program. A domestic ceding insurer shall notify the Director within 30 days after ceding to any single assuming insurer, or group of affiliated assuming insurers, more than 20% of the ceding insurer's gross written premium in the prior calendar year, or after it has determined that the reinsurance ceded to any single assuming insurer, or group of affiliated assuming insurers, is likely to exceed this limit. The notification shall demonstrate that the exposure is safely managed by the domestic ceding insurer.

(2) Credit for the reinsurance ceded by a domestic insurer to an assuming insurer not meeting the requirements of subsection (1) of this Section shall be allowed in an amount not exceeding the assets or liabilities carried by the ceding insurer. The credit shall not exceed the amount of funds held by or held in trust for the ceding insurer under a reinsurance contract with the assuming insurer as security for the payment of obligations thereunder, if the security is held in the United States subject to withdrawal solely by, and under the exclusive control of, the ceding insurer; or, in the case of a trust, held in a qualified United States financial institution, as defined in paragraph (B) of subsection (3) of this Section. This security may be in the form of:

(A) Cash.

(B) Securities listed by the Securities Valuation Office of the National Association of Insurance Commissioners, including those deemed exempt from filing as defined by the Purposes and Procedures Manual of the Securities Valuation Office that conform to the requirements of Article VIII of this Code that are not issued by an affiliate of either the assuming or ceding company.

(C) Clean, irrevocable, unconditional, letters of credit issued or confirmed by a qualified United States financial institution, as defined in paragraph (A) of subsection (3) of this Section. The letters of credit shall be effective no later than December 31 of the year for which filing is being made, and in the possession of, or in trust for, the ceding company on or before the filing date of its annual statement. Letters of credit meeting applicable standards of issuer acceptability as of the dates of their issuance (or confirmation) shall, notwithstanding the issuing (or confirming) institution's subsequent failure to meet applicable standards of issuer acceptability, continue to be acceptable as security until their expiration, extension, renewal, modification, or amendment, whichever first occurs.

(D) Any other form of security acceptable to the Director.

(3)(A) For purposes of paragraph (C) of subsection (2) of this Section, a "qualified United States financial institution" means an institution that:

(1) is organized or, in the case of a U.S. office of a foreign banking organization, licensed under the laws of the United States or any state thereof;

(2) is regulated, supervised, and examined by U.S. federal or state authorities having regulatory authority over banks and trust companies;

(3) has been designated by either the Director or the Securities Valuation Office of the National Association of Insurance Commissioners as meeting such standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Director; and

(4) is not affiliated with the assuming company.

(B) A "qualified United States financial institution" means, for purposes of those provisions of this law specifying those institutions that are eligible to act as a fiduciary of a trust, an institution that:

(1) is organized or, in the case of the U.S. branch or agency office of a foreign banking organization, licensed under the laws of the United States or any state thereof and has been granted authority to operate with fiduciary powers;

(2) is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies; and

(3) is not affiliated with the assuming company, however, if the subject of the reinsurance contract is insurance written pursuant to Section 155.51 of this Code, the financial institution may be affiliated with the assuming company with the prior approval of the Director.

(C) Except as set forth in subparagraph (11) of paragraph (C-5) of subsection (1) of this Section as to cessions by certified reinsurers, this amendatory Act of the 100th General Assembly shall apply to all cessions after the effective date of this amendatory Act of the 100th General Assembly under reinsurance agreements that have an inception, anniversary, or renewal date not less than 6 months after the effective date of this amendatory Act of the 100th General Assembly.

(D) The Department shall adopt rules implementing the provisions of this Article.

(Source: P.A. 102-578, eff. 7-1-22 (See Section 5 of P.A. 102-672 for effective date of P.A. 102-578).)

(215 ILCS 5/179A-5)

Sec. 179A-5. Purpose. This Article is adopted to provide a basis for the creation of protected cells by a domestic insurer as one means of accessing alternative sources of capital and achieving the benefits of insurance securitization. Investors in fully funded insurance securitization transactions provide funds that are available to pay the insurer's insurance obligations or to repay the investors or both. The creation of protected cells is intended to be a means to achieve more efficiencies in conducting insurance securitizations.

Under the terms of the typical debt instrument underlying an insurance securitization transaction, prepaid principal is repaid to the investor on a specified maturity date with interest, unless a trigger event occurs. The insurance securitization proceeds secure both the protected cell company's insurance obligations if a trigger event occurs, as well as the protected cell company's obligation to repay the insurance securitization investors if a trigger event does not occur. Insurance securitization transactions have been performed through non-domestic alien companies in order to utilize efficiencies available to non-domestic alien companies that are not currently available to domestic companies. This Article is adopted in order to create more efficiency in conducting insurance securitization, to allow domestic companies easier access to alternative sources of capital, and to promote the benefits of insurance securitization generally.

(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

(215 ILCS 5/179E-5)

Sec. 179E-5. Purpose. This Article is adopted to provide for the creation of Special Purpose Reinsurance Vehicles ("SPRV") exclusively to facilitate the securitization of one or more ceding insurers' risk as a means of accessing alternative sources of capital and achieving the benefits of securitization. Investors in fully funded insurance securitization transactions provide funds that are available to the SPRV to secure the aggregate limit under an SPRV contract that provides coverage against the occurrence of a triggering event. The creation of SPRVs is intended to achieve greater efficiencies in conducting insurance securitizations, to diversify and broaden insurers' access to sources of risk bearing capital, and to make insurance securitization generally available on reasonable terms to as many U.S. insurers as possible.

Under the terms of the typical securities underlying an insurance securitization transaction, proceeds from the issuance of securities are repaid to the investor on a specified maturity date with interest or dividends unless a triggering event occurs. The insurance securitization proceeds are available to pay the SPRV's obligations to the ceding insurer if the triggering event occurs, as well as being available to satisfy the SPRV's obligation to repay the insurance securitization investors if a triggering event does not occur. Insurance securitization transactions have been performed by non-domestic alien companies to utilize efficiencies available to those non-domestic alien companies that are not currently available to domestic companies. This Article is adopted to allow more efficiency in conducting insurance securitizations, to allow ceding insurers easier access to alternative sources of risk bearing capital, and to promote the benefits of insurance securitization to U.S. insurers.

(Source: P.A. 92-124, eff. 7-20-01.)

(215 ILCS 5/Art. XII heading)

ARTICLE XII. DOMESTICATION OF

FOREIGN AND NON-DOMESTIC ALIEN COMPANIES

(215 ILCS 5/180) (from Ch. 73, par. 792)

Sec. 180. Companies that may domesticate.

(1) Any domestic, foreign, or non-domestic alien stock company, mutual company, assessment legal reserve company, reciprocal, or fraternal benefit society, authorized or which may be authorized to do business in this State, may reorganize under the laws of this State (including a reorganization as a captive insurance company under the laws of this State), by complying with the provisions of this Article.

(2) As used in this Article: "reorganize" means reorganize, reincorporate, or domesticate as an Illinois insurer; "reorganization" means reorganization, reincorporation, or domestication as an Illinois insurer; "reorganized company" means any company that has availed itself of the provisions of this Article, and the reorganization of which has been effected as in this Article provided; and "similar domestic company" means, in the case of an application for reorganization as a domestic captive insurance company, a domestic captive insurance company organized under Article VIIC.

(Source: P.A. 87-1216.)

(215 ILCS 5/185.1) (from Ch. 73, par. 797.1)

Sec. 185.1. Effect of Reorganization.

When the reorganization has been effected:

(a) The articles of reorganization shall be the articles of incorporation of the reorganized company and said company shall continue in existence as, and thereafter be, a company of this State.

(b) The reorganized company shall make its reports in accordance with the laws of this State and shall be subject to the exclusive regulation and supervision by the Department of Insurance of this State and shall be subject to regulation and supervision by the Insurance Departments of other states and countries as a foreign or non-domestic alien company.

(c) The reorganized company shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by this Code (except in the case of a domestic captive insurance company, which shall have all of the rights, privileges, immunities and powers and shall be subject to all of the duties and liabilities granted or imposed by Article VIIC of this Code).

(d) The reorganized company shall thereupon and thereafter possess all the rights, privileges, immunities, powers and franchises of a public as well as a private nature, theretofore possessed by the company so reorganized. Without limiting the generality of the foregoing, (i) the agency appointments, licenses, certificates of authority and rates which are in existence at the time of the reorganization of such reorganized company takes effect shall continue in full force and effect; (ii) all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares, assessments payable from members or policyholders, and all other choses in action, and all and every other interest of, or belonging to or due to the company so reorganized, shall be deemed to be transferred to and vested in the reorganized company without further act or deed; and (iii) the title to any real estate or any interest therein theretofore vested in the company so reorganized, shall not revert or be in any way impaired by reason of such reorganization.

(e) The reorganized company shall thenceforth be responsible and liable for all the liabilities and obligations of the company so reorganized. Any claim existing, or action or proceeding pending by or against the company so reorganized, may be prosecuted to judgment as if such reorganization had not taken place, or such reorganized company may be substituted in its place. Neither the rights of creditors nor any liens upon the property of the company so reorganized, shall be impaired by such reorganization, but such liens shall be limited to the property upon which they were liens immediately prior to the reorganization, unless otherwise provided in the articles of reorganization.

(Source: P.A. 85-131.)

(215 ILCS 5/188) (from Ch. 73, par. 800)

Sec. 188. Grounds for rehabilitation and liquidation of a domestic company or an unauthorized foreign or non-domestic alien company. Whenever any domestic company or any unauthorized foreign or non-domestic alien company:

1. is insolvent;

2. has failed or refused to submit its books, papers, accounts, records or affairs to the reasonable inspection or examination of the Director or his actuaries, supervisors, deputies, or examiners;

3. has concealed, removed, altered, destroyed or failed to establish and maintain books, records, documents, accounts, vouchers and other pertinent material adequate for the determination of its financial condition by examination under Sections 132 through 132.7 or has failed to properly administer claims and to maintain claims records which are adequate for the determination of its outstanding claims liability;

4. has failed or refused to observe an order of the Director to make good within the time prescribed by law any deficiency, whenever its capital and minimum required surplus, if a stock company, or its required surplus, if a company other than stock, has become impaired;

5. has, by articles of consolidation, contract of reinsurance or otherwise, transferred or attempted to transfer its entire property or business not in conformity with this Code, or entered into any transaction the effect of which is to merge substantially its entire property or business in any other company without having first obtained the written approval of the Director under this Code;

6. is found to be in such condition that its further transaction of business would be hazardous to its policyholders, or to its creditors, or to the public;

7. has violated its charter or any law of this State or has exceeded or is exceeding its corporate powers;

8. has an officer who has refused upon reasonable demand to be examined under oath touching its affairs;

9. is found to be in such condition that it could not meet the requirements for organization and authorization as required by law, except as to the amount of the original surplus required of a stock company in Section 13, and except as to the amount of the surplus required of a mutual company in excess of the minimum surplus required by this Code to be maintained, or either an authorized control level event or a mandatory control level event as set forth in Article IIA exists;

10. has ceased for the period of one year to transact insurance business;

11. has commenced, or has attempted to commence, any voluntary liquidation or dissolution proceeding, or any proceeding to procure the appointment of a receiver, liquidator, rehabilitator, sequestrator, or a similar officer for itself;

12. is a party, whether plaintiff or defendant in any proceeding in which an application is made for the appointment of a receiver, custodian, liquidator, rehabilitator, sequestrator, or similar officer for such company or its property, or a receiver, custodian, liquidator, rehabilitator, sequestrator or similar officer, for such company or its property is appointed by any court, or such appointment is imminent;

13. consents by a majority of its directors, stockholders or members;

14. has not organized and obtained a certificate authorizing it to commence the transaction of its business within the period of time prescribed by the sections of this Code under which it is or proposes to be organized; or

15. has failed or refused to pay any valid final judgment within 30 days after the rendition thereof, or whenever it appears to the Director that any person has committed a violation of Article VIII 1/2 with the result described in Section 131.26,

sufficient grounds shall be deemed to exist for the commencement of rehabilitation or liquidation proceedings.

With respect to a domestic company, the Director must report, and with respect to an unauthorized foreign or non-domestic alien company, the Director may report any such case to the Attorney General of this State whose duty it shall be to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the Circuit Court of Cook County, the Circuit Court of Sangamon County, or the circuit court of the county in which such company has, or last had its principal office, for an order to rehabilitate or liquidate the defendant company as provided in this Article, and for such other relief as the nature of the case and the interests of its policyholders, creditors, members, stockholders or the public may require.

When, upon investigation, the Director finds that a company is engaged in any aspect of the business of insurance on behalf of or in association with any domestic insurance company, against which a receivership proceeding has been or is being filed under this Article, in a manner that appears to be detrimental to policyholders, creditors, members, shareholders, or the public, the Director may report such case to the Attorney General of this State, whose duty it is to apply forthwith by complaint on relation of the Director in the name of the People of the State of Illinois, as plaintiff, to the court in which the receivership proceeding is pending for an order to appoint the Director as receiver to assume control of the assets and operation of the company pending a complete investigation and determination of the rights of the policyholders, creditors, members, shareholders, and the general public.

(Source: P.A. 92-140, eff. 7-24-01.)

(215 ILCS 5/188.1) (from Ch. 73, par. 800.1)

Sec. 188.1. Provisions for conservation of assets of a domestic, foreign, or non-domestic alien company.

(1) Upon the filing by the Director of a verified complaint alleging (a) that with respect to a domestic, foreign, or non-domestic alien company, whether authorized or unauthorized, a condition exists that would justify a court order for proceedings under Section 188, and (b) that the interests of creditors, policyholders or the public will probably be endangered by delay, then the circuit court of Sangamon or Cook County or the circuit court of the county in which such company has or last had its principal office shall enter forthwith without a hearing or prior notice an order directing the director to take possession and control of the property, business, books, records, and accounts of the company, and of the premises occupied by it for the transaction of its business, or such part of each as the complaint shall specify, and enjoining the company and its officers, directors, agents, servants, and employees from disposition of its property and from transaction of its business except with the concurrence of the Director until the further order of the court. Copies of the verified complaint and the seizure order shall be served upon the company.

(2) The order shall continue in force and effect for such time as the court deems necessary for the Director to ascertain the condition and situation of the company. On motion of either party or on its own motion, the court may from time to time hold such hearings as it deems desirable, and may extend, shorten, or modify the terms of, the seizure order. So far as the court deems it possible, the parties shall be given adequate notice of such hearings. As soon as practicable, the court shall vacate the seizure order or terminate the conservation proceedings of the company, either when the Director has failed to institute proceedings under Section 188 having a reasonable opportunity to do so, or upon an order of the court pursuant to such proceedings.

(3) Entry of a seizure order under this section shall not constitute an anticipatory breach of any contract of the company.

(4) The court may hold all hearings in conservation proceedings privately in chambers, and shall do so on request of any officer of the company proceeded against.

(5) In conservation proceedings and judicial reviews thereof, all records of the company, other documents, and all insurance department files and court records and papers, so far as they pertain to and are a part of the record of the conservation proceedings, shall be and remain confidential except as is necessary to obtain compliance therewith, unless and until the court, after hearing arguments in chambers from the Director and the company, shall decide otherwise, or unless the company requests that the matter be made public.

(6) Any person having possession of and refusing to deliver any of the property, business, books, records or accounts of a company against which a seizure order has been issued shall be guilty of a Class A misdemeanor.

(Source: P.A. 89-206, eff. 7-21-95.)

(215 ILCS 5/197) (from Ch. 73, par. 809)

Sec. 197. Rights, powers, and duties ancillary to domiciliary proceeding.

The rights, powers, and duties of the Director as conservator, rehabilitator, or liquidator, with reference to the assets of a foreign or non-domestic alien company, whether authorized or unauthorized, shall be ancillary to the rights, powers and duties imposed upon any receiver or other person, if any, in charge of the property, business and affairs of such company in its domiciliary state or country.

(Source: P.A. 86-1154; 86-1156.)

(215 ILCS 5/201) (from Ch. 73, par. 813)

Sec. 201. Who may apply for appointment of receiver or liquidator.) No order or judgment enjoining, restraining or interfering with the prosecution of the business of any company, or for the appointment of a temporary or permanent receiver, rehabilitator or liquidator of a domestic company, or receiver or conservator of a foreign or non-domestic alien company, shall be made or granted otherwise than upon the complaint of the Director represented by the Attorney General as provided in this article, except in an action by a judgment creditor or in proceedings supplementary thereto after notice that a final judgment has been entered and that the judgment creditor intends to file a complaint praying for any of the relief in this section mentioned, has been served upon the Director at least 30 days prior to the filing of such complaint by such judgment creditor.

(Source: P.A. 84-546.)

(215 ILCS 5/223) (from Ch. 73, par. 835)

Sec. 223. Director to value policies - Legal standard of valuation.

(1) For policies and contracts issued prior to the operative date of the Valuation Manual, the Director shall annually value, or cause to be valued, the reserve liabilities (hereinafter called reserves) for all outstanding life insurance policies and annuity and pure endowment contracts of every life insurance company doing business in this State, except that in the case of a non-domestic an alien company, such valuation shall be limited to its United States business. In calculating such reserves, he may use group methods and approximate averages for fractions of a year or otherwise. In lieu of the valuation of the reserves herein required of any foreign or non-domestic alien company, he may accept any valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when such valuation complies with the minimum standard provided in this Section.

The provisions set forth in this subsection (1) and in subsections (2), (3), (4), (5), (6), and (7) of this Section shall apply to all policies and contracts, as appropriate, subject to this Section issued prior to the operative date of the Valuation Manual. The provisions set forth in subsections (8) and (9) of this Section shall not apply to any such policies and contracts.

For policies and contracts issued on or after the operative date of the Valuation Manual, the Director shall annually value, or cause to be valued, the reserve liabilities (reserves) for all outstanding life insurance contracts, annuity and pure endowment contracts, accident and health contracts, and deposit-type contracts of every company issued on or after the operative date of the Valuation Manual. In lieu of the valuation of the reserves required of a foreign or non-domestic alien company, the Director may accept a valuation made, or caused to be made, by the insurance supervisory official of any state or other jurisdiction when the valuation complies with the minimum standard provided in this Section.

The provisions set forth in subsections (8) and (9) of this Section shall apply to all policies and contracts issued on or after the operative date of the Valuation Manual.

Any such company which adopts at any time a standard of valuation producing greater aggregate reserves than those calculated according to the minimum standard provided under this Section may adopt a lower standard of valuation, with the approval of the Director, but not lower than the minimum herein provided, however, that, for the purposes of this subsection, the holding of additional reserves previously determined by the appointed actuary to be necessary to render the opinion required by subsection (1a) shall not be deemed to be the adoption of a higher standard of valuation. In the valuation of policies the Director shall give no consideration to, nor make any deduction because of, the existence or the possession by the company of

(a) policy liens created by any agreement given or assented to by any assured subsequent to July 1, 1937, for which liens such assured has not received cash or other consideration equal in value to the amount of such liens, or

(b) policy liens created by any agreement entered into in violation of Section 232 unless the agreement imposing or creating such liens has been approved by a Court in a proceeding under Article XIII, or in the case of a foreign or non-domestic alien company has been approved by a court in a rehabilitation or liquidation proceeding or by the insurance official of its domiciliary state or country, in accordance with the laws thereof.

(1a) This subsection shall become operative at the end of the first full calendar year following the effective date of this amendatory Act of 1991.

(A) General.

(1) Prior to the operative date of the Valuation Manual, every life insurance company doing business in this State shall annually submit the opinion of a qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Director by regulation are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts and comply with applicable laws of this State. The Director by regulation shall define the specifics of this opinion and add any other items deemed to be necessary to its scope.

(2) The opinion shall be submitted with the annual statement reflecting the valuation of reserve liabilities for each year ending on or after December 31, 1992.

(3) The opinion shall apply to all business in force including individual and group health insurance plans, in form and substance acceptable to the Director as specified by regulation.

(4) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board and on additional standards as the Director may by regulation prescribe.

(5) In the case of an opinion required to be submitted by a foreign or non-domestic alien company, the Director may accept the opinion filed by that company with the insurance supervisory official of another state if the Director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.

(6) For the purpose of this Section, "qualified actuary" means a member in good standing of the American Academy of Actuaries who meets the requirements set forth in its regulations.

(7) Except in cases of fraud or willful misconduct, the qualified actuary shall not be liable for damages to any person (other than the insurance company and the Director) for any act, error, omission, decision or conduct with respect to the actuary's opinion.

(8) Disciplinary action by the Director against the company or the qualified actuary shall be defined in regulations by the Director.

(9) A memorandum, in form and substance acceptable to the Director as specified by regulation, shall be prepared to support each actuarial opinion.

(10) If the insurance company fails to provide a supporting memorandum at the request of the Director within a period specified by regulation or the Director determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the regulations or is otherwise unacceptable to the Director, the Director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum as is required by the Director.

(11) Any memorandum in support of the opinion, and any other material provided by the company to the Director in connection therewith, shall be kept confidential by the Director and shall not be made public and shall not be subject to subpoena, other than for the purpose of defending an action seeking damages from any person by reason of any action required by this Section or by regulations promulgated hereunder; provided, however, that the memorandum or other material may otherwise be released by the Director (a) with the written consent of the company or (b) to the American Academy of Actuaries upon request stating that the memorandum or other material is required for the purpose of professional disciplinary proceedings and setting forth procedures satisfactory to the Director for preserving the confidentiality of the memorandum or other material. Once any portion of the confidential memorandum is cited by the company in its marketing or is cited before any governmental agency other than a state insurance department or is released by the company to the news media, all portions of the confidential memorandum shall be no longer confidential.

(B) Actuarial analysis of reserves and assets supporting those reserves.

(1) Every life insurance company, except as exempted by or under regulation, shall also annually include in the opinion required by paragraph (A)(1) of this subsection (1a), an opinion of the same qualified actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified by the Director by regulation, when considered in light of the assets held by the company with respect to the reserves and related actuarial items including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts including, but not limited to, the benefits under and expenses associated with the policies and contracts.

(2) The Director may provide by regulation for a transition period for establishing any higher reserves which the qualified actuary may deem necessary in order to render the opinion required by this Section.

(1b) Actuarial Opinion of Reserves after the Operative Date of the Valuation Manual.

(A) General.

(1) Every company with outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this State and subject to regulation by the Director shall annually submit the opinion of the appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts are computed appropriately, are based on assumptions that satisfy contractual provisions, are consistent with prior reported amounts, and comply with applicable laws of this State. The Valuation Manual shall prescribe the specifics of this opinion, including any items deemed to be necessary to its scope.

(2) The opinion shall be submitted with the annual statement reflecting the valuation of such reserve liabilities for each year ending on or after the operative date of the Valuation Manual.

(3) The opinion shall apply to all policies and contracts subject to paragraph (B) of this subsection (1b), plus other actuarial liabilities as may be specified in the Valuation Manual.

(4) The opinion shall be based on standards adopted from time to time by the Actuarial Standards Board or its successor and on additional standards as may be prescribed in the Valuation Manual.

(5) In the case of an opinion required to be submitted by a foreign or non-domestic alien company, the Director may accept the opinion filed by that company with the insurance supervisory official of another state if the Director determines that the opinion reasonably meets the requirements applicable to a company domiciled in this State.

(6) Except in cases of fraud or willful misconduct, the appointed actuary shall not be liable for damages to any person (other than the insurance company and the Director) for any act, error, omission, decision, or conduct with respect to the appointed actuary's opinion.

(7) Disciplinary action by the Director against the company or the appointed actuary shall be defined by the Director by rule.

(8) A memorandum, in a form and substance as specified in the Valuation Manual and acceptable to the Director, shall be prepared to support each actuarial opinion.

(9) If the insurance company fails to provide a supporting memorandum at the request of the Director within a period specified in the Valuation Manual or the Director determines that the supporting memorandum provided by the insurance company fails to meet the standards prescribed by the Valuation Manual or is otherwise unacceptable to the Director, the Director may engage a qualified actuary at the expense of the company to review the opinion and the basis for the opinion and prepare the supporting memorandum as is required by the Director.

(B) Every company with outstanding life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this State and subject to regulation by the Director, except as exempted in the Valuation Manual, shall also annually include in the opinion required by subparagraph (1) of paragraph (A) of this subsection (1b), an opinion of the same appointed actuary as to whether the reserves and related actuarial items held in support of the policies and contracts specified in the Valuation Manual, when considered in light of the assets held by the company with respect to the reserves and related actuarial items, including, but not limited to, the investment earnings on the assets and the considerations anticipated to be received and retained under the policies and contracts, make adequate provision for the company's obligations under the policies and contracts, including, but not limited to, the benefits under and expenses associated with the policies and contracts.

(2) This subsection shall apply to only those policies and contracts issued prior to the operative date of Section 229.2 (the Standard Non-forfeiture Law).

(a) Except as otherwise in this Article provided, the legal minimum standard for valuation of contracts issued before January 1, 1908, shall be the Actuaries or Combined Experience Table of Mortality with interest at 4% per annum and for valuation of contracts issued on or after that date shall be the American Experience Table of Mortality with either Craig's or Buttolph's Extension for ages under 10 and with interest at 3 1/2% per annum. The legal minimum standard for the valuation of group insurance policies under which premium rates are not guaranteed for a period in excess of 5 years shall be the American Men Ultimate Table of Mortality with interest at 3 1/2% per annum. Any life company may, at its option, value its insurance contracts issued on or after January 1, 1938, in accordance with their terms on the basis of the American Men Ultimate Table of Mortality with interest not higher than 3 1/2% per annum.

(b) Policies issued prior to January 1, 1908, may continue to be valued according to a method producing reserves not less than those produced by the full preliminary term method. Policies issued on and after January 1, 1908, may be valued according to a method producing reserves not less than those produced by the modified preliminary term method hereinafter described in paragraph (c). Policies issued on and after January 1, 1938, may be valued either according to a method producing reserves not less than those produced by such modified preliminary term method or by the select and ultimate method on the basis that the rate of mortality during the first 5 years after the issuance of such contracts respectively shall be calculated according to the following percentages of rates shown by the American Experience Table of Mortality:

(i) first insurance year 50% thereof;

(ii) second insurance year 65% thereof;

(iii) third insurance year 75% thereof;

(iv) fourth insurance year 85% thereof;

(v) fifth insurance year 95% thereof.

(c) If the premium charged for the first policy year under a limited payment life preliminary term policy providing for the payment of all premiums thereon in less than 20 years from the date of the policy or under an endowment preliminary term policy, exceeds that charged for the first policy year under 20 payment life preliminary term policies of the same company, the reserve thereon at the end of any year, including the first, shall not be less than the reserve on a 20 payment life preliminary term policy issued in the same year at the same age, together with an amount which shall be equivalent to the accumulation of a net level premium sufficient to provide for a pure endowment at the end of the premium payment period, equal to the difference between the value at the end of such period of such a 20 payment life preliminary term policy and the full net level premium reserve at such time of such a limited payment life or endowment policy. The premium payment period is the period during which premiums are concurrently payable under such 20 payment life preliminary term policy and such limited payment life or endowment policy.

(d) The legal minimum standard for the valuations of annuities issued on and after January 1, 1938, shall be the American Annuitant's Table with interest not higher than 3 3/4% per annum, and all annuities issued before that date shall be valued on a basis not lower than that used for the annual statement of the year 1937; but annuities deferred 10 or more years and written in connection with life insurance shall be valued on the same basis as that used in computing the consideration or premiums therefor, or upon any higher standard at the option of the company.

(e) The Director may vary the standards of interest and mortality as to contracts issued in countries other than the United States and may vary standards of mortality in particular cases of invalid lives and other extra hazards.

(f) The legal minimum standard for valuation of waiver of premium disability benefits or waiver of premium and income disability benefits issued on and after January 1, 1938, shall be the Class (3) Disability Table (1926) modified to conform to the contractual waiting period, with interest at not more than 3 1/2% per annum; but in no event shall the values be less than those produced by the basis used in computing premiums for such benefits. The legal minimum standard for the valuation of such benefits issued prior to January 1, 1938, shall be such as to place an adequate value, as determined by sound insurance practices, on the liabilities thereunder and shall be such that the value of the benefits under each and every policy shall in no case be less than the value placed upon the future premiums.

(g) The legal minimum standard for the valuation of industrial policies issued on or after January 1, 1938, shall be the American Experience Table of Mortality or the Standard Industrial Mortality Table or the Substandard Industrial Mortality Table with interest at 3 1/2% per annum by the net level premium method, or in accordance with their terms by the modified preliminary term method hereinabove described.

(h) Reserves for all such policies and contracts may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for all such policies and contracts than the minimum reserves required by this subsection.

(3) This subsection shall apply to only those policies and contracts issued on or after January 1, 1948 or such earlier operative date of Section 229.2 (the Standard Non-forfeiture Law) as shall have been elected by the insurance company issuing such policies or contracts.

(a) Except as otherwise provided in subsections (4), (6), and (7), the minimum standard for the valuation of all such policies and contracts shall be the Commissioners Reserve valuation method defined in paragraphs (b) and (f) of this subsection and in subsection 5, 3 1/2% interest for such policies issued prior to September 8, 1977, 5 1/2% interest for single premium life insurance policies and 4 1/2% interest for all other such policies issued on or after September 8, 1977, and the following tables:

(i) The Commissioners 1941 Standard Ordinary Mortality Table for all Ordinary policies of life insurance issued on the standard basis, excluding any disability and accidental death benefits in such policies, for such policies issued prior to the operative date of subsection (4a) of Section 229.2 (Standard Non-forfeiture Law); and the Commissioners 1958 Standard Ordinary Mortality Table for such policies issued on or after such operative date but prior to the operative date of subsection (4c) of Section 229.2 provided that for any category of such policies issued on female risks all modified net premiums and present values referred to in this Section may, prior to September 8, 1977, be calculated according to an age not more than 3 years younger than the actual age of the insured and, after September 8, 1977, calculated according to an age not more than 6 years younger than the actual age of the insured; and for such policies issued on or after the operative date of subsection (4c) of Section 229.2, (i) the Commissioners 1980 Standard Ordinary Mortality Table, or (ii) at the election of the company for any one or more specified plans of life insurance, the Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select Mortality Factors, or (iii) any ordinary mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies.

(ii) For all Industrial Life Insurance policies issued on the standard basis, excluding any disability and accidental death benefits in such policies--the 1941 Standard Industrial Mortality Table for such policies issued prior to the operative date of subsection 4 (b) of Section 229.2 (Standard Non-forfeiture Law); and for such policies issued on or after such operative date the Commissioners 1961 Standard Industrial Mortality Table or any industrial mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies.

(iii) For Individual Annuity and Pure Endowment contracts, excluding any disability and accidental death benefits in such policies--the 1937 Standard Annuity Mortality Table--or, at the option of the company, the Annuity Mortality Table for 1949, Ultimate, or any modification of either of these tables approved by the Director.

(iv) For Group Annuity and Pure Endowment contracts, excluding any disability and accidental death benefits in such policies--the Group Annuity Mortality Table for 1951, any modification of such table approved by the Director, or, at the option of the company, any of the tables or modifications of tables specified for Individual Annuity and Pure Endowment contracts.

(v) For Total and Permanent Disability Benefits in or supplementary to Ordinary policies or contracts for policies or contracts issued on or after January 1, 1966, the tables of Period 2 disablement rates and the 1930 to 1950 termination rates of the 1952 Disability Study of the Society of Actuaries, with due regard to the type of benefit, or any tables of disablement rates and termination rates adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies; for policies or contracts issued on or after January 1, 1961, and prior to January 1, 1966, either such tables or, at the option of the company, the Class (3) Disability Table (1926); and for policies issued prior to January 1, 1961, the Class (3) Disability Table (1926). Any such table shall, for active lives, be combined with a mortality table permitted for calculating the reserves for life insurance policies.

(vi) For Accidental Death benefits in or supplementary to policies--for policies issued on or after January 1, 1966, the 1959 Accidental Death Benefits Table or any accidental death benefits table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such policies; for policies issued on or after January 1, 1961, and prior to January 1, 1966, any of such tables or, at the option of the company, the Inter-Company Double Indemnity Mortality Table; and for policies issued prior to January 1, 1961, the Inter-Company Double Indemnity Mortality Table. Either table shall be combined with a mortality table permitted for calculating the reserves for life insurance policies.

(vii) For Group Life Insurance, life insurance issued on the substandard basis and other special benefits--such tables as may be approved by the Director.

(b) Except as otherwise provided in paragraph (f) of subsection (3), subsection (5), and subsection (7) reserves according to the Commissioners reserve valuation method, for the life insurance and endowment benefits of policies providing for a uniform amount of insurance and requiring the payment of uniform premiums shall be the excess, if any, of the present value, at the date of valuation, of such future guaranteed benefits provided for by such policies, over the then present value of any future modified net premiums therefor. The modified net premiums for any such policy shall be such uniform percentage of the respective contract premiums for such benefits that the present value, at the date of issue of the policy, of all such modified net premiums shall be equal to the sum of the then present value of such benefits provided for by the policy and the excess of (A) over (B), as follows:

(A) A net level annual premium equal to the present value, at the date of issue, of such benefits provided for after the first policy year, divided by the present value, at the date of issue, of an annuity of one per annum payable on the first and each subsequent anniversary of such policy on which a premium falls due; provided, however, that such net level annual premium shall not exceed the net level annual premium on the 19 year premium whole life plan for insurance of the same amount at an age one year higher than the age at issue of such policy.

(B) A net one year term premium for such benefits provided for in the first policy year.

For any life insurance policy issued on or after January 1, 1987, for which the contract premium in the first policy year exceeds that of the second year with no comparable additional benefit being provided in that first year, which policy provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the reserve according to the Commissioners reserve valuation method as of any policy anniversary occurring on or before the assumed ending date, defined herein as the first policy anniversary on which the sum of any endowment benefit and any cash surrender value then available is greater than such excess premium, shall, except as otherwise provided in paragraph (f) of subsection (3), be the greater of the reserve as of such policy anniversary calculated as described in the preceding part of this paragraph (b) and the reserve as of such policy anniversary calculated as described in the preceding part of this paragraph (b) with (i) the value defined in subpart A of the preceding part of this paragraph (b) being reduced by 15% of the amount of such excess first year premium, (ii) all present values of benefits and premiums being determined without reference to premiums or benefits provided for by the policy after the assumed ending date, (iii) the policy being assumed to mature on such date as an endowment, and (iv) the cash surrender value provided on such date being considered as an endowment benefit. In making the above comparison, the mortality and interest bases stated in paragraph (a) of subsection (3) and in subsection (6) shall be used.

Reserves according to the Commissioners reserve valuation method for (i) life insurance policies providing for a varying amount of insurance or requiring the payment of varying premiums, (ii) group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended, (iii) disability and accidental death benefits in all policies and contracts, and (iv) all other benefits, except life insurance and endowment benefits in life insurance policies and benefits provided by all other annuity and pure endowment contracts, shall be calculated by a method consistent with the principles of this paragraph (b), except that any extra premiums charged because of impairments or special hazards shall be disregarded in the determination of modified net premiums.

(c) In no event shall a company's aggregate reserves for all life insurance policies, excluding disability and accidental death benefits be less than the aggregate reserves calculated in accordance with the methods set forth in paragraphs (b), (f), and (g) of subsection (3) and in subsection (5) and the mortality table or tables and rate or rates of interest used in calculating non-forfeiture benefits for such policies.

(d) In no event shall the aggregate reserves for all policies, contracts, and benefits be less than the aggregate reserves determined by the appointed actuary to be necessary to render the opinion required by subsection (1a).

(e) Reserves for any category of policies, contracts or benefits as established by the Director, may be calculated, at the option of the company, according to any standards which produce greater aggregate reserves for such category than those calculated according to the minimum standard herein provided, but the rate or rates of interest used for policies and contracts, other than annuity and pure endowment contracts, shall not be higher than the corresponding rate or rates of interest used in calculating any nonforfeiture benefits provided for therein.

(f) If in any contract year the gross premium charged by any life insurance company on any policy or contract is less than the valuation net premium for the policy or contract calculated by the method used in calculating the reserve thereon but using the minimum valuation standards of mortality and rate of interest, the minimum reserve required for such policy or contract shall be the greater of either the reserve calculated according to the mortality table, rate of interest, and method actually used for such policy or contract, or the reserve calculated by the method actually used for such policy or contract but using the minimum standards of mortality and rate of interest and replacing the valuation net premium by the actual gross premium in each contract year for which the valuation net premium exceeds the actual gross premium. The minimum valuation standards of mortality and rate of interest referred to in this paragraph (f) are those standards stated in subsection (6) and paragraph (a) of subsection (3).

For any life insurance policy issued on or after January 1, 1987, for which the gross premium in the first policy year exceeds that of the second year with no comparable additional benefit provided in that first year, which policy provides an endowment benefit or a cash surrender value or a combination thereof in an amount greater than such excess premium, the foregoing provisions of this paragraph (f) shall be applied as if the method actually used in calculating the reserve for such policy were the method described in paragraph (b) of subsection (3), ignoring the second paragraph of said paragraph (b). The minimum reserve at each policy anniversary of such a policy shall be the greater of the minimum reserve calculated in accordance with paragraph (b) of subsection (3), including the second paragraph of said paragraph (b), and the minimum reserve calculated in accordance with this paragraph (f).

(g) In the case of any plan of life insurance which provides for future premium determination, the amounts of which are to be determined by the insurance company based on then estimates of future experience, or in the case of any plan of life insurance or annuity which is of such a nature that the minimum reserves cannot be determined by the methods described in paragraphs (b) and (f) of subsection (3) and subsection (5), the reserves which are held under any such plan shall:

(i) be appropriate in relation to the benefits and the pattern of premiums for that plan, and

(ii) be computed by a method which is consistent with the principles of this Standard Valuation Law, as determined by regulations promulgated by the Director.

(4) Except as provided in subsection (6), the minimum standard of valuation for individual annuity and pure endowment contracts issued on or after the operative date of this subsection, as defined herein, and for all annuities and pure endowments purchased on or after such operative date under group annuity and pure endowment contracts shall be the Commissioners Reserve valuation methods defined in paragraph (b) of subsection (3) and subsection (5) and the following tables and interest rates:

(a) For individual single premium immediate annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, any individual annuity mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such contracts, or any modification of those tables approved by the Director, and 7 1/2% interest.

(b) For individual and pure endowment contracts other than single premium annuity contracts, excluding any disability and accidental death benefits in such contracts, the 1971 Individual Annuity Mortality Table, any individual annuity mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such contracts, or any modification of those tables approved by the Director, and 5 1/2% interest for single premium deferred annuity and pure endowment contracts and 4 1/2% interest for all other such individual annuity and pure endowment contracts.

(c) For all annuities and pure endowments purchased under group annuity and pure endowment contracts, excluding any disability and accidental death benefits purchased under such contracts, the 1971 Group Annuity Mortality Table, any group annuity mortality table adopted after 1980 by the NAIC and approved by regulations promulgated by the Director for use in determining the minimum standard of valuation for such annuities and pure endowments, or any modification of those tables approved by the Director, and 7 1/2% interest.

After September 8, 1977, any company may file with the Director a written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1979, which shall be the operative date of this subsection for such company; provided, a company may elect a different operative date for individual annuity and pure endowment contracts from that elected for group annuity and pure endowment contracts. If a company makes no election, the operative date of this subsection for such company shall be January 1, 1979.

(5) This subsection shall apply to all annuity and pure endowment contracts other than group annuity and pure endowment contracts purchased under a retirement plan or plan of deferred compensation, established or maintained by an employer (including a partnership or sole proprietorship) or by an employee organization, or by both, other than a plan providing individual retirement accounts or individual retirement annuities under Section 408 of the Internal Revenue Code, as now or hereafter amended.

Reserves according to the Commissioners annuity reserve method for benefits under annuity or pure endowment contracts, excluding any disability and accidental death benefits in such contracts, shall be the greatest of the respective excesses of the present values, at the date of valuation, of the future guaranteed benefits, including guaranteed nonforfeiture benefits, provided for by such contracts at the end of each respective contract year, over the present value, at the date of valuation, of any future valuation considerations derived from future gross considerations, required by the terms of such contract, that become payable prior to the end of such respective contract year. The future guaranteed benefits shall be determined by using the mortality table, if any, and the interest rate, or rates, specified in such contracts for determining guaranteed benefits. The valuation considerations are the portions of the respective gross considerations applied under the terms of such contracts to determine nonforfeiture values.

(6)(a) Applicability of this subsection. The interest rates used in determining the minimum standard for the valuation of

(A) all life insurance policies issued in a particular calendar year, on or after the operative date of subsection (4c) of Section 229.2 (Standard Nonforfeiture Law),

(B) all individual annuity and pure endowment contracts issued in a particular calendar year ending on or after December 31, 1983,

(C) all annuities and pure endowments purchased in a particular calendar year ending on or after December 31, 1983, under group annuity and pure endowment contracts, and

(D) the net increase in a particular calendar year ending after December 31, 1983, in amounts held under guaranteed interest contracts shall be the calendar year statutory valuation interest rates, as defined in this subsection.

