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    (215 ILCS 5/Art. I heading)
ARTICLE I. SHORT TITLE, DEFINITIONS AND CLASSIFICATIONS

    (215 ILCS 5/1) (from Ch. 73, par. 613)
    Sec. 1. Short title. This Act shall be known and may be cited as the Illinois Insurance Code.
(Source: P.A. 96-328, eff. 8-11-09.)

    (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) "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 5/2.1) (from Ch. 73, par. 614.1)
    Sec. 2.1. Public Policy.
    It is declared to be the public policy of this State, pursuant to paragraphs (h) and (i) of Section 6 of Article VII of the Illinois Constitution of 1970, that any power or function set forth in this Act to be exercised by the State is an exclusive State power or function. Such power or function shall not be exercised concurrently, either directly or indirectly, by any unit of local government, including home rule units, except as otherwise provided in this Act. Provided further that the fees, charges and taxes provided for by this Act shall, as provided for in Section 415 of this Act, be in lieu of all license fees or privilege or occupation taxes or other fees levied or assessed by any home rule unit and said Section 415 of this Act 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. 78-1224.)

    (215 ILCS 5/2.5)
    Sec. 2.5. Exemption. This Code shall not be construed to apply to the administration of the Drycleaner Environmental Response Trust Fund under the Drycleaner Environmental Response Trust Fund Act.
(Source: P.A. 90-502, eff. 8-19-97.)

    (215 ILCS 5/3.1) (from Ch. 73, par. 615.1)
    Sec. 3.1. Definitions of admitted assets. "Admitted Assets" includes the investments authorized or permitted by this Code, the credit for reinsurance allowed by this Code, and in addition thereto, only the following:
    (1) Amounts, other than premium, receivable from affiliates, not outstanding for more than 3 months, and arising under, management contracts or service agreements which meet the requirements of Section 141.1 of the Illinois Insurance Code to the extent that the affiliate has liquid assets sufficient to pay the balance. The amount of those receivables included in admitted assets may not exceed the lesser of 5% of the company's admitted assets or 10% of the company's surplus as regards policyholders. For purposes of this subsection, "affiliate" has the meaning given that term in Article VIII 1/2 of the Illinois Insurance Code.
    (2) Amounts permitted under Section 136.
(Source: P.A. 90-418, eff. 8-15-97; 91-549, eff. 8-14-99.)

    (215 ILCS 5/4) (from Ch. 73, par. 616)
    Sec. 4. Classes of insurance. Insurance and insurance business shall be classified as follows:
    Class 1. Life, Accident and Health.
    (a) Life. Insurance on the lives of persons and every insurance appertaining thereto or connected therewith and granting, purchasing or disposing of annuities. Policies of life or endowment insurance or annuity contracts or contracts supplemental thereto which contain provisions for additional benefits in case of death by accidental means and provisions operating to safeguard such policies or contracts against lapse, to give a special surrender value, or special benefit, or an annuity, in the event, that the insured or annuitant shall become a person with a total and permanent disability as defined by the policy or contract, or which contain benefits providing acceleration of life or endowment or annuity benefits in advance of the time they would otherwise be payable, as an indemnity for long term care which is certified or ordered by a physician, including but not limited to, professional nursing care, medical care expenses, custodial nursing care, non-nursing custodial care provided in a nursing home or at a residence of the insured, or which contain benefits providing acceleration of life or endowment or annuity benefits in advance of the time they would otherwise be payable, at any time during the insured's lifetime, as an indemnity for a terminal illness shall be deemed to be policies of life or endowment insurance or annuity contracts within the intent of this clause.
    Also to be deemed as policies of life or endowment insurance or annuity contracts within the intent of this clause shall be those policies or riders that provide for the payment of up to 75% of the face amount of benefits in advance of the time they would otherwise be payable upon a diagnosis by a physician licensed to practice medicine in all of its branches that the insured has incurred a covered condition listed in the policy or rider.
    "Covered condition", as used in this clause, means: heart attack, stroke, coronary artery surgery, life-threatening cancer, renal failure, Alzheimer's disease, paraplegia, major organ transplantation, total and permanent disability, and any other medical condition that the Department may approve for any particular filing.
    The Director may issue rules that specify prohibited policy provisions, not otherwise specifically prohibited by law, which in the opinion of the Director are unjust, unfair, or unfairly discriminatory to the policyholder, any person insured under the policy, or beneficiary.
    (b) Accident and health. Insurance against bodily injury, disablement or death by accident and against disablement resulting from sickness or old age and every insurance appertaining thereto, including stop-loss insurance. In this clause, "stop-loss insurance" means insurance against the risk of economic loss issued to or for the benefit of a single employer self-funded employee disability benefit plan or an employee welfare benefit plan as described in 29 U.S.C. 1001 et seq., where (i) the policy is issued to and insures an employer, trustee, or other sponsor of the plan, or the plan itself, but not employees, members, or participants; and (ii) payments by the insurer are made to the employer, trustee, or other sponsors of the plan, or the plan itself, but not to the employees, members, participants, or health care providers. The insurance laws of this State, including this Code, do not apply to arrangements between a religious organization and the organization's members or participants when the arrangement and organization meet all of the following criteria:
        (i) the organization is described in Section
    
501(c)(3) of the Internal Revenue Code and is exempt from taxation under Section 501(a) of the Internal Revenue Code;
        (ii) members of the organization share a common set
    
of ethical or religious beliefs and share medical expenses among members in accordance with those beliefs and without regard to the state in which a member resides or is employed;
        (iii) no funds that have been given for the purpose
    
of the sharing of medical expenses among members described in paragraph (ii) of this subsection (b) are held by the organization in an off-shore trust or bank account;
        (iv) the organization provides at least monthly to
    
all of its members a written statement listing the dollar amount of qualified medical expenses that members have submitted for sharing, as well as the amount of expenses actually shared among the members;
        (v) members of the organization retain membership
    
even after they develop a medical condition;
        (vi) the organization or a predecessor organization
    
has been in existence at all times since December 31, 1999, and medical expenses of its members have been shared continuously and without interruption since at least December 31, 1999;
        (vii) the organization conducts an annual audit that
    
is performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and is made available to the public upon request;
        (viii) the organization includes the following
    
statement, in writing, on or accompanying all applications and guideline materials:
        "Notice: The organization facilitating the sharing of
        
medical expenses is not an insurance company, and neither its guidelines nor plan of operation constitute or create an insurance policy. Any assistance you receive with your medical bills will be totally voluntary. As such, participation in the organization or a subscription to any of its documents should never be considered to be insurance. Whether or not you receive any payments for medical expenses and whether or not this organization continues to operate, you are always personally responsible for the payment of your own medical bills.";
        (ix) any membership card or similar document issued
    
by the organization and any written communication sent by the organization to a hospital, physician, or other health care provider shall include a statement that the organization does not issue health insurance and that the member or participant is personally liable for payment of his or her medical bills;
        (x) the organization provides to a participant,
    
within 30 days after the participant joins, a complete set of its rules for the sharing of medical expenses, appeals of decisions made by the organization, and the filing of complaints;
        (xi) the organization does not offer any other
    
services that are regulated under any provision of the Illinois Insurance Code or other insurance laws of this State; and
        (xii) the organization does not amass funds as
    
reserves intended for payment of medical services, rather the organization facilitates the payments provided for in this subsection (b) through payments made directly from one participant to another.
    (c) Legal Expense Insurance. Insurance which involves the assumption of a contractual obligation to reimburse the beneficiary against or pay on behalf of the beneficiary, all or a portion of his fees, costs, or expenses related to or arising out of services performed by or under the supervision of an attorney licensed to practice in the jurisdiction wherein the services are performed, regardless of whether the payment is made by the beneficiaries individually or by a third person for them, but does not include the provision of or reimbursement for legal services incidental to other insurance coverages. The insurance laws of this State, including this Act do not apply to:
        (i) retainer contracts made by attorneys at law with
    
individual clients with fees based on estimates of the nature and amount of services to be provided to the specific client, and similar contracts made with a group of clients involved in the same or closely related legal matters;
        (ii) plans owned or operated by attorneys who are the
    
providers of legal services to the plan;
        (iii) plans providing legal service benefits to
    
groups where such plans are owned or operated by authority of a state, county, local or other bar association;
        (iv) any lawyer referral service authorized or
    
operated by a state, county, local or other bar association;
        (v) the furnishing of legal assistance by labor
    
unions and other employee organizations to their members in matters relating to employment or occupation;
        (vi) the furnishing of legal assistance to members or
    
dependents, by churches, consumer organizations, cooperatives, educational institutions, credit unions, or organizations of employees, where such organizations contract directly with lawyers or law firms for the provision of legal services, and the administration and marketing of such legal services is wholly conducted by the organization or its subsidiary;
        (vii) legal services provided by an employee welfare
    
benefit plan defined by the Employee Retirement Income Security Act of 1974;
        (viii) any collectively bargained plan for legal
    
services between a labor union and an employer negotiated pursuant to Section 302 of the Labor Management Relations Act as now or hereafter amended, under which plan legal services will be provided for employees of the employer whether or not payments for such services are funded to or through an insurance company.
    Class 2. Casualty, Fidelity and Surety.
    (a) Accident and health. Insurance against bodily injury, disablement or death by accident and against disablement resulting from sickness or old age and every insurance appertaining thereto, including stop-loss insurance. In this clause, "stop-loss insurance" has meaning given to that term in clause (b) of Class 1.
    (b) Vehicle. Insurance against any loss or liability resulting from or incident to the ownership, maintenance or use of any vehicle (motor or otherwise), draft animal or aircraft. Any policy insuring against any loss or liability on account of the bodily injury or death of any person may contain a provision for payment of disability benefits to injured persons and death benefits to dependents, beneficiaries or personal representatives of persons who are killed, including the named insured, irrespective of legal liability of the insured, if the injury or death for which benefits are provided is caused by accident and sustained while in or upon or while entering into or alighting from or through being struck by a vehicle (motor or otherwise), draft animal or aircraft, and such provision shall not be deemed to be accident insurance.
    (c) Liability. Insurance against the liability of the insured for the death, injury or disability of an employee or other person, and insurance against the liability of the insured for damage to or destruction of another person's property.
    (d) Workers' compensation. Insurance of the obligations accepted by or imposed upon employers under laws for workers' compensation.
    (e) Burglary and forgery. Insurance against loss or damage by burglary, theft, larceny, robbery, forgery, fraud or otherwise; including all householders' personal property floater risks.
    (f) Glass. Insurance against loss or damage to glass including lettering, ornamentation and fittings from any cause.
    (g) Fidelity and surety. Become surety or guarantor for any person, copartnership or corporation in any position or place of trust or as custodian of money or property, public or private; or, becoming a surety or guarantor for the performance of any person, copartnership or corporation of any lawful obligation, undertaking, agreement or contract of any kind, except contracts or policies of insurance; and underwriting blanket bonds. Such obligations shall be known and treated as suretyship obligations and such business shall be known as surety business.
    (h) Miscellaneous. Insurance against loss or damage to property and any liability of the insured caused by accidents to boilers, pipes, pressure containers, machinery and apparatus of any kind and any apparatus connected thereto, or used for creating, transmitting or applying power, light, heat, steam or refrigeration, making inspection of and issuing certificates of inspection upon elevators, boilers, machinery and apparatus of any kind and all mechanical apparatus and appliances appertaining thereto; insurance against loss or damage by water entering through leaks or openings in buildings, or from the breakage or leakage of a sprinkler, pumps, water pipes, plumbing and all tanks, apparatus, conduits and containers designed to bring water into buildings or for its storage or utilization therein, or caused by the falling of a tank, tank platform or supports, or against loss or damage from any cause (other than causes specifically enumerated under Class 3 of this Section) to such sprinkler, pumps, water pipes, plumbing, tanks, apparatus, conduits or containers; insurance against loss or damage which may result from the failure of debtors to pay their obligations to the insured; and insurance of the payment of money for personal services under contracts of hiring.
    (i) Other casualty risks. Insurance against any other casualty risk not otherwise specified under Classes 1 or 3, which may lawfully be the subject of insurance and may properly be classified under Class 2.
    (j) Contingent losses. Contingent, consequential and indirect coverages wherein the proximate cause of the loss is attributable to any one of the causes enumerated under Class 2. Such coverages shall, for the purpose of classification, be included in the specific grouping of the kinds of insurance wherein such cause is specified.
    (k) Livestock and domestic animals. Insurance against mortality, accident and health of livestock and domestic animals.
    (l) Legal expense insurance. Insurance against risk resulting from the cost of legal services as defined under Class 1(c).
    Class 3. Fire and Marine, etc.
    (a) Fire. Insurance against loss or damage by fire, smoke and smudge, lightning or other electrical disturbances.
    (b) Elements. Insurance against loss or damage by earthquake, windstorms, cyclone, tornado, tempests, hail, frost, snow, ice, sleet, flood, rain, drought or other weather or climatic conditions including excess or deficiency of moisture, rising of the waters of the ocean or its tributaries.
    (c) War, riot and explosion. Insurance against loss or damage by bombardment, invasion, insurrection, riot, strikes, civil war or commotion, military or usurped power, or explosion (other than explosion of steam boilers and the breaking of fly wheels on premises owned, controlled, managed, or maintained by the insured).
    (d) Marine and transportation. Insurance against loss or damage to vessels, craft, aircraft, vehicles of every kind, (excluding vehicles operating under their own power or while in storage not incidental to transportation) as well as all goods, freights, cargoes, merchandise, effects, disbursements, profits, moneys, bullion, precious stones, securities, choses in action, evidences of debt, valuable papers, bottomry and respondentia interests and all other kinds of property and interests therein, in respect to, appertaining to or in connection with any or all risks or perils of navigation, transit, or transportation, including war risks, on or under any seas or other waters, on land or in the air, or while being assembled, packed, crated, baled, compressed or similarly prepared for shipment or while awaiting the same or during any delays, storage, transshipment, or reshipment incident thereto, including marine builder's risks and all personal property floater risks; and for loss or damage to persons or property in connection with or appertaining to marine, inland marine, transit or transportation insurance, including liability for loss of or damage to either arising out of or in connection with the construction, repair, operation, maintenance, or use of the subject matter of such insurance, (but not including life insurance or surety bonds); but, except as herein specified, shall not mean insurances against loss by reason of bodily injury to the person; and insurance against loss or damage to precious stones, jewels, jewelry, gold, silver and other precious metals whether used in business or trade or otherwise and whether the same be in course of transportation or otherwise, which shall include jewelers' block insurance; and insurance against loss or damage to bridges, tunnels and other instrumentalities of transportation and communication (excluding buildings, their furniture and furnishings, fixed contents and supplies held in storage) unless fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion are the only hazards to be covered; and to piers, wharves, docks and slips, excluding the risks of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion; and to other aids to navigation and transportation, including dry docks and marine railways, against all risk.
    (e) Vehicle. Insurance against loss or liability resulting from or incident to the ownership, maintenance or use of any vehicle (motor or otherwise), draft animal or aircraft, excluding the liability of the insured for the death, injury or disability of another person.
    (f) Property damage, sprinkler leakage and crop. Insurance against the liability of the insured for loss or damage to another person's property or property interests from any cause enumerated in this class; insurance against loss or damage by water entering through leaks or openings in buildings, or from the breakage or leakage of a sprinkler, pumps, water pipes, plumbing and all tanks, apparatus, conduits and containers designed to bring water into buildings or for its storage or utilization therein, or caused by the falling of a tank, tank platform or supports or against loss or damage from any cause to such sprinklers, pumps, water pipes, plumbing, tanks, apparatus, conduits or containers; insurance against loss or damage from insects, diseases or other causes to trees, crops or other products of the soil.
    (g) Other fire and marine risks. Insurance against any other property risk not otherwise specified under Classes 1 or 2, which may lawfully be the subject of insurance and may properly be classified under Class 3.
    (h) Contingent losses. Contingent, consequential and indirect coverages wherein the proximate cause of the loss is attributable to any of the causes enumerated under Class 3. Such coverages shall, for the purpose of classification, be included in the specific grouping of the kinds of insurance wherein such cause is specified.
    (i) Legal expense insurance. Insurance against risk resulting from the cost of legal services as defined under Class 1(c).
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/5) (from Ch. 73, par. 617)
    Sec. 5. Classes of companies.
    (1) All Companies now or hereafter authorized to transact business in this State shall be classified according to their functions into one or more of the classes of insurance enumerated in section 4.
    (2) No company shall be authorized to transact any kind or kinds of business other than those enumerated in its respective class, or classes, except as otherwise specifically provided in this Code, but any company, upon complying with all applicable provisions of this Code, may be authorized to transact all or any part of its business on the basis of reinsurance, except that no certificate of authority shall be limited in whole or in part to reinsurance unless the restriction as to such reinsurance is expressed in the articles of incorporation of said company.
(Source: Laws 1959, p. 638.)

    (215 ILCS 5/5.5)
    Sec. 5.5. Compliance with the Department of Healthcare and Family Services. A company authorized to do business in this State or accredited by the State to issue policies of health insurance, including but not limited to, self-insured plans, group health plans (as defined in Section 607(1) of the Employee Retirement Income Security Act of 1974), service benefit plans, managed care organizations, pharmacy benefit managers, or other parties that are by statute, contract, or agreement legally responsible for payment of a claim for a health care item or service as a condition of doing business in the State must:
        (1) provide to the Department of Healthcare and
    
Family Services, or any successor agency, on at least a quarterly basis if so requested by the Department, information to determine during what period any individual may be, or may have been, covered by a health insurer and the nature of the coverage that is or was provided by the health insurer, including the name, address, and identifying number of the plan;
        (2) accept the State's right of recovery and the
    
assignment to the State of any right of an individual or other entity to payment from the party for an item or service for which payment has been made under the medical programs of the Department of Healthcare and Family Services, or any successor or authorized agency, under this Code, the Illinois Public Aid Code, or any other applicable law; and (other than parties expressly excluded under 42 U.S.C. 1396a(a)(25)(I)(ii)(II)) accept authorization provided by the State that the item or service is covered under such medical programs for the individual, as if the State's authorization was the prior authorization made by the company for the item or service;
        (3) not later than 60 days after receiving any
    
inquiry by the Department of Healthcare and Family Services regarding a claim for payment for any health care item or service that is submitted not later than 3 years after the date of the provision of such health care item or service, respond to such inquiry; and
        (4) agree not to deny a claim submitted by the
    
Department of Healthcare and Family Services solely on the basis of the date of submission of the claim, the type or format of the claim form, a failure to present proper documentation at the point-of-sale that is the basis of the claim, or (other than parties expressly excluded under 42 U.S.C. 1396a(a)(25)(I)(iv)) a failure to obtain a prior authorization for the item or service for which the claim is being submitted if (i) the claim is submitted by the Department of Healthcare and Family Services within the 3-year period beginning on the date on which the item or service was furnished and (ii) any action by the Department of Healthcare and Family Services to enforce its rights with respect to such claim is commenced within 6 years of its submission of such claim.
    The Department of Healthcare and Family Services may impose an administrative penalty as provided under Section 12-4.45 of the Illinois Public Aid Code on entities that have established a pattern of failure to provide the information required under this Section, or in cases in which the Department of Healthcare and Family Services has determined that an entity that provides health insurance coverage has established a pattern of failure to provide the information required under this Section, and has subsequently certified that determination, along with supporting documentation, to the Director of the Department of Insurance, the Director of the Department of Insurance, based upon the certification of determination made by the Department of Healthcare and Family Services, may commence regulatory proceedings in accordance with all applicable provisions of the Illinois Insurance Code.
(Source: P.A. 103-102, eff. 1-1-24.)


 
    (215 ILCS 5/Art. II heading)
ARTICLE II. DOMESTIC STOCK COMPANIES
(Article scheduled to be repealed on January 1, 2027)

    (215 ILCS 5/6) (from Ch. 73, par. 618)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 6. Scope of Article. This Article shall apply to all domestic stock companies transacting or being organized to transact any of the kinds of insurance business enumerated in Section 4.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/7) (from Ch. 73, par. 619)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 7. Name. The corporate name of any company organized under this Article shall not be the same as, or deceptively similar to, the name of any domestic company, or of any foreign or alien company authorized to transact business in this State.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/8) (from Ch. 73, par. 620)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 8. Principal office and place of business. The principal office of any company organized under this Article shall be located in this State. Unless the Director has approved otherwise, the principal place of business of any company organized under this Article shall be located in this State.
(Source: P.A. 82-498.)

    (215 ILCS 5/9) (from Ch. 73, par. 621)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 9. Authorized kinds of business.
    (1) Companies may be organized under this Article either for the purpose of transacting any of the kind or kinds of business enumerated in Class 1 of Section 4, or for the purpose of transacting any of the kind or kinds of business enumerated in Classes 2 and 3 of that Section, except that those companies offering mortgage pool or mortgage guaranty insurance may provide no other types of insurance.
    (2) A domestic company may, notwithstanding limitations otherwise applicable, and provided it maintains books and records which account for such business, engage directly in any of the following businesses: (a) rendering investment advice; (b) rendering services related to the functions involved in the operation of its insurance business including, but not limited to, actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal and collection services; (c) acting as administrative agent for a government instrumentality which is performing an insurance function for a health or welfare program; (d) reinsuring the business of title insurance companies, provided such domestic company if organized as a stock company shall have capital and surplus of not less than $5,000,000 and if organized as a domestic mutual or reciprocal company have surplus of not less than $5,000,000; (e) any other business activity reasonably complementary or supplementary to its insurance business; either to the extent necessarily or properly incidental to the insurance business the company is authorized to do in this State or to the extent approved by the Director and subject to any limitations he may prescribe for the protection of the interests of the policyholders of the company taking into account the effect of such business on the company's existing insurance business and its surplus, the proposed allocation of the estimated cost of such business and the risks inherent in such business as well as the relative advantages to the company and its policyholders of conducting such business directly instead of through a subsidiary.
(Source: P.A. 86-1156.)

    (215 ILCS 5/10) (from Ch. 73, par. 622)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 10. Directors.
    (1) After the date of incorporation, as determined by Section 18, and until the first meeting of shareholders, the incorporators shall have the powers and perform the duties ordinarily possessed and exercised by a board of directors.
    (2) Upon the issuance of a certificate of authority to a company organized under this article, the corporate powers shall be exercised by, and its business and affairs shall be under the control of, a board of directors composed of not less than 3 nor more than 21 natural persons who are shareholders, except where the Company is a wholly owned subsidiary, and who are at least 18 years of age and at least 3 of whom are residents and citizens of this State. After June 30, 2002, at least 20%, but not less than one, of the directors of a company that is not subject to Section 131.20b shall be persons who are not officers or employees of the company. A person convicted of a felony may not be a director, and all directors shall be of good character and known professional, administrative, or business ability, such business ability to include a practical knowledge of insurance, finance, or investment. The first board of directors shall be elected at the first meeting of shareholders, and, except as provided in subsection (3) below, all directors shall be elected annually thereafter.
    (3) If the board of directors consists of 6 or more members, in lieu of electing the membership of the whole board of directors annually, the articles of incorporation may provide that the directors shall be divided into two or three classes, each class to be as nearly equal in number as is possible. The term of office of directors of the first class shall expire at the first annual meeting of shareholders after their election, that of the second class shall expire at the second annual meeting after their election, and that of the third class, if any, shall expire at the third annual meeting after their election. At each annual meeting after such classification, a number of directors equal to the number of directors in the class whose terms expire at the time of such meeting shall be elected to hold office until the second succeeding annual meeting, if there are two classes, or until the third succeeding annual meeting, if there are three classes.
    (4) In all elections for directors every shareholder of common shares has the right to vote, in person or by proxy, for the number of common shares owned by him, for as many persons as there are directors to be elected, or to cumulate his shares, and give one candidate as many votes as the number of directors multiplied by the number of his shares equals, or to distribute them on the same principle among as many candidates as he thinks fit, and directors shall not be elected in any other manner.
    (5) Meetings of the board of directors, regular or special, may be held either within or without the State. Meetings of the board of directors shall be upon such notice as the by-laws may prescribe. Attendance of a director at any meeting shall constitute a waiver of notice of such meeting except where a director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting, unless expressly otherwise provided by this Code. Unless specifically prohibited by the articles of incorporation or by-laws, members of the board of directors or of any committee of the board of directors may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. Unless specifically prohibited by the articles of incorporation or by-laws, members of the board of directors or of any committee of the board of directors may take action without a meeting, if a consent in writing setting forth the action so taken shall be signed by all of the directors entitled to vote with respect to the subject matter thereof, or by all of the members of such committee, as the case may be. The consent shall be evidenced by one or more written approvals, each of which sets forth the action taken and bears the signature of one or more directors or committee members. All approvals evidencing the consent shall be filed in the company's corporate records. The action taken shall be effective when all of the directors, or members of the committee, have approved the consent unless the consent specifies a different effective date.
    (6) If the number of directors provided for in the articles of incorporation be indefinite, the number of directors to be elected, within the minimum and maximum limits set forth in paragraph (2), shall be as provided in the by-laws. The number of directors may be increased or decreased from time to time by amendment to the by-laws. The by-laws may establish a variable range for the size of the board by prescribing a minimum and maximum number of directors. The maximum may not exceed the minimum by more than 5. If a variable range is established, the number of directors may be fixed or changed from time to time, within the minimum and maximum, by the directors or the shareholders without further amendment to the by-laws.
    (7) (a) A company may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the company) by reason of the fact that he or she is or was a director, officer, employee or agent, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to the best interests of the company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interest of the company or, with respect to any criminal action or proceeding, that the person had reasonable cause to believe that his or her conduct was unlawful.
    (b) A company may indemnify any person who was or is a party, or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the company to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to the best interests of the company, provided that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to the company, unless, and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses as the court shall deem proper.
    (c) To the extent that a director, officer, employee or agent of a company has been successful, on the merits or otherwise, in the defense of any action, suit or proceeding referred to in subsections (a) and (b), or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
    (d) Any indemnification under subsections (a) and (b) (unless ordered by a court) shall be made by the company only as authorized in the specific case, upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in subsections (a) or (b). Such determination shall be made (1) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum is not obtainable, or even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the shareholders.
    (e) Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the company in advance of the final disposition of such action, suit or proceeding, as authorized by the board of directors in the specific case, upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount, unless it shall ultimately be determined that he or she is entitled to be indemnified by the company as authorized in this Section.
    (f) The indemnification provided by this Section shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the heirs, executors and administrators of such a person.
    (g) A company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the company, or who is or was serving at the request of the company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred by such person in any such capacity, or arising out of his or her status as such, whether or not the company would have the power to indemnify such person against such liability under the provisions of this Section.
    (h) If a company has paid indemnification or has advanced expenses to a director, officer, employee or agent, the company shall report the indemnification or advance in writing to the shareholders with or before the notice of the next shareholders meeting.
    (i) For purposes of this Section, references to "the company" shall include, in addition to the surviving company, any merging company (including any company having merged with a merging company) absorbed in a merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors, officers, and employees or agents, so that any person who was a director, officer, employee or agent of such merging company, or was serving at the request of such merging company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the surviving company as such person would have with respect to such merging company if its separate existence had continued.
    (j) For purposes of this Section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the company" shall include any service as a director, officer, employee or agent of the company which imposes duties on, or involves services by such director, officer, employee, or agent with respect to any employee benefit plan, its participants, or beneficiaries. A person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of any employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interest of the company" as referred to in this Section.
(Source: P.A. 92-140, eff. 7-24-01.)

    (215 ILCS 5/11) (from Ch. 73, par. 623)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 11. Executive committee. If the by-laws of any company subject to the provisions of this article, so provide, the board of directors, by a resolution adopted by a majority of the whole board, may designate three or more directors to constitute an executive committee, which committee, to the extent provided in the resolution or in the by-laws, shall have and exercise, during the interim between the meetings of the board, all of the authority of the board in the management of the company, but the designation of such committee shall not relieve the board nor any member thereof of any responsibility imposed by law.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/12) (from Ch. 73, par. 624)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 12. By-laws.
    (1) The incorporators shall adopt by-laws for the company and such by-laws may not be altered, amended, or repealed, prior to the issuance of a certificate of authority to the company, except by written consent of subscribers representing at least two-thirds of the shares subscribed, and the approval of the Director.
    (2) After a certificate of authority is issued to a company, the power to make, alter, amend or repeal by-laws shall be vested in the board of directors unless reserved to the shareholders by the articles of incorporation.
(Source: Laws 1937, 696.)

    (215 ILCS 5/13) (from Ch. 73, par. 625)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 13. Minimum capital and surplus requirements.
    (1) A company organized after December 31, 1985 under this Article must have and at all times maintain a paid-up capital of not less than the minimum capital requirement applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), $1,000,000;
    
more than one clause, $1,000,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j) $1,000,000; more than one clause, $1,000,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l) or Class 3,
    
any or all clauses or any combination thereof, $400,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, $1,000,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $100,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    Any company organized prior to January 1, 1986 and regulated under this Article must have and at all times maintain paid-up capital of not less than the minimum capital that was required for that particular company at the time it was organized, unless any clause or clauses have been added. If any clause or clauses have been added, then such company must have and at all times maintain paid-up capital of not less than the minimum capital requirement applicable to the class or classes and clause or clauses of Section 4 at the time that the additional clause or clauses are authorized.
    (2) A company organized after December 31, 1985 under this Article must have at the time its Certificate of Authority is issued by the Director paid-in surplus of not less than the minimum paid-in surplus requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), $1,000,000;
    
more than one clause, $1,000,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), $1,000,000; more than one clause, $1,000,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l), or Class 3,
    
any or all clauses or any combination thereof, $600,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, $1,000,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $150,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (3) Any company organized after December 31, 1985 under this Article must have and at all times maintain, in addition to the minimum capital required by paragraph (1) of this Section, minimum surplus requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), $500,000; more
    
than one clause, $500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), $500,000; more than one clause, $500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l), or Class 3,
    
any or all clauses or any combination thereof, $300,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, $500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $50,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (4) Any company organized prior to January 1, 1986 and regulated under this Article, in addition to the minimum capital which is required by paragraph (1) of this Section, must have and at all times maintain until December 31, 1986, minimum surplus of $300,000; and on December 31, 1986 and thereafter such company must have and maintain at all times, surplus of no less than the following amounts:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), $500,000; more
    
than one clause, $500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), $500,000; more than one clause, $500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l), or Class 3,
    
any or all clauses or any combination thereof, $300,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, $500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $50,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (5) Any company organized prior to January 1, 1986 and regulated under this Article must have on December 31, 1990 and thereafter maintain until December 31, 1995 the greater of (a) minimum capital required by paragraph (1) of this Section plus the surplus required to be maintained after December 31, 1986 by paragraph (4) of this Section; or (b) combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), $1,200,000;
    
more than one clause, $1,200,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), $1,200,000; more than one clause, $1,200,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l), or Class 3,
    
any or all clauses or any combination thereof, $600,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, $1,200,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $100,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (6) Any company organized prior to January 1, 1986 and regulated under this Article must have on December 31, 1995 and thereafter maintain at all times combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), $1,500,000;
    
more than one clause, $1,500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), $1,500,000; more than one clause, $1,500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l), or Class 3,
    
any or all clauses or any combination thereof, $700,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, $1,500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $150,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (7) Any company organized prior to January 1, 1986 and regulated under this Article experiencing a change in control, as control is defined in Section 131.1(b) of this Code, must have simultaneously with the change in control and thereafter maintain at all times combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), $1,500,000;
    
more than one clause, $1,500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), $1,500,000; more than one clause, $1,500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l), or Class 3,
    
any or all clauses or any combination thereof, $700,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, $1,500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $150,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    Notwithstanding, the foregoing provisions of this paragraph (7), any company which experiences a change in control, as control is defined in Section 131.1(b) of this Code, by reason of any laws of descent, distribution or probate, shall be exempt from the requirements of this paragraph (7) for a period of 2 years following the date of death or incompetency giving rise to the change in control.
    (8) Any company organized prior to September 10, 1971 or converted from a mutual company to a stock company between July 1, 1983 and June 30, 1985, which had less than $1,000,000 capital and surplus on January 1, 1986, and whose authority is limited to Class 2 of Section 4 of this Code and which is regulated under this Article, shall be exempt from the requirements of paragraphs (5) and (6) of this Section.
    (9) The Director shall take action under Section 34 of this Code against any company which fails to maintain the minimum surplus required by this Section. The words "minimum surplus" mean the net total of the following accounts, where applicable, as they appear in the annual statement of a stock company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners: paid-in surplus; contributed surplus; unassigned or earned surplus; and special surplus.
(Source: P.A. 87-315.)

    (215 ILCS 5/14) (from Ch. 73, par. 626)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 14. Incorporators. Any one or more natural persons, at least one of whom is a resident of this State, who desire to form a company under this Article shall sign and acknowledge before an officer authorized to take acknowledgments, articles of incorporation in duplicate.
(Source: P.A. 84-502.)

    (215 ILCS 5/14.1) (from Ch. 73, par. 626.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 14.1. Articles of incorporation. The articles shall set forth:
        (a) the corporate name;
        (b) the location of its principal office;
        (c) the period of duration, which may be perpetual;
        (d) the class or classes of insurance business as
    
provided in Section 4, in which it proposes to engage and the kinds of insurance in each class it proposes to write;
        (e) the number of its directors, or that the number
    
of directors shall be not less than the minimum nor more than the maximum stated in Section 10, the terms of office; and the manner of electing the directors;
        (f) the amount of its authorized capital, the number
    
of authorized common and non-voting preferred shares, the par value of each share, and the number of the common and non-voting preferred shares to be issued and sold in accordance with this Article to provide at least the minimum paid-up capital and paid-in surplus as set forth in Section 13 of this Article;
        (g) the terms and conditions on which preferred
    
shares may be converted to common shares, if any shares are issued with the right of conversion;
        (h) such other provisions not inconsistent with law
    
as may be deemed by the incorporators to be necessary or advisable.
(Source: P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/15) (from Ch. 73, par. 627)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 15. Documents to be delivered to Director by incorporators. Upon the execution of the articles of incorporation, there shall be delivered to the Director:
        (a) duplicate originals of the articles of
    
incorporation;
        (b) a copy of the by-laws adopted by the
    
incorporators;
        (c) the form of subscription agreement to be used by
    
the company;
        (d) 2 organization bonds or the cash or securities
    
provided for in Section 16; and
        (e) the form of escrow agreement for the deposit of
    
cash or securities.
(Source: P.A. 100-863, eff. 8-14-18.)

    (215 ILCS 5/16) (from Ch. 73, par. 628)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 16. Organization bonds.
    (1) The incorporators except as stated in subsection (3) of this Section, shall deliver to the Director two bonds in favor of the State of Illinois, in the penalty of $50,000 each, with the incorporators as principals and a duly authorized surety company as surety. One of such bonds shall be for the use and benefit of the State of Illinois, and shall be conditioned upon the payment of costs incurred by the State by reason of any legal proceedings for liquidation or dissolution of such company prior to the issuance to it of a certificate of authority to do an insurance business. The other bond shall be for the use and benefit of subscribers, shareholders and creditors, and shall be conditioned upon the full and complete accounting for all funds and property coming into the possession of the incorporators or into the possession of the company prior to the issuance to it of a certificate of authority to do an insurance business.
    (2) In lieu of delivering the above bonds, the incorporators may deposit with the Director $100,000 in cash or securities of the United States Government or of the State of Illinois, having a market value of at least $100,000. The cash or securities so deposited shall be held in trust by the Director, until the issuance of a certificate of authority to the company, to indemnify the State of Illinois and all subscribers, shareholders and creditors of the company for the same matters and things set forth as conditions of the organization bonds mentioned in subsection (1).
    (3) No bonds are required if the stock of the company is to be purchased by a sole shareholder.
(Source: P.A. 84-1431.)

    (215 ILCS 5/17) (from Ch. 73, par. 629)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 17. Publication of intention.
    (1) Upon complying with the provisions of Section 15, the incorporators shall cause to be published in a newspaper of general circulation in this State, in the county where the principal office of the company is to be located, once each week for 3 consecutive weeks, a notice setting forth:
        (a) their intent to form the company and the proposed
    
name thereof;
        (b) the class or classes of insurance business in
    
which the company proposes to engage; and
        (c) the address where its principal office shall be
    
located.
    (2) Proof of such publication made by a certificate of the publisher or his agent shall be delivered to the Director.
(Source: P.A. 100-863, eff. 8-14-18.)

    (215 ILCS 5/18) (from Ch. 73, par. 630)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 18. Approval of documents.
    (1) If the Director finds that the documents and papers so delivered comply with this Code, he must place on file in his office the by-laws, form of subscription agreement, bonds or securities, and one of the duplicate originals of the articles of incorporation, and endorse upon the other duplicate original his approval, and the month, day and year of approval and deliver it to the incorporators. The company is deemed to be fully organized on the date of the approval of the articles of incorporation by the Director, and that date is the date of incorporation of the company.
    (2) If the Director finds that any of said documents are insufficient or do not comply with this Code, he shall notify the incorporators in writing in what respect said documents are found to be insufficient and if requested so to do must grant the incorporators a hearing.
(Source: P.A. 77-747.)

    (215 ILCS 5/19) (from Ch. 73, par. 631)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 19. Recording articles of incorporation. The duplicate original of the articles of incorporation returned by the Director shall be filed for record, within 15 days after it is delivered to the company, in the office of the recorder of the county where the principal office of the company is to be located.
(Source: P.A. 83-358.)

