SB0765 EnrolledLRB103 03220 BMS 48226 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Farm Mutual Insurance Company Act of 1986
5is amended by changing Section 10 as follows:
 
6    (215 ILCS 120/10)  (from Ch. 73, par. 1260)
7    Sec. 10. Property insurable; limitations of risk.
8    (a) Until the date that is 5 years after the effective date
9of this amendatory Act of the 103rd General Assembly this
10subsection (a) applies:
11        (1) Farm mutual insurance companies are permitted to
12    insure the following classes of property:
13            (A) (a) Farm property, including residences and
14        other farm buildings and all classes of personal
15        property in connection therewith, other than motor
16        vehicles required to be licensed for road use,
17        including such property temporarily located elsewhere;
18            (B) (b) Growing crops;
19            (C) (c) Buildings and personal property used in
20        the processing of agricultural products in conjunction
21        with a farming operation;
22            (D) (d) Residences, including household and
23        personal effects, and including such property

 

 

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1        temporarily located elsewhere;
2            (E) (e) Churches, schools and community buildings
3        and such property as may be properly contained
4        therein.
5        No farm mutual insurance company may insure any
6    property within the limits of any city containing over
7    50,000 inhabitants at the time of the organization of the
8    company.
9        (2) No farm mutual insurance company authorized to
10    write the kinds of insurance enumerated in Section 5 of
11    this Act may expose itself to any loss on any one risk in
12    an amount in excess of $20,000 plus 10% of its
13    policyholders' surplus in excess of $20,000.
14            A farm mutual insurance company insuring against
15    the perils of wind or hail must have and maintain adequate
16    catastrophic reinsurance which limits the company's
17    exposure on any one loss occurrence to 20% of its
18    policyholders' surplus.
19        A farm mutual insurance company converting from
20    unlimited catastrophic reinsurance to adequate
21    catastrophic reinsurance under this Section shall provide
22    notice of the change to policyholders in a form approved
23    by the Director of Insurance.
24        A farm mutual insurance company must additionally have
25    and maintain aggregate reinsurance coverage in an amount
26    no less than that required for a 250-year event, based on

 

 

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1    an actuarially sound catastrophe model.
2        The reinsurance permitted or required by this Section
3    must be provided by (i) a farm mutual insurance company,
4    (ii) an insurance company authorized to write the kinds of
5    insurance described in Class 2 or Class 3 of Section 4 of
6    the Illinois Insurance Code, or (iii) a reinsurer and
7    reinsurance program meeting the standards set forth in
8    Article XI of the Illinois Insurance Code that permit a
9    domestic company to take credit for reinsurance.
10        Nothing in this Section shall be construed to prohibit
11    a farm mutual insurance company from purchasing
12    reinsurance coverage greater than the minimum requirement
13    set forth under this Section, including purchasing
14    unlimited catastrophic coverage.
15        No portion of any such risk which has been reinsured
16    with a farm mutual insurance company or an insurance
17    company authorized to write the kinds of insurance
18    described in Class 2 or Class 3 of Section 4 of the
19    Illinois Insurance Code shall be included in determining
20    the limitation of risk described herein.
21        For purposes of this Section:
22        A single risk shall be all real and personal property
23    in one fixed location and not separated by 50 feet.
24        "Adequate catastrophic reinsurance" means reinsurance
25    in an amount no less than that required for a 500-year
26    event, based on an actuarially sound catastrophe model

 

 