(b) Calendar Year Statutory Valuation Interest Rates.

(i) The calendar year statutory valuation interest rates shall be determined according to the following formulae, rounding "I" to the nearest .25%.

(A) For life insurance,

I = .03 + W (R1 - .03) + W/2 (R2 - .09).

(B) For single premium immediate annuities and annuity benefits involving life contingencies arising from other annuities with cash settlement options and from guaranteed interest contracts with cash settlement options,

I = .03 + W (R - .03) or with prior approval of the Director I = .03 + W (Rq - .03).

For the purposes of this subparagraph (i), "I" equals the calendar year statutory valuation interest rate, "R" is the reference interest rate defined in this subsection, "R1" is the lesser of R and .09, "R2" is the greater of R and .09, "Rq" is the quarterly reference interest rate defined in this subsection, and "W" is the weighting factor defined in this subsection.

(C) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on an issue year basis, except as stated in (B), the formula for life insurance stated in (A) applies to annuities and guaranteed interest contracts with guarantee durations in excess of 10 years, and the formula for single premium immediate annuities stated in (B) above applies to annuities and guaranteed interest contracts with guarantee durations of 10 years or less.

(D) For other annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the formula for single premium immediate annuities stated in (B) applies.

(E) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, the formula for single premium immediate annuities stated in (B) applies.

(ii) If the calendar year statutory valuation interest rate for any life insurance policy issued in any calendar year determined without reference to this subparagraph differs from the corresponding actual rate for similar policies issued in the immediately preceding calendar year by less than .5%, the calendar year statutory valuation interest rate for such life insurance policy shall be the corresponding actual rate for the immediately preceding calendar year. For purposes of applying this subparagraph, the calendar year statutory valuation interest rate for life insurance policies issued in a calendar year shall be determined for 1980, using the reference interest rate defined for 1979, and shall be determined for each subsequent calendar year regardless of when subsection (4c) of Section 229.2 (Standard Nonforfeiture Law) becomes operative.

(c) Weighting Factors.

(i) The weighting factors referred to in the formulae stated in paragraph (b) are given in the following tables.

(A) Weighting Factors for Life Insurance.

For life insurance, the guarantee duration is the maximum number of years the life insurance can remain in force on a basis guaranteed in the policy or under options to convert to plans of life insurance with premium rates or nonforfeiture values or both which are guaranteed in the original policy.

(B) The weighting factor for single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options is .80.

(C) The weighting factors for other annuities and for guaranteed interest contracts, except as stated in (B) of this subparagraph (i), shall be as specified in tables (1), (2), and (3) of this subpart (C), according to the rules and definitions in (4), (5) and (6) of this subpart (C).

(1) For annuities and guaranteed interest contracts valued on an issue year basis.

(2) For annuities and guaranteed interest contracts valued on a change in fund basis, the factors shown in (1) for Plan Types A, B and C are increased by .15, .25 and .05, respectively.

(3) For annuities and guaranteed interest contracts valued on an issue year basis, other than those with no cash settlement options, which do not guarantee interest on considerations received more than one year after issue or purchase, and for annuities and guaranteed interest contracts valued on a change in fund basis which do not guarantee interest rates on considerations received more than 12 months beyond the valuation date, the factors shown in (1), or derived in (2), for Plan Types A, B and C are increased by .05.

(4) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the guarantee duration is the number of years for which the contract guarantees interest rates in excess of the calendar year statutory valuation interest rate for life insurance policies with guarantee durations in excess of 20 years. For other annuities with no cash settlement options, and for guaranteed interest contracts with no cash settlement options, the guarantee duration is the number of years from the date of issue or date of purchase to the date annuity benefits are scheduled to commence.

(5) The plan types used in the above tables are defined as follows.

Plan Type A is a plan under which the policyholder may not withdraw funds, or may withdraw funds at any time but only (a) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, (b) without such an adjustment but in installments over 5 years or more, or (c) as an immediate life annuity.

Plan Type B is a plan under which the policyholder may not withdraw funds before expiration of the interest rate guarantee, or may withdraw funds before such expiration but only (a) with an adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (b) without such adjustment but in installments over 5 years or more. At the end of the interest rate guarantee, funds may be withdrawn without such adjustment in a single sum or installments over less than 5 years.

Plan Type C is a plan under which the policyholder may withdraw funds before expiration of the interest rate guarantee in a single sum or installments over less than 5 years either (a) without adjustment to reflect changes in interest rates or asset values since receipt of the funds by the insurance company, or (b) subject only to a fixed surrender charge stipulated in the contract as a percentage of the fund.

(6) A company may elect to value guaranteed interest contracts with cash settlement options and annuities with cash settlement options on either an issue year basis or on a change in fund basis. Guaranteed interest contracts with no cash settlement options and other annuities with no cash settlement options shall be valued on an issue year basis. As used in this Section, "issue year basis of valuation" refers to a valuation basis under which the interest rate used to determine the minimum valuation standard for the entire duration of the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of issue or year of purchase of the annuity or guaranteed interest contract. "Change in fund basis of valuation", as used in this Section, refers to a valuation basis under which the interest rate used to determine the minimum valuation standard applicable to each change in the fund held under the annuity or guaranteed interest contract is the calendar year valuation interest rate for the year of the change in the fund.

(d) Reference Interest Rate. The reference interest rate referred to in paragraph (b) of this subsection is defined as follows.

(A) For all life insurance, the reference interest rate is the lesser of the average over a period of 36 months, and the average over a period of 12 months, with both periods ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year next preceding the year of issue, of Moody's Corporate Bond Yield Average - Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(B) For single premium immediate annuities and for annuity benefits involving life contingencies arising from other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or year of purchase, of Moody's Corporate Bond Yield Average - Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(C) For annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except those described in (B), with guarantee durations in excess of 10 years, the reference interest rate is the lesser of the average over a period of 36 months and the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(D) For other annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a year of issue basis, except those described in (B), with guarantee durations of 10 years or less, the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(E) For annuities with no cash settlement options and for guaranteed interest contracts with no cash settlement options, the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of issue or purchase, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(F) For annuities with cash settlement options and guaranteed interest contracts with cash settlement options, valued on a change in fund basis, except those described in (B), the reference interest rate is the average over a period of 12 months, ending on June 30, or with prior approval of the Director ending on December 31, of the calendar year of the change in the fund, of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(G) For annuities valued by a formula based on Rq, the quarterly reference interest rate is, with the prior approval of the Director, the average within each of the 4 consecutive calendar year quarters ending on March 31, June 30, September 30 and December 31 of the calendar year of issue or year of purchase of Moody's Corporate Bond Yield Average-Monthly Average Corporates, as published by Moody's Investors Service, Inc.

(e) Alternative Method for Determining Reference Interest Rates. In the event that the Moody's Corporate Bond Yield Average-Monthly Average Corporates is no longer published by Moody's Investors Services, Inc., or in the event that the NAIC determines that Moody's Corporate Bond Yield Average-Monthly Average Corporates as published by Moody's Investors Service, Inc. is no longer appropriate for the determination of the reference interest rate, then an alternative method for determination of the reference interest rate, which is adopted by the NAIC and approved by regulations promulgated by the Director, may be substituted.

(7) Minimum Standards for Accident and Health (Disability, Accident and Sickness) Insurance Contracts. The Director shall promulgate a regulation containing the minimum standards applicable to the valuation of health (disability, sickness and accident) plans which are issued prior to the operative date of the Valuation Manual. For accident and health (disability, accident and sickness) insurance contracts issued on or after the operative date of the Valuation Manual, the standard prescribed in the Valuation Manual is the minimum standard of valuation required under subsection (1).

(8) Valuation Manual for Policies Issued On or After the Operative Date of the Valuation Manual.

(a) For policies issued on or after the operative date of the Valuation Manual, the standard prescribed in the Valuation Manual is the minimum standard of valuation required under subsection (1), except as provided under paragraphs (e) or (g) of this subsection (8).

(b) The operative date of the Valuation Manual is January 1 of the first calendar year following the first July 1 when all of the following have occurred:

(i) The Valuation Manual has been adopted by the NAIC by an affirmative vote of at least 42 members, or three-fourths of the members voting, whichever is greater.

(ii) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by states representing greater than 75% of the direct premiums written as reported in the following annual statements submitted for 2008: life, accident and health annual statements; health annual statements; or fraternal annual statements.

(iii) The Standard Valuation Law, as amended by the NAIC in 2009, or legislation including substantially similar terms and provisions, has been enacted by at least 42 of the following 55 jurisdictions: the 50 states of the United States, American Samoa, the American Virgin Islands, the District of Columbia, Guam, and Puerto Rico.

(c) Unless a change in the Valuation Manual specifies a later effective date, changes to the Valuation Manual shall be effective on January 1 following the date when the change to the Valuation Manual has been adopted by the NAIC by an affirmative vote representing:

(i) at least three-fourths of the members of the NAIC voting, but not less than a majority of the total membership; and

(ii) members of the NAIC representing jurisdictions totaling greater than 75% of the direct premiums written as reported in the following annual statements most recently available prior to the vote in subparagraph (i) of this paragraph (c): life, accident and health annual statements; health annual statements; or fraternal annual statements.

(d) The Valuation Manual must specify all of the following:

(i) Minimum valuation standards for and definitions of the policies or contracts subject to subsection (1). Such minimum valuation standards shall be:

(A) the Commissioners reserve valuation method for life insurance contracts, other than annuity contracts, subject to subsection (1);

(B) the Commissioners annuity reserve valuation method for annuity contracts subject to subsection (1); and

(C) minimum reserves for all other policies or contracts subject to subsection (1).

(ii) Which policies or contracts or types of policies or contracts are subject to the requirements of a principle-based valuation in paragraph (a) of subsection (9) and the minimum valuation standards consistent with those requirements.

(iii) For policies and contracts subject to a principle-based valuation under subsection (9):

(A) Requirements for the format of reports to the Director under subparagraph (iii) of paragraph (b) of subsection (9), and which shall include information necessary to determine if the valuation is appropriate and in compliance with this Section.

(B) Assumptions shall be prescribed for risks over which the company does not have significant control or influence.

(C) Procedures for corporate governance and oversight of the actuarial function, and a process for appropriate waiver or modification of such procedures.

(iv) For policies not subject to a principle-based valuation under subsection (9), the minimum valuation standard shall either:

(A) be consistent with the minimum standard of valuation prior to the operative date of the Valuation Manual; or

(B) develop reserves that quantify the benefits and guarantees and the funding associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring.

(v) Other requirements, including, but not limited to, those relating to reserve methods, models for measuring risk, generation of economic scenarios, assumptions, margins, use of company experience, risk measurement, disclosure, certifications, reports, actuarial opinions and memorandums, transition rules, and internal controls.

(vi) The data and form of the data required under subsection (10) of this Section, with whom the data must be submitted, and may specify other requirements, including data analyses and the reporting of analyses.

(e) In the absence of a specific valuation requirement or if a specific valuation requirement in the Valuation Manual is not, in the opinion of the Director, in compliance with this Section, then the company shall, with respect to such requirements, comply with minimum valuation standards prescribed by the Director by rule.

(f) The Director may engage a qualified actuary, at the expense of the company, to perform an actuarial examination of the company and opine on the appropriateness of any reserve assumption or method used by the company, or to review and opine on a company's compliance with any requirement set forth in this Section. The Director may rely upon the opinion regarding provisions contained within this Section of a qualified actuary engaged by the Director of another state, district, or territory of the United States. As used in this paragraph, "engage" includes employment and contracting.

(g) The Director may require a company to change any assumption or method that in the opinion of the Director is necessary in order to comply with the requirements of the Valuation Manual or this Section; and the company shall adjust the reserves as required by the Director. The Director may take other disciplinary action as permitted pursuant to law.

(9) Requirements of a Principle-Based Valuation.

(a) A company must establish reserves using a principle-based valuation that meets the following conditions for policies or contracts as specified in the Valuation Manual:

(i) Quantify the benefits and guarantees, and the funding, associated with the contracts and their risks at a level of conservatism that reflects conditions that include unfavorable events that have a reasonable probability of occurring during the lifetime of the contracts. For policies or contracts with significant tail risk, reflect conditions appropriately adverse to quantify the tail risk.

(ii) Incorporate assumptions, risk analysis methods, and financial models and management techniques that are consistent with, but not necessarily identical to, those utilized within the company's overall risk assessment process, while recognizing potential differences in financial reporting structures and any prescribed assumptions or methods.

(iii) Incorporate assumptions that are derived in one of the following manners:

(A) The assumption is prescribed in the Valuation Manual.

(B) For assumptions that are not prescribed, the assumptions shall:

(1) be established utilizing the company's available experience, to the extent it is relevant and statistically credible; or

(2) to the extent that company data is not available, relevant, or statistically credible, be established utilizing other relevant, statistically credible experience.

(iv) Provide margins for uncertainty, including adverse deviation and estimation error, such that the greater the uncertainty, the larger the margin and resulting reserve.

(b) A company using a principle-based valuation for one or more policies or contracts subject to this subsection as specified in the Valuation Manual shall:

(i) Establish procedures for corporate governance and oversight of the actuarial valuation function consistent with those described in the Valuation Manual.

(ii) Provide to the Director and the board of directors an annual certification of the effectiveness of the internal controls with respect to the principle-based valuation. Such controls shall be designed to ensure that all material risks inherent in the liabilities and associated assets subject to such valuation are included in the valuation, and that valuations are made in accordance with the Valuation Manual. The certification shall be based on the controls in place as of the end of the preceding calendar year.

(iii) Develop and file with the Director upon request a principle-based valuation report that complies with standards prescribed in the Valuation Manual.

(c) A principle-based valuation may include a prescribed formulaic reserve component.

(10) Experience Reporting for Policies In Force On or After the Operative Date of the Valuation Manual. A company shall submit mortality, morbidity, policyholder behavior, or expense experience and other data as prescribed in the Valuation Manual.

(11) Confidentiality.

(a) For the purposes of this subsection (11), "confidential information" means any of the following:

(i) A memorandum in support of an opinion submitted under subsection (1) of this Section and any other documents, materials, and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the Director or any other person in connection with the memorandum.

(ii) All documents, materials, and other information, including, but not limited to, all working papers, and copies thereof, created, produced, or obtained by or disclosed to the Director or any other person in the course of an examination made under paragraph (f) of subsection (8) of this Section.

(iii) Any reports, documents, materials, and other information developed by a company in support of, or in connection with, an annual certification by the company under subparagraph (ii) of paragraph (b) of subsection (9) of this Section evaluating the effectiveness of the company's internal controls with respect to a principle-based valuation and any other documents, materials, and other information, including, but not limited to, all working papers, and copies thereof, created, produced, or obtained by or disclosed to the Director or any other person in connection with such reports, documents, materials, and other information.

(iv) Any principle-based valuation report developed under subparagraph (iii) of paragraph (b) of subsection (9) of this Section and any other documents, materials and other information, including, but not limited to, all working papers, and copies thereof, created, produced or obtained by or disclosed to the Director or any other person in connection with such report.

(v) Any documents, materials, data, and other information submitted by a company under subsection (10) of this Section (collectively, "experience data") and any other documents, materials, data, and other information, including, but not limited to, all working papers, and copies thereof, created or produced in connection with such experience data, in each case that include any potentially company-identifying or personally identifiable information, that is provided to or obtained by the Director (together with any experience data, the "experience materials") and any other documents, materials, data and other information, including, but not limited to, all working papers and copies thereof, created, produced, or obtained by or disclosed to the Director or any other person in connection with such experience materials.

(b) Privilege for and Confidentiality of Confidential Information.

(i) Except as provided in this subsection (11), a company's confidential information is confidential by law and privileged, and shall not be subject to the Freedom of Information Act, subpoena, or discovery or admissible as evidence in any private civil action; however, the Director is authorized to use the confidential information in the furtherance of any regulatory or legal action brought against the company as a part of the Director's official duties.

(ii) Neither the Director nor any person who received confidential information while acting under the authority of the Director shall be permitted or required to testify in any private civil action concerning any confidential information.

(iii) In order to assist in the performance of the Director's duties, the Director may share confidential information (A) with other state, federal, and international regulatory agencies and with the NAIC and its affiliates and subsidiaries and (B) in the case of confidential information specified in subparagraphs (i) and (iv) of paragraph (a) of subsection (11) only, with the Actuarial Board for Counseling and Discipline or its successor upon request stating that the confidential information is required for the purpose of professional disciplinary proceedings and with state, federal, and international law enforcement officials; in the case of (A) and (B), provided that such recipient agrees and has the legal authority to agree, to maintain the confidentiality and privileged status of such documents, materials, data, and other information in the same manner and to the same extent as required for the Director.

(iv) The Director may receive documents, materials, data, and other information, including otherwise confidential and privileged documents, materials, data, or information, from the NAIC and its affiliates and subsidiaries, from regulatory or law enforcement officials of other foreign or domestic jurisdictions, and from the Actuarial Board for Counseling and Discipline or its successor and shall maintain as confidential or privileged any document, material, data, or other information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or other information.

(v) The Director may enter into agreements governing the sharing and use of information consistent with paragraph (b) of this subsection (11).

(vi) No waiver of any applicable privilege or claim of confidentiality in the confidential information shall occur as a result of disclosure to the Director under this subsection (11) or as a result of sharing as authorized in subparagraph (iii) of paragraph (b) of this subsection (11).

(vii) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under paragraph (b) of this subsection (11) shall be available and enforced in any proceeding in and in any court of this State.

(viii) In this subsection (11), "regulatory agency", "law enforcement agency", and "NAIC" include, but are not limited to, their employees, agents, consultants, and contractors.

(c) Notwithstanding paragraph (b) of this subsection (11), any confidential information specified in subparagraphs (i) and (iv) of paragraph (a) of this subsection (11):

(i) may be subject to subpoena for the purpose of defending an action seeking damages from the appointed actuary submitting the related memorandum in support of an opinion submitted under subsection (1) of this Section or principle-based valuation report developed under subparagraph (iii) of paragraph (b) of subsection (9) of this Section by reason of an action required by this Section or by regulations promulgated under this Section;

(ii) may otherwise be released by the Director with the written consent of the company; and

(iii) once any portion of a memorandum in support of an opinion submitted under subsection (1) of this Section or a principle-based valuation report developed under subparagraph (iii) of paragraph (b) of subsection (9) of this Section is cited by the company in its marketing or is publicly volunteered to or before a governmental agency other than a state insurance department or is released by the company to the news media, all portions of such memorandum or report shall no longer be confidential.

(12) Exemptions.

(a) The Director may exempt specific product forms or product lines of a domestic company that is licensed and doing business only in Illinois from the requirements of subsection (8) of this Section, provided that:

(i) the Director has issued an exemption in writing to the company and has not subsequently revoked the exemption in writing; and

(ii) the company computes reserves using assumptions and methods used prior to the operative date of the Valuation Manual in addition to any requirements established by the Director and adopted by rule.

(b) For any company granted an exemption under this subsection, subsections (1), (2), (3), (4), (5), (6), and (7) shall be applicable. With respect to any company applying this exemption, any reference to subsection (8) found in subsections (1), (2), (3), (4), (5), (6), and (7) shall not be applicable.

(13) Definitions. For the purposes of this Section, the following definitions shall apply beginning on the operative date of the Valuation Manual:

"Accident and health insurance" means contracts that incorporate morbidity risk and provide protection against economic loss resulting from accident, sickness, or medical conditions and as may be specified in the Valuation Manual.

"Appointed actuary" means a qualified actuary who is appointed in accordance with the Valuation Manual to prepare the actuarial opinion required in paragraph (b) of subsection (1) of this Section.

"Company" means an entity that (a) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in this State and has at least one such policy in force or on claim or (b) has written, issued, or reinsured life insurance contracts, accident and health insurance contracts, or deposit-type contracts in any state and is required to hold a certificate of authority to write life insurance, accident and health insurance, or deposit-type contracts in this State.

"Deposit-type contract" means contracts that do not incorporate mortality or morbidity risks and as may be specified in the Valuation Manual.

"Life insurance" means contracts that incorporate mortality risk, including annuity and pure endowment contracts, and as may be specified in the Valuation Manual.

"NAIC" means the National Association of Insurance Commissioners.

"Policyholder behavior" means any action a policyholder, contract holder, or any other person with the right to elect options, such as a certificate holder, may take under a policy or contract subject to this Section including, but not limited to, lapse, withdrawal, transfer, deposit, premium payment, loan, annuitization, or benefit elections prescribed by the policy or contract, but excluding events of mortality or morbidity that result in benefits prescribed in their essential aspects by the terms of the policy or contract.

"Principle-based valuation" means a reserve valuation that uses one or more methods or one or more assumptions determined by the insurer and is required to comply with subsection (9) of this Section as specified in the Valuation Manual.

"Qualified actuary" means an individual who is qualified to sign the applicable statement of actuarial opinion in accordance with the American Academy of Actuaries qualification standards for actuaries signing such statements and who meets the requirements specified in the Valuation Manual.

"Tail risk" means a risk that occurs either where the frequency of low probability events is higher than expected under a normal probability distribution or where there are observed events of very significant size or magnitude.

"Valuation Manual" means the manual of valuation instructions adopted by the NAIC as specified in this Section or as subsequently amended.

(Source: P.A. 99-162, eff. 1-1-16.)

(215 ILCS 5/241) (from Ch. 73, par. 853)

Sec. 241. Trust settlements.

Any domestic life company shall have the power to hold the proceeds of any policy issued by it under a trust or other agreement upon such terms and restrictions as to revocation by the policyholder and control by beneficiaries, and with such exemptions from the claims of creditors of beneficiaries other than the policyholder as shall have been agreed to in writing by such company and the policyholder. Upon maturity of a policy in the event the policyholder has made no such agreement, the company shall have power to hold the proceeds of the policy under an agreement with the beneficiaries. Such company shall not be required to segregate funds so held but may hold them as part of its general company assets. A foreign or non-domestic alien company, when authorized by its charter or the laws of its domicile, may exercise any such powers in this State.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/292.1) (from Ch. 73, par. 904.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 292.1. Amendments to Laws.

(a) A domestic society may amend its laws in accordance with the provisions thereof by action of its supreme governing body at any regular or special meeting thereof or, if its laws so provide, by referendum. Such referendum may be held in accordance with the provisions of its laws by the vote of the voting members of the society, by the vote of delegates or representatives of voting members or by the vote of local lodges. A society may provide for voting by mail. No amendment submitted for adoption by referendum shall be adopted unless, within 6 months from the date of submission thereof, a majority of the members voting shall have signified their consent to such amendment by one of the methods herein specified.

(b) No amendment to the laws of any domestic society shall take effect unless approved by the Director, who shall approve such amendment if the Director finds that it has been duly adopted and is not inconsistent with any requirement of the laws of this State or with the character, objects and purposes of the society. Unless the Director shall disapprove any such amendment within 60 days after the filing of same, such amendment shall be considered approved. The approval or disapproval of the Director shall be in writing and mailed to the society. In case the Director disapproves such amendment, the reasons therefor shall be stated in such written notice.

(c) Within 90 days from the approval thereof by the Director, all such amendments, or a synopsis thereof, shall be furnished to all members of the society either by mail or by publication in full in the official publication of the society. The affidavit of any officer of the society or of anyone authorized by it to mail any amendments or synopsis thereof, stating facts which show that same have been duly addressed and mailed, shall be prima facie evidence that such amendments, or a synopsis thereof, have been furnished the addressee.

(d) Every foreign or non-domestic alien society authorized to do business in this State shall file with the Director a certified copy of all amendments of, or additions to, its laws within 90 days after the enactment of same.

(e) Printed copies of the laws as amended, certified by the secretary or corresponding officer of the society, shall be prima facie evidence of the legal adoption thereof.

(Source: P.A. 84-303.)

(215 ILCS 5/302.1) (from Ch. 73, par. 914.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 302.1. Investments and admitted assets. A domestic society shall invest its funds only in such investments as are authorized by the laws of this State for the investment of assets of life insurers and subject to the limitations thereon. Any foreign or non-domestic alien society permitted or seeking to do business in this State which invests its funds in accordance with the laws of the state, district, territory, country or province in which it is incorporated shall be held to meet the requirements of this Section for the investment of funds. Admitted assets in addition to investments authorized by this Section and Article VIII and Article VIII 1/2 of this Code shall be in accordance with Section 3.1 of this Code.

(Source: P.A. 84-303.)

(215 ILCS 5/308.1) (from Ch. 73, par. 920.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 308.1. Examination of societies - adverse publications.

(a) The Director, or any person he or she may appoint, may examine any domestic, foreign or non-domestic alien society transacting or applying for admission to transact business in this State in the same manner as authorized for examination of domestic, foreign or non-domestic alien insurance companies. Requirements of notice and an opportunity to respond before findings are made public as provided in the laws regulating insurance companies shall also be applicable to the examination of societies.

(b) The expense of each examination and of each valuation, including compensation and actual expense of examiners, shall be paid by the society examined or whose certificates are valued, upon statements furnished by the Director.

(Source: P.A. 84-303.)

(215 ILCS 5/309.1) (from Ch. 73, par. 921.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 309.1. Foreign or non-domestic alien society - admission. No foreign or non-domestic alien society shall transact business in this State without a certificate of authority issued by the Director in accordance with Article VI of this Code. Any such society desiring admission to this State shall comply substantially with the requirements and limitations of this amendatory Act applicable to domestic societies.

(Source: P.A. 84-303.)

(215 ILCS 5/310.1) (from Ch. 73, par. 922.1)

(Section scheduled to be repealed on January 1, 2027)

Sec. 310.1. Suspension, revocation or refusal to renew certificate of authority.

(a) Domestic Societies. When, upon investigation, the Director is satisfied that any domestic society transacting business under this amendatory Act has exceeded its powers or has failed to comply with any provisions of this amendatory Act or is conducting business fraudulently or in a way hazardous to its members, creditors or the public or is not carrying out its contracts in good faith, the Director shall notify the society of his or her findings, stating in writing the grounds of his or her dissatisfaction, and, after reasonable notice, require the society on a date named to show cause why its certificate of authority should not be revoked or suspended or why such society should not be fined as hereinafter provided or why the Director should not proceed against the society under Article XIII of this Code. If, on the date named in said notice, such objections have not been removed to the satisfaction of the Director or if the society does not present good and sufficient reasons why its authority to transact business in this State should not at that time be revoked or suspended or why such society should not be fined as hereinafter provided, the Director may revoke the authority of the society to continue business in this State and proceed against the society under Article XIII of this Code or suspend such certificate of authority for any period of time up to, but not to exceed, 2 years; or may by order require such society to pay to the people of the State of Illinois a penalty in a sum not exceeding $10,000, and, upon the failure of such society to pay such penalty within 20 days after the mailing of such order, postage prepaid, registered and addressed to the last known place of business of such society, unless such order is stayed by an order of a court of competent jurisdiction, the Director may revoke or suspend the license of such society for any period of time up to, but not exceeding, a period of 2 years.

(b) Foreign or non-domestic alien societies. The Director shall suspend, revoke or refuse to renew certificates of authority in accordance with Article VI of this Code.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/357.29) (from Ch. 73, par. 969.29)

Sec. 357.29. Any policy of a foreign or non-domestic alien company, when delivered or issued for delivery to any person in this State, may contain any provision which is not less favorable to the insured or the beneficiary than the provisions of this article and which is prescribed or required by the law of the state under which the company is organized.

Any policy of a domestic company may, when issued for delivery in any other state or country, contain any provision permitted or required by the laws of such other state or country.

(Source: Laws 1967, p. 1735.)

(215 ILCS 5/370) (from Ch. 73, par. 982)

Sec. 370. Policies issued in violation of article-Penalty.

(1) Any company, or any officer or agent thereof, issuing or delivering to any person in this State any policy in wilful violation of the provision of this article shall be guilty of a petty offense.

(2) The Director may revoke the license of any foreign or non-domestic alien company, or of the agent thereof wilfully violating any provision of this article or suspend such license for any period of time up to, but not to exceed, two years; or may by order require such insurance company or agent to pay to the people of the State of Illinois a penalty in a sum not exceeding $1,000, and upon the failure of such insurance company or agent to pay such penalty within twenty days after the mailing of such order, postage prepaid, registered, and addressed to the last known place of business of such insurance company or agent, unless such order is stayed by an order of a court of competent jurisdiction, the Director of Insurance may revoke or suspend the license of such insurance company or agent for any period of time up to, but not exceeding a period of, two years.

(Source: P.A. 93-32, eff. 7-1-03.)

(215 ILCS 5/404) (from Ch. 73, par. 1016)

Sec. 404. Office of Director; a public office; destruction or disposal of records, papers, documents, and memoranda.

(1)(a) The office of the Director shall be a public office and the records, books, and papers thereof on file therein, except those records or documents containing or disclosing any analysis, opinion, calculation, ratio, recommendation, advice, viewpoint, or estimation by any Department staff regarding the financial or market condition of an insurer not otherwise made part of the public record by the Director, shall be accessible to the inspection of the public, except as the Director, for good reason, may decide otherwise, or except as may be otherwise provided in this Code or as otherwise provided in Section 7 of the Freedom of Information Act.

(b) Except where another provision of this Code expressly prohibits a disclosure of confidential information to the specific officials or organizations described in this subsection, the Director may disclose or share any confidential records or information in his custody and control with any insurance regulatory officials of any state or country, with the law enforcement officials of this State, any other state, or the federal government, or with the National Association of Insurance Commissioners, upon the written agreement of the official or organization receiving the information to hold the information or records confidential and in a manner consistent with this Code.

(c) The Director shall maintain as confidential any records or information received from the National Association of Insurance Commissioners or insurance regulatory officials of other states which is confidential in that other jurisdiction.

(2) Upon the filing of the examination to which they relate, the Director is authorized to destroy or otherwise dispose of all working papers relative to any company which has been examined at any time prior to that last examination by the Department, so that in such circumstances only current working papers of that last examination may be retained by the Department.

(3) Five years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all books, records, papers, memoranda and correspondence directly related to consumer complaints or inquiries.

(4) Two years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all books, records, papers, memoranda, and correspondence directly related to all void, obsolete, or superseded rate filings and schedules required to be filed by statute; and all individual company rating experience data and all records, papers, documents and memoranda in the possession of the Director relating thereto.

(5) Five years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all examination reports of companies made by the insurance supervisory officials of states other than Illinois; applications, requisitions, and requests for licenses; all records of hearings; and all similar records, papers, documents, and memoranda in the possession of the Director.

(6) Ten years after the conclusion of the transactions to which they relate, the Director is authorized to destroy or otherwise dispose of all official correspondence of foreign and non-domestic alien companies, all foreign companies' and non-domestic alien companies' annual statements, valuation reports, tax reports, and all similar records, papers, documents and memoranda in the possession of the Director.

(7) Whenever any records, papers, documents or memoranda are destroyed or otherwise disposed of pursuant to the provisions of this section, the Director shall execute and file in a separate, permanent office file a certificate listing and setting forth by summary description the records, papers, documents or memoranda so destroyed or otherwise disposed of, and the Director may, in his discretion, preserve copies of any such records, papers, documents or memoranda by means of microfilming or photographing the same.

(8) This Section shall apply to records, papers, documents, and memoranda presently in the possession of the Director as well as to records, papers, documents, and memoranda hereafter coming into his possession.

(Source: P.A. 97-1004, eff. 8-17-12.)

(215 ILCS 5/408) (from Ch. 73, par. 1020)

Sec. 408. Fees and charges.

(1) The Director shall charge, collect and give proper acquittances for the payment of the following fees and charges:

(a) For filing all documents submitted for the incorporation or organization or certification of a domestic company, except for a fraternal benefit society, $2,000.

(b) For filing all documents submitted for the incorporation or organization of a fraternal benefit society, $500.

(c) For filing amendments to articles of incorporation and amendments to declaration of organization, except for a fraternal benefit society, a mutual benefit association, a burial society or a farm mutual, $200.

(d) For filing amendments to articles of incorporation of a fraternal benefit society, a mutual benefit association or a burial society, $100.

(e) For filing amendments to articles of incorporation of a farm mutual, $50.

(f) For filing bylaws or amendments thereto, $50.

(g) For filing agreement of merger or consolidation:

(i) for a domestic company, except for a fraternal benefit society, a mutual benefit association, a burial society, or a farm mutual, $2,000.

(ii) for a foreign or non-domestic alien company, except for a fraternal benefit society, $600.

(iii) for a fraternal benefit society, a mutual benefit association, a burial society, or a farm mutual, $200.

(h) For filing agreements of reinsurance by a domestic company, $200.

(i) For filing all documents submitted by a foreign or non-domestic alien company to be admitted to transact business or accredited as a reinsurer in this State, except for a fraternal benefit society, $5,000.

(j) For filing all documents submitted by a foreign or non-domestic alien fraternal benefit society to be admitted to transact business in this State, $500.

(k) For filing declaration of withdrawal of a foreign or non-domestic alien company, $50.

(l) For filing annual statement by a domestic company, except a fraternal benefit society, a mutual benefit association, a burial society, or a farm mutual, $200.

(m) For filing annual statement by a domestic fraternal benefit society, $100.

(n) For filing annual statement by a farm mutual, a mutual benefit association, or a burial society, $50.

(o) For issuing a certificate of authority or renewal thereof except to a foreign fraternal benefit society, $400.

(p) For issuing a certificate of authority or renewal thereof to a foreign fraternal benefit society, $200.

(q) For issuing an amended certificate of authority, $50.

(r) For each certified copy of certificate of authority, $20.

(s) For each certificate of deposit, or valuation, or compliance or surety certificate, $20.

(t) For copies of papers or records per page, $1.

(u) For each certification to copies of papers or records, $10.

(v) For multiple copies of documents or certificates listed in subparagraphs (r), (s), and (u) of paragraph (1) of this Section, $10 for the first copy of a certificate of any type and $5 for each additional copy of the same certificate requested at the same time, unless, pursuant to paragraph (2) of this Section, the Director finds these additional fees excessive.

(w) For issuing a permit to sell shares or increase paid-up capital:

(i) in connection with a public stock offering, $300;

(ii) in any other case, $100.

(x) For issuing any other certificate required or permissible under the law, $50.

(y) For filing a plan of exchange of the stock of a domestic stock insurance company, a plan of demutualization of a domestic mutual company, or a plan of reorganization under Article XII, $2,000.

(z) For filing a statement of acquisition of a domestic company as defined in Section 131.4 of this Code, $2,000.

(aa) For filing an agreement to purchase the business of an organization authorized under the Dental Service Plan Act or the Voluntary Health Services Plans Act or of a health maintenance organization or a limited health service organization, $2,000.

(bb) For filing a statement of acquisition of a foreign or non-domestic alien insurance company as defined in Section 131.12a of this Code, $1,000.

(cc) For filing a registration statement as required in Sections 131.13 and 131.14, the notification as required by Sections 131.16, 131.20a, or 141.4, or an agreement or transaction required by Sections 124.2(2), 141, 141a, or 141.1, $200.

(dd) For filing an application for licensing of:

(i) a religious or charitable risk pooling trust or a workers' compensation pool, $1,000;

(ii) a workers' compensation service company, $500;

(iii) a self-insured automobile fleet, $200; or

(iv) a renewal of or amendment of any license issued pursuant to (i), (ii), or (iii) above, $100.

(ee) For filing articles of incorporation for a syndicate to engage in the business of insurance through the Illinois Insurance Exchange, $2,000.

(ff) For filing amended articles of incorporation for a syndicate engaged in the business of insurance through the Illinois Insurance Exchange, $100.

(gg) For filing articles of incorporation for a limited syndicate to join with other subscribers or limited syndicates to do business through the Illinois Insurance Exchange, $1,000.

(hh) For filing amended articles of incorporation for a limited syndicate to do business through the Illinois Insurance Exchange, $100.

(ii) For a permit to solicit subscriptions to a syndicate or limited syndicate, $100.

(jj) For the filing of each form as required in Section 143 of this Code, $50 per form. The fee for advisory and rating organizations shall be $200 per form.

(i) For the purposes of the form filing fee, filings made on insert page basis will be considered one form at the time of its original submission. Changes made to a form subsequent to its approval shall be considered a new filing.

(ii) Only one fee shall be charged for a form, regardless of the number of other forms or policies with which it will be used.

(iii) Fees charged for a policy filed as it will be issued regardless of the number of forms comprising that policy shall not exceed $1,500. For advisory or rating organizations, fees charged for a policy filed as it will be issued regardless of the number of forms comprising that policy shall not exceed $2,500.

(iv) The Director may by rule exempt forms from such fees.

(kk) For filing an application for licensing of a reinsurance intermediary, $500.

(ll) For filing an application for renewal of a license of a reinsurance intermediary, $200.

(2) When printed copies or numerous copies of the same paper or records are furnished or certified, the Director may reduce such fees for copies if he finds them excessive. He may, when he considers it in the public interest, furnish without charge to state insurance departments and persons other than companies, copies or certified copies of reports of examinations and of other papers and records.

(3) The expenses incurred in any performance examination authorized by law shall be paid by the company or person being examined. The charge shall be reasonably related to the cost of the examination including but not limited to compensation of examiners, electronic data processing costs, supervision and preparation of an examination report and lodging and travel expenses. All lodging and travel expenses shall be in accord with the applicable travel regulations as published by the Department of Central Management Services and approved by the Governor's Travel Control Board, except that out-of-state lodging and travel expenses related to examinations authorized under Section 132 shall be in accordance with travel rates prescribed under paragraph 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2, for reimbursement of subsistence expenses incurred during official travel. All lodging and travel expenses may be reimbursed directly upon authorization of the Director. With the exception of the direct reimbursements authorized by the Director, all performance examination charges collected by the Department shall be paid to the Insurance Producer Administration Fund, however, the electronic data processing costs incurred by the Department in the performance of any examination shall be billed directly to the company being examined for payment to the Technology Management Revolving Fund.

(4) At the time of any service of process on the Director as attorney for such service, the Director shall charge and collect the sum of $20, which may be recovered as taxable costs by the party to the suit or action causing such service to be made if he prevails in such suit or action.

(5) (a) The costs incurred by the Department of Insurance in conducting any hearing authorized by law shall be assessed against the parties to the hearing in such proportion as the Director of Insurance may determine upon consideration of all relevant circumstances including: (1) the nature of the hearing; (2) whether the hearing was instigated by, or for the benefit of a particular party or parties; (3) whether there is a successful party on the merits of the proceeding; and (4) the relative levels of participation by the parties.

(b) For purposes of this subsection (5) costs incurred shall mean the hearing officer fees, court reporter fees, and travel expenses of Department of Insurance officers and employees; provided however, that costs incurred shall not include hearing officer fees or court reporter fees unless the Department has retained the services of independent contractors or outside experts to perform such functions.

(c) The Director shall make the assessment of costs incurred as part of the final order or decision arising out of the proceeding; provided, however, that such order or decision shall include findings and conclusions in support of the assessment of costs. This subsection (5) shall not be construed as permitting the payment of travel expenses unless calculated in accordance with the applicable travel regulations of the Department of Central Management Services, as approved by the Governor's Travel Control Board. The Director as part of such order or decision shall require all assessments for hearing officer fees and court reporter fees, if any, to be paid directly to the hearing officer or court reporter by the party(s) assessed for such costs. The assessments for travel expenses of Department officers and employees shall be reimbursable to the Director of Insurance for deposit to the fund out of which those expenses had been paid.

(d) The provisions of this subsection (5) shall apply in the case of any hearing conducted by the Director of Insurance not otherwise specifically provided for by law.

(6) The Director shall charge and collect an annual financial regulation fee from every domestic company for examination and analysis of its financial condition and to fund the internal costs and expenses of the Interstate Insurance Receivership Commission as may be allocated to the State of Illinois and companies doing an insurance business in this State pursuant to Article X of the Interstate Insurance Receivership Compact. The fee shall be the greater fixed amount based upon the combination of nationwide direct premium income and nationwide reinsurance assumed premium income or upon admitted assets calculated under this subsection as follows:

(a) Combination of nationwide direct premium income and nationwide reinsurance assumed premium.

(i) $150, if the premium is less than $500,000 and there is no reinsurance assumed premium;

(ii) $750, if the premium is $500,000 or more, but less than $5,000,000 and there is no reinsurance assumed premium; or if the premium is less than $5,000,000 and the reinsurance assumed premium is less than $10,000,000;

(iii) $3,750, if the premium is less than $5,000,000 and the reinsurance assumed premium is $10,000,000 or more;

(iv) $7,500, if the premium is $5,000,000 or more, but less than $10,000,000;

(v) $18,000, if the premium is $10,000,000 or more, but less than $25,000,000;

(vi) $22,500, if the premium is $25,000,000 or more, but less than $50,000,000;

(vii) $30,000, if the premium is $50,000,000 or more, but less than $100,000,000;

(viii) $37,500, if the premium is $100,000,000 or more.