    (215 ILCS 5/20) (from Ch. 73, par. 632)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 20. Authority to solicit subscriptions.
    (1) Upon the approval of the articles of incorporation by the Director and upon compliance with such reasonable regulations relating to the offering and subscription of or for shares as may be promulgated by the Director to the end that no inequity, fraud or deceit may be worked or tend to be worked upon prospective subscribers to or purchasers of such shares, he shall issue to the company a permit, which shall expire at the end of two years from its date, authorizing it to solicit subscriptions in accordance with such regulations, this Code and the form of subscription agreement filed with him, to receive payment for its shares and to do such other acts as may be necessary and proper in order to complete its organization and to entitle it to receive a certificate of authority to transact an insurance business.
    (2) No subscription for shares shall be solicited, until such subscriptions or shares shall have been qualified or registered in accordance with any law of this State or of the United States requiring qualification or registration.
    (3) If the Director finds that any company in process of organization has failed to comply with, or has violated any provision of the Code, he may proceed against the company under Article XIII, and may after notice and hearing, if any provision of the Code or any regulation promulgated under subsection (1) has been violated, revoke the permit issued to it under subsection (1).
(Source: Laws 1959, p. 1428.)

    (215 ILCS 5/21) (from Ch. 73, par. 633)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 21. Subscription agreement.
    (1) The company and each subscriber shall enter into an agreement for the subscription to the shares of the company and such agreement shall also constitute an agreement between the several subscribers. It shall state:
        (a) the price of the shares, terms, time, and medium
    
of payment therefor;
        (b) the part of the price that may be used for
    
commission, promotion, organization, and other expenses;
        (c) the name of the bank or trust company in this
    
State in which the funds or securities are to be deposited pending the completion of the organization of the company; and
        (d) that the total cash or securities received in
    
payment will be returned to the subscribers who have made such payments in the event the organization of the company is not completed.
    (2) Subscriptions to shares shall be irrevocable unless subscribers representing 50% or more of the amount subscribed consent to the revocation.
    (3) Any subscription agreement may provide for payment in installments but in the case of subscriptions prior to the issuance of a certificate of authority to the company, such installments shall not extend beyond 2 years from the date of the permit of the Director authorizing the solicitation of subscriptions.
(Source: P.A. 100-863, eff. 8-14-18.)

    (215 ILCS 5/21.1) (from Ch. 73, par. 633.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 21.1. Escrow agreement. The company and the bank or trust company designated in the subscription agreement shall execute an escrow agreement. The escrow agreement shall state that the proceeds of all subscriptions to shares shall be placed in the bank or trust company and remain until an organization examination has been completed, at which time the escrow agent is authorized to purchase securities for deposit in the amount required by Section 26 and forward them to the Director. The escrow agent is authorized to release the balance of the escrowed funds to the company only upon notification that a Certificate of Authority or similar documentation has been issued by the Director.
(Source: P.A. 84-502.)

    (215 ILCS 5/22) (from Ch. 73, par. 634)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 22. Payments for shares-Promotion expenses. The net proceeds of all subscriptions to shares prior to the issuance of a certificate of authority to the company to transact business shall not be less than the paid up capital specified in the articles of incorporation and the required paid-in surplus. Payments upon subscriptions shall be made only in cash or securities that are eligible for investment under Article VIII. The part of the subscription price, that may be used for commission, promotion, organization, and other expenses, in no event shall be in excess of 15% of the amount collected on the respective subscriptions and in no case shall such expenses be paid out of the subscription proceeds until such time as the sale of all of the shares constituting the offering has been completed.
(Source: Laws 1961, p. 3735.)

    (215 ILCS 5/23) (from Ch. 73, par. 635)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 23. Deposit of proceeds of shares - When subscribers deemed shareholders.
    (1) The cash or securities received by the company upon subscriptions for shares shall be placed in the bank or trust company designated in the escrow and subscription agreements. No part of the cash or securities so deposited shall be used by the company prior to the issuance to it of a certificate of authority to transact business, except when payments for all the shares to be issued and sold, as set forth in the articles of incorporation, are completed, for the purpose of making the deposit as provided for in Section 26.
    (2) Any officer, director or incorporator of a company who, prior to the issuance of the certificate of authority to the company, withdraws, causes to be withdrawn or knowingly permits the withdrawal of any cash or securities on deposit in such bank or trust company, for any purposes other than those authorized in subsection (1), shall be guilty of a Class A misdemeanor.
    (3) The subscribers shall be deemed to be shareholders when full payment upon the subscriptions for all shares which the company proposes to issue and sell, as set forth in the articles of incorporation, shall have been received by the company, but no certificate for shares may be issued by the company prior to the issuance to it of a certificate of authority to transact business.
    (4) In the event that payments for all shares to be issued and sold by the company, as set forth in the articles of incorporation, are not completed within the time provided in the permit of the Director authorizing the solicitation of subscriptions the cash and securities received in payment shall be returned to the subscribers who have made the payments.
(Source: P.A. 84-502.)

    (215 ILCS 5/24) (from Ch. 73, par. 636)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 24. Certificate of authority to do an insurance business. When the Director has been notified that the capital required by the articles of incorporation has been fully subscribed, and that such capital and the required surplus has been fully collected, he shall conduct an examination of the company. If he finds that the organization of the company is complete, that the required capital provided in the articles of incorporation and required surplus has been fully collected and deposited with the designated bank or trust company, that the deposit provided for by Section 26 has been made and that all of the requirements imposed by this Code, have been met, he shall issue to the company a certificate of authority to transact the kind or kinds of business specified therein. No company shall transact any business of insurance until it has received a certificate of authority as herein prescribed nor any business of insurance not specified in such certificate of authority.
(Source: Laws 1957, p. 603.)

    (215 ILCS 5/25) (from Ch. 73, par. 637)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 25. Voluntary surrender of the articles of incorporation. At any time prior to the issuance of the certificate of authority to the company the articles of incorporation may be voluntarily surrendered and the company dissolved by written agreement filed with the Director, signed by a majority of the incorporators, and by subscribers representing at least two-thirds of the shares subscribed. Such surrender and dissolution shall become effective only upon the approval thereof by the Director. The Director shall approve the surrender of such articles of incorporation if upon investigation he shall find that:
        (a) no insurance business has been transacted by the
    
company;
        (b) all sums of money or securities, if any,
    
collected upon subscriptions, have been returned to the subscribers; and
        (c) all obligations of the company have been paid or
    
discharged.
(Source: P.A. 100-863, eff. 8-14-18.)

    (215 ILCS 5/26) (from Ch. 73, par. 638)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 26. Deposit.
    (a) A company subject to the provisions of this Article shall make and maintain with the Director for the protection of all creditors, policyholders and policy obligations of the company, a deposit of securities having a fair market value equal to the minimum capital and surplus required to be maintained under Section 13. The Director may release the required deposit of securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the company that it has no outstanding creditors, policyholders, or policy obligations in effect and no plans to engage in the business of insurance; (ii) receipt of a lawful resolution of the company's board of directors effecting the surrender of its articles of incorporation for administrative dissolution by the Director; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the company, together with a plan of dissolution approved by the Director.
    (b) All deposits by insurers subject to this Article must be limited to the following types:
        (1) United States government bonds, notes, and bills
    
for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest.
        (2) United States public bonds and notes of any state
    
or of the District of Columbia, or Canadian public bonds and notes of any province thereof, for which the full faith and credit of the issuer has been pledged for the payment of principal and interest.
        (3) United States and Canadian county, provincial,
    
municipal, and district bonds and notes for which the issuer has lawful authority to levy taxes or make assessments for the payment of principal and interest.
        (4) Bonds and notes of any federal agency that are
    
guaranteed as to payment of principal and interest by the United States.
        (5) International development bank bonds, bonds
    
issued by the State of Israel and sold through the Development Corporation for Israel or its successor entities, and notes issued, assumed, and guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation.
        (6) Corporate bonds and notes of any private
    
corporations that are not affiliates or subsidiaries of the insurer, which corporations are organized under the laws of the United States, Canada, any state, the District of Columbia, any territory or possession of the United States, or any province of Canada.
        (7) Certificates of deposit.
    (c) To be eligible for deposit under subsection (b), any bond or note must have the following characteristics:
        (1) The bond or note must be interest-bearing or
    
interest-accruing, and the insurer must be the exclusive owner of the interest accruing thereon and entitled to receive the interest for its account.
        (2) The issuer must be in a solvent financial
    
condition and the bond or note must not be in default.
        (3) The bond, note, or debt of the issuing country
    
must be rated in one of the 4 highest classifications by an established, nationally recognized investment rating service or must have been given a rating of 1 by the Securities Valuation Office of the National Association of Insurance Commissioners.
        (4) The market value of the bond or note must be
    
readily ascertainable or the value of the bond or note must be obtainable by the insurer or its custodian from the issuer's fiscal agent.
        (5) The bond or note must be the direct obligation of
    
the issuer.
        (6) The bond or note must be stated in United States
    
dollar denominations.
        (7) The bond or note must be eligible for book-entry
    
form on the books of the Federal Reserve's book-entry system or in a depository trust clearing system or on the books of the issuer's transfer agent or evidenced by a certificate delivered to the insurer or its custodian.
    (d) To be eligible for deposit under item (7) of subsection (b), a certificate of deposit must have the following characteristics:
        (1) The certificate of deposit must be issued by a
    
bank, savings bank, or savings association that is organized under the laws of the United States, of this State, or of any other state and that has a principal office or branch office in this State that is authorized to receive deposits in this State.
        (2) The certificate of deposit must be
    
interest-bearing and may not be issued in discounted form.
        (3) The certificate of deposit must be issued for a
    
period of not less than one year.
        (4) The issuing bank, savings bank, or savings
    
association must agree to the terms and conditions of the Director regarding the rights to the certificate of deposit and must have executed a written certificate of deposit agreement with the Director. The terms and conditions of the agreement shall include, but need not be limited to:
            (A) Exclusive authorized signature authority for
        
the chief financial officer.
            (B) An agreement to pay, without protest, the
        
proceeds of its certificate of deposit to the Director within 30 business days after presentation.
            (C) A prohibition against levies, setoffs,
        
survivorship, or other conditions that might hinder the Director's ability to recover the full face value of a certificate of deposit.
            (D) Instructions regarding interest payments,
        
renewals, taxpayer identification, and early withdrawal penalties.
            (E) An agreement to be subject to the
        
jurisdiction of the courts of this State, or those of the United States that are located in this State, for the purposes of any litigation arising out of this Section.
            (F) Such other conditions as the Director
        
requires.
    (e) The Director may refuse to accept certain securities or refuse to accept the reported market value of certain securities offered pursuant to this Section in order to ensure that sufficient cash and securities are on hand to meet the purposes of the deposit. In making a refusal under this subsection (e), the guidelines for use of the Director may include, but need not be limited to, whether the market value of the securities cannot be readily ascertained and the lack of liquidity of the securities. Securities refused under this subsection (e) are not acceptable as deposits.
    (f) All deposits required of a domestic insurer pursuant to the laws of another state, province, or country must be comprised of securities of the kinds required under subsection (b), having the characteristics required under subsections (c) and (d), and permitted by the laws of the other state, province, or country, except common stocks, mortgages or loans of any kind, real estate investment trust funds or programs, commercial paper, and letters of credit.
(Source: P.A. 98-110, eff. 1-1-14; 98-969, eff. 1-1-15.)

    (215 ILCS 5/27) (from Ch. 73, par. 639)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 27. Dividends and other distributions.
    (1) The board of directors of any company subject to this Article may declare and the company may pay dividends and other distributions (i) on its outstanding shares in cash, property, or its own shares and (ii) on its treasury shares in its own shares, subject to the following provisions:
        (a) No dividend or other distribution may be declared
    
or paid at any time except out of earned, as distinguished from contributed, surplus, nor when the surplus of the company is less than the surplus required by Section 13 for the kind or kinds of business authorized to be transacted by such company, nor when the payment of a dividend or other distribution would reduce its surplus to less than such amount.
        (b) Except in the case of share dividends, surplus
    
for determining whether dividends or other distributions may be declared shall not include surplus arising from unrealized appreciation in value, or revaluation of assets, or from unrealized profits upon investments.
        (c) No dividend or other distribution may be declared
    
or paid contrary to any restriction contained in the articles of incorporation.
        (d) No dividend or other distribution may be declared
    
or paid contrary to Section 131.20 or 131.20a.
    (2) No payments may be made to policyholders by way of dividends unless the company possesses admitted assets in the amount of such payments in excess of its capital, minimum required surplus and all liabilities.
(Source: P.A. 88-364.)

    (215 ILCS 5/27.1) (from Ch. 73, par. 639.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 27.1. Treasury shares. "Treasury shares" means (a) shares of a company which have been issued, have been subsequently acquired by and belong to the company, and have not, either by reason of the acquisition or thereafter, been cancelled or restored to the status of authorized but unissued shares and (b) shares declared and paid as a share dividend on the shares referred to in clause (a) or this clause (b) of this Section. Treasury shares shall be deemed to be "issued" shares but not outstanding shares and shall not be voted. Shares converted into or exchanged for other shares of the company shall not be deemed to be treasury shares.
(Source: P.A. 100-863, eff. 8-14-18.)

    (215 ILCS 5/28) (from Ch. 73, par. 640)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 28. Dealing in shares of company.
    (1) A company subject to the provisions of this Article shall have the power to purchase, take, receive, or otherwise acquire, hold, own, pledge, transfer, or otherwise dispose of its own shares, provided that it shall not purchase, either directly or indirectly, its own shares when its net assets are less than the sum of its paid-up capital, and its required surplus, any surplus arising from unrealized appreciation in value or revaluation of its assets and any surplus arising from surrender to the corporation of any of its shares, or when by so doing its net assets would be reduced below the minimum capital and surplus requirements of Section 13 hereof, and as set forth in the articles of incorporation. Notwithstanding the foregoing limitations, a company may purchase its own shares for any of the following purposes:
        (a) eliminating fractional shares;
        (b) collecting or compromising claims of the company
    
or securing any indebtedness to the company previously incurred;
        (c) paying dissenting shareholders entitled to
    
payment for their shares in the event of a merger or consolidation;
        (d) effecting a plan for the mutualization of the
    
company; or
        (e) furthering a general savings and investment plan
    
for employees of the company.
    (2) No shares which are or have been reacquired, purchased, pledged or held pursuant to paragraph (1) of this Section shall be considered an admitted asset as defined in this Code, or considered in determining the solvency of such company.
(Source: Laws 1959, p. 631.)

    (215 ILCS 5/28.1) (from Ch. 73, par. 640.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 28.1. Dealing in shares of company by officers, directors and principal stockholders.
    (a) Any person who is directly or indirectly the beneficial owner of more than 10% of any class of any equity security of a domestic stock insurance company, or who is a director or an officer of such company, shall file in the office of the Director by January 31, 1966 or within 10 days after he becomes such beneficial owner, director or officer, a statement, in such form as the Director may prescribe, of the amount of all equity securities of such company of which he is the beneficial owner; and, within 10 days after the close of each calendar month thereafter, if there has been a change in such ownership during such month, shall file in the office of the Director a statement, in such form as the Director may prescribe, indicating his ownership at the close of the calendar month and such changes in his ownership as have occurred during such calendar month.
    (b) For the purpose of preventing the unfair use of information which may have been obtained by such beneficial owner, director or officer by reason of his relationship to such company, any profit realized by such beneficial owner, officer or director from any purchase and sale, or any sale and purchase, of any equity security of such company within any period of less than 6 months, unless such security was acquired in good faith in connection with a debt previously contracted, shall inure to and be recoverable by the company, irrespective of any intention on the part of such beneficial owner, director or officer in entering into such transaction of holding the security purchased or of not repurchasing the security sold for a period exceeding 6 months. Suit to recover such profit may be instituted at law or in equity by the company, or if the company shall fail or refuse to bring such suit within 60 days after request or shall fail diligently to prosecute such a suit, a suit may be instituted by the owner of any security of the company in the name and in behalf of the company, but no such suit shall be brought more than 2 years after the date such profit was realized. This subsection shall not be construed to cover any transaction where such beneficial owner was not such both at the time of the purchase and sale, or the sale and purchase, of the security involved, or any transaction or transactions which the Director by rules and regulations may exempt as not comprehended within the purpose of this subsection.
    (c) It is unlawful for any such beneficial owner, director or officer, directly or indirectly, to sell any equity security of such company if the person selling the security or his principal (i) does not own the security sold, or (ii) if owning the security, does not deliver it against such sale within 20 days thereafter, or does not within 5 days after such sale deposit it in the mails or other usual channels of transportation; provided, however, that this provision does not apply if such person proves that notwithstanding the exercise of good faith he was unable to make such delivery or deposit within such time, or that to do so would cause undue inconvenience or expense.
    (d) The provisions of paragraph b of this Section do not apply to any purchase and sale, or sale and purchase, and the provisions of paragraph c of this Section do not apply to any sale, of an equity security of a domestic stock insurance company not then or theretofore held by such beneficial owner, director or officer in an investment account, by a dealer in the ordinary course of his business and incident to the establishment or maintenance by him of a primary or secondary market (otherwise than on an exchange as defined in the Securities Exchange Act of 1934) for such security. The Director may, by such rules and regulations as he finds to be necessary or appropriate in the public interest, define and prescribe terms and conditions with respect to securities held in an investment account and transactions made in the ordinary course of business and incident to the establishment or maintenance of a primary or secondary market.
    (e) The provisions of paragraphs a, b and c of this Section do not apply to foreign or domestic arbitrage transactions unless made in contravention of such rules and regulations as the Director may adopt in order to carry out the purposes of this Act.
    (f) The term "equity security" when used in this Act means any stock or similar security; or any security convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such a security; or any such warrant or right; or any other security which the Director finds to be of similar nature and considers necessary or appropriate, by such rules and regulations as he may prescribe in the public interest or for the protection of investors, to treat as an equity security.
    (g) The provisions of paragraphs a, b and c of this Section do not apply to equity securities of a domestic stock insurance company if (i) such securities are registered, or are required to be registered, pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, or if (ii) such domestic stock insurance company does not have any class of its equity securities held of record by 100 or more persons on the last business day of the year next preceding the year in which equity securities of the company would be subject to the provisions of paragraphs a, b and c of this Section except for the provisions of this subsection (ii).
    (h) The Director may make such rules and regulations as may be necessary for the execution of the functions vested in him by this Section, and may for such purpose classify domestic stock insurance companies, securities, and other persons or matters within his jurisdiction. No provision of this Section imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule or regulation of the Director, notwithstanding that such rule or regulation may, after such act or omission, be amended or rescinded or determined by judicial or other authority to be invalid for any reason.
    (i) The provisions of this Section do not apply to any sale made prior to its effective date.
(Source: Laws 1965, p. 2257.)

    (215 ILCS 5/28.2) (from Ch. 73, par. 640.2)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 28.2. Proxies, consents and authorizations of domestic stock companies.
    (a) The Director is authorized to regulate proxies, consents, and authorizations in respect of securities issued by any company subject to the provisions of this Article to the extent as may be necessary or appropriate in the public interest or for the protection of investors, and such regulation may include but shall not be limited to rules and regulations under which any such company, director, or employee of the company or any other person may solicit or permit the use of his name to solicit any proxy, consent or authorization in respect of securities issued by any such company.
    (b) Unless proxies, consents or authorizations in respect of a security of a company subject to the provisions of this Article are solicited by or on behalf of the management of such company from the holders of record of such security in accordance with the provisions of any rules and regulations prescribed under subsection (a) of this Section, prior to any annual or other meeting of the holders of such security, such company shall, if required by such rules and regulations prescribed by the Director as may be necessary or appropriate in the public interest or for the protection of investors, file with the Director and transmit to all holders of record of such security information substantially equivalent to the information which would be required to be transmitted if a solicitation were made.
    (c) The authority granted under subsections (a) and (b) hereof includes the power on the part of the Director to require such companies to file with the Director and transmit to shareholders prior to the annual meeting of shareholders an annual report containing such financial statements for the last fiscal year as are referred to in the Stockholder Information Supplement filed with the annual statement of any such company under the provisions of Section 136 of this Code.
    (d) If the Director finds, after notice and hearing, that such company or any director, officer or employee of such company or any other person has willfully violated the provisions of this Section or of any rule or regulation prescribed by the Director hereunder, he may order such company or any director, officer or employee of such company, or any other person, as the case may be, to pay to the State of Illinois a penalty in a sum not exceeding $5,000 for each such offense. The findings, determinations and orders of the Director made pursuant to this Section shall be subject to judicial review under the Administrative Review Law, as now or hereafter amended.
(Source: P.A. 82-783.)

    (215 ILCS 5/28.2a) (from Ch. 73, par. 640.2a)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 28.2a. Proxies.
    (1) A shareholder may appoint a proxy to vote or otherwise act for him or her by signing an appointment form and delivering it to the person so appointed.
    (2) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this Section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by, or by attendance at the meeting and voting in person by, the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.
    (3) An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest in the shares or in the corporation generally. By way of example and without limiting the generality of the foregoing, a proxy is coupled with an interest when the proxy appointed is one of the following:
        (a) a pledgee;
        (b) a person who has purchased or had agreed to
    
purchase the shares;
        (c) a creditor of the corporation who has extended it
    
credit under terms requiring the appointment, if the appointment states the purpose for which it was given, the name of the creditor, and the amount of credit extended; or
        (d) an employee of the corporation whose employment
    
contract requires the appointment, if the appointment states the purpose for which it was given, the name of the employee, and the period of employment.
    (4) The death or incapacity of the shareholder appointing a proxy does not revoke the proxy's authority unless notice of the death or incapacity is received by the officer or agent who maintains the corporation's share transfer book before the proxy exercises his or her authority under the appointment.
    (5) An appointment made irrevocable under subsection (3) becomes revocable when the interest in the proxy terminates such as when the pledge is redeemed, the shares are registered in the purchaser's name, the creditor's debt is paid, the employment contract ends, or the voting agreement expires.
    (6) A transferee for value of shares subject to an irrevocable appointment may revoke the appointment if the transferee was ignorant of its existence when the shares were acquired and both the existence of the appointment and its revocability were not noted conspicuously on the certificate (or information statement for shares without certificates) representing the shares.
    (7) Unless the appointment of a proxy contains an express limitation on the proxy's authority, a corporation may accept one proxy's vote or other action as that of the shareholder making the appointment. If the proxy appointed fails to vote or otherwise act in accordance with the appointment, the shareholder is entitled to such legal or equitable relief as is appropriate in the circumstances.
(Source: P.A. 102-558, eff. 8-20-21.)

    (215 ILCS 5/29) (from Ch. 73, par. 641)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 29. Amendment of articles of incorporation.
    (1) A company subject to the provisions of this article may amend its articles of incorporation in any respect not in violation of law but may not amend its articles to insert any provision prohibited, or to delete any provision required, in original articles of incorporation for a similar domestic company organized under this Code, except as provided by Section 35.
    (2) Amendments to the articles of incorporation, after a certificate of authority has been issued to the company, shall be made in the following manner:
        (a) The board of directors shall adopt a resolution
    
setting forth the proposed amendment and directing that it be submitted to a vote of shareholders at either an annual or special meeting.
        (b) Written or printed notice setting forth the
    
proposed amendment or a summary of the changes to be effected thereby and stating the time and place of the meeting at which the same will be considered, shall be mailed, postage prepaid and properly addressed, to each shareholder at least ten days before the time fixed for such meeting. A written waiver of notice signed by the shareholders, whether before or after the date of the meeting mentioned therein, shall be deemed equivalent to the notice in this Section provided.
        (c) At such meeting a vote of the shareholders shall
    
be taken on the proposed amendment. The proposed amendment shall be adopted upon receiving the affirmative vote of the holders of at least two-thirds of the outstanding shares.
    (3) Amendments to the articles of incorporation, prior to the issuance of a certificate of authority to the company, shall be made by the submission of the proposed amendment by the incorporators to a vote of the subscribers in the same manner as provided in subsection (2) for submission to shareholders. The proposed amendment in such cases shall be adopted upon receiving the affirmative vote of all subscribers. If such company has no subscribers the proposed amendment shall be adopted by the written consent of all the incorporators.
    (4) Upon the adoption of the amendment to the articles of incorporation, the restated articles of incorporation shall be executed in duplicate by the company by its president or vice-president and its secretary or assistant secretary, or officers corresponding thereto, and the corporate seal shall be thereunto affixed.
    (5) There shall be delivered to the Director duplicate originals of the restated articles of incorporation and an affidavit of the secretary or assistant secretary of the company, setting forth the facts showing that the requirements of this Section have been complied with.
(Source: P.A. 84-502.)

    (215 ILCS 5/30) (from Ch. 73, par. 642)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 30. Approval of amendment. The restated articles of incorporation and the other documents so delivered to the Director may be approved or disapproved by the Director in the same manner as original articles of incorporation. If said restated articles of incorporation be approved by the Director, he shall place on file in his office all the documents so delivered to him, except one of the duplicate originals of the restated articles of incorporation, and shall endorse upon such duplicate original his approval thereof and the month, day and year of such approval and deliver it to the company. The restated articles shall be effective as of the date of the approval thereof by the Director.
(Source: P.A. 84-1431.)

    (215 ILCS 5/31) (from Ch. 73, par. 643)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 31. Recording restated articles of incorporation. The duplicate original of the restated articles of incorporation returned by the Director shall be filed for record, within 15 days after it is delivered to the company, in the office of the recorder of the county where the principal office of the company is located.
(Source: P.A. 84-1431.)

    (215 ILCS 5/32) (from Ch. 73, par. 644)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 32. Increase in capital.
    (1) Any company subject to this Article may increase its paid-up capital either by issuing additional shares not to exceed the number of authorized shares as set forth in its Articles or by increasing the par value of its shares. No company shall issue additional shares nor increase the par value of its shares without first procuring from the Director a permit so to do, which permit shall expire one year from its date. If the proposed increase in capital is part of a series of transactions that includes subsequent transactions that will be subject to Article VIII 1/2, the company shall provide the Director all of the information called for in Article VIII 1/2 prior to the Director's issuance of a permit. The Director may decline to issue a permit if the Director is not satisfied that the proposed series of transactions satisfies the standards established in Article VIII 1/2.
    The Director, upon compliance by the company with the applicable provisions of this Code, and such reasonable regulations relating to the offering, issuance, subscription or sale of or for shares as may be promulgated by the Director to the end that no inequity, fraud or deceit may be worked or tend to be worked upon prospective subscribers to, recipients or purchasers of shares or present holders thereof, shall issue a permit to the company to issue additional shares upon receipt of a copy of a resolution by the Board of Directors authorizing the issuance of such shares.
    If preferred shares having a right of conversion to common shares are to be issued, the terms and conditions on which the shares may be converted shall be provided to the Director before a permit may be issued pursuant to this Section.
    In the case of shares to be issued for sale, the permit shall authorize the company to solicit subscriptions to such shares on a form of subscription agreement which shall have been submitted to and approved by the Director.
    All of the provisions of this Code relative to the filing, terms and effect of subscription agreements, payment for shares, the limitations of expenses, filing of bonds except that no bonds shall be required when a company issues stock to its sole shareholder, deposit of proceeds of shares, return of funds in the event the payment for all of the additional shares is not completed, and qualification or registration shall apply to the same extent and effect as if the additional shares were shares representing the original capital of a company being organized under this Article, except that no organization bond with regard to costs incurred in connection with liquidation or dissolution shall be required, and if the subscription agreement provides for payment in installments, such installments shall not extend beyond one year from date of the permit of the Director.
    If shares are to be issued as a stock dividend, or if the par value of shares is to be increased, the permit shall authorize the company to pay for such additional shares or increase in par value by transferring the requisite amount of surplus to paid-up capital provided, however, no transfer of such surplus shall be made which will reduce the remaining surplus to less than the surplus required by Section 13. In the case of an increase in par value, the company may require each shareholder to surrender his or her certificate and to accept in lieu thereof a new certificate conforming to such increase in par value.
    No more than one permit of the types under this Section may be outstanding in the name of any company at any time.
    (2) When the Director is notified that the additional shares proposed to be issued have, or that the increase in par value has, been fully paid, and that all of the requirements of the permit have been satisfied, he or she shall make an examination of the company and if he or she finds that the provisions of this Section have been complied with, he or she shall issue a certificate of paid-up capital to that effect which shall be filed with the recorder of the county in which the principal office of the company is located within 15 days from the date of said certificate. Upon the issuance of such certificate, the company may withdraw the proceeds of the sale, if any, of its shares and the bond, conditioned upon the full and complete accounting by the company for the proceeds of any such sale of shares, shall terminate or the cash deposited with the Director in lieu of such bond shall be returned.
    (3) If the Director finds that any company has failed to comply with, or has violated any provision of the Code or any regulation promulgated under subsection (1), he or she may, in addition to and notwithstanding any other procedure, remedy or penalty provided under the laws of this State, after notice and hearing, revoke the permit issued to it under subsection (1).
(Source: P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/32.1) (from Ch. 73, par. 644.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 32.1. Stock option plans. A company subject to this Article which has done business in Illinois for 3 or more years and which has adopted a stock option plan shall submit that plan to the Director. Unless the Director finds that such stock option plan creates an inequity, fraud, or deception upon shareholders of the company, the Director shall approve such plan and issue a permit to the company authorizing the issuance of such shares of stock as optionees under the plan are entitled from time to time to acquire by the exercise of their options, including an adjustment in the number of shares to be issued as may at any time be appropriate due to the increase or decrease in the number of shares resulting from any share dividend, and subdivision or combination of shares, or any reorganization, merger, consolidation, or other recapitalization or change in the corporate structure or shares of the company. A stock option plan is deemed prima facie as not creating any inequity, fraud, or deception upon shareholders if it complies with applicable provisions of the Internal Revenue Code in effect at the time of the adoption of the plan and continues in compliance with those provisions or other new provisions of the Internal Revenue Code as it hereafter may be amended; provided, however, that the number of shares in respect to such plan together with the number of shares in respect of which unexpired options are outstanding or may be granted under any and all option plans of the company shall in no event exceed 10% of the total shares outstanding. The permit is effective with respect to all shares issued at any time to optionees under the plan. After receipt of the permit and upon receipt by the company of the full purchase price for any shares to be issued to any optionee, the company may issue such shares to any such optionee without further authorization from the Director. If a plan approved by the Director is amended, no shares may be issued under the plan as amended until the amendment, or the plan as amended, has been approved by the Director. Upon such approval, the permit previously issued shall be deemed to authorize the issuance of shares under the plan as amended. A permit or permits to issue shares under this Section may be outstanding in addition to any outstanding permit to issue shares for any other purpose.
    On or before the 25th day of each month a company which issued shares during the preceding month under this Section shall provide the Director with the following information and affidavit:
        (1) a list of the names of the individuals to whom
    
were issued shares during the preceding month under the stock option plan;
        (2) the number of shares and a description of the
    
shares issued to each individual;
        (3) the date of each issue;
        (4) the price per share and total price paid by each
    
said individual; and
        (5) an affidavit signed by either the president, a
    
vice president, the secretary, or the treasurer of the company under oath averring that the dollar consideration due from each such individual was actually received by the company before the issuance of those shares. Such information and affidavit shall be accompanied by the company's request for a certificate of paid-up capital.
    After receiving the information and affidavit and satisfying himself as to the accuracy thereof, the Director shall issue a certificate of paid-up capital which shall be recorded by the company with the recorder of the county in which the principal office of the company is located, within 15 days from the date of the issuance of the certificate. No bond or cash deposit with the Director is required with respect to shares issued under this Section.
(Source: P.A. 83-358.)

    (215 ILCS 5/33) (from Ch. 73, par. 645)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 33. Decrease of capital.
    (1) When articles of amendment providing for a decrease of capital or a decrease in the par value of shares, or both, become effective, each issued share of the company shall thereupon be changed into and be a fractional part of a share, or a share having a reduced par value, or both, as provided by such amendment, and the holders of shares issued before the amendment shall thereupon cease to be holders of such shares and shall be and become holders of the shares authorized by the amendment upon the basis specified in the amendment, whether or not certificates representing the shares authorized by the amendment are then issued and delivered. The company may require each shareholder to surrender his or her certificate and accept in lieu thereof a new certificate conforming to such decrease.
    (2) No distribution of the assets of the company shall be made to the shareholders upon any decrease of capital which shall reduce its surplus to less than the surplus required by this Code for the kind or kinds of business authorized to be transacted by the company.
    (3) If the proposed articles of amendment providing for a decrease of capital or a decrease in the par value of shares, or both, is part of a series of transactions that includes subsequent transactions that will be subject to Article VIII 1/2, the company shall provide the Director all of the information called for in Article VIII 1/2 prior to the Director's approval. The Director may decline to approve if the Director is not satisfied that the proposed series of transactions satisfies the standards established in Article VIII 1/2.
(Source: P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/34) (from Ch. 73, par. 646)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 34. Procedure when insufficient assets possessed by company.
    (1) Whenever the Director finds that the admitted assets of any company subject to the provisions of this Article are less than its capital, minimum required surplus and all liabilities, he or she must give written notice to the company of the amount of the impairment and require that the impairment be removed within such period, which must be not less than 30 nor more than 90 days from the date of the notice, as he or she may designate. Unless otherwise allowed by the Director, the company must discontinue the issuance of new and renewal policies while the impairment exists.
    (2) Upon the receipt of the notice from the Director, the board of directors of the company must cause the impairment to be removed and call upon its shareholders ratably for the necessary amount to remove the impairment, or, by proper action, reduce its capital to meet the impairment providing the reduced capital is not less than the minimum requirements fixed by this Code or by other means remove the impairment. If the impairment is not removed within the period of time designated, the Director may order the board of directors to call upon its shareholders ratably. If a shareholder of the company refuses or neglects to pay the amount so called for after notice, given personally or by mail, by a date stated in the notice not less than 15 days from the date of such notice, the Director may order the board of directors to declare, by resolution, the shares of such person cancelled, and in lieu thereof may issue new certificates for shares and dispose of the same at the best price obtainable not less than par. If the amount received for such new certificates for shares exceeds the amount required to be paid by such shareholder, the excess must be paid to the shareholder so refusing to pay his or her ratable share of the impairment. Nothing contained in this subsection may be construed to impose any liability on any shareholder as a result of any call, enforceable in any manner other than through a sale of his or her shares as provided in this subsection.
    (3) If the impairment is not removed within the period specified in the Director's notice, the company shall be deemed insolvent and the Director shall proceed against the company in accordance with Article XIII.
    (4) If while the impairment exists any officer or director of the company knowingly renews, issues or delivers or causes to be renewed, issued or delivered any policy, contract or certificate of insurance unless allowed by the Director, and the fact of such impairment is known to the officer or director of the company, such officer or director shall be guilty of a business offense and may be fined not less than $200 and not more than $5,000 for each offense.
    (5) Nothing in this Section prohibits, while such impairment exists, any such officer, director, trustee, agent or employee from issuing or renewing a policy of insurance when an insured or owner exercises an option granted to him or her under an existing policy to obtain new, renewed or converted insurance coverage.
(Source: P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/34.1) (from Ch. 73, par. 646.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 34.1. Subordinated indebtedness. A company organized under this Article may borrow or assume a liability for the repayment of a sum of money under a written agreement. The loan or advance shall bear interest either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum. In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum. The insurer shall elect at the time of execution of the loan or advance agreement whether the interest rate is to be fixed or floating for the term of the agreement. The loan and interest shall be repaid only out of surplus of the company in excess of the minimum surplus as is stipulated in and by the agreement. The agreement shall first be submitted to and approved by not less than a majority of the voting shares of the company and the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he is satisfied that the financial condition of the company warrants that action, but approval may not be withheld if the company shall have and submit satisfactory evidence of surplus of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement. No loan or advance made under this Section or interest accruing thereon shall form a part of the legal liabilities of the company until authorized for payment by the Director but until that authorization all statements published by the company or filed with the Director shall show the amount thereof then remaining unpaid as a special surplus account. Subject to approval of the Director, the interest rate on all subordinated surplus debentures existing on the effective date of this amendatory Act of 1991 can be amended to the rate as permitted in this Section with the mutual agreement of the company and the subordinated surplus debenture holder. Nothing in this Section shall be construed to mean that a company may not otherwise borrow money, but the amount so borrowed with accrued interest thereon shall be carried by the company as a liability.
(Source: P.A. 87-777; 87-1090.)