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1    that limits the company's exposure on any one loss
2    occurrence to (i) 20% of its policyholders' surplus or
3    (ii) an amount authorized by the Director of Insurance.
4        As regards the peril of wind or hail, the term "loss
5    occurrence" shall mean all losses occasioned by tornadoes,
6    cyclones, windstorms, hurricanes, or hail stones arising
7    from the same atmospheric disturbance and occurring during
8    any continuous period of not less than 48 hours.
9        (3) Whenever the company's financial condition is such
10    that the further assumption of risks might be hazardous to
11    policyholders, the Director of Insurance may order the
12    company to take one or more of the following steps:
13            (A) (a) To reduce the loss exposure by
14        reinsurance;
15            (B) (b) To reduce the volume of business being
16        written or renewed;
17            (C) (c) To suspend the writing of new business;
18            (D) (d) To suspend the writing of both new and
19        renewal business;
20            (E) (e) To levy a special assessment of
21        policyholders;
22            (F) (f) To reduce general or acquisition expenses
23        by specified methods.
24        (4) Whenever the Director determines that a farm
25    mutual insurance company is insolvent he shall order the
26    farm mutual insurance company to levy a special assessment

 

 

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1    within 30 days of receipt of such order. If the insolvency
2    is not corrected within 90 days of the mailing of such
3    assessment, the company shall be subject to liquidation
4    pursuant to Article XIII of the Illinois Insurance Code.
5    (b) On and after the date that is 5 years after the
6effective date of this amendatory Act of the 103rd General
7Assembly this subsection (b) applies:
8        (1) Farm mutual insurance companies are permitted to
9    insure the following classes of property:
10            (A) Farm property, including residences and other
11        farm buildings and all classes of personal property in
12        connection therewith, other than motor vehicles
13        required to be licensed for road use, including such
14        property temporarily located elsewhere;
15            (B) Growing crops;
16            (C) Buildings and personal property used in the
17        processing of agricultural products in conjunction
18        with a farming operation;
19            (D) Residences, including household and personal
20        effects, and including such property temporarily
21        located elsewhere;
22            (E) Churches, schools and community buildings and
23        such property as may be properly contained therein.
24        No farm mutual insurance company may insure any
25    property within the limits of any city containing over
26    50,000 inhabitants at the time of the organization of the

 

 

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1    company.
2        (2) No farm mutual insurance company authorized to
3    write the kinds of insurance enumerated in Section 5 of
4    this Act may expose itself to any loss on any one risk in
5    an amount in excess of $20,000 plus 10% of its
6    policyholders' surplus in excess of $20,000.
7        A farm mutual insurance company insuring against the
8    perils of wind or hail must have and maintain catastrophic
9    reinsurance which limits the company's exposure on any one
10    loss occurrence to 20% of its policyholders' surplus.
11        No portion of any such risk which has been reinsured
12    with a farm mutual insurance company or an insurance
13    company authorized to write the kinds of insurance
14    described in Class 2 or Class 3 of Section 4 of the
15    Illinois Insurance Code shall be included in determining
16    the limitation of risk described herein.
17        For purposes of this Section:
18        A single risk shall be all real and personal property
19    in one fixed location and not separated by 50 feet.
20        As regards the peril of wind or hail, the term "loss
21    occurrence" shall mean all losses occasioned by tornadoes,
22    cyclones, windstorms, hurricanes, or hail stones arising
23    from the same atmospheric disturbance and occurring during
24    any continuous period of not less than 48 hours.
25        (3) Whenever the company's financial condition is such
26    that the further assumption of risks might be hazardous to

 

 

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1    policyholders, the Director of Insurance may order the
2    company to take one or more of the following steps:
3            (A) To reduce the loss exposure by reinsurance;
4            (B) To reduce the volume of business being written
5        or renewed;
6            (C) To suspend the writing of new business;
7            (D) To suspend the writing of both new and renewal
8        business;
9            (E) To levy a special assessment of policyholders;
10            (F) To reduce general or acquisition expenses by
11        specified methods.
12        (4) Whenever the Director determines that a farm
13    mutual insurance company is insolvent he shall order the
14    farm mutual insurance company to levy a special assessment
15    within 30 days of receipt of such order. If the insolvency
16    is not corrected within 90 days of the mailing of such
17    assessment, the company shall be subject to liquidation
18    pursuant to Article XIII of the Illinois Insurance Code.
19(Source: P.A. 88-364.)
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.