(b) Admitted assets.

(i) $150, if admitted assets are less than $1,000,000;

(ii) $750, if admitted assets are $1,000,000 or more, but less than $5,000,000;

(iii) $3,750, if admitted assets are $5,000,000 or more, but less than $25,000,000;

(iv) $7,500, if admitted assets are $25,000,000 or more, but less than $50,000,000;

(v) $18,000, if admitted assets are $50,000,000 or more, but less than $100,000,000;

(vi) $22,500, if admitted assets are $100,000,000 or more, but less than $500,000,000;

(vii) $30,000, if admitted assets are $500,000,000 or more, but less than $1,000,000,000;

(viii) $37,500, if admitted assets are $1,000,000,000 or more.

(c) The sum of financial regulation fees charged to the domestic companies of the same affiliated group shall not exceed $250,000 in the aggregate in any single year and shall be billed by the Director to the member company designated by the group.

(7) The Director shall charge and collect an annual financial regulation fee from every foreign or non-domestic alien company, except fraternal benefit societies, for the examination and analysis of its financial condition and to fund the internal costs and expenses of the Interstate Insurance Receivership Commission as may be allocated to the State of Illinois and companies doing an insurance business in this State pursuant to Article X of the Interstate Insurance Receivership Compact. The fee shall be a fixed amount based upon Illinois direct premium income and nationwide reinsurance assumed premium income in accordance with the following schedule:

(a) $150, if the premium is less than $500,000 and there is no reinsurance assumed premium;

(b) $750, if the premium is $500,000 or more, but less than $5,000,000 and there is no reinsurance assumed premium; or if the premium is less than $5,000,000 and the reinsurance assumed premium is less than $10,000,000;

(c) $3,750, if the premium is less than $5,000,000 and the reinsurance assumed premium is $10,000,000 or more;

(d) $7,500, if the premium is $5,000,000 or more, but less than $10,000,000;

(e) $18,000, if the premium is $10,000,000 or more, but less than $25,000,000;

(f) $22,500, if the premium is $25,000,000 or more, but less than $50,000,000;

(g) $30,000, if the premium is $50,000,000 or more, but less than $100,000,000;

(h) $37,500, if the premium is $100,000,000 or more.

The sum of financial regulation fees under this subsection (7) charged to the foreign or non-domestic alien companies within the same affiliated group shall not exceed $250,000 in the aggregate in any single year and shall be billed by the Director to the member company designated by the group.

(8) Beginning January 1, 1992, the financial regulation fees imposed under subsections (6) and (7) of this Section shall be paid by each company or domestic affiliated group annually. After January 1, 1994, the fee shall be billed by Department invoice based upon the company's premium income or admitted assets as shown in its annual statement for the preceding calendar year. The invoice is due upon receipt and must be paid no later than June 30 of each calendar year. All financial regulation fees collected by the Department shall be paid to the Insurance Financial Regulation Fund. The Department may not collect financial examiner per diem charges from companies subject to subsections (6) and (7) of this Section undergoing financial examination after June 30, 1992.

(9) In addition to the financial regulation fee required by this Section, a company undergoing any financial examination authorized by law shall pay the following costs and expenses incurred by the Department: electronic data processing costs, the expenses authorized under Section 131.21 and subsection (d) of Section 132.4 of this Code, and lodging and travel expenses.

Electronic data processing costs incurred by the Department in the performance of any examination shall be billed directly to the company undergoing examination for payment to the Technology Management Revolving Fund. Except for direct reimbursements authorized by the Director or direct payments made under Section 131.21 or subsection (d) of Section 132.4 of this Code, all financial regulation fees and all financial examination charges collected by the Department shall be paid to the Insurance Financial Regulation Fund.

All lodging and travel expenses shall be in accordance with applicable travel regulations published by the Department of Central Management Services and approved by the Governor's Travel Control Board, except that out-of-state lodging and travel expenses related to examinations authorized under Sections 132.1 through 132.7 shall be in accordance with travel rates prescribed under paragraph 301-7.2 of the Federal Travel Regulations, 41 C.F.R. 301-7.2, for reimbursement of subsistence expenses incurred during official travel. All lodging and travel expenses may be reimbursed directly upon the authorization of the Director.

In the case of an organization or person not subject to the financial regulation fee, the expenses incurred in any financial examination authorized by law shall be paid by the organization or person being examined. The charge shall be reasonably related to the cost of the examination including, but not limited to, compensation of examiners and other costs described in this subsection.

(10) Any company, person, or entity failing to make any payment of $150 or more as required under this Section shall be subject to the penalty and interest provisions provided for in subsections (4) and (7) of Section 412.

(11) Unless otherwise specified, all of the fees collected under this Section shall be paid into the Insurance Financial Regulation Fund.

(12) For purposes of this Section:

(a) "Domestic company" means a company as defined in Section 2 of this Code which is incorporated or organized under the laws of this State, and in addition includes a not-for-profit corporation authorized under the Dental Service Plan Act or the Voluntary Health Services Plans Act, a health maintenance organization, and a limited health service organization.

(b) "Foreign company" means a company as defined in Section 2 of this Code which is incorporated or organized under the laws of any state of the United States other than this State and in addition includes a health maintenance organization and a limited health service organization which is incorporated or organized under the laws of any state of the United States other than this State.

(c) "Non-domestic Alien company" means a company as defined in Section 2 of this Code which is incorporated or organized under the laws of any country other than the United States.

(d) "Fraternal benefit society" means a corporation, society, order, lodge or voluntary association as defined in Section 282.1 of this Code.

(e) "Mutual benefit association" means a company, association or corporation authorized by the Director to do business in this State under the provisions of Article XVIII of this Code.

(f) "Burial society" means a person, firm, corporation, society or association of individuals authorized by the Director to do business in this State under the provisions of Article XIX of this Code.

(g) "Farm mutual" means a district, county and township mutual insurance company authorized by the Director to do business in this State under the provisions of the Farm Mutual Insurance Company Act of 1986.

(Source: P.A. 100-23, eff. 7-6-17.)

(215 ILCS 5/412) (from Ch. 73, par. 1024)

Sec. 412. Refunds; penalties; collection.

(1)(a) Whenever it appears to the satisfaction of the Director that because of some mistake of fact, error in calculation, or erroneous interpretation of a statute of this or any other state, any authorized company, surplus line producer, or industrial insured has paid to him, pursuant to any provision of law, taxes, fees, or other charges in excess of the amount legally chargeable against it, during the 6 year period immediately preceding the discovery of such overpayment, he shall have power to refund to such company, surplus line producer, or industrial insured the amount of the excess or excesses by applying the amount or amounts thereof toward the payment of taxes, fees, or other charges already due, or which may thereafter become due from that company until such excess or excesses have been fully refunded, or upon a written request from the authorized company, surplus line producer, or industrial insured, the Director shall provide a cash refund within 120 days after receipt of the written request if all necessary information has been filed with the Department in order for it to perform an audit of the tax report for the transaction or period or annual return for the year in which the overpayment occurred or within 120 days after the date the Department receives all the necessary information to perform such audit. The Director shall not provide a cash refund if there are insufficient funds in the Insurance Premium Tax Refund Fund to provide a cash refund, if the amount of the overpayment is less than $100, or if the amount of the overpayment can be fully offset against the taxpayer's estimated liability for the year following the year of the cash refund request. Any cash refund shall be paid from the Insurance Premium Tax Refund Fund, a special fund hereby created in the State treasury.

(b) Beginning January 1, 2000 and thereafter, the Department shall deposit a percentage of the amounts collected under Sections 409, 444, and 444.1 of this Code into the Insurance Premium Tax Refund Fund. The percentage deposited into the Insurance Premium Tax Refund Fund shall be the annual percentage. The annual percentage shall be calculated as a fraction, the numerator of which shall be the amount of cash refunds approved by the Director for payment and paid during the preceding calendar year as a result of overpayment of tax liability under Sections 121-2.08, 409, 444, 444.1, and 445 of this Code and the denominator of which shall be the amounts collected pursuant to Sections 121-2.08, 409, 444, 444.1, and 445 of this Code during the preceding calendar year. However, if there were no cash refunds paid in a preceding calendar year, the Department shall deposit 5% of the amount collected in that preceding calendar year pursuant to Sections 121-2.08, 409, 444, 444.1, and 445 of this Code into the Insurance Premium Tax Refund Fund instead of an amount calculated by using the annual percentage.

(c) Beginning July 1, 1999, moneys in the Insurance Premium Tax Refund Fund shall be expended exclusively for the purpose of paying cash refunds resulting from overpayment of tax liability under Sections 121-2.08, 409, 444, 444.1, and 445 of this Code as determined by the Director pursuant to subsection 1(a) of this Section. Cash refunds made in accordance with this Section may be made from the Insurance Premium Tax Refund Fund only to the extent that amounts have been deposited and retained in the Insurance Premium Tax Refund Fund.

(d) This Section shall constitute an irrevocable and continuing appropriation from the Insurance Premium Tax Refund Fund for the purpose of paying cash refunds pursuant to the provisions of this Section.

(2)(a) When any insurance company fails to file any tax return required under Sections 408.1, 409, 444, and 444.1 of this Code or Section 12 of the Fire Investigation Act on the date prescribed, including any extensions, there shall be added as a penalty $400 or 10% of the amount of such tax, whichever is greater, for each month or part of a month of failure to file, the entire penalty not to exceed $2,000 or 50% of the tax due, whichever is greater.

(b) When any industrial insured or surplus line producer fails to file any tax return or report required under Sections 121-2.08 and 445 of this Code or Section 12 of the Fire Investigation Act on the date prescribed, including any extensions, there shall be added:

(i) as a late fee, if the return or report is received at least one day but not more than 7 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, the entire fee not to exceed $1,000;

(ii) as a late fee, if the return or report is received at least 8 days but not more than 14 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, the entire fee not to exceed $1,500;

(iii) as a late fee, if the return or report is received at least 15 days but not more than 21 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, the entire fee not to exceed $2,000; or

(iv) as a penalty, if the return or report is received more than 21 days after the prescribed due date, $400 or 10% of the tax due, whichever is greater, for each month or part of a month of failure to file, the entire penalty not to exceed $2,000 or 50% of the tax due, whichever is greater.

A tax return or report shall be deemed received as of the date mailed as evidenced by a postmark, proof of mailing on a recognized United States Postal Service form or a form acceptable to the United States Postal Service or other commercial mail delivery service, or other evidence acceptable to the Director.

(3)(a) When any insurance company fails to pay the full amount due under the provisions of this Section, Sections 408.1, 409, 444, or 444.1 of this Code, or Section 12 of the Fire Investigation Act, there shall be added to the amount due as a penalty an amount equal to 10% of the deficiency.

(a-5) When any industrial insured or surplus line producer fails to pay the full amount due under the provisions of this Section, Sections 121-2.08 or 445 of this Code, or Section 12 of the Fire Investigation Act on the date prescribed, there shall be added:

(i) as a late fee, if the payment is received at least one day but not more than 7 days after the prescribed due date, 10% of the tax due, the entire fee not to exceed $1,000;

(ii) as a late fee, if the payment is received at least 8 days but not more than 14 days after the prescribed due date, 10% of the tax due, the entire fee not to exceed $1,500;

(iii) as a late fee, if the payment is received at least 15 days but not more than 21 days after the prescribed due date, 10% of the tax due, the entire fee not to exceed $2,000; or

(iv) as a penalty, if the return or report is received more than 21 days after the prescribed due date, 10% of the tax due.

A tax payment shall be deemed received as of the date mailed as evidenced by a postmark, proof of mailing on a recognized United States Postal Service form or a form acceptable to the United States Postal Service or other commercial mail delivery service, or other evidence acceptable to the Director.

(b) If such failure to pay is determined by the Director to be wilful, after a hearing under Sections 402 and 403, there shall be added to the tax as a penalty an amount equal to the greater of 50% of the deficiency or 10% of the amount due and unpaid for each month or part of a month that the deficiency remains unpaid commencing with the date that the amount becomes due. Such amount shall be in lieu of any determined under paragraph (a) or (a-5).

(4) Any insurance company, industrial insured, or surplus line producer that fails to pay the full amount due under this Section or Sections 121-2.08, 408.1, 409, 444, 444.1, or 445 of this Code, or Section 12 of the Fire Investigation Act is liable, in addition to the tax and any late fees and penalties, for interest on such deficiency at the rate of 12% per annum, or at such higher adjusted rates as are or may be established under subsection (b) of Section 6621 of the Internal Revenue Code, from the date that payment of any such tax was due, determined without regard to any extensions, to the date of payment of such amount.

(5) The Director, through the Attorney General, may institute an action in the name of the People of the State of Illinois, in any court of competent jurisdiction, for the recovery of the amount of such taxes, fees, and penalties due, and prosecute the same to final judgment, and take such steps as are necessary to collect the same.

(6) In the event that the certificate of authority of a foreign or non-domestic alien company is revoked for any cause or the company withdraws from this State prior to the renewal date of the certificate of authority as provided in Section 114, the company may recover the amount of any such tax paid in advance. Except as provided in this subsection, no revocation or withdrawal excuses payment of or constitutes grounds for the recovery of any taxes or penalties imposed by this Code.

(7) When an insurance company or domestic affiliated group fails to pay the full amount of any fee of $200 or more due under Section 408 of this Code, there shall be added to the amount due as a penalty the greater of $100 or an amount equal to 10% of the deficiency for each month or part of a month that the deficiency remains unpaid.

(8) The Department shall have a lien for the taxes, fees, charges, fines, penalties, interest, other charges, or any portion thereof, imposed or assessed pursuant to this Code, upon all the real and personal property of any company or person to whom the assessment or final order has been issued or whenever a tax return is filed without payment of the tax or penalty shown therein to be due, including all such property of the company or person acquired after receipt of the assessment, issuance of the order, or filing of the return. The company or person is liable for the filing fee incurred by the Department for filing the lien and the filing fee incurred by the Department to file the release of that lien. The filing fees shall be paid to the Department in addition to payment of the tax, fee, charge, fine, penalty, interest, other charges, or any portion thereof, included in the amount of the lien. However, where the lien arises because of the issuance of a final order of the Director or tax assessment by the Department, the lien shall not attach and the notice referred to in this Section shall not be filed until all administrative proceedings or proceedings in court for review of the final order or assessment have terminated or the time for the taking thereof has expired without such proceedings being instituted.

Upon the granting of Department review after a lien has attached, the lien shall remain in full force except to the extent to which the final assessment may be reduced by a revised final assessment following the rehearing or review. The lien created by the issuance of a final assessment shall terminate, unless a notice of lien is filed, within 3 years after the date all proceedings in court for the review of the final assessment have terminated or the time for the taking thereof has expired without such proceedings being instituted, or (in the case of a revised final assessment issued pursuant to a rehearing or review by the Department) within 3 years after the date all proceedings in court for the review of such revised final assessment have terminated or the time for the taking thereof has expired without such proceedings being instituted. Where the lien results from the filing of a tax return without payment of the tax or penalty shown therein to be due, the lien shall terminate, unless a notice of lien is filed, within 3 years after the date when the return is filed with the Department.

The time limitation period on the Department's right to file a notice of lien shall not run during any period of time in which the order of any court has the effect of enjoining or restraining the Department from filing such notice of lien. If the Department finds that a company or person is about to depart from the State, to conceal himself or his property, or to do any other act tending to prejudice or to render wholly or partly ineffectual proceedings to collect the amount due and owing to the Department unless such proceedings are brought without delay, or if the Department finds that the collection of the amount due from any company or person will be jeopardized by delay, the Department shall give the company or person notice of such findings and shall make demand for immediate return and payment of the amount, whereupon the amount shall become immediately due and payable. If the company or person, within 5 days after the notice (or within such extension of time as the Department may grant), does not comply with the notice or show to the Department that the findings in the notice are erroneous, the Department may file a notice of jeopardy assessment lien in the office of the recorder of the county in which any property of the company or person may be located and shall notify the company or person of the filing. The jeopardy assessment lien shall have the same scope and effect as the statutory lien provided for in this Section. If the company or person believes that the company or person does not owe some or all of the tax for which the jeopardy assessment lien against the company or person has been filed, or that no jeopardy to the revenue in fact exists, the company or person may protest within 20 days after being notified by the Department of the filing of the jeopardy assessment lien and request a hearing, whereupon the Department shall hold a hearing in conformity with the provisions of this Code and, pursuant thereto, shall notify the company or person of its findings as to whether or not the jeopardy assessment lien will be released. If not, and if the company or person is aggrieved by this decision, the company or person may file an action for judicial review of the final determination of the Department in accordance with the Administrative Review Law. If, pursuant to such hearing (or after an independent determination of the facts by the Department without a hearing), the Department determines that some or all of the amount due covered by the jeopardy assessment lien is not owed by the company or person, or that no jeopardy to the revenue exists, or if on judicial review the final judgment of the court is that the company or person does not owe some or all of the amount due covered by the jeopardy assessment lien against them, or that no jeopardy to the revenue exists, the Department shall release its jeopardy assessment lien to the extent of such finding of nonliability for the amount, or to the extent of such finding of no jeopardy to the revenue. The Department shall also release its jeopardy assessment lien against the company or person whenever the amount due and owing covered by the lien, plus any interest which may be due, are paid and the company or person has paid the Department in cash or by guaranteed remittance an amount representing the filing fee for the lien and the filing fee for the release of that lien. The Department shall file that release of lien with the recorder of the county where that lien was filed.

Nothing in this Section shall be construed to give the Department a preference over the rights of any bona fide purchaser, holder of a security interest, mechanics lienholder, mortgagee, or judgment lien creditor arising prior to the filing of a regular notice of lien or a notice of jeopardy assessment lien in the office of the recorder in the county in which the property subject to the lien is located. For purposes of this Section, "bona fide" shall not include any mortgage of real or personal property or any other credit transaction that results in the mortgagee or the holder of the security acting as trustee for unsecured creditors of the company or person mentioned in the notice of lien who executed such chattel or real property mortgage or the document evidencing such credit transaction. The lien shall be inferior to the lien of general taxes, special assessments, and special taxes levied by any political subdivision of this State. In case title to land to be affected by the notice of lien or notice of jeopardy assessment lien is registered under the provisions of the Registered Titles (Torrens) Act, such notice shall be filed in the office of the Registrar of Titles of the county within which the property subject to the lien is situated and shall be entered upon the register of titles as a memorial or charge upon each folium of the register of titles affected by such notice, and the Department shall not have a preference over the rights of any bona fide purchaser, mortgagee, judgment creditor, or other lienholder arising prior to the registration of such notice. The regular lien or jeopardy assessment lien shall not be effective against any purchaser with respect to any item in a retailer's stock in trade purchased from the retailer in the usual course of the retailer's business.

(Source: P.A. 98-158, eff. 8-2-13; 98-978, eff. 1-1-15.)

(215 ILCS 5/413) (from Ch. 73, par. 1025)

Sec. 413. Privilege Tax Payable on Admission of Foreign or Non-domestic Alien Company.

(1) Every foreign or non-domestic alien company applying for a certificate of authority to transact business in this State shall pay to the Director a tax for the privilege of transacting business in this State in accordance with Section 409.

(2) If during all or any part of the 3 year period next preceding the date of application for a certificate of authority the company had a certificate of authority to transact business in this State, or if it survives or was formed by a merger, consolidation, reorganization or reincorporation, and one or more of the parties thereto was a foreign or non-domestic alien company authorized to transact business in this State during all or any part of such 3 year period, then the tax shall be determined in accordance with Section 409 on the basis of the last entire calendar year during which the company or any one of the foreign or non-domestic alien companies parties to the merger, consolidation, reorganization or reincorporation was authorized to transact business in this State, or if none was authorized during any entire calendar year, then on the basis of the last partial calendar year during which any of such companies were authorized to transact business in this State.

(Source: P.A. 77-2087.)

(215 ILCS 5/415) (from Ch. 73, par. 1027)

Sec. 415. No taxes to be imposed by political subdivisions. The fees, charges and taxes provided for by this Article shall be in lieu of all license fees or privilege or occupation taxes or other fees levied or assessed by any municipality, county or other political subdivision of this State, and no municipality, county or other political subdivision of this State shall impose any license fee or privilege or occupation tax or fee upon any domestic, foreign or non-domestic alien company, or upon any of its agents, for the privilege of doing an insurance business therein, except the tax authorized by Division 10 of Article 11 of the Illinois Municipal Code, as heretofore and hereafter amended. This Section shall not be construed to prohibit the levy and collection of:

(a) State, county or municipal taxes upon the real and personal property of such a company, including the tax imposed by Section 414 of this Code, and

(b) taxes for the purpose of maintaining the Office of the State Fire Marshal and paying the expenses incident thereto.

(Source: P.A. 91-357, eff. 7-29-99.)

(215 ILCS 5/444) (from Ch. 73, par. 1056)

Sec. 444. Retaliation.

(1) Whenever the existing or future laws of any other state or country shall require of companies incorporated or organized under the laws of this State as a condition precedent to their doing business in such other state or country, compliance with laws, rules, regulations, and prohibitions more onerous or burdensome than the rules and regulations imposed by this State on foreign or non-domestic alien companies, or shall require any deposit of securities or other obligations in such state or country, for the protection of policyholders or otherwise or require of such companies or agents thereof or brokers the payment of penalties, fees, charges, or taxes greater than the penalties, fees, charges, or taxes required in the aggregate for like purposes by this Code or any other law of this State, of foreign or non-domestic alien companies, agents thereof or brokers, then such laws, rules, regulations, and prohibitions of said other state or country shall apply to companies incorporated or organized under the laws of such state or country doing business in this State, and all such companies, agents thereof, or brokers doing business in this State, shall be required to make deposits, pay penalties, fees, charges, and taxes, in amounts equal to those required in the aggregate for like purposes of Illinois companies doing business in such state or country, agents thereof or brokers. Whenever any other state or country shall refuse to permit any insurance company incorporated or organized under the laws of this State to transact business according to its usual plan in such other state or country, the director may, if satisfied that such company of this State is solvent, properly managed, and can operate legally under the laws of such other state or country, forthwith suspend or cancel the license of every insurance company doing business in this State which is incorporated or organized under the laws of such other state or country to the extent that it insures in this State against any of the risks or hazards which are sought to be insured against by the company of this State in such other state or country.

(2) The provisions of this Section shall not apply to residual market or special purpose assessments or guaranty fund or guaranty association assessments, both under the laws of this State and under the laws of any other state or country, and any tax offset or credit for any such assessment shall, for purposes of this Section, be treated as a tax paid both under the laws of this State and under the laws of any other state or country.

(3) The terms "penalties", "fees", "charges", and "taxes" in subsection (1) of this Section shall include: the penalties, fees, charges, and taxes collected on a cash basis under State law and referenced within Article XXV exclusive of any items referenced by subsection (2) of this Section, but including any tax offset allowed under Section 531.13 of this Code; the aggregate Illinois corporate income taxes paid under Sections 601 and 803 of the Illinois Income Tax Act during the calendar year for which the retaliatory tax calculation is being made, less the recapture of any Illinois corporate income tax cash refunds to the extent that the amount of tax refunded was reported as part of the Illinois basis in the calculation of the retaliatory tax for a prior tax year, provided that such recaptured refund shall not exceed the amount necessary for equivalence of the Illinois basis with the state of incorporation basis in such tax year, and after any tax offset allowed under Section 531.13 of this Code; income or personal property taxes imposed by other states or countries; penalties, fees, charges, and taxes of other states or countries imposed for purposes like those of the penalties, fees, charges, and taxes specified in Article XXV of this Code exclusive of any item referenced in subsection (2) of this Section; and any penalties, fees, charges, and taxes required as a franchise, privilege, or licensing tax for conducting the business of insurance whether calculated as a percentage of income, gross receipts, premium, or otherwise.

(4) Nothing contained in this Section or Section 409 or Section 444.1 is intended to authorize or expand any power of local governmental units or municipalities to impose taxes, fees, or charges.

(5) This Section is subject to the provisions of Section 10 of the New Markets Development Program Act.

(Source: P.A. 98-1169, eff. 1-9-15.)

(215 ILCS 5/444.1) (from Ch. 73, par. 1056.1)

Sec. 444.1. Payment of retaliatory taxes.

(1) Every foreign or non-domestic alien company doing insurance business in this State shall pay the Director the retaliatory tax determined in accordance with Section 444.

(2) (a) All companies subject to the provisions of this Section shall make an annual return for the preceding calendar year on or before March 15 setting forth such information on such forms as the Director may reasonably require. Payments of quarterly installments of the taxpayer's total estimated retaliatory tax for the current calendar year shall be due on or before April 15, June 15, September 15, and December 15 of such year, except that all companies transacting insurance business in this State whose annual tax for the immediately preceding calendar year was less than $5,000 shall make only an annual return. Failure of a company to make the annual payment, or to make the quarterly payments, if required, of at least one-fourth of either (i) the total tax paid during the previous calendar year or (ii) 80% of the actual tax for the current calendar year shall subject it to the penalty provisions set forth in Section 412 of this Code.

(b) Notwithstanding the foregoing provisions of paragraph (a) of this subsection, the retaliatory tax liability of companies under Section 444 of this Code for the calendar year ended December 31, 1997 shall be determined in accordance with this amendatory Act of 1998 and shall include in the aggregate comparative tax burden for the State of Illinois, any tax offset allowed under Section 531.13 of this Code and any income taxes paid for the year 1997 under subsections (a) through (d) of Section 201 of the Illinois Income Tax Act after any tax offset allowed under Section 531.13 of this Code.

(i) Any annual retaliatory tax returns and payments made for the year ended December 31, 1997 and any quarterly installments of the taxpayer's total estimated 1998 retaliatory tax liability paid prior to the effective date of this Amendatory Act of 1998 that do not include the items specified by subsection (1) of this Section shall be amended and restated, at the taxpayer's election, on forms prepared by the Director so as to provide for the inclusion of such items. An amended and restated return for the year ended December 31, 1997 filed under this subparagraph shall treat any payment of estimated privilege taxes under Section 409 as in effect prior to October 23, 1997 as a payment of estimated retaliatory taxes for the year ended December 31, 1997.

(ii) Any overpayment resulting from such amended return and restated tax liability shall be allowed as a credit against any subsequent privilege or retaliatory tax obligations of the taxpayer.

(iii) In the year 1999 and thereafter all companies shall make annual and quarterly installments of their estimated tax as provided by paragraph (a) of this subsection.

(3) Any tax payment made under this Section and any tax returns prepared in compliance with Section 410 shall give full consideration to the impact of any future reduction in or elimination of a taxpayer's liability under Section 409, whether such reduction or elimination is due to an operation of law or an Act of the General Assembly.

(4) Any foreign or non-domestic alien taxpayer who makes, under protest, a tax payment required by Section 409 shall, at the time of payment, file a retaliatory tax return sufficient to disclose the full amount of retaliatory taxes which would be due and owing for the tax period in question if the protest were upheld. Notwithstanding the provisions of the State Officers and Employees Money Disposition Act or any other laws of this State, the protested payment, to the extent of the retaliatory tax so disclosed, shall be deposited directly in the General Revenue Fund; and the balance of the payment, if any, shall be deposited in a protest account pursuant to the provisions of the aforesaid Act, as now or hereafter amended.

(5) The failure of a company to make the annual payment or to make the quarterly payments, if required, of at least one-fourth of either (i) the total tax paid during the preceding calendar year or (ii) 80% of the actual tax for the current calendar year shall subject it to the penalty provisions set forth in Section 412 of this Code.

(6) This Section is subject to the provisions of Section 10 of the New Markets Development Program Act.

(Source: P.A. 95-1024, eff. 12-31-08.)

(215 ILCS 5/445) (from Ch. 73, par. 1057)

Sec. 445. Surplus line.

(1) Definitions. For the purposes of this Section:

"Affiliate" means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured. For the purpose of this definition, an entity has control over another entity if:

(A) the entity directly or indirectly or acting through one or more other persons owns, controls, or has the power to vote 25% or more of any class of voting securities of the other entity; or

(B) the entity controls in any manner the election of a majority of the directors or trustees of the other entity.

"Affiliated group" means any group of entities that are all affiliated.

"Authorized insurer" means an insurer that holds a certificate of authority issued by the Director but, for the purposes of this Section, does not include a domestic surplus line insurer as defined in Section 445a or any residual market mechanism.

"Exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:

(A) The person employs or retains a qualified risk manager to negotiate insurance coverage.

(B) The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months.

(C) The person meets at least one of the following criteria:

(I) The person possesses a net worth in excess of $20,000,000, as such amount is adjusted pursuant to the provision in this definition concerning percentage change.

(II) The person generates annual revenues in excess of $50,000,000, as such amount is adjusted pursuant to the provision in this definition concerning percentage change.

(III) The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate.

(IV) The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000, as such amount is adjusted pursuant to the provision in this definition concerning percentage change.

(V) The person is a municipality with a population in excess of 50,000 persons.

Effective on January 1, 2015 and each fifth January 1 occurring thereafter, the amounts in subitems (I), (II), and (IV) of item (C) of this definition shall be adjusted to reflect the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

"Home state" means the following:

(A) With respect to an insured, except as provided in item (B) of this definition:

(I) the state in which an insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or

(II) if 100% of the insured risk is located out of the state referred to in subitem (I), the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.

(B) If more than one insured from an affiliated group are named insureds on a single surplus line insurance contract, then "home state" means the home state, as determined pursuant to item (A) of this definition, of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.

If more than one insured from a group that is not affiliated are named insureds on a single surplus line insurance contract, then:

(I) if individual group members pay 100% of the premium for the insurance from their own funds, "home state" means the home state, as determined pursuant to item (A) of this definition, of each individual group member; each individual group member's coverage under the surplus line insurance contract shall be treated as a separate surplus line contract for the purposes of this Section;

(II) otherwise, "home state" means the home state, as determined pursuant to item (A) of this definition, of the group.

Nothing in this definition shall be construed to alter the terms of the surplus line insurance contract.

"Master policy" means a surplus line insurance contract with a single set of general contractual terms that are designed to apply on a group basis to multiple insureds who may or may not be affiliated and who may be added to or removed from the contract throughout the course of the contract period. A master policy may include certain provisions that vary for each insured depending on the insured's characteristics and the coverage sought.

"Multi-State risk" means a risk with insured exposures in more than one State.

"NAIC" means the National Association of Insurance Commissioners or any successor entity.

"Personal lines insurance" means insurance as defined in subsection (a), (b), or (c) of Section 143.13 of this Code.

"Premium" means any amount designated as premium on the declarations page or elsewhere in a policy and on any endorsement, but does not include taxes, the Surplus Line Association of Illinois recording fee, or any other fee.

"Program business" means a clearly defined group of insurance contracts procured by a licensed surplus line producer from an unauthorized insurer, under a single agreement between the producer and insurer, for insureds with the same or similar characteristics and containing the same or similar contract terms.

"Qualified risk manager" means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:

(A) The person is an employee of, or third-party consultant retained by, the commercial policyholder.

(B) The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance.

(C) With regard to the person:

(I) the person has:

(a) a bachelor's degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the Director or his designee to demonstrate minimum competence in risk management; and

(b) the following:

(i) three years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or

(ii) alternatively has:

(AA) a designation as a Chartered Property and Casualty Underwriter (in this subparagraph (ii) referred to as "CPCU") issued by the American Institute for CPCU/Insurance Institute of America;

(BB) a designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America;

(CC) a designation as Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education & Research;

(DD) a designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; or

(EE) any other designation, certification, or license determined by the Director or his designee to demonstrate minimum competency in risk management;

(II) the person has:

(a) at least 7 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; and

(b) has any one of the designations specified in subparagraph (ii) of paragraph (b);

(III) the person has at least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or

(IV) the person has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the Director or his or her designee to demonstrate minimum competence in risk management.

"Residual market mechanism" means an association, organization, or other entity described in Article XXXIII of this Code or Section 7-501 of the Illinois Vehicle Code or any similar association, organization, or other entity.

"State" means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa.

"Surplus line insurance" means insurance on a risk:

(A) of the kinds specified in Classes 2 and 3 of Section 4 of this Code; and

(B) that is procured from an unauthorized insurer after the insurance producer representing the insured or the surplus line producer is unable, after diligent effort, to procure the insurance from authorized insurers; and

(C) where Illinois is the home state of the insured, for policies effective, renewed or extended on July 21, 2011 or later and for multiyear policies upon the policy anniversary that falls on or after July 21, 2011; and

(D) that is located in Illinois, for policies effective prior to July 21, 2011.

"Taxable premium" means a premium for any risk that is located in or attributed to any state.

"Unauthorized insurer" means an insurer that does not hold a valid certificate of authority issued by the Director but, for the purposes of this Section, shall also include a domestic surplus line insurer as defined in Section 445a.

(1.5) Procuring surplus line insurance; surplus line insurer requirements.

(a) License required. Insurance producers may procure surplus line insurance only if licensed as a surplus line producer under this Section.

(b) Domestic and foreign insurer eligibility. Licensed surplus line producers may procure surplus line insurance from an unauthorized insurer domiciled in any state only if the insurer:

(i) is permitted in its domiciliary jurisdiction to write the type of insurance involved; and

(ii) has, based upon information available to the surplus line producer, a policyholders surplus of not less than $15,000,000 determined in accordance with the laws of its domiciliary jurisdiction; and

(iii) has standards of solvency and management that are adequate for the protection of policyholders.

Where an unauthorized insurer does not meet the standards set forth in (ii) and (iii) above, a surplus line producer may, if necessary, procure insurance from that insurer only if prior written warning of such fact or condition is given to the insured by the insurance producer or surplus line producer.

(c) Non-domestic Alien insurer eligibility. Licensed surplus line producers may procure surplus line insurance from an unauthorized insurer not domiciled in any state only if the insurer meets the standards for unauthorized insurers domiciled in any state in paragraph (b) of this subsection (1.5) or is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC at the time of procurement. The Director shall make the Quarterly Listing of Alien Insurers available to surplus line producers without charge.

(d) Prohibited transactions. Insurance producers shall not procure from an unauthorized insurer an insurance policy:

(i) that is designed to satisfy the proof of financial responsibility and insurance requirements in any Illinois law where the law requires that the proof of insurance is issued by an authorized insurer or residual market mechanism;

(ii) that covers the risk of accidental injury to employees arising out of and in the course of employment according to the provisions of the Workers' Compensation Act; or

(iii) that insures any Illinois personal lines risk that is eligible for residual market mechanism coverage, unless the insured or prospective insured requests limits of liability greater than the limits provided by the residual market mechanism. In the course of making a diligent effort to procure insurance from authorized insurers, an insurance producer shall not be required to submit a risk to a residual market mechanism when the risk is not eligible for coverage or exceeds the limits available in the residual market mechanism.

Where there is an insurance policy issued by an authorized insurer or residual market mechanism insuring a risk described in item (i), (ii), or (iii) above, nothing in this paragraph shall be construed to prohibit a surplus line producer from procuring from an unauthorized insurer a policy insuring the risk on an excess or umbrella basis where the excess or umbrella policy is written over one or more underlying policies.

(e) Exempt commercial purchaser diligent effort. Licensed surplus line producers may procure surplus line insurance from an unauthorized insurer for an exempt commercial purchaser without making the required diligent effort to procure the insurance from authorized insurers if:

(i) the producer has disclosed to the exempt commercial purchaser that such insurance may or may not be available from authorized insurers that may provide greater protection with more regulatory oversight; and

(ii) the exempt commercial purchaser has subsequently in writing requested the producer to procure such insurance from an unauthorized insurer.

(f) Commercial wholesale transaction diligent effort. A licensed surplus line producer may procure a surplus line insurance contract, other than a personal lines insurance contract, from an unauthorized insurer without making the required diligent effort to procure the insurance from authorized insurers if the risk was referred to the surplus line producer by an Illinois-licensed insurance producer who is not affiliated with the surplus line producer.

(g) Master policy diligent effort. For a master policy insurance contract, a licensed surplus line producer may make the required diligent effort to procure the insurance from authorized insurers annually for the master policy rather than individually for each insured that is added during the policy period. The diligent effort shall include all variable provisions of the master policy.

(h) Program business diligent effort. For program business, a licensed surplus line producer may make the required diligent effort to procure the insurance from authorized insurers annually for the program rather than individually for each contract. The diligent effort shall include all variable provisions of the master policy.

(2) Surplus line producer; license. Any licensed producer who is a resident of this State, or any nonresident who qualifies under Section 500-40, may be licensed as a surplus line producer upon payment of an annual license fee of $400.

A surplus line producer so licensed shall keep a separate account of the business transacted thereunder for 7 years from the policy effective date which shall be open at all times to the inspection of the Director or his representative.

No later than July 21, 2012, the State of Illinois shall participate in the national insurance producer database of the NAIC, or any other equivalent uniform national database, for the licensure of surplus line producers and the renewal of such licenses.

(3) Taxes and reports.

(a) Surplus line tax and penalty for late payment. The surplus line tax rate for a surplus line insurance policy or contract is determined as follows:

(i) 3% for policies or contracts with an effective date prior to July 1, 2003;

(ii) 3.5% for policies or contracts with an effective date of July 1, 2003 or later.

A surplus line producer shall file with the Director on or before February 1 and August 1 of each year a report in the form prescribed by the Director on all surplus line insurance procured from unauthorized insurers and submitted to the Surplus Line Association of Illinois during the preceding 6 month period ending December 31 or June 30 respectively, and on the filing of such report shall pay to the Director for the use and benefit of the State a sum equal to the surplus line tax rate multiplied by the gross taxable premiums less returned taxable premiums upon all surplus line insurance submitted to the Surplus Line Association of Illinois during the preceding 6 months.

Any surplus line producer who fails to pay the full amount due under this subsection is liable, in addition to the amount due, for such late fee, penalty, and interest charges as are provided for under Section 412 of this Code. The Director, through the Attorney General, may institute an action in the name of the People of the State of Illinois, in any court of competent jurisdiction, for the recovery of the amount of such taxes, late fees, interest, and penalties due, and prosecute the same to final judgment, and take such steps as are necessary to collect the same.

(b) Fire Marshal Tax. Each surplus line producer shall file with the Director on or before February 1 of each year a report in the form prescribed by the Director on all fire insurance procured from unauthorized insurers and submitted to the Surplus Line Association of Illinois during the previous year that is subject to tax under Section 12 of the Fire Investigation Act and shall pay to the Director the fire marshal tax required thereunder.

(c) Taxes and fees charged to insured. The taxes imposed under this subsection and the recording fees charged by the Surplus Line Association of Illinois may be charged to and collected from surplus line insureds.

(4) (Blank).

(5) Submission of documents to Surplus Line Association of Illinois. A surplus line producer shall submit every insurance contract and premium-bearing endorsement issued under his or her license to the Surplus Line Association of Illinois for recording. The submission and recording may be effected through electronic means. The submission shall set forth:

(a) the name of the insured;

(b) the description and location of the insured property or risk;

(c) (blank);

(d) the gross premiums charged or returned;

(e) the name of the unauthorized insurer from whom coverage has been procured;

(f) the kind or kinds of insurance procured; and

(g) amount of premium subject to tax required by Section 12 of the Fire Investigation Act.

Proposals, endorsements, and other documents which are incidental to the insurance but which do not affect the premium charged are exempted from the submission and recording requirements.

The submission of insuring contracts to the Surplus Line Association of Illinois constitutes a certification by the surplus line producer or by the insurance producer who presented the risk to the surplus line producer for placement as a surplus line risk that after diligent effort, where required, the required insurance could not be procured from authorized insurers and that such procurement was otherwise in accordance with the surplus line law.

(6) Evidence of recording required. It shall be unlawful for an insurance producer to deliver any unauthorized insurer contract or premium-bearing endorsement unless it contains evidence of recording by the Surplus Line Association of Illinois.

(7) Inspection of records. A surplus line producer shall maintain separate records of the business transacted under his or her license for 7 years from the policy effective date, including complete copies of surplus line insurance contracts maintained on paper or by electronic means, which records shall be open at all times for inspection by the Director and by the Surplus Line Association of Illinois.

(8) Violations and penalties. The Director may suspend or revoke or refuse to renew a surplus line producer license for any violation of this Code. In addition to or in lieu of suspension or revocation, the Director may subject a surplus line producer to a civil penalty of up to $2,000 for each cause for suspension or revocation. Such penalty is enforceable under subsection (5) of Section 403A of this Code.

Whenever it appears to the satisfaction of the Director that a surplus line producer has made a documented good faith determination of the home state for a surplus line insurance contract and has paid the surplus line taxes to a state other than Illinois, and the Director determines that the producer's good faith determination was incorrect and the home state is Illinois, the surplus line producer may, at the discretion of the Director, be required to submit the contract to the Surplus Line Association of Illinois and pay applicable taxes and recording fees, but there shall be no penalty, interest, or late fee assessed.