    (215 ILCS 5/35) (from Ch. 73, par. 647)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 35. Stock companies may become mutuals.
    (1) Any domestic stock company may become a mutual company by complying with the provisions of this Section.
    (2) The board of directors shall adopt a mutualization plan and amended articles of incorporation, which articles shall conform to the articles required by this Code of a mutual company authorized to transact the kind or kinds of insurance stated in the articles. The mutualization plan and amended articles of incorporation shall be executed in duplicate by the company by its president or vice-president and its secretary or assistant secretary, or officers corresponding thereto, and shall be delivered to the Director. The plan and amended articles of incorporation delivered to the Director may be approved or disapproved by him in the same manner as original articles of incorporation. If the Director does not approve the plan and amended articles, he or she shall notify the company in writing of the reasons for such disapproval and if requested so to do, shall grant the company a hearing.
    (3) If the plan and amended articles of incorporation be approved by the Director he or she shall place on file in his or her office one of the duplicate copies of each of the documents, shall endorse upon the other duplicate copies his approval thereof, and the month, day and year of such approval, and deliver the same to the company.
    (4) The plan and amended articles of incorporation shall thereupon be submitted to and be approved by the shareholders in the same manner as is required for the submission and approval of amendments to articles of incorporation.
    (5) After approval by the shareholders, a written or printed notice setting forth a copy of the plan and amended articles of incorporation, or a summary of the same, and stating the time and place of the special meeting at which they will be considered, and the manner of voting, shall be mailed to each policyholder of the company at least thirty days before the date set for such meeting. In a life insurance company each policyholder shall have one vote for each $1,000 of insurance which on the day of the meeting has been in force for one year or longer. In a company other than life, each policyholder shall be entitled to one vote for each policy in force on the day of the meeting, and upon which the premium has been paid at the time of the meeting. A policyholder may vote in person, by proxy or by mail. The election shall be under the supervision of not less than 3 nor more than 5 inspectors who shall be appointed by the Director. Such inspectors shall pass upon the qualifications of the voters, the validity of the ballots, shall canvass the vote and certify the result of such vote to the Director and to the company. If 2/3 of the votes cast at the meeting are in favor of the adoption of the plan, the said plan shall become effective. All necessary expenses incurred by the Director or by the inspectors in connection with the vote shall be certified to by the Director and paid by the company.
    (6) The plan may provide for the acquisition by the company of its own shares, by purchase, by gift or otherwise in the manner provided therein. Any shares so acquired shall be held in trust for the company and shall be assigned and transferred on the books of the company to three individual trustees or to any trust company authorized under the laws of this State to do a trust business, to be chosen or approved by a majority vote of those policyholders who vote at the meeting referred to in subsection (5) of this Section, and such trustee or trustees shall vote the shares held by them or by it at any company meeting. Each such trustee shall file with the company a verified acceptance of his, hers or its appointment and a declaration that he or it will faithfully discharge his, hers or its duties as such trustee. Any dividends or other sums acquired or accruing to the trustees upon shares coming within their trusteeship shall upon the termination of the trust be delivered to the company.
    (7) If a shareholder of the company shall file with such company, prior to or at the meeting of shareholders at which the plan of mutualization is submitted to a vote, a written objection to such plan and shall not vote in favor thereof, and such shareholder within 20 days after the plan is approved by such meeting shall make written demand on the company for payment of the fair value of his shares as of the day prior to the date on which such plan is approved by the shareholders, such shareholder shall be entitled to receive prior to the completion of the plan, upon surrender of his certificate or certificates representing said shares, such fair value thereof. Any shareholder who fails to make such objection or having objected fails to make demand within the 20 day period shall be conclusively presumed to have consented to the said plan and shall be bound by the terms thereof.
    (8) If within 30 days after the date of the written demand mentioned in subsection (7), the value of such shares is agreed upon between the dissenting shareholder, the company and the Director, payment therefor shall be made within 90 days after the date of such agreement upon the surrender of his or her certificate or certificates representing the shares. Upon payment of the agreed value the dissenting shareholder shall cease to have any interest in such shares and cease to be a shareholder in the company.
    (9) If, within such period of 30 days, the shareholder and the company do not so agree, then the dissenting shareholder may within 60 days after the expiration of the 30 day period, petition the Circuit Court of the county in which the principal office of the company is located, to appraise the value of such shares as of the date of the day prior to the date on which such vote was taken approving such plan. A copy of the petition shall be delivered or mailed by registered mail to the Director within 5 days after the filing thereof and proof of such delivery or mailing shall be filed with the court. The Director shall have the right to appear through the Attorney General and be heard upon all questions and issues in the proceeding. The practice, procedure, and judgment shall be, so far as practicable, the same as that under the eminent domain laws of this State.
    (10) The judgment shall be payable only upon and simultaneously with the surrender to the company of the certificate or certificates representing the shares. Upon the payment of the judgment the dissenting shareholder shall cease to have any interest in such shares, and cease to be a shareholder in the company. Unless the dissenting shareholder shall file such petition within the time herein limited, such shareholder and all persons claiming under him or her shall be conclusively presumed to have approved and ratified the mutualization plan, and shall be bound by the terms thereof. The right of a dissenting shareholder to be paid the fair value of his shares as herein provided shall cease if and when the company shall abandon the mutualization plan.
    (11) When all the shares of the Company have been acquired and cancelled in conformity with the plan and this Section, the Director shall issue a certificate to that effect, and the amended articles of incorporation shall thereupon become effective and the company shall thenceforth be a mutual company.
    (12) The certificate mentioned in subsection (11) together with the duplicate original of the amended articles of incorporation theretofore approved by the Director shall be filed for record in the office of the recorder where the principal office of the company is located, within 15 days from the date of such certificate.
(Source: P.A. 83-358.)

    (215 ILCS 5/35.1) (from Ch. 73, par. 647.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 35.1. Par value of stock. No company organized after August 10, 1961 under this Article shall issue any shares of stock having a par value of less than $1.00 per share. No company organized under this article whose stock has a par value of $1.00 or more per share, or after August 10, 1961, whose stock shall be increased to $1.00 or more per share, shall decrease the par value of its stock to less than $1.00 per share; and after October 1, 1963, no such company whose stock has a par value of less than $1.00 per share shall decrease the par value below the value fixed for it on October 1, 1963. The restrictions of this Section shall not apply to a decrease in par value because of any reduction of capital under subsection (2) of Section 34.
(Source: Laws 1963, p. 2765.)


 
    (215 ILCS 5/Art. IIA heading)
ARTICLE IIA. RISK-BASED CAPITAL.

    (215 ILCS 5/35A-1)
    Sec. 35A-1. Short title. This Article may be cited as the Risk-Based Capital Law.
(Source: P.A. 88-364.)

    (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 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 5/35A-10)
    Sec. 35A-10. RBC Reports.
    (a) On or before each March 1 (the "filing date"), every domestic insurer shall prepare and submit to the Director a report of its RBC levels as of the end of the previous calendar year in the form and containing the information required by the RBC Instructions. Every domestic insurer shall also file its RBC Report with the NAIC in accordance with the RBC Instructions. In addition, if requested in writing by the chief insurance regulatory official of any state in which it is authorized to do business, every domestic insurer shall file its RBC Report with that official no later than the later of 15 days after the insurer receives the written request or the filing date.
    (b) A life, health, or life and health insurer's or fraternal benefit society's RBC shall be determined under the formula set forth in the RBC Instructions. The formula shall take into account (and may adjust for the covariance between):
        (1) the risk with respect to the insurer's assets;
        (2) the risk of adverse insurance experience with
    
respect to the insurer's liabilities and obligations;
        (3) the interest rate risk with respect to the
    
insurer's business; and
        (4) all other business risks and other relevant risks
    
set forth in the RBC Instructions.
These risks shall be determined in each case by applying the factors in the manner set forth in the RBC Instructions. Notwithstanding the foregoing, and notwithstanding the RBC Instructions, health maintenance organizations operating as Medicaid managed care plans under contract with the Department of Healthcare and Family Services shall not be required to include in its RBC calculations any capitation revenue identified by Medicaid managed care plans as authorized under Section 5A-12.6(r) of the Illinois Public Aid Code.
    (c) A property and casualty insurer's RBC shall be determined in accordance with the formula set forth in the RBC Instructions. The formula shall take into account (and may adjust for the covariance between):
        (1) asset risk;
        (2) credit risk;
        (3) underwriting risk; and
        (4) all other business risks and other relevant risks
    
set forth in the RBC Instructions.
These risks shall be determined in each case by applying the factors in the manner set forth in the RBC Instructions.
    (d) A health organization's RBC shall be determined in accordance with the formula set forth in the RBC Instructions. The formula shall take the following into account (and may adjust for the covariance between):
        (1) asset risk;
        (2) credit risk;
        (3) underwriting risk; and
        (4) all other business risks and other relevant risks
    
set forth in the RBC Instructions.
These risks shall be determined in each case by applying the factors in the manner set forth in the RBC Instructions.
    (e) An excess of capital over the amount produced by the risk-based capital requirements contained in this Code and the formulas, schedules, and instructions referenced in this Code is desirable in the business of insurance. Accordingly, insurers should seek to maintain capital above the RBC levels required by this Code. Additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this Code.
    (f) If a domestic insurer files an RBC Report that, in the judgment of the Director, is inaccurate, the Director shall adjust the RBC Report to correct the inaccuracy and shall notify the insurer of the adjustment. The notice shall contain a statement of the reason for the adjustment.
(Source: P.A. 100-580, eff. 3-12-18.)

    (215 ILCS 5/35A-15)
    Sec. 35A-15. Company action level event.
    (a) A company action level event means any of the following events:
        (1) The filing of an RBC Report by an insurer that
    
indicates that:
            (A) the insurer's total adjusted capital is
        
greater than or equal to its regulatory action level RBC, but less than its company action level RBC;
            (B) the insurer, if a life, health, or life and
        
health insurer or a fraternal benefit society, has total adjusted capital that is greater than or equal to its company action level RBC, but less than the product of its authorized control level RBC and 3.0 and has a negative trend;
            (C) the insurer, if a property and casualty
        
insurer, has total adjusted capital that is greater than or equal to its company action level RBC, but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the property and casualty RBC Instructions; or
            (D) the insurer, if a health organization, has
        
total adjusted capital that is greater than or equal to its company action level RBC but less than the product of its authorized control level RBC and 3.0 and triggers the trend test determined in accordance with the trend test calculation included in the Health RBC Instructions.
        (2) The notification by the Director to the insurer
    
of an Adjusted RBC Report that indicates an event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
        (3) The notification by the Director to the insurer
    
that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to an Adjusted RBC Report that indicates the event described in paragraph (1).
    (b) In the event of a company action level event, the insurer shall prepare and submit to the Director an RBC Plan that does all of the following:
        (1) Identifies the conditions that contribute to the
    
company action level event.
        (2) Contains proposed corrective actions that the
    
insurer intends to take and that are expected to result in the elimination of the company action level event. A health organization is not prohibited from proposing recognition of a parental guarantee or a letter of credit to eliminate the company action level event; however the Director shall, at his discretion, determine whether or the extent to which the proposed parental guarantee or letter of credit is an acceptable part of a satisfactory RBC Plan or Revised RBC Plan.
        (3) Provides projections of the insurer's financial
    
results in the current year and at least the 4 succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital, and surplus. The projections for both new and renewal business may include separate projections for each major line of business and separately identify each significant income, expense, and benefit component.
        (4) Identifies the key assumptions affecting the
    
insurer's projections and the sensitivity of the projections to the assumptions.
        (5) Identifies the quality of, and problems
    
associated with, the insurer's business including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and use of reinsurance, if any, in each case.
    (c) The insurer shall submit the RBC Plan to the Director within 45 days after the company action level event occurs or within 45 days after the Director notifies the insurer that the Director has, after a hearing, rejected its challenge under Section 35A-35 to an Adjusted RBC Report.
    (d) Within 60 days after an insurer submits an RBC Plan to the Director, the Director shall notify the insurer whether the RBC Plan shall be implemented or is, in the judgment of the Director, unsatisfactory. If the Director determines the RBC Plan is unsatisfactory, the notification to the insurer shall set forth the reasons for the determination and may set forth proposed revisions that will render the RBC Plan satisfactory in the judgment of the Director. Upon notification from the Director, the insurer shall prepare a Revised RBC Plan, which may incorporate by reference any revisions proposed by the Director. The insurer shall submit the Revised RBC Plan to the Director within 45 days after the Director notifies the insurer that the RBC Plan is unsatisfactory or within 45 days after the Director notifies the insurer that the Director has, after a hearing, rejected its challenge under Section 35A-35 to the determination that the RBC Plan is unsatisfactory.
    (e) In the event the Director notifies an insurer that its RBC Plan or Revised RBC Plan is unsatisfactory, the Director may, at the Director's discretion and subject to the insurer's right to a hearing under Section 35A-35, specify in the notification that the notification constitutes a regulatory action level event.
    (f) Every domestic insurer that files an RBC Plan or Revised RBC Plan with the Director shall file a copy of the RBC Plan or Revised RBC Plan with the chief insurance regulatory official in any state in which the insurer is authorized to do business if that state has a law substantially similar to the confidentiality provisions in subsection (a) of Section 35A-50 and if that official requests in writing a copy of the plan. The insurer shall file a copy of the RBC Plan or Revised RBC Plan in that state no later than the later of 15 days after receiving the written request for the copy or the date on which the RBC Plan or Revised RBC Plan is filed under subsection (c) or (d) of this Section.
(Source: P.A. 99-542, eff. 7-8-16; 100-201, eff. 8-18-17.)

    (215 ILCS 5/35A-20)
    Sec. 35A-20. Regulatory action level event.
    (a) A regulatory action level event means any of the following events:
        (1) The filing of an RBC Report by the insurer that
    
indicates that the insurer's total adjusted capital is greater than or equal to its authorized control level RBC, but less than its regulatory action level RBC.
        (2) The notification by the Director to an insurer of
    
an Adjusted RBC Report that indicates the event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
        (3) The notification by the Director to the insurer
    
that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to an Adjusted RBC Report that indicates the event described in paragraph (1).
        (4) The failure of the insurer to file an RBC Report
    
by the filing date, unless the insurer has provided an explanation for the failure that is satisfactory to the Director and has cured the failure within 10 days after the filing date.
        (5) The failure of the insurer to submit an RBC Plan
    
to the Director within the time period set forth in subsection (c) of Section 35A-15.
        (6) The notification by the Director to the insurer
    
that the insurer's RBC Plan or revised RBC Plan is, in the judgment of the Director, unsatisfactory and that the notification constitutes a regulatory action level event with respect to the insurer, provided the insurer does not challenge the determination under Section 35A-35.
        (7) The notification by the Director to the insurer
    
that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to the determination made by the Director under paragraph (6).
        (8) The notification by the Director to the insurer
    
that the insurer has failed to adhere to its RBC Plan or Revised RBC Plan, but only if that failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC Plan or Revised RBC Plan and the Director has so stated in the notification, provided the insurer does not challenge the determination under Section 35A-35.
        (9) The notification by the Director to the insurer
    
that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to the determination made by the Director under paragraph (8).
    (b) In the event of a regulatory action level event, the Director shall do all of the following:
        (1) Require the insurer to prepare and submit an RBC
    
Plan or, if applicable, a Revised RBC Plan to the Director within 45 days after the regulatory action level event occurs or within 45 days after the Director notifies the insurer that the Director has, after a hearing, rejected its challenge under Section 35A-35 to either an Adjusted RBC Report or a Revised RBC Plan. However, if the insurer previously prepared and submitted an RBC Plan or a Revised RBC Plan in accordance with any provision of this Article, the Director may determine that the previously prepared RBC Plan or Revised RBC Plan satisfies the requirement of this subsection (b)(1).
        (2) Perform any examination or analysis of the
    
assets, liabilities, and operations of the insurer, including a review of its RBC Plan or Revised RBC Plan, that the Director deems necessary.
        (3) After the examination or analysis, issue a
    
Corrective Order specifying the corrective actions the Director determines are required.
    (c) In determining corrective actions, the Director may take into account any factors the Director deems relevant based upon the examination or analysis of the assets, liabilities, and operations of the insurer including, but not limited to, the results of any sensitivity tests undertaken under the RBC Instructions. The regulatory action level event shall be deemed sufficient grounds for the Director to issue a Corrective Order in accordance with Article XII 1/2. The Director shall have rights, powers, and duties with respect to the insurer that are set forth in Article XII 1/2 and the insurer shall be entitled to the protections afforded insurers under Article XII 1/2.
    (d) The Director may retain actuaries, investment experts, and other consultants necessary to review an insurer's RBC Plan or Revised RBC Plan, examine or analyze the assets, liabilities, and operations of the insurer, and formulate the Corrective Order with respect to the insurer. The fees, costs, and expenses related to the actuaries, investment experts, and other consultants shall be reasonable and customary for the nature of the services provided and shall be borne by the affected insurer or the party designated by the Director.
(Source: P.A. 90-794, eff. 8-14-98; 91-549, eff. 8-14-99.)

    (215 ILCS 5/35A-25)
    Sec. 35A-25. Authorized control event.
    (a) An authorized control event means any of the following events:
        (1) The filing of an RBC Report by the insurer that
    
indicates that the insurer's total adjusted capital is greater than or equal to its mandatory control level RBC, but less than its authorized control level RBC.
        (2) The notification by the Director to the insurer
    
of an Adjusted RBC Report that indicates the event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
        (3) The notification by the Director to the insurer
    
that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to an Adjusted RBC Report that indicates the event described in paragraph (1).
        (4) The insurer's failure to respond to a Corrective
    
Order in a manner satisfactory to the Director, provided the insurer does not challenge the Corrective Order under Section 35A-35.
        (5) The insurer's failure to respond to a challenged
    
or modified Corrective Order in a manner satisfactory to the Director after the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 or modified the Corrective Order.
    (b) In the event of an authorized control level event, the Director shall take the actions required under Section 35A-20 regarding an insurer with respect to which a regulatory action level event has occurred or, if the Director deems it to be in the best interests of the insurer's policyholders and creditors and of the public, take the actions necessary to cause the insurer to be placed in receivership under Article XIII. In the event the Director determines that receivership is necessary, the authorized control level event shall be deemed sufficient grounds for the Director to take action under Article XIII, and the Director shall have the rights, powers, and duties with respect to the insurer that are set forth in Article XIII. In the event the Director takes action under this subsection regarding an Adjusted RBC Report, the insurer shall be entitled to the protections afforded insurers under Article XIII.
(Source: P.A. 88-364.)

    (215 ILCS 5/35A-30)
    Sec. 35A-30. Mandatory control level event.
    (a) A mandatory control level event means any of the following events:
        (1) The filing of an RBC Report that indicates that
    
the insurer's total adjusted capital is less than its mandatory control level RBC.
        (2) The notification by the Director to the insurer
    
of an Adjusted RBC Report that indicates the event described in paragraph (1), provided the insurer does not challenge the Adjusted RBC Report under Section 35A-35.
        (3) The notification by the Director to the insurer
    
that the Director has, after a hearing, rejected the insurer's challenge under Section 35A-35 to the Adjusted RBC Report that indicates the event described in paragraph (1).
    (b) In the event of a mandatory control level event with respect to a life, health, or life and health insurer or a fraternal benefit society, the Director shall take actions necessary to place the insurer in receivership under Article XIII. In that event, the mandatory control level event shall be deemed sufficient grounds for the Director to take action under Article XIII, and the Director shall have the rights, powers, and duties with respect to the insurer that are set forth in Article XIII. If the Director takes action under this subsection regarding an Adjusted RBC Report, the insurer shall be entitled to the protections of Article XIII. If the Director finds that there is a reasonable expectation that the mandatory control level event may be eliminated within 90 days after it occurs, the Director may delay action for not more than 90 days after the mandatory control level event.
    (c) In the case of a mandatory control level event with respect to a property and casualty insurer, the Director shall take the actions necessary to place the insurer in receivership under Article XIII or, in the case of an insurer that is writing no business and that is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the Director. In either case, the mandatory control level event is deemed sufficient grounds for the Director to take action under Article XIII, and the Director has the rights, powers, and duties with respect to the insurer that are set forth in Article XIII. If the Director takes action regarding an Adjusted RBC Report, the insurer shall be entitled to the protections of Article XIII. If the Director finds that there is a reasonable expectation that the mandatory control level event may be eliminated within 90 days after it occurs, the Director may delay action for not more than 90 days after the mandatory control level event.
    (d) In the case of a mandatory control level event with respect to a health organization, the Director shall take the actions necessary to place the insurer in receivership under Article XIII or, in the case of an insurer that is writing no business and that is running-off its existing business, may allow the insurer to continue its run-off under the supervision of the Director. In either case, the mandatory control level event is deemed sufficient grounds for the Director to take action under Article XIII, and the Director has the rights, powers, and duties with respect to the insurer that are set forth in Article XIII. If the Director takes action regarding an Adjusted RBC Report, the insurer shall be entitled to the protections of Article XIII. If the Director finds that there is a reasonable expectation that the mandatory control level event may be eliminated within 90 days after it occurs, the Director may delay action for not more than 90 days after the mandatory control level event.
(Source: P.A. 98-157, eff. 8-2-13.)

    (215 ILCS 5/35A-35)
    Sec. 35A-35. Hearings.
    (a) An insurer has the right to an administrative hearing with respect to any of the following:
        (1) The notification by the Director to the insurer
    
of an Adjusted RBC Report.
        (2) The notification by the Director to the insurer
    
that the insurer's RBC Plan or Revised RBC Plan is unsatisfactory and that the notification constitutes a regulatory action level event.
        (3) The notification by the Director to the insurer
    
that the insurer has failed to adhere to its RBC Plan or Revised RBC Plan and that the failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its RBC Plan or Revised RBC Plan.
    (b) At the administrative hearing, the insurer may challenge any determination or action by the Director. The insurer shall notify the Director of its request for a hearing within 5 days after notification by the Director made under subsection (a). Upon receipt of the insurer's request for a hearing, the Director shall set a date for the hearing. The hearing shall be held no fewer than 10 days and no more than 30 days after the date of the insurer's request for the hearing.
(Source: P.A. 90-794, eff. 8-14-98.)

    (215 ILCS 5/35A-40)
    Sec. 35A-40. Foreign insurers.
    (a) Upon the written request of the Director, a foreign insurer shall submit to the Director an RBC Report as of the end of the previous calendar year no later than the later of the date an RBC Report would be required to be filed by a domestic insurer under this Article or 15 days after the foreign insurer receives the Director's request. Upon the written request of the Director, a foreign insurer shall promptly submit to the Director a copy of any RBC Plan that is filed with the chief insurance regulatory official or any other state.
    (b) In the event of a company action level event, regulatory action level event, or authorized control level event with respect to any foreign insurer as determined under the RBC statute applicable in the state of domicile of the insurer or, if no RBC statute is in force in that state, under the provisions of this Article, if the chief insurance regulatory official of the state of domicile of the foreign insurer fails to require the foreign insurer to file an RBC Plan in the manner specified under that state's RBC statute or, if no RBC statute is in force in that state, under Section 35A-15, the Director may require the foreign insurer to file an RBC Plan with the Director. In that event, the failure of the foreign insurer to file an RBC Plan with the Director is grounds to order the insurer to cease and desist from writing new insurance business in this State.
    (c) In the event of a mandatory control level event with respect to any foreign insurer, if no domiciliary receiver has been appointed with respect to the foreign insurer under the rehabilitation and liquidation statute applicable in the state of domicile of the foreign insurer, the Director may make application to the Circuit Court of Sangamon County or Cook County as permitted under Article XIII with respect to the liquidation of property of foreign insurers found in this State, and the occurrence of the mandatory control level event shall be considered adequate grounds for the application.
(Source: P.A. 88-364; 89-97, eff. 7-7-95.)

    (215 ILCS 5/35A-45)
    Sec. 35A-45. Notices. All notices by the Director to an insurer that may result in regulatory action under this Article are effective upon dispatch if transmitted by registered or certified mail, and are effective upon the insurer's receipt thereof in the case of any other means of transmission.
(Source: P.A. 88-364.)

    (215 ILCS 5/35A-50)
    Sec. 35A-50. Confidentiality and prohibition on announcements.
    (a) All RBC Reports, to the extent the information therein is not required to be set forth in a publicly available annual statement schedule, and RBC Plans, including the results or report of any examination or analysis of an insurer performed under this Article and any Corrective Order issued by the Director pursuant to the examination or analysis, with respect to any domestic insurer or foreign insurer that are filed with the Director constitute information that might be damaging to the insurer if made available to its competitors and shall be kept confidential by the Director. This information shall not be made public or be subject to subpoena, other than by the Director and then only for the purpose of enforcement actions taken by the Director under this Code or other provisions of the insurance laws of this State.
    (b) It is the judgment of the legislature that the comparison of an insurer's total adjusted capital to any of its RBC levels is a regulatory tool that may indicate the need for possible corrective action with respect to the insurer and not a means to rank insurers generally. Therefore, except as otherwise required under the provisions of this Code, the disclosure, in any manner or form, directly or indirectly, of information containing an assertion, representation, or statement regarding the RBC levels of any insurer or any component derived in the calculation of RBC levels by any insurer, insurance producer, limited insurance producer, broker, or other person engaged in any manner in the insurance business would be misleading and is prohibited. In the event that a materially false statement with respect to the comparison regarding an insurer's total adjusted capital to any of its RBC levels or an inappropriate comparison of any other amount to the insurer's RBC levels is published in any written publication and the insurer is able to demonstrate to the Director with substantial proof the falsity of the statement or the inappropriateness thereof, the insurer may publish an announcement in a written publication if the sole purpose of the announcement is to rebut the materially false statement.
    (c) It is the further judgment of the legislature that the RBC Instructions, RBC Reports, Adjusted RBC Reports, RBC Plans, and Revised RBC Plans are intended solely for use by the Director in monitoring the solvency of insurers and the need for possible corrective action with respect to insurers and shall not be used by the Director for ratemaking or considered or introduced as evidence in any rate proceeding or used by the Director to calculate or derive any elements of an appropriate premium level or rate of return for any line of insurance that an insurer or an affiliate is authorized to write.
(Source: P.A. 88-364; 89-97, eff. 7-7-95.)

    (215 ILCS 5/35A-55)
    Sec. 35A-55. Provisions of Article supplemental; exemptions.
    (a) The provisions of this Article are supplemental to the provisions of any other laws of this State and do not preclude or limit other powers or duties of the Director under any other laws.
    (b) The Director may exempt from the application of this Article any domestic property and casualty insurer that:
        (1) writes direct business only in this State;
        (2) writes direct annual premiums of $2,000,000 or
    
less; and
        (3) assumes no reinsurance in excess of 5% of direct
    
premium written.
    (c) The Director may exempt from the application of this Article any company that is organized under Article IV of this Code, that writes direct business only in this State, and that assumes no reinsurance in excess of 5% of direct written premiums.
    (d) The Director may exempt from the application of this Article any domestic health organization upon a showing by the health organization of the reasons for requesting the exemption and a determination by the Director of good cause for an exemption.
    (e) The Director may by rule impose upon any insurer exempted from the application of this Article under subsection (b), (c), or (d) of this Section conditions to the exemption that require maintenance of adequate capital. These conditions shall not exceed the requirements of this Article.
(Source: P.A. 91-549, eff. 8-14-99.)

    (215 ILCS 5/35A-60)
    Sec. 35A-60. Phase-in of Article.
    (a) For RBC Reports filed with respect to the December 31, 1993 annual statement, instead of the provisions of Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following provisions apply:
        (1) In the event of a company action level event, the
    
Director shall take no action under this Article.
        (2) In the event of a regulatory action level event
    
under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
        (3) In the event of a regulatory action level event
    
under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
        (4) In the event of a mandatory control level event,
    
the Director shall take the actions required under Section 35A-25.
    (b) For RBC Reports required to be filed by property and casualty insurers with respect to the December 31, 1995 annual statement, instead of the provisions of Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following provisions apply:
        (1) In the event of a company action level event with
    
respect to a domestic insurer, the Director shall take no regulatory action under this Article.
        (2) In the event of a regulatory action level event
    
under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
        (3) In the event of a regulatory action level event
    
under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
        (4) In the event of a mandatory control level event,
    
the Director shall take the actions required under Section 35A-25.
    (c) For RBC Reports required to be filed by health organizations with respect to the December 31, 1999 annual statement and the December 31, 2000 annual statement, instead of the provisions of Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following provisions apply:
        (1) In the event of a company action level event with
    
respect to a domestic insurer, the Director shall take no regulatory action under this Article.
        (2) In the event of a regulatory action level event
    
under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
        (3) In the event of a regulatory action level event
    
under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
        (4) In the event of a mandatory control level event,
    
the Director shall take the actions required under Section 35A-25.
    This subsection does not apply to a health organization that provides or arranges for a health care plan under which enrollees may access health care services from contracted providers without a referral from their primary care physician.
    Nothing in this subsection shall preclude or limit other powers or duties of the Director under any other laws.
    (d) For RBC Reports required to be filed by fraternal benefit societies with respect to the December 31, 2013 annual statement and the December 31, 2014 annual statement, instead of the provisions of Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following provisions apply:
        (1) In the event of a company action level event with
    
respect to a domestic insurer, the Director shall take no regulatory action under this Article.
        (2) In the event of a regulatory action level event
    
under paragraph (1), (2), or (3) of subsection (a) of Section 35A-20, the Director shall take the actions required under Section 35A-15.
        (3) In the event of a regulatory action level event
    
under paragraph (4), (5), (6), (7), (8), or (9) of subsection (a) of Section 35A-20 or an authorized control level event, the Director shall take the actions required under Section 35A-20.
        (4) In the event of a mandatory control level event,
    
the Director shall take the actions required under Section 35A-25.
    Nothing in this subsection shall preclude or limit other powers or duties of the Director under any other laws.
(Source: P.A. 100-201, eff. 8-18-17.)

    (215 ILCS 5/35A-65)
    Sec. 35A-65. Liability of Director. There shall be no liability on the part of, and no cause of action shall arise against, the Director or the Department or its employees or agents for any action taken by them in the performance of their powers and duties under this Article.
(Source: P.A. 89-97, eff. 7-7-95.)

    (215 ILCS 5/35A-70)
    Sec. 35A-70. Severability. The provisions of this Article are severable under Section 1.31 of the Statute on Statutes.
(Source: P.A. 89-97, eff. 7-7-95.)


 
    (215 ILCS 5/Art. IIB heading)
ARTICLE IIB. DOMESTIC STOCK COMPANY DIVISION
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-1)
    Sec. 35B-1. Short title. This Article may be cited as the Domestic Stock Company Division Law.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-5)
    Sec. 35B-5. Purpose. The purpose of this Article is to stimulate economic development in the State of Illinois by creating and sustaining employment opportunities and increasing and sustaining taxable revenue, through improving the competitive position of domestic stock companies, maintaining the competitiveness of this State as a state of domicile for domestic stock companies, and enhancing the desirability of this State as a jurisdiction of domicile for newly incorporating and existing foreign stock companies.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-10)
    Sec. 35B-10. Definitions. As used in this Article:
    "Assets" means all assets or property, whether real, personal or mixed, tangible or intangible, and any right or interest therein, including all rights under contracts and other agreements.
    "Capital" means the capital stock component of statutory surplus, as defined in the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions.
    "Divide" or "division" means the act by operation of law by which a domestic stock company divides into 2 or more resulting companies in accordance with a plan of division and this Article;
    "Dividing company" means a domestic stock company that approves a plan of division pursuant to Section 35B-20;
    "Domestic stock company" means a domestic stock company transacting or being organized to transact any of the kinds of insurance business enumerated in Section 4.
    "Liability" means a liability or obligation of any kind, character, or description, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, determined, determinable, or otherwise.
    "New company" means a domestic stock company that is created by a division occurring on or after the effective date of this amendatory Act of the 100th General Assembly.
    "Plan of division" means a plan of division approved by a dividing company in accordance Section 35B-20.
    "Policy liability" means a liability as defined in this Section arising out of or related to an insurance policy, contract of insurance, or reinsurance agreement.
    "Recorder" means the office of the recorder of the county where the principal office of a domestic stock company is located.
    "Resulting company" means a domestic stock company created by a division or a dividing company that survives a division.
    "Shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation.
    "Sign" or "signature" includes a manual, facsimile, or conformed or electronic signature.
    "Surplus" means total statutory surplus less capital, calculated in accordance with the National Association of Insurance Commissioners Accounting Practices and Procedures Manual, version effective January 1, 2001, and subsequent revisions.
    "Transfer" includes an assignment, assumption, conveyance, sale, lease, encumbrance, including a mortgage or security interest, gift, or transfer by operation of law.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-15)
    Sec. 35B-15. Plan of division.
    (a) A domestic stock company may, in accordance with the requirements of this Article, divide into 2 or more resulting companies pursuant to a plan of division.
    (b) Each plan of division shall include:
        (1) the name of the domestic stock company seeking to
    
divide;
        (2) the name of each resulting company that will be
    
created by the proposed division;
        (3) for each new company that will be created by the
    
proposed division, a copy of its:
            (A) proposed articles of incorporation;
            (B) proposed bylaws; and
            (C) the kinds of insurance business enumerated in
        
Section 4 that the new company would be authorized to conduct;
        (4) the manner of allocating between or among the
    
resulting companies:
            (A) the assets of the domestic stock company that
        
will not be owned by all of the resulting companies as tenants in common pursuant to Section 35B-35; and
            (B) the liabilities of the domestic stock
        
company, including policy liabilities, to which not all of the resulting companies will become jointly and severally liable pursuant to paragraph (3) of subsection (a) of Section 35B-40;
        (5) the manner of distributing shares in the new
    
companies to the dividing company or its shareholders;
        (6) a reasonable description of the liabilities,
    
including policy liabilities, and items of capital, surplus, or other assets, in each case, that the domestic stock company proposes to allocate to each resulting company, including specifying the reinsurance contract, reinsurance coverage obligations, and related claims that are applicable to those policies;
        (7) all terms and conditions required by the laws of
    
this State or the articles of incorporation and bylaws of the domestic stock company;
        (8) evidence demonstrating that the interest of all
    
classes of policyholders of the dividing company will be properly protected; and
        (9) all other terms and conditions of the division.
    Nothing in this subsection (b) shall expand or reduce the allocation and assignment of reinsurance as stated in the reinsurance contract.
    (c) If the domestic stock company survives the division, the plan of division shall include, in addition to the information required by subsection (b):
        (1) all proposed amendments to the dividing company's
    
articles of incorporation and bylaws, if any;
        (2) if the dividing company desires to cancel some,
    
but less than all, shares in the dividing company, the manner in which it will cancel such shares; and
        (3) if the dividing company desires to convert some,
    
but less than all, shares in the dividing company into shares, securities, obligations, money, other property, rights to acquire shares or securities, or any combination thereof, a statement disclosing the manner in which it will convert the shares.
    (d) If the domestic stock company does not survive the proposed division, the plan of division shall contain, in addition to the information required by subsection (b), the manner in which the dividing company will cancel or convert shares in the dividing company into shares, securities, obligations, money, other property, rights to acquire shares or securities, or any combination thereof.
    (e) Terms of a plan of division may be made dependent on facts objectively ascertainable outside of the plan of division.
    (f) A dividing company may amend a plan of division in accordance with any procedures set forth in the plan of division or, if no such procedures are set forth in the plan of division, in any manner determined by the board of directors of the dividing company, except that a shareholder that was entitled to vote on or consent to approval of the plan of division is entitled to vote on or consent to any amendment of the plan of division that will change:
        (1) the amount or kind of shares, securities,
    
obligations, money, other property, rights to acquire shares or securities, or any combination thereof, to be received by any of the shareholders of the dividing company under the plan of division;
        (2) the articles of incorporation or bylaws of any
    
resulting company that will be in effect when the division becomes effective, except for changes that do not require approval of the shareholders of the resulting company under its articles of incorporation or bylaws; or
        (3) any other terms or conditions of the plan of
    
division, if the change would adversely affect the shareholders in any material respect.
    (g) A dividing company may abandon a plan of division after it has approved the plan of division without any action by the shareholders and in accordance with any procedures set forth in the plan of division or, if no such procedures are set forth in the plan of division, in a manner determined by the board of directors of the dividing company.
    (h) A dividing company may abandon a plan of division after it has filed a certificate of division with the recorder by filing with the recorder, with concurrent copy to the director, a certificate of abandonment signed by the dividing company. The certificate of abandonment shall be effective on the date it is filed with the recorder and the dividing company shall be deemed to have abandoned its plan of division on such date.
    (i) A dividing company may not abandon or amend its plan of division once the division becomes effective.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-20)
    Sec. 35B-20. Requirements of a plan of division.
    (a) A domestic stock company shall not file a plan of division with the Director unless the plan of division has been approved in accordance with:
        (1) any applicable provisions of its articles of
    
incorporation and bylaws; and
        (2) all laws of this State governing the internal
    
affairs of a domestic stock company that provide for approval of a merger.
    (b) If any provision of the articles of incorporation or bylaws of a domestic stock company requires that a specific number or percentage of board of directors or shareholders approve the proposal or adoption of a plan of merger, or imposes other special procedures for the proposal or adoption of a plan of merger, such domestic stock company shall adhere to such provision in proposing or adopting a plan of division. If any provision of the articles of incorporation or bylaws of a domestic stock company is amended, such amendment shall thereafter apply to a division only in accordance with its express terms.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-25)
    Sec. 35B-25. Plan of division approval.
    (a) A division shall not become effective until it is approved by the Director after reasonable notice and a public hearing, if the notice and hearing are deemed by the Director to be in the public interest. Any decision by the Director on whether or not to hold a public hearing on either a plan of division or an amended plan of division may be made independently by the Director. The Director shall hold a public hearing if one is requested by the dividing company. A hearing conducted under this Section shall be conducted in accordance with Article 10 of the Illinois Administrative Procedure Act.
    (b) The Director shall approve a plan of division unless the Director finds that:
        (1) the interest of any class of policyholder or
    
shareholder of the dividing company will not be properly protected;
        (2) each new company created by the proposed
    
division, except a new company that is a nonsurviving party to a merger pursuant to subsection (b) of Section 156, would be ineligible to receive a license to do insurance business in this State pursuant to Section 5;
        (2.5) each new company created by the proposed
    
division, except a new company that is a nonsurviving party to a merger pursuant to subsection (b) of Section 156, that will be a member insurer of the Illinois Life and Health Insurance Guaranty Association and that will have policy liabilities allocated to it will not be licensed to do insurance business in each state where such policies were written by the dividing company;
        (3) the proposed division violates a provision of the
    
Uniform Fraudulent Transfer Act;
        (4) the division is being made for purposes of
    
hindering, delaying, or defrauding any policyholders or other creditors of the dividing company;
        (5) one or more resulting companies will not be
    
solvent upon the consummation of the division; or
        (6) the remaining assets of one or more resulting
    
companies will be, upon consummation of a division, unreasonably small in relation to the business and transactions in which the resulting company was engaged or is about to engage.
    (c) In determining whether the standards set forth in paragraph (3) of subsection (b) have been satisfied, the Director shall only apply the Uniform Fraudulent Transfer Act to a dividing company in its capacity as a resulting company and shall not apply the Uniform Fraudulent Transfer Act to any dividing company that is not proposed to survive the division.
    (d) In determining whether the standards set forth in paragraphs (3), (4), (5), and (6) of subsection (b) have been satisfied, the Director may consider all proposed assets of the resulting company, including, without limitation, reinsurance agreements, parental guarantees, support or keep well agreements, or capital maintenance or contingent capital agreements, in each case, regardless of whether the same would qualify as an admitted asset as defined in Section 3.1.
    (e) In determining whether the standards set forth in paragraph (3) of subsection (b) have been satisfied, with respect to each resulting company, the Director shall, in applying the Uniform Fraudulent Transfer Act, treat:
        (1) the resulting company as a debtor;
        (2) liabilities allocated to the resulting company as
    
obligations incurred by a debtor;
        (3) the resulting company as not having received
    
reasonably equivalent value in exchange for incurring the obligations; and
        (4) assets allocated to the resulting company as
    
remaining property.
    (f) All information, documents, materials, and copies thereof submitted to, obtained by, or disclosed to the Director in connection with a plan of division or in contemplation thereof, including any information, documents, materials, or copies provided by or on behalf of a domestic stock company in advance of its adoption or submission of a plan of division, shall be confidential and shall be subject to the same protection and treatment in accordance with Section 131.22 as documents and reports disclosed to or filed with the Director pursuant to subsection (a) of Section 131.14b until such time, if any, as a notice of the hearing contemplated by subsection (a) is issued.
    (g) From and after the issuance of a notice of the hearing contemplated by subsection (a), all business, financial, and actuarial information that the domestic stock company requests confidential treatment, other than the plan of division, shall continue to be confidential and shall not be available for public inspection and shall be subject to the same protection and treatment in accordance with Section 131.22 as documents and reports disclosed to or filed with the Director pursuant to subsection (a) of Section 131.14b.
    (h) All expenses incurred by the Director in connection with proceedings under this Section, including expenses for the services of any attorneys, actuaries, accountants, and other experts as may be reasonably necessary to assist the Director in reviewing the proposed division, shall be paid by the dividing company filing the plan of division. A dividing company may allocate expenses described in this subsection in a plan of division in the same manner as any other liability.
    (i) If the Director approves a plan of division, the Director shall issue an order that shall be accompanied by findings of fact and conclusions of law.
    (j) The conditions in this Section for freeing one or more of the resulting companies from the liabilities of the dividing company and for allocating some or all of the liabilities of the dividing company shall be conclusively deemed to have been satisfied if the plan of division has been approved by the Director in a final order that is not subject to further appeal.
    (k) If a dividing company amends its plan of division at any time before the plan of division becomes effective, including after the Director's approval of the plan or after any hearing has been conducted under this Section, then the dividing company shall file the amended plan of division for approval by the Director pursuant to the provisions of this Section. If the Director has already issued an order approving the dividing company's previous plan of division under subsection (i), then that order shall not be rescinded by the Director's subsequent disapproval of an amended plan.
        (1) If a hearing is conducted on the amended plan of
    
division after the Director has approved a previous plan of division, then the hearing shall not be considered a rehearing or a reopening of any hearing conducted on the previous plan. Nothing in this Section shall prohibit the dividing company from requesting a rehearing or reopening of any hearing conducted on any disapproved plan of division, amended or otherwise.
        (2) Whether under direct review or in a hearing, the
    
Director may rely on information already submitted or developed in connection with the previous plan of division, as well as any findings of fact or conclusions of law if a hearing has been conducted or an approval order has been issued on the previous plan, to the extent the information, findings, or conclusions remain relevant to the amended plan of division, and the Director shall collect any other information necessary to make a determination under subsection (b).
        (3) The fee assessed under Section 408 for filing a
    
plan of division shall not apply to the filing of an amended plan of division, but subsection (h) shall apply to all proceedings related to the amended plan.
(Source: P.A. 102-394, eff. 8-16-21; 102-578, eff. 7-1-22 (See Section 5 of P.A. 102-672 for effective date of P.A. 102-578); 103-90, eff. 6-9-23.)

    (215 ILCS 5/35B-30)
    Sec. 35B-30. Certificate of division.
    (a) After a plan of division has been adopted and approved, an officer or duly authorized representative of the dividing company shall sign a certificate of division.
    (b) The certificate of division shall set forth:
        (1) the name of the dividing company;
        (2) a statement disclosing whether the dividing
    
company will survive the division;
        (3) the name of each new company that will be created
    
by the division;
        (4) the kinds of insurance business enumerated in
    
Section 4 that the new company will be authorized to conduct;
        (5) the date that the division is to be effective,
    
which shall not be more than 90 days after the dividing company has filed the certificate of division with the recorder, with a concurrent copy to the Director;
        (6) a statement that the division was approved by the
    
Director in accordance with Section 35B-25, including the date when approval was served on the dividing company;
        (7) a statement that the dividing company provided,
    
no later than 10 business days after the dividing company filed the plan of division with the Director, reasonable notice to each reinsurer that is party to a reinsurance contract that is applicable to the policies included in the plan of division;
        (8) if the dividing company will survive the
    
division, an amendment to its articles of incorporation or bylaws approved as part of the plan of division;
        (9) for each new company created by the division, its
    
articles of incorporation and bylaws, provided that the articles of incorporation and bylaws need not state the name or address of an incorporator; and
        (10) a reasonable description of the capital,
    
surplus, other assets and liabilities, including policy liabilities, of the dividing company that are to be allocated to each resulting company.
    (c) The articles of incorporation and bylaws of each new company must satisfy the requirements of the laws of this State, provided that the documents need not be signed or include a provision that need not be included in a restatement of the document.
    (d) A certificate of division is effective when filed with the recorder, with a concurrent copy to the Director, as provided in this Section or on another date specified in the plan of division, whichever is later, provided that a certificate of division shall become effective not more than 90 days after it is filed with the recorder. A division is effective when the relevant certificate of division is effective.
    (e) If the dividing company files an amended plan of division with the Director after a certificate of division has been filed for a previous plan, then the dividing company shall file a certificate of stay with the recorder, with a concurrent copy to the Director. The certificate of stay shall identify the certificate of division being stayed and the date on which the amended plan of division was filed with the Director. If the Director issues an order on the amended plan, or if the dividing company withdraws the amended plan before an order is issued, then the dividing company shall file an amended certificate of division pursuant to this Section. Nothing in this subsection (e) shall allow a dividing company to amend its plan of division under Section 35B-15 on or after the effective date specified in a certificate of division that is active or that has been stayed.
(Source: P.A. 102-775, eff. 5-13-22; 103-90, eff. 6-9-23.)

    (215 ILCS 5/35B-35)
    Sec. 35B-35. Effects of division.
    (a) When a division becomes effective pursuant to Section 35B-30:
        (1) if the dividing company has survived the division:
            (A) it continues to exist;
            (B) its articles of incorporation shall be
        
amended, if necessary, as provided in the plan of division; and
            (C) its bylaws shall be amended, if necessary,
        
as provided in the plan of division;
        (2) if the dividing company has not survived the
    
division, its separate existence ceases to exist;
        (3) each new company:
            (A) comes into existence;
            (B) shall hold any capital, surplus, and other
        
assets allocated to such new company by the plan of division as a successor to the dividing company, automatically, by operation of law and not by transfer, whether directly or indirectly; and
            (C) its articles of incorporation, if any, and
        
bylaws, if any, shall be effective;
        (4) capital, surplus, and other assets of the
    
dividing company:
            (A) that is allocated by the plan of division
        
either:
                (i) vests in the applicable new company as
            
provided in the plan of division; or
                (ii) remains vested in the dividing company
            
as provided in the plan of division;
            (B) that is not allocated by the plan of division
        
either:
                (i) remains vested in the dividing company,
            
if the dividing company survives the division; or
                (ii) is allocated to and vests equally in the
            
resulting companies as tenants in common, if the dividing company does not survive the division; or
            (C) otherwise vests as provided in this
        
subsection without transfer, reversion, or impairment;
        (5) a resulting company to which a cause of action is
    
allocated as provided in paragraph (4) of this subsection (a) may be substituted or added in any pending action or proceeding to which the dividing company is a party when the division becomes effective;
        (6) the liabilities, including policy liabilities, of
    
the dividing company are allocated between or among the resulting companies as provided in Section 35B-40 and each resulting company to which liabilities are allocated is liable only for those liabilities, including policy liabilities, so allocated as successors to the dividing company, automatically, by operation of law, and not by transfer (or, for the avoidance of doubt, assumption), whether directly or indirectly; and
        (7) the shares in the dividing company that are to be
    
converted or canceled in the division are converted or canceled, and the shareholders of those shares are entitled only to the rights provided to them under the plan of division and any appraisal rights that they may have pursuant to Section 35B-45.
    (b) Except as provided in the articles of incorporation or bylaws of the dividing company, the division does not give rise to any rights that a shareholder, director of a domestic stock company, or third party would have upon a dissolution, liquidation, or winding up of the dividing company.
    (c) The allocation to a new company of capital, surplus, or other assets that is collateral covered by an effective financing statement shall not be effective until a new financing statement naming the new company as a debtor is effective under the Uniform Commercial Code.
    (d) Unless otherwise provided in the plan of division, the shares in and any securities of each new company shall be distributed to:
        (1) the dividing company, if it survives the
    
division; or
        (2) shareholders of the dividing company that do not
    
assert any appraisal rights that they may have pursuant to Section 35B-45, pro rata.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-40)
    Sec. 35B-40. Resulting company liabilities.
    (a) Except as otherwise expressly provided in this Section, when a division becomes effective, each resulting company is responsible, automatically, by operation of law, for:
        (1) individually, the liabilities, including policy
    
liabilities, that the resulting company issues, undertakes, or incurs in its own name after the division;
        (2) individually, the liabilities, including policy
    
liabilities, of the dividing company that are allocated to or remain the liability of the resulting company to the extent specified in the plan of division; and
        (3) jointly and severally with the other resulting
    
companies, the liabilities, including policy liabilities, of the dividing company that are not allocated by the plan of division.
    (b) Except as otherwise expressly provided in this Section, when a division becomes effective, no resulting company is responsible for or shall have any liability or obligation in respect of:
        (1) any liabilities, including policy liabilities,
    
that another resulting company issues, undertakes, or incurs in its own name after the division; or
        (2) any liabilities, including policy liabilities, of
    
the dividing company that are allocated to or remain the liability of another resulting company in accordance with the plan of division.
    (c) If a provision of a debt security, note, or similar evidence of indebtedness for money borrowed, whether secured or unsecured, indenture or other contract relating to indebtedness, or a provision of any other type of contract other than an insurance policy, annuity, or reinsurance agreement, that was issued, incurred, or executed by the domestic stock company before requires the consent of the obligee to a merger of the dividing company or treats the merger as a default, that provision applies to a division of the dividing company as if the division was a merger.
    (d) If a division breaches a contractual obligation of the dividing company at the time the division becomes effective, all of the resulting companies are liable, jointly and severally, for the contractual breach, but the validity and effectiveness of the division, including, without limitation, the allocation of liabilities in accordance with the plan of division, shall not be affected by the contractual breach.
    (e) A direct or indirect allocation of capital, surplus, assets, or liabilities, including policy liabilities, in a division shall occur automatically, by operation of law, and shall not be treated as a distribution or transfer for any purpose with respect to either the dividing company or any of the resulting companies.
    (f) Liens, security interests, and other charges on the capital, surplus, or other assets of the dividing company are not impaired by the division, notwithstanding any otherwise enforceable allocation of liabilities, including policy liabilities, of the dividing company.
    (g) If the dividing company is bound by a security agreement governed by Article 9 of the Uniform Commercial Code as enacted in this State or in any other jurisdiction, and the security agreement provides that the security interest attaches to after-acquired collateral, each resulting company is bound by the security agreement.
    (h) An allocation of a policy or other liability does not:
        (1) except as provided in the plan of division and
    
specifically approved by the Director, affect the rights that a policyholder or creditor has under other law in respect of the policy or other liability, except that those rights are available only against a resulting company responsible for the policy or liability under this Section; or
        (2) release or reduce the obligation of a reinsurer,
    
surety, or guarantor of the policy or liability.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-45)
    Sec. 35B-45. Shareholder rights. If the dividing company does not survive the division, an objecting shareholder of a dividing company is entitled to appraisal rights and to obtain payment of the fair value of that shareholder's shares, in the same manner and to the extent provided for pursuant to Section 167.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/35B-50)
    Sec. 35B-50. Rules. The Director may adopt such rules as are necessary or appropriate to carry out this Article.
(Source: P.A. 100-1118, eff. 11-27-18.)


 
    (215 ILCS 5/Art. III heading)
ARTICLE III. DOMESTIC MUTUAL COMPANIES
(Article scheduled to be repealed on January 1, 2027)

    (215 ILCS 5/36) (from Ch. 73, par. 648)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 36. Scope of Article. This Article shall apply to all domestic mutual companies transacting or being organized to transact any of the kinds of business enumerated in Section 4.
(Source: Laws 1937, p. 696.)

    (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 alien company authorized to transact business in this State.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/38) (from Ch. 73, par. 650)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 38. Principal office and place of business. The principal office of any company organized under this Article shall be located in this State. Unless the Director has approved otherwise, the principal place of business of any company organized under this Article shall be located in this State.
(Source: P.A. 82-498.)

    (215 ILCS 5/39) (from Ch. 73, par. 651)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 39. Authorized kinds of business.
    (1) Companies may be organized under this Article either for the purpose of transacting any of the kind or kinds of business enumerated in Class 1 of Section 4, or for the purpose of transacting any of the kind or kinds of business enumerated in Classes 2 and 3 of that Section.
    (2) A domestic company may, notwithstanding limitations otherwise applicable, and provided it maintains books and records which account for such business, engage directly in any of the following businesses: (a) rendering investment advice; (b) rendering services related to the functions involved in the operation of its insurance business including, but not limited to, actuarial, loss prevention, safety engineering, data processing, accounting, claims, appraisal and collection services; (c) acting as administrative agent for a health or welfare program; (d) any other business activity reasonably complementary or supplementary to its insurance business; either to the extent necessarily or properly incidental to the insurance business the company is authorized to do in this State or to the extent approved by the Director and subject to any limitations he may prescribe for the protection of the interests of the policyholders of the company taking into account the effect of such business on the company's existing insurance business and its surplus, the proposed allocation of the estimated cost of such business and the risks inherent in such business as well as relative advantages to the company and its policyholders of conducting such business directly instead of through a subsidiary.
(Source: P.A. 77-673.)

    (215 ILCS 5/40) (from Ch. 73, par. 652)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 40. Directors or trustees.
    (1) After the date of incorporation, as determined by Section 48, and until the first meeting of the members, the incorporators shall have the powers and perform the duties ordinarily possessed and exercised by a board of directors.
    (2) Upon the issuance of a certificate of authority to a company organized under this Article, the corporate powers shall be exercised by, and its business and affairs shall be under the control of, a board of directors or trustees composed of not less than 3 nor more than 21 natural persons who are members and who are at least 18 years of age and at least 3 of whom are residents and citizens of this State. After June 30, 2002, at least 20%, but not less than one, of the directors of a company that is not subject to Section 131.20b shall be persons who are not officers or employees of the company. A person convicted of a felony may not be a director, and all directors shall be of good character and known professional, administrative, or business ability, such business ability to include a practical knowledge of insurance, finance, or investment. The first board of directors or trustees shall be elected at the first meeting of the members, and all directors or trustees shall be elected annually thereafter, except only as provided in subsection (3).
    (3) The articles of incorporation may provide for the division of the board into classes, as nearly equal in number as possible, and fix the term of office for each class, but no term shall be for more than 3 years.
    (4) Meetings of the board of directors or trustees, regular or special, may be held either within or without the State. Meetings of the board of directors or trustees shall be upon such notice as the by-laws may prescribe. Attendance of a director or trustee at any meeting shall constitute a waiver of notice of such meeting except where a director or trustee attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors or trustees need be specified in the notice or waiver of notice of such meeting, unless expressly otherwise provided by this Code. Unless specifically prohibited by the articles of incorporation or by-laws, members of the board of directors or of any committee of the board of directors may participate in and act at any meeting of such board or committee through the use of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such meeting shall constitute attendance and presence in person at the meeting of the person or persons so participating. Unless specifically prohibited by the articles of incorporation or by-laws, members of the board of directors or of any committee of the board of directors may take action without a meeting, if a consent in writing setting forth the action so taken shall be signed by all of the directors entitled to vote with respect to the subject matter thereof, or by all of the members of such committee, as the case may be. The consent shall be evidenced by one or more written approvals, each of which sets forth the action taken and bears the signature of one or more directors or committee members. All approvals evidencing the consent shall be filed in the company's corporate records. The action taken shall be effective when all of the directors, or members of the committee, have approved the consent unless the consent specifies a different effective date.
    (5) A company may indemnify any person in conformance with subsection (7) of Section 10.
(Source: P.A. 92-140, eff. 7-24-01.)

    (215 ILCS 5/41) (from Ch. 73, par. 653)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 41. Executive committee. If the by-laws so provide, the board of directors or trustees, by a resolution adopted by a majority of the whole board, may designate three or more of their number to constitute an executive committee, which committee shall, to the extent provided in the resolution or in the by-laws, have and exercise, during the interim between the meetings of the board, all of the authority of the board in the management of the company, but the designation of such committee shall not relieve the board or any member thereof of any responsibility imposed by law.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/42) (from Ch. 73, par. 654)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 42. By-laws.
    (1) The incorporators shall adopt by-laws for the company which shall not be altered, amended, or repealed prior to the issuance of a certificate of authority to the company without the approval of the Director. The by-laws shall provide that each policyholder of the company shall be a member of the company and shall be entitled to one or more votes in person or by proxy, based upon the amount of insurance in force, the number of policies held or the amount of premium paid, as shall be stated in such by-laws.
    (2) After a certificate of authority is issued to the company, the power to make, alter, amend or repeal by-laws shall be vested in the board of directors or trustees unless reserved to the members by the articles of incorporation.
    (3) The by-laws of a mutual legal reserve life company shall provide for a specific premium and that there shall be no assessment or contingent liability on the part of the member.
    (4) The by-laws of a mutual company other than life shall provide
        (a) for a specific premium or premium deposit; and
        (b) except as provided in section 55, for a
    
contingent liability of each member in an amount not less than one nor more than ten times the specific premium or premium deposit stated in the policy.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/43) (from Ch. 73, par. 655)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 43. Minimum surplus requirements.
    (1) No company organized after December 31, 1985 under this Article may receive a certificate of authority from the Director to issue policies or contracts of insurance until it has complied with the requirements in respect of original surplus applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance it is organized to write, as set forth in the following table:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
    
least $2,000,000; more than one clause, a surplus of at least $2,000,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), a surplus of at least $2,000,000; more than one clause, a surplus of at least $2,000,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $1,000,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, a surplus of at least $2,000,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $250,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (2) Every company subject to this Article and organized on or after June 28, 1965 must have and at all times maintain a minimum surplus equal to 2/3 of the original surplus required for that particular company at the time it was organized. Any such company organized prior to June 28, 1965 must have and at all times maintain a minimum surplus equal to that which would have been required for that particular company at the time it was issued a Certificate of Authority. Any company which has added any clause or clauses must have and at all times maintain minimum surplus not less than the minimum surplus requirement applicable to the class or classes and clause or clauses of Section 4 at the time that the additional clause or clauses are authorized. Any company organized prior to October 1, 1972 must have and at all times maintain, in addition to the minimum surplus required to be maintained by that particular company, additional minimum surplus of not less than $300,000.
    (3) Any company organized prior to January 1, 1986 and regulated under this Article, in addition to the minimum surplus which is required by paragraph (2) of this Section must have by December 31, 1986 and at all times maintain until December 31, 1990 additional minimum surplus of $200,000.
    (4) Provided, however, mutual companies organized prior to October 1, 1972 and authorized to engage only in insurance business as specified in Class 2(f) of Section 4 on an assessable basis shall not be required to establish an additional minimum surplus as provided herein.
    (5) Subsections (2) and (3) shall be applicable until December 31, 1990 for all companies organized prior to January 1, 1986; thereafter, such companies must have and maintain surplus as required by subsections (7) and (8).
    (6) Every company subject to this Article and organized after December 31, 1985 under this Article must maintain minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
    
least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $150,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (7) Any company organized prior to January 1, 1986, regulated under this Article must have by December 31, 1990, and thereafter maintain until December 31, 1995, surplus not less than the minimum applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
    
least $1,200,000; more than one clause, a surplus of at least $1,200,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), a surplus of at least $1,200,000; more than one clause, a surplus of at least $1,200,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $600,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,200,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $100,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (8) Any company organized prior to January 1, 1986, regulated under this Article must have by December 31, 1995, and thereafter maintain at all times, surplus not less than the minimum applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Life, Accident, Health and Legal Expense
        (a) Class 1, Clauses (a), (b) or (c), a surplus of at
    
least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Casualty, Fidelity and Surety
        (b) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
        (c) Class 2, Clauses (e), (f), (k), (l) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
        (d) Class 2, any or all clauses other than those
    
specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
        (e) Class 2, Clause (f) only or (k) only, $150,000;
    
provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (9) The Director shall take action under Section 60 of this Code against any company which fails to maintain the minimum surplus required by this section. The words "minimum surplus" mean the "surplus as regards policyholders", as it appears on the annual statement of a mutual company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners.
(Source: P.A. 84-934.)

    (215 ILCS 5/44) (from Ch. 73, par. 656)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 44. Articles of incorporation. Any one or more natural persons, at least one of whom is a resident of Illinois, who desire to form a company under this Article, shall sign and acknowledge before an officer authorized to take acknowledgments articles of incorporation in duplicate. The articles shall set forth
        (a) the corporate name;
        (b) the location of its principal office;
        (c) the period of duration, which may be perpetual;
        (d) the class or classes of insurance business, as
    
provided in Section 4, in which it proposes to engage, and the kinds of insurance in each class it proposes to write;
        (e) the name of the governing body of the company,
    
whether board of trustees or board of directors, and the number, the terms of office of and the manner of electing the members of the board; and
        (f) such other provisions not inconsistent with law
    
as may be deemed by the incorporators to be necessary or advisable.
(Source: P.A. 84-502.)

    (215 ILCS 5/45) (from Ch. 73, par. 657)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 45. Documents to be delivered to Director by incorporators. Upon the execution of the articles of incorporation, there shall be delivered to the Director
        (a) duplicate originals of the articles of
    
incorporation;
        (b) a copy of the by-laws adopted by the
    
incorporators;
        (c) 2 organization bonds, or the cash or securities,
    
provided for in Section 46;
        (d) the form of guaranty fund agreements and of
    
guaranty capital shares, if any, as provided in Section 56 to be issued in connection with solicitation of surplus; and
        (e) the form of escrow agreement for the deposit of
    
cash or securities.
(Source: P.A. 84-502.)

    (215 ILCS 5/45.1) (from Ch. 73, par. 657.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 45.1. Escrow agreements. The company shall designate a bank or trust company with whom it will enter into an escrow agreement, which agreement shall state that the organization surplus shall be placed in escrow and remain so, until an organization examination has been completed. When the examination has been completed the escrow agent is authorized to purchase securities for deposit as required by Section 53 and forward them to the Director. The escrow agent is authorized to release the balance of the escrowed funds to the company only upon notification that a Certificate of Authority or similar documentation has been issued by the Director.
(Source: P.A. 84-502.)

    (215 ILCS 5/46) (from Ch. 73, par. 658)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 46. Organization bonds. The incorporators shall deliver to the Director two bonds in the same penalties and containing the same provisions, so far as applicable, as the bonds required for the organization of a stock company by Section 16, for the use and benefit of the State of Illinois and subscribers, members and creditors, or in lieu of delivering such bonds, the incorporators may deposit cash or securities of the same kind and amount on the same terms and conditions, so far as applicable, as provided by said Section.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/47) (from Ch. 73, par. 659)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 47. Publication of intention.
    (1) Upon compliance with the provisions of Section 45, the incorporators shall cause to be published in a newspaper of general circulation in this State, in the county where the principal office of the company is to be located, once each week for three consecutive weeks, a notice setting forth
        (a) their intent to form the company and the proposed
    
name thereof;
        (b) the class or classes of insurance business in
    
which the company proposes to engage; and
        (c) the address where its principal office shall be
    
located.
    (2) Proof of such publication made by a certificate of the publisher or his agent shall be delivered to the Director.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/48) (from Ch. 73, par. 660)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 48. Approval of documents. The documents and papers so delivered to the Director may be approved or disapproved by the Director and the incorporators are entitled to a hearing in the same manner as provided in Section 18 in the case of documents delivered for approval in connection with the organization of stock companies. If the documents and papers so delivered are approved by the Director, the Director must file in his office the bylaws, bond or securities and one of the duplicate originals of the articles of incorporation, and endorse upon the other duplicate original his approval and the month, day and year of approval and deliver it to the incorporators. The company is deemed to be fully organized on the date of the approval of the articles of incorporation by the Director, and that date is the date of incorporation of the company.
(Source: P.A. 82-498.)

    (215 ILCS 5/49) (from Ch. 73, par. 661)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 49. Recording of articles of incorporation. The duplicate original of the articles of incorporation returned by the Director shall be filed for record, within 15 days after it is delivered to the company, in the office of the recorder of the county where the principal office of the company is to be located.
(Source: P.A. 83-358.)

    (215 ILCS 5/50) (from Ch. 73, par. 662)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 50. Authority to solicit subscriptions to surplus.
    (1) Upon the approval of the articles of incorporation by the Director he shall issue to the company a permit which shall expire at the end of two years from its date, authorizing it to solicit subscriptions to surplus in accordance with this Code and to do such other acts as may be necessary and proper in order to complete its organization and to entitle it to receive a certificate of authority to transact an insurance business.
    (2) If the Director finds that any company in process of organization has failed to comply with, or has violated any provision of the Code, he may proceed against the company under Article XIII, and may after notice and hearing revoke the permit issued to it under subsection (1) of this Section.
(Source: Laws 1951, p. 1565.)

    (215 ILCS 5/51) (from Ch. 73, par. 663)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 51. Issuance of certificate of authority. When the Director has been notified that the company has the required surplus as set forth in Section 43 of this Article as now and hereafter amended, he shall conduct an examination of the company. If he finds that the organization is complete and that all of the requirements of this Code have been met he shall issue to such company a certificate of authority to transact the kind or kinds of business specified therein. No company shall transact any business of insurance in this State until it shall have received such certificate of authority as herein prescribed nor any business of insurance not specified in such certificate of authority.
(Source: Laws 1967, p. 1808.)

    (215 ILCS 5/52) (from Ch. 73, par. 664)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 52. Voluntary surrender of articles of incorporation. At any time prior to the issuance of the certificate of authority to the company the articles of incorporation may be voluntarily surrendered and the company dissolved by written agreement filed with the Director, signed by a majority of the incorporators. Such surrender and dissolution shall become effective only upon the approval thereof by the Director. The Director shall approve the surrender of such articles of incorporation if upon investigation he shall find that
        (a) no insurance business has been transacted by the
    
company;
        (b) all sums of money or securities, if any,
    
collected upon applications or subscriptions, have been returned to the applicants or subscribers; and
        (c) all obligations of the company have been paid or
    
discharged.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/53) (from Ch. 73, par. 665)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 53. Deposit.
    (a) A company subject to the provisions of this Article shall make and maintain with the Director for the protection of all creditors, policyholders and policy obligations of the company, a deposit of securities having a fair market value equal to the minimum surplus required to be maintained under Section 43. The Director may release the required deposit of securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the company that it has no outstanding creditors, policyholders, or policy obligations in effect and no plans to engage in the business of insurance; (ii) receipt of a lawful resolution of the company's board of directors effecting the surrender of its articles of incorporation for administrative dissolution by the Director; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the company, together with a plan of dissolution approved by the Director.
    (b) All deposits by insurers subject to this Article must be limited to the following types:
        (1) United States government bonds, notes, and bills
    
for which the full faith and credit of the government of the United States is pledged for the payment of principal and interest.
        (2) United States public bonds and notes of any state
    
or of the District of Columbia, or Canadian public bonds and notes of any province thereof, for which the full faith and credit of the issuer has been pledged for the payment of principal and interest.
        (3) United States and Canadian county, provincial,
    
municipal, and district bonds and notes for which the issuer has lawful authority to levy taxes or make assessments for the payment of principal and interest.
        (4) Bonds and notes of any federal agency that are
    
guaranteed as to payment of principal and interest by the United States.
        (5) International development bank bonds, bonds
    
issued by the State of Israel and sold through the Development Corporation for Israel or its successor entities, and notes issued, assumed, and guaranteed by the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, or the International Finance Corporation.
        (6) Corporate bonds and notes of any private
    
corporations that are not affiliates or subsidiaries of the insurer, which corporations are organized under the laws of the United States, Canada, any state, the District of Columbia, any territory or possession of the United States, or any province of Canada.
        (7) Certificates of deposit.
    (c) To be eligible for deposit under subsection (b), any bond or note must have the following characteristics:
        (1) The bond or note must be interest-bearing or
    
interest-accruing, and the insurer must be the exclusive owner of the interest accruing thereon and entitled to receive the interest for its account.
        (2) The issuer must be in a solvent financial
    
condition and the bond or note must not be in default.
        (3) The bond, note, or debt of the issuing country
    
must be rated in one of the 4 highest classifications by an established, nationally recognized investment rating service or must have been given a rating of 1 by the Securities Valuation Office of the National Association of Insurance Commissioners.
        (4) The market value of the bond or note must be
    
readily ascertainable or the value of the bond or note must be obtainable by the insurer or its custodian from the issuer's fiscal agent.
        (5) The bond or note must be the direct obligation of
    
the issuer.
        (6) The bond or note must be stated in United States
    
dollar denominations.
        (7) The bond or note must be eligible for book-entry
    
form on the books of the Federal Reserve's book-entry system or in a depository trust clearing system or on the books of the issuer's transfer agent or evidenced by a certificate delivered to the insurer or its custodian.
    (d) To be eligible for deposit under item (7) of subsection (b), a certificate of deposit must have the following characteristics:
        (1) The certificate of deposit must be issued by a
    
bank, savings bank, or savings association that is organized under the laws of the United States, of this State, or of any other state and that has a principal office or branch office in this State that is authorized to receive deposits in this State.
        (2) The certificate of deposit must be
    
interest-bearing and may not be issued in discounted form.
        (3) The certificate of deposit must be issued for a
    
period of not less than one year.
        (4) The issuing bank, savings bank, or savings
    
association must agree to the terms and conditions of the Director regarding the rights to the certificate of deposit and must have executed a written certificate of deposit agreement with the Director. The terms and conditions of the agreement shall include, but need not be limited to:
            (A) Exclusive authorized signature authority for
        
the chief financial officer.
            (B) An agreement to pay, without protest, the
        
proceeds of its certificate of deposit to the Director within 30 business days after presentation.
            (C) A prohibition against levies, setoffs,
        
survivorship, or other conditions that might hinder the Director's ability to recover the full face value of a certificate of deposit.
            (D) Instructions regarding interest payments,
        
renewals, taxpayer identification, and early withdrawal penalties.
            (E) An agreement to be subject to the
        
jurisdiction of the courts of this State, or those of the United States that are located in this State, for the purposes of any litigation arising out of this Section.
            (F) Such other conditions as the Director
        
requires.
    (e) The Director may refuse to accept certain securities or refuse to accept the reported market value of certain securities offered pursuant to this Section in order to ensure that sufficient cash and securities are on hand to meet the purposes of the deposit. In making a refusal under this subsection (e), the guidelines for use of the Director may include, but need not be limited to, whether the market value of the securities cannot be readily ascertained and the lack of liquidity of the securities. Securities refused under this subsection (e) are not acceptable as deposits.
    (f) All deposits required of a domestic insurer pursuant to the laws of another state, province, or country must be comprised of securities of the kinds required under subsection (b), having the characteristics required under subsections (c) and (d), and permitted by the laws of the other state, province, or country, except common stocks, mortgages or loans of any kind, real estate investment trust funds or programs, commercial paper, and letters of credit.
(Source: P.A. 98-110, eff. 1-1-14; 98-969, eff. 1-1-15.)

    (215 ILCS 5/54) (from Ch. 73, par. 666)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 54. Dividends.
    (1) The board of directors or trustees of any company subject to the provisions of this Article doing the kind or kinds of insurance business described in Class 1 of Section 4 may declare dividends to its members.
    (2) The board of directors or trustees of any company subject to the provisions of this article doing any of the kind or kinds of business described in Classes 2 and 3 of Section 4 may from time to time fix and determine the amount of dividends or of unabsorbed or unused premiums or premium deposits to be returned to each policyholder, and may for such purpose establish reasonable classifications or groupings of policyholders and plans for the distribution of such refunds upon each general kind of insurance or groups or classes thereof and may establish reasonable territorial divisions upon policies expiring during a fixed period, after retaining sufficient funds for the payment by the company of all outstanding policy and other obligations.
    (3) The declaration and payment of dividends by any company subject to the provisions of this Article shall be subject to the following conditions:
        (a) No dividend shall be declared or paid at any time
    
except out of earned, as distinguished from contributed, surplus, nor when the surplus of the company is less than the surplus required in section 43 for the kind or kinds of insurance the company is authorized to write, nor when the payment of such dividend will reduce its surplus to less than such amount.
        (b) No dividend shall be declared or paid contrary to
    
any restriction contained in the articles of incorporation.
(Source: P.A. 86-753.)

    (215 ILCS 5/55) (from Ch. 73, par. 667)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 55. Contingent liability policy provisions. In cases where contingent liability of members is provided for, the provision therefor shall be plainly stated in each policy with prominence equal to the indemnifying clause. In addition, each such assessable policy, other than an accident or health policy, issued or delivered in this State insuring against the hazards included in Class 2, subparagraph (b) of Section 4 after September 1, 1967 must have the following statement printed in bold face on the face of the policy: "This is an assessable policy". If a mutual company other than life has a surplus equal to the capital and surplus required in Section 13, for a stock company transacting the same kind or kinds of business, such company may issue policies without contingent liability. Any such mutual company which shall have issued policies without contingent liability after the acquisition of such surplus may continue to do so as long as it maintains a surplus equal to the capital and surplus of a stock company doing the same kind or kinds of business, but no company may issue such policies except during such time as it shall continue to have such a surplus, but any company which is, immediately prior to July 1, 1965, issuing policies without contingent liability, may continue to do so as long as it maintains a surplus equal in amount to that which would have been required immediately prior to July 1, 1965. After July 18, 1967, no company subject to this Article may make, levy or impose upon its members any assessment based on their contingent liability unless ordered to do so by the Director under Section 60 of this Code.
(Source: P.A. 86-753.)

    (215 ILCS 5/56) (from Ch. 73, par. 668)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 56. Accumulation of guaranty fund or guaranty capital. Any company subject to the provisions of this Article, may provide for a surplus either by accumulating a guaranty fund or a guaranty capital as follows:
        (a) Guaranty fund. It may accumulate a guaranty fund
    
by borrowing money at an interest rate either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum. In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum. The insurer shall elect at the time of execution of the loan or advance agreement whether the interest rate is to be fixed or floating for the term of the agreement. An agreement issued after the insurer has received its Certificate of Authority shall first be approved by resolution of the Board of Directors and the Director. The agreement shall provide that such loan and the interest thereon shall be repaid only out of the surplus of such company in excess of the greater of the original or minimum surplus required of such company by Section 43. Such excess of surplus shall be calculated upon the fair market value of the assets of the company, and such guaranty loan fund shall constitute and be enforceable as a liability of the company only as against such excess of surplus. Any unpaid balance of such guaranty fund loan shall be reported in the annual statement to be filed with the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he or she is satisfied that the financial condition of the company warrants that action, but approval may not be withheld if the company shall have and submit satisfactory evidence of surplus of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement.
        (b) Guaranty capital. It may in addition to any
    
advances provided for herein, establish and maintain a guaranty capital divided into shares having a par value of not more than $100 nor less than $5 each. The guaranty capital shall be applied to the payment of losses only when the company has exhausted its assets in excess of unearned premium reserve and other liabilities; and when thus impaired the directors may make good the whole or any part of it by assessment on its policyholders as provided for in Section 60. Said guaranty capital may, by vote of the board of directors of the company and the written consent of the Director be reduced or retired by any amount, provided that the net surplus of the company together with the remaining guaranty capital shall equal or exceed the amount of surplus required by Section 43, and due notice of such proposed action on the part of the company shall be published in a newspaper of general circulation, approved by the Director, not less than once each week for at least 4 consecutive weeks before such action is taken. No company with a guaranty capital, which has ceased to do business, shall divide any part of its assets or guaranty capital among its shareholders unless it has paid or it has otherwise been released from its policy obligations. The holders of the shares of such guaranty capital shall be entitled to interest either (1) at a fixed rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, in effect on the first business day of the month in which the loan document is executed, plus 3% per annum or (2) at a variable rate equal to the corporate base rate determined on the first business day of each month during the term of the loan plus 2% per annum. In no event shall the variable interest rate for any month exceed the initial rate for the loan or advance by more than 10% per annum. The insurer shall elect at the time of issuance of the shares whether the interest rate is to be fixed or floating for the term of the agreement. Such interest shall be payable from the surplus in excess of the surplus required of the company by Section 43. In the event of dissolution and liquidation of such a company after the retirement of all outstanding obligations of the company, the holders of such shares of guaranty capital shall be entitled to a preferential right in the assets of such company equal to the par value of their share of such guaranty capital before any distribution to members.
(Source: P.A. 90-381, eff. 8-14-97; 91-357, eff. 7-29-99.)