(9) Director may declare insurer ineligible. If the Director determines that the further assumption of risks might be hazardous to the policyholders of an unauthorized insurer, the Director may order the Surplus Line Association of Illinois not to accept and record insurance contracts evidencing insurance in such insurer and order surplus line producers to cease procuring insurance from such insurer.

(10) Service of process upon Director. Insurance contracts delivered under this Section from unauthorized insurers, other than domestic surplus line insurers as defined in Section 445a, shall contain a provision designating the Director and his successors in office the true and lawful attorney of the insurer upon whom may be served all lawful process in any action, suit or proceeding arising out of such insurance. Service of process made upon the Director to be valid hereunder must state the name of the insured, the name of the unauthorized insurer and identify the contract of insurance. The Director at his option is authorized to forward a copy of the process to the Surplus Line Association of Illinois for delivery to the unauthorized insurer or the Director may deliver the process to the unauthorized insurer by other means which he considers to be reasonably prompt and certain.

(10.5) Required notice to policyholder. Insurance contracts delivered under this Section from unauthorized insurers, other than domestic surplus line insurers as defined in Section 445a, shall have stamped or imprinted on the first page thereof in not less than 12-pt. bold face type the following legend: "Notice to Policyholder: This contract is issued, pursuant to Section 445 of the Illinois Insurance Code, by a company not authorized and licensed to transact business in Illinois and as such is not covered by the Illinois Insurance Guaranty Fund." Insurance contracts delivered under this Section from domestic surplus line insurers as defined in Section 445a shall have stamped or imprinted on the first page thereof in not less than 12-pt. bold face type the following legend: "Notice to Policyholder: This contract is issued by a domestic surplus line insurer, as defined in Section 445a of the Illinois Insurance Code, pursuant to Section 445, and as such is not covered by the Illinois Insurance Guaranty Fund."

(11) Marine, aviation, and transportation. The Illinois Surplus Line law does not apply to insurance of property and operations of railroads or aircraft engaged in interstate or foreign commerce, insurance of vessels, crafts or hulls, cargoes, marine builder's risks, marine protection and indemnity, or other risks including strikes and war risks insured under ocean or wet marine forms of policies.

(12) Applicability of Illinois Insurance Code. Surplus line insurance procured under this Section, including insurance procured from a domestic surplus line insurer, is not subject to the provisions of the Illinois Insurance Code other than Sections 123, 123.1, 401, 401.1, 402, 403, 403A, 408, 412, 445, 445a, 445.1, 445.2, 445.3, 445.4, and all of the provisions of Article XXXI to the extent that the provisions of Article XXXI are not inconsistent with the terms of this Act.

(Source: P.A. 102-224, eff. 1-1-22.)

(215 ILCS 5/448) (from Ch. 73, par. 1060)

Sec. 448. Certain powers reserved to General Assembly.

The General Assembly shall at all times have power to prescribe such regulations, provisions, and limitations as it may deem advisable, which regulations, provisions, and limitations shall be binding upon any and all companies, domestic, foreign or non-domestic alien, subject to the provisions of this Code, and the General Assembly shall have power to amend, repeal, or modify this Code at pleasure.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/451) (from Ch. 73, par. 1063)

Sec. 451. Companies not subject to Code. This Code shall not apply to companies now or hereafter organized or transacting business under the Title Insurance Act, or Act amendatory thereof, supplementary thereto, or in replacement thereof; nor to corporations now or hereafter organized and transacting business under "An Act to provide for the incorporation and regulation of nonprofit hospital service corporations" approved July 6, 1935, or Act amendatory thereof or supplementary thereto; nor shall any part of this Code other than Articles X, XI, XIII, and XXIV apply to companies now or hereafter organized or transacting business under an Act entitled, "An Act relating to local mutual district, county and township insurance companies," approved March 13, 1936, or Act amendatory thereof or supplementary thereto. No domestic company shall be organized under this Code, nor shall any foreign or non-domestic alien company receive a certificate of authority under this Code, to transact the business of title insurance. The changes made to this Section by Public Act 96-334 are a statement and clarification of existing law.

(Source: P.A. 96-334, eff. 1-1-10; 96-1000, eff. 7-2-10.)

(215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)

Sec. 531.09. Assessments.

(1) For the purpose of providing the funds necessary to carry out the powers and duties of the Association, the board of directors shall assess the member insurers, separately for each account, at such times and for such amounts as the board finds necessary. Assessments shall be due not less than 30 days after written notice to the member insurers and shall accrue interest from the due date at such adjusted rate as is established under Section 6621 of Chapter 26 of the United States Code and such interest shall be compounded daily.

(2) There shall be 2 classes of assessments, as follows:

(a) Class A assessments shall be made for the purpose of meeting administrative costs and other general expenses and examinations conducted under the authority of the Director under subsection (5) of Section 531.12.

(b) Class B assessments shall be made to the extent necessary to carry out the powers and duties of the Association under Section 531.08 with regard to an impaired or insolvent domestic insurer or insolvent foreign or non-domestic alien insurers.

(3)(a) The amount of any Class A assessment shall be determined at the discretion of the board of directors and such assessments shall be authorized and called on a non-pro rata basis. The amount of any Class B assessment, except for assessments related to long-term care insurance, shall be allocated for assessment purposes among the accounts and subaccounts pursuant to an allocation formula which may be based on the premiums or reserves of the impaired or insolvent insurer or any other standard deemed by the board in its sole discretion as being fair and reasonable under the circumstances.

(b) Class B assessments against member insurers for each account and subaccount shall be in the proportion that the premiums received on business in this State by each assessed member insurer on policies or contracts covered by each account or subaccount for the three most recent calendar years for which information is available preceding the year in which the member insurer became impaired or insolvent, as the case may be, bears to such premiums received on business in this State for such calendar years by all assessed member insurers.

(b-5) The amount of the Class B assessment for long-term care insurance written by the impaired or insolvent insurer shall be allocated according to a methodology included in the plan of operation and approved by the Director. The methodology shall provide for 50% of the assessment to be allocated to accident and health member insurers and 50% to be allocated to life and annuity member insurers.

(c) Assessments for funds to meet the requirements of the Association with respect to an impaired or insolvent insurer shall not be made until necessary to implement the purposes of this Article. Classification of assessments under subsection (2) and computations of assessments under this subsection shall be made with a reasonable degree of accuracy, recognizing that exact determinations may not always be possible.

(4) The Association may abate or defer, in whole or in part, the assessment of a member insurer if, in the opinion of the board, payment of the assessment would endanger the ability of the member insurer to fulfill its contractual obligations. In the event an assessment against a member insurer is abated or deferred in whole or in part the amount by which the assessment is abated or deferred may be assessed against the other member insurers in a manner consistent with the basis for assessments set forth in this Section. Once the conditions that caused a deferral have been removed or rectified, the member insurer shall pay all assessments that were deferred pursuant to a repayment plan approved by the Association.

(5) (a) Subject to the provisions of this paragraph, the total of all assessments authorized by the Association with respect to a member insurer for each subaccount of the life insurance and annuity account and for the health account shall not in one calendar year exceed 2% of that member insurer's average annual premiums received in this State on the policies and contracts covered by the subaccount or account during the 3 calendar years preceding the year in which the member insurer became an impaired or insolvent insurer.

If 2 or more assessments are authorized in one calendar year with respect to member insurers that become impaired or insolvent in different calendar years, the average annual premiums for purposes of the aggregate assessment percentage limitation referenced in subparagraph (a) of this paragraph shall be equal and limited to the higher of the 3-year average annual premiums for the applicable subaccount or account as calculated pursuant to this Section.

If the maximum assessment, together with the other assets of the Association in an account, does not provide in one year in either account an amount sufficient to carry out the responsibilities of the Association, the necessary additional funds shall be assessed as soon thereafter as permitted by this Article.

(b) The board may provide in the plan of operation a method of allocating funds among claims, whether relating to one or more impaired or insolvent insurers, when the maximum assessment will be insufficient to cover anticipated claims.

(c) If the maximum assessment for a subaccount of the life insurance and annuity account in one year does not provide an amount sufficient to carry out the responsibilities of the Association, then pursuant to paragraph (b) of subsection (3), the board shall assess the other subaccounts of the life insurance and annuity account for the necessary additional amount, subject to the maximum stated in paragraph (a) of this subsection.

(6) The board may, by an equitable method as established in the plan of operation, refund to member insurers, in proportion to the contribution of each member insurer to that account, the amount by which the assets of the account exceed the amount the board finds is necessary to carry out during the coming year the obligations of the Association with regard to that account, including assets accruing from net realized gains and income from investments. A reasonable amount may be retained in any account to provide funds for the continuing expenses of the Association and for future losses.

(7) An assessment is deemed to occur on the date upon which the board votes such assessment. The board may defer calling the payment of the assessment or may call for payment in one or more installments.

(8) It is proper for any member insurer, in determining its premium rates and policy owner dividends as to any kind of insurance or health maintenance organization business within the scope of this Article, to consider the amount reasonably necessary to meet its assessment obligations under this Article.

(9) The Association must issue to each member insurer paying a Class B assessment under this Article a certificate of contribution, in a form acceptable to the Director, for the amount of the assessment so paid. All outstanding certificates are of equal dignity and priority without reference to amounts or dates of issue. A certificate of contribution may be shown by the member insurer in its financial statement as an asset in such form and for such amount, if any, and period of time as the Director may approve, provided the member insurer shall in any event at its option have the right to show a certificate of contribution as an admitted asset at percentages of the original face amount for calendar years as follows:

100% for the calendar year after the year of issuance;

80% for the second calendar year after the year of issuance;

60% for the third calendar year after the year of issuance;

40% for the fourth calendar year after the year of issuance;

20% for the fifth calendar year after the year of issuance.

(10) The Association may request information of member insurers in order to aid in the exercise of its power under this Section and member insurers shall promptly comply with a request.

(Source: P.A. 100-687, eff. 8-3-18.)

(215 ILCS 5/531.11) (from Ch. 73, par. 1065.80-11)

Sec. 531.11. Duties and powers of the Director. In addition to the duties and powers enumerated elsewhere in this Article:

(1) The Director must do all of the following:

(a) Upon request of the board of directors, provide the Association with a statement of the premiums in the appropriate accounts for each member insurer.

(b) Notify the board of directors of the existence of an impaired or insolvent insurer not later than 3 days after a determination of impairment or insolvency is made or when the Director receives notice of impairment or insolvency.

(c) Give notice to an impaired insurer as required by Sections 34 or 60. Notice to the impaired insurer shall constitute notice to its shareholders, if any.

(d) In any liquidation or rehabilitation proceeding involving a domestic member insurer, be appointed as the liquidator or rehabilitator. If a foreign or non-domestic alien member insurer is subject to a liquidation proceeding in its domiciliary jurisdiction or state of entry, the Director shall be appointed conservator.

(2) The Director may suspend or revoke, after notice and hearing, the certificate of authority to transact business in this State of any member insurer which fails to pay an assessment when due or fails to comply with the plan of operation. As an alternative the Director may levy a forfeiture on any member insurer which fails to pay an assessment when due. Such forfeiture may not exceed 5% of the unpaid assessment per month, but no forfeiture may be less than $100 per month.

(3) Any action of the board of directors or the Association may be appealed to the Director by any member insurer or any other person adversely affected by such action if such appeal is taken within 30 days of the action being appealed. Any final action or order of the Director is subject to judicial review in a court of competent jurisdiction.

(4) The liquidator, rehabilitator, or conservator of any impaired insurer may notify all interested persons of the effect of this Article.

(Source: P.A. 100-687, eff. 8-3-18.)

(215 ILCS 5/534.5) (from Ch. 73, par. 1065.84-5)

Sec. 534.5. Member company. "Member Company" means any insurance company organized as a stock company, mutual company, reciprocal or Lloyds, which holds a certificate of authority to transact any kind of insurance in this State to which this Article applies, and which is either:

(a) a domestic insurance company formed before or after the effective date of this Article; or

(b) a foreign or non-domestic alien insurance company.

An insurance company shall cease to be a member company effective on the day following the termination or expiration of its license to transact the kinds of insurance to which this Article applies; provided, however, that the insurance company shall remain liable as a member company for any and all obligations, including obligations for assessments levied before the termination or expiration of the insurance company's license and assessments levied after the termination or expiration, based on any insolvency as to which the determination of insolvency by a court of competent jurisdiction occurs before the termination or expiration of the insurance company's license.

(Source: P.A. 89-97, eff. 7-7-95.)

(215 ILCS 5/543.1) (from Ch. 73, par. 1065.93-1)

Sec. 543.1. The Director shall serve a copy of the complaint seeking an Order of Liquidation with a finding of insolvency against a domestic member company on the Fund at the same time that such complaint is filed with the circuit court or shall forward to the Fund notice of the filing of such a complaint against a foreign or non-domestic alien member company promptly upon receipt thereof. The Director also shall serve on the Fund a copy of an Order of Liquidation with a finding of insolvency against a domestic member company immediately after it is entered by the circuit court or shall forward to the Fund a copy of such order against a foreign or non-domestic alien member company promptly upon receipt thereof.

(Source: P.A. 85-576.)

(215 ILCS 5/1103) (from Ch. 73, par. 1065.803)

Sec. 1103. Name. The corporate name of any trust organized under this Article shall not be the same as or deceptively similar to the name of any domestic insurance company or of any foreign or non-domestic alien insurance company authorized to transact business in this State.

(Source: P.A. 84-1431.)

Section 95. The Reinsurance Intermediary Act is amended by changing Section 5 as follows:

(215 ILCS 100/5) (from Ch. 73, par. 1605)

Sec. 5. Definitions.

"Actuary" means a person who is a member in good standing of the American Academy of Actuaries.

"Controlling person" means any person, firm, association, or corporation that directly or indirectly has the power to direct or cause to be directed the management, control, or activities of the reinsurance intermediary.

"Director" means the Director of the Department of Insurance.

"Insurer" means any person, firm, association, or corporation duly licensed in this State under the applicable provisions of law as an insurer.

"Licensed producer" means an agent, broker, or reinsurance intermediary licensed under the applicable provision of the insurance law.

"Reinsurance intermediary" means an intermediary broker or a manager.

"Intermediary broker" means any person, other than an officer or employee of the ceding insurer, firm, association, or corporation, who solicits, negotiates, or places reinsurance cessions or retrocessions on behalf of a ceding insurer without the authority or power to bind reinsurance on behalf of the insurer.

"Intermediary manager" means any person, firm, association, or corporation that has authority to bind or manages all or part of the assumed reinsurance business of a reinsurer (including the management of a separate division, department, or underwriting office) and acts as an agent for the reinsurer. However, the following persons shall not be considered an intermediary manager, with respect to the reinsurer, for the purposes of this Act:

(1) An employee of the reinsurer.

(2) A U.S. Manager of the United States branch of a non-domestic an alien reinsurer.

(3) An underwriting manager that, under a contract, manages all the reinsurance operations of the reinsurer, is under common control with the reinsurer, subject to Article VIII 1/2 of the Illinois Insurance Code, and whose compensation is not based on the volume of premiums written.

(4) The manager of a group, association, pool, or organization of insurers that engage in joint underwriting or joint reinsurance and who are subject to examinations by the insurance regulatory authority of the state in which the manager's principal business office is located.

"Reinsurer" means any person, firm, association, or corporation duly licensed in this State under the applicable provisions of law as an insurer with the authority to assume reinsurance.

"To be in violation" means that the reinsurance intermediary, insurer, or reinsurer for whom the reinsurance intermediary was acting failed to substantially comply with the provisions of this Act.

"Qualified United States financial institution" means an institution that:

(1) is organized or (in the case of a U.S. office of a foreign banking organization) licensed under the laws of the United States or any state thereof;

(2) is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks and trust companies; and

(3) has been determined by either the Director or the Securities Valuation Office of the National Association of Insurance Commissioners to meet the standards of financial condition and standing as are considered necessary and appropriate to regulate the quality of financial institutions whose letters of credit will be acceptable to the Director.

(Source: P.A. 87-108.)

Section 100. The Comprehensive Health Insurance Plan Act is amended by changing Section 7 as follows:

(215 ILCS 105/7) (from Ch. 73, par. 1307)

Sec. 7. Eligibility.

a. Except as provided in subsection (e) of this Section or in Section 15 of this Act, any person who is either a citizen of the United States or a noncitizen an alien lawfully admitted for permanent residence and who has been for a period of at least 180 days and continues to be a resident of this State shall be eligible for Plan coverage under this Section if evidence is provided of:

(1) A notice of rejection or refusal to issue substantially similar individual health insurance coverage for health reasons by a health insurance issuer;

(2) A refusal by a health insurance issuer to issue individual health insurance coverage except at a rate exceeding the applicable Plan rate for which the person is responsible; or

(3) The absence of available health insurance coverage for a person under 19 years of age.

A rejection or refusal by a group health plan or health insurance issuer offering only stop-loss or excess of loss insurance or contracts, agreements, or other arrangements for reinsurance coverage with respect to the applicant shall not be sufficient evidence under this subsection.

b. The Board shall promulgate a list of medical or health conditions for which a person who is either a citizen of the United States or a noncitizen an alien lawfully admitted for permanent residence and a resident of this State would be eligible for Plan coverage without applying for health insurance coverage pursuant to subsection a. of this Section. Persons who can demonstrate the existence or history of any medical or health conditions on the list promulgated by the Board shall not be required to provide the evidence specified in subsection a. of this Section. The list shall be effective on the first day of the operation of the Plan and may be amended from time to time as appropriate.

c. Family members of the same household who each are covered persons are eligible for optional family coverage under the Plan.

d. For persons qualifying for coverage in accordance with Section 7 of this Act, the Board shall, if it determines that such appropriations as are made pursuant to Section 12 of this Act are insufficient to allow the Board to accept all of the eligible persons which it projects will apply for enrollment under the Plan, limit or close enrollment to ensure that the Plan is not over-subscribed and that it has sufficient resources to meet its obligations to existing enrollees. The Board shall not limit or close enrollment for federally eligible individuals.

e. A person shall not be eligible for coverage under the Plan if:

(1) He or she has or obtains other coverage under a group health plan or health insurance coverage substantially similar to or better than a Plan policy as an insured or covered dependent or would be eligible to have that coverage if he or she elected to obtain it. Persons otherwise eligible for Plan coverage may, however, solely for the purpose of having coverage for a pre-existing condition, maintain other coverage only while satisfying any pre-existing condition waiting period under a Plan policy or a subsequent replacement policy of a Plan policy.

(1.1) His or her prior coverage under a group health plan or health insurance coverage, provided or arranged by an employer of more than 10 employees was discontinued for any reason without the entire group or plan being discontinued and not replaced, provided he or she remains an employee, or dependent thereof, of the same employer.

(2) He or she is a recipient of or is approved to receive medical assistance, except that a person may continue to receive medical assistance through the medical assistance no grant program, but only while satisfying the requirements for a preexisting condition under Section 8, subsection f. of this Act. Payment of premiums pursuant to this Act shall be allocable to the person's spenddown for purposes of the medical assistance no grant program, but that person shall not be eligible for any Plan benefits while that person remains eligible for medical assistance. If the person continues to receive or be approved to receive medical assistance through the medical assistance no grant program at or after the time that requirements for a preexisting condition are satisfied, the person shall not be eligible for coverage under the Plan. In that circumstance, coverage under the Plan shall terminate as of the expiration of the preexisting condition limitation period. Under all other circumstances, coverage under the Plan shall automatically terminate as of the effective date of any medical assistance.

(3) Except as provided in Section 15, the person has previously participated in the Plan and voluntarily terminated Plan coverage, unless 12 months have elapsed since the person's latest voluntary termination of coverage.

(4) The person fails to pay the required premium under the covered person's terms of enrollment and participation, in which event the liability of the Plan shall be limited to benefits incurred under the Plan for the time period for which premiums had been paid and the covered person remained eligible for Plan coverage.

(5) The Plan has paid a total of $5,000,000 in benefits on behalf of the covered person.

(6) The person is a resident of a public institution.

(7) The person's premium is paid for or reimbursed under any government sponsored program or by any government agency or health care provider, except as an otherwise qualifying full-time employee, or dependent of such employee, of a government agency or health care provider or, except when a person's premium is paid by the U.S. Treasury Department pursuant to the federal Trade Act of 2002.

(8) The person has or later receives other benefits or funds from any settlement, judgement, or award resulting from any accident or injury, regardless of the date of the accident or injury, or any other circumstances creating a legal liability for damages due that person by a third party, whether the settlement, judgment, or award is in the form of a contract, agreement, or trust on behalf of a minor or otherwise and whether the settlement, judgment, or award is payable to the person, his or her dependent, estate, personal representative, or guardian in a lump sum or over time, so long as there continues to be benefits or assets remaining from those sources in an amount in excess of $300,000.

(9) Within the 5 years prior to the date a person's Plan application is received by the Board, the person's coverage under any health care benefit program as defined in 18 U.S.C. 24, including any public or private plan or contract under which any medical benefit, item, or service is provided, was terminated as a result of any act or practice that constitutes fraud under State or federal law or as a result of an intentional misrepresentation of material fact; or if that person knowingly and willfully obtained or attempted to obtain, or fraudulently aided or attempted to aid any other person in obtaining, any coverage or benefits under the Plan to which that person was not entitled.

f. The Board or the administrator shall require verification of residency and may require any additional information or documentation, or statements under oath, when necessary to determine residency upon initial application and for the entire term of the policy.

g. Coverage shall cease (i) on the date a person is no longer a resident of Illinois, (ii) on the date a person requests coverage to end, (iii) upon the death of the covered person, (iv) on the date State law requires cancellation of the policy, or (v) at the Plan's option, 30 days after the Plan makes any inquiry concerning a person's eligibility or place of residence to which the person does not reply.

h. Except under the conditions set forth in subsection g of this Section, the coverage of any person who ceases to meet the eligibility requirements of this Section shall be terminated at the end of the current policy period for which the necessary premiums have been paid.

(Source: P.A. 96-938, eff. 6-24-10; 97-661, eff. 1-13-12.)

Section 105. The Religious and Charitable Risk Pooling Trust Act is amended by changing Section 15 as follows:

(215 ILCS 150/15) (from Ch. 148, par. 215)

Sec. 15. Ineligible beneficiaries. A beneficiary is ineligible (1) if it is not exempt from taxation under paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code of 1954 as amended, or an affiliate of a corporation exempt from taxation under paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code, as amended, and exempt from taxation under paragraph (2) of subsection (c) of Section 501 of the Internal Revenue Code of 1954, as amended, or tax exempt as a unit of local government or as a hospital owned and operated by a unit of local government; (2) if a corporation, it is not incorporated as a not-for-profit corporation; or (3) if a foreign or non-domestic alien corporation, it no longer has a Certificate of Authority issued by the Secretary of State.

(Source: P.A. 92-99, eff. 7-20-01.)

Section 110. The Title Insurance Act is amended by changing Sections 11 and 15.1 as follows:

(215 ILCS 155/11) (from Ch. 73, par. 1411)

Sec. 11. Statutory premium reserve.

(a) A domestic title insurance company shall establish and maintain a statutory premium reserve computed in accordance with this Section. The reserve shall be reported as a liability of the title insurance company in its financial statements. The statutory premium reserve shall be maintained by the title insurance company for the protection of holders of title insurance policies. Except as provided in this Section, assets equal in value to the statutory premium reserve are not subject to distribution among creditors or stockholders of the title insurance company until all claims of policyholders or claims under reinsurance contracts have been paid in full and discharged, lawfully reinsured, or otherwise assumed by another title insurance company authorized to do business under this Act.

(b) A foreign or non-domestic alien title insurance company authorized to do business under this Act shall maintain at least the same reserves on title insurance policies issued on properties located in this State as are required of domestic title insurance companies.

(c) The statutory premium reserve shall consist of:

(1) the amount of the statutory premium reserve on January 1, 1990; and

(2) a sum equal to 12 1/2 cents for each $1,000 of net retained liability under each title insurance policy on a single risk written on properties located in this State after January 1, 1990.

(d) Amounts placed in the statutory premium reserve in any year in accordance with this Section shall be deducted in determining the net profit of the title insurance company for that year.

(e) A title insurance company shall release from the statutory premium reserve a sum equal to 10% of the amount added to the reserve during a calendar year on July 1 of each of the 5 years following the year in which the sum was added, and shall release from the statutory premium reserve a sum equal to 3 1/3% of the amount added to the reserve during that year on each succeeding July 1 until the entire amount for that year has been released. The amount of the statutory premium reserve or similar premium reserve maintained before January 1, 1990, shall be released in accordance with the law in effect before January 1, 1990.

(f) This reserve is independent of the deposit requirements of Section 4 of this Act.

(Source: P.A. 94-893, eff. 6-20-06.)

(215 ILCS 155/15.1)

Sec. 15.1. No taxes to be imposed by political subdivisions. The fees, charges, and taxes provided for by this Act shall be in lieu of all license fees or privilege or occupation taxes or other fees levied or assessed by any municipality, county, or other political subdivision of this State. No municipality, county, or other political subdivision of this State shall impose any license fee or privilege or occupation tax or fee upon any domestic, foreign, or non-domestic alien company, or upon any of its agents, for the privilege of doing insurance business therein. This Section shall not be construed to prohibit the levy and collection of State, county, or municipal taxes upon the real and personal property of the company, including the tax imposed by subsections (c) and (d) of Section 201 of the Illinois Income Tax Act. This Section 15.1 is declared to be a denial and limitation of the powers of home rule units pursuant to paragraph (g) of Section 6 of Article VII of the Illinois Constitution of 1970.

(Source: P.A. 90-317, eff. 8-1-97.)

Section 115. The Viatical Settlements Act of 2009 is amended by changing Sections 5 and 30 as follows:

(215 ILCS 159/5)

Sec. 5. Definitions.

"Accredited investor" means an accredited investor as defined in Rule 501(a) promulgated under the Securities Act of 1933 (15 U.S.C. 77 et seq.), as amended.

"Advertising" means any written, electronic, or printed communication or any communication by means of recorded telephone messages or transmitted on radio, television, the Internet, or similar communications media, including film strips, digital picture slides, motion pictures, and videos published, disseminated, circulated, or placed before the public in this State, for the purpose of creating an interest in or inducing a person to sell, assign, devise, bequest, or transfer the death benefit or ownership of a policy pursuant to a viatical settlement contract.

"Non-domestic Alien licensee" means a licensee incorporated or organized under the laws of any country other than the United States.

"Business of viatical settlements" means any activity involved in, but not limited to, the offering, soliciting, negotiating, procuring, effectuating, purchasing, investing, financing, monitoring, tracking, underwriting, selling, transferring, assigning, pledging, or hypothecating or in any other manner acquiring an interest in a life insurance policy by means of a viatical settlement contract or other agreement.

"Chronically ill" means having been certified within the preceding 12-month period by a licensed health professional as:

(1) being unable to perform, without substantial assistance from another individual and for at least 90 days due to a loss of functional capacity, at least 2 activities of daily living, including, but not limited to, eating, toileting, transferring, bathing, dressing, or continence;

(2) requiring substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment; or

(3) having a level of disability similar to that described in paragraph (1) as determined by the Secretary of Health and Human Services.

"Controlling person" means any person, firm, association, or corporation that directly or indirectly has the power to direct or cause to be directed the management, control, or activities of the viatical settlement provider.

"Director" means the Director of the Division of Insurance of the Department of Financial and Professional Regulation.

"Division" means the Division of Insurance of the Department of Financial and Professional Regulation.

"Escrow agent" means an independent third-party person who, pursuant to a written agreement signed by the viatical settlement provider and viator, provides escrow services related to the acquisition of a life insurance policy pursuant to a viatical settlement contract. "Escrow agent" does not include any person associated or affiliated with or under the control of a licensee.

"Financial institution" means a financial institution as defined by the Financial Institutions Insurance Sales Law in Article XLIV of the Illinois Insurance Code.

"Financing entity" means an underwriter, placement agent, lender, purchaser of securities, purchaser of a policy or certificate from a viatical settlement provider, credit enhancer, or an entity that has a direct ownership in a policy that is the subject of a viatical settlement contract, and to which both of the following apply:

(1) its principal activity related to the transaction is providing funds to effect the viatical settlement or purchase of one or more viaticated policies; and

(2) it has an agreement in writing with one or more licensed viatical settlement providers to finance the acquisition of viatical settlement contracts. "Financing entity" does not include an investor that is not an accredited investor.

"Financing transaction" means a transaction in which a viatical settlement provider obtains financing from a financing entity, including, without limitation, any secured or unsecured financing, securitization transaction, or securities offering that either is registered or exempt from registration under federal and State securities law.

"Foreign licensee" means any viatical settlement provider incorporated or organized under the laws of any state of the United States other than this State.

"Insurance producer" means an insurance producer as defined by Section 10 of Article XXXI of the Illinois Insurance Code.

"Licensee" means a viatical settlement provider or viatical settlement broker.

"Life expectancy provider" means a person who determines or holds himself or herself out as determining life expectancies or mortality ratings used to determine life expectancies on behalf of or in connection with any of the following:

(1) A viatical settlement provider, viatical settlement broker, or person engaged in the business of viatical settlements.

(2) A viatical investment as defined by Section 2.33 of the Illinois Securities Law of 1953 or a viatical settlement contract.

"NAIC" means the National Association of Insurance Commissioners.

"Person" means an individual or a legal entity, including, without limitation, a partnership, limited liability company, limited liability partnership, association, trust, business trust, or corporation.

"Policy" means an individual or group policy, group certificate, contract, or arrangement of insurance of the class defined by subsection (a) of Section 4 of the Illinois Insurance Code owned by a resident of this State, regardless of whether delivered or issued for delivery in this State.

"Qualified institutional buyer" means a qualified institutional buyer as defined in Rule 144 promulgated under the Securities Act of 1933, as amended.

"Related provider trust" means a titling trust or other trust established by a licensed viatical settlement provider or a financing entity for the sole purpose of holding the ownership or beneficial interest in purchased policies in connection with a financing transaction. The trust shall have a written agreement with the licensed viatical settlement provider under which the licensed viatical settlement provider is responsible for ensuring compliance with all statutory and regulatory requirements and under which the trust agrees to make all records and files related to viatical settlement transactions available to the Director as if those records and files were maintained directly by the licensed viatical settlement provider.

"Special purpose entity" means a corporation, partnership, trust, limited liability company, or other similar entity formed only to provide, directly or indirectly, access to institutional capital markets (i) for a financing entity or licensed viatical settlement provider; or (ii) in connection with a transaction in which the securities in the special purposes entity are acquired by the viator or by qualified institutional buyers or the securities pay a fixed rate of return commensurate with established asset-backed institutional capital markets.

"Stranger-originated life insurance" or "STOLI" means an act, practice, or arrangement to initiate a life insurance policy for the benefit of a third-party investor who, at the time of policy origination, has no insurable interest in the insured. STOLI practices include, but are not limited to, cases in which life insurance is purchased with resources or guarantees from or through a person or entity who, at the time of policy inception, could not lawfully initiate the policy himself or itself and where, at the time of policy inception, there is an arrangement or agreement, whether verbal or written, to directly or indirectly transfer the ownership of the policy or policy benefits to a third party. Trusts created to give the appearance of an insurable interest and used to initiate policies for investors violate insurance interest laws and the prohibition against wagering on life. STOLI arrangements do not include lawful viatical settlement contracts as permitted by this Act.

"Terminally ill" means certified by a physician as having an illness or physical condition that reasonably is expected to result in death in 24 months or less.

"Viatical settlement broker" means a licensed insurance producer who has been issued a license pursuant to paragraph (1) or (2) of subsection (a) of Section 500-35 of the Illinois Insurance Code who, working exclusively on behalf of a viator and for a fee, commission, or other valuable consideration, offers, solicits, promotes, or attempts to negotiate viatical settlement contracts between a viator and one or more viatical settlement providers or one or more viatical settlement brokers. "Viatical settlement broker" does not include an attorney, certified public accountant, or a financial planner accredited by a nationally recognized accreditation agency, who is retained to represent the viator and whose compensation is not paid directly or indirectly by the viatical settlement provider or purchaser.

"Viatical settlement contract" means any of the following:

(1) A written agreement between a viator and a viatical settlement provider establishing the terms under which compensation or anything of value is or will be paid, which compensation or value is less than the expected death benefits of the policy, in return for the viator's present or future assignment, transfer, sale, devise, or bequest of the death benefit or ownership of any portion of the insurance policy.

(2) A written agreement for a loan or other lending transaction, secured primarily by an individual life insurance policy or an individual certificate of a group life insurance policy.

(3) The transfer for compensation or value of ownership of a beneficial interest in a trust or other entity that owns such policy, if the trust or other entity was formed or availed of for the principal purpose of acquiring one or more life insurance contracts and the life insurance contract insures the life of a person residing in this State.

(4) A premium finance loan made for a life insurance policy by a lender to a viator on, before, or after the date of issuance of the policy in either of the following situations:

(A) The viator or the insured receives a guarantee of the viatical settlement value of the policy.

(B) The viator or the insured agrees to sell the policy or any portion of the policy's death benefit on any date before or after issuance of the policy.

"Viatical settlement contract" does not include any of the following acts, practices, or arrangements listed below in subparagraphs (a) through (i) of this definition of "viatical settlement contract", unless part of a plan, scheme, device, or artifice to avoid application of this Act; provided, however, that the list of excluded items contained in subparagraphs (a) through (i) is not intended to be an exhaustive list and that an act, practice, or arrangement that is not described below in subparagraphs (a) through (i) does not necessarily constitute a viatical settlement contract:

(a) A policy loan or accelerated death benefit made by the insurer pursuant to the policy's terms;

(b) Loan proceeds that are used solely to pay: (i) premiums for the policy and (ii) the costs of the loan, including, without limitation, interest, arrangement fees, utilization fees and similar fees, closing costs, legal fees and expenses, trustee fees and expenses, and third party collateral provider fees and expenses, including fees payable to letter of credit issuers;

(c) A loan made by a bank or other financial institution in which the lender takes an interest in a life insurance policy solely to secure repayment of a loan or, if there is a default on the loan and the policy is transferred, the transfer of such a policy by the lender, provided that neither the default itself nor the transfer of the policy in connection with the default is pursuant to an agreement or understanding with any other person for the purpose of evading regulation under this Act;

(d) A loan made by a lender that does not violate Article XXXIIa of the Illinois Insurance Code, provided that the premium finance loan is not described in this Act;

(e) An agreement in which all the parties (i) are closely related to the insured by blood or law or (ii) have a lawful substantial economic interest in the continued life, health, and bodily safety of the person insured, or trusts established primarily for the benefit of such parties;

(f) Any designation, consent, or agreement by an insured who is an employee of an employer in connection with the purchase by the employer, or trust established by the employer, of life insurance on the life of the employee;

(g) A bona fide business succession planning arrangement: (i) between one or more shareholders in a corporation or between a corporation and one or more of its shareholders or one or more trusts established by its shareholders; (ii) between one or more partners in a partnership or between a partnership and one or more of its partners or one or more trusts established by its partners; or (iii) between one or more members in a limited liability company or between a limited liability company and one or more of its members or one or more trusts established by its members;

(h) An agreement entered into by a service recipient, or a trust established by the service recipient, and a service provider, or a trust established by the service provider, who performs significant services for the service recipient's trade or business; or

(i) Any other contract, transaction, or arrangement exempted from the definition of viatical settlement contract by the Director based on the Director's determination that the contract, transaction, or arrangement is not of the type intended to be regulated by this Act.

"Viatical settlement investment agent" means a person who is an appointed or contracted agent of a licensed viatical settlement provider who solicits or arranges the funding for the purchase of a viatical settlement by a viatical settlement purchaser and who is acting on behalf of a viatical settlement provider. A viatical settlement investment agent is deemed to represent the viatical settlement provider of whom the viatical settlement investment agent is an appointed or contracted agent.

"Viatical settlement provider" means a person, other than a viator, who enters into or effectuates a viatical settlement contract with a viator. "Viatical settlement provider" does not include:

(1) a bank, savings bank, savings and loan association, credit union, or other financial institution that takes an assignment of a policy as collateral for a loan;

(2) a financial institution or premium finance company making premium finance loans and exempted by the Director from the licensing requirement under the premium finance laws where the institution or company takes an assignment of a life insurance policy solely as collateral for a premium finance loan;

(3) the issuer of the life insurance policy;

(4) an authorized or eligible insurer that provides stop loss coverage or financial guaranty insurance to a viatical settlement provider, purchaser, financing entity, special purpose entity, or related provider trust;

(5) An individual person who enters into or effectuates no more than one viatical settlement contract in a calendar year for the transfer of policies for any value less than the expected death benefit;

(6) a financing entity;

(7) a special purpose entity;

(8) a related provider trust;

(9) a viatical settlement purchaser; or

(10) any other person that the Director determines is consistent with the definition of viatical settlement provider.

"Viatical settlement purchaser" means a person who provides a sum of money as consideration for a life insurance policy or an interest in the death benefits of a life insurance policy, or a person who owns or acquires or is entitled to a beneficial interest in a trust that owns a viatical settlement contract or is the beneficiary of a life insurance policy, in each case where such policy has been or will be the subject of a viatical settlement contract, for the purpose of deriving an economic benefit. "Viatical settlement purchaser" does not include: (i) a licensee under this Act; (ii) an accredited investor or qualified institutional buyer; (iii) a financing entity; (iv) a special purpose entity; or (v) a related provider trust.

"Viaticated policy" means a life insurance policy that has been acquired by a viatical settlement provider pursuant to a viatical settlement contract.

"Viator" means the owner of a life insurance policy or a certificate holder under a group policy who enters or seeks to enter into a viatical settlement contract. For the purposes of this Act, a viator is not limited to an owner of a life insurance policy or a certificate holder under a group policy insuring the life of an individual with a terminal or chronic illness or condition, except where specifically addressed. "Viator" does not include:

(1) a licensee;

(2) a qualified institutional buyer;

(3) a financing entity;

(4) a special purpose entity; or

(5) a related provider trust.

(Source: P.A. 100-863, eff. 8-14-18.)

(215 ILCS 159/30)

Sec. 30. Examination or investigation.

(a) The Director may when and as often as the Director deems it reasonably necessary to protect the interests of the public, examine the business affairs of any licensee.

In scheduling and determining the nature, scope, and frequency of the examinations, the Director shall consider such matters as consumer complaints, results of financial statement analyses and ratios, changes in management or ownership, actuarial opinions, report of independent certified public accountants, and other relevant criteria as determined by the Director.

(b) For purposes of completing an examination of a licensee under this Act, the Director may examine or investigate any person, or the business of any person, in so far as the examination or investigation is, in the sole discretion of the Director, necessary or material to the examination.

(c) In lieu of an examination under this Act of any foreign licensee or non-domestic alien licensee licensed in this State, the Director may, at the Director's discretion, accept an examination report on the licensee as prepared by the chief insurance regulatory official for the licensee's state of domicile or port-of-entry state.

(d) As far as practical, the examination of a foreign licensee or non-domestic alien licensee shall be made in cooperation with the insurance supervisory officials of other states in which the licensee transacts business.

(e) Licensees shall for 5 years retain copies of:

(1) all proposed, offered, or executed contracts, purchase agreements, underwriting documents, policy forms, and applications from the date of the proposal, offer, or execution of the contract or purchase agreement, whichever is later;

(2) all checks, drafts, or other evidence and documentation related to the payment, transfer, deposit, or release of funds from the date of the transaction;

(3) all other records and documents in any format related to the requirements of this Act, including a record of complaints received against the licensee and agents representing the licensee and a list of all life expectancy providers that have provider services to the licensee.

This subsection (e) does not relieve a person of the obligation to produce records required by this subsection to the Director after the retention period has expired if the person has retained the documents.

Records required to be retained by this subsection (e) must be legible and complete and may be retained in paper, photograph, microprocessor, magnetic, mechanical, or electronic media, or by any process that accurately reproduces or forms a durable medium for the reproduction of a record.

(f) Upon determining that an examination should be conducted, the Director shall appoint one or more examiners to perform the examination and instruct them as to the scope of the examination. The Director may employ any guidelines or procedures for purposes of this subsection (f) that the Director deems appropriate.

Every licensee or person, including all officers, partners, members, directors, employees, controlling persons, and agents of any licensee or person, from whom information is sought shall provide to the examiners timely, convenient, and free access at all reasonable hours at the licensee's or person's offices to all books, records, accounts, papers, documents, assets, and computer or other recordings relating to the property, assets, business, and affairs of the licensee being examined. The officers, directors, employees, and agents of the licensee or person shall facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of a licensee by its officers, directors, employees, or agents to submit to examination or to comply with any reasonable written request of the Director shall be grounds for revocation, denial of issuance, or non-renewal of any license or authority held by the licensee to engage in the viatical settlement business or other business subject to the Director's jurisdiction.