    (215 ILCS 5/57) (from Ch. 73, par. 669)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 57. Amendment of articles of incorporation.
    (1) A company subject to the provisions of this Article may amend its articles of incorporation in any respect not in violation of law, but may not amend such articles to insert any provision prohibited, or to delete any provision required, in original articles of incorporation for a similar domestic company organized under this Code except as otherwise provided in Section 59.1 or 59.2 of this Code.
    (2) Amendments to the articles of incorporation for the various classes of companies shall be made in the following manner:
        (a) Class 1. The board of directors or trustees shall
    
adopt a resolution setting forth the proposed amendment and directing that it be submitted to a vote of the policyholders at either an annual or special meeting. Written or printed notice shall be given to policyholders in the same manner as is required in the case of notices to shareholders of stock companies by Section 29. The proposed amendment shall be adopted upon receiving the affirmative vote of 2/3 of the policyholders present in person or by proxy at such meeting. Restated articles of incorporation setting forth the articles of incorporation as amended shall thereupon be executed in duplicate by the company or its president or vice president, and its secretary or assistant secretary, and duplicate originals of such restated articles of incorporation and an affidavit of the secretary of the company setting forth the facts to show that this section has been fully complied with shall be delivered to the Director.
        (b) Classes 2 and 3. The board of directors or
    
trustees shall adopt the amendment and deliver to the Director duplicate original restated articles of incorporation setting forth the articles of incorporation as amended and a copy of the resolution of the board of directors or trustees adopting such an amendment certified to by the secretary of the company.
    (3) The restated articles of incorporation of any company subject to the provisions of this article so delivered to the Director may be approved or disapproved by the Director in the same manner as the original articles of incorporation. If approved, the Director shall place on file in his office all of the documents so delivered to him except one of the duplicate originals of the restated articles of incorporation, and shall endorse upon such duplicate original his approval thereof and the month, day and year of such approval, and deliver it to the company. The amendment shall be effective as of the date of the approval thereof by the Director. Such duplicate original shall be filed for record, within 15 days after it has been delivered to the company, in the office of the recorder of the county where the principal office of the company is located.
(Source: P.A. 90-810, eff. 1-6-99.)

    (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 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 5/59) (from Ch. 73, par. 671)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 59. Reinsurance agreements. Unless the contract provides otherwise any reinsurance agreement effected by any company subject to the provisions of this Article upon the whole or any part of any risk shall be without contingent liability or participation or membership.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/59.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 59.1. Conversion to stock company.
    (1) Definitions. For the purposes of this Section, the following terms shall have the meanings indicated:
        (a) "Eligible member" is a member as of the date the
    
mutual company's board of directors adopts a plan of conversion. A person insured under a group policy is not an eligible member, unless:
            (i) the person is insured or covered under a
        
group life policy or group annuity contract under which funds are accumulated and allocated to the respective covered persons;
            (ii) the person has the right to direct the
        
application of the funds so allocated;
            (iii) the group policyholder makes no
        
contribution to the premiums or deposits for the policy or contract; and
            (iv) the mutual company has the names and
        
addresses of the persons covered under the group life policy or group annuity contract.
        A person whose policy is issued after the board of
    
directors adopts the plan but before the plan's effective date is not an eligible member but shall have those rights set forth in subsection (10) of this Section.
        (b) "Converted stock company" is an Illinois
    
domiciled stock company that converted from an Illinois domiciled mutual company under this Section.
        (c) "Plan of conversion" or "plan" is a plan adopted
    
by an Illinois domestic mutual company's board of directors under this Section to convert the mutual company into an Illinois domiciled stock company.
        (d) "Policy" includes an annuity contract.
        (e) "Member" means a person who, on the records of
    
the mutual company and pursuant to its articles of incorporation or bylaws, is deemed to be a holder of a membership interest in the mutual company.
    (2) Adoption of the plan of conversion by the board of directors.
        (a) A mutual company seeking to convert to a stock
    
company shall, by the affirmative vote of two-thirds of its board of directors, adopt a plan of conversion consistent with the requirements of subsection (6) of this Section.
        (b) At any time before approval of a plan by the
    
Director, the mutual company by the affirmative vote of two-thirds of its board of directors, may amend or withdraw the plan.
    (3) Approval of the plan of conversion by the Director of Insurance.
        (a) Required findings. After adoption by the mutual
    
company's board of directors, the plan shall be submitted to the Director for review and approval. The Director shall approve the plan upon finding that:
            (i) the provisions of this Section have been
        
complied with;
            (ii) the plan will not prejudice the interests of
        
the members; and
            (iii) the plan's method of allocating
        
subscription rights is fair and equitable.
        (b) Documents to be filed.
            (i) Prior to the members' approval of the plan, a
        
mutual company seeking the Director's approval of a plan shall file the following documents with the Director for review and approval:
                (A) the plan of conversion, including the
            
independent evaluation of pro forma market value required by item (f) of subsection (6) of this Section;
                (B) the form of notice required by item (b)
            
of subsection (4) of this Section for eligible members of the meeting to vote on the plan;
                (C) any proxies to be solicited from eligible
            
members pursuant to subitem (ii) of item (c) of subsection (4) of this Section;
                (D) the form of notice required by item (a)
            
of subsection (10) of this Section for persons whose policies are issued after adoption of the plan but before its effective date; and
                (E) the proposed articles of incorporation
            
and bylaws of the converted stock company.
        Once filed, these documents shall be approved or
        
disapproved by the Director within a reasonable time.
            (ii) After the members have approved the plan,
        
the converted stock company shall file the following documents with the Director:
                (A) the minutes of the meeting of the members
            
at which the plan was voted upon; and
                (B) the revised articles of incorporation and
            
bylaws of the converted stock company.
        (c) Consultant. The Director may retain, at the
    
mutual company's expense, any qualified expert not otherwise a part of the Director's staff to assist in reviewing the plan and the independent evaluation of the pro forma market value which is required by item (f) of subsection (6) of this Section.
    (4) Approval of the plan by the members.
        (a) Members entitled to notice of and to vote on the
    
plan. All eligible members shall be given notice of and an opportunity to vote upon the plan.
        (b) Notice required. All eligible members shall be
    
given notice of the members' meeting to vote upon the plan. A copy of the plan or a summary of the plan shall accompany the notice. The notice shall be mailed to each member's last known address, as shown on the mutual company's records, within 45 days of the Director's approval of the plan. The meeting to vote upon the plan shall not be set for a date less than 30 days after the date when the notice of the meeting is mailed by the mutual company. If the meeting to vote upon the plan is held coincident with the mutual company's annual meeting of policyholders, only one combined notice of meeting is required.
        (c) Vote required for approval.
            (i) After approval by the Director, the plan
        
shall be adopted upon receiving the affirmative vote of at least two-thirds of the votes cast by eligible members.
            (ii) Members entitled to vote upon the proposed
        
plan may vote in person or by proxy. Any proxies to be solicited from eligible members shall be filed with and approved by the Director.
            (iii) The number of votes each eligible member
        
may cast shall be determined by the mutual company's bylaws. If the bylaws are silent, each eligible member may cast one vote.
    (5) Adoption of revised articles of incorporation. Adoption of the revised articles of incorporation of the converted stock company is necessary to implement the plan and shall be governed by the applicable provisions of Section 57 of this Code. For a Class 1 mutual company, the members may adopt the revised articles of incorporation at the same meeting at which the members approve the plan. For a Class 2 or 3 mutual company, the revised articles of incorporation may be adopted solely by the board of directors or trustees, as provided in Section 57 of this Code.
    (5.5) Prior to the completion of a plan of conversion filed by a mutual company with the Director, no person shall knowingly acquire, make any offer, or make any announcement of an offer for any security issued or to be issued by the converting mutual company in connection with its plan of conversion or for any security issued or to be issued by any other company authorized in item(c)(i) of subsection (6) of this Section and organized for purposes of effecting the conversion, except in compliance with the maximum purchase limitations imposed by item (i) of subsection (6) of this Section or the terms of the plan of conversion as approved by the Director.
    (6) Required provisions in a plan of conversion. The following provisions shall be included in the plan:
        (a) Reasons for conversion. The plan shall set forth
    
the reasons for the proposed conversion.
        (b) Effect of conversion on existing policies.
            (i) The plan shall provide that all policies in
        
force on the effective date of conversion shall continue to remain in force under the terms of those policies, except that any voting rights of the policyholders provided for under the policies or under this Code and any contingent liability policy provisions of the type described in Section 55 of this Code shall be extinguished on the effective date of the conversion.
            (ii) The plan shall further provide that holders
        
of participating policies in effect on the date of conversion shall continue to have the right to receive dividends as provided in the participating policies, if any.
            (iii) Except for a mutual company's participating
        
life policies, guaranteed renewable accident and health policies, and non-cancelable accident and health policies, the converted stock company may issue the insured a nonparticipating policy as a substitute for the participating policy upon the renewal date of a participating policy.
        (c) Subscription rights to eligible members.
            (i) The plan shall provide that each eligible
        
member is to receive, without payment, nontransferable subscription rights to purchase a portion of the capital stock of the converted stock company. As an alternative to subscription rights in the converted stock company, the plan may provide that each eligible member is to receive, without payment, nontransferable subscription rights to purchase a portion of the capital stock of: (A) a corporation organized and owned by the mutual company for the purpose of acquiring or holding all the stock of the converted stock company; or (B) a stock insurance company owned by the mutual company into which the mutual company will be merged.
            (ii) The subscription rights shall be allocated
        
in whole shares among the eligible members using a fair and equitable formula. This formula may but need not take into account how the different classes of policies of the eligible members contributed to the surplus of the mutual company.
        (d) Oversubscription. The plan shall provide a fair
    
and equitable means for the allocation of shares of capital stock in the event of an oversubscription to shares by eligible members exercising subscription rights received pursuant to item (c) of subsection (6) of this Section.
        (e) Undersubscription. The plan shall provide that
    
any shares of capital stock not subscribed to by eligible members exercising subscription rights received under item (c) of subsection (6) of this Section shall be sold in a public offering through an underwriter. If the number of shares of capital stock not subscribed by eligible members is so small or the additional time or expense required for a public offering of those shares would be otherwise unwarranted under the circumstances, the plan of conversion may provide for the purchase of the unsubscribed shares by a private placement or other alternative method approved by the Director that is fair and equitable to the eligible members.
        (f) Total price of stock. The plan shall set the
    
total price of the capital stock equal to the estimated pro forma market value of the converted stock company based upon an independent evaluation by a qualified person. The pro forma market value may be the value that is estimated to be necessary to attract full subscription for the shares as indicated by the independent evaluation.
        (g) Purchase price of each share. The plan shall set
    
the purchase price of each share of capital stock equal to any reasonable amount that will not inhibit the purchase of shares by members. The purchase price of each share shall be uniform for all purchasers except the price may be modified by the Director by reason of his consideration of a plan for the purchase of unsubscribed stock pursuant to item (e) of subsection (6) of this Section.
        (h) Closed block of business for participating life
    
policies of a Class 1 mutual company.
            (i) The plan shall provide that a Class 1 mutual
        
company's participating life policies in force on the effective date of the conversion shall be operated by the converted stock company for dividend purposes as a closed block of participating business except that any or all classes of group participating policies may be excluded from the closed block.
            (ii) The plan shall establish one or more
        
segregated accounts for the benefit of the closed block of business and shall allocate to those segregated accounts enough assets of the mutual company so that the assets together with the revenue from the closed block of business are sufficient to support the closed block including, but not limited to, the payment of claims, expenses, taxes, and any dividends that are provided for under the terms of the participating policies with appropriate adjustments in the dividends for experience changes. The plan shall be accompanied by an opinion of a qualified actuary or an appointed actuary who meets the standards set forth in the insurance laws or regulations for the submission of actuarial opinions as to the adequacy of reserves or assets. The opinion shall relate to the adequacy of the assets allocated to the segregated accounts in support of the closed block of business. The actuarial opinion shall be based on methods of analysis deemed appropriate for those purposes by the Actuarial Standards Board.
            (iii) The amount of assets allocated to the
        
segregated accounts of the closed block shall be based upon the mutual company's last annual statement that is updated to the effective date of the conversion.
            (iv) The converted stock company shall keep a
        
separate accounting for the closed block and shall make and include in the annual statement to be filed with the Director each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block.
            (v) Periodically, upon the Director's approval,
        
those assets allocated to the closed block as provided in subitem (ii) of item (h) of subsection (6) of this Section that are in excess of the amount of assets necessary to support the remaining policies in the closed block shall revert to the benefit of the converted stock company.
            (vi) The Director may waive the requirement for
        
the establishment of a closed block of business if the Director deems it to be in the best interests of the participating policyholders of the mutual insurer to do so.
        (i) Limitations on acquisition of control. The plan
    
shall provide that any one person or group of persons acting in concert may not acquire, through public offering or subscription rights, more than 5% of the capital stock of the converted stock company for a period of 5 years from the effective date of the plan except with the approval of the Director. This limitation does not apply to any entity that is to purchase 100% of the capital stock of the converted company as part of the plan of conversion approved by the Director or to a purchase of stock by a tax-qualified employee benefit plan pursuant to subscription grants granted to that plan as authorized under item (b) of subsection (7) of this Section and to a purchase of unsubscribed stock pursuant to item (e) of subsection (6) of this Section.
    (7) Optional provisions in a plan of conversion. The following provisions may be included in the plan:
        (a) Directors and officers subscription rights.
            (i) The plan may provide that the directors and
        
officers of the mutual company shall receive, without payment, nontransferable subscription rights to purchase capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan as provided in subitem (i) of item (c) of subsection (6) of this Section. Those subscription rights shall be allocated among the directors and officers by a fair and equitable formula.
            (ii) The total number of shares that may be
        
purchased under subitem (i) of item (a) of subsection (7) of this Section may not exceed 35% of the total number of shares to be issued in the case of a mutual company with total assets of less than $50 million or 25% of the total shares to be issued in the case of a mutual company with total assets of more than $500 million. For mutual companies with total assets between $50 million and $500 million, the total number of shares that may be purchased shall be interpolated.
            (iii) Stock purchased by a director or officer
        
under subitem (i) of item (a) of subsection (7) of this Section may not be sold within one year following the effective date of the conversion.
            (iv) The plan may also provide that a director or
        
officer or person acting in concert with a director or officer of the mutual company may not acquire any capital stock of the converted stock company for 3 years after the effective date of the plan, except through a broker or dealer, without the permission of the Director. That provision may not apply to prohibit the directors and officers from purchasing stock through subscription rights received in the plan under subitem (i) of item (a) of subsection (7) of this Section.
        (b) Tax-qualified employee stock benefit plan. The
    
plan may allocate to a tax-qualified employee benefit plan nontransferable subscription rights to purchase up to 10% of the capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan as provided in subitem (i) of item (c) of subsection (6) of this Section. That employee benefit plan shall be entitled to exercise its subscription rights regardless of the amount of shares purchased by other persons.
    (8) Alternative plan of conversion. The board of directors may adopt a plan of conversion that does not rely in whole or in part upon the issuance to members of non-transferable subscription rights to purchase stock of the converted stock company if the Director finds that the plan does not prejudice the interests of the members, is fair and equitable, and is based upon an independent appraisal of the market value of the mutual company by a qualified person and a fair and equitable allocation of any consideration to be given eligible members. The Director may retain, at the mutual company's expense, any qualified expert not otherwise a part of the Director's staff to assist in reviewing whether the plan may be approved by the Director.
    (9) Effective date of the plan. A plan shall become effective when the Director has approved the plan, the members have approved the plan, and the revised articles of incorporation have been adopted.
    (10) Rights of members whose policies are issued after adoption of the plan and before its effective date.
        (a) Notice. All members whose policies are issued
    
after the proposed plan has been adopted by the board of directors and before the effective date of the plan shall be given written notice of the plan of conversion. The notice shall specify the member's right to rescind that policy as provided in item (b) of subsection (10) of this Section within 45 days after the effective date of the plan. A copy of the plan or a summary of the plan shall accompany the notice. The form of the notice shall be filed with and approved by the Director.
        (b) Option to rescind. Any member entitled to receive
    
the notice described in item (a) of subsection (10) of this Section shall be entitled to rescind his or her policy and receive a full refund of any amounts paid for the policy or contract within 10 days after the receipt of the notice.
    (11) Corporate existence.
        (a) Upon the conversion of a mutual company to a
    
converted stock company according to the provisions of this Section, the corporate existence of the mutual company shall be continued in the converted stock company. All the rights, franchises, and interests of the mutual company in and to every type of property, real, personal, and mixed, and things in action thereunto belonging, is deemed transferred to and vested in the converted stock company without any deed or transfer. Simultaneously, the converted stock company is deemed to have assumed all the obligations and liabilities of the mutual company.
        (b) The directors and officers of the mutual company,
    
unless otherwise specified in the plan of conversion, shall serve as directors and officers of the converted stock company until new directors and officers of the converted stock company are duly elected pursuant to the articles of incorporation and bylaws of the converted stock company.
    (12) Conflict of interest. No director, officer, agent, or employee of the mutual company or any other person shall receive any fee, commission, or other valuable consideration, other than his or her usual regular salary and compensation, for in any manner aiding, promoting, or assisting in the conversion except as set forth in the plan approved by the Director. This provision does not prohibit the payment of reasonable fees and compensation to attorneys, accountants, and actuaries for services performed in the independent practice of their professions, even if the attorney, accountant, or actuary is also a Director of the mutual company.
    (13) Costs and expenses. All the costs and expenses connected with a plan of conversion shall be paid for or reimbursed by the mutual company or the converted stock company except where the plan provides either for a holding company to acquire the stock of the converted stock company or for the merger of the mutual company into a stock insurance company as provided in subitem (i) of item (c) of subsection (6) of this Section. In those cases, the acquiring holding company or the stock insurance company shall pay for or reimburse all the costs and expenses connected with the plan.
    (14) Failure to give notice. If the mutual company complies substantially and in good faith with the notice requirements of this Section, the mutual company's failure to give any member or members any required notice does not impair the validity of any action taken under this Section.
    (15) Limitation of actions. Any action challenging the validity of or arising out of acts taken or proposed to be taken under this Section shall be commenced within 30 days after the effective date of the plan.
(Source: P.A. 98-755, eff. 7-16-14.)

    (215 ILCS 5/59.2)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 59.2. Formation of mutual insurance holding company and conversion of mutual company to stock company.
    (1) Definitions. For the purposes of this Section, the following terms shall have the meanings indicated:
        (a) "Converted company" means an Illinois domiciled
    
stock insurance company subject to the provisions of Article II, except as otherwise provided in this Section, that continues in existence after a reorganization under this Section in connection with the formation of a mutual holding company.
        (b) "Converted mutual holding company" means the
    
stock corporation into which a mutual holding company has been converted in accordance with Section 59.1 and subsection (13) of this Section.
        (c) "Eligible member" means a member as of the date
    
the board of directors adopts a plan of MHC conversion under this Section. For the conversion of a mutual holding company, "eligible member" means a member of the mutual holding company who is of record as of the date the mutual holding company board of directors adopts a plan of conversion under Section 59.1.
        (d) "Intermediate holding company" means a
    
corporation authorized to issue one or more classes of capital stock, the corporate purposes of which include holding directly or indirectly the voting stock of a converted company.
        (e) "Member" means a person who, on the records of
    
the mutual company and pursuant to its articles of incorporation or bylaws, is deemed to be a holder of a membership interest in the mutual company and shall also include a person or persons insured under a group policy, subject to the following conditions:
            (i) the person is insured or covered under a
        
group life policy or group annuity contract under which funds are accumulated and allocated to the respective covered persons;
            (ii) the person has the right to direct the
        
application of the funds so allocated;
            (iii) the group policyholder makes no
        
contribution to the premiums or deposits for the policy or contract; and
            (iv) the mutual company has the names and
        
addresses of the persons covered under the group life policy or group annuity contract.
        On and after the effective date of a plan of MHC
    
conversion under this Section, the term "member" shall mean a member of the mutual holding company created thereby.
        (f) "Mutual holding company" or "MHC" means a
    
corporation resulting from a reorganization of a mutual company under this Section. A mutual holding company shall be subject to the provisions of this Article and to any other provisions of this Code applicable to mutual companies, except as otherwise provided in this Section. The articles of incorporation of a mutual holding company shall include provisions setting forth the following:
            (i) that it is a mutual holding company organized
        
under this Article;
            (ii) that the mutual holding company may hold not
        
less than a majority of the shares of voting stock of a converted company or an intermediate holding company, which in turn holds directly or indirectly all of the voting stock of a converted company;
            (iii) that it is not authorized to issue any
        
capital stock except pursuant to a conversion in accordance with the provisions of Section 59.1 and subsection (13) of this Section;
            (iv) that its members shall have the rights
        
specified in this Section and in its articles of incorporation and bylaws; and
            (v) that its assets shall be subject to inclusion
        
in the estate of the converted company in any proceedings initiated by the Director against the converted company under Article XIII.
        (g) "Mutual company" means for purposes of this
    
Section a mutual life insurer or mutual property-casualty insurer that may convert pursuant to a plan of MHC conversion under this Section.
        (h) "Plan of MHC conversion," or "plan" when used in
    
this Section means a plan adopted pursuant to this Section by the board of directors of an Illinois domestic mutual company for the conversion of the mutual company into a direct or indirect stock subsidiary of a mutual holding company.
        (i) "Policy" includes any group or individual
    
insurance policy or contract issued by a mutual company, including an annuity contract. The term policy does not include a certificate of insurance issued in connection with a group policy or contract.
        (j) "Policyholder" means the holder of a policy other
    
than a reinsurance contract.
    (2) Formation of mutual holding company and conversion of mutual company. A mutual company, upon approval of the Director, may reorganize by forming a mutual holding company and continue the corporate existence of the reorganizing mutual company as a stock insurance company in accordance with this Section. Upon effectiveness of a plan of MHC conversion, and without any further action:
        (a) The mutual company shall become a stock
    
corporation, the membership interests of the policyholders in the mutual company shall be deemed extinguished and all eligible members of the mutual company shall be and become members of the mutual holding company, in accordance with the articles of incorporation and bylaws of the mutual holding company and the applicable provisions of this Section and Article III; and
        (b) all of the shares of the capital stock of the
    
converted company shall be issued to the mutual holding company, which at all times shall own a majority of the shares of the voting stock of the converted company, except that either at the time of conversion, or at a later time with the approval of the Director, an intermediate holding company or companies may be created, so long as the mutual holding company at all times owns directly or indirectly a majority of the shares of the voting stock of the converted company.
    (3) MHC membership interests.
        (a) No member of a mutual holding company may
    
transfer membership in the mutual holding company or any right arising from the membership.
        (b) A member of a mutual holding company shall not,
    
as a member, be personally liable for the acts, debts, liabilities, or obligations of the company.
        (c) No assessments of any kind may be imposed upon
    
the members of a mutual holding company by the directors or members, or because of any liability of any company owned or controlled by the mutual holding company or because of any act, debt, liability, or obligation of the mutual holding company itself.
        (d) A membership interest in a domestic mutual
    
holding company shall not constitute a security under any law of this State.
    (4) Adoption of the plan of MHC conversion by the board of directors.
        (a) A mutual company seeking to convert to a mutual
    
holding company structure shall, by the affirmative vote of two-thirds of its board of directors, adopt a plan of MHC conversion consistent with the requirements of subsection (8) of this Section.
        (b) At any time before approval of a plan by eligible
    
members, the mutual company, by the affirmative vote of two-thirds of its board of directors, may amend or withdraw the plan of MHC conversion.
    (5) Approval of the plan of MHC conversion by the Director.
        (a) Required findings. After adoption or amendment
    
of the plan by the mutual company's board of directors, the plan of MHC conversion shall be submitted to the Director for review and approval. The Director shall hold a public hearing on the plan. The Director shall approve the plan upon finding that:
            (i) the provisions of this Section have been
        
complied with; and
            (ii) the plan is fair and equitable as it relates
        
to the interests of the members.
        (b) Documents to be filed.
            (i) Prior to the members' approval of the plan of
        
MHC conversion, a mutual company seeking the Director's approval of a plan shall file the following documents with the Director for review and approval:
                (A) the plan of MHC conversion;
                (B) the form of notice required by item (b)
            
of subsection (6) of this Section for eligible members to vote on the plan;
                (C) any proxies to be solicited from eligible
            
members and any other soliciting materials;
                (D) the proposed articles of incorporation
            
and bylaws of the mutual holding company, each intermediate holding company, if any, and the revised articles of incorporation and bylaws of the converted company.
            Once filed, these documents shall be approved or
        
disapproved by the Director within a reasonable time.
            (ii) After the members have approved the plan,
        
the converted company shall file the following documents with the Director:
                (A) the minutes of the meeting of the members
            
at which the plan of MHC conversion was voted upon; and
                (B) the articles and bylaws of the mutual
            
holding company and each intermediate holding company, if any, and the revised articles of incorporation and bylaws of the converted company.
        (c) The Director's approval of a plan pursuant to
    
this subsection (5) may be made conditional at the sole discretion of the Director whenever he determines that such conditions are reasonably necessary to protect policyholder interests. Such conditions may include, but shall not be limited to, limitations, requirements, or prohibitions as follows:
            (i) prior approval of any acquisition or
        
formation of affiliate entities of the MHC;
            (ii) prior approval of the capital structure of
        
any intermediate holding company or any changes thereto;
            (iii) prior approval of any initial public
        
offering or other issuance of equity or debt securities of an intermediate holding company or the converted company in a private sale or public offering;
            (iv) prior approval of the expansion of the
        
mutual holding company system into lines of business, industries, or operations not presented at the time of the conversion;
            (v) limitations on dividends and distributions if
        
the effect would be to reduce capital and surplus of the converted company, in addition to any limitations which may otherwise be authorized by law; and
            (vi) limitations on the pledge, incumbrance, or
        
transfer of the stock of the converted company.
        (d) Consultant. The Director may retain, at the
    
mutual company's expense, any qualified expert not otherwise a part of the Director's staff to assist in reviewing the plan of MHC conversion.
    (6) Approval of the plan by the members.
        (a) Members entitled to notice of and to vote on the
    
plan. All eligible members shall be given notice of and an opportunity to vote upon the plan of MHC conversion.
        (b) Notice required. All eligible members shall be
    
given notice of the members' meeting to vote upon the plan of MHC conversion. The notice shall identify in reasonable detail the benefits and risks of the MHC conversion. A copy of the plan of MHC conversion or a summary of the plan, if so authorized by the Director, shall accompany the notice. If a summary of the plan accompanies the notice, a copy of the plan shall be made available without charge to any eligible member upon request. The notice shall state that approval by the Director does not constitute a recommendation that eligible members approve the plan. The notice shall be mailed to each member's last known address, as shown on the mutual company's records, within 45 days of the Director's approval of the plan. The meeting to vote upon the plan shall not be set for a date less than 60 days after the date when the notice of the meeting is mailed by the mutual company. If the meeting to vote upon the plan is held coincident with the mutual company's annual meeting of policyholders, only one combined notice of meeting is required.
        (c) Vote required for approval.
            (i) After approval by the Director, the plan of
        
MHC conversion shall be adopted, at an annual or special meeting of policyholders at which a quorum is present, upon receiving the affirmative vote of at least two-thirds of the votes cast by eligible members.
            (ii) Members entitled to vote upon the proposed
        
plan may vote in person or by proxy. Any proxies to be solicited from eligible members, together with the related proxy statement and any other soliciting materials, shall be filed with and approved by the Director.
            (iii) The number of votes each eligible member
        
may cast shall be determined by the mutual company's bylaws. If the bylaws are silent, each eligible member may cast one vote.
    (7) Adoption of articles of incorporation. Adoption of articles of incorporation for the mutual holding company, each intermediate holding company, if any, and revised articles of incorporation for the converted company is necessary to implement the plan of MHC conversion. Procedures for adoption or revision of such articles shall be governed by the applicable provisions of this Code or, in the case of an intermediate holding company, the business corporation law of the state in which the intermediate holding company is incorporated. For a Class I mutual company, the members may adopt revised articles of incorporation at the same meeting at which the members approve the plan. For a Class 2 or 3 mutual company, the articles of incorporation may be adopted solely by the board of directors or trustees, as provided in Section 57 of this Code.
    (8) Required provisions in a plan of MHC conversion. The following provisions shall be included in the plan of MHC conversion:
        (a) The plan shall set forth the reasons for the
    
proposed conversion.
        (b) Effect of MHC conversion on existing policies.
            (i) The plan shall provide that all policies of
        
the converted company in force on the effective date of conversion shall continue to remain in force under the terms of those policies, except that any voting or other membership rights of the policyholders provided for under the policies or under this Code and any contingent liability policy provisions of the type described in Section 55 of this Code shall be extinguished on the effective date of the conversion.
            (ii) The plan shall further provide that holders
        
of participating policies in effect on the date of conversion shall continue to have the right to receive dividends as provided in the participating policies, if any.
            (iii) Except for a mutual company's life
        
policies, guaranteed renewable accident and health policies, and non-cancelable accident and health policies, the converted stock company may issue the insured a nonparticipating policy as a substitute for the participating policy upon the renewal date of a participating policy.
            (iv) The plan shall provide that a Class I mutual
        
company's participating life policies in force on the effective date of the conversion shall be operated by the converted company for dividend purposes as a closed block of participating business except that any or all classes of group participating policies may be excluded from the closed block. The plan shall establish one or more segregated accounts for the benefit of the closed block of business and shall allocate to those segregated accounts enough assets of the mutual company so that the assets together with the revenue from the closed block of business are sufficient to support the closed block including, but not limited to, the payment of claims, expenses, taxes, and any dividends that are provided for under the terms of the participating policies with appropriate adjustments in the dividends for experience changes. The plan shall be accompanied by an opinion of a qualified actuary or an appointed actuary who meets the standards set forth in the insurance laws or regulations for the submission of actuarial opinions as to the adequacy of reserves or assets. The opinion shall relate to the adequacy of the assets allocated to the segregated accounts in support of the closed block of business. The actuarial opinion shall be based on methods of analysis deemed appropriate for those purposes by the Actuarial Standards Board. The amount of assets allocated to the segregated accounts of the closed block shall be based upon the mutual company's last annual statement that is updated to the effective date of the conversion. The converted stock company shall keep a separate accounting for the closed block and shall make and include in the annual statement to be filed with the Director each year a separate statement showing the gains, losses, and expenses properly attributable to the closed block. Periodically, upon the Director's approval, those assets allocated to the closed block as provided herein that are in excess of the amount of assets necessary to support the remaining policies in the closed block shall revert to the benefit of the converted company. The Director may waive the requirement for the establishment of a closed block of business if the Director deems it to be in the best interests of the participating policyholders of the mutual company to do so.
        (c) The plan shall set forth the requirements for
    
granting membership interests to future policyholders of the converted company.
        (d) The plan shall include information sufficient to
    
demonstrate that the financial condition of the converted company will not be diminished by the plan of MHC conversion.
        (e) The plan shall include a description of any
    
current proposal to issue shares of an intermediate holding company or the converted company to the public or to other persons who are not direct or indirect subsidiaries of the mutual holding company.
        (f) The plan shall include the identity of the
    
proposed officers and directors of the mutual holding company and each intermediate holding company, if any, together with such other biographical information as the Director may request.
        (g) The plan shall include such other information as
    
the Director may request or may prescribe by rule.
    (9) Effective date of the plan of MHC conversion. A plan shall become effective when the Director has approved the plan, the members have approved the plan and the articles of incorporation of the mutual holding company, each intermediate holding company, if any, and the revised articles of incorporation of the converted company have been adopted and filed with the Director.
    (10) Corporate existence.
        (a) Upon the conversion of a mutual company to a
    
converted company according to the provisions of this Section, the corporate existence of the mutual company shall be continued in the converted company with the original date of incorporation of the mutual company. All the rights, franchises, and interests of the mutual company in and to every type of property, real, personal, and mixed, and things in action thereunto belonging, is deemed transferred to and vested in the converted company without any deed or transfer. Simultaneously, the converted company is deemed to have assumed all the obligations and liabilities of the mutual company.
        (b) The directors and officers of the mutual company,
    
unless otherwise specified in the plan of conversion shall serve as directors and officers of the converted company until new directors and officers of the converted company are duly elected pursuant to the articles of incorporation and bylaws of the converted company.
    (11) Regulation and authority of mutual holding company.
        (a) A mutual holding company shall have the same
    
powers granted to domestic mutual companies and be subject to the same requirements and provisions of Article III and any other provisions of this Code applicable to mutual companies that are not inconsistent with the provisions of this Section, provided however that a mutual holding company shall not have the authority to transact insurance pursuant to Section 39(1).
        (b) Neither the mutual holding company nor any
    
intermediate holding company shall issue or reinsure policies of insurance.
        (c) A mutual holding company may enter into an
    
affiliation agreement or a merger agreement either at the time of conversion, or at some later time with the approval of the Director, with any mutual insurance company authorized to do business in this State or another mutual holding company. Any such merger agreement may authorize members of the mutual insurance company or other mutual holding company to become members of the mutual holding company. Any such affiliation agreement or merger agreement shall be subject to the insurance laws of this State relating to such transactions entered into by a domestic mutual company.
        (d) The assets of the MHC shall be held in trust,
    
under such arrangements and on such terms as the Director may approve, for the benefit of the policyholders of the converted company. Any residual rights of the MHC in such assets or any assets of the MHC determined not to be held in trust shall be subject to a lien in favor of the policyholders of the converted company under such terms as the Director may approve. Upon conversion of the mutual holding company as provided for in subsection (13) of this Section, such assets shall be released from trust in accordance with the plan of conversion approved by the Director.
    (12) Diversion of business to affiliates. Without prior approval of the Director, neither the converted company nor any other person affiliated with or controlling the converted company shall divert business from the converted company to any insurance company affiliate if the purpose or effect would be to significantly reduce the number of members of the mutual holding company.
    (13) Conversion of mutual holding company. A mutual holding company created pursuant to this Section may reorganize by complying with the applicable provisions of Section 59. For purposes of effecting a conversion under that Section, the mutual holding company shall be deemed a "mutual company" and the converted mutual holding company shall be deemed a "converted stock company," as such terms are defined in Section 59.1.
    (14) Conflict of interest. No director, officer, agent, or employee of the mutual company or any other person shall receive any fee, commission, or other valuable consideration, other than his or her usual regular salary and compensation, for in any manner aiding, promoting, or assisting in the conversion except as set forth in the plan of MHC conversion approved by the Director. This provision does not prohibit the payment of reasonable fees and compensation to attorneys, accountants, and actuaries for services performed in the independent practice of their professions, even if the attorney, accountant, or actuary is also a director of the mutual company.
    (15) Costs and expenses. All the costs and expenses connected with a plan of MHC conversion shall be paid for or reimbursed by the mutual company or the converted company.
    (16) Failure to give notice. If the mutual company complies substantially and in good faith with the notice requirements of this Section, the mutual company's failure to give any member or members any required notice does not impair the validity of any action taken under this Section.
    (17) Limitation of actions. Any action challenging the validity of or arising out of acts taken or proposed to be taken under this Section shall be commenced within 30 days after the effective date of the plan of MHC conversion.
(Source: P.A. 90-810, eff. 1-6-99.)

    (215 ILCS 5/60) (from Ch. 73, par. 672)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 60. Procedure when insufficient assets are possessed by company.
    (1) Whenever the Director finds that the admitted assets of a company subject to the provisions of this Article are less than the aggregate of (a) its liabilities and (b) the minimum surplus required to be maintained by Section 43, he must notify the company in writing of the amount of such impairment and require that such impairment must be removed within such period, which shall not be less than 30 nor more than 90 days, as he may designate. Unless otherwise allowed by the Director, the company must discontinue the issuance of new or renewal policies while such impairment exists. If the contracts issued by the company contain a provision for a contingent liability, the Director may order the board of directors or trustees of the company to levy an assessment for the purpose of removing such impairment against each member in accordance with the terms of his policy. If the Director finds that the company will remove the impairment or a part thereof from sources other than an assessment, he may permit a reduction in the amount of the assessment to the extent of the sum so to be obtained. No member is liable for an assessment unless notified of the company's claim therefor within one year after the termination of the policy whether by expiration, cancellation or otherwise. Nothing contained in this paragraph may be construed to limit or restrict the authority of any liquidator, conservator or rehabilitator acting under Article XIII or XIII 1/2 of this Act.
    (2) If policies containing provisions for a contingent liability are outstanding, and the company fails to levy an assessment within 20 days from the date of an order, or if the impairment is not removed within the period specified in the Director's notice, the company shall be deemed insolvent and the Director may cancel the company's certificate of authority and shall proceed against it in accordance with Article XIII.
    (3) If, while the impairment exists, any officer, director, or trustee of the company renews, issues or delivers or causes to be renewed, issued or delivered any policy, contract or certificate of insurance unless otherwise allowed by the Director, and the fact of such impairment is known to the officer, director, or trustee of the company, such officer, director, or trustee shall be guilty of a business offense and may be fined not less than $200 and not more than $5,000 for each offense.
    (4) Nothing in this Section prohibits, while such impairment exists, any such officer, director, trustee, agent or employee from issuing or renewing a policy of insurance when an insured or owner exercises an option granted to him under an existing policy to obtain new, renewed or converted insurance coverage.
(Source: P.A. 82-498.)


 
    (215 ILCS 5/Art. III.5 heading)
ARTICLE III 1/2. ALIEN COMPANIES

    (215 ILCS 5/60a) (from Ch. 73, par. 672a)
    Sec. 60a. Alien companies; Illinois State of entry.
    (1) 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 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 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 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. Alien companies; Illinois trusteed assets.
    (1) 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 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 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 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 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 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 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 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 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 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 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 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 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 Alien Company; definitions. As used in Sections 60e through 60i:
    (1) "Domestication" means the reorganization of the United States branch of 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 alien company.
    (2) "United States branch" means the business unit through which business is transacted within the United States by 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 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 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 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 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 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 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 alien companies. (1) The directors of 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 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 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 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 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 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/Art. IV heading)
ARTICLE IV. RECIPROCALS
(Article scheduled to be repealed on January 1, 2027)

    (215 ILCS 5/61) (from Ch. 73, par. 673)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 61. Scope of Article.
    (1) This Article shall apply to all reciprocals transacting or being organized to transact any of the kinds of business specified in this Article.
    (2) As used in this Article the word "subscriber" shall mean the participant or policyholder. The word "attorney-in-fact" shall mean the representative of the subscribers. The word "reciprocal" shall mean the organization or group of all the subscribers. The word "governmental reciprocal" shall mean a reciprocal in which all subscribers are governmental entities, including, but not limited to, federal, State, territorial, commonwealth, and local governments and agencies, subdivisions, departments, joint ventures, partnerships, and consortia of these governments.
(Source: P.A. 88-364.)

    (215 ILCS 5/62) (from Ch. 73, par. 674)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 62. Authority to exchange contracts. Individuals, partnerships and corporations of this State are hereby authorized to exchange reciprocal or inter-insurance contracts with each other or with individuals, partnerships and corporations of other states and countries, in accordance with the provisions of this Code and not otherwise. All insurance contracts so exchanged shall be executed by an attorney-in-fact duly authorized and acting for the subscribers.
(Source: Laws 1937, p. 696.)

    (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 alien company authorized to transact business in this State.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/64) (from Ch. 73, par. 676)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 64. Principal office. The principal office of the attorney-in-fact of a domestic reciprocal shall be maintained in this State, at such place as may be designated by the subscribers in the power of attorney or other authority under which insurance is to be effected or exchanged.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/65) (from Ch. 73, par. 677)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 65. Authorized kinds of business. A reciprocal may be authorized to exchange contracts covering any or all of the kinds of insurance enumerated in Classes 2 and 3 of Section 4.
(Source: Laws 1951, p. 605.)

    (215 ILCS 5/66) (from Ch. 73, par. 678)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 66. Minimum surplus requirements.
    (1) No reciprocal may after December 31, 1985 receive a certificate of authority from the Director to exchange contracts under this Article in the name of the subscribers until it has complied with the requirements in respect of original surplus applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance it seeks to exchange, as set forth in the following table:
Casualty, Fidelity and Surety
        (a) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), a surplus of at least $2,000,000; more than one clause, a surplus of at least $2,000,000.
Fire and Marine
        (b) Class 2, Clauses (e), (f), (k) or (l) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $1,000,000.
Multiple Line
        (c) Class 2, any or all clauses other than those
    
specified in (b) above, and Class 3, any or all clauses, a surplus of at least $2,000,000.
Glass and Livestock and Domestic Animals
        (d) Class 2, Clause (f) only or (k) only $250,000;
    
provided any reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in any amount exceeding $5,000.
    (2) Every reciprocal subject to this Article issued a certificate of authority on or after June 28, 1965 must have and at all times maintain a minimum surplus in an amount equal to 2/3 of the original surplus required for that particular company at the time it was organized. Any such reciprocal organized prior to June 28, 1965 must have and at all times maintain admitted assets in excess of all liabilities in an amount not less than the minimum amount of advance cash deposits or surplus which was required for that particular reciprocal at the time it was issued a certificate of authority. Any reciprocal which has added any clause or clauses must have and at all times maintain minimum surplus not less than the minimum surplus requirement applicable to the class or classes and clause or clauses of section 4 at the time that the additional clause or clauses are authorized. Any reciprocal organized prior to October 1, 1972 must have and at all times maintain, in addition to the minimum surplus required to be maintained by that particular reciprocal, additional minimum surplus of not less than $300,000.
    (3) Any company organized prior to January 1, 1986 and regulated under this Article, in addition to the minimum surplus which is required by paragraph (2) of this Section must have by December 31, 1986 and at all times maintain until December 31, 1990 additional minimum surplus of $200,000.
    (4) Subsections (2) and (3) shall be applicable until December 31, 1990 for all reciprocals organized prior to January 1, 1986, thereafter, such reciprocals must have and maintain surplus as required by subsections (6) and (7).
    (5) Every reciprocal subject to this Article and organized after December 31, 1985 must have and maintain at all times minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Casualty, Fidelity and Surety
        (a) Class 2, Clauses (a), (b), (c), (d), (g), (h) or
    
(i), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
        (b) Class 2, Clauses (e), (f), (k), (l) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
        (c) Class 2, any or all clauses other than those
    
specified in (b) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
        (d) Class 2, Clause (f) only or (k) only, $150,000;
    
provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (6) Any reciprocal subject to this Article and organized prior to January 1, 1986 must have by December 31, 1990, and thereafter maintain until December 31, 1995, minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Casualty, Fidelity and Surety
        (a) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), a surplus of at least $1,200,000; more than one clause, a surplus of at least $1,200,000.
Fire, Marine and Legal Expense
        (b) Class 2, Clauses (e), (f), (k), (1) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $600,000.
Multiple Line
        (c) Class 2, any or all clauses other than those
    
specified in (b) above, and Class 3, any or all clauses, a surplus of at least $1,200,000.
Glass and Livestock and Domestic Animals
        (d) Class 2, Clause (f) only or (k) only, $100,000;
    
provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.
    (7) Any reciprocal subject to this Article and organized prior to January 1, 1986 must have by December 31, 1995 and thereafter maintain at all times minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:
Casualty, Fidelity and Surety
        (a) Class 2, Clauses (a), (b), (c), (d), (g), (h),
    
(i) or (j), a surplus of at least $1,500,000; more than one clause, a surplus of at least $1,500,000.
Fire, Marine and Legal Expense
        (b) Class 2, Clauses (e), (f), (k), (l) or Class 3,
    
any or all clauses or any combination thereof, a surplus of at least $700,000.
Multiple Line
        (c) Class 2, any or all clauses other than those
    
specified in (b) above, and Class 3, any or all clauses, a surplus of at least $1,500,000.
Glass and Livestock and Domestic Animals
        (d) Class 2, Clause (f) only or (k) only, $150,000;
    
provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in the amount exceeding $5,000.
    (8) The Director shall take action under Section 83 of this Code against any reciprocal which fails to maintain the minimum surplus required by this section. The words "minimum surplus" mean the "surplus as regards policyholders" as it appears on the annual statement of a reciprocal company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners.
(Source: P.A. 85-293.)

    (215 ILCS 5/67) (from Ch. 73, par. 679)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 67. Power of attorney. The power of attorney or other authority of the attorney-in-fact under which contracts of insurance are to be exchanged pursuant to this Article shall set forth
        (a) the address of the principal office of the
    
attorney-in-fact;
        (b) that the attorney-in-fact is authorized to accept
    
service of process on behalf of the reciprocal and to appoint the Director and his successor or successors in office the true and lawful attorney of such reciprocal for the service of process in actions upon contracts exchanged;
        (c) the amount to be deducted from advance deposits
    
to be paid to the attorney-in-fact and the items of expense, in addition to losses, to be paid by the reciprocal;
        (d) a provision for a cash deposit;
        (e) except as provided in Section 75, a provision for
    
a contingent several liability of each subscriber in an amount of not less than one nor more than ten times the cash deposit stated in the contract; and
        (f) such other provisions not inconsistent with law
    
as may be deemed necessary or advisable.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/68) (from Ch. 73, par. 680)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 68. Declaration of organization. The attorney-in-fact of subscribers who desire to form a reciprocal under this Article shall sign and acknowledge, before an officer authorized to take acknowledgments, a declaration of organization in duplicate. When the attorney-in-fact is a corporation, the declaration shall be acknowledged by an officer thereof. The declaration shall set forth
        (a) the name of the attorney-in-fact and the name or
    
designation under which contracts are to be exchanged;
        (b) the location of the principal office of the
    
attorney-in-fact;
        (c) the class or classes of insurance, as provided in
    
Section 65, which it proposes to effect or exchange and the kinds of insurance in each class to be effected or exchanged;
        (d) such other provisions not inconsistent with law
    
which may be deemed by the attorney-in-fact or subscribers to be necessary or advisable.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/69) (from Ch. 73, par. 681)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 69. Documents to be delivered to Director. Upon the execution of a declaration of organization, there shall be delivered to the Director
        (a) duplicate originals of the declaration of
    
organization;
        (b) a copy of the power of attorney of the
    
attorney-in-fact under or by virtue of which such insurance is to be effected or exchanged;
        (c) an instrument authorizing service of process on
    
the Director provided for in Section 77;
        (d) 2 organization bonds, or the cash or securities,
    
provided for in Section 70;
        (e) the form of guaranty fund agreements and of
    
guaranty capital shares, if any, as provided in Section 76 to be issued in connection with solicitation of surplus; and
        (f) the form of escrow agreement for the deposit of
    
cash or securities.
(Source: P.A. 84-502.)

    (215 ILCS 5/69.1) (from Ch. 73, par. 681.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 69.1. Escrow agreements. The company shall designate a bank or trust company with whom it will enter into an escrow agreement, which agreement shall state that the organization surplus shall be placed in escrow and remain so, until an organization examination has been completed. When the exam has been completed the escrow agent is authorized to purchase securities for deposit as required by Section 74 and forward them to the Director. The escrow agent is authorized to release the balance of the escrow funds to the company only upon notification that a Certificate of Authority or similar documentation has been issued by the Director.
(Source: P.A. 84-502.)

    (215 ILCS 5/70) (from Ch. 73, par. 682)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 70. Organization bonds. The attorney-in-fact shall deliver to the Director two bonds in the same penalties and containing the same provisions, so far as applicable, as the bonds required for the organization of a stock company by Section 16 for the use and benefit of the State of Illinois, subscribers and creditors, or in lieu of delivering such bonds, the attorney-in-fact may deposit cash or securities of the same kind and amount and on the same terms and conditions, so far as applicable, as provided by said Section.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/71) (from Ch. 73, par. 683)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 71. Approval of documents. The documents and papers so delivered to the Director may be approved or disapproved by the Director, and the attorney-in-fact is entitled to a hearing, in the same manner as provided in Section 18 in the case of documents delivered for approval in connection with the organization of stock companies. If the documents and papers so delivered are approved by the Director he must file in his office the power of attorney, forms of policies and applications, bonds or securities and one of the duplicate originals of the declaration of organization, and endorse upon the other duplicate original his approval and the month, day and year of approval and deliver it to the attorney-in-fact. Upon the date of approval of the declaration of organization by the Director, the reciprocal is deemed to be organized.
(Source: P.A. 77-747.)

    (215 ILCS 5/72) (from Ch. 73, par. 684)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 72. Authority to solicit subscriptions to surplus. Upon the approval of the declaration of organization by the Director, he shall issue to the attorney-in-fact a permit, which shall expire at the end of two years from its date, authorizing him to solicit subscriptions to surplus in accordance with this Code and to do such other acts as may be necessary and proper in order to complete its organization and to entitle it to receive a certificate of authority to transact an insurance business.
(Source: Laws 1951, p. 1565.)

    (215 ILCS 5/73) (from Ch. 73, par. 685)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 73. Issuance of certificate of authority. When the Director has been notified that the required surplus has been fully collected, he shall conduct an examination of the reciprocal. If he finds that the organization is complete, that all of the requirements of this Code have been met, that the required surplus has been fully collected, and that the deposits provided for by Section 74 have been met, he shall issue to the attorney-in-fact a certificate of authority to transact the kind or kinds of business specified therein. No attorney-in-fact shall transact any business of insurance until he or it has received a certificate of authority as herein prescribed nor any business of insurance not specified in such certificate of authority.
(Source: Laws 1951, p. 1565.)

    (215 ILCS 5/74) (from Ch. 73, par. 686)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 74. Deposit. A domestic reciprocal subject to the provisions of this Article shall make and maintain with the Director, for the protection of all creditors, policyholders and policy obligations of the reciprocal, a deposit of securities that are authorized investments under Section 126.11A(1), 126.11A(2), 126.24A(1), or 126.24A(2), having a fair market value equal to the surplus required to be maintained under Section 66. The Director may release the required deposit of securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the reciprocal company that it has no outstanding creditors, policyholders, or policy obligations in effect and no plans to engage in the business of insurance; (ii) receipt of a lawful resolution of the governing body of the reciprocal's attorney-in-fact effecting the surrender of its certificate of authority and declaration of organization for administrative dissolution by the Director; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the reciprocal's attorney-in-fact, together with a plan of dissolution approved by the Director.
(Source: P.A. 92-75, eff. 7-12-01.)

    (215 ILCS 5/75) (from Ch. 73, par. 687)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 75. Contingent liability policy provisions.
    (1) Except as provided in subsection (2) any contract of insurance exchanged under this Article shall provide for a cash deposit and a contingent several liability of the subscriber in an amount not less than one nor more than 10 times the amount of the cash deposit stated in the contract.
    (2) In cases where contingent liability of subscribers is provided for, the provision therefor must be plainly stated in each policy with prominence equal to the indemnifying clause. In addition, each assessable policy, other than an accident and health policy, issued or delivered in this State after September 1, 1967 must have the following statement printed in bold face type on the face of the policy: "This is an assessable policy". If a reciprocal has a surplus equal to the minimum capital and surplus required in Section 13 for a stock company transacting the same kind or kinds of business, such reciprocal may issue policies without contingent liability. Any such reciprocal which has issued policies without contingent liability after the acquisition of such surplus may continue to do so as long as it maintains a surplus equal to the capital and minimum surplus of a stock company doing the same kind or kinds of business, but no reciprocal may issue such policies except during such time as it continues to have such a surplus, provided, however, that any reciprocal which is, immediately prior to July 1, 1965, issuing policies without contingent liability, may continue to do so as long as it maintains a surplus equal in amount to that which would have been required immediately prior to July 1, 1965. Any reciprocal with a surplus equal to the minimum capital and surplus required in Section 13 for a stock company transacting the same kind or kinds of business may issue policies without the limitations contained in subsection (1). After July 18, 1967, no company subject to this Article may make, levy or impose upon its subscribers any assessment based on their contingent liability unless ordered by the Director pursuant to Section 83 of this Code.
(Source: P.A. 83-333.)

    (215 ILCS 5/76) (from Ch. 73, par. 688)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 76. Guaranty fund or guaranty capital. Any domestic reciprocal may provide for a surplus by accumulating a guaranty fund or guaranty capital in the same manner and upon the same terms and conditions as is provided in Section 56 for mutual companies.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/77) (from Ch. 73, par. 689)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 77. Director as attorney - Service of process.
    (1) The attorney-in-fact of every reciprocal transacting business in this State shall file with the Director a duly executed instrument whereby the attorney-in-fact shall appoint and constitute the Director and his successor or successors in office, the true and lawful attorney of such reciprocal upon whom all lawful process in any action or legal proceeding against such reciprocal may be served and shall agree that any lawful process against such reciprocal which may be served upon said attorney 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 the reciprocal in the State shall remain outstanding.
    (2) Any reciprocal transacting business in this State may sue or be sued in the name or designation under which its contracts are authorized to be exchanged. Any such suit may be brought in the county in which the cause of action arises or in which the claimant resides, or in the county in which the attorney-in-fact has his principal office. Service may be had upon such reciprocal by service upon the last appointed attorney-in-fact or by service upon the Director. Service of process on an individual subscriber shall not constitute service upon the reciprocal. When such process is served upon the Director, duplicate copies of such process shall be delivered to him and he shall immediately forward one copy of such process to the last appointed attorney-in-fact, by certified or registered mail, postage prepaid, giving the date and hour of such service.
(Source: P.A. 83-598.)

    (215 ILCS 5/78) (from Ch. 73, par. 690)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 78. Governmental subscribers accounts; dividends; other returns.
    (a) The attorney-in-fact of a governmental reciprocal, in addition to the books of account of the reciprocal, shall keep and maintain from and after the effective date of this amendatory Act of 1993, a separate account for each individual subscriber, setting forth therein the date or periods of the subscriber's participation in the reciprocal, the subscriber's deposits, the savings returned to the subscriber and such other information as may be necessary for the determination of the subscriber's proportionate share, if any, of the surplus funds of the reciprocal in case of liquidation. The attorney-in-fact shall not be required to file a list of the subscribers with the Department.
    (b) The board of directors of the attorney-in-fact of any governmental reciprocal may in its discretion and subject to the prior approval of the advisory committee of the governmental reciprocal and the Director of Insurance:
        (1) declare dividends to its subscribers in the same
    
manner and upon and subject to the same terms and conditions as are provided in Section 54 for mutual companies, except that the reference to "articles of incorporation" in Section 54 shall mean the declaration of organization or the power of attorney or other authority of the attorney-in-fact under which contracts of insurance are to be exchanged pursuant to this article as applied to governmental reciprocals; and
        (2) return guaranty fund or guaranty capital
    
contributions in the same manner and upon and subject to the same terms and conditions as are provided in Section 56 for mutual companies and upon compliance with the provisions of the agreement to subscribe (the agreement to make the contributions), if any.
    No payment or return of surplus (other than return of guaranty fund or of guaranty capital) shall be made except in accordance with this Section and sound business judgment.
(Source: P.A. 90-817, eff. 3-23-99.)

    (215 ILCS 5/79) (from Ch. 73, par. 691)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 79. Reserves. All reciprocals subject to this Article shall maintain reserves calculated in the same manner and upon the same basis as stock and mutual companies doing the same kind or kinds of business are required to maintain.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/80) (from Ch. 73, par. 692)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 80. Amendments to power of attorney and other documents.
    (1) The attorney-in-fact of any reciprocal subject to the provisions of this article may amend the declaration of organization or power of attorney in any respect not in violation of law, but may not amend such documents to insert any provision prohibited, or to delete any provision required, in original declarations of organization or powers of attorney of a similar domestic reciprocal organized under this Code.
    (2) Amendments of the declarations of organization or powers of attorney, shall be made in the following manner:
        (a) Amendment of declaration of organization. The
    
attorney-in-fact shall sign and acknowledge, before an officer authorized to take acknowledgments, an amendment to the declaration of organization, in duplicate. When the attorney-in-fact is a corporation, such amendment shall be acknowledged by an officer thereof. The attorney-in-fact shall deliver such duplicate originals of the amendment to the Director. Such amendment may be approved or disapproved by the Director in the same manner as the original declaration of organization. If approved, the Director shall place on file in his office one of the duplicate originals of the amendment and shall endorse upon the other duplicate original his approval thereof and the month, day and year of such approval, and deliver it to the attorney-in-fact. The amendment shall be effective as of the date of the approval thereof by the Director.
        (b) Amendment of power of attorney. The
    
attorney-in-fact shall deliver to the Director a copy of any form of power of attorney under or by virtue of which it is proposed that insurance is to be effected or exchanged, which varies from the form of any power of attorney previously filed with the Director by such attorney-in-fact, before the same shall be used by any reciprocal. Such power of attorney may be approved or disapproved by the Director in the same manner as the original power of attorney. If approved, the Director shall place on file in his office a duplicate original of the power of attorney and shall endorse upon the other duplicate original his approval thereof and the month, day and year of such approval, and deliver it to the attorney-in-fact. The amendment shall be effective as of the date of approval thereof by the Director.
(Source: P.A. 96-328, eff. 8-11-09.)

    (215 ILCS 5/81) (from Ch. 73, par. 693)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 81. Governmental agencies and corporations may be subscribers. 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 subscriber of any reciprocal subject to the provisions of this Article. Any officer, representative, trustee, receiver, or legal representative of any such subscriber shall be recognized as acting for or on its behalf for the purpose of such contract but shall not be personally liable upon such contract by reason of acting in such representative capacity.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/82) (from Ch. 73, par. 694)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 82. Reinsurance. Any domestic reciprocal may enter into reinsurance contracts subject to the provisions of Article XI.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/83) (from Ch. 73, par. 695)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 83. Procedure when insufficient assets are possessed by reciprocal.
    (1) Whenever the Director finds that the admitted assets in excess of all liabilities of a reciprocal are less than the amount required by subsection (2) of Section 66, the Director shall proceed in the manner set forth as provided in Section 60 applicable to mutual companies and the reciprocal, its attorney-in-fact or any officers thereof, shall be subject to the same requirements and penalties in such Section provided. Nothing contained in this paragraph shall be construed to limit or restrict the authority of any liquidator, conservator or rehabilitator acting under the provisions of Article XIII or XIII 1/2 of this Act.
    (2) The attorney-in-fact of any such reciprocal may repair such deficiency within the period designated by the Director, by advancing the amount or any part thereof, at an interest rate not exceeding 7% per annum. The funds so advanced shall not be treated as a liability of such reciprocal and such advance including interest thereon shall be repaid only out of the surplus funds of the reciprocal in excess of the amount required by Section 66.
(Source: Laws 1965, p. 2630.)

    (215 ILCS 5/84) (from Ch. 73, par. 696)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 84. Penalties. No person shall act as attorney-in-fact for a reciprocal except in accordance with the provisions of this Article and any person, who violates any of the provisions of this Section or who knowingly participates in or abets such violation shall be guilty of a business offense and shall be required to pay a penalty of not more than one thousand dollars, for each offense, 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 5/85) (from Ch. 73, par. 697)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 85. Application of other Code provisions. Unless otherwise provided in this Article every reciprocal shall be subject to other applicable provisions of this Code.
(Source: Laws 1937, p. 696.)


 
    (215 ILCS 5/Art. V heading)
ARTICLE V. LLOYDS
(Article scheduled to be repealed on January 1, 2027)

    (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.
    "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 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 alien Lloyds shall not be subject to Section 144 of this Code.
    (4) All foreign and alien entities and individuals transacting an insurance business as domestic, foreign, or 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 alien Lloyds. Upon notification, the Secretary of State may require submission of additional information to determine whether a foreign or alien individual or entity is transacting business solely as a domestic, foreign, or 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 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 alien company authorized to transact business in this State.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/89) (from Ch. 73, par. 701)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 89. Principal office of attorney-in-fact. The principal office of the attorney-in-fact of a domestic Lloyds shall be maintained in this State.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/90) (from Ch. 73, par. 702)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 90. Kinds of business permitted. Except as otherwise provided in this Article, a Lloyds may be authorized to transact any or all of the kind or kinds of business enumerated in Classes 2 and 3 of Section 4.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/91) (from Ch. 73, par. 703)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 91. Declaration of domestic Lloyds. The attorney-in-fact for underwriters who desire to form a domestic Lloyds under this Article shall sign and acknowledge before an officer authorized to take acknowledgments, a declaration in duplicate. When the attorney-in-fact is a corporation the declaration shall be acknowledged by an officer of such corporation. The declaration shall set forth
        (a) the name of the attorney-in-fact, and the name or
    
designation under which contracts are to be effected;
        (b) the location of the office of the
    
attorney-in-fact;
        (c) the names and addresses, including streets and
    
numbers, if any, of the underwriters;
        (d) the class or classes of insurance which such
    
Lloyds proposes to transact and the kinds of insurance in each class which it proposes to write;
        (e) such other provisions not inconsistent with law
    
which may be deemed by the attorney-in-fact or the underwriters to be necessary or advisable.
(Source: P.A. 88-535.)

    (215 ILCS 5/92) (from Ch. 73, par. 704)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 92. Documents to be delivered to director. Upon the execution of the declaration by the attorney-in-fact for a domestic Lloyds, there shall be delivered to the Director
        (a) duplicate originals of the declaration;
        (b) a copy of the power of attorney of the
    
attorney-in-fact;
        (c) an instrument authorizing the service of process
    
on the Director provided for in Section 105;
        (d) 2 organization bonds or the cash or securities
    
provided for in Section 93.
(Source: Laws 1965, p. 422.)

    (215 ILCS 5/93) (from Ch. 73, par. 705)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 93. Bonds. The attorney-in-fact for any domestic Lloyds in the process of organization shall deliver to the Director two bonds in the same penalties and containing the same provisions so far as applicable as the bonds required for the organization of a stock company by Section 16, for the use and benefit of the State of Illinois, the underwriters and creditors, or in lieu of delivering such bonds the attorney-in-fact may deposit cash or securities of the same kind or amount and on the same terms and conditions so far as applicable as provided by said Section.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/94) (from Ch. 73, par. 706)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 94. Approval of documents. The documents and papers so delivered to the Director may be approved or disapproved by the Director, and the attorney-in-fact or underwriters shall be entitled to a hearing in the same manner as provided in Section 18 in the case of documents delivered for approval in connection with the organization of stock companies. If the documents and papers so delivered are approved by the Director, the Director shall, thereupon, place on file in his office all of such documents except one of the duplicate originals of the declaration, and shall endorse upon such duplicate original his approval thereof and the month, day and year of such approval, and deliver it to the attorney-in-fact. Upon the date of approval of said declaration by the Director, the domestic Lloyds shall be deemed to be in existence.
(Source: Laws 1959, p. 627.)

    (215 ILCS 5/95) (from Ch. 73, par. 707)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 95. Authority to solicit underwriters. Upon the approval of the declaration by the Director, he shall issue to the attorney-in-fact a permit which shall expire at the end of one year from its date, authorizing the attorney-in-fact to solicit deposits of underwriters in accordance with this Code and in accordance with the power of attorney filed with the Director, and to do such other acts as may be necessary or proper in order to complete the organization of such Lloyds and to entitle it to receive a certificate of authority to transact an insurance business.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/96) (from Ch. 73, par. 708)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 96. Issuance of certificate of authority. When the Director has been notified that the underwriters have deposited a sum not less than the minimum admitted assets required by Section 99, he shall conduct an examination of such Lloyds. If he finds that the organization has been completed and that all other requirements of this Code have been met, he shall issue to such Lloyds a certificate of authority to transact the kind or kinds of business specified in the declaration.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/97) (from Ch. 73, par. 709)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 97. Deposit required of underwriters. Each underwriter of a domestic Lloyds shall make and maintain a deposit of cash or securities, or both, in trust with a responsible bank or trust company in this State to indemnify policyholders against loss. Securities so deposited shall be of a character conformable to the requirements of Article VIII applicable to companies transacting the same kind or kinds of business. The attorney-in-fact shall file with the Director an authenticated copy of each trust agreement under which any such deposit is made. All such deposits shall be considered as admitted assets of such Lloyds. No change or withdrawal of cash or securities deposited in trust shall be made without the approval of the Director.
(Source: Laws 1959, p. 1431.)

    (215 ILCS 5/98) (from Ch. 73, par. 710)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 98. Verified statement. Whenever the Director shall so require, the attorney-in-fact of a domestic Lloyds shall file with the Director a verified statement setting forth
        (a) the names and addresses of all underwriters; and
        (b) a description of the cash and securities
    
deposited in trust by each underwriter.
(Source: P.A. 90-794, eff. 8-14-98.)

    (215 ILCS 5/99) (from Ch. 73, par. 711)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 99. Minimum admitted assets required of domestic Lloyds. Each domestic Lloyds shall at all times keep and maintain in this State admitted assets, including the deposits of underwriters required by section 97, exceeding all outstanding claims and other liabilities plus the unearned premiums (less reinsurance premiums) on the policies in force, by not less than $900,000 if such Lloyds is writing all or any kinds of insurance enumerated in Class 2 of section 4, by not less than $600,000 if such Lloyds is writing all or any kinds of insurance enumerated in Class 3 of section 4 and by not less than $1,500,000 if such Lloyds is writing the kinds of insurance enumerated in both Class 2 and Class 3 of section 4, provided however, that any such Lloyds organized prior to the effective date of this amendatory Act of 1965 shall have and at all times maintain admitted assets in excess of all liabilities in the amount which was required for that particular Lloyds at the time it was issued a certificate of authority.
(Source: Laws 1965, p. 971.)

    (215 ILCS 5/100) (from Ch. 73, par. 712)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 100. Minimum available assets required of domestic Lloyds. The aggregate of the amounts on deposit of all underwriters and all other admitted assets of each domestic Lloyds available for the payment of losses shall at all times be at least five times the amount to be assumed by such Lloyds, net not including reinsurance in licensed insurers, upon a single risk cumulative for each kind of insurance.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/101) (from Ch. 73, par. 713)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 101. Restrictions upon domestic Lloyds.
    (1) A domestic Lloyds shall not
        (a) change its name or title without first obtaining
    
the written approval of the Director; nor
        (b) establish branches under other or different names
    
or titles; nor
        (c) amend or change its declaration or power of
    
attorney without the approval of the Director and any amendment thereto or change therein shall be set forth in an amended verified declaration or power of attorney filed with the Director.
    (2) A domestic Lloyds shall
        (a) maintain the assets required by this Article
    
either in cash or in investments permitted by this Code;
        (b) maintain in this State the principal office of
    
its attorney-in-fact for the transaction of business therein, and shall notify the Director of any change in the location of the principal office of its attorney-in-fact;
        (c) notify the Director of any change in
    
underwriters; and
        (d) notify the Director of any change of
    
attorney-in-fact by filing with the Director an instrument signed by the underwriters of such Lloyds revoking the previous appointment of any attorney-in-fact and designating and appointing a substitute attorney-in-fact.
    (3) All notices required by subsections (1) and (2) except the notice prescribed by clause (d) of subsection (2) shall be in writing and shall be verified by the attorney-in-fact if an individual or by an officer of the attorney-in-fact if a corporation.
    (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 in this Article with regard to underwriters. 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 also be the attorney-in-fact for such additional underwriters.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/102) (from Ch. 73, par. 714)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 102. Restrictions upon foreign Lloyds.
    (1) Each foreign Lloyds authorized to transact business in this State shall
        (a) maintain cash and securities, including the
    
deposits of its underwriters, 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 admitted assets required by this Article for a domestic Lloyds doing the same kind or kinds of business.
        (b) 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 are held;
        (c) notify the Director forthwith of any amendment to
    
its power of attorney, deposit agreement or other documents underlying its organization, by filing with the Director an authenticated copy of such document as amended;
        (d) 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 foreign 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 of such foreign Lloyds at the time of filing the annual statement, or more often if required by the Director, a statement verified by the appropriate official of such Lloyds, 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.
(Source: P.A. 90-794, eff. 8-14-98.)

    (215 ILCS 5/103) (from Ch. 73, par. 715)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 103. Alien Lloyds.
    (1) Each 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) 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 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 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 5/106) (from Ch. 73, par. 718)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 106. Penalties. It shall be unlawful for any person to act as an underwriter of or attorney-in-fact for a Lloyds except in accordance with the provisions of this Article, and any person violating any of the provisions of this section shall be guilty of a business offense and shall be required to pay a penalty of not more than one thousand dollars, for each offense, 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 5/107) (from Ch. 73, par. 719)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 107. Application of other Code provisions. Unless otherwise provided in this Article, every Lloyds shall be subject to other applicable provisions of this Code.
(Source: Laws 1937, p. 696.)


 
    (215 ILCS 5/Art. V.5 heading)
ARTICLE V 1/2. INSURANCE EXCHANGE
(Repealed by P.A. 98-969, eff. 1-1-15)


 
    (215 ILCS 5/Art. V.75 heading)
ARTICLE V 3/4. GROUP WORKERS' COMPENSATION
POOLS; POOLING; INSOLVENCY FUND
(Source: P.A. 104-417, eff. 8-15-25.)

    (215 ILCS 5/107a.01)
    Sec. 107a.01. Short title. This Article may be cited as the Workers' Compensation Pool Law.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.02)
    Sec. 107a.02. Scope. This Article applies to all qualified group workers' compensation pools.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.03)
    Sec. 107a.03. Purpose. The purpose of this Article is to permit 2 or more employers with homogeneous risk characteristics or that are members of a bona fide professional, commercial, industrial, or trade association, with homogenous risk characteristics to pool their workers' compensation and employer's liability exposures under this Article.
    The State of Illinois, a unit of local government or school district, or association or instrumentality thereof, or an intergovernmental risk management association, self-insurance pool or self-administered health and accident cooperative or pool shall not be deemed an "employer" or "pool" for the purpose of this Article.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.04)
    Sec. 107a.04. Organization under the Illinois Insurance Code.
    (a) After December 31, 2000, group workers' compensation pools shall for the purpose of this Article, and this Article only, be considered as though they were assessable domestic mutual insurance companies and subject to the following:
        (1) Article XII 1/2, Article XIII, Article XIII 1/2,
    
Article XXIV; and
        (2) Sections 126.2, 126.4, 126.7, 132, 132.1 through
    
132.7, 133, 134, 137, 139, 140, 141.1, 141.2, 142, 143, 143c, 147, 148, 149, 154.5, 154.6, 154.7, 154.8, 155.01, 155.04, 173.1, 173.2, 173.3, 173.4, 173.5, 174, 174.1, 175, 176, 178, 179b, 378, 379.1, 408, 408.3, 449, 456, 457, and 458, subsections A, B, C, and E of Section 126.5, subsection A of Section 126.6, and subsections (1) and (7) of Section 412 of this Code.
    (b) If there is a conflict between any Section of this Article and any other Section of this Code, then the provisions of this Article shall apply.
    (c) No other provision of this Code shall be applicable to any qualified workers' compensation group workers' compensation pool except as provided in this Article.
    (d) A certificate of authority that is in effect on the effective date of this amendatory Act of the 91st General Assembly and that was issued pursuant to Section 4a of the Workers' Compensation Act or Section 4a of the Workers' Occupational Diseases Act to a group self-insurer shall remain in effect under this Article. Such group self-insurer shall then be deemed to be a qualified group workers' compensation pool and shall be subject to this Article.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.05)
    Sec. 107a.05. Definitions and interchangeable terms.
    (a) Unless otherwise provided, the following definitions shall apply:
    "Authorized insurer" means an insurer licensed in this State to transact business as described in Clauses (c) and (d) of Class 2 of Section 4 of this Code.
    "Calendar Quarter" means the 3-month periods ending March 31, June 30, September 30, and December 31.
    "Director" means the Director of Insurance.
    "Engaged actively in the business" means a bona fide business concern having conducted commerce, trade, or industry in this State for a specified period of time. Any and all records relating to this requirement shall be open to inspection by the Director or his designee during normal business hours.
    "Gross annual payroll" means payroll for the preceding fiscal year.
    "Independent actuarial opinion" means an opinion expressed by a member of the American Academy of Actuaries or Casualty Actuarial Society.
    "Independent CPA" means an independent certified public accountant or independent certified public accounting firm in good standing and licensed to practice by the Department of Professional Regulation.
    "Pool" means a qualified group workers' compensation pool as authorized by this Article.
    "Qualified group workers' compensation pool" means a group workers' compensation pool that has received a certificate of authority pursuant to this Article.
    (b) For purposes of incorporating the provisions of this Code designated in paragraphs (1) and (2) of subsection (a) of Section 107a.04 into this Article, the following terms shall be interchangeable:
    "Contribution" shall be considered premium.
    "Pooling agreement" shall be considered a policy of insurance.
    "Trustees of a group workers' compensation pool" shall be considered as though they were directors of a domestic mutual insurance company.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.06)
    Sec. 107a.06. Pool administration.
    (a) An application for Certificate of Authority to establish a pool must include the documentation and information regarding its administrator, pooling agreement, plan of operation, and membership required by this Section.
    (b) Administrators must disclose all of the following:
        (1) Biography of the risk manager on forms prescribed
    
by the Director.
        (2) If a corporation, biographies of all officers and
    
directors.
        (3) The size of staff and other information, such as
    
the kinds of staff positions, location of administrative offices and the nature of any electronic data processing equipment, if any, available for servicing the pool, to demonstrate that the administrator has the resources to administer the program disclosed pursuant to subsection (d).
        (4) The most recent financial statement of the
    
administrator. If a publicly held company, a copy of the last 10-K filed with the Securities and Exchange Commission.
        (5) The compensation contract of the administrator.
        (6) The bylaws of the pool and articles of
    
incorporation, if any.
        (7) Any agreement that subcontracts any of the
    
administrator's duties or responsibilities.
    (c) A pooling agreement must contain all of the following:
        (1) A description of the services to be provided by
    
the administrator.
        (2) The manner in which costs are to be apportioned
    
by the administrator.
        (3) The initial premium deposit.
        (4) The assessment provision.
        (5) The termination provisions and minimum term of
    
membership, which minimum term of membership shall not be less than one year.
        (6) The duration of liability for additional
    
assessments following termination of membership, which shall be for a period of not less than 3 years.
        (7) The prerequisites for membership.
        (8) A provision stating that a claim shall be paid by
    
the pool, regardless of the size of the claim, and that the pool shall be reimbursed by the employer for any amounts required to be paid by the employer under the agreement.
        (9) A provision stating that the terms of termination
    
after the first year of pool membership shall be dictated by the pooling agreement.
        (10) If a pooling agreement requires a member to
    
submit written notice in order for the member to withdraw from a qualified pool, then the period in which the member must provide the written notice cannot be greater than 90 days.
    (d) Plans of operation must disclose all of the following:
        (1) A listing of initial members.
        (2) The aggregate loss history of initial members for
    
each of the last 3 years.
        (3) The amount of the net retention of the pool and a
    
list of reinsurers.
        (4) The names of all entities that will provide
    
services for the pool and copies of proposed contracts in connection those services.
        (5) The safety and loss control programs to be
    
provided or required.
    (e) The application must contain information about initial members specified on forms prescribed by the Director.
    (f) The application must contain the combined loss experience for the group for the last 3 years and any other financial data required by the Director.
    (g) A pool administrator's original books and records relating to the operations of the pool shall at all times be located within the State of Illinois.
    (h) Any change of the pooling agreement, bylaws, plan of operation, reinsurance agreements, or membership shall be delivered to the Director within 30 days after the amendment or change.
    (i) A pool trustee must be an employee, officer, director, or owner of a pool member.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.07)
    Sec. 107a.07. Standards for issuing and maintaining pool certificates of authority.
    (a) The Department shall consider the following in evaluating the financial strength of the pool:
        (1) The number of employees covered by the pool.
        (2) The particular industries in which the
    
participants are engaged.
        (3) The combined net worth of pool participants.
        (4) Any excess insurance purchased from authorized
    
insurers.
        (5) The gross annual payroll of members, which must
    
be at least $10,000,000 for active pools not in runoff.
    (b) The pool administrator must either contract with a licensed service company or have sufficient resources, such as those set forth in item (3) of subsection (b) of Section 107a.06, to administer the proposed pool.
    (c) The Department must determine whether the pool can ensure that individual pool members are in compliance with Section 107a.08.
(Source: P.A. 96-965, eff. 7-2-10.)