The Director shall have the power to issue subpoenas, to administer oaths, and to examine under oath any person as to any matter pertinent to the examination. Upon the failure or refusal of a person to obey a subpoena, the Director may petition a court of competent jurisdiction, and upon proper showing, the court may enter an order compelling the witness to appear and testify or produce documentary evidence. Failure to obey the court order shall be punishable as contempt of court. Subpoenas may be enforced pursuant to Section 403 of the Illinois Insurance Code.

When making an examination under this Act, the Director may retain attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the reasonable cost of which shall be borne by the licensee that is the subject of the examination.

(g) Nothing contained in this Act limits the Director's authority to terminate or suspend an examination in order to pursue other legal or regulatory action pursuant to the insurance laws of this State. Findings of fact and conclusions made pursuant to any examination shall be prima facie evidence in any legal or regulatory action.

(h) Nothing contained in this Act shall be construed to limit the Director's authority to use and, if appropriate, to make public any final or preliminary examination report, any examiner or licensee workpapers or other documents, or any other information discovered or developed during the course of any examination in the furtherance of any legal or regulatory action that the Director may, in the Director's discretion, deem appropriate.

(i) No later than 60 days following completion of the examination, the examiner in charge shall file with the Director a verified written report of examination under oath. Upon receipt of the verified report, the Director shall transmit the report to the licensee examined.

(j) Examination reports shall be comprised only of facts appearing upon the books, records, or other documents of the licensee, its agents, or other persons examined, or as ascertained from the testimony of its officers or agents or other persons examined concerning its affairs and the conclusions and recommendations that the examiners find reasonably warranted from the facts.

(k) The licensee may request a hearing within 10 days after receipt of the examination report by giving the Director written notice of that request, together with a statement of its objections. The Director then must conduct a hearing in conjunction with Sections 402 and 403 of the Illinois Insurance Code. The Director must issue a written order based upon the examination report and upon the hearing within 90 days after the report is filed or within 90 days after the hearing. After the hearing, the Director may make such order or orders as may be reasonably necessary to correct, eliminate, or remedy unlawful conduct.

(l) If the Director determines that regulatory action is appropriate as a result of an examination, the Director may initiate any proceedings or actions provided by law.

(m) Names and individual identification data for all viators in the possession and control of the Director shall be considered private and confidential and shall not be disclosed by the Director unless required by law.

Except as otherwise provided in this Act, all examination reports, working papers, recorded information, documents, and copies thereof produced by, obtained by or disclosed to the Director or any other person in the course of an examination made under this Act or the law of another state or jurisdiction that is substantially similar to this Act, or in the course of analysis or investigation by the Director of the financial condition or market conduct of a licensee are (i) confidential by law and privileged, (ii) not subject to the Freedom of Information Act, (iii) not subject to subpoena, and (iv) not subject to discovery or admissible in evidence in any private civil action.

The Director is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as part of the Director's official duties.

Documents, materials, or other information, including, but not limited to, all working papers and copies thereof, in the possession or control of the NAIC and its affiliates and subsidiaries are:

(1) confidential by law and privileged;

(2) not subject to subpoena; and

(3) not subject to discovery or admissible in evidence in any private civil action if they are:

(A) created, produced or obtained by, or disclosed to the NAIC and its affiliates and subsidiaries in the course of assisting an examination made under this Act or assisting the Director or the chief insurance regulatory official in another state in the analysis or investigation of the financial condition or market conduct of a licensee; or

(B) disclosed under this subsection (m) by the Director or disclosed under a comparable provision in law of another state by that state's chief insurance regulatory official to the NAIC and its affiliates and subsidiaries.

Neither the Director nor any person that received the documents, material, or other information while acting under the authority of the Director, including the NAIC and its affiliates and subsidiaries, shall be permitted to testify in any private civil action concerning any confidential documents, materials, or information subject to this subsection (m).

(n) In order to assist in the performance of the Director's duties, the Director may:

(1) share documents, materials, or other information, including the confidential and privileged documents, materials, or information subject to subsection (m) of this Section, with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, and with state, federal, and international law enforcement authorities, provided that the recipient agrees to maintain the confidentiality and privileged status of the document, material, communication, or other information;

(2) receive documents, materials, communications, or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates and subsidiaries and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential or privileged any document, material, or information received with notice or the understanding that it is confidential or privileged under the laws of the jurisdiction that is the source of the document, material, or information; and

(3) enter into agreements governing sharing and use of information consistent with this Section.

(o) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, or information shall occur as a result of disclosure to the Director under this Section or as a result of sharing as authorized in subsection (n) of this Section.

(p) A privilege established under the law of any state or jurisdiction that is substantially similar to the privilege established under this Section shall be available and enforced in any proceeding in, and in any court of, this State.

(q) Nothing contained in this Act prevents or prohibits the Director from disclosing the content of an examination report, preliminary examination report or results, or any matter relating to those reports or results, to the chief insurance regulatory official of any other state or country, or to law enforcement officials of this or any other state or agency of the federal government at any time or to the NAIC, if the agency or office receiving the report or matters relating to it agrees in writing to hold it confidential and in a manner consistent with this Act.

(r) The expenses incurred in conducting an examination shall be paid by the licensee.

(s) No cause of action shall arise nor shall any liability be imposed against the Director, the Director's authorized representatives, or any examiner appointed by the Director for any statements made or conduct performed in good faith while carrying out the provisions of this Act.

No cause of action shall arise, nor shall any liability be imposed against any person for the act of communicating or delivering information or data to the Director or the Director's authorized representative or examiner pursuant to an examination made under this Section, if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive. This subsection (s) does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in this subsection (s).

A person identified in this subsection (s) shall be entitled to an award of attorney's fees and costs if he or she is the prevailing party in a civil cause of action for libel, slander, or any other relevant tort arising out of activities in carrying out the provisions of this Section and the party bringing the action was not substantially justified in doing so. For purposes of this Section, a proceeding is "substantially justified" if it had a reasonable basis in law or fact at the time that it was initiated.

(t) The Director may investigate suspected viatical settlement fraud and persons engaged in the business of viatical settlements.

(Source: P.A. 96-736, eff. 7-1-10.)

Section 120. The Hearing Instrument Consumer Protection Act is amended by changing Section 8 as follows:

(225 ILCS 50/8) (from Ch. 111, par. 7408)

(Section scheduled to be repealed on January 1, 2026)

Sec. 8. Applicant qualifications; examination.

(a) In order to protect persons who are deaf or hard of hearing, the Department shall authorize or shall conduct an appropriate examination, which may be the International Hearing Society's licensure examination, for persons who dispense, test, select, recommend, fit, or service hearing instruments. The frequency of holding these examinations shall be determined by the Department by rule. Those who successfully pass such an examination shall be issued a license as a hearing instrument dispenser, which shall be effective for a 2-year period.

(b) Applicants shall be:

(1) at least 18 years of age;

(2) of good moral character;

(3) the holder of an associate's degree or the equivalent;

(4) free of contagious or infectious disease; and

(5) a citizen or person who has the status as a legal noncitizen alien.

Felony convictions of the applicant and findings against the applicant involving matters set forth in Sections 17 and 18 shall be considered in determining moral character, but such a conviction or finding shall not make an applicant ineligible to register for examination.

(c) Prior to engaging in the practice of fitting, dispensing, or servicing hearing instruments, an applicant shall demonstrate, by means of written and practical examinations, that such person is qualified to practice the testing, selecting, recommending, fitting, selling, or servicing of hearing instruments as defined in this Act. An applicant must obtain a license within 12 months after passing either the written or practical examination, whichever is passed first, or must take and pass those examinations again in order to be eligible to receive a license.

The Department shall, by rule, determine the conditions under which an individual is examined.

(d) Proof of having met the minimum requirements of continuing education as determined by the Board shall be required of all license renewals. Pursuant to rule, the continuing education requirements may, upon petition to the Board, be waived in whole or in part if the hearing instrument dispenser can demonstrate that he or she served in the Coast Guard or Armed Forces, had an extreme hardship, or obtained his or her license by examination or endorsement within the preceding renewal period.

(e) Persons applying for an initial license must demonstrate having earned, at a minimum, an associate degree or its equivalent from an accredited institution of higher education that is recognized by the U.S. Department of Education or that meets the U.S. Department of Education equivalency as determined through a National Association of Credential Evaluation Services (NACES) member, and meet the other requirements of this Section. In addition, the applicant must demonstrate the successful completion of (1) 12 semester hours or 18 quarter hours of academic undergraduate course work in an accredited institution consisting of 3 semester hours of anatomy and physiology of the hearing mechanism, 3 semester hours of hearing science, 3 semester hours of introduction to audiology, and 3 semester hours of aural rehabilitation, or the quarter hour equivalent or (2) an equivalent program as determined by the Department that is consistent with the scope of practice of a hearing instrument dispenser as defined in Section 3 of this Act. Persons licensed before January 1, 2003 who have a valid license on that date may have their license renewed without meeting the requirements of this subsection.

(Source: P.A. 98-827, eff. 1-1-15; 99-204, eff. 7-30-15; 99-847, eff. 8-19-16.)

Section 125. The Appraisal Management Company Registration Act is amended by changing Section 10 as follows:

(225 ILCS 459/10)

Sec. 10. Definitions. In this Act:

"Address of record" means the principal address recorded by the Department in the applicant's or registrant's application file or registration file maintained by the Department's registration maintenance unit.

"Applicant" means a person or entity who applies to the Department for a registration under this Act.

"Appraisal" means (noun) the act or process of developing an opinion of value; an opinion of value (adjective) of or pertaining to appraising and related functions.

"Appraisal firm" means an appraisal entity that is 100% owned and controlled by a person or persons licensed in Illinois as a certified general real estate appraiser or a certified residential real estate appraiser. An appraisal firm does not include an appraisal management company.

"Appraisal management company" means any corporation, limited liability company, partnership, sole proprietorship, subsidiary, unit, or other business entity that directly or indirectly: (1) provides appraisal management services to creditors or secondary mortgage market participants, including affiliates; (2) provides appraisal management services in connection with valuing the consumer's principal dwelling as security for a consumer credit transaction (including consumer credit transactions incorporated into securitizations); and (3) any appraisal management company that, within a given 12-month period, oversees an appraiser panel of 16 or more State-certified appraisers in Illinois or 25 or more State-certified or State-licensed appraisers in 2 or more jurisdictions. "Appraisal management company" includes a hybrid entity.

"Appraisal management company national registry fee" means the fee implemented pursuant to Title XI of the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989 for an appraiser management company's national registry.

"Appraisal management services" means one or more of the following:

(1) recruiting, selecting, and retaining appraisers;

(2) contracting with State-certified or State-licensed appraisers to perform appraisal assignments;

(3) managing the process of having an appraisal performed, including providing administrative services such as receiving appraisal orders and appraisal reports; submitting completed appraisal reports to creditors and secondary market participants; collecting compensation from creditors, underwriters, or secondary market participants for services provided; or paying appraisers for services performed; or

(4) reviewing and verifying the work of appraisers.

"Appraiser panel" means a network, list, or roster of licensed or certified appraisers approved by the appraisal management company or by the end-user client to perform appraisals as independent contractors for the appraisal management company. "Appraiser panel" includes both appraisers accepted by an appraisal management company for consideration for future appraisal assignments and appraisers engaged by an appraisal management company to perform one or more appraisals. For the purposes of determining the size of an appraiser panel, only independent contractors of hybrid entities shall be counted towards the appraiser panel.

"Appraiser panel fee" means the amount collected from a registrant that, where applicable, includes an appraisal management company's national registry fee.

"Appraisal report" means a written appraisal by an appraiser to a client.

"Appraisal practice service" means valuation services performed by an individual acting as an appraiser, including, but not limited to, appraisal or appraisal review.

"Appraisal subcommittee" means the appraisal subcommittee of the Federal Financial Institutions Examination Council as established by Title XI.

"Appraiser" means a person who performs real estate or real property appraisals.

"Assignment result" means an appraiser's opinions and conclusions developed specific to an assignment.

"Audit" includes, but is not limited to, an annual or special audit, visit, or review necessary under this Act or required by the Secretary or the Secretary's authorized representative in carrying out the duties and responsibilities under this Act.

"Client" means the party or parties who engage an appraiser by employment or contract in a specific appraisal assignment.

"Controlling person" means:

(1) an owner, officer, or director of an entity seeking to offer appraisal management services;

(2) an individual employed, appointed, or authorized by an appraisal management company who has the authority to:

(A) enter into a contractual relationship with a client for the performance of an appraisal management service or appraisal practice service; and

(B) enter into an agreement with an appraiser for the performance of a real estate appraisal activity;

(3) an individual who possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of an appraisal management company; or

(4) an individual who will act as the sole compliance officer with regard to this Act and any rules adopted under this Act.

"Covered transaction" means a consumer credit transaction secured by a consumer's principal dwelling.

"Department" means the Department of Financial and Professional Regulation.

"Email address of record" means the designated email address recorded by the Department in the applicant's application file or the registrant's registration file maintained by the Department's registration maintenance unit.

"Entity" means a corporation, a limited liability company, partnership, a sole proprietorship, or other entity providing services or holding itself out to provide services as an appraisal management company or an appraisal management service.

"End-user client" means any person who utilizes or engages the services of an appraiser through an appraisal management company.

"Federally regulated appraisal management company" means an appraisal management company that is owned and controlled by an insured depository institution, as defined in 12 U.S.C. 1813, or an insured credit union, as defined in 12 U.S.C. 1752, and regulated by the Office of the Comptroller of the Currency, the Federal Reserve Board, the National Credit Union Association, or the Federal Deposit Insurance Corporation.

"Financial institution" means any bank, savings bank, savings and loan association, credit union, mortgage broker, mortgage banker, registrant under the Consumer Installment Loan Act or the Sales Finance Agency Act, or a corporate fiduciary, subsidiary, affiliate, parent company, or holding company of any registrant, or any institution involved in real estate financing that is regulated by State or federal law.

"Foreign appraisal management company" means any appraisal management company organized under the laws of any other state of the United States, the District of Columbia, or any other jurisdiction of the United States.

"Hybrid entity" means an appraisal management company that hires an appraiser as an employee to perform an appraisal and engages an independent contractor to perform an appraisal.

"Multi-state licensing system" means a web-based platform that allows an applicant to submit the application or registration renewal to the Department online.

"Person" means individuals, entities, sole proprietorships, corporations, limited liability companies, and non-domestic alien, foreign, or domestic partnerships, except that when the context otherwise requires, the term may refer to a single individual or other described entity.

"Principal dwelling" means a residential structure that contains one to 4 units, whether or not that structure is attached to real property. "Principal dwelling" includes an individual condominium unit, cooperative unit, manufactured home, mobile home, and trailer, if it is used as a residence.

"Principal office" means the actual, physical business address, which shall not be a post office box or a virtual business address, of a registrant, at which (i) the Department may contact the registrant and (ii) records required under this Act are maintained.

"Qualified to transact business in this State" means being in compliance with the requirements of the Business Corporation Act of 1983.

"Quality control review" means a review of an appraisal report for compliance and completeness, including grammatical, typographical, or other similar errors, unrelated to developing an opinion of value.

"Real estate" means an identified parcel or tract of land, including any improvements.

"Real estate related financial transaction" means any transaction involving:

(1) the sale, lease, purchase, investment in, or exchange of real property, including interests in property or the financing thereof;

(2) the refinancing of real property or interests in real property; and

(3) the use of real property or interest in property as security for a loan or investment, including mortgage backed securities.

"Real property" means the interests, benefits, and rights inherent in the ownership of real estate.

"Secretary" means the Secretary of Financial and Professional Regulation.

"USPAP" means the Uniform Standards of Professional Appraisal Practice as adopted by the Appraisal Standards Board under Title XI.

"Valuation" means any estimate of the value of real property in connection with a creditor's decision to provide credit, including those values developed under a policy of a government sponsored enterprise or by an automated valuation model or other methodology or mechanism.

"Written notice" means a communication transmitted by mail or by electronic means that can be verified between an appraisal management company and a licensed or certified real estate appraiser.

(Source: P.A. 102-20, eff. 1-1-22; 102-687, eff. 12-17-21.)

Section 130. The Illinois Public Aid Code is amended by changing Section 5-3 as follows:

(305 ILCS 5/5-3) (from Ch. 23, par. 5-3)

Sec. 5-3. Residence.) Any person who has established his residence in this State and lives therein, including any person who is a migrant worker, may qualify for medical assistance. A person who, while temporarily in this State, suffers injury or illness endangering his life and health and necessitating emergency care, may also qualify.

Temporary absence from the State shall not disqualify a person from maintaining his eligibility under this Article.

As used in this Section, "migrant worker" means any person residing temporarily and employed in Illinois who moves seasonally from one place to another for the purpose of employment in agricultural activities, including the planting, raising or harvesting of any agricultural or horticultural commodities and the handling, packing or processing of such commodities on the farm where produced or at the point of first processing, in animal husbandry, or in other activities connected with the care of animals. Dependents of such person shall be considered eligible if they are living with the person during his or her temporary residence and employment in Illinois.

In order to be eligible for medical assistance under this section, each migrant worker shall show proof of citizenship or legal noncitizen alien status.

(Source: P.A. 81-746.)

Section 135. The Housing Development and Construction Act is amended by changing Section 5 as follows:

(310 ILCS 20/5) (from Ch. 67 1/2, par. 57)

Sec. 5. Any grants paid hereunder to a housing authority shall be deposited in a separate fund and, subject to the approval of the Department of Commerce and Economic Opportunity, may be used for any or all of the following purposes as the needs of the community may require: the acquisition of land by purchase, gift or condemnation and the improvement thereof, the purchase and installation of temporary housing facilities, the construction of housing units for rent or sale to veterans, the families of deceased servicemen, and for persons and families who by reason of overcrowded housing conditions or displacement by eviction, fires or other calamities, or slum clearance or other private or public project involving relocation, are in urgent need of safe and sanitary housing, the making of grants in connection with the sale or lease of real property as provided in the following paragraph of this section, and for any and all purposes authorized by the "Housing Authorities Act," approved March 19, 1934, as amended, including administrative expenses of the housing authorities in relation to the aforesaid objectives, to the extent and for the purposes authorized and approved by the Department of Commerce and Economic Opportunity. Each housing authority is vested with power to exercise the right of eminent domain for the purposes authorized by this Act. Condemnation proceedings instituted by any such authority shall be in all respects in the manner provided for the exercise of the right of eminent domain under the Eminent Domain Act.

In addition to the foregoing, and for the purpose of facilitating the development and construction of housing, housing authorities may, with the approval of the Department of Commerce and Economic Opportunity, enter into contracts and agreements for the sale or lease of real property acquired by the Authority through the use of the grant hereunder, and may sell or lease such property to (1) housing corporations operating under "An Act in relation to housing," approved July 12, 1933, as amended; (2) neighborhood redevelopment corporations operating under the "Neighborhood Redevelopment Corporation Law," approved July 9, 1941; (3) insurance companies operating under Article VIII of the Illinois Insurance Code; (4) non-profit corporations organized for the purpose of constructing, managing and operating housing projects and the improvement of housing conditions, including the sale or rental of housing units to persons in need thereof; or (5) to any other individual, association or corporation, including bona fide housing cooperatives, desiring to engage in a development or redevelopment project. The term "corporation" as used in this section, means a corporation organized under the laws of this or any other state of the United States, or of any country, which may legally make investments in this State of the character herein prescribed, including foreign and non-domestic alien insurance companies as defined in Section 2 of the "Illinois Insurance Code." No sale or lease shall be made hereunder to any of the aforesaid corporations, associations or individuals unless a plan approved by the Authority has been presented by the purchaser or lessee for the development or redevelopment of such property, together with a bond, with satisfactory sureties, of not less than 10% of the cost of such development or redevelopment, conditioned upon the completion of such development or redevelopment; provided that the requirement of the bond may be waived by the Department of Commerce and Economic Opportunity if it is satisfied of the financial ability of the purchaser or lessee to complete such development or redevelopment in accordance with the presented plan. To further assure that the real property so sold or leased shall be used in accordance with the plan, the Department of Commerce and Economic Opportunity may require the purchaser or lessee to execute in writing such undertakings as the Department deems necessary to obligate such purchaser or lessee (1) to use the property for the purposes presented in the plan; (2) to commence and complete the building of the improvements designated in the plan within the periods of time that the Department of Commerce and Economic Opportunity fixes as reasonable, and (3) to comply with such other conditions as are necessary to carry out the purposes of this Act. Any such property may be sold pursuant to this section for any legal consideration in an amount to be approved by the Department of Commerce and Economic Opportunity. Subject to the approval of the Department of Commerce and Economic Opportunity, a housing authority may pay to any non-profit corporation of the character described in this section from grants made available from state funds, such sum of money which, when added to the value of the land so sold or leased to such non-profit corporation and the value of other assets of such non-profit corporation available for use in the project, will enable such non-profit corporation to obtain Federal Housing Administration insured construction mortgages. Any such authority may also sell, transfer, convey or assign to any such non-profit corporation any personal property, including building materials and supplies, as it deems necessary to facilitate the completion of the development or redevelopment by such non-profit corporation.

If the area of operation of a housing authority includes a city, village or incorporated town having a population in excess of 500,000, as determined by the last preceding Federal Census, no real property or interest in real property shall be acquired in such municipality by the housing authority until such time as the housing authority has advised the governing body of such municipality of the description of the real property, or interest therein, proposed to be acquired, and the governing body of the municipality has approved the acquisition thereof by the housing authority.

(Source: P.A. 94-793, eff. 5-19-06; 94-1055, eff. 1-1-07.)

Section 140. The Urban Renewal Consolidation Act of 1961 is amended by changing Section 18 as follows:

(315 ILCS 30/18) (from Ch. 67 1/2, par. 91.118)

Sec. 18. The Department may at such times as it deems expedient transfer and sell the fee simple title, or such lesser estate as the Department may have acquired, or as may theretofore have been acquired by a land clearance commission, to all or any part of the real property within the area of a redevelopment project not disposed of in accordance with Sections 15, 16, and 17 hereof to (1) Neighborhood Redevelopment Corporations operating under the "Neighborhood Redevelopment Corporation Law," approved July 9, 1941, as amended, (2) Insurance Companies operating under Section 125a of the "Illinois Insurance Code," approved June 29, 1937, as amended, (3) any individual, association, or corporation, organized under the laws of this State or of any other State or country, which may legally make such investments in this State, including foreign and non-domestic alien insurance companies, as defined in Section 2 of said "Illinois Insurance Code", or (4) bodies politic and corporate, public corporations, or any private interest empowered by law to acquire, develop and use such real property for such uses, public or private, as are in accordance with an approved plan; provided, however, that any sale of real property to a housing authority shall be made only in accordance with the provisions of Sections 16 and 17 hereof. To assure that the real property so sold is used in accordance with the approved plan referred to in Section 19 hereof, the Department shall inquire into and satisfy itself concerning the financial ability of the purchaser to complete the redevelopment in accordance with the approved plan and shall require the purchaser to execute in writing such undertakings as the Department may deem necessary to obligate the purchaser: (1) to use the land for the purposes designated in the approved plan, (2) to commence and complete the building of the improvements within the periods of time which the Department fixes as reasonable, and (3) to comply with such other conditions as are necessary to carry out the purposes of this Act. Any such area may be sold either as an entirety or in such parcels as the Department shall deem expedient. It shall not be necessary that title be acquired to all real property within the area of a redevelopment project before the sale of a part thereof may be made as provided herein. Any real property sold pursuant to the foregoing provisions of this Section shall be sold at its use value (which may be less than its acquisition cost), which represents the value at which the Department determines such land should be made available in order that it may be developed or redeveloped for the purposes specified in the approved plan.

Any real property lying within the area of the redevelopment project which has not been sold by the Department within five years after the Department has acquired title to all the real property within the area of that redevelopment project, shall be forthwith sold by the Department at public sale for cash to the highest bidder obligating himself in the manner set forth in the preceding paragraph of this Section to redevelop the property in accordance with the approved plan. Notice of such sale and of the place where the approved plan may be inspected shall be published once in a newspaper having a general circulation in the municipality in which the real property is situated at least twenty (20) days prior to the date of such public sale, and shall contain a description of the real property to be sold.

The Department may reject the bids received if, in the opinion of the Department, the highest bid does not equal or exceed the use value (as hereinabove defined) of the land to be sold. At the expiration of six (6) months from the date of rejecting bids, the Department shall again advertise for sale any real property then remaining unsold. Each publication shall be subject to the same requirements and conditions as the original publication.

(Source: P.A. 83-333.)

Section 145. The Service Member Employment and Reemployment Rights Act is amended by changing Section 1-10 as follows:

(330 ILCS 61/1-10)

Sec. 1-10. Definitions. As used in this Act:

"Accrue" means to accumulate in regular or increasing amounts over time subject to customary allocation of cost.

"Active duty" means any full-time military service regardless of length or voluntariness including, but not limited to, annual training, full-time National Guard duty, and State active duty. "Active duty" does not include any form of inactive duty service such as drill duty or muster duty. "Active duty", unless provided otherwise, includes active duty without pay.

"Active service" means all forms of active and inactive duty regardless of voluntariness including, but not limited to, annual training, active duty for training, initial active duty training, overseas training duty, full-time National Guard duty, active duty other than training, State active duty, mobilizations, and muster duty. "Active service", unless provided otherwise, includes active service without pay. "Active service" includes:

(1) Reserve component voluntary active service means service under one of the following authorities:

(A) any duty under 32 U.S.C. 502(f)(1)(B);

(B) active guard reserve duty, operational support, or additional duty under 10 U.S.C. 12301(d) or 32 U.S.C. 502(f)(1)(B);

(C) funeral honors under 10 U.S.C. 12503 or 32 U.S.C. 115;

(D) duty at the National Guard Bureau under 10 U.S.C. 12402;

(E) unsatisfactory participation under 10 U.S.C. 10148 or 10 U.S.C. 12303;

(F) discipline under 10 U.S.C. 802(d);

(G) extended active duty under 10 U.S.C. 12311; and

(H) reserve program administrator under 10 U.S.C. 10211.

(2) Reserve component involuntary active service includes, but is not limited to, service under one of the following authorities:

(A) annual training or drill requirements under 10 U.S.C. 10147, 10 U.S.C. 12301(b) or 32 U.S.C. 502(a).

(B) additional training duty or other duty under 32 U.S.C. 502(f)(1)(A);

(C) pre-planned or pre-programmed combatant commander support under 10 U.S.C. 12304b;

(D) mobilization under 10 U.S.C. 12301(a) or 10 U.S.C. 12302;

(E) presidential reserve call-up under 10 U.S.C. 12304;

(F) emergencies and natural disasters under 10 U.S.C. 12304a or 14 U.S.C. 712;

(G) muster duty under 10 U.S.C. 12319;

(H) retiree recall under 10 U.S.C. 688;

(I) captive status under 10 U.S.C. 12301(g);

(J) insurrection under 10 U.S.C. 331, 10 U.S.C. 332, or 10 U.S.C. 12406;

(K) pending line of duty determination for response to sexual assault under 10 U.S.C. 12323; and

(L) initial active duty for training under 10 U.S.C. 671.

Reserve component active service not listed in paragraph (1) or (2) shall be considered involuntary active service under paragraph (2).

"Active service without pay" means active service performed under any authority in which base pay is not received regardless of other allowances.

"Annual training" means any active duty performed under Section 10147 or 12301(b) of Title 10 of the United States Code or under Section 502(a) of Title 32 of the United States Code.

"Base pay" means the main component of military pay, whether active or inactive, based on rank and time in service. It does not include the addition of conditional funds for specific purposes such as allowances, incentive and special pay. Base pay, also known as basic pay, can be determined by referencing the appropriate military pay chart covering the time period in question located on the federal Defense Finance and Accounting Services website or as reflected on a federal Military Leave and Earnings Statement.

"Benefits" includes, but is not limited to, the terms, conditions, or privileges of employment, including any advantage, profit, privilege, gain, status, account, or interest, including wages or salary for work performed, that accrues by reason of an employment contract or agreement or an employer policy, plan, or practice and includes rights and benefits under a pension plan, a health plan, an employee stock ownership plan, insurance coverage and awards, bonuses, severance pay, supplemental unemployment benefits, vacations, and the opportunity to select work hours or location of employment.

"Differential compensation" means pay due when the employee's daily rate of compensation for military service is less than his or her daily rate of compensation as a public employee.

"Employee" means anyone employed by an employer. "Employee" includes any person who is a citizen, national, or permanent resident noncitizen alien of the United States employed in a workplace that the State has legal authority to regulate business and employment. "Employee" does not include an independent contractor.

"Employer" means any person, institution, organization, or other entity that pays salary or wages for work performed or that has control over employment opportunities, including:

(1) a person, institution, organization, or other entity to whom the employer has delegated the performance of employment-related responsibilities;

(2) an employer of a public employee;

(3) any successor in interest to a person, institution, organization, or other entity referred to under this definition; and

(4) a person, institution, organization, or other entity that has been denied initial employment in violation of Section 5-15.

"Inactive duty" means inactive duty training, including drills, consisting of regularly scheduled unit training assemblies, additional training assemblies, periods of appropriate duty or equivalent training, and any special additional duties authorized for reserve component personnel by appropriate military authority. "Inactive duty" does not include active duty.

"Military leave" means a furlough or leave of absence while performing active service. It cannot be substituted for accrued vacation, annual, or similar leave with pay except at the sole discretion of the service member employee. It is not a benefit of employment that is requested but a legal requirement upon receiving notice of pending military service.

"Military service" means:

(1) Service in the Armed Forces of the United States, the National Guard of any state or territory regardless of status, and the State Guard as defined in the State Guard Act. "Military service", whether active or reserve, includes service under the authority of U.S.C. Titles 10, 14, or 32, or State active duty.

(2) Service in a federally recognized auxiliary of the United States Armed Forces when performing official duties in support of military or civilian authorities as a result of an emergency.

(3) A period for which an employee is absent from a position of employment for the purpose of medical or dental treatment for a condition, illness, or injury sustained or aggravated during a period of active service in which treatment is paid by the United States Department of Defense Military Health System.

"Public employee" means any person classified as a full-time employee of the State of Illinois, a unit of local government, a public institution of higher education as defined in Section 1 of the Board of Higher Education Act, or a school district, other than an independent contractor.

"Reserve component" means the reserve components of Illinois and the United States Armed Forces regardless of status.

"Service member" means any person who is a member of a military service.

"State active duty" means full-time State-funded military duty under the command and control of the Governor and subject to the Military Code of Illinois.

"Unit of local government" means any city, village, town, county, or special district.

(Source: P.A. 100-1101, eff. 1-1-19.)

Section 150. The Firearm Owners Identification Card Act is amended by changing Sections 1.1, 4, and 8 as follows:

(430 ILCS 65/1.1) (from Ch. 38, par. 83-1.1)

Sec. 1.1. For purposes of this Act:

"Addicted to narcotics" means a person who has been:

(1) convicted of an offense involving the use or possession of cannabis, a controlled substance, or methamphetamine within the past year; or

(2) determined by the Illinois State Police to be addicted to narcotics based upon federal law or federal guidelines.

"Addicted to narcotics" does not include possession or use of a prescribed controlled substance under the direction and authority of a physician or other person authorized to prescribe the controlled substance when the controlled substance is used in the prescribed manner.

"Adjudicated as a person with a mental disability" means the person is the subject of a determination by a court, board, commission or other lawful authority that the person, as a result of marked subnormal intelligence, or mental illness, mental impairment, incompetency, condition, or disease:

(1) presents a clear and present danger to himself, herself, or to others;

(2) lacks the mental capacity to manage his or her own affairs or is adjudicated a person with a disability as defined in Section 11a-2 of the Probate Act of 1975;

(3) is not guilty in a criminal case by reason of insanity, mental disease or defect;

(3.5) is guilty but mentally ill, as provided in Section 5-2-6 of the Unified Code of Corrections;

(4) is incompetent to stand trial in a criminal case;

(5) is not guilty by reason of lack of mental responsibility under Articles 50a and 72b of the Uniform Code of Military Justice, 10 U.S.C. 850a, 876b;

(6) is a sexually violent person under subsection (f) of Section 5 of the Sexually Violent Persons Commitment Act;

(7) is a sexually dangerous person under the Sexually Dangerous Persons Act;

(8) is unfit to stand trial under the Juvenile Court Act of 1987;

(9) is not guilty by reason of insanity under the Juvenile Court Act of 1987;

(10) is subject to involuntary admission as an inpatient as defined in Section 1-119 of the Mental Health and Developmental Disabilities Code;

(11) is subject to involuntary admission as an outpatient as defined in Section 1-119.1 of the Mental Health and Developmental Disabilities Code;

(12) is subject to judicial admission as set forth in Section 4-500 of the Mental Health and Developmental Disabilities Code; or

(13) is subject to the provisions of the Interstate Agreements on Sexually Dangerous Persons Act.

"Clear and present danger" means a person who:

(1) communicates a serious threat of physical violence against a reasonably identifiable victim or poses a clear and imminent risk of serious physical injury to himself, herself, or another person as determined by a physician, clinical psychologist, or qualified examiner; or

(2) demonstrates threatening physical or verbal behavior, such as violent, suicidal, or assaultive threats, actions, or other behavior, as determined by a physician, clinical psychologist, qualified examiner, school administrator, or law enforcement official.

"Clinical psychologist" has the meaning provided in Section 1-103 of the Mental Health and Developmental Disabilities Code.

"Controlled substance" means a controlled substance or controlled substance analog as defined in the Illinois Controlled Substances Act.

"Counterfeit" means to copy or imitate, without legal authority, with intent to deceive.

"Federally licensed firearm dealer" means a person who is licensed as a federal firearms dealer under Section 923 of the federal Gun Control Act of 1968 (18 U.S.C. 923).

"Firearm" means any device, by whatever name known, which is designed to expel a projectile or projectiles by the action of an explosion, expansion of gas or escape of gas; excluding, however:

(1) any pneumatic gun, spring gun, paint ball gun, or B-B gun which expels a single globular projectile not exceeding .18 inch in diameter or which has a maximum muzzle velocity of less than 700 feet per second;

(1.1) any pneumatic gun, spring gun, paint ball gun, or B-B gun which expels breakable paint balls containing washable marking colors;

(2) any device used exclusively for signaling or safety and required or recommended by the United States Coast Guard or the Interstate Commerce Commission;

(3) any device used exclusively for the firing of stud cartridges, explosive rivets or similar industrial ammunition; and

(4) an antique firearm (other than a machine-gun) which, although designed as a weapon, the Illinois State Police finds by reason of the date of its manufacture, value, design, and other characteristics is primarily a collector's item and is not likely to be used as a weapon.

"Firearm ammunition" means any self-contained cartridge or shotgun shell, by whatever name known, which is designed to be used or adaptable to use in a firearm; excluding, however:

(1) any ammunition exclusively designed for use with a device used exclusively for signaling signalling or safety and required or recommended by the United States Coast Guard or the Interstate Commerce Commission; and

(2) any ammunition designed exclusively for use with a stud or rivet driver or other similar industrial ammunition.

"Gun show" means an event or function:

(1) at which the sale and transfer of firearms is the regular and normal course of business and where 50 or more firearms are displayed, offered, or exhibited for sale, transfer, or exchange; or

(2) at which not less than 10 gun show vendors display, offer, or exhibit for sale, sell, transfer, or exchange firearms.

"Gun show" includes the entire premises provided for an event or function, including parking areas for the event or function, that is sponsored to facilitate the purchase, sale, transfer, or exchange of firearms as described in this Section. Nothing in this definition shall be construed to exclude a gun show held in conjunction with competitive shooting events at the World Shooting Complex sanctioned by a national governing body in which the sale or transfer of firearms is authorized under subparagraph (5) of paragraph (g) of subsection (A) of Section 24-3 of the Criminal Code of 2012.

Unless otherwise expressly stated, "gun show" does not include training or safety classes, competitive shooting events, such as rifle, shotgun, or handgun matches, trap, skeet, or sporting clays shoots, dinners, banquets, raffles, or any other event where the sale or transfer of firearms is not the primary course of business.

"Gun show promoter" means a person who organizes or operates a gun show.

"Gun show vendor" means a person who exhibits, sells, offers for sale, transfers, or exchanges any firearms at a gun show, regardless of whether the person arranges with a gun show promoter for a fixed location from which to exhibit, sell, offer for sale, transfer, or exchange any firearm.

"Involuntarily admitted" has the meaning as prescribed in Sections 1-119 and 1-119.1 of the Mental Health and Developmental Disabilities Code.

"Mental health facility" means any licensed private hospital or hospital affiliate, institution, or facility, or part thereof, and any facility, or part thereof, operated by the State or a political subdivision thereof which provides provide treatment of persons with mental illness and includes all hospitals, institutions, clinics, evaluation facilities, mental health centers, colleges, universities, long-term care facilities, and nursing homes, or parts thereof, which provide treatment of persons with mental illness whether or not the primary purpose is to provide treatment of persons with mental illness.

"National governing body" means a group of persons who adopt rules and formulate policy on behalf of a national firearm sporting organization.

"Noncitizen" means a person who is not a citizen of the United States, but is a person who is a foreign-born person who lives in the United States, has not been naturalized, and is still a citizen of a foreign country.

"Patient" means:

(1) a person who is admitted as an inpatient or resident of a public or private mental health facility for mental health treatment under Chapter III of the Mental Health and Developmental Disabilities Code as an informal admission, a voluntary admission, a minor admission, an emergency admission, or an involuntary admission, unless the treatment was solely for an alcohol abuse disorder; or

(2) a person who voluntarily or involuntarily receives mental health treatment as an out-patient or is otherwise provided services by a public or private mental health facility, and who poses a clear and present danger to himself, herself, or to others.

"Person with a developmental disability" means a person with a disability which is attributable to any other condition which results in impairment similar to that caused by an intellectual disability and which requires services similar to those required by persons with intellectual disabilities. The disability must originate before the age of 18 years, be expected to continue indefinitely, and constitute a substantial disability. This disability results, in the professional opinion of a physician, clinical psychologist, or qualified examiner, in significant functional limitations in 3 or more of the following areas of major life activity:

(i) self-care;

(ii) receptive and expressive language;

(iii) learning;

(iv) mobility; or

(v) self-direction.

"Person with an intellectual disability" means a person with a significantly subaverage general intellectual functioning which exists concurrently with impairment in adaptive behavior and which originates before the age of 18 years.

"Physician" has the meaning as defined in Section 1-120 of the Mental Health and Developmental Disabilities Code.

"Protective order" means any orders of protection issued under the Illinois Domestic Violence Act of 1986, stalking no contact orders issued under the Stalking No Contact Order Act, civil no contact orders issued under the Civil No Contact Order Act, and firearms restraining orders issued under the Firearms Restraining Order Act.

"Qualified examiner" has the meaning provided in Section 1-122 of the Mental Health and Developmental Disabilities Code.

"Sanctioned competitive shooting event" means a shooting contest officially recognized by a national or state shooting sport association, and includes any sight-in or practice conducted in conjunction with the event.

"School administrator" means the person required to report under the School Administrator Reporting of Mental Health Clear and Present Danger Determinations Law.

"Stun gun or taser" has the meaning ascribed to it in Section 24-1 of the Criminal Code of 2012.

(Source: P.A. 102-237, eff. 1-1-22; 102-538, eff. 8-20-21; revised 10-6-21.)

(430 ILCS 65/4) (from Ch. 38, par. 83-4)

Sec. 4. Application for Firearm Owner's Identification Cards.