    (215 ILCS 5/107a.08)
    Sec. 107a.08. Provisions applicable to members of a group workers' compensation pool.
    (a) All members of a group workers' compensation pool must have homogeneous risk characteristics as provided in Section 107a.03.
    (b) In determining whether members exhibit homogeneous risk characteristics, the Director shall consider any or all of the following characteristics:
        (1) The loss frequency inherent in the occupational
    
framework of group members.
        (2) The loss severity inherent in the occupational
    
framework of group members.
        (3) The occupational disease potential inherent in
    
the occupational framework of group members.
        (4) The occupational tasks of member employees.
        (5) Any other relevant fact the group members present
    
to the Director that has reference to the classification of similar risks (e.g. SIC codes).
    (c) Eligibility as a pool participant shall be based upon having a minimum of:
        (1) 20 employees and $250,000 gross annual payroll; or
        (2) 10 employees and $125,000 gross annual payroll
    
for participants who have engaged actively in business for a minimum of 3 years; or
        (3) 5 employees and $62,500 gross annual payroll for
    
participants who have actively engaged in business for a minimum of 5 years.
    (d) Exceptions to the minimum eligibility requirements of this Section may be allowed by any pool whenever the following conditions are met:
        (1) the participant has been actively engaged in
    
business for a minimum period of 5 consecutive years in Illinois; and
        (2) the participant agrees to make all of its
    
financial records available to the Director for reasonable inspection during the period of membership; and
        (3) the pool administrator certifies to the Director
    
that he examined the financial records of the pool participant prior to the participant's admission to the pool and found the participant to be solvent and financially stable.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.09)
    Sec. 107a.09. Service companies for group workers' compensation pools.
    (a) No association, corporation, partnership, sole proprietorship, trust, or other business entity shall provide services in the design, establishment, or administration of a group workers' compensation pool unless it is licensed to do so by the Department. An applicant for a license shall state in writing the type of activities it seeks authorization to engage in and the type of services it seeks authorization to provide. The license shall be granted only when the Director is satisfied that the entity possesses the necessary organization, background, character, expertise, and financial integrity to supply the services sought to be offered. The Department may issue a license subject to restrictions or limitations, including restrictions or limitations on the type of services that may be supplied or the activities in which the entity may engage. A license issued under this Section shall be valid for 2 years.
    (b) To assure that administrators are financially solvent, that pools are administered in a fair and capable fashion, and that administrators are able to process claims and pay benefits in a prompt, fair, and equitable manner, entities licensed to engage in those activities under this Section are subject to supervision and examination by the Department.
    (c) The Department may adopt rules for the purposes of this Article. The rules shall (i) establish reporting requirements for administrators for group workers' compensation pools, including experience reporting requirements consistent with those established under this Code for insurers; (ii) establish bonding requirements or other provisions assuring the financial integrity of entities administering group self-insurance; and (iii) establish other reasonable requirements to further the purposes of this Article.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.10)
    Sec. 107a.10. Bond requirements.
    (a) An administrator shall obtain and maintain in force fidelity bonds on employees, officers, or positions in an amount not less than the amount set forth in the column "Minimum Amount of Bond", based on the amount of assets administered on behalf of pools by the administrator (as determined from year to year) stated in the annual statement of the pools as filed with the Department. All such bonds shall be written with at least a one-year discovery period and, if written with less than a 3-year discovery period, shall contain a provision that no cancellation or termination of the bond, whether by or at the request of the insured or by the underwriter, shall take effect before the expiration of 90 days after written notice of the cancellation or termination has been filed with the Department unless an earlier date of cancellation or termination is approved by the Department.
    (b) The bonds shall include all employees, officers, or positions for the following perils, which may be covered under separate policies:
        (1) dishonesty of employees and officers;
        (2) robbery, burglary, larceny, theft, false
    
pretense, hold-up, misplacement, mysterious disappearance, and damage or destruction while property is in any bank, any recognized place of safe deposit, or in transit; and
        (3) forgery or alteration.
    (c) The bond shall be written by an insurer licensed to transact business in the State of Illinois.
    (d) Schedule of assets in relationship to amount of bond:
TOTAL ASSETSMINIMUM AMOUNT OF BOND
$500,000 or less..........$20,000 plus 6% of total
assets
more than $ 500,000 and
not more than $1,000,000.....$50,000 plus 4% of assets
over $500,000
more than $1,000,000 and
not more than $3,000,000.....$70,000 plus 3% of assets
over $1,000,000
more than $3,000,000 and
not more than $5,000,000.....$130,000 plus 2% of assets
over $3,000,000
more than $5,000,000 and
not more than $10,000,000.....$170,000 plus 1.5% of assets
over $5,000,000
more than $10,000,000.......$245,000 plus 0.75% of assets
more than $10,000,000
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.11)
    Sec. 107a.11. Admissible assets.
    (a) Admitted assets include amounts permitted under Section 107a.12 as modified by only the following:
        (1) Direct obligations of the United States of
    
America for the payment of money or obligations for the payment of money that are guaranteed as to the payment of principal and interest by the United States of America.
        (2) Direct obligations for the payment of money
    
issued by an agency or instrumentality of the United States of America or obligations for the payment of money that are guaranteed as to payment of principal and interest by an agency or instrumentality of the United States of America.
        (3) Bonds or securities that are issued by any state
    
of the United States and that are secured by the full faith and credit of that state.
        (4) Certificates of deposit, time deposits, or demand
    
deposits in a bank in the State of Illinois that has deposits insured by the Federal Deposit Insurance Corporation.
        (5) Saving certificates issued by any savings and
    
loan association in the State of Illinois that has deposits insured by the Federal Deposit Insurance Corporation.
        (6) Direct, unconditional obligations of a solvent
    
business corporation for the payment of money on the following conditions:
            (A) the corporation is incorporated under the
        
laws of the United States of America or any state of the United States of America;
            (B) the corporation has a tangible net worth of
        
not less than $500,000 and the obligations have been awarded a "1" or "2" rating by the Securities Valuation Office of the National Association of Insurance Commissioners;
            (C) the corporation is not affiliated with any
        
member of the pool;
            (D) no such obligation of the corporation has
        
been in default as to principal or interest during the 5 years preceding the date of investment, however, the corporation need not have had obligations outstanding during that period and need not have been in existence for that period, and obligations acquired under this Section may be newly issued;
            (E) a pool may not invest more than 33 1/3% of
        
its assets under this item (6); and
            (F) a pool may not invest under this Section more
        
than 5% of its assets in the obligations of any one corporation.
        (7) Obligations of any political subdivision of any
    
state of the United States of America for the payment of money on the following conditions:
            (A) the obligations are payable from ad valorem
        
taxes;
            (B) the political subdivision is not in default
        
in the payment of principal or interest on any of its direct, general obligations;
            (C) no investment may be made under this Section
        
in obligations that are secured only by special assessments for local improvements;
            (D) a pool may not invest under this Section more
        
than 4% of its assets in direct, general obligations issued by any one political subdivision; and
            (E) a pool may not invest more than 50% of its
        
assets under this item (7).
        (8) Mutual funds:
            (A) government money market mutual funds that
        
meet the conditions of paragraphs (c)(2), (c)(3), and (c)(4) of 17 C.F.R. 270.2a-7, revised as of April 1, 1992, that have been rated in one of the 2 highest rating categories by an independent rating agency recognized by the National Association of Insurance Commissioners, and that invest in obligations issued, guaranteed, or insured by the United States or Canada or any agency or instrumentality of the United States or Canada.
            (B) fixed income bond mutual funds that meet the
        
conditions of paragraphs (c)(2), (c)(3), and (c)(4) of 17 C.F.R. 270.2a-7, revised as of April 1, 1992, and that have been rated in one of the 2 highest rating categories by an independent rating agency recognized by the National Association of Insurance Commissioners, however, a pool may not invest in fixed income bond mutual funds more than the greater of $100,000 or 10% of its total assets in any one fund.
        (9) Not more than 5% of a pool's admitted assets may
    
be assessment receivables. In order to be an admitted asset, an assessment receivable cannot be more than 60 days past due.
        (10) Not more than 10% of a pool's admitted assets
    
may be reinsurance receivables. In order to be an admitted asset, a reinsurance receivable cannot be more than 90 days past due.
    (b) Amounts recoverable from authorized reinsurers on unpaid losses may be deducted from the reserves required by Section 4 of the Workers' Compensation Act.
    (c) All securities eligible for registration shall be registered in the name of the pool and all securities shall be maintained in a State or National Bank having trust powers and located within this State.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.12)
    Sec. 107a.12. Annual statement.
    (a) A pool authorized to do business in this State shall file with the Director by March 1st in each year 2 copies of its financial statement for the year ending December 31st immediately preceding on forms 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 may promulgate rules for determining which portions of the annual statement instructions and Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners are germane for the purpose of ascertaining the condition and affairs of a pool.
    (b) The Director shall have authority to extend the time for filing any statement by any pool for reasons that he considers good and sufficient. The admitted assets shall be shown in the statement at the actual values as of the last day of the preceding year, in accordance with Section 126.7 of this Code. The statement shall be verified by oaths of a majority of the trustees or directors of the pool. In addition, when the Director considers it to be necessary and appropriate for the protection of policyholders, creditors, shareholders, or claimants, the Director may require the pool to file, within 60 days after mailing to the pool a notice that a supplemental summary statement 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 the notice, designated by him or her 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.
    (c) On or before June 1 of each year, a pool shall file with the Director an audited financial statement reporting the financial condition of the pool as of the end of the most recent calendar year and changes in the surplus funds for the year then ending. The annual audited financial report shall include the following:
        (1) a report of an independent certified public
    
accountant;
        (2) a balance sheet reporting assets, as defined in
    
this Article, liabilities, and surplus funds;
        (3) a statement of gain and loss from operations;
        (4) a statement of changes in financial position;
        (5) a statement of changes in surplus funds; and
        (6) the notes to financial statements.
    (d) The Director shall require a pool to file an independent actuarial opinion as to the sufficiency of the loss and loss adjustment expense reserves. This opinion shall be due on March 1 of each year.
(Source: P.A. 102-135, eff. 1-1-22.)

    (215 ILCS 5/107a.13)
    Sec. 107a.13. Group Workers' Compensation Pool Insolvency Fund.
    (a) All qualified group workers' compensation pools shall pay a sum equal to 0.5% of all compensation and medical service payments made under either the Workers' Compensation Act or the Workers' Occupational Diseases Act during the 6 months immediately preceding the date of payment, into the Group Workers' Compensation Pool Insolvency Fund, the successor fund to the Group Self-Insurers' Insolvency Fund. On the effective date of this amendatory Act of the 91st General Assembly, all moneys in the Group Self-Insurers' Insolvency Fund shall be transferred into the Group Workers' Compensation Pool Insolvency Fund.
    (b) The State Treasurer is ex-officio custodian of the Group Workers' Compensation Pool Insolvency Fund. Moneys in the Fund shall be deposited the same as are State funds and any interest accruing on moneys in the Fund shall be added to the Fund every 6 months. The Fund 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. The Fund shall be considered always appropriated for the purposes of compensating employees who are eligible to receive benefits from their employers pursuant to the provisions of the Workers' Compensation Act or Workers' Occupational Diseases Act when their employer is a member of a qualified group workers' compensation pool and the qualified group workers' compensation pool has become unable to pay compensation and medical service payments due to financial insolvency either prior to or following the date of award. Moneys in the Fund may be used to compensate any type of injury or occupational disease that is compensable under either the Workers' Compensation Act or the Workers' Occupational Diseases Act. The State Treasurer shall be joined with the qualified group workers' compensation pool as party respondent in any claim or application for adjustment of claim filed against a qualified group workers' compensation pool whenever the compensation and medical services provided pursuant to this Article may be unpaid by reason of default of an insolvent qualified group workers' compensation pool.
    (c) Payment shall be made out of the Group Workers' Compensation Pool Insolvency Fund only upon order of the Director and only after the penal sum of the fidelity bond and securities, if any, has been exhausted. It shall be the obligation of a qualified group workers' compensation pool or its successor to make arrangements to repay the Group Workers' Compensation Pool Insolvency Fund for all moneys paid out in its behalf. The Director is authorized to make arrangements with the qualified group workers' compensation pool as to terms of repayment. The obligations of qualified group workers' compensation pools to make contributions to the Group Workers' Compensation Pool Insolvency Fund shall be waived on any January 1 or July 1, if the Fund has a positive balance of at least $2,000,000 on the date one month prior to the date of payment.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.14)
    Sec. 107a.14. Group workers' compensation pools assessment provisions.
    (a) When the Director determines by means of audit, annual certified statement, actuarial opinion, or otherwise that the assets possessed by a pool are less than the reserves required together with any other unpaid liabilities, he or she shall order the pool trustees to assess the individual pool participants in an amount not less than necessary to correct the deficiency. This Section is not intended to restrict or preclude the trustees from time to time levying assessments or increasing premium deposits in accordance with the pooling agreement.
    (b) When the Director determines that the compensation and medical services provided pursuant to this Article may be unpaid by reason of the default of an insolvent qualified group workers' compensation pool and the penal sum of the fidelity bond and the securities provided by the qualified group workers' compensation pool are about to become exhausted, the Director shall declare the qualified group workers' compensation pool to be in default and first levy upon and collect from the individual employer members of the qualified group workers' compensation pool in default an assessment to assure prompt payment of compensation and medical services. No assessment of any individual employer member of the qualified group workers' compensation pool made pursuant to this subsection shall exceed 25% of the average annual contribution paid by that employer over the previous 3-year period; however, if the Group Workers' Compensation Pool Insolvency Fund is then for any reason financially unable to assure prompt payment of compensation and medical services, the employer member may be assessed without limitation. If and only if (i) the Group Workers' Compensation Pool Insolvency Fund has a positive balance of less than $1,000,000, (ii) the Director has declared a qualified group workers' compensation pool to be in default, and (iii) the Group Workers' Compensation Pool Insolvency Fund is financially unable to pay all employees whose compensation and medical services have been approved, the Director shall levy upon and collect from all qualified group workers' compensation pools an assessment to provide the balance necessary to assure prompt payment of approved compensation and medical services. If an insurance carrier becomes liable for workers' compensation and occupational diseases payments under the terms of the policy covering the qualified group workers' compensation pool, the carrier shall make appropriate payments and payments from the Fund shall cease. Payments from the Fund shall resume only when the insurance carrier's liability is exhausted.
(Source: P.A. 91-757, eff. 1-1-01.)

    (215 ILCS 5/107a.15)
    Sec. 107a.15. Authority of Director.
    (a) If the Director determines that a group workers' compensation pool is not in compliance with this Article, the Director shall require the pool to eliminate the condition causing the noncompliance within a specified time from the date the notice of the Director's requirement is mailed or delivered to the pool.
    (b) If a pool fails to comply with the Director's requirement, the pool shall be deemed to be in a hazardous financial condition, and the Director may take one or more of the actions authorized by law as to pools in hazardous financial condition.
(Source: P.A. 91-757, eff. 1-1-01.)


 
    (215 ILCS 5/Art. VI heading)
ARTICLE VI. FOREIGN OR 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 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 an alien Lloyds shall be subject to all of the provisions of Section 103.
    (2) No foreign or alien mutual benefit society or burial society shall hereafter be admitted to transact business in this State.
    (3) No foreign or 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 alien company shall be a party to a consolidation, then the certificate of authority of such foreign or 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 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 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 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 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 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/Art. VII heading)
ARTICLE VII. UNAUTHORIZED COMPANIES

    (215 ILCS 5/121) (from Ch. 73, par. 733)
    Sec. 121. Transacting business without certificate of authority prohibited.
    (1) It shall be unlawful for any company to enter into a contract of insurance as an insurer or to transact insurance business in this State, without a certificate of authority from the Director; provided that this subsection shall not apply to contracts procured by agents under the authority of section 445, nor to contracts of reinsurance.
    (2) The following acts, if performed in this State, shall be included among those deemed to constitute transacting insurance business in this State:
    (a) maintaining an agency or office where contracts are executed which are or purport to be contracts of insurance with citizens of this or any other State;
    (b) maintaining files or records of contracts of insurance; or
    (c) receiving payment of premiums for contracts of insurance.
    (3) Any company that violates any of the provisions of subsections (1) and (2) of this section shall be guilty of a business offense and shall be required to pay a penalty of not less than $100 nor more than $1000 for each offense, 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. Each day in which a violation occurs shall constitute a separate offense.
    (4) The failure of a company to obtain a certificate of authority shall not impair the validity of any act or contract of such company and shall not prevent such company from defending any action in any court of this State, but no company transacting insurance business in this State without a certificate of authority shall be permitted to maintain an action in any court of this State to enforce any right, claim or demand arising out of the transaction of such business until such company shall have obtained a certificate of authority. Nor shall an action be maintained in any court of this State by any successor or assignee of such company on any such right, claim or demand originally held by such company until a certificate of authority shall have been obtained by such company or by a company which has acquired all or substantially all of its assets.
(Source: P.A. 83-345.)

    (215 ILCS 5/121-1) (from Ch. 73, par. 733-1)
    Sec. 121-1. Purpose of Article. The purpose of this Article is to subject certain insurers to the jurisdiction of the Director of Insurance and the courts of this State in suits by or on behalf of the State. The General Assembly declares that it is concerned with the protection of residents of this State against acts by insurers not authorized to do an insurance business in this State, by the maintenance of fair and honest insurance markets, by protecting authorized insurers which are subject to regulation from unfair competition by unauthorized insurers, and by protecting against the evasion of the insurance regulatory laws of this State. In furtherance of this State interest, the General Assembly in this Article provides methods for substituted service of process upon such insurers in any proceeding, suit or action in any court and substituted service of any notice, order, pleading or process upon such insurers in any proceeding by the Director of Insurance to enforce or effect full compliance with the insurance laws of this State. In so doing, the State exercises its powers to protect its residents and to define what constitutes transacting an insurance business in this State, and also exercises powers and privileges available to this State under Public Law 79-15, 79th Congress of the United States, Chapter 20, 1st Sess., S. 340, 59 Stat. 33; 15 U.S.C. 1011 through 1015, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-2) (from Ch. 73, par. 733-2)
    Sec. 121-2. Transacting business without certificate of authority prohibited - Exempt transactions. It is unlawful for any insurer to transact insurance business in this State, (as described in Section 121-3,) without a certificate of authority from the Director. This Section does not however, apply to any transaction described in Sections 121-2.01 through 121-2.10.
(Source: P.A. 89-124, eff. 7-7-95.)

    (215 ILCS 5/121-2.01) (from Ch. 73, par. 733-2.01)
    Sec. 121-2.01. The lawful transaction of business under Section 445.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-2.02) (from Ch. 73, par. 733-2.02)
    Sec. 121-2.02. The lawful transaction of reinsurance by insurers.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-2.03) (from Ch. 73, par. 733-2.03)
    Sec. 121-2.03. Transactions in this State involving a policy lawfully solicited, written, and delivered outside of this State covering only subjects of insurance not resident, located, or expressly to be performed in this State at the time of issuance, and which transactions are subsequent to the issuance of such policy.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-2.04) (from Ch. 73, par. 733-2.04)
    Sec. 121-2.04. Attorneys acting in the ordinary relation of attorney and client in the adjustment of claims or losses.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-2.05) (from Ch. 73, par. 733-2.05)
    Sec. 121-2.05. Group insurance policies issued and delivered in other State-Transactions in this State. With the exception of insurance transactions authorized under Sections 230.2 or 367.3 of this Code or transactions described under Section 352c, transactions in this State involving group legal, group life and group accident and health or blanket accident and health insurance or group annuities where the master policy of such groups was lawfully issued and delivered in, and under the laws of, a State in which the insurer was authorized to do an insurance business, to a group properly established pursuant to law or regulation, and where the policyholder is domiciled or otherwise has a bona fide situs.
(Source: P.A. 103-649, eff. 1-1-25.)

    (215 ILCS 5/121-2.06) (from Ch. 73, par. 733-2.06)
    Sec. 121-2.06. Transactions in this State involving any policy of insurance or annuity contract issued before the effective date of this amendatory Act of 1971.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-2.07) (from Ch. 73, par. 733-2.07)
    Sec. 121-2.07. Transactions in this State relative to a policy issued or to be issued outside this State involving insurance on vessels, craft or hulls, cargos, marine builder's risk, marine protection and indemnity or other risk, including strikes and war risks commonly insured under ocean or wet marine forms of policy.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-2.08) (from Ch. 73, par. 733-2.08)
    Sec. 121-2.08. Transactions in this State involving contracts of insurance independently procured directly from an unauthorized insurer by industrial insureds.
    (a) As used in this Section:
    "Exempt commercial purchaser" means exempt commercial purchaser as the term is defined in subsection (1) of Section 445 of this Code.
    "Home state" means home state as the term is defined in subsection (1) of Section 445 of this Code.
    "Industrial insured" means an insured:
        (i) that procures the insurance of any risk or risks
    
of the kinds specified in Classes 2 and 3 of Section 4 of this Code by use of the services of a full-time employee who is a qualified risk manager or the services of a regularly and continuously retained consultant who is a qualified risk manager;
        (ii) that procures the insurance without the services
    
of an intermediary insurance producer; and
        (iii) that is an exempt commercial purchaser whose
    
home state is Illinois.
    "Insurance producer" means insurance producer as the term is defined in Section 500-10 of this Code.
    "Qualified risk manager" means qualified risk manager as the term is defined in subsection (1) of Section 445 of this Code.
    "Safety-Net Hospital" means an Illinois hospital that qualifies as a Safety-Net Hospital under Section 5-5e.1 of the Illinois Public Aid Code.
    "Unauthorized insurer" means unauthorized insurer as the term is defined in subsection (1) of Section 445 of this Code.
    (b) For contracts of insurance procured directly from an unauthorized insurer effective January 1, 2015 or later, within 90 days after the effective date of each contract of insurance issued under this Section, the insured shall file a report with the Director by submitting the report to the Surplus Line Association of Illinois in writing or in a computer readable format and provide information as designated by the Surplus Line Association of Illinois. The information in the report shall be substantially similar to that required for surplus line submissions as described in subsection (5) of Section 445 of this Code. Where applicable, the report shall satisfy, with respect to the subject insurance, the reporting requirement of Section 12 of the Fire Investigation Act.
    (c) For contracts of insurance procured directly from an unauthorized insurer effective January 1, 2015 through December 31, 2017, within 30 days after filing the report, the insured shall pay to the Director for the use and benefit of the State a sum equal to the gross premium of the contract of insurance multiplied by the surplus line tax rate, as described in paragraph (3) of subsection (a) of Section 445 of this Code, and shall pay the fire marshal tax that would otherwise be due annually in March for insurance subject to tax under Section 12 of the Fire Investigation Act. For contracts of insurance procured directly from an unauthorized insurer effective January 1, 2018 or later, within 30 days after filing the report, the insured shall pay to the Director for the use and benefit of the State a sum equal to 0.5% of the gross premium of the contract of insurance, and shall pay the fire marshal tax that would otherwise be due annually in March for insurance subject to tax under Section 12 of the Fire Investigation Act. For contracts of insurance procured directly from an unauthorized insurer effective January 1, 2015 or later, within 30 days after filing the report, the insured shall pay to the Surplus Line Association of Illinois a countersigning fee that shall be assessed at the same rate charged to members pursuant to subsection (4) of Section 445.1 of this Code.
    (d) For contracts of insurance procured directly from an unauthorized insurer effective January 1, 2015 or later, the insured shall withhold the amount of the taxes and countersignature fee from the amount of premium charged by and otherwise payable to the insurer for the insurance. If the insured fails to withhold the tax and countersignature fee from the premium, then the insured shall be liable for the amounts thereof and shall pay the amounts as prescribed in subsection (c) of this Section.
    (e) Contracts of insurance with an industrial insured that qualifies as a Safety-Net Hospital are not subject to subsections (b) through (d) of this Section.
(Source: P.A. 104-334, eff. 8-15-25.)

    (215 ILCS 5/121-2.09) (from Ch. 73, par. 733-2.09)
    Sec. 121-2.09. Transactions in this State involving bankers' blanket bonds or directors' and officers' liability insurance issued by a captive insurance company, formed exclusively for the purpose of providing directors' and officers' liability and bankers' blanket bond insurance to a bank or bank holding company, as such terms are defined in Section 2 of "The Illinois Bank Holding Company Act of 1957", as amended, if the aggregate annual premiums for each bank or bank holding company for insurance on all of its property and liability risks total at least $25,000, and such insurance is procured by a full-time employee acting as an insurance manager or buyer or through the services of a regularly and continuously retained qualified insurance consultant.
(Source: P.A. 84-1431.)

    (215 ILCS 5/121-2.10)
    Sec. 121-2.10. Exempt charitable gift annuities. The insurance laws of this State, including this Code, do not apply to any charitable gift annuity, as defined in Section 501(m)(5) of the Internal Revenue Code, issued by an organization that is described in Section 170(c) of the Internal Revenue Code, if either (i) an insurer authorized to transact business in this State is directly obligated to the annuitant or (ii) the organization has been in active operation for not less than 20 years before the date the annuity is issued and has an unrestricted fund balance of not less than $2,000,000 on the date the annuity is issued. For purposes of this Section, "Internal Revenue Code" refers to the Internal Revenue Code of 1986, as amended, and corresponding provisions of subsequent federal tax laws.
(Source: P.A. 89-124, eff. 7-7-95; 89-485, eff. 6-21-96.)

    (215 ILCS 5/121-3) (from Ch. 73, par. 733-3)
    Sec. 121-3. Transaction of insurance business defined. Any of the following acts in this State, effected by mail or otherwise by or on behalf of an unauthorized insurer, constitutes the transaction of an insurance business in this State.
    (a) The making of or proposing to make, as an insurer, an insurance contract.
    (b) The making of or proposing to make, as guarantor or surety, any contract of guaranty or suretyship as a vocation and not merely incidental to any other legitimate business or activity of the guarantor or surety.
    (c) The taking or receiving of any application for insurance.
    (d) The receiving or collection of any premium, commission, membership fees, assessments, dues or other consideration for any insurance or any part thereof.
    (e) The issuance or delivery of contracts of insurance to residents of this State or to persons authorized to do business in this State.
    (f) Directly or indirectly acting as an agent for or otherwise representing or aiding on behalf of another any person or insurer in the solicitation, negotiation, procurement or effectuation of insurance or renewals thereof or in the dissemination of information as to coverage or rates, or forwarding of applications, or delivery of policies or contracts, or inspection of risks, a fixing of rates or investigation or adjustment of claims or losses or in the transaction of matters subsequent to effectuation of the contract and arising out of that contract, or in any other manner representing or assisting a person or insurer in the transaction of insurance with respect to subjects of insurance resident, located or to be performed in this State. This paragraph does not prohibit full-time salaried employees of a corporate insured from acting in the capacity of an insurance manager or buyer in placing insurance in behalf of that employer.
    (g) The transaction of any kind of insurance business specifically recognized as transacting an insurance business within the meaning of this Act.
    (h) The transacting or proposing to transact any insurance business in substance equivalent to any of the foregoing in a manner designed to evade this Act.
    The venue of an act committed by mail is at the point where the matter transmitted by mail is delivered and takes effect. Unless otherwise indicated, the term "insurer" as used in this Article includes all corporations, associations, partnerships and individuals, engaged as principals in the business of insurance and also includes interinsurance exchanges and mutual benefit societies.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-4) (from Ch. 73, par. 733-4)
    Sec. 121-4. Validity of contracts - court actions.) The failure of an insurer transacting insurance business in this State to obtain a certificate of authority does not impair the validity of any act or contract of that insurer nor does it prevent that insurer from defending any action in any court of this State. However, no insurer transacting insurance business in this State without a certificate of authority may maintain an action in any court of this State to enforce any right, claim or demand arising out of the transaction of that business until the insurer has obtained a certificate of authority.
    If any such unauthorized insurer fails to pay any claim or loss within the provisions of such an insurance contract, any person who assisted or in any manner aided directly or indirectly in the procurement of the insurance contract shall be liable to the insured for the full amount of the claim or loss as provided in that insurance contract.
(Source: P.A. 79-1362.)

    (215 ILCS 5/121-5) (from Ch. 73, par. 733-5)
    Sec. 121-5. Injunctive proceedings. Whenever the Director believes, from evidence satisfactory to him that any insurer is violating or about to violate Section 121-2 of this Act, the Director may, through the Illinois Attorney General, cause a complaint to be filed in the Circuit Court of Cook County, or the Circuit Court of Sangamon County, to enjoin and restrain that insurer from continuing such violation or engaging therein or doing any act in furtherance thereof. The court shall have jurisdiction of the proceeding and may make and enter an order or judgment awarding such preliminary or final injunctive relief as, in its judgment, is proper.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-6) (from Ch. 73, par. 733-6)
    Sec. 121-6. Acts constituting Secretary of State as agent for process. Any act of transacting an insurance business, as set forth in Section 121-3; by any unauthorized insurer constitutes an irrevocable appointment by that insurer, binding upon him, his executor or administrator, or successor in interest if a corporation, of the Secretary of State, to be the true and lawful attorney of such insurer upon whom may be served all lawful process in any action, suit, or proceeding in any court by the Director or by the State and upon whom may be served any notice, order, pleading or process in any proceeding before the Director which arises out of transacting an insurance business in this State by that insurer. Any act of transacting an insurance business in this State by any unauthorized insurer signifies its agreement that any lawful process in such a court action, suit, or proceeding and any such notice, order, pleading, or process in an administrative proceeding before the Director so served shall be of the same legal force and validity as personal service of process in this State upon that insurer.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-7) (from Ch. 73, par. 733-7)
    Sec. 121-7. Service of process - notice. Service of process in an action described in Section 121-6 shall be made by delivering to and leaving with the Secretary of State, or some person in apparent charge of his office, 2 copies thereof and by payment to the Secretary of State of the fee prescribed by law. Service upon the Secretary of State as such attorney shall be service upon the principal.
    The Secretary of State shall forthwith forward by certified mail one of the copies of the process or notice, order, pleading, or process in proceedings before the Director to the defendant in such court proceeding or to whom the notice, order, pleading, or process in such administrative proceeding is addressed or directed at its last known principal place of business and shall keep a record of all process so served on him which shall show the day and hour of service. Such service is sufficient if:
    (a) Notice of such service and a copy of the court process or the notice, order, pleading, or process in such administrative proceeding are sent within 10 days thereafter by certified mail by the plaintiff or the plaintiff's attorney in the court proceeding, or by the Director of Insurance in the administrative proceeding, to the defendant in the court proceeding or to whom the notice, order, pleading, or process in such administrative proceeding is addressed or directed at the last known principal place of business of the defendant in the court or administrative proceeding.
    (b) The defendant's receipt or receipts issued by the post office with which the letter is registered, showing the name of the sender of the letter and the name and address of the person or insurer to whom the letter is addressed, and an affidavit of the plaintiff or the plaintiff's attorney in a court proceeding or of the Director in an administrative proceeding, showing compliance therewith are filed with the clerk of the court in which such action, suit, or proceeding is pending or with the Director in administrative proceedings, by the date the defendant in the court or administrative proceeding is required to appear or respond thereto, or within such further time as the court or Director, as the case may be, may allow.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-8) (from Ch. 73, par. 733-8)
    Sec. 121-8. Judgment or default - time limitation. No plaintiff is entitled to a judgment or to a determination by default in any court or administrative proceeding in which court process or notice, order, pleading, or process in proceedings before the Director is served under Section 121-7 until the expiration of 45 days from the date of filing of the affidavit of compliance under that Section.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-9) (from Ch. 73, par. 733-9)
    Sec. 121-9. Other proceedings not barred. Nothing in this Article limits or affects the right to serve any process, notice, order, or demand upon any person or insurer in any other manner now or hereafter permitted by law.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-10) (from Ch. 73, par. 733-10)
    Sec. 121-10. Pleadings by unauthorized insurer - bond or certificate of authority. Before any unauthorized insurer files or causes to be filed any pleading in any court action, suit or proceeding or any notice, order, pleading, or process in an administrative proceeding before the Director instituted against such person or insurer, by services made as provided in Section 121-7, such insurer must either:
    (a) Deposit with the clerk of the court in which such action, suit, or proceeding is pending, or with the Director in administrative proceedings before him, cash or securities, or file with such clerk or Director a bond with good and sufficient sureties, to be approved by the clerk or Director in an amount to be fixed by the court or Director sufficient to secure the payment of any final judgment which may be rendered in such action or administrative proceeding; or
    (b) Procure a certificate of authority to transact the business of insurance in this State. In considering the application of an insurer for a certificate of authority, for the purposes of this paragraph, the Director need not assert the provisions of Section 444 against such insurer with respect to its application if he determines that such company would otherwise comply with the requirements for a certificate of authority.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-11) (from Ch. 73, par. 733-11)
    Sec. 121-11. Postponement of proceedings - Motions by unauthorized insurer. The Director, in any administrative proceeding in which service is made under Section 121-7, may order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with Section 121-10 and to defend such action.
    Nothing in this Article prevents an unauthorized insurer from filing a motion to quash process or to set aside service thereof made under Section 121-7, on the ground that the unauthorized insurer has not done any of the acts enumerated in Section 121-3.
(Source: P.A. 83-346.)

    (215 ILCS 5/121-12) (from Ch. 73, par. 733-12)
    Sec. 121-12. Enforcement by Attorney General. The Attorney General, upon request of the Director, may proceed in the courts of this State or any reciprocal State to enforce an order or decision in any court proceeding or in any administrative proceeding before the Director.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-13) (from Ch. 73, par. 733-13)
    Sec. 121-13. Definitions.) As used in this Article:
    (a) "Reciprocal state" means any State or territory of the United States and the laws of which contain procedures substantially similar to those specified in this Article for the enforcement of judgments or orders issued by courts located in other States or territories of the United States, against an insurer incorporated or authorized to do business in that State or territory.
    (b) "Foreign judgment" means any judgment or order relating to fraudulent claims practices, false and deceptive advertising, unfair methods of transacting business, or payment of taxes, of a court located in a "reciprocal state", including a court of the United States located therein, against any insurer incorporated or authorized to do business in this State.
    (c) "Qualified party" means a state regulatory agency acting in its capacity to enforce the insurance laws of this State.
(Source: P.A. 79-1362.)

    (215 ILCS 5/121-14) (from Ch. 73, par. 733-14)
    Sec. 121-14. List of reciprocal states. The Director shall determine which States and territories qualify as reciprocal States and shall maintain at all times an up-to-date list of those States.
(Source: P.A. 77-1565.)

    (215 ILCS 5/121-15) (from Ch. 73, par. 733-15)
    Sec. 121-15. Filing and status of foreign judgments.) A copy of any foreign judgment authenticated in accordance with the statutes of this State may be filed in the office of the clerk of any circuit court of this State. The clerk, upon verifying with the Director that the judgment or order qualifies as a "foreign judgment", shall treat the foreign judgment in the same manner as a judgment of any circuit court of this State. A foreign judgment so filed has the same effect, is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying and may be enforced or satisfied in like manner as a judgment of any circuit court of this State.
(Source: P.A. 79-1362.)

    (215 ILCS 5/121-16) (from Ch. 73, par. 733-16)
    Sec. 121-16. Notice of filing.) At the time of the filing of a foreign judgment, the Attorney General shall make and file with the clerk of the court an affidavit setting forth the name and last known post office address of the defendant.
    Promptly upon the filing of the foreign judgment and the affidavit, the clerk shall mail notice of the filing of the foreign judgment to the defendant at the address given and to the Director and shall note that mailing in the docket. In addition, the Attorney General may mail a notice of the filing of the foreign judgment to the defendant and to the Director and may file proof of mailing with the clerk. Lack of mailing notice of filing by the clerk does not affect the enforcement proceedings if proof of mailing by the Attorney General has been filed.
    No process for enforcement of a foreign judgment filed under this Article may issue until 30 days after the date the judgment is filed.
(Source: P.A. 84-546.)