(a) Each applicant for a Firearm Owner's Identification Card must:

(1) Submit an application as made available by the Illinois State Police; and

(2) Submit evidence to the Illinois State Police that:

(i) This subparagraph (i) applies through the 180th day following July 12, 2019 (the effective date of Public Act 101-80) this amendatory Act of the 101st General Assembly. He or she is 21 years of age or over, or if he or she is under 21 years of age that he or she has the written consent of his or her parent or legal guardian to possess and acquire firearms and firearm ammunition and that he or she has never been convicted of a misdemeanor other than a traffic offense or adjudged delinquent, provided, however, that such parent or legal guardian is not an individual prohibited from having a Firearm Owner's Identification Card and files an affidavit with the Department as prescribed by the Department stating that he or she is not an individual prohibited from having a Card;

(i-5) This subparagraph (i-5) applies on and after the 181st day following July 12, 2019 (the effective date of Public Act 101-80) this amendatory Act of the 101st General Assembly. He or she is 21 years of age or over, or if he or she is under 21 years of age that he or she has never been convicted of a misdemeanor other than a traffic offense or adjudged delinquent and is an active duty member of the United States Armed Forces or has the written consent of his or her parent or legal guardian to possess and acquire firearms and firearm ammunition, provided, however, that such parent or legal guardian is not an individual prohibited from having a Firearm Owner's Identification Card and files an affidavit with the Illinois State Police Department as prescribed by the Illinois State Police Department stating that he or she is not an individual prohibited from having a Card or the active duty member of the United States Armed Forces under 21 years of age annually submits proof to the Illinois State Police, in a manner prescribed by the Illinois State Police Department;

(ii) He or she has not been convicted of a felony under the laws of this or any other jurisdiction;

(iii) He or she is not addicted to narcotics;

(iv) He or she has not been a patient in a mental health facility within the past 5 years or, if he or she has been a patient in a mental health facility more than 5 years ago submit the certification required under subsection (u) of Section 8 of this Act;

(v) He or she is not a person with an intellectual disability;

(vi) He or she is not a noncitizen an alien who is unlawfully present in the United States under the laws of the United States;

(vii) He or she is not subject to an existing order of protection prohibiting him or her from possessing a firearm;

(viii) He or she has not been convicted within the past 5 years of battery, assault, aggravated assault, violation of an order of protection, or a substantially similar offense in another jurisdiction, in which a firearm was used or possessed;

(ix) He or she has not been convicted of domestic battery, aggravated domestic battery, or a substantially similar offense in another jurisdiction committed before, on or after January 1, 2012 (the effective date of Public Act 97-158). If the applicant knowingly and intelligently waives the right to have an offense described in this clause (ix) tried by a jury, and by guilty plea or otherwise, results in a conviction for an offense in which a domestic relationship is not a required element of the offense but in which a determination of the applicability of 18 U.S.C. 922(g)(9) is made under Section 112A-11.1 of the Code of Criminal Procedure of 1963, an entry by the court of a judgment of conviction for that offense shall be grounds for denying the issuance of a Firearm Owner's Identification Card under this Section;

(x) (Blank);

(xi) He or she is not a person an alien who has been admitted to the United States under a non-immigrant visa (as that term is defined in Section 101(a)(26) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(26))), or that he or she is a noncitizen an alien who has been lawfully admitted to the United States under a non-immigrant visa if that person alien is:

(1) admitted to the United States for lawful hunting or sporting purposes;

(2) an official representative of a foreign government who is:

(A) accredited to the United States Government or the Government's mission to an international organization having its headquarters in the United States; or

(B) en route to or from another country to which that noncitizen alien is accredited;

(3) an official of a foreign government or distinguished foreign visitor who has been so designated by the Department of State;

(4) a foreign law enforcement officer of a friendly foreign government entering the United States on official business; or

(5) one who has received a waiver from the Attorney General of the United States pursuant to 18 U.S.C. 922(y)(3);

(xii) He or she is not a minor subject to a petition filed under Section 5-520 of the Juvenile Court Act of 1987 alleging that the minor is a delinquent minor for the commission of an offense that if committed by an adult would be a felony;

(xiii) He or she is not an adult who had been adjudicated a delinquent minor under the Juvenile Court Act of 1987 for the commission of an offense that if committed by an adult would be a felony;

(xiv) He or she is a resident of the State of Illinois;

(xv) He or she has not been adjudicated as a person with a mental disability;

(xvi) He or she has not been involuntarily admitted into a mental health facility; and

(xvii) He or she is not a person with a developmental disability; and

(3) Upon request by the Illinois State Police, sign a release on a form prescribed by the Illinois State Police waiving any right to confidentiality and requesting the disclosure to the Illinois State Police of limited mental health institution admission information from another state, the District of Columbia, any other territory of the United States, or a foreign nation concerning the applicant for the sole purpose of determining whether the applicant is or was a patient in a mental health institution and disqualified because of that status from receiving a Firearm Owner's Identification Card. No mental health care or treatment records may be requested. The information received shall be destroyed within one year of receipt.

(a-5) Each applicant for a Firearm Owner's Identification Card who is over the age of 18 shall furnish to the Illinois State Police either his or her Illinois driver's license number or Illinois Identification Card number, except as provided in subsection (a-10).

(a-10) Each applicant for a Firearm Owner's Identification Card, who is employed as a law enforcement officer, an armed security officer in Illinois, or by the United States Military permanently assigned in Illinois and who is not an Illinois resident, shall furnish to the Illinois State Police his or her driver's license number or state identification card number from his or her state of residence. The Illinois State Police may adopt rules to enforce the provisions of this subsection (a-10).

(a-15) If an applicant applying for a Firearm Owner's Identification Card moves from the residence address named in the application, he or she shall immediately notify in a form and manner prescribed by the Illinois State Police of that change of address.

(a-20) Each applicant for a Firearm Owner's Identification Card shall furnish to the Illinois State Police his or her photograph. An applicant who is 21 years of age or older seeking a religious exemption to the photograph requirement must furnish with the application an approved copy of United States Department of the Treasury Internal Revenue Service Form 4029. In lieu of a photograph, an applicant regardless of age seeking a religious exemption to the photograph requirement shall submit fingerprints on a form and manner prescribed by the Illinois State Police Department with his or her application.

(a-25) Beginning January 1, 2023, each applicant for the issuance of a Firearm Owner's Identification Card may include a full set of his or her fingerprints in electronic format to the Illinois State Police, unless the applicant has previously provided a full set of his or her fingerprints to the Illinois State Police under this Act or the Firearm Concealed Carry Act.

The fingerprints must be transmitted through a live scan fingerprint vendor licensed by the Department of Financial and Professional Regulation. The fingerprints shall be checked against the fingerprint records now and hereafter filed in the Illinois State Police and Federal Bureau of Investigation criminal history records databases, including all available State and local criminal history record information files.

The Illinois State Police shall charge applicants a one-time fee for conducting the criminal history record check, which shall be deposited into the State Police Services Fund and shall not exceed the actual cost of the State and national criminal history record check.

(a-26) The Illinois State Police shall research, explore, and report to the General Assembly by January 1, 2022 on the feasibility of permitting voluntarily submitted fingerprints obtained for purposes other than Firearm Owner's Identification Card enforcement that are contained in the Illinois State Police database for purposes of this Act.

(b) Each application form shall include the following statement printed in bold type: "Warning: Entering false information on an application for a Firearm Owner's Identification Card is punishable as a Class 2 felony in accordance with subsection (d-5) of Section 14 of the Firearm Owners Identification Card Act.".

(c) Upon such written consent, pursuant to Section 4, paragraph (a)(2)(i), the parent or legal guardian giving the consent shall be liable for any damages resulting from the applicant's use of firearms or firearm ammunition.

(Source: P.A. 101-80, eff. 7-12-19; 102-237, eff. 1-1-22; 102-538, eff. 8-20-21; revised 10-12-21.)

(430 ILCS 65/8) (from Ch. 38, par. 83-8)

Sec. 8. Grounds for denial and revocation. The Illinois State Police has authority to deny an application for or to revoke and seize a Firearm Owner's Identification Card previously issued under this Act only if the Illinois State Police Department finds that the applicant or the person to whom such card was issued is or was at the time of issuance:

(a) A person under 21 years of age who has been convicted of a misdemeanor other than a traffic offense or adjudged delinquent;

(b) This subsection (b) applies through the 180th day following July 12, 2019 (the effective date of Public Act 101-80) this amendatory Act of the 101st General Assembly. A person under 21 years of age who does not have the written consent of his parent or guardian to acquire and possess firearms and firearm ammunition, or whose parent or guardian has revoked such written consent, or where such parent or guardian does not qualify to have a Firearm Owner's Identification Card;

(b-5) This subsection (b-5) applies on and after the 181st day following July 12, 2019 (the effective date of Public Act 101-80) this amendatory Act of the 101st General Assembly. A person under 21 years of age who is not an active duty member of the United States Armed Forces and does not have the written consent of his or her parent or guardian to acquire and possess firearms and firearm ammunition, or whose parent or guardian has revoked such written consent, or where such parent or guardian does not qualify to have a Firearm Owner's Identification Card;

(c) A person convicted of a felony under the laws of this or any other jurisdiction;

(d) A person addicted to narcotics;

(e) A person who has been a patient of a mental health facility within the past 5 years or a person who has been a patient in a mental health facility more than 5 years ago who has not received the certification required under subsection (u) of this Section. An active law enforcement officer employed by a unit of government or a Department of Corrections employee authorized to possess firearms who is denied, revoked, or has his or her Firearm Owner's Identification Card seized under this subsection (e) may obtain relief as described in subsection (c-5) of Section 10 of this Act if the officer or employee did not act in a manner threatening to the officer or employee, another person, or the public as determined by the treating clinical psychologist or physician, and the officer or employee seeks mental health treatment;

(f) A person whose mental condition is of such a nature that it poses a clear and present danger to the applicant, any other person or persons, or the community;

(g) A person who has an intellectual disability;

(h) A person who intentionally makes a false statement in the Firearm Owner's Identification Card application;

(i) A noncitizen An alien who is unlawfully present in the United States under the laws of the United States;

(i-5) A person An alien who has been admitted to the United States under a non-immigrant visa (as that term is defined in Section 101(a)(26) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(26))), except that this subsection (i-5) does not apply to any noncitizen alien who has been lawfully admitted to the United States under a non-immigrant visa if that person alien is:

(1) admitted to the United States for lawful hunting or sporting purposes;

(2) an official representative of a foreign government who is:

(A) accredited to the United States Government or the Government's mission to an international organization having its headquarters in the United States; or

(B) en route to or from another country to which that noncitizen alien is accredited;

(3) an official of a foreign government or distinguished foreign visitor who has been so designated by the Department of State;

(4) a foreign law enforcement officer of a friendly foreign government entering the United States on official business; or

(5) one who has received a waiver from the Attorney General of the United States pursuant to 18 U.S.C. 922(y)(3);

(j) (Blank);

(k) A person who has been convicted within the past 5 years of battery, assault, aggravated assault, violation of an order of protection, or a substantially similar offense in another jurisdiction, in which a firearm was used or possessed;

(l) A person who has been convicted of domestic battery, aggravated domestic battery, or a substantially similar offense in another jurisdiction committed before, on or after January 1, 2012 (the effective date of Public Act 97-158). If the applicant or person who has been previously issued a Firearm Owner's Identification Card under this Act knowingly and intelligently waives the right to have an offense described in this paragraph (l) tried by a jury, and by guilty plea or otherwise, results in a conviction for an offense in which a domestic relationship is not a required element of the offense but in which a determination of the applicability of 18 U.S.C. 922(g)(9) is made under Section 112A-11.1 of the Code of Criminal Procedure of 1963, an entry by the court of a judgment of conviction for that offense shall be grounds for denying an application for and for revoking and seizing a Firearm Owner's Identification Card previously issued to the person under this Act;

(m) (Blank);

(n) A person who is prohibited from acquiring or possessing firearms or firearm ammunition by any Illinois State statute or by federal law;

(o) A minor subject to a petition filed under Section 5-520 of the Juvenile Court Act of 1987 alleging that the minor is a delinquent minor for the commission of an offense that if committed by an adult would be a felony;

(p) An adult who had been adjudicated a delinquent minor under the Juvenile Court Act of 1987 for the commission of an offense that if committed by an adult would be a felony;

(q) A person who is not a resident of the State of Illinois, except as provided in subsection (a-10) of Section 4;

(r) A person who has been adjudicated as a person with a mental disability;

(s) A person who has been found to have a developmental disability;

(t) A person involuntarily admitted into a mental health facility; or

(u) A person who has had his or her Firearm Owner's Identification Card revoked or denied under subsection (e) of this Section or item (iv) of paragraph (2) of subsection (a) of Section 4 of this Act because he or she was a patient in a mental health facility as provided in subsection (e) of this Section, shall not be permitted to obtain a Firearm Owner's Identification Card, after the 5-year period has lapsed, unless he or she has received a mental health evaluation by a physician, clinical psychologist, or qualified examiner as those terms are defined in the Mental Health and Developmental Disabilities Code, and has received a certification that he or she is not a clear and present danger to himself, herself, or others. The physician, clinical psychologist, or qualified examiner making the certification and his or her employer shall not be held criminally, civilly, or professionally liable for making or not making the certification required under this subsection, except for willful or wanton misconduct. This subsection does not apply to a person whose firearm possession rights have been restored through administrative or judicial action under Section 10 or 11 of this Act.

Upon revocation of a person's Firearm Owner's Identification Card, the Illinois State Police shall provide notice to the person and the person shall comply with Section 9.5 of this Act.

(Source: P.A. 101-80, eff. 7-12-19; 102-538, eff. 8-20-21; 102-645, eff. 1-1-22; revised 10-14-21.)

Section 155. The Criminal Code of 2012 is amended by changing Section 17-6.5 as follows:

(720 ILCS 5/17-6.5)

Sec. 17-6.5. Persons under deportation order; ineligibility for benefits.

(a) An individual against whom a United States Immigration Judge has issued an order of deportation which has been affirmed by the Board of Immigration Review, as well as an individual who appeals such an order pending appeal, under paragraph 19 of Section 241(a) of the Immigration and Nationality Act relating to persecution of others on account of race, religion, national origin or political opinion under the direction of or in association with the Nazi government of Germany or its allies, shall be ineligible for the following benefits authorized by State law:

(1) The homestead exemptions and homestead improvement exemption under Sections 15-170, 15-175, 15-176, and 15-180 of the Property Tax Code.

(2) Grants under the Senior Citizens and Persons with Disabilities Property Tax Relief Act.

(3) The double income tax exemption conferred upon persons 65 years of age or older by Section 204 of the Illinois Income Tax Act.

(4) Grants provided by the Department on Aging.

(5) Reductions in vehicle registration fees under Section 3-806.3 of the Illinois Vehicle Code.

(6) Free fishing and reduced fishing license fees under Sections 20-5 and 20-40 of the Fish and Aquatic Life Code.

(7) Tuition free courses for senior citizens under the Senior Citizen Courses Act.

(8) Any benefits under the Illinois Public Aid Code.

(b) If a person has been found by a court to have knowingly received benefits in violation of subsection (a) and:

(1) the total monetary value of the benefits received is less than $150, the person is guilty of a Class A misdemeanor; a second or subsequent violation is a Class 4 felony;

(2) the total monetary value of the benefits received is $150 or more but less than $1,000, the person is guilty of a Class 4 felony; a second or subsequent violation is a Class 3 felony;

(3) the total monetary value of the benefits received is $1,000 or more but less than $5,000, the person is guilty of a Class 3 felony; a second or subsequent violation is a Class 2 felony;

(4) the total monetary value of the benefits received is $5,000 or more but less than $10,000, the person is guilty of a Class 2 felony; a second or subsequent violation is a Class 1 felony; or

(5) the total monetary value of the benefits received is $10,000 or more, the person is guilty of a Class 1 felony.

(c) For purposes of determining the classification of an offense under this Section, all of the monetary value of the benefits received as a result of the unlawful act, practice, or course of conduct may be accumulated.

(d) Any grants awarded to persons described in subsection (a) may be recovered by the State of Illinois in a civil action commenced by the Attorney General in the circuit court of Sangamon County or the State's Attorney of the county of residence of the person described in subsection (a).

(e) An individual described in subsection (a) who has been deported shall be restored to any benefits which that individual has been denied under State law pursuant to subsection (a) if (i) the Attorney General of the United States has issued an order cancelling deportation and has adjusted the status of the individual to that of a noncitizen an alien lawfully admitted for permanent residence in the United States or (ii) the country to which the individual has been deported adjudicates or exonerates the individual in a judicial or administrative proceeding as not being guilty of the persecution of others on account of race, religion, national origin, or political opinion under the direction of or in association with the Nazi government of Germany or its allies.

(Source: P.A. 99-143, eff. 7-27-15.)

Section 160. The Prevention of Cigarette and Electronic Cigarette Sales to Persons under 21 Years of Age Act is amended by changing Section 2 as follows:

(720 ILCS 678/2)

Sec. 2. Definitions. For the purpose of this Act:

"Cigarette", when used in this Act, means any roll for smoking made wholly or in part of tobacco irrespective of size or shape and whether or not the tobacco is flavored, adulterated, or mixed with any other ingredient, and the wrapper or cover of which is made of paper or any other substance or material except whole leaf tobacco.

"Clear and conspicuous statement" means the statement is of sufficient type size to be clearly readable by the recipient of the communication.

"Consumer" means an individual who acquires or seeks to acquire cigarettes or electronic cigarettes for personal use.

"Delivery sale" means any sale of cigarettes or electronic cigarettes to a consumer if:

(a) the consumer submits the order for such sale by means of a telephone or other method of voice transmission, the mails, or the Internet or other online service, or the seller is otherwise not in the physical presence of the buyer when the request for purchase or order is made; or

(b) the cigarettes or electronic cigarettes are delivered by use of a common carrier, private delivery service, or the mails, or the seller is not in the physical presence of the buyer when the buyer obtains possession of the cigarettes or electronic cigarettes.

"Delivery service" means any person (other than a person that makes a delivery sale) who delivers to the consumer the cigarettes or electronic cigarettes sold in a delivery sale.

"Department" means the Department of Revenue.

"Electronic cigarette" means:

(1) any device that employs a battery or other mechanism to heat a solution or substance to produce a vapor or aerosol intended for inhalation;

(2) any cartridge or container of a solution or substance intended to be used with or in the device or to refill the device; or

(3) any solution or substance, whether or not it contains nicotine, intended for use in the device.

"Electronic cigarette" includes, but is not limited to, any electronic nicotine delivery system, electronic cigar, electronic cigarillo, electronic pipe, electronic hookah, vape pen, or similar product or device, and any component, part, or accessory of a device used during the operation of the device, even if the part or accessory was sold separately. "Electronic cigarette" does not include: cigarettes, as defined in Section 1 of the Cigarette Tax Act; any product approved by the United States Food and Drug Administration for sale as a tobacco cessation product, a tobacco dependence product, or for other medical purposes that is marketed and sold solely for that approved purpose; any asthma inhaler prescribed by a physician for that condition that is marketed and sold solely for that approved purpose; any device that meets the definition of cannabis paraphernalia under Section 1-10 of the Cannabis Regulation and Tax Act; or any cannabis product sold by a dispensing organization pursuant to the Cannabis Regulation and Tax Act or the Compassionate Use of Medical Cannabis Program Act.

"Government-issued identification" means a State driver's license, State identification card, passport, a military identification or an official naturalization or immigration document, such as a an alien registration recipient card (commonly known as a "green card") or an immigrant visa.

"Mails" or "mailing" mean the shipment of cigarettes or electronic cigarettes through the United States Postal Service.

"Out-of-state sale" means a sale of cigarettes or electronic cigarettes to a consumer located outside of this State where the consumer submits the order for such sale by means of a telephonic or other method of voice transmission, the mails or any other delivery service, facsimile transmission, or the Internet or other online service and where the cigarettes or electronic cigarettes are delivered by use of the mails or other delivery service.

"Person" means any individual, corporation, partnership, limited liability company, association, or other organization that engages in any for-profit or not-for-profit activities.

"Shipping package" means a container in which packs or cartons of cigarettes or electronic cigarettes are shipped in connection with a delivery sale.

"Shipping documents" means bills of lading, air bills, or any other documents used to evidence the undertaking by a delivery service to deliver letters, packages, or other containers.

(Source: P.A. 102-575, eff. 1-1-22.)

Section 165. The Code of Criminal Procedure of 1963 is amended by changing Section 113-8 as follows:

(725 ILCS 5/113-8)

Sec. 113-8. Advisement concerning status as a noncitizen an alien.

(a) Before the acceptance of a plea of guilty, guilty but mentally ill, or nolo contendere to a misdemeanor or felony offense, the court shall give the following advisement to the defendant in open court:

"If you are not a citizen of the United States, you are hereby advised that conviction of the offense for which you have been charged may have the consequence of deportation, exclusion from admission to the United States, or denial of naturalization under the laws of the United States.".

(b) If the defendant is arraigned on or after the effective date of this amendatory Act of the 101st General Assembly, and the court fails to advise the defendant as required by subsection (a) of this Section, and the defendant shows that conviction of the offense to which the defendant pleaded guilty, guilty but mentally ill, or nolo contendere may have the consequence for the defendant of deportation, exclusion from admission to the United States, or denial of naturalization under the laws of the United States, the court, upon the defendant's motion, shall vacate the judgment and permit the defendant to withdraw the plea of guilty, guilty but mentally ill, or nolo contendere and enter a plea of not guilty. The motion shall be filed within 2 years of the date of the defendant's conviction.

(Source: P.A. 101-409, eff. 1-1-20.)

Section 170. The Unified Code of Corrections is amended by changing Sections 3-2-2 and 5-5-3 as follows:

(730 ILCS 5/3-2-2) (from Ch. 38, par. 1003-2-2)

Sec. 3-2-2. Powers and duties of the Department.

(1) In addition to the powers, duties, and responsibilities which are otherwise provided by law, the Department shall have the following powers:

(a) To accept persons committed to it by the courts of this State for care, custody, treatment, and rehabilitation, and to accept federal prisoners and noncitizens aliens over whom the Office of the Federal Detention Trustee is authorized to exercise the federal detention function for limited purposes and periods of time.

(b) To develop and maintain reception and evaluation units for purposes of analyzing the custody and rehabilitation needs of persons committed to it and to assign such persons to institutions and programs under its control or transfer them to other appropriate agencies. In consultation with the Department of Alcoholism and Substance Abuse (now the Department of Human Services), the Department of Corrections shall develop a master plan for the screening and evaluation of persons committed to its custody who have alcohol or drug abuse problems, and for making appropriate treatment available to such persons; the Department shall report to the General Assembly on such plan not later than April 1, 1987. The maintenance and implementation of such plan shall be contingent upon the availability of funds.

(b-1) To create and implement, on January 1, 2002, a pilot program to establish the effectiveness of pupillometer technology (the measurement of the pupil's reaction to light) as an alternative to a urine test for purposes of screening and evaluating persons committed to its custody who have alcohol or drug problems. The pilot program shall require the pupillometer technology to be used in at least one Department of Corrections facility. The Director may expand the pilot program to include an additional facility or facilities as he or she deems appropriate. A minimum of 4,000 tests shall be included in the pilot program. The Department must report to the General Assembly on the effectiveness of the program by January 1, 2003.

(b-5) To develop, in consultation with the Illinois State Police, a program for tracking and evaluating each inmate from commitment through release for recording his or her gang affiliations, activities, or ranks.

(c) To maintain and administer all State correctional institutions and facilities under its control and to establish new ones as needed. Pursuant to its power to establish new institutions and facilities, the Department may, with the written approval of the Governor, authorize the Department of Central Management Services to enter into an agreement of the type described in subsection (d) of Section 405-300 of the Department of Central Management Services Law. The Department shall designate those institutions which shall constitute the State Penitentiary System. The Department of Juvenile Justice shall maintain and administer all State youth centers pursuant to subsection (d) of Section 3-2.5-20.

Pursuant to its power to establish new institutions and facilities, the Department may authorize the Department of Central Management Services to accept bids from counties and municipalities for the construction, remodeling, or conversion of a structure to be leased to the Department of Corrections for the purposes of its serving as a correctional institution or facility. Such construction, remodeling, or conversion may be financed with revenue bonds issued pursuant to the Industrial Building Revenue Bond Act by the municipality or county. The lease specified in a bid shall be for a term of not less than the time needed to retire any revenue bonds used to finance the project, but not to exceed 40 years. The lease may grant to the State the option to purchase the structure outright.

Upon receipt of the bids, the Department may certify one or more of the bids and shall submit any such bids to the General Assembly for approval. Upon approval of a bid by a constitutional majority of both houses of the General Assembly, pursuant to joint resolution, the Department of Central Management Services may enter into an agreement with the county or municipality pursuant to such bid.

(c-5) To build and maintain regional juvenile detention centers and to charge a per diem to the counties as established by the Department to defray the costs of housing each minor in a center. In this subsection (c-5), "juvenile detention center" means a facility to house minors during pendency of trial who have been transferred from proceedings under the Juvenile Court Act of 1987 to prosecutions under the criminal laws of this State in accordance with Section 5-805 of the Juvenile Court Act of 1987, whether the transfer was by operation of law or permissive under that Section. The Department shall designate the counties to be served by each regional juvenile detention center.

(d) To develop and maintain programs of control, rehabilitation, and employment of committed persons within its institutions.

(d-5) To provide a pre-release job preparation program for inmates at Illinois adult correctional centers.

(d-10) To provide educational and visitation opportunities to committed persons within its institutions through temporary access to content-controlled tablets that may be provided as a privilege to committed persons to induce or reward compliance.

(e) To establish a system of supervision and guidance of committed persons in the community.

(f) To establish in cooperation with the Department of Transportation to supply a sufficient number of prisoners for use by the Department of Transportation to clean up the trash and garbage along State, county, township, or municipal highways as designated by the Department of Transportation. The Department of Corrections, at the request of the Department of Transportation, shall furnish such prisoners at least annually for a period to be agreed upon between the Director of Corrections and the Secretary of Transportation. The prisoners used on this program shall be selected by the Director of Corrections on whatever basis he deems proper in consideration of their term, behavior and earned eligibility to participate in such program - where they will be outside of the prison facility but still in the custody of the Department of Corrections. Prisoners convicted of first degree murder, or a Class X felony, or armed violence, or aggravated kidnapping, or criminal sexual assault, aggravated criminal sexual abuse or a subsequent conviction for criminal sexual abuse, or forcible detention, or arson, or a prisoner adjudged a Habitual Criminal shall not be eligible for selection to participate in such program. The prisoners shall remain as prisoners in the custody of the Department of Corrections and such Department shall furnish whatever security is necessary. The Department of Transportation shall furnish trucks and equipment for the highway cleanup program and personnel to supervise and direct the program. Neither the Department of Corrections nor the Department of Transportation shall replace any regular employee with a prisoner.

(g) To maintain records of persons committed to it and to establish programs of research, statistics, and planning.

(h) To investigate the grievances of any person committed to the Department and to inquire into any alleged misconduct by employees or committed persons; and for these purposes it may issue subpoenas and compel the attendance of witnesses and the production of writings and papers, and may examine under oath any witnesses who may appear before it; to also investigate alleged violations of a parolee's or releasee's conditions of parole or release; and for this purpose it may issue subpoenas and compel the attendance of witnesses and the production of documents only if there is reason to believe that such procedures would provide evidence that such violations have occurred.

If any person fails to obey a subpoena issued under this subsection, the Director may apply to any circuit court to secure compliance with the subpoena. The failure to comply with the order of the court issued in response thereto shall be punishable as contempt of court.

(i) To appoint and remove the chief administrative officers, and administer programs of training and development of personnel of the Department. Personnel assigned by the Department to be responsible for the custody and control of committed persons or to investigate the alleged misconduct of committed persons or employees or alleged violations of a parolee's or releasee's conditions of parole shall be conservators of the peace for those purposes, and shall have the full power of peace officers outside of the facilities of the Department in the protection, arrest, retaking, and reconfining of committed persons or where the exercise of such power is necessary to the investigation of such misconduct or violations. This subsection shall not apply to persons committed to the Department of Juvenile Justice under the Juvenile Court Act of 1987 on aftercare release.

(j) To cooperate with other departments and agencies and with local communities for the development of standards and programs for better correctional services in this State.

(k) To administer all moneys and properties of the Department.

(l) To report annually to the Governor on the committed persons, institutions, and programs of the Department.

(l-5) (Blank).

(m) To make all rules and regulations and exercise all powers and duties vested by law in the Department.

(n) To establish rules and regulations for administering a system of sentence credits, established in accordance with Section 3-6-3, subject to review by the Prisoner Review Board.

(o) To administer the distribution of funds from the State Treasury to reimburse counties where State penal institutions are located for the payment of assistant state's attorneys' salaries under Section 4-2001 of the Counties Code.

(p) To exchange information with the Department of Human Services and the Department of Healthcare and Family Services for the purpose of verifying living arrangements and for other purposes directly connected with the administration of this Code and the Illinois Public Aid Code.

(q) To establish a diversion program.

The program shall provide a structured environment for selected technical parole or mandatory supervised release violators and committed persons who have violated the rules governing their conduct while in work release. This program shall not apply to those persons who have committed a new offense while serving on parole or mandatory supervised release or while committed to work release.

Elements of the program shall include, but shall not be limited to, the following:

(1) The staff of a diversion facility shall provide supervision in accordance with required objectives set by the facility.

(2) Participants shall be required to maintain employment.

(3) Each participant shall pay for room and board at the facility on a sliding-scale basis according to the participant's income.

(4) Each participant shall:

(A) provide restitution to victims in accordance with any court order;

(B) provide financial support to his dependents; and

(C) make appropriate payments toward any other court-ordered obligations.

(5) Each participant shall complete community service in addition to employment.

(6) Participants shall take part in such counseling, educational, and other programs as the Department may deem appropriate.

(7) Participants shall submit to drug and alcohol screening.

(8) The Department shall promulgate rules governing the administration of the program.

(r) To enter into intergovernmental cooperation agreements under which persons in the custody of the Department may participate in a county impact incarceration program established under Section 3-6038 or 3-15003.5 of the Counties Code.

(r-5) (Blank).

(r-10) To systematically and routinely identify with respect to each streetgang active within the correctional system: (1) each active gang; (2) every existing inter-gang affiliation or alliance; and (3) the current leaders in each gang. The Department shall promptly segregate leaders from inmates who belong to their gangs and allied gangs. "Segregate" means no physical contact and, to the extent possible under the conditions and space available at the correctional facility, prohibition of visual and sound communication. For the purposes of this paragraph (r-10), "leaders" means persons who:

(i) are members of a criminal streetgang;

(ii) with respect to other individuals within the streetgang, occupy a position of organizer, supervisor, or other position of management or leadership; and

(iii) are actively and personally engaged in directing, ordering, authorizing, or requesting commission of criminal acts by others, which are punishable as a felony, in furtherance of streetgang related activity both within and outside of the Department of Corrections.

"Streetgang", "gang", and "streetgang related" have the meanings ascribed to them in Section 10 of the Illinois Streetgang Terrorism Omnibus Prevention Act.

(s) To operate a super-maximum security institution, in order to manage and supervise inmates who are disruptive or dangerous and provide for the safety and security of the staff and the other inmates.

(t) To monitor any unprivileged conversation or any unprivileged communication, whether in person or by mail, telephone, or other means, between an inmate who, before commitment to the Department, was a member of an organized gang and any other person without the need to show cause or satisfy any other requirement of law before beginning the monitoring, except as constitutionally required. The monitoring may be by video, voice, or other method of recording or by any other means. As used in this subdivision (1)(t), "organized gang" has the meaning ascribed to it in Section 10 of the Illinois Streetgang Terrorism Omnibus Prevention Act.

As used in this subdivision (1)(t), "unprivileged conversation" or "unprivileged communication" means a conversation or communication that is not protected by any privilege recognized by law or by decision, rule, or order of the Illinois Supreme Court.

(u) To establish a Women's and Children's Pre-release Community Supervision Program for the purpose of providing housing and services to eligible female inmates, as determined by the Department, and their newborn and young children.

(u-5) To issue an order, whenever a person committed to the Department absconds or absents himself or herself, without authority to do so, from any facility or program to which he or she is assigned. The order shall be certified by the Director, the Supervisor of the Apprehension Unit, or any person duly designated by the Director, with the seal of the Department affixed. The order shall be directed to all sheriffs, coroners, and police officers, or to any particular person named in the order. Any order issued pursuant to this subdivision (1)(u-5) shall be sufficient warrant for the officer or person named in the order to arrest and deliver the committed person to the proper correctional officials and shall be executed the same as criminal process.

(u-6) To appoint a point of contact person who shall receive suggestions, complaints, or other requests to the Department from visitors to Department institutions or facilities and from other members of the public.

(v) To do all other acts necessary to carry out the provisions of this Chapter.

(2) The Department of Corrections shall by January 1, 1998, consider building and operating a correctional facility within 100 miles of a county of over 2,000,000 inhabitants, especially a facility designed to house juvenile participants in the impact incarceration program.

(3) When the Department lets bids for contracts for medical services to be provided to persons committed to Department facilities by a health maintenance organization, medical service corporation, or other health care provider, the bid may only be let to a health care provider that has obtained an irrevocable letter of credit or performance bond issued by a company whose bonds have an investment grade or higher rating by a bond rating organization.

(4) When the Department lets bids for contracts for food or commissary services to be provided to Department facilities, the bid may only be let to a food or commissary services provider that has obtained an irrevocable letter of credit or performance bond issued by a company whose bonds have an investment grade or higher rating by a bond rating organization.

(5) On and after the date 6 months after August 16, 2013 (the effective date of Public Act 98-488), as provided in the Executive Order 1 (2012) Implementation Act, all of the powers, duties, rights, and responsibilities related to State healthcare purchasing under this Code that were transferred from the Department of Corrections to the Department of Healthcare and Family Services by Executive Order 3 (2005) are transferred back to the Department of Corrections; however, powers, duties, rights, and responsibilities related to State healthcare purchasing under this Code that were exercised by the Department of Corrections before the effective date of Executive Order 3 (2005) but that pertain to individuals resident in facilities operated by the Department of Juvenile Justice are transferred to the Department of Juvenile Justice.

(Source: P.A. 101-235, eff. 1-1-20; 102-350, eff. 8-13-21; 102-535, eff. 1-1-22; 102-538, eff. 8-20-21; revised 10-15-21.)

(730 ILCS 5/5-5-3)

Sec. 5-5-3. Disposition.

(a) (Blank).

(b) (Blank).

(c) (1) (Blank).

(2) A period of probation, a term of periodic imprisonment or conditional discharge shall not be imposed for the following offenses. The court shall sentence the offender to not less than the minimum term of imprisonment set forth in this Code for the following offenses, and may order a fine or restitution or both in conjunction with such term of imprisonment:

(A) First degree murder where the death penalty is not imposed.

(B) Attempted first degree murder.

(C) A Class X felony.

(D) A violation of Section 401.1 or 407 of the Illinois Controlled Substances Act, or a violation of subdivision (c)(1.5) of Section 401 of that Act which relates to more than 5 grams of a substance containing fentanyl or an analog thereof.

(D-5) A violation of subdivision (c)(1) of Section 401 of the Illinois Controlled Substances Act which relates to 3 or more grams of a substance containing heroin or an analog thereof.

(E) (Blank).

(F) A Class 1 or greater felony if the offender had been convicted of a Class 1 or greater felony, including any state or federal conviction for an offense that contained, at the time it was committed, the same elements as an offense now (the date of the offense committed after the prior Class 1 or greater felony) classified as a Class 1 or greater felony, within 10 years of the date on which the offender committed the offense for which he or she is being sentenced, except as otherwise provided in Section 40-10 of the Substance Use Disorder Act.

(F-3) A Class 2 or greater felony sex offense or felony firearm offense if the offender had been convicted of a Class 2 or greater felony, including any state or federal conviction for an offense that contained, at the time it was committed, the same elements as an offense now (the date of the offense committed after the prior Class 2 or greater felony) classified as a Class 2 or greater felony, within 10 years of the date on which the offender committed the offense for which he or she is being sentenced, except as otherwise provided in Section 40-10 of the Substance Use Disorder Act.

(F-5) A violation of Section 24-1, 24-1.1, or 24-1.6 of the Criminal Code of 1961 or the Criminal Code of 2012 for which imprisonment is prescribed in those Sections.

(G) Residential burglary, except as otherwise provided in Section 40-10 of the Substance Use Disorder Act.

(H) Criminal sexual assault.

(I) Aggravated battery of a senior citizen as described in Section 12-4.6 or subdivision (a)(4) of Section 12-3.05 of the Criminal Code of 1961 or the Criminal Code of 2012.

(J) A forcible felony if the offense was related to the activities of an organized gang.

Before July 1, 1994, for the purposes of this paragraph, "organized gang" means an association of 5 or more persons, with an established hierarchy, that encourages members of the association to perpetrate crimes or provides support to the members of the association who do commit crimes.

Beginning July 1, 1994, for the purposes of this paragraph, "organized gang" has the meaning ascribed to it in Section 10 of the Illinois Streetgang Terrorism Omnibus Prevention Act.

(K) Vehicular hijacking.

(L) A second or subsequent conviction for the offense of hate crime when the underlying offense upon which the hate crime is based is felony aggravated assault or felony mob action.

(M) A second or subsequent conviction for the offense of institutional vandalism if the damage to the property exceeds $300.

(N) A Class 3 felony violation of paragraph (1) of subsection (a) of Section 2 of the Firearm Owners Identification Card Act.

(O) A violation of Section 12-6.1 or 12-6.5 of the Criminal Code of 1961 or the Criminal Code of 2012.

(P) A violation of paragraph (1), (2), (3), (4), (5), or (7) of subsection (a) of Section 11-20.1 of the Criminal Code of 1961 or the Criminal Code of 2012.

(P-5) A violation of paragraph (6) of subsection (a) of Section 11-20.1 of the Criminal Code of 1961 or the Criminal Code of 2012 if the victim is a household or family member of the defendant.

(Q) A violation of subsection (b) or (b-5) of Section 20-1, Section 20-1.2, or Section 20-1.3 of the Criminal Code of 1961 or the Criminal Code of 2012.

(R) A violation of Section 24-3A of the Criminal Code of 1961 or the Criminal Code of 2012.

(S) (Blank).

(T) (Blank).

(U) A second or subsequent violation of Section 6-303 of the Illinois Vehicle Code committed while his or her driver's license, permit, or privilege was revoked because of a violation of Section 9-3 of the Criminal Code of 1961 or the Criminal Code of 2012, relating to the offense of reckless homicide, or a similar provision of a law of another state.

(V) A violation of paragraph (4) of subsection (c) of Section 11-20.1B or paragraph (4) of subsection (c) of Section 11-20.3 of the Criminal Code of 1961, or paragraph (6) of subsection (a) of Section 11-20.1 of the Criminal Code of 2012 when the victim is under 13 years of age and the defendant has previously been convicted under the laws of this State or any other state of the offense of child pornography, aggravated child pornography, aggravated criminal sexual abuse, aggravated criminal sexual assault, predatory criminal sexual assault of a child, or any of the offenses formerly known as rape, deviate sexual assault, indecent liberties with a child, or aggravated indecent liberties with a child where the victim was under the age of 18 years or an offense that is substantially equivalent to those offenses.

(W) A violation of Section 24-3.5 of the Criminal Code of 1961 or the Criminal Code of 2012.

(X) A violation of subsection (a) of Section 31-1a of the Criminal Code of 1961 or the Criminal Code of 2012.

(Y) A conviction for unlawful possession of a firearm by a street gang member when the firearm was loaded or contained firearm ammunition.

(Z) A Class 1 felony committed while he or she was serving a term of probation or conditional discharge for a felony.

(AA) Theft of property exceeding $500,000 and not exceeding $1,000,000 in value.

(BB) Laundering of criminally derived property of a value exceeding $500,000.

(CC) Knowingly selling, offering for sale, holding for sale, or using 2,000 or more counterfeit items or counterfeit items having a retail value in the aggregate of $500,000 or more.

(DD) A conviction for aggravated assault under paragraph (6) of subsection (c) of Section 12-2 of the Criminal Code of 1961 or the Criminal Code of 2012 if the firearm is aimed toward the person against whom the firearm is being used.

(EE) A conviction for a violation of paragraph (2) of subsection (a) of Section 24-3B of the Criminal Code of 2012.

(3) (Blank).

(4) A minimum term of imprisonment of not less than 10 consecutive days or 30 days of community service shall be imposed for a violation of paragraph (c) of Section 6-303 of the Illinois Vehicle Code.

(4.1) (Blank).

(4.2) Except as provided in paragraphs (4.3) and (4.8) of this subsection (c), a minimum of 100 hours of community service shall be imposed for a second violation of Section 6-303 of the Illinois Vehicle Code.

(4.3) A minimum term of imprisonment of 30 days or 300 hours of community service, as determined by the court, shall be imposed for a second violation of subsection (c) of Section 6-303 of the Illinois Vehicle Code.

(4.4) Except as provided in paragraphs (4.5), (4.6), and (4.9) of this subsection (c), a minimum term of imprisonment of 30 days or 300 hours of community service, as determined by the court, shall be imposed for a third or subsequent violation of Section 6-303 of the Illinois Vehicle Code. The court may give credit toward the fulfillment of community service hours for participation in activities and treatment as determined by court services.

(4.5) A minimum term of imprisonment of 30 days shall be imposed for a third violation of subsection (c) of Section 6-303 of the Illinois Vehicle Code.

(4.6) Except as provided in paragraph (4.10) of this subsection (c), a minimum term of imprisonment of 180 days shall be imposed for a fourth or subsequent violation of subsection (c) of Section 6-303 of the Illinois Vehicle Code.

(4.7) A minimum term of imprisonment of not less than 30 consecutive days, or 300 hours of community service, shall be imposed for a violation of subsection (a-5) of Section 6-303 of the Illinois Vehicle Code, as provided in subsection (b-5) of that Section.

(4.8) A mandatory prison sentence shall be imposed for a second violation of subsection (a-5) of Section 6-303 of the Illinois Vehicle Code, as provided in subsection (c-5) of that Section. The person's driving privileges shall be revoked for a period of not less than 5 years from the date of his or her release from prison.

(4.9) A mandatory prison sentence of not less than 4 and not more than 15 years shall be imposed for a third violation of subsection (a-5) of Section 6-303 of the Illinois Vehicle Code, as provided in subsection (d-2.5) of that Section. The person's driving privileges shall be revoked for the remainder of his or her life.

(4.10) A mandatory prison sentence for a Class 1 felony shall be imposed, and the person shall be eligible for an extended term sentence, for a fourth or subsequent violation of subsection (a-5) of Section 6-303 of the Illinois Vehicle Code, as provided in subsection (d-3.5) of that Section. The person's driving privileges shall be revoked for the remainder of his or her life.

(5) The court may sentence a corporation or unincorporated association convicted of any offense to:

(A) a period of conditional discharge;

(B) a fine;

(C) make restitution to the victim under Section 5-5-6 of this Code.

(5.1) In addition to any other penalties imposed, and except as provided in paragraph (5.2) or (5.3), a person convicted of violating subsection (c) of Section 11-907 of the Illinois Vehicle Code shall have his or her driver's license, permit, or privileges suspended for at least 90 days but not more than one year, if the violation resulted in damage to the property of another person.

(5.2) In addition to any other penalties imposed, and except as provided in paragraph (5.3), a person convicted of violating subsection (c) of Section 11-907 of the Illinois Vehicle Code shall have his or her driver's license, permit, or privileges suspended for at least 180 days but not more than 2 years, if the violation resulted in injury to another person.

(5.3) In addition to any other penalties imposed, a person convicted of violating subsection (c) of Section 11-907 of the Illinois Vehicle Code shall have his or her driver's license, permit, or privileges suspended for 2 years, if the violation resulted in the death of another person.

(5.4) In addition to any other penalties imposed, a person convicted of violating Section 3-707 of the Illinois Vehicle Code shall have his or her driver's license, permit, or privileges suspended for 3 months and until he or she has paid a reinstatement fee of $100.

(5.5) In addition to any other penalties imposed, a person convicted of violating Section 3-707 of the Illinois Vehicle Code during a period in which his or her driver's license, permit, or privileges were suspended for a previous violation of that Section shall have his or her driver's license, permit, or privileges suspended for an additional 6 months after the expiration of the original 3-month suspension and until he or she has paid a reinstatement fee of $100.

(6) (Blank).

(7) (Blank).

(8) (Blank).

(9) A defendant convicted of a second or subsequent offense of ritualized abuse of a child may be sentenced to a term of natural life imprisonment.

(10) (Blank).

(11) The court shall impose a minimum fine of $1,000 for a first offense and $2,000 for a second or subsequent offense upon a person convicted of or placed on supervision for battery when the individual harmed was a sports official or coach at any level of competition and the act causing harm to the sports official or coach occurred within an athletic facility or within the immediate vicinity of the athletic facility at which the sports official or coach was an active participant of the athletic contest held at the athletic facility. For the purposes of this paragraph (11), "sports official" means a person at an athletic contest who enforces the rules of the contest, such as an umpire or referee; "athletic facility" means an indoor or outdoor playing field or recreational area where sports activities are conducted; and "coach" means a person recognized as a coach by the sanctioning authority that conducted the sporting event.

(12) A person may not receive a disposition of court supervision for a violation of Section 5-16 of the Boat Registration and Safety Act if that person has previously received a disposition of court supervision for a violation of that Section.

(13) A person convicted of or placed on court supervision for an assault or aggravated assault when the victim and the offender are family or household members as defined in Section 103 of the Illinois Domestic Violence Act of 1986 or convicted of domestic battery or aggravated domestic battery may be required to attend a Partner Abuse Intervention Program under protocols set forth by the Illinois Department of Human Services under such terms and conditions imposed by the court. The costs of such classes shall be paid by the offender.

(d) In any case in which a sentence originally imposed is vacated, the case shall be remanded to the trial court. The trial court shall hold a hearing under Section 5-4-1 of this Code which may include evidence of the defendant's life, moral character and occupation during the time since the original sentence was passed. The trial court shall then impose sentence upon the defendant. The trial court may impose any sentence which could have been imposed at the original trial subject to Section 5-5-4 of this Code. If a sentence is vacated on appeal or on collateral attack due to the failure of the trier of fact at trial to determine beyond a reasonable doubt the existence of a fact (other than a prior conviction) necessary to increase the punishment for the offense beyond the statutory maximum otherwise applicable, either the defendant may be re-sentenced to a term within the range otherwise provided or, if the State files notice of its intention to again seek the extended sentence, the defendant shall be afforded a new trial.

(e) In cases where prosecution for aggravated criminal sexual abuse under Section 11-1.60 or 12-16 of the Criminal Code of 1961 or the Criminal Code of 2012 results in conviction of a defendant who was a family member of the victim at the time of the commission of the offense, the court shall consider the safety and welfare of the victim and may impose a sentence of probation only where:

(1) the court finds (A) or (B) or both are appropriate:

(A) the defendant is willing to undergo a court approved counseling program for a minimum duration of 2 years; or

(B) the defendant is willing to participate in a court approved plan, including, but not limited to, the defendant's:

(i) removal from the household;

(ii) restricted contact with the victim;

(iii) continued financial support of the family;

(iv) restitution for harm done to the victim; and

(v) compliance with any other measures that the court may deem appropriate; and

(2) the court orders the defendant to pay for the victim's counseling services, to the extent that the court finds, after considering the defendant's income and assets, that the defendant is financially capable of paying for such services, if the victim was under 18 years of age at the time the offense was committed and requires counseling as a result of the offense.

Probation may be revoked or modified pursuant to Section 5-6-4; except where the court determines at the hearing that the defendant violated a condition of his or her probation restricting contact with the victim or other family members or commits another offense with the victim or other family members, the court shall revoke the defendant's probation and impose a term of imprisonment.

For the purposes of this Section, "family member" and "victim" shall have the meanings ascribed to them in Section 11-0.1 of the Criminal Code of 2012.

(f) (Blank).

(g) Whenever a defendant is convicted of an offense under Sections 11-1.20, 11-1.30, 11-1.40, 11-1.50, 11-1.60, 11-14, 11-14.3, 11-14.4 except for an offense that involves keeping a place of juvenile prostitution, 11-15, 11-15.1, 11-16, 11-17, 11-18, 11-18.1, 11-19, 11-19.1, 11-19.2, 12-13, 12-14, 12-14.1, 12-15, or 12-16 of the Criminal Code of 1961 or the Criminal Code of 2012, the defendant shall undergo medical testing to determine whether the defendant has any sexually transmissible disease, including a test for infection with human immunodeficiency virus (HIV) or any other identified causative agent of acquired immunodeficiency syndrome (AIDS). Any such medical test shall be performed only by appropriately licensed medical practitioners and may include an analysis of any bodily fluids as well as an examination of the defendant's person. Except as otherwise provided by law, the results of such test shall be kept strictly confidential by all medical personnel involved in the testing and must be personally delivered in a sealed envelope to the judge of the court in which the conviction was entered for the judge's inspection in camera. Acting in accordance with the best interests of the victim and the public, the judge shall have the discretion to determine to whom, if anyone, the results of the testing may be revealed. The court shall notify the defendant of the test results. The court shall also notify the victim if requested by the victim, and if the victim is under the age of 15 and if requested by the victim's parents or legal guardian, the court shall notify the victim's parents or legal guardian of the test results. The court shall provide information on the availability of HIV testing and counseling at Department of Public Health facilities to all parties to whom the results of the testing are revealed and shall direct the State's Attorney to provide the information to the victim when possible. The court shall order that the cost of any such test shall be paid by the county and may be taxed as costs against the convicted defendant.

(g-5) When an inmate is tested for an airborne communicable disease, as determined by the Illinois Department of Public Health, including, but not limited to, tuberculosis, the results of the test shall be personally delivered by the warden or his or her designee in a sealed envelope to the judge of the court in which the inmate must appear for the judge's inspection in camera if requested by the judge. Acting in accordance with the best interests of those in the courtroom, the judge shall have the discretion to determine what if any precautions need to be taken to prevent transmission of the disease in the courtroom.

(h) Whenever a defendant is convicted of an offense under Section 1 or 2 of the Hypodermic Syringes and Needles Act, the defendant shall undergo medical testing to determine whether the defendant has been exposed to human immunodeficiency virus (HIV) or any other identified causative agent of acquired immunodeficiency syndrome (AIDS). Except as otherwise provided by law, the results of such test shall be kept strictly confidential by all medical personnel involved in the testing and must be personally delivered in a sealed envelope to the judge of the court in which the conviction was entered for the judge's inspection in camera. Acting in accordance with the best interests of the public, the judge shall have the discretion to determine to whom, if anyone, the results of the testing may be revealed. The court shall notify the defendant of a positive test showing an infection with the human immunodeficiency virus (HIV). The court shall provide information on the availability of HIV testing and counseling at Department of Public Health facilities to all parties to whom the results of the testing are revealed and shall direct the State's Attorney to provide the information to the victim when possible. The court shall order that the cost of any such test shall be paid by the county and may be taxed as costs against the convicted defendant.

(i) All fines and penalties imposed under this Section for any violation of Chapters 3, 4, 6, and 11 of the Illinois Vehicle Code, or a similar provision of a local ordinance, and any violation of the Child Passenger Protection Act, or a similar provision of a local ordinance, shall be collected and disbursed by the circuit clerk as provided under the Criminal and Traffic Assessment Act.

(j) In cases when prosecution for any violation of Section 11-1.20, 11-1.30, 11-1.40, 11-1.50, 11-1.60, 11-6, 11-8, 11-9, 11-11, 11-14, 11-14.3, 11-14.4, 11-15, 11-15.1, 11-16, 11-17, 11-17.1, 11-18, 11-18.1, 11-19, 11-19.1, 11-19.2, 11-20.1, 11-20.1B, 11-20.3, 11-21, 11-30, 11-40, 12-13, 12-14, 12-14.1, 12-15, or 12-16 of the Criminal Code of 1961 or the Criminal Code of 2012, any violation of the Illinois Controlled Substances Act, any violation of the Cannabis Control Act, or any violation of the Methamphetamine Control and Community Protection Act results in conviction, a disposition of court supervision, or an order of probation granted under Section 10 of the Cannabis Control Act, Section 410 of the Illinois Controlled Substances Act, or Section 70 of the Methamphetamine Control and Community Protection Act of a defendant, the court shall determine whether the defendant is employed by a facility or center as defined under the Child Care Act of 1969, a public or private elementary or secondary school, or otherwise works with children under 18 years of age on a daily basis. When a defendant is so employed, the court shall order the Clerk of the Court to send a copy of the judgment of conviction or order of supervision or probation to the defendant's employer by certified mail. If the employer of the defendant is a school, the Clerk of the Court shall direct the mailing of a copy of the judgment of conviction or order of supervision or probation to the appropriate regional superintendent of schools. The regional superintendent of schools shall notify the State Board of Education of any notification under this subsection.

(j-5) A defendant at least 17 years of age who is convicted of a felony and who has not been previously convicted of a misdemeanor or felony and who is sentenced to a term of imprisonment in the Illinois Department of Corrections shall as a condition of his or her sentence be required by the court to attend educational courses designed to prepare the defendant for a high school diploma and to work toward a high school diploma or to work toward passing high school equivalency testing or to work toward completing a vocational training program offered by the Department of Corrections. If a defendant fails to complete the educational training required by his or her sentence during the term of incarceration, the Prisoner Review Board shall, as a condition of mandatory supervised release, require the defendant, at his or her own expense, to pursue a course of study toward a high school diploma or passage of high school equivalency testing. The Prisoner Review Board shall revoke the mandatory supervised release of a defendant who wilfully fails to comply with this subsection (j-5) upon his or her release from confinement in a penal institution while serving a mandatory supervised release term; however, the inability of the defendant after making a good faith effort to obtain financial aid or pay for the educational training shall not be deemed a wilful failure to comply. The Prisoner Review Board shall recommit the defendant whose mandatory supervised release term has been revoked under this subsection (j-5) as provided in Section 3-3-9. This subsection (j-5) does not apply to a defendant who has a high school diploma or has successfully passed high school equivalency testing. This subsection (j-5) does not apply to a defendant who is determined by the court to be a person with a developmental disability or otherwise mentally incapable of completing the educational or vocational program.

(k) (Blank).

(l) (A) Except as provided in paragraph (C) of subsection (l), whenever a defendant, who is not a citizen or national of the United States an alien as defined by the Immigration and Nationality Act, is convicted of any felony or misdemeanor offense, the court after sentencing the defendant may, upon motion of the State's Attorney, hold sentence in abeyance and remand the defendant to the custody of the Attorney General of the United States or his or her designated agent to be deported when:

(1) a final order of deportation has been issued against the defendant pursuant to proceedings under the Immigration and Nationality Act, and

(2) the deportation of the defendant would not deprecate the seriousness of the defendant's conduct and would not be inconsistent with the ends of justice.

Otherwise, the defendant shall be sentenced as provided in this Chapter V.

(B) If the defendant has already been sentenced for a felony or misdemeanor offense, or has been placed on probation under Section 10 of the Cannabis Control Act, Section 410 of the Illinois Controlled Substances Act, or Section 70 of the Methamphetamine Control and Community Protection Act, the court may, upon motion of the State's Attorney to suspend the sentence imposed, commit the defendant to the custody of the Attorney General of the United States or his or her designated agent when:

(1) a final order of deportation has been issued against the defendant pursuant to proceedings under the Immigration and Nationality Act, and

(2) the deportation of the defendant would not deprecate the seriousness of the defendant's conduct and would not be inconsistent with the ends of justice.

(C) This subsection (l) does not apply to offenders who are subject to the provisions of paragraph (2) of subsection (a) of Section 3-6-3.

(D) Upon motion of the State's Attorney, if a defendant sentenced under this Section returns to the jurisdiction of the United States, the defendant shall be recommitted to the custody of the county from which he or she was sentenced. Thereafter, the defendant shall be brought before the sentencing court, which may impose any sentence that was available under Section 5-5-3 at the time of initial sentencing. In addition, the defendant shall not be eligible for additional earned sentence credit as provided under Section 3-6-3.

(m) A person convicted of criminal defacement of property under Section 21-1.3 of the Criminal Code of 1961 or the Criminal Code of 2012, in which the property damage exceeds $300 and the property damaged is a school building, shall be ordered to perform community service that may include cleanup, removal, or painting over the defacement.

(n) The court may sentence a person convicted of a violation of Section 12-19, 12-21, 16-1.3, or 17-56, or subsection (a) or (b) of Section 12-4.4a, of the Criminal Code of 1961 or the Criminal Code of 2012 (i) to an impact incarceration program if the person is otherwise eligible for that program under Section 5-8-1.1, (ii) to community service, or (iii) if the person has a substance use disorder, as defined in the Substance Use Disorder Act, to a treatment program licensed under that Act.

(o) Whenever a person is convicted of a sex offense as defined in Section 2 of the Sex Offender Registration Act, the defendant's driver's license or permit shall be subject to renewal on an annual basis in accordance with the provisions of license renewal established by the Secretary of State.

(Source: P.A. 101-81, eff. 7-12-19; 102-168, eff. 7-27-21; 102-531, eff. 1-1-22; revised 10-12-21.)

Section 175. The Frauds Act is amended by changing Section 12 as follows:

(740 ILCS 80/12) (from Ch. 59, par. 12)

Sec. 12. When any lands, tenements or hereditaments, or any rents or profits out of the same, shall descend to any heir, or be devised to any devisee, and the personal estate of the ancestor of such heir or devisor of such devisee shall be insufficient to discharge the just demands against such ancestor, or devisor's estate, such heir or devisee shall be liable to the creditor of their ancestor or devisor to the full amount of the lands, tenements or hereditaments, or rents and profits out of the same, as may descend or be devised to the said heir or devisee; and in all cases where any heir or devisee shall be liable to pay the debts of his executor or devisor, in regard of any lands, tenements or hereditaments, or any rent or profit arising out of the same, descending or being devised to him, and shall sell, transfer, alien or make over the same before any action brought, or process sued out against him, such heir at law or devisee shall be answerable for such debts to the value of the said lands, tenements and hereditaments, rents or profits so by him transferred aliened or made over; and executions may be taken out upon any judgment so obtained against such heir or devisee, to the value of the said lands, tenements and hereditaments, rents and profits, out of the same, as if the same were his own proper debts, saving and excepting that the lands and tenements, rents and profits, by him bona fide transferred aliened, before the action brought, shall not be liable to such execution.

(Source: R.S. 1874, p. 540.)

Section 180. The Income Withholding for Support Act is amended by changing Section 20 as follows:

(750 ILCS 28/20)

Sec. 20. Entry of order for support containing income withholding provisions; income withholding notice.

(a) In addition to any content required under other laws, every order for support entered on or after July 1, 1997, shall:

(1) Require an income withholding notice to be prepared and served immediately upon any payor of the obligor by the obligee or public office, unless a written agreement is reached between and signed by both parties providing for an alternative arrangement, approved and entered into the record by the court, which ensures payment of support. In that case, the order for support shall provide that an income withholding notice is to be prepared and served only if the obligor becomes delinquent in paying the order for support; and

(2) Contain a dollar amount to be paid until payment in full of any delinquency that accrues after entry of the order for support. The amount for payment of delinquency shall not be less than 20% of the total of the current support amount and the amount to be paid periodically for payment of any arrearage stated in the order for support; and

(3) Include the obligor's Social Security Number, which the obligor shall disclose to the court. If the obligor is not a United States citizen, the obligor shall disclose to the court, and the court shall include in the order for support, the obligor's alien registration number as a noncitizen, passport number, and home country's social security or national health number, if applicable.

(b) At the time the order for support is entered, the Clerk of the Circuit Court shall provide a copy of the order to the obligor and shall make copies available to the obligee and public office.

(c) The income withholding notice shall:

(1) be in the standard format prescribed by the federal Department of Health and Human Services; and

(1.1) state the date of entry of the order for support upon which the income withholding notice is based; and

(2) direct any payor to withhold the dollar amount required for current support under the order for support; and

(3) direct any payor to withhold the dollar amount required to be paid periodically under the order for support for payment of the amount of any arrearage stated in the order for support; and

(4) direct any payor or labor union or trade union to enroll a child as a beneficiary of a health insurance plan and withhold or cause to be withheld, if applicable, any required premiums; and

(5) state the amount of the payor income withholding fee specified under this Section; and

(6) state that the amount actually withheld from the obligor's income for support and other purposes, including the payor withholding fee specified under this Section, may not be in excess of the maximum amount permitted under the federal Consumer Credit Protection Act; and

(7) in bold face type, the size of which equals the largest type on the notice, state the duties of the payor and the fines and penalties for failure to withhold and pay over income and for discharging, disciplining, refusing to hire, or otherwise penalizing the obligor because of the duty to withhold and pay over income under this Section; and

(8) state the rights, remedies, and duties of the obligor under this Section; and

(9) include the Social Security number of the obligor; and

(10) (blank); and

(11) contain the signature of the obligee or the printed name and telephone number of the authorized representative of the public office, except that the failure to contain the signature of the obligee or the printed name and telephone number of the authorized representative of the public office shall not affect the validity of the income withholding notice; and

(12) direct any payor to pay over amounts withheld for payment of support to the State Disbursement Unit.

(d) The accrual of a delinquency as a condition for service of an income withholding notice, under the exception to immediate withholding in subsection (a) of this Section, shall apply only to the initial service of an income withholding notice on a payor of the obligor.

(e) Notwithstanding the exception to immediate withholding contained in subsection (a) of this Section, if the court finds at the time of any hearing that an arrearage has accrued, the court shall order immediate service of an income withholding notice upon the payor.

(f) If the order for support, under the exception to immediate withholding contained in subsection (a) of this Section, provides that an income withholding notice is to be prepared and served only if the obligor becomes delinquent in paying the order for support, the obligor may execute a written waiver of that condition and request immediate service on the payor.

(g) The obligee or public office may serve the income withholding notice on the payor or its superintendent, manager, or other agent by ordinary mail or certified mail return receipt requested, by facsimile transmission or other electronic means, by personal delivery, or by any method provided by law for service of a summons. At the time of service on the payor and as notice that withholding has commenced, the obligee or public office shall serve a copy of the income withholding notice on the obligor by ordinary mail addressed to his or her last known address. A copy of an income withholding notice and proof of service shall be filed with the Clerk of the Circuit Court only when necessary in connection with a petition to contest, modify, suspend, terminate, or correct an income withholding notice, an action to enforce income withholding against a payor, or the resolution of other disputes involving an income withholding notice. The changes made to this subsection by this amendatory Act of the 96th General Assembly apply on and after September 1, 2009.

(h) At any time after the initial service of an income withholding notice, any other payor of the obligor may be served with the same income withholding notice without further notice to the obligor. A copy of the income withholding notice together with a proof of service on the other payor shall be filed with the Clerk of the Circuit Court.

(i) New service of an income withholding notice is not required in order to resume withholding of income in the case of an obligor with respect to whom an income withholding notice was previously served on the payor if withholding of income was terminated because of an interruption in the obligor's employment of less than 180 days.

(Source: P.A. 97-994, eff. 8-17-12; 98-81, eff. 7-15-13.)

Section 185. The Property Owned By Aliens Act is amended by changing the title of the Act and Sections 0.01, 7, and 8 as follows:

(765 ILCS 60/Act title)

An Act concerning the right of noncitizens aliens to acquire and hold real and personal property.

(765 ILCS 60/0.01) (from Ch. 6, par. 0.01)

Sec. 0.01. Short title. This Act may be cited as the Property Owned By Noncitizens Aliens Act.

(Source: P.A. 86-1324.)

(765 ILCS 60/7) (from Ch. 6, par. 7)

Sec. 7. All noncitizens aliens may acquire, hold, and dispose of real and personal property in the same manner and to the same extent as natural born citizens of the United States, and the personal estate of a noncitizen an alien dying intestate shall be distributed in the same manner as the estates of natural born citizens, and all persons interested in such estate shall be entitled to proper distributive shares thereof under the laws of this state, whether they are noncitizens aliens or not.

This amendatory Act of 1992 does not apply to the Agricultural Foreign Investment Disclosure Act.

(Source: P.A. 87-1101.)

(765 ILCS 60/8) (from Ch. 6, par. 8)

Sec. 8. An act in regard to noncitizens aliens and to restrict their right to acquire and hold real and personal estate and to provide for the disposition of the lands now owned by non-resident noncitizens aliens, approved June 16, 1887, and in force July 1, 1887, and all other acts and parts of acts in conflict with this act, are hereby repealed.

(Source: Laws 1897, p. 5.)

Section 190. The Property Taxes of Alien Landlords Act is amended by changing the title of the Act and Sections 0.01 and 1 as follows:

(765 ILCS 725/Act title)

An Act to prevent noncitizen alien landlords from including the payment of taxes in the rent of farm lands as a part of the rental thereof.

(765 ILCS 725/0.01) (from Ch. 6, par. 8.9)

Sec. 0.01. Short title. This Act may be cited as the Property Taxes Of Noncitizen Alien Landlords Act.

(Source: P.A. 86-1324.)

(765 ILCS 725/1) (from Ch. 6, par. 9)

Sec. 1. No contract, agreement or lease in writing or by parol, by which any lands or tenements therein are demised or leased by any noncitizen alien or his agents for the purpose of farming, cultivation or the raising of crops thereon, shall contain any provision requiring the tenant or other person for him, to pay taxes on said lands or tenements, or any part thereof, and all such provisions, agreements and leases so made are declared void as to the taxes aforesaid. If any noncitizen alien landlord or his agents shall receive in advance or at any other time any sum of money or article of value from any tenant in lieu of such taxes, directly or indirectly, the same may be recovered back by such tenant before any court having jurisdiction of the amount thereof, and all provisions or agreements in writing or otherwise to pay such taxes shall be held in all courts of this state to be void.

(Source: P.A. 81-1509.)

Section 195. The Illinois Human Rights Act is amended by changing Section 2-101 as follows:

(775 ILCS 5/2-101)

Sec. 2-101. Definitions. The following definitions are applicable strictly in the context of this Article.

(A) Employee.

(1) "Employee" includes:

(a) Any individual performing services for remuneration within this State for an employer;

(b) An apprentice;

(c) An applicant for any apprenticeship.

For purposes of subsection (D) of Section 2-102 of this Act, "employee" also includes an unpaid intern. An unpaid intern is a person who performs work for an employer under the following circumstances:

(i) the employer is not committed to hiring the person performing the work at the conclusion of the intern's tenure;

(ii) the employer and the person performing the work agree that the person is not entitled to wages for the work performed; and

(iii) the work performed:

(I) supplements training given in an educational environment that may enhance the employability of the intern;

(II) provides experience for the benefit of the person performing the work;

(III) does not displace regular employees;

(IV) is performed under the close supervision of existing staff; and

(V) provides no immediate advantage to the employer providing the training and may occasionally impede the operations of the employer.

(2) "Employee" does not include:

(a) (Blank);

(b) Individuals employed by persons who are not "employers" as defined by this Act;

(c) Elected public officials or the members of their immediate personal staffs;

(d) Principal administrative officers of the State or of any political subdivision, municipal corporation or other governmental unit or agency;

(e) A person in a vocational rehabilitation facility certified under federal law who has been designated an evaluee, trainee, or work activity client.

(B) Employer.

(1) "Employer" includes:

(a) Any person employing one or more employees within Illinois during 20 or more calendar weeks within the calendar year of or preceding the alleged violation;

(b) Any person employing one or more employees when a complainant alleges civil rights violation due to unlawful discrimination based upon his or her physical or mental disability unrelated to ability, pregnancy, or sexual harassment;

(c) The State and any political subdivision, municipal corporation or other governmental unit or agency, without regard to the number of employees;

(d) Any party to a public contract without regard to the number of employees;

(e) A joint apprenticeship or training committee without regard to the number of employees.

(2) "Employer" does not include any place of worship, religious corporation, association, educational institution, society, or non-profit nursing institution conducted by and for those who rely upon treatment by prayer through spiritual means in accordance with the tenets of a recognized church or religious denomination with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such place of worship, corporation, association, educational institution, society or non-profit nursing institution of its activities.

(C) Employment Agency. "Employment Agency" includes both public and private employment agencies and any person, labor organization, or labor union having a hiring hall or hiring office regularly undertaking, with or without compensation, to procure opportunities to work, or to procure, recruit, refer or place employees.

(D) Labor Organization. "Labor Organization" includes any organization, labor union, craft union, or any voluntary unincorporated association designed to further the cause of the rights of union labor which is constituted for the purpose, in whole or in part, of collective bargaining or of dealing with employers concerning grievances, terms or conditions of employment, or apprenticeships or applications for apprenticeships, or of other mutual aid or protection in connection with employment, including apprenticeships or applications for apprenticeships.

(E) Sexual Harassment. "Sexual harassment" means any unwelcome sexual advances or requests for sexual favors or any conduct of a sexual nature when (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual's employment, (2) submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or (3) such conduct has the purpose or effect of substantially interfering with an individual's work performance or creating an intimidating, hostile or offensive working environment.

For purposes of this definition, the phrase "working environment" is not limited to a physical location an employee is assigned to perform his or her duties.

(E-1) Harassment. "Harassment" means any unwelcome conduct on the basis of an individual's actual or perceived race, color, religion, national origin, ancestry, age, sex, marital status, order of protection status, disability, military status, sexual orientation, pregnancy, unfavorable discharge from military service, citizenship status, or work authorization status that has the purpose or effect of substantially interfering with the individual's work performance or creating an intimidating, hostile, or offensive working environment. For purposes of this definition, the phrase "working environment" is not limited to a physical location an employee is assigned to perform his or her duties.

(F) Religion. "Religion" with respect to employers includes all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate an employee's or prospective employee's religious observance or practice without undue hardship on the conduct of the employer's business.

(G) Public Employer. "Public employer" means the State, an agency or department thereof, unit of local government, school district, instrumentality or political subdivision.

(H) Public Employee. "Public employee" means an employee of the State, agency or department thereof, unit of local government, school district, instrumentality or political subdivision. "Public employee" does not include public officers or employees of the General Assembly or agencies thereof.

(I) Public Officer. "Public officer" means a person who is elected to office pursuant to the Constitution or a statute or ordinance, or who is appointed to an office which is established, and the qualifications and duties of which are prescribed, by the Constitution or a statute or ordinance, to discharge a public duty for the State, agency or department thereof, unit of local government, school district, instrumentality or political subdivision.

(J) Eligible Bidder. "Eligible bidder" means a person who, prior to contract award or prior to bid opening for State contracts for construction or construction-related services, has filed with the Department a properly completed, sworn and currently valid employer report form, pursuant to the Department's regulations. The provisions of this Article relating to eligible bidders apply only to bids on contracts with the State and its departments, agencies, boards, and commissions, and the provisions do not apply to bids on contracts with units of local government or school districts.

(K) Citizenship Status. "Citizenship status" means the status of being:

(1) a born U.S. citizen;

(2) a naturalized U.S. citizen;

(3) a U.S. national; or

(4) a person born outside the United States and not a U.S. citizen who is not an unauthorized noncitizen alien and who is protected from discrimination under the provisions of Section 1324b of Title 8 of the United States Code, as now or hereafter amended.

(L) Work Authorization Status. "Work authorization status" means the status of being a person born outside of the United States, and not a U.S. citizen, who is authorized by the federal government to work in the United States.

(Source: P.A. 101-221, eff. 1-1-20; 101-430, eff. 7-1-20; 102-233, eff. 8-2-21; 102-558, eff. 8-20-21.)

Section 200. The Resident Alien Course Act is amended by changing the title of the Act and Sections 0.01, 1, 2, and 3 as follows:

(815 ILCS 400/Act title)

An Act concerning fees charged for courses offered to persons seeking permanent resident noncitizen alien status under the Immigration Reform and Control Act of 1986.

(815 ILCS 400/0.01) (from Ch. 111, par. 8050)

Sec. 0.01. Short title. This Act may be cited as the Resident Noncitizen Alien Course Act.

(Source: P.A. 86-1324.)

(815 ILCS 400/1) (from Ch. 111, par. 8051)

Sec. 1. No individual or agency, authorized by the U.S. Immigration and Naturalization Service to offer a course leading to a certificate of satisfactory pursuit for issuance of permanent resident noncitizen alien status, may charge a fee for such course in excess of $5 per hour per individual up to the first 60 hours of instruction or $500 for up to 12 months of instruction from the date of registration. As used in this Section, the term "fee" includes all costs associated with the course, including the costs of instruction and materials.

(Source: P.A. 86-831.)

(815 ILCS 400/2) (from Ch. 111, par. 8052)

Sec. 2. No individual or agency which offers any service or course with the promise of preparing the recipient or enrollee for the English and civics exam of the U.S. Immigration and Naturalization Service for issuance of permanent resident noncitizen alien status may charge a fee for such service or course in excess of $5 per hour per individual up to the first 60 hours of instruction or $500 for up to 12 months of instruction from the date of registration. As used in this Section, the term "fee" includes all costs associated with the service or course, including the costs of instruction and materials.

(Source: P.A. 86-831.)

(815 ILCS 400/3) (from Ch. 111, par. 8053)

Sec. 3. Any individual or agency offering a course or service described in Section 2 shall include within any literature or print or electronic advertisement for such service or course a statement that such service or course is designed to prepare the recipient or enrollee for the English and civics exam of the U.S. Immigration and Naturalization Service and that the individual or agency offering the service or course does not issue the certificate of satisfactory pursuit required by the U.S. Immigration and Naturalization Service for issuance of permanent resident noncitizen alien status.

(Source: P.A. 86-831.)

Section 205. The Consumer Fraud and Deceptive Business Practices Act is amended by changing Section 2AA as follows:

(815 ILCS 505/2AA)

Sec. 2AA. Immigration services.

(a) "Immigration matter" means any proceeding, filing, or action affecting the nonimmigrant, immigrant or citizenship status of any person that arises under immigration and naturalization law, executive order or presidential proclamation of the United States or any foreign country, or that arises under action of the United States Citizenship and Immigration Services, the United States Department of Labor, or the United States Department of State.

"Immigration assistance service" means any information or action provided or offered to customers or prospective customers related to immigration matters, excluding legal advice, recommending a specific course of legal action, or providing any other assistance that requires legal analysis, legal judgment, or interpretation of the law.

"Compensation" means money, property, services, promise of payment, or anything else of value.

"Employed by" means that a person is on the payroll of the employer and the employer deducts from the employee's paycheck social security and withholding taxes, or receives compensation from the employer on a commission basis or as an independent contractor.

"Reasonable costs" means actual costs or, if actual costs cannot be calculated, reasonably estimated costs of such things as photocopying, telephone calls, document requests, and filing fees for immigration forms, and other nominal costs incidental to assistance in an immigration matter.

(a-1) The General Assembly finds and declares that private individuals who assist persons with immigration matters have a significant impact on the ability of their clients to reside and work within the United States and to establish and maintain stable families and business relationships. The General Assembly further finds that that assistance and its impact also have a significant effect on the cultural, social, and economic life of the State of Illinois and thereby substantially affect the public interest. It is the intent of the General Assembly to establish rules of practice and conduct for those individuals to promote honesty and fair dealing with residents and to preserve public confidence.

(a-5) The following persons are exempt from this Section, provided they prove the exemption by a preponderance of the evidence:

(1) An attorney licensed to practice law in any state or territory of the United States, or of any foreign country when authorized by the Illinois Supreme Court, to the extent the attorney renders immigration assistance service in the course of his or her practice as an attorney.

(2) A legal intern, as described by the rules of the Illinois Supreme Court, employed by and under the direct supervision of a licensed attorney and rendering immigration assistance service in the course of the intern's employment.

(3) A not-for-profit organization recognized by the Board of Immigration Appeals under 8 CFR 292.2(a) and employees of those organizations accredited under 8 CFR 292.2(d).

(4) Any organization employing or desiring to employ a documented or undocumented immigrant or nonimmigrant alien, where the organization, its employees or its agents provide advice or assistance in immigration matters to documented or undocumented immigrant or nonimmigrant alien employees or potential employees without compensation from the individuals to whom such advice or assistance is provided.

Nothing in this Section shall regulate any business to the extent that such regulation is prohibited or preempted by State or federal law.

All other persons providing or offering to provide immigration assistance service shall be subject to this Section.

(b) Any person who provides or offers to provide immigration assistance service may perform only the following services:

(1) Completing a government agency form, requested by the customer and appropriate to the customer's needs, only if the completion of that form does not involve a legal judgment for that particular matter.

(2) Transcribing responses to a government agency form which is related to an immigration matter, but not advising a customer as to his or her answers on those forms.

(3) Translating information on forms to a customer and translating the customer's answers to questions posed on those forms.

(4) Securing for the customer supporting documents currently in existence, such as birth and marriage certificates, which may be needed to be submitted with government agency forms.

(5) Translating documents from a foreign language into English.

(6) Notarizing signatures on government agency forms, if the person performing the service is a notary public of the State of Illinois.

(7) Making referrals, without fee, to attorneys who could undertake legal representation for a person in an immigration matter.

(8) Preparing or arranging for the preparation of photographs and fingerprints.

(9) Arranging for the performance of medical testing (including X-rays and AIDS tests) and the obtaining of reports of such test results.

(10) Conducting English language and civics courses.

(11) Other services that the Attorney General determines by rule may be appropriately performed by such persons in light of the purposes of this Section.

Fees for a notary public, agency, or any other person who is not an attorney or an accredited representative filling out immigration forms shall be limited to the maximum fees set forth in subsections (a) and (b) of Section 3-104 of the Illinois Notary Public Act (5 ILCS 312/3-104). The maximum fee schedule set forth in subsections (a) and (b) of Section 3-104 of the Illinois Notary Public Act shall apply to any person that provides or offers to provide immigration assistance service performing the services described therein. The Attorney General may promulgate rules establishing maximum fees that may be charged for any services not described in that subsection. The maximum fees must be reasonable in light of the costs of providing those services and the degree of professional skill required to provide the services.

No person subject to this Act shall charge fees directly or indirectly for referring an individual to an attorney or for any immigration matter not authorized by this Article, provided that a person may charge a fee for notarizing documents as permitted by the Illinois Notary Public Act.

(c) Any person performing such services shall register with the Illinois Attorney General and submit verification of malpractice insurance or of a surety bond.

(d) Except as provided otherwise in this subsection, before providing any assistance in an immigration matter a person shall provide the customer with a written contract that includes the following:

(1) An explanation of the services to be performed.

(2) Identification of all compensation and costs to be charged to the customer for the services to be performed.

(3) A statement that documents submitted in support of an application for nonimmigrant, immigrant, or naturalization status may not be retained by the person for any purpose, including payment of compensation or costs.

This subsection does not apply to a not-for-profit organization that provides advice or assistance in immigration matters to clients without charge beyond a reasonable fee to reimburse the organization's or clinic's reasonable costs relating to providing immigration services to that client.

(e) Any person who provides or offers immigration assistance service and is not exempted from this Section, shall post signs at his or her place of business, setting forth information in English and in every other language in which the person provides or offers to provide immigration assistance service. Each language shall be on a separate sign. Signs shall be posted in a location where the signs will be visible to customers. Each sign shall be at least 11 inches by 17 inches, and shall contain the following:

(1) The statement "I AM NOT AN ATTORNEY LICENSED TO PRACTICE LAW AND MAY NOT GIVE LEGAL ADVICE OR ACCEPT FEES FOR LEGAL ADVICE.".

(2) The statement "I AM NOT ACCREDITED TO REPRESENT YOU BEFORE THE UNITED STATES IMMIGRATION AND NATURALIZATION SERVICE AND THE IMMIGRATION BOARD OF APPEALS.".

(3) The fee schedule.

(4) The statement that "You may cancel any contract within 3 working days and get your money back for services not performed.".

(5) Additional information the Attorney General may require by rule.

Every person engaged in immigration assistance service who is not an attorney who advertises immigration assistance service in a language other than English, whether by radio, television, signs, pamphlets, newspapers, or other written communication, with the exception of a single desk plaque, shall include in the document, advertisement, stationery, letterhead, business card, or other comparable written material the following notice in English and the language in which the written communication appears. This notice shall be of a conspicuous size, if in writing, and shall state: "I AM NOT AN ATTORNEY LICENSED TO PRACTICE LAW IN ILLINOIS AND MAY NOT GIVE LEGAL ADVICE OR ACCEPT FEES FOR LEGAL ADVICE.". If such advertisement is by radio or television, the statement may be modified but must include substantially the same message.

Any person who provides or offers immigration assistance service and is not exempted from this Section shall not, in any document, advertisement, stationery, letterhead, business card, or other comparable written material, literally translate from English into another language terms or titles including, but not limited to, notary public, notary, licensed, attorney, lawyer, or any other term that implies the person is an attorney. To illustrate, the words "notario" and "poder notarial" are prohibited under this provision.

If not subject to penalties under subsection (a) of Section 3-103 of the Illinois Notary Public Act (5 ILCS 312/3-103), violations of this subsection shall result in a fine of $1,000. Violations shall not preempt or preclude additional appropriate civil or criminal penalties.

(f) The written contract shall be in both English and in the language of the customer.

(g) A copy of the contract shall be provided to the customer upon the customer's execution of the contract.

(h) A customer has the right to rescind a contract within 72 hours after his or her signing of the contract.

(i) Any documents identified in paragraph (3) of subsection (c) shall be returned upon demand of the customer.

(j) No person engaged in providing immigration services who is not exempted under this Section shall do any of the following:

(1) Make any statement that the person can or will obtain special favors from or has special influence with the United States Immigration and Naturalization Service or any other government agency.

(2) Retain any compensation for service not performed.

(2.5) Accept payment in exchange for providing legal advice or any other assistance that requires legal analysis, legal judgment, or interpretation of the law.

(3) Refuse to return documents supplied by, prepared on behalf of, or paid for by the customer upon the request of the customer. These documents must be returned upon request even if there is a fee dispute between the immigration assistant and the customer.

(4) Represent or advertise, in connection with the provision of assistance in immigration matters, other titles of credentials, including but not limited to "notary public" or "immigration consultant," that could cause a customer to believe that the person possesses special professional skills or is authorized to provide advice on an immigration matter; provided that a notary public appointed by the Illinois Secretary of State may use the term "notary public" if the use is accompanied by the statement that the person is not an attorney; the term "notary public" may not be translated to another language; for example "notario" is prohibited.

(5) Provide legal advice, recommend a specific course of legal action, or provide any other assistance that requires legal analysis, legal judgment, or interpretation of the law.

(6) Make any misrepresentation of false statement, directly or indirectly, to influence, persuade, or induce patronage.

(k) (Blank).

(l) (Blank).

(m) Any person who violates any provision of this Section, or the rules and regulations issued under this Section, shall be guilty of a Class A misdemeanor for a first offense and a Class 3 felony for a second or subsequent offense committed within 5 years of a previous conviction for the same offense.