    (215 ILCS 5/121-17) (from Ch. 73, par. 733-17)
    Sec. 121-17. Stay.) If the defendant shows the circuit court that an appeal from the foreign judgment is pending or will be taken, or that a stay of enforcement has been granted, the court shall stay enforcement of the foreign judgment until the appeal is concluded, the time for appeal expires or the stay of enforcement expires or is vacated, upon proof that the defendant has furnished the security for the satisfaction of the judgment required by the State in which it was entered.
    If the defendant shows the circuit court any ground upon which enforcement of a judgment of any circuit court of this State would be stayed, the court shall stay enforcement of the foreign judgment for an appropriate period, upon requiring the same security for satisfaction of the judgment as is required in this State.
(Source: P.A. 84-546.)

    (215 ILCS 5/121-18) (from Ch. 73, par. 733-18)
    Sec. 121-18. Fees. Any person filing a foreign judgment must pay to the clerk of the court such fees as may apply in other cases. Fees for docketing, transcription or other enforcement proceedings shall be as provided for judgment of the circuit court.
(Source: P.A. 79-1362.)

    (215 ILCS 5/121-19) (from Ch. 73, par. 733-19)
    Sec. 121-19. Fine for unauthorized insurance. Any unauthorized insurer who transacts any unauthorized act of an insurance business as set forth in this Act is guilty of a business offense and may be fined not more than $20,000.
(Source: P.A. 93-32, eff. 7-1-03.)

    (215 ILCS 5/122) (from Ch. 73, par. 734)
    Sec. 122. Representing unauthorized company prohibited.
    (a) It is unlawful for a person as officer, director, clerk, employee, or agent to serve or represent a company in connection with an act performed or contract entered into in violation of Section 121. A person who violates this Section is guilty of a Class A misdemeanor.
    (b) If, after notice and hearing, the Director finds that a person who holds or seeks a license or privilege under the jurisdiction of the Director has represented or served an unauthorized insurer as an owner, director, officer, employee, agent, or producer in connection with the sale or solicitation of insurance contracts or the collection of insurance premiums, the Director may deny, revoke, refuse to renew, or suspend any of the person's licenses or privileges.
(Source: P.A. 88-627, eff. 9-9-94.)

    (215 ILCS 5/122-1) (from Ch. 73, par. 734-1)
    Sec. 122-1. The authority and jurisdiction of Insurance Department. Notwithstanding any other provision of law, and except as provided herein, any person or other entity which provides coverage in this State for medical, surgical, chiropractic, naprapathic, physical therapy, speech pathology, audiology, professional mental health, dental, hospital, ophthalmologic, or optometric expenses, whether such coverage is by direct-payment, reimbursement, or otherwise, shall be presumed to be subject to the jurisdiction of the Department unless the person or other entity shows that while providing such coverage it is subject to the jurisdiction of another agency of this State, any subdivision of this State, or the federal government, or is a plan of self-insurance or other employee welfare benefit program of an individual employer or labor union established or maintained under or pursuant to a collective bargaining agreement or other arrangement which provides for health care services solely for its employees or members and their dependents.
(Source: P.A. 90-7, eff. 6-10-97.)

    (215 ILCS 5/122-2) (from Ch. 73, par. 734-2)
    Sec. 122-2. How to Show Jurisdiction. A person or entity may show that it is subject to the jurisdiction of another agency of this or another state, any subdivision of this State, or the Federal Government by providing to the Director the appropriate certificate, license or other document issued by the other governmental agency which permits or qualifies it to provide those coverages.
(Source: P.A. 86-753.)

    (215 ILCS 5/122-3) (from Ch. 73, par. 734-3)
    Sec. 122-3. Examination. Any person or entity which is unable to show that it is subject to the jurisdiction of another agency of this state, any subdivision of this state, or the Federal Government, or is an employee welfare benefit program of an individual employer or labor union as described in Section 122-1, shall submit to an examination by the Director to determine the organization and solvency of the person or entity, and to determine whether or not such person or entity is in compliance with the applicable provisions of this Code.
(Source: P.A. 86-753.)

    (215 ILCS 5/122-4) (from Ch. 73, par. 734-4)
    Sec. 122-4. Subject to State Laws. Any person or entity unable to show that it is subject to the jurisdiction of another agency of this state, any subdivision of this state, or the Federal Government, or is an employee welfare benefit program of an individual employer or labor union as described in Section 122-1, shall be subject to all appropriate provisions of this Code regarding the conduct of its business.
(Source: P.A. 86-753.)

    (215 ILCS 5/122-5) (from Ch. 73, par. 734-5)
    Sec. 122-5. Disclosure. (1) Any agent, broker, producer, administrator, or other person or company which advertises, solicits, negotiates, procures, sells, renews, continues or administers coverage in this state, described in Section 122-1 and which is provided by any person or entity described in Section 122-3 shall, if that coverage is not fully insured or otherwise fully covered by a company authorized to do such business in this State advise any purchaser, prospective purchaser, and covered person of such lack of insurance or other coverage.
    (2) Any administrator which advertises or administers coverage in this state, described in Section 122-1 and which is provided by any person or entity described in Section 122-3 shall advise any agent, broker or other person or company which advertises, solicits, negotiates, sells, procures, renews or continues such coverage of the elements of the coverage including the amount of "stop-loss" insurance in effect.
(Source: P.A. 86-753.)

    (215 ILCS 5/123) (from Ch. 73, par. 735)
    Sec. 123. Service of process upon an unauthorized foreign or alien company.
    (1) The purpose of this Section is to subject unauthorized foreign and alien companies to the jurisdiction of courts of this State in actions by or on behalf of insureds, reinsureds, or beneficiaries under insurance or reinsurance contracts. The Legislature declares that it is a subject of concern that many residents of this State or corporations authorized to do business in this State hold policies of insurance or reinsurance issued by companies not authorized to do business in this State, thus presenting to such residents or corporations authorized to do business in this State the often insuperable obstacle of resorting to distant forums for the purpose of asserting legal rights under such policies. In furtherance of such State interest, the Legislature herein provides a method of substituted service of process upon such companies and declares that in so doing it exercises its power to protect its residents and corporations authorized to do business in this State and to define, for the purpose of this statute, what constitutes doing business in this State, and also exercises powers and privileges available to the State by virtue of Public Law 15, 79th Congress of the United States, Chapter 20, 1st. Sess., S. 340, as amended, which declares that the business of insurance and every person engaged therein shall be subject to the laws of the several states.
    (2) Any of the following acts in this State, effected by mail or otherwise, by an unauthorized foreign or alien company: (a) the issuance or delivery of contracts of insurance or reinsurance to residents of this State or to corporations authorized to do business therein, (b) the solicitation of applications for such contracts, (c) the collection of premiums, membership fees, assessments or other considerations for such contracts, or (d) any other transaction of business, is equivalent to and shall constitute an appointment by such company, of the Director and his or her successor or successors in office, to be its true and lawful attorney upon whom may be served all lawful process in any action or proceeding against it, arising out of such policy or contract of insurance or reinsurance, and the acts shall be a signification of its agreement that any such process against it which is so served shall be of the same legal force and validity as if served upon the company.
    (3) Service of such process shall be made by delivering and leaving with the Director a copy thereof and the payment to the Director of the fee prescribed by this Code. The Director shall keep a record of all process so served upon him or her. Such process shall be sufficient service upon such foreign or alien company provided notice of such service and a copy of the process are, within 10 days thereafter, sent by certified or registered mail by the plaintiff's attorney of record to the defendant at the last known principal place of business of the defendant, and the defendant's receipt and the plaintiff's attorney's affidavit of compliance herewith are filed with the Clerk of the Court in which such action is pending on or before the return date of the process or within such further time as the court may allow.
    (4) Service of process in any such action against any such company shall in addition to the mode hereinabove described be valid and legal if served upon any person within this State who, in this State on behalf of such company, is
        (a) soliciting insurance or reinsurance, or
        (b) making, issuing, or delivering any policies or
    
contracts of insurance or reinsurance, or
        (c) collecting or receiving any premium, membership
    
fee, assessment or other consideration for insurance or reinsurance, or
        (d) in any manner aiding or assisting in doing any of
    
the things enumerated in clauses (a), (b), or (c) of this subsection; and a copy of such process is within 10 days thereafter sent by certified or registered mail by the plaintiff's attorney of record to the defendant at the last known principal place of business of the defendant and the defendant's receipt and the plaintiff's attorney's affidavit of compliance herewith are filed with the clerk of the court in which such action is pending on or before the return date of the process or within such further time as the court may allow.
    (5) Before any unauthorized foreign or alien company shall file or cause to be filed any pleading in any action or proceeding, including any arbitration, instituted against it, such unauthorized company shall either (1) deposit with the clerk of the court in which such action or proceeding is pending or with the clerk of the court in the jurisdiction in which the arbitration is pending cash or securities or file with such clerk a bond with good and sufficient sureties, to be approved by the court, in an amount to be fixed by the court sufficient to secure the payment of any final judgment which may be rendered in such action, proceeding, or arbitration; or (2) where the unauthorized company continues to transact the business of insurance by issuing new contracts of insurance or reinsurance, procure a certificate of authority to transact the business of insurance in this State.
    The court in any action or proceeding, in which service is made in the manner provided in subsections (3) or (4) may, in its discretion, order such postponement as may be necessary to afford the defendant reasonable opportunity to comply with the provisions of this subsection and to defend such action.
    Nothing in this Section is to be construed to prevent an unauthorized foreign or alien company from filing a motion to quash process or to set aside service thereof made in the manner provided in subsections (3) or (4) on the ground either (a) that such unauthorized company has not done any of the acts enumerated in subsection (2) or (b) that the person on whom service was made pursuant to subsection (4) was not doing any of the acts therein enumerated.
    (6) In any action against an unauthorized foreign or alien company upon a contract of insurance or reinsurance issued or delivered in this State to a resident thereof or to a corporation authorized to do business therein, if the company has failed for 30 days after demand prior to the commencement of the action to make payment in accordance with the terms of the contract, and it appears to the court that such refusal was vexatious and without reasonable cause, the court may allow to the plaintiff a reasonable attorney fee and include such fee in any judgment that may be rendered in such action. Such fee shall not exceed 12-1/2 per cent of the amount which the court or jury finds the plaintiff is entitled to recover against the insurer, but in no event shall such fee be less than $25. Failure of a company to defend any such action shall be deemed prima facie evidence that its failure to make payment was vexatious and without reasonable cause.
    (7) No plaintiff shall be entitled to a judgment by default under this Section until the expiration of 30 days from the date of the filing of the affidavit of compliance.
    (8) The provisions of this Section shall not apply to any action or proceeding against any unauthorized foreign or alien company arising out of any contract of direct 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 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 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 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, 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 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/Art. VIIA heading)
ARTICLE VIIA. ADVISORY ORGANIZATIONS
(Article scheduled to be repealed on January 1, 2027)

    (215 ILCS 5/123A-1) (from Ch. 73, par. 735A-1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-1. Purpose of Article. The purpose of this Article is to authorize the existence, operation, and regulation of qualified advisory organizations generally available to all admitted companies and to permit under certain conditions joint underwriting and joint reinsurance.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-2) (from Ch. 73, par. 735A-2)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-2. Definitions. As used in this Article, unless the context requires otherwise:
    (a) "Advisory Organization" means every person, other than an insurance company who as its primary functions (i) compiles insurance statistics, or (ii) prepares insurance policies, bond forms, and underwriting rules, and (iii) furnishes that which it compiles and prepares to insurance companies who are its only members and subscribers.
    (b) "Member" means an insurance company who participates in or is entitled to participate in the management of an advisory organization.
    (c) "Subscriber" means an insurance company which is furnished at its request with those services provided for in par. (a) of this Section by an advisory organization of which it is not a member.
(Source: P.A. 82-626.)

    (215 ILCS 5/123A-3) (from Ch. 73, par. 735A-3)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-3. Scope of Article. The provisions of this Article apply to all classes of insurance in Section 4 of the "Illinois Insurance Code" except Clause (d) of Class 2.
    This Article applies to all companies, Lloyds associations, reciprocal and interinsurance exchanges, and Fraternal Benefits Societies which, under the laws of this State, write any of the kinds of insurance to which this Article applies.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-4) (from Ch. 73, par. 735A-4)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-4. Licenses - Application - Fees.
    (1) An advisory organization must be licensed by the Director before it is authorized to conduct activities in this State.
    (2) Any advisory organization shall make application for a license as an advisory organization by providing with the application satisfactory evidence to the Director that it has complied with Sections 123A-6 and 123A-7 of this Article.
    (3) The fee for filing an application as an advisory organization is $50 payable to the Director.
(Source: P.A. 93-32, eff. 7-1-03.)

    (215 ILCS 5/123A-5) (from Ch. 73, par. 735A-5)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-5. Issuance of License.
    (1) The Director shall examine each application for license as an advisory organization and the supporting documents and data filed with it and may make a further investigation of the applicant and its officers, its affairs, and its proposed plan of operation.
    (2) The Director shall issue the license applied for within 45 days from the date the application is properly submitted to him if he is satisfied
        (a) that the applicant, its officers, its affairs and
    
its proposed plan of operation conform to this Article;
        (b) that the business reputation of the applicant is
    
good and that the business reputation and character of its officers is good; and
        (c) that the rules required under Section 123A-7 are
    
reasonable and conform with this Article.
    (3) The Director shall notify in writing the applicant of his decision to deny the application and submit the reasons for the denial. The applicant has 10 days from the date he receives the Director's denial to request a hearing which shall be held within 20 days of the date of the request.
    (4) Any advisory organization conducting activities in this State for a period of at least 90 days prior to the effective date of this Article is authorized to continue to conduct its activities in this State without the required license for 90 days from the effective date of this Article if the activities comply with this Article.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-6) (from Ch. 73, par. 735A-6)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-6. Documents prerequisite to engaging in activities. No advisory organization and no group, association or other organization authorized in 123A-10 of this Code may engage in activities in this State unless it has filed with the Director
        (a) a copy of its constitution, of its articles of
    
incorporation, agreement or association, and of its by-laws, rules and regulations governing its activities, all duly certified by the custodian of the originals thereof;
        (b) a list of its members and subscribers; and
        (c) the name and address of a resident of this State
    
upon whom notices or orders of the Director or process may be served.
    Every such organization shall notify the Director promptly of every change in its constitution, in its article of incorporation, agreement or association, and in its by-laws, rules and regulations governing the conduct of its business; in its list of members and subscribers; and in the name and address of the resident of this State designated by it upon whom notices or orders of the Director or process affecting such organization may be served.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-7) (from Ch. 73, par. 735A-7)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-7. Eligibility for membership-activities of Advisory Organization. Subject to the approval of the Director, every advisory organization must make reasonable rules governing eligibility for membership and must make rules governing their activities. These rules must provide that the advisory organization will
        (a) permit any admitted company to become a member of
    
or a subscriber to such organization at a reasonable cost and without discrimination, or to withdraw therefrom;
        (b) refrain from adopting any policy, the effect of
    
which would be to require any member or subscriber as a condition to membership or subscribership, to adhere to its insurance statistics, insurance policies, bond forms, or underwriting rules;
        (c) neither practice nor sanction any plan or act of
    
boycott or intimidation tending to result in the unreasonable restraint of or monopoly in the business of insurance; and
        (d) allow admitted companies who are not members or
    
subscribers to the organization to purchase the same services of such organization as are made available to members and subscribers without discrimination as respects costs to members and subscribers.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-8) (from Ch. 73, par. 735A-8)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-8. Common ownership or management organization. If 2 or more companies have common ownership or are operating in this State under common management, the advisory organization may require as a condition to membership or subscribership of one or more then all such companies must become members or subscribers.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-9) (from Ch. 73, par. 735A-9)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-9. Authorization to act.
    (1) Any advisory organization is authorized to compile statistics and to formulate insurance policies, bond forms and underwriting rules and to furnish that which it prepares to its members and subscribers.
    (2) Subject to the provisions of this Article, two or more companies are authorized to act in concert with each other and with others with respect to any activities of an advisory organization as authorized under this Article.
    (3) Any company is authorized but not required by this Article to furnish to any advisory organization information in its possession relating to that which the advisory organization is authorized in this Article.
    (4) Any company is authorized to become a member or subscriber to any advisory organization.
    (5) The Director may review such cooperative activities and practices as are authorized in this section and if, after a hearing upon notice to all the cooperating parties, he finds that any activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of the Illinois Insurance Code, he may issue a written order requiring the discontinuance of such activity or practice.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-10) (from Ch. 73, par. 735A-10)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-10. Compliance of membership with Article. Any group, association or organization of admitted companies which engages in joint underwriting or joint reinsurance through any group, association or organizations or by standing agreement among the members of such organizations, which has complied with the applicable provisions of this Article are authorized to conduct joint reinsurance and joint underwriting activities relative to individual risks in this State.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-11) (from Ch. 73, par. 735A-11)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-11. Prohibition against agreements of use or adherence.
    (1) Two or more companies, except as authorized in this Article or in Section 478.1 of this Code, must not agree with each other or any advisory organization to adhere to or to use any statistics, policy or bond forms or underwriting rules furnished by any advisory organization or other source, either as a condition to receive such statistics, policy or bond forms or underwriting rules or otherwise.
    (2) The fact that two or more companies, whether or not members or subscribers of an advisory organization, use consistently or intermittently, the insurance statistics, insurance policy or bond forms or underwriting rules of an advisory organization, is not sufficient in itself to support a finding that an agreement to adhere exists, and may be used only for the purpose of supplementing or explaining direct evidence of the existence of any such agreement.
    (3) Two or more companies having a common ownership or operating in this State under common management or control may act in concert with respect to any matters pertaining to those activities authorized in this Article or in Section 478.1 of this Code between or among themselves the same as if they constituted a single company, and to the extent that such matters relate to co-surety bonds, two or more admitted companies executing such bonds are authorized to act in concert between or among themselves as if they constituted a single company. Nothing hereunder requires such companies to act in concert.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-12) (from Ch. 73, par. 735A-12)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-12. Exchange of information or statistical data between advisory Organizations and companies. Advisory organizations, or advisory organizations and companies may exchange the type of information or statistical data authorized under this Article. The Director may review such cooperative activities and practices and if, after a hearing, upon notice of all the cooperating parties, he finds that any activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of the Illinois Insurance Code, he may issue a written order requiring the discontinuance of such activity or practice.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-13) (from Ch. 73, par. 735A-13)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-13. Examination of advisory organization, members, subscribers and other companies.
    (1) As often as may be reasonable and necessary, the Director must make or cause to be made an examination of any advisory organization. In lieu of any such examination the Director may accept the report of an examination made by the insurance regulatory official of another state. In examining any organization pursuant to this Section, the Director shall ascertain whether such organization complies with the requirements of this Article and all other applicable provisions of the Illinois Insurance Code.
    (2) If after examination of a company or advisory organization, or upon the basis of other information, the Director has good cause to believe that the company or organization does not comply with the applicable provisions of the Illinois Insurance Code, he shall, unless he has good cause to believe such noncompliance is knowingly and wilfully, give notice in writing to the company or organization, stating therein to the extent practicable, in what manner such noncompliance is allowed to exist and specifying therein a reasonable time, not less than 10 days thereafter, in which such noncompliance may be corrected. Notices under this Section shall be confidential between the Director and the parties unless a hearing is held thereon.
    (3) If the Director has good cause to believe such noncompliance to be wilful, or if within, the period prescribed by the Director in the notice required by paragraph (2) of this Section the company or organization does not make the changes as may be necessary to correct the noncompliance specified by the Director or establish to the satisfaction of the Director that the specified noncompliance does not exist, then the Director may hold a public hearing in connection therewith, provided that within a reasonable period of time, which shall be not less than 10 days before the date of such hearing, he must mail written notice specifying the matters to be considered at such hearing to such company or organization. If no notice has been given as provided in paragraph (2) of this Section, notice of hearing shall state therein, to the extent practicable, in what manner such noncompliance is alleged to exist.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-14) (from Ch. 73, par. 735A-14)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-14. Notice of violation-suspension or revocation of certificate-cease and desist order. If after a hearing pursuant to Sec. 123A-13, the Director finds
        (a) that a company or advisory organization is in
    
violation of this Article or other applicable provisions of the Illinois Insurance Code, he may issue an order to such company or organization which has been the subject of the hearing specifying the violation which exists and requiring compliance within a reasonable time thereafter;
        (b) that the violation of any of the applicable
    
provisions of the Illinois Insurance Code by any company or advisory organization was wilful, he may suspend or revoke, in whole or in part, the certificate of authority of such company, and revoke the license of the advisory organization and order it to cease all activities within the State of Illinois.
(Source: P.A. 77-1882.)

    (215 ILCS 5/123A-15) (from Ch. 73, par. 735A-15)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123A-15. Failure to comply with final order of Director; penalty; collection; to be in addition to other penalties; wilful violation of Act-misdemeanor.
    (1) Any person, company or organization who fails to comply with a final order of the Director under this Article shall be liable to the State up to $100 per violation, according to the findings of the Director. If the Director finds the noncompliance wilful, the person, company, or organization shall be liable to the State up to $5,000 per violation. The Director may bring action in the name of the people of the State of Illinois to enforce collection. These penalties may be in addition to any other penalties provided by law.
    (2) A wilful violation of the provisions of this Article by any person is a misdemeanor.
(Source: P.A. 77-1882.)


 
    (215 ILCS 5/Art. VIIB heading)
ARTICLE VIIB. RISK RETENTION COMPANIES
(Article scheduled to be repealed on January 1, 2057)

    (215 ILCS 5/123B-1) (from Ch. 73, par. 735B-1)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-1. Purpose. The purpose of this Article is to regulate the formation or operation, or both, of risk retention groups and purchasing groups in Illinois formed pursuant to the provisions of the federal Liability Risk Retention Act of 1986 to the extent permitted by such law.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-2) (from Ch. 73, par. 735B-2)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-2. Definitions. As used in this Article:
    (1) "Director" means the Director of the Department of Insurance.
    (2) "Completed operations liability" means liability arising out of the installation, maintenance, or repair of any product at a site which is not owned or controlled by:
        (a) any person who performs that work; or
        (b) any person who hires an independent contractor to
    
perform that work; but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability.
    (3) "Domicile", for purposes of determining the state in which a purchasing group is domiciled, means:
        (a) for a corporation, the state in which the
    
purchasing group is incorporated; and
        (b) for an unincorporated entity, the state of its
    
principal place of business.
    (4) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able:
        (a) to meet obligations to policyholders with respect
    
to known claims and reasonably anticipated claims; or
        (b) to pay other obligations in the normal course of
    
business.
    (5) "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of Illinois.
    (6) "Liability" means:
        (a) legal liability for damages (including costs of
    
defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of:
            (i) any business (whether for profit or not for
        
profit), trade, product, services (including professional services), premises, or operations; or
            (ii) any activity of any state or local
        
government, or any agency or political subdivision thereof; but
        (b) does not include personal risk liability and an
    
employer's liability with respect to its employees other than legal liability under the Federal Employers' Liability Act (45 U.S.C. 51 et seq.).
    (7) "Personal risk liability" means liability for damage because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in paragraph (a) of subsection (6) of this Section;
    (8) "Plan of operation or a feasibility study" means an analysis which presents the expected activities and results of a risk retention group including, at a minimum:
        (a) information sufficient to verify that its members
    
are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises or operations;
        (b) for each state in which it intends to operate,
    
the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer;
        (c) historical and expected loss experience of the
    
proposed members and national experience of similar exposures to the extent this experience is reasonably available;
        (d) pro forma financial statements and projections;
        (e) appropriate opinions by a qualified, independent
    
casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition;
        (f) identification of management, underwriting and
    
claims procedures, marketing methods, managerial oversight methods, investment policies and reinsurance agreements;
        (f-5) identification of each state in which the risk
    
retention group has obtained, or sought to obtain, a charter and license and a description of its status in each such state; and
        (g) such other matters as may be prescribed by the
    
commissioner of the state in which the group is chartered for liability insurance companies authorized by the insurance laws of such state.
    (9) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.
    (10) "Purchasing group" means any group which:
        (a) has as one of its purposes the purchase of
    
liability insurance on a group basis;
        (b) purchases such insurance only for its group
    
members and only to cover their similar or related liability exposure, as described in paragraph (c) of this subsection (10);
        (c) is composed of members whose businesses or
    
activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and
        (d) is domiciled in any State.
    (11) "Risk retention group" means any corporation or other limited liability association:
        (a) whose primary activity consists of assuming and
    
spreading all, or any portion, of the liability exposure of its group members;
        (b) which is organized for the primary purpose of
    
conducting the activity described under paragraph (a) of this subsection (11);
        (c) which:
            (i) is organized and licensed as a liability
        
insurance company and authorized to engage in the business of insurance under the laws of any state; or
            (ii) before January 1, 1985 was organized or
        
licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purposes of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Risk Retention Act of 1986);
        (d) which does not exclude any person from membership
    
in the group solely to provide for members of such a group a competitive advantage over such a person;
        (e) which:
            (i) has as its owners (directly or indirectly)
        
only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or
            (ii) has as its sole owner (directly or
        
indirectly) an organization which:
                (I) has as its members only persons who
            
comprise the membership of the risk retention group; and
                (II) has as its owners only persons who
            
comprise the membership of the risk retention group and who are provided insurance by such group;
        (f) whose members are engaged in businesses or
    
activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations;
        (g) whose activities do not include the provision of
    
insurance other than:
            (i) liability insurance for assuming and
        
spreading all or any portion of the liability of its group members; and
            (ii) reinsurance with respect to the liability of
        
any other risk retention group (or any members of such other group) which is engaged in businesses or activities so that such group or member meets the requirement described in paragraph (f) of this subsection (11) for membership in the risk retention group which provides such reinsurance; and
        (h) the name of which includes the phrase "Risk
    
Retention Group".
    (12) "State" means any state of the United States or the District of Columbia.
    (13) "NAIC" means the National Association of Insurance Commissioners.
(Source: P.A. 99-512, eff. 1-1-17.)

    (215 ILCS 5/123B-3) (from Ch. 73, par. 735B-3)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-3. Risk retention groups organized in this State.
    A. A risk retention group shall either:
        (1) pursuant to the provisions of Articles II or III,
    
be organized to write only liability insurance and, except as provided elsewhere in this Article, must comply with all of the laws, rules, regulations and requirements applicable to such insurers organized in this State and with Section 123B-4 of this Article to the extent such requirements are not a limitation on laws, rules, regulations or requirements of this State; or
        (2) pursuant to the provisions of Article VIIC, be
    
organized to write only liability insurance as a captive insurance company and, except as provided elsewhere in this Article, must comply with all of the laws, rules, regulations and requirements applicable to such insurers organized in this State and with Section 123B-4 of this Article to the extent such requirements are not a limitation on laws, rules, regulations or requirements of this State.
    Except that, as of the effective date of this amendatory Act of 1995, a new risk retention group must qualify under paragraph (1) of this subsection.
    B. Before it may offer insurance in any state, each risk retention group shall also submit for approval to the Director a plan of operation or a feasibility study and revisions of such plan or study if the group intends to offer any additional lines of liability insurance. In the event of any subsequent material change in any item of its plan or study, such risk retention group shall submit an appropriate revision to the Director within 10 days of any such change for approval by the Director. The group shall not offer any additional kinds of liability insurance, in this State or in any other state, until a revision of such plan or study is approved by the Director.
    C. At the time of filing its application for organization, the risk retention group shall provide to the Director in summary form the following information: the identity of the initial members of the group, the identity of those individuals who organized the group or who will provide administrative services or otherwise influence or control the activities of the group, the amount and nature of initial capitalization, the coverages to be afforded, and the states in which the group intends to operate. Upon receipt of this information, the Director shall forward the information to the NAIC. Providing notification to the NAIC is in addition to and shall not be sufficient to satisfy the requirements of Section 123B-4 of this Code or any other provisions of this Article.
    D. The name under which a risk retention group may be organized and licensed shall include the phrase "Risk Retention Group".
    E. Notwithstanding any other provision to the contrary, all risk retention groups chartered in this State shall file an annual statement with the Department and NAIC. The annual statement shall be in a form prescribed by the Director. The statement may be required to be in diskette form. The statement shall be completed in accordance with the annual statement instructions and the NAIC Accounting Practices and Procedures Manual.
    F. As used in this subsection F:
    "Board of directors" means the governing body of the risk retention group elected by shareholders or members to establish policy, elect or appoint officers and committees, and make other governing decisions.
    "Director" means a natural person designated in the articles of the risk retention group, or designated, elected, or appointed by any other manner, name, or title, to act as a director.
    "Material relationship" means a relationship of a person with the risk retention group that includes, but is not limited to:
        (a) The receipt in any one 12-month period of
    
compensation or payment of any other item of value by the person, a member of the person's immediate family, or any business with which the person is affiliated from the risk retention group or a consultant or services provider to the risk retention group is greater than or equal to 5% of the risk retention group's gross written premium for the 12-month period or 2% of its surplus, whichever is greater, as measured at the end of any fiscal quarter falling in a 12-month period. The person or immediate family member of that person is not independent until one year after his or her compensation from the risk retention group falls below the threshold.
        (b) A relationship with the auditor as follows: a
    
director or an immediate family member of a director who is affiliated with or employed in a professional capacity by a present or former internal or external auditor of the risk retention group is not independent until one year after the end of the affiliation, employment, or auditing relationship.
        (c) A relationship with a related entity as follows:
    
a director or an immediate family member of a director who is employed as an executive officer of another company where any of the risk retention group's present executives serve on that other company's board of directors is not independent until one year after the end of the service or the employment relationship.
    Within one year after the effective date of this amendatory Act of the 99th General Assembly, existing risk retention groups shall be in compliance with the following governance standards and new risk retention groups shall be in compliance with the standards at the time of licensure:
        (1) The board of directors of the risk retention
    
group shall have a majority of independent directors. If the risk retention group is a reciprocal, then the attorney-in-fact shall adhere to the same standards regarding independence of operations and governance as imposed on the risk retention group's board of directors or subscribers advisory committee under these standards and, to the extent permissible under State law, service providers of a reciprocal risk retention group shall contract with the risk retention group and not the attorney-in-fact.
        No director qualifies as independent unless the board
    
of directors affirmatively determines that the director has no material relationship with the risk retention group. Each risk retention group shall disclose these determinations to the Department at least annually and the Director may approve or refute the board's determination. For this purpose, any person that is a direct or indirect owner of or subscriber in the risk retention group (or is an officer, director, or employee of an owner and insured, unless some other position of the officer, director, or employee constitutes a material relationship), as contemplated by 15 U.S.C. 3901(a)(4)(E)(ii), shall be deemed independent.
        A material relationship shall not be deemed to exist
    
by reason that a majority of the membership of the related entity's board of directors is the same as the membership of the board of directors of the risk retention group unless the director decides otherwise.
        (2) The term of any material service provider
    
contract with the risk retention group shall not exceed 5 years. Any contract, or its renewal, shall require the approval of the majority of the risk retention group's independent directors. The risk retention group's board of directors shall have the right to terminate any service provider, audit, or actuarial contracts at any time for cause after providing adequate notice as defined in the contract. The service provider contract is deemed material if the amount to be paid for the contract is greater than or equal to 5% of the risk retention group's annual gross written premium or 2% of its surplus, whichever is greater.
        No service provider in a material relationship with
    
the risk retention group shall enter into a contract with the risk retention group unless the risk retention group has notified the Director of Insurance in writing of its intention to enter into a transaction at least 30 days prior thereto and the Director of Insurance has not disapproved it within that period.
        For the purposes of this paragraph (2), "service
    
providers" includes captive managers, auditors, accountants, actuaries, investment advisors, lawyers, managing general underwriters, and other parties responsible for underwriting, determination of rates, collection of premium, adjusting and settling claims or preparation of financial statements.
        "Lawyers" does not include defense counsel retained
    
by the risk retention group to defend claims, unless the amount of fees paid to the lawyers meet the definition of a material relationship.
        (3) The risk retention group's board of directors
    
shall adopt a written policy in the plan of operation as approved by the board that requires the board to:
            (a) ensure that all owner-insureds of the risk
        
retention group receive evidence of ownership interest;
            (b) develop a set of governance standards
        
applicable to the risk retention group;
            (c) oversee the evaluation of the risk retention
        
group's management, including, but not limited to, the performance of the captive manager, managing general underwriter, or other party or parties responsible for underwriting, determination of rates, collection of premium, adjusting or settling claims or the preparation of financial statements;
            (d) review and approve the amount to be paid for
        
all material service providers; and
            (e) review and approve at least annually:
                (i) the risk retention group's goals and
            
objectives relevant to the compensation of officers and service providers;
                (ii) the officers' and service providers'
            
performance in light of those goals and objectives; and
                (iii) the continued engagement of the
            
officers and material service providers.
        (4) The risk retention group shall have an audit
    
committee composed of at least 3 independent board members as defined in this subsection F. A non-independent board member may participate in the activities of the audit committee, if invited by the members, but cannot be a member of the committee.
        The audit committee shall have a written charter that
    
defines the committee's purpose, which at a minimum must be to:
            (a) assist board oversight of: (I) the integrity
        
of the financial statements, (II) the compliance with legal and regulatory requirements, and (III) the qualifications, independence, and performance of the independent auditor and actuary;
            (b) discuss the annual audited financial
        
statements and quarterly financial statements with management;
            (c) discuss the annual audited financial
        
statements with its independent auditor and, if advisable, discuss its quarterly financial statements with its independent auditor;
            (d) discuss policies with respect to risk
        
assessment and risk management;
            (e) meet separately and periodically, either
        
directly or through a designated representative of the committee, with management and independent auditors;
            (f) review with the independent auditor any audit
        
problems or difficulties and management's response;
            (g) set clear hiring policies of the risk
        
retention group as to the hiring of employees or former employees of the independent auditor;
            (h) require the external auditor to rotate the
        
lead or coordinating audit partner having primary responsibility for the risk retention group's audit as well as the audit partner responsible for reviewing that audit so that neither individual performs audit services for more than 5 consecutive fiscal years; and
            (i) report regularly to the board of directors.
        The Department may waive the requirement to establish
    
an audit committee composed of independent board members if the risk retention group is able to demonstrate to the Department that it is impracticable to do so and the risk retention group's board of directors itself is otherwise able to accomplish the purposes of an audit committee as described in this paragraph (4).
        (5) The board of directors shall adopt and disclose
    
governance standards, either through electronic or other means, and provide information to members and insureds upon request, including, but not limited to:
            (a) a process by which the directors are elected
        
by the owner or insureds;
            (b) director qualification standards;
            (c) director responsibilities;
            (d) director access to management and, as
        
necessary and appropriate, independent advisors;
            (e) director compensation;
            (f) director orientation and continuing education;
            (g) the policies and procedures that are followed
        
for management succession; and
            (h) the policies and procedures that are followed
        
for annual performance evaluation of the board.
        (6) The board of directors shall adopt and disclose a
    
code of business conduct and ethics for directors, officers, and employees and promptly disclose to the board of directors any waivers of the code for directors or executive officers. The code of business conduct and ethics shall include, but is not limited to, the following topics:
            (a) conflicts of interest;
            (b) matters covered under the corporate
        
opportunities doctrine under the state of domicile;
            (c) confidentiality;
            (d) fair dealing;
            (e) protection and proper use of risk retention
        
group assets;
            (f) compliance with all applicable laws, rules,
        
and regulations; and
            (g) the required reporting of any illegal or
        
unethical behavior that affects the operation of the risk retention group.
        (7) The captive manager, president, or chief
    
executive officer of the risk retention group shall promptly notify the Department in writing if he or she becomes aware of any material non-compliance with any of these governance standards.
(Source: P.A. 99-512, eff. 1-1-17.)

    (215 ILCS 5/123B-4) (from Ch. 73, par. 735B-4)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-4. Risk retention groups not organized in this State. Any risk retention group organized and licensed in a state other than this State and seeking to do business as a risk retention group in this State shall comply with the laws of this State as follows:
    A. Notice of operations and designation of the Director as agent.
    Before offering insurance in this State, a risk retention group shall submit to the Director on a form prescribed by the NAIC:
        (1) a statement identifying the state or states in
    
which the risk retention group is organized and licensed as a liability insurance company, its date of organization, its principal place of business, and such other information, including information on its membership, as the Director may require to verify that the risk retention group is qualified under subsection (11) of Section 123B-2 of this Article;
        (2) a copy of its plan of operations or a feasibility
    
study and revisions of such plan or study submitted to its state of domicile; provided, however, that the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance which (a) was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986, and (b) was offered before such date by any risk retention group which had been organized and operating for not less than 3 years before such date; and
        (3) a statement of registration which designates the
    
Director as its agent for the purpose of receiving service of legal documents or process, together with a filing fee of $200 payable to the Director.
    A risk retention group shall submit a copy of any material revision to its plan of operation or feasibility study required by subsection B of Section 123B-3 of this Code within 30 days after the date of the approval of the revision by the Director or, if no such approval is required, within 30 days after filing.
    B. Financial condition. Any risk retention group doing business in this State shall submit to the Director:
        (1) a copy of the group's financial statement
    
submitted to the state in which the risk retention group is organized and licensed, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist (under criteria established by the NAIC);
        (2) a copy of each examination of the risk retention
    
group as certified by the public official conducting the examination;
        (3) upon request by the Director, a copy of any
    
information or document pertaining to any outside audit performed with respect to the risk retention group; and
        (4) such information as may be required to verify its
    
continuing qualification as a risk retention group under subsection (11) of Section 123B-2.
    C. Taxation.
        (1) Each risk retention group shall be liable for the
    
payment of premium taxes and taxes on premiums of direct business for risks resident or located within this State, and shall report to the Director the net premiums written for risks resident or located within this State. Such risk retention group shall be subject to taxation, and any applicable fines and penalties related thereto, on the same basis as a foreign admitted insurer.
        (2) To the extent licensed