Upon his own information or upon the complaint of any person, the Attorney General or any State's Attorney, or a municipality with a population of more than 1,000,000, may maintain an action for injunctive relief and also seek a civil penalty not exceeding $50,000 in the circuit court against any person who violates any provision of this Section. These remedies are in addition to, and not in substitution for, other available remedies.

If the Attorney General or any State's Attorney or a municipality with a population of more than 1,000,000 fails to bring an action as provided under this Section any person may file a civil action to enforce the provisions of this Article and maintain an action for injunctive relief, for compensatory damages to recover prohibited fees, or for such additional relief as may be appropriate to deter, prevent, or compensate for the violation. In order to deter violations of this Section, courts shall not require a showing of the traditional elements for equitable relief. A prevailing plaintiff may be awarded 3 times the prohibited fees or a minimum of $1,000 in punitive damages, attorney's fees, and costs of bringing an action under this Section. It is the express intention of the General Assembly that remedies for violation of this Section be cumulative.

(n) No unit of local government, including any home rule unit, shall have the authority to regulate immigration assistance services unless such regulations are at least as stringent as those contained in Public Act 87-1211. It is declared to be the law of this State, pursuant to paragraph (i) of Section 6 of Article VII of the Illinois Constitution of 1970, that Public Act 87-1211 is a limitation on the authority of a home rule unit to exercise powers concurrently with the State. The limitations of this Section do not apply to a home rule unit that has, prior to January 1, 1993 (the effective date of Public Act 87-1211), adopted an ordinance regulating immigration assistance services.

(o) This Section is severable under Section 1.31 of the Statute on Statutes.

(p) The Attorney General shall issue rules not inconsistent with this Section for the implementation, administration, and enforcement of this Section. The rules may provide for the following:

(1) The content, print size, and print style of the signs required under subsection (e). Print sizes and styles may vary from language to language.

(2) Standard forms for use in the administration of this Section.

(3) Any additional requirements deemed necessary.

(Source: P.A. 99-679, eff. 1-1-17; 100-863, eff. 8-14-18.)

Section 210. The Workers' Compensation Act is amended by changing Sections 1 and 7 as follows:

(820 ILCS 305/1) (from Ch. 48, par. 138.1)

Sec. 1. This Act may be cited as the Workers' Compensation Act.

(a) The term "employer" as used in this Act means:

1. The State and each county, city, town, township, incorporated village, school district, body politic, or municipal corporation therein.

2. Every person, firm, public or private corporation, including hospitals, public service, eleemosynary, religious or charitable corporations or associations who has any person in service or under any contract for hire, express or implied, oral or written, and who is engaged in any of the enterprises or businesses enumerated in Section 3 of this Act, or who at or prior to the time of the accident to the employee for which compensation under this Act may be claimed, has in the manner provided in this Act elected to become subject to the provisions of this Act, and who has not, prior to such accident, effected a withdrawal of such election in the manner provided in this Act.

3. Any one engaging in any business or enterprise referred to in subsections 1 and 2 of Section 3 of this Act who undertakes to do any work enumerated therein, is liable to pay compensation to his own immediate employees in accordance with the provisions of this Act, and in addition thereto if he directly or indirectly engages any contractor whether principal or sub-contractor to do any such work, he is liable to pay compensation to the employees of any such contractor or sub-contractor unless such contractor or sub-contractor has insured, in any company or association authorized under the laws of this State to insure the liability to pay compensation under this Act, or guaranteed his liability to pay such compensation. With respect to any time limitation on the filing of claims provided by this Act, the timely filing of a claim against a contractor or subcontractor, as the case may be, shall be deemed to be a timely filing with respect to all persons upon whom liability is imposed by this paragraph.

In the event any such person pays compensation under this subsection he may recover the amount thereof from the contractor or sub-contractor, if any, and in the event the contractor pays compensation under this subsection he may recover the amount thereof from the sub-contractor, if any.

This subsection does not apply in any case where the accident occurs elsewhere than on, in or about the immediate premises on which the principal has contracted that the work be done.

4. Where an employer operating under and subject to the provisions of this Act loans an employee to another such employer and such loaned employee sustains a compensable accidental injury in the employment of such borrowing employer and where such borrowing employer does not provide or pay the benefits or payments due such injured employee, such loaning employer is liable to provide or pay all benefits or payments due such employee under this Act and as to such employee the liability of such loaning and borrowing employers is joint and several, provided that such loaning employer is in the absence of agreement to the contrary entitled to receive from such borrowing employer full reimbursement for all sums paid or incurred pursuant to this paragraph together with reasonable attorneys' fees and expenses in any hearings before the Illinois Workers' Compensation Commission or in any action to secure such reimbursement. Where any benefit is provided or paid by such loaning employer the employee has the duty of rendering reasonable cooperation in any hearings, trials or proceedings in the case, including such proceedings for reimbursement.

Where an employee files an Application for Adjustment of Claim with the Illinois Workers' Compensation Commission alleging that his claim is covered by the provisions of the preceding paragraph, and joining both the alleged loaning and borrowing employers, they and each of them, upon written demand by the employee and within 7 days after receipt of such demand, shall have the duty of filing with the Illinois Workers' Compensation Commission a written admission or denial of the allegation that the claim is covered by the provisions of the preceding paragraph and in default of such filing or if any such denial be ultimately determined not to have been bona fide then the provisions of Paragraph K of Section 19 of this Act shall apply.

An employer whose business or enterprise or a substantial part thereof consists of hiring, procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wages notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this Section.

(b) The term "employee" as used in this Act means:

1. Every person in the service of the State, including members of the General Assembly, members of the Commerce Commission, members of the Illinois Workers' Compensation Commission, and all persons in the service of the University of Illinois, county, including deputy sheriffs and assistant state's attorneys, city, town, township, incorporated village or school district, body politic, or municipal corporation therein, whether by election, under appointment or contract of hire, express or implied, oral or written, including all members of the Illinois National Guard while on active duty in the service of the State, and all probation personnel of the Juvenile Court appointed pursuant to Article VI of the Juvenile Court Act of 1987, and including any official of the State, any county, city, town, township, incorporated village, school district, body politic or municipal corporation therein except any duly appointed member of a police department in any city whose population exceeds 500,000 according to the last Federal or State census, and except any member of a fire insurance patrol maintained by a board of underwriters in this State. A duly appointed member of a fire department in any city, the population of which exceeds 500,000 according to the last federal or State census, is an employee under this Act only with respect to claims brought under paragraph (c) of Section 8.

One employed by a contractor who has contracted with the State, or a county, city, town, township, incorporated village, school district, body politic or municipal corporation therein, through its representatives, is not considered as an employee of the State, county, city, town, township, incorporated village, school district, body politic or municipal corporation which made the contract.

2. Every person in the service of another under any contract of hire, express or implied, oral or written, including persons whose employment is outside of the State of Illinois where the contract of hire is made within the State of Illinois, persons whose employment results in fatal or non-fatal injuries within the State of Illinois where the contract of hire is made outside of the State of Illinois, and persons whose employment is principally localized within the State of Illinois, regardless of the place of the accident or the place where the contract of hire was made, and including noncitizens aliens, and minors who, for the purpose of this Act are considered the same and have the same power to contract, receive payments and give quittances therefor, as adult employees.

3. Every sole proprietor and every partner of a business may elect to be covered by this Act.

An employee or his dependents under this Act who shall have a cause of action by reason of any injury, disablement or death arising out of and in the course of his employment may elect to pursue his remedy in the State where injured or disabled, or in the State where the contract of hire is made, or in the State where the employment is principally localized.

However, any employer may elect to provide and pay compensation to any employee other than those engaged in the usual course of the trade, business, profession or occupation of the employer by complying with Sections 2 and 4 of this Act. Employees are not included within the provisions of this Act when excluded by the laws of the United States relating to liability of employers to their employees for personal injuries where such laws are held to be exclusive.

The term "employee" does not include persons performing services as real estate broker, broker-salesman, or salesman when such persons are paid by commission only.

(c) "Commission" means the Industrial Commission created by Section 5 of "The Civil Administrative Code of Illinois", approved March 7, 1917, as amended, or the Illinois Workers' Compensation Commission created by Section 13 of this Act.

(d) To obtain compensation under this Act, an employee bears the burden of showing, by a preponderance of the evidence, that he or she has sustained accidental injuries arising out of and in the course of the employment.

(Source: P.A. 97-18, eff. 6-28-11; 97-268, eff. 8-8-11; 97-813, eff. 7-13-12.)

(820 ILCS 305/7) (from Ch. 48, par. 138.7)

Sec. 7. The amount of compensation which shall be paid for an accidental injury to the employee resulting in death is:

(a) If the employee leaves surviving a widow, widower, child or children, the applicable weekly compensation rate computed in accordance with subparagraph 2 of paragraph (b) of Section 8, shall be payable during the life of the widow or widower and if any surviving child or children shall not be physically or mentally incapacitated then until the death of the widow or widower or until the youngest child shall reach the age of 18, whichever shall come later; provided that if such child or children shall be enrolled as a full time student in any accredited educational institution, the payments shall continue until such child has attained the age of 25. In the event any surviving child or children shall be physically or mentally incapacitated, the payments shall continue for the duration of such incapacity.

The term "child" means a child whom the deceased employee left surviving, including a posthumous child, a child legally adopted, a child whom the deceased employee was legally obligated to support or a child to whom the deceased employee stood in loco parentis. The term "children" means the plural of "child".

The term "physically or mentally incapacitated child or children" means a child or children incapable of engaging in regular and substantial gainful employment.

In the event of the remarriage of a widow or widower, where the decedent did not leave surviving any child or children who, at the time of such remarriage, are entitled to compensation benefits under this Act, the surviving spouse shall be paid a lump sum equal to 2 years compensation benefits and all further rights of such widow or widower shall be extinguished.

If the employee leaves surviving any child or children under 18 years of age who at the time of death shall be entitled to compensation under this paragraph (a) of this Section, the weekly compensation payments herein provided for such child or children shall in any event continue for a period of not less than 6 years.

Any beneficiary entitled to compensation under this paragraph (a) of this Section shall receive from the special fund provided in paragraph (f) of this Section, in addition to the compensation herein provided, supplemental benefits in accordance with paragraph (g) of Section 8.

(b) If no compensation is payable under paragraph (a) of this Section and the employee leaves surviving a parent or parents who at the time of the accident were totally dependent upon the earnings of the employee then weekly payments equal to the compensation rate payable in the case where the employee leaves surviving a widow or widower, shall be paid to such parent or parents for the duration of their lives, and in the event of the death of either, for the life of the survivor.

(c) If no compensation is payable under paragraphs (a) or (b) of this Section and the employee leaves surviving any child or children who are not entitled to compensation under the foregoing paragraph (a) but who at the time of the accident were nevertheless in any manner dependent upon the earnings of the employee, or leaves surviving a parent or parents who at the time of the accident were partially dependent upon the earnings of the employee, then there shall be paid to such dependent or dependents for a period of 8 years weekly compensation payments at such proportion of the applicable rate if the employee had left surviving a widow or widower as such dependency bears to total dependency. In the event of the death of any such beneficiary the share of such beneficiary shall be divided equally among the surviving beneficiaries and in the event of the death of the last such beneficiary all the rights under this paragraph shall be extinguished.

(d) If no compensation is payable under paragraphs (a), (b) or (c) of this Section and the employee leaves surviving any grandparent, grandparents, grandchild or grandchildren or collateral heirs dependent upon the employee's earnings to the extent of 50% or more of total dependency, then there shall be paid to such dependent or dependents for a period of 5 years weekly compensation payments at such proportion of the applicable rate if the employee had left surviving a widow or widower as such dependency bears to total dependency. In the event of the death of any such beneficiary the share of such beneficiary shall be divided equally among the surviving beneficiaries and in the event of the death of the last such beneficiary all rights hereunder shall be extinguished.

(e) The compensation to be paid for accidental injury which results in death, as provided in this Section, shall be paid to the persons who form the basis for determining the amount of compensation to be paid by the employer, the respective shares to be in the proportion of their respective dependency at the time of the accident on the earnings of the deceased. The Commission or an Arbitrator thereof may, in its or his discretion, order or award the payment to the parent or grandparent of a child for the latter's support the amount of compensation which but for such order or award would have been paid to such child as its share of the compensation payable, which order or award may be modified from time to time by the Commission in its discretion with respect to the person to whom shall be paid the amount of the order or award remaining unpaid at the time of the modification.

The payments of compensation by the employer in accordance with the order or award of the Commission discharges such employer from all further obligation as to such compensation.

(f) The sum of $8,000 for burial expenses shall be paid by the employer to the widow or widower, other dependent, next of kin or to the person or persons incurring the expense of burial.

In the event the employer failed to provide necessary first aid, medical, surgical or hospital service, he shall pay the cost thereof to the person or persons entitled to compensation under paragraphs (a), (b), (c) or (d) of this Section, or to the person or persons incurring the obligation therefore, or providing the same.

On January 15 and July 15, 1981, and on January 15 and July 15 of each year thereafter the employer shall within 60 days pay a sum equal to 1/8 of 1% of all compensation payments made by him after July 1, 1980, either under this Act or the Workers' Occupational Diseases Act, whether by lump sum settlement or weekly compensation payments, but not including hospital, surgical or rehabilitation payments, made during the first 6 months and during the second 6 months respectively of the fiscal year next preceding the date of the payments, into a special fund which shall be designated the "Second Injury Fund", of which the State Treasurer is ex-officio custodian, such special fund to be held and disbursed for the purposes hereinafter stated in paragraphs (f) and (g) of Section 8, either upon the order of the Commission or of a competent court. Said special fund shall be deposited the same as are State funds and any interest accruing thereon shall be added thereto every 6 months. It is subject to audit the same as State funds and accounts and is protected by the General bond given by the State Treasurer. It is considered always appropriated for the purposes of disbursements as provided in Section 8, paragraph (f), of this Act, and shall be paid out and disbursed as therein provided and shall not at any time be appropriated or diverted to any other use or purpose.

On January 15, 1991, the employer shall further pay a sum equal to one half of 1% of all compensation payments made by him from January 1, 1990 through June 30, 1990 either under this Act or under the Workers' Occupational Diseases Act, whether by lump sum settlement or weekly compensation payments, but not including hospital, surgical or rehabilitation payments, into an additional Special Fund which shall be designated as the "Rate Adjustment Fund". On March 15, 1991, the employer shall pay into the Rate Adjustment Fund a sum equal to one half of 1% of all such compensation payments made from July 1, 1990 through December 31, 1990. Within 60 days after July 15, 1991, the employer shall pay into the Rate Adjustment Fund a sum equal to one half of 1% of all such compensation payments made from January 1, 1991 through June 30, 1991. Within 60 days after January 15 of 1992 and each subsequent year through 1996, the employer shall pay into the Rate Adjustment Fund a sum equal to one half of 1% of all such compensation payments made in the last 6 months of the preceding calendar year. Within 60 days after July 15 of 1992 and each subsequent year through 1995, the employer shall pay into the Rate Adjustment Fund a sum equal to one half of 1% of all such compensation payments made in the first 6 months of the same calendar year. Within 60 days after January 15 of 1997 and each subsequent year through 2005, the employer shall pay into the Rate Adjustment Fund a sum equal to three-fourths of 1% of all such compensation payments made in the last 6 months of the preceding calendar year. Within 60 days after July 15 of 1996 and each subsequent year through 2004, the employer shall pay into the Rate Adjustment Fund a sum equal to three-fourths of 1% of all such compensation payments made in the first 6 months of the same calendar year. Within 60 days after July 15 of 2005, the employer shall pay into the Rate Adjustment Fund a sum equal to 1% of such compensation payments made in the first 6 months of the same calendar year. Within 60 days after January 15 of 2006 and each subsequent year, the employer shall pay into the Rate Adjustment Fund a sum equal to 1.25% of such compensation payments made in the last 6 months of the preceding calendar year. Within 60 days after July 15 of 2006 and each subsequent year, the employer shall pay into the Rate Adjustment Fund a sum equal to 1.25% of such compensation payments made in the first 6 months of the same calendar year. The administrative costs of collecting assessments from employers for the Rate Adjustment Fund shall be paid from the Rate Adjustment Fund. The cost of an actuarial audit of the Fund shall be paid from the Rate Adjustment Fund. The State Treasurer is ex officio custodian of such Special Fund and the same shall be held and disbursed for the purposes hereinafter stated in paragraphs (f) and (g) of Section 8 upon the order of the Commission or of a competent court. The Rate Adjustment Fund shall be deposited the same as are State funds and any interest accruing thereon shall be added thereto every 6 months. It shall be subject to audit the same as State funds and accounts and shall be protected by the general bond given by the State Treasurer. It is considered always appropriated for the purposes of disbursements as provided in paragraphs (f) and (g) of Section 8 of this Act and shall be paid out and disbursed as therein provided and shall not at any time be appropriated or diverted to any other use or purpose. Within 5 days after the effective date of this amendatory Act of 1990, the Comptroller and the State Treasurer shall transfer $1,000,000 from the General Revenue Fund to the Rate Adjustment Fund. By February 15, 1991, the Comptroller and the State Treasurer shall transfer $1,000,000 from the Rate Adjustment Fund to the General Revenue Fund. The Comptroller and Treasurer are authorized to make transfers at the request of the Chairman up to a total of $19,000,000 from the Second Injury Fund, the General Revenue Fund, and the Workers' Compensation Benefit Trust Fund to the Rate Adjustment Fund to the extent that there is insufficient money in the Rate Adjustment Fund to pay claims and obligations. Amounts may be transferred from the General Revenue Fund only if the funds in the Second Injury Fund or the Workers' Compensation Benefit Trust Fund are insufficient to pay claims and obligations of the Rate Adjustment Fund. All amounts transferred from the Second Injury Fund, the General Revenue Fund, and the Workers' Compensation Benefit Trust Fund shall be repaid from the Rate Adjustment Fund within 270 days of a transfer, together with interest at the rate earned by moneys on deposit in the Fund or Funds from which the moneys were transferred.

Upon a finding by the Commission, after reasonable notice and hearing, that any employer has willfully and knowingly failed to pay the proper amounts into the Second Injury Fund or the Rate Adjustment Fund required by this Section or if such payments are not made within the time periods prescribed by this Section, the employer shall, in addition to such payments, pay a penalty of 20% of the amount required to be paid or $2,500, whichever is greater, for each year or part thereof of such failure to pay. This penalty shall only apply to obligations of an employer to the Second Injury Fund or the Rate Adjustment Fund accruing after the effective date of this amendatory Act of 1989. All or part of such a penalty may be waived by the Commission for good cause shown.

Any obligations of an employer to the Second Injury Fund and Rate Adjustment Fund accruing prior to the effective date of this amendatory Act of 1989 shall be paid in full by such employer within 5 years of the effective date of this amendatory Act of 1989, with at least one-fifth of such obligation to be paid during each year following the effective date of this amendatory Act of 1989. If the Commission finds, following reasonable notice and hearing, that an employer has failed to make timely payment of any obligation accruing under the preceding sentence, the employer shall, in addition to all other payments required by this Section, be liable for a penalty equal to 20% of the overdue obligation or $2,500, whichever is greater, for each year or part thereof that obligation is overdue. All or part of such a penalty may be waived by the Commission for good cause shown.

The Chairman of the Illinois Workers' Compensation Commission shall, annually, furnish to the Director of the Department of Insurance a list of the amounts paid into the Second Injury Fund and the Rate Adjustment Fund by each insurance company on behalf of their insured employers. The Director shall verify to the Chairman that the amounts paid by each insurance company are accurate as best as the Director can determine from the records available to the Director. The Chairman shall verify that the amounts paid by each self-insurer are accurate as best as the Chairman can determine from records available to the Chairman. The Chairman may require each self-insurer to provide information concerning the total compensation payments made upon which contributions to the Second Injury Fund and the Rate Adjustment Fund are predicated and any additional information establishing that such payments have been made into these funds. Any deficiencies in payments noted by the Director or Chairman shall be subject to the penalty provisions of this Act.

The State Treasurer, or his duly authorized representative, shall be named as a party to all proceedings in all cases involving claim for the loss of, or the permanent and complete loss of the use of one eye, one foot, one leg, one arm or one hand.

The State Treasurer or his duly authorized agent shall have the same rights as any other party to the proceeding, including the right to petition for review of any award. The reasonable expenses of litigation, such as medical examinations, testimony, and transcript of evidence, incurred by the State Treasurer or his duly authorized representative, shall be borne by the Second Injury Fund.

If the award is not paid within 30 days after the date the award has become final, the Commission shall proceed to take judgment thereon in its own name as is provided for other awards by paragraph (g) of Section 19 of this Act and take the necessary steps to collect the award.

Any person, corporation or organization who has paid or become liable for the payment of burial expenses of the deceased employee may in his or its own name institute proceedings before the Commission for the collection thereof.

For the purpose of administration, receipts and disbursements, the Special Fund provided for in paragraph (f) of this Section shall be administered jointly with the Special Fund provided for in Section 7, paragraph (f) of the Workers' Occupational Diseases Act.

(g) All compensation, except for burial expenses provided in this Section to be paid in case accident results in death, shall be paid in installments equal to the percentage of the average earnings as provided for in Section 8, paragraph (b) of this Act, at the same intervals at which the wages or earnings of the employees were paid. If this is not feasible, then the installments shall be paid weekly. Such compensation may be paid in a lump sum upon petition as provided in Section 9 of this Act. However, in addition to the benefits provided by Section 9 of this Act where compensation for death is payable to the deceased's widow, widower or to the deceased's widow, widower and one or more children, and where a partial lump sum is applied for by such beneficiary or beneficiaries within 18 months after the deceased's death, the Commission may, in its discretion, grant a partial lump sum of not to exceed 100 weeks of the compensation capitalized at their present value upon the basis of interest calculated at 3% per annum with annual rests, upon a showing that such partial lump sum is for the best interest of such beneficiary or beneficiaries.

(h) In case the injured employee is under 16 years of age at the time of the accident and is illegally employed, the amount of compensation payable under paragraphs (a), (b), (c), (d) and (f) of this Section shall be increased 50%.

Nothing herein contained repeals or amends the provisions of the Child Labor Law relating to the employment of minors under the age of 16 years.

However, where an employer has on file an employment certificate issued pursuant to the Child Labor Law or work permit issued pursuant to the Federal Fair Labor Standards Act, as amended, or a birth certificate properly and duly issued, such certificate, permit or birth certificate is conclusive evidence as to the age of the injured minor employee for the purposes of this Section only.

(i) Whenever the dependents of a deceased employee are noncitizens aliens not residing in the United States, Mexico or Canada, the amount of compensation payable is limited to the beneficiaries described in paragraphs (a), (b) and (c) of this Section and is 50% of the compensation provided in paragraphs (a), (b) and (c) of this Section, except as otherwise provided by treaty.

In a case where any of the persons who would be entitled to compensation is living at any place outside of the United States, then payment shall be made to the personal representative of the deceased employee. The distribution by such personal representative to the persons entitled shall be made to such persons and in such manner as the Commission orders.

(Source: P.A. 93-721, eff. 1-1-05; 94-277, eff. 7-20-05; 94-695, eff. 11-16-05.)

Section 215. The Workers' Occupational Diseases Act is amended by changing Section 1 as follows:

(820 ILCS 310/1) (from Ch. 48, par. 172.36)

Sec. 1. This Act shall be known and may be cited as the "Workers' Occupational Diseases Act".

(a) The term "employer" as used in this Act shall be construed to be:

1. The State and each county, city, town, township, incorporated village, school district, body politic, or municipal corporation therein.

2. Every person, firm, public or private corporation, including hospitals, public service, eleemosynary, religious or charitable corporations or associations, who has any person in service or under any contract for hire, express or implied, oral or written.

3. Where an employer operating under and subject to the provisions of this Act loans an employee to another such employer and such loaned employee sustains a compensable occupational disease in the employment of such borrowing employer and where such borrowing employer does not provide or pay the benefits or payments due such employee, such loaning employer shall be liable to provide or pay all benefits or payments due such employee under this Act and as to such employee the liability of such loaning and borrowing employers shall be joint and several, provided that such loaning employer shall in the absence of agreement to the contrary be entitled to receive from such borrowing employer full reimbursement for all sums paid or incurred pursuant to this paragraph together with reasonable attorneys' fees and expenses in any hearings before the Illinois Workers' Compensation Commission or in any action to secure such reimbursement. Where any benefit is provided or paid by such loaning employer, the employee shall have the duty of rendering reasonable co-operation in any hearings, trials or proceedings in the case, including such proceedings for reimbursement.

Where an employee files an Application for Adjustment of Claim with the Illinois Workers' Compensation Commission alleging that his or her claim is covered by the provisions of the preceding paragraph, and joining both the alleged loaning and borrowing employers, they and each of them, upon written demand by the employee and within 7 days after receipt of such demand, shall have the duty of filing with the Illinois Workers' Compensation Commission a written admission or denial of the allegation that the claim is covered by the provisions of the preceding paragraph and in default of such filing or if any such denial be ultimately determined not to have been bona fide then the provisions of Paragraph K of Section 19 of this Act shall apply.

An employer whose business or enterprise or a substantial part thereof consists of hiring, procuring or furnishing employees to or for other employers operating under and subject to the provisions of this Act for the performance of the work of such other employers and who pays such employees their salary or wage notwithstanding that they are doing the work of such other employers shall be deemed a loaning employer within the meaning and provisions of this Section.

(b) The term "employee" as used in this Act, shall be construed to mean:

1. Every person in the service of the State, county, city, town, township, incorporated village or school district, body politic or municipal corporation therein, whether by election, appointment or contract of hire, express or implied, oral or written, including any official of the State, or of any county, city, town, township, incorporated village, school district, body politic or municipal corporation therein and except any duly appointed member of the fire department in any city whose population exceeds 500,000 according to the last Federal or State census, and except any member of a fire insurance patrol maintained by a board of underwriters in this State. One employed by a contractor who has contracted with the State, or a county, city, town, township, incorporated village, school district, body politic or municipal corporation therein, through its representatives, shall not be considered as an employee of the State, county, city, town, township, incorporated village, school district, body politic or municipal corporation which made the contract.

2. Every person in the service of another under any contract of hire, express or implied, oral or written, who contracts an occupational disease while working in the State of Illinois, or who contracts an occupational disease while working outside of the State of Illinois but where the contract of hire is made within the State of Illinois, and any person whose employment is principally localized within the State of Illinois, regardless of the place where the disease was contracted or place where the contract of hire was made, including noncitizens aliens, and minors who, for the purpose of this Act, except Section 3 hereof, shall be considered the same and have the same power to contract, receive payments and give quittances therefor, as adult employees. An employee or his or her dependents under this Act who shall have a cause of action by reason of an occupational disease, disablement or death arising out of and in the course of his or her employment may elect or pursue his or her remedy in the State where the disease was contracted, or in the State where the contract of hire is made, or in the State where the employment is principally localized.

(c) "Commission" means the Illinois Workers' Compensation Commission created by the Workers' Compensation Act, approved July 9, 1951, as amended.

(d) In this Act the term "Occupational Disease" means a disease arising out of and in the course of the employment or which has become aggravated and rendered disabling as a result of the exposure of the employment. Such aggravation shall arise out of a risk peculiar to or increased by the employment and not common to the general public.

A disease shall be deemed to arise out of the employment if there is apparent to the rational mind, upon consideration of all the circumstances, a causal connection between the conditions under which the work is performed and the occupational disease. The disease need not to have been foreseen or expected but after its contraction it must appear to have had its origin or aggravation in a risk connected with the employment and to have flowed from that source as a rational consequence.

An employee shall be conclusively deemed to have been exposed to the hazards of an occupational disease when, for any length of time however short, he or she is employed in an occupation or process in which the hazard of the disease exists; provided however, that in a claim of exposure to atomic radiation, the fact of such exposure must be verified by the records of the central registry of radiation exposure maintained by the Department of Public Health or by some other recognized governmental agency maintaining records of such exposures whenever and to the extent that the records are on file with the Department of Public Health or the agency.

Any injury to or disease or death of an employee arising from the administration of a vaccine, including without limitation smallpox vaccine, to prepare for, or as a response to, a threatened or potential bioterrorist incident to the employee as part of a voluntary inoculation program in connection with the person's employment or in connection with any governmental program or recommendation for the inoculation of workers in the employee's occupation, geographical area, or other category that includes the employee is deemed to arise out of and in the course of the employment for all purposes under this Act. This paragraph added by Public Act 93-829 is declarative of existing law and is not a new enactment.

The employer liable for the compensation in this Act provided shall be the employer in whose employment the employee was last exposed to the hazard of the occupational disease claimed upon regardless of the length of time of such last exposure, except, in cases of silicosis or asbestosis, the only employer liable shall be the last employer in whose employment the employee was last exposed during a period of 60 days or more after the effective date of this Act, to the hazard of such occupational disease, and, in such cases, an exposure during a period of less than 60 days, after the effective date of this Act, shall not be deemed a last exposure. If a miner who is suffering or suffered from pneumoconiosis was employed for 10 years or more in one or more coal mines there shall, effective July 1, 1973 be a rebuttable presumption that his or her pneumoconiosis arose out of such employment.

If a deceased miner was employed for 10 years or more in one or more coal mines and died from a respirable disease there shall, effective July 1, 1973, be a rebuttable presumption that his or her death was due to pneumoconiosis.

Any condition or impairment of health of an employee employed as a firefighter, emergency medical technician (EMT), emergency medical technician-intermediate (EMT-I), advanced emergency medical technician (A-EMT), or paramedic which results directly or indirectly from any bloodborne pathogen, lung or respiratory disease or condition, heart or vascular disease or condition, hypertension, tuberculosis, or cancer resulting in any disability (temporary, permanent, total, or partial) to the employee shall be rebuttably presumed to arise out of and in the course of the employee's firefighting, EMT, EMT-I, A-EMT, or paramedic employment and, further, shall be rebuttably presumed to be causally connected to the hazards or exposures of the employment. This presumption shall also apply to any hernia or hearing loss suffered by an employee employed as a firefighter, EMT, EMT-I, A-EMT, or paramedic. However, this presumption shall not apply to any employee who has been employed as a firefighter, EMT, EMT-I, A-EMT, or paramedic for less than 5 years at the time he or she files an Application for Adjustment of Claim concerning this condition or impairment with the Illinois Workers' Compensation Commission. The rebuttable presumption established under this subsection, however, does not apply to an emergency medical technician (EMT), emergency medical technician-intermediate (EMT-I), advanced emergency medical technician (A-EMT), or paramedic employed by a private employer if the employee spends the preponderance of his or her work time for that employer engaged in medical transfers between medical care facilities or non-emergency medical transfers to or from medical care facilities. The changes made to this subsection by this amendatory Act of the 98th General Assembly shall be narrowly construed. The Finding and Decision of the Illinois Workers' Compensation Commission under only the rebuttable presumption provision of this paragraph shall not be admissible or be deemed res judicata in any disability claim under the Illinois Pension Code arising out of the same medical condition; however, this sentence makes no change to the law set forth in Krohe v. City of Bloomington, 204 Ill.2d 392.

The insurance carrier liable shall be the carrier whose policy was in effect covering the employer liable on the last day of the exposure rendering such employer liable in accordance with the provisions of this Act.

(e) "Disablement" means an impairment or partial impairment, temporary or permanent, in the function of the body or any of the members of the body, or the event of becoming disabled from earning full wages at the work in which the employee was engaged when last exposed to the hazards of the occupational disease by the employer from whom he or she claims compensation, or equal wages in other suitable employment; and "disability" means the state of being so incapacitated.

(f) No compensation shall be payable for or on account of any occupational disease unless disablement, as herein defined, occurs within two years after the last day of the last exposure to the hazards of the disease, except in cases of occupational disease caused by berylliosis or by the inhalation of silica dust or asbestos dust and, in such cases, within 3 years after the last day of the last exposure to the hazards of such disease and except in the case of occupational disease caused by exposure to radiological materials or equipment, and in such case, within 25 years after the last day of last exposure to the hazards of such disease.

(g)(1) In any proceeding before the Commission in which the employee is a COVID-19 first responder or front-line worker as defined in this subsection, if the employee's injury or occupational disease resulted from exposure to and contraction of COVID-19, the exposure and contraction shall be rebuttably presumed to have arisen out of and in the course of the employee's first responder or front-line worker employment and the injury or occupational disease shall be rebuttably presumed to be causally connected to the hazards or exposures of the employee's first responder or front-line worker employment.

(2) The term "COVID-19 first responder or front-line worker" means: all individuals employed as police, fire personnel, emergency medical technicians, or paramedics; all individuals employed and considered as first responders; all workers for health care providers, including nursing homes and rehabilitation facilities and home care workers; corrections officers; and any individuals employed by essential businesses and operations as defined in Executive Order 2020-10 dated March 20, 2020, as long as individuals employed by essential businesses and operations are required by their employment to encounter members of the general public or to work in employment locations of more than 15 employees. For purposes of this subsection only, an employee's home or place of residence is not a place of employment, except for home care workers.

(3) The presumption created in this subsection may be rebutted by evidence, including, but not limited to, the following:

(A) the employee was working from his or her home, on leave from his or her employment, or some combination thereof, for a period of 14 or more consecutive days immediately prior to the employee's injury, occupational disease, or period of incapacity resulted from exposure to COVID-19; or

(B) the employer was engaging in and applying to the fullest extent possible or enforcing to the best of its ability industry-specific workplace sanitation, social distancing, and health and safety practices based on updated guidance issued by the Centers for Disease Control and Prevention or Illinois Department of Public Health or was using a combination of administrative controls, engineering controls, or personal protective equipment to reduce the transmission of COVID-19 to all employees for at least 14 consecutive days prior to the employee's injury, occupational disease, or period of incapacity resulting from exposure to COVID-19. For purposes of this subsection, "updated" means the guidance in effect at least 14 days prior to the COVID-19 diagnosis. For purposes of this subsection, "personal protective equipment" means industry-specific equipment worn to minimize exposure to hazards that cause illnesses or serious injuries, which may result from contact with biological, chemical, radiological, physical, electrical, mechanical, or other workplace hazards. "Personal protective equipment" includes, but is not limited to, items such as face coverings, gloves, safety glasses, safety face shields, barriers, shoes, earplugs or muffs, hard hats, respirators, coveralls, vests, and full body suits; or

(C) the employee was exposed to COVID-19 by an alternate source.

(4) The rebuttable presumption created in this subsection applies to all cases tried after June 5, 2020 (the effective date of Public Act 101-633) and in which the diagnosis of COVID-19 was made on or after March 9, 2020 and on or before June 30, 2021 (including the period between December 31, 2020 and the effective date of this amendatory Act of the 101st General Assembly).

(5) Under no circumstances shall any COVID-19 case increase or affect any employer's workers' compensation insurance experience rating or modification, but COVID-19 costs may be included in determining overall State loss costs.

(6) In order for the presumption created in this subsection to apply at trial, for COVID-19 diagnoses occurring on or before June 15, 2020, an employee must provide a confirmed medical diagnosis by a licensed medical practitioner or a positive laboratory test for COVID-19 or for COVID-19 antibodies; for COVID-19 diagnoses occurring after June 15, 2020, an employee must provide a positive laboratory test for COVID-19 or for COVID-19 antibodies.

(7) The presumption created in this subsection does not apply if the employee's place of employment was solely the employee's home or residence for a period of 14 or more consecutive days immediately prior to the employee's injury, occupational disease, or period of incapacity resulted from exposure to COVID-19.

(8) The date of injury or the beginning of the employee's occupational disease or period of disability is either the date that the employee was unable to work due to contraction of COVID-19 or was unable to work due to symptoms that were later diagnosed as COVID-19, whichever came first.

(9) An employee who contracts COVID-19, but fails to establish the rebuttable presumption is not precluded from filing for compensation under this Act or under the Workers' Compensation Act.

(10) To qualify for temporary total disability benefits under the presumption created in this subsection, the employee must be certified for or recertified for temporary disability.

(11) An employer is entitled to a credit against any liability for temporary total disability due to an employee as a result of the employee contracting COVID-19 for (A) any sick leave benefits or extended salary benefits paid to the employee by the employer under Emergency Family Medical Leave Expansion Act, Emergency Paid Sick Leave Act of the Families First Coronavirus Response Act, or any other federal law, or (B) any other credit to which an employer is entitled under the Workers' Compensation Act.

(Source: P.A. 101-633, eff. 6-5-20; 101-653, eff. 2-28-21.)

Section 220. The Unemployment Insurance Act is amended by changing Sections 211.4 and 614 as follows:

(820 ILCS 405/211.4) (from Ch. 48, par. 321.4)

Sec. 211.4. A. Notwithstanding any other provision of this Act, the term "employment" shall include service performed after December 31, 1977, by an individual in agricultural labor as defined in Section 214 when:

1. Such service is performed for an employing unit which (a) paid cash wages of $20,000 or more during any calendar quarter in either the current or preceding calendar year to an individual or individuals employed in agricultural labor (not taking into account service in agricultural labor performed before January 1, 1980, by a noncitizen an alien referred to in paragraph 2); or (b) employed in agricultural labor (not taking into account service in agricultural labor performed before January 1, 1980, by a noncitizen an alien referred to in paragraph 2) 10 or more individuals within each of 20 or more calendar weeks (but not necessarily simultaneously and irrespective of whether the same individuals are or were employed in each such week), whether or not such weeks are or were consecutive, within either the current or preceding calendar year.

2. Such service is not performed in agricultural labor if performed before January 1, 1980 or on or after the effective date of this amendatory Act of the 96th General Assembly, by an individual who is a noncitizen an alien admitted to the United States to perform service in agricultural labor pursuant to Sections 214(c) and 101(a)(15)(H) of the Immigration and Nationality Act.

B. For the purposes of this Section, any individual who is a member of a crew furnished by a crew leader to perform service in agricultural labor for any other employing unit shall be treated as performing service in the employ of such crew leader if (1) the leader holds a valid certificate of registration under the Farm Labor Contractor Registration Act of 1963, or substantially all the members of such crew operate or maintain tractors, mechanized harvesting or crop dusting equipment, or any other mechanized equipment, which is provided by the crew leader; and (2) the service of such individual is not in employment for such other employing unit within the meaning of subsections A and C of Section 212, and of Section 213.

C. For the purposes of this Section, any individual who is furnished by a crew leader to perform service in agricultural labor for any other employing unit, and who is not treated as performing service in the employ of such crew leader under subsection B, shall be treated as performing service in the employ of such other employing unit, and such employing unit shall be treated as having paid cash wages to such individual in an amount equal to the amount of cash wages paid to the individual by the crew leader (either on his own behalf or on behalf of such other employing unit) for the service in agricultural labor performed for such other employing unit.

D. For the purposes of this Section, the term "crew leader" means an individual who (1) furnishes individuals to perform service in agricultural labor for any other employing unit; (2) pays (either on his own behalf or on behalf of such other employing unit) the individuals so furnished by him for the service in agricultural labor performed by them; and (3) has not entered into a written agreement with such other employing unit under which an individual so furnished by him is designated as performing services in the employ of such other employing unit.

(Source: P.A. 96-1208, eff. 1-1-11.)

(820 ILCS 405/614) (from Ch. 48, par. 444)

Sec. 614. Non-resident noncitizens aliens - ineligibility. A noncitizen An alien shall be ineligible for benefits for any week which begins after December 31, 1977, on the basis of wages for services performed by such noncitizen alien, unless the noncitizen alien was an individual who was lawfully admitted for permanent residence at the time such services were performed or otherwise was permanently residing in the United States under color of law at the time such services were performed (including a person an alien who was lawfully present in the United States as a result of the application of the provisions of Section 212(d) (5) of the Immigration and Nationality Act); provided, that any modifications of the provisions of Section 3304(a) (14) of the Federal Unemployment Tax Act which

A. Specify other conditions or another effective date than stated herein for ineligibility for benefits based on wages for services performed by noncitizens aliens, and

B. Are required to be implemented under this Act as a condition for the Federal approval of this Act requisite to the full tax credit against the tax imposed by the Federal Act for contributions paid by employers pursuant to this Act, shall be applicable under the provisions of this Section.

Any data or information required of individuals who claim benefits for the purpose of determining whether benefits are not payable to them pursuant to this Section shall be uniformly required of all individuals who claim benefits.

If an individual would otherwise be eligible for benefits, no determination shall be made that such individual is ineligible for benefits pursuant to this Section because of the individual's noncitizen alien status, except upon a preponderance of the evidence.

(Source: P.A. 86-3; 87-122.)

Section 995. No acceleration or delay. Where this Act makes changes in a statute that is represented in this Act by text that is not yet or no longer in effect (for example, a Section represented by multiple versions), the use of that text does not accelerate or delay the taking effect of (i) the changes made by this Act or (ii) provisions derived from any other Public Act.

Section 999. Effective date. This Act takes effect upon becoming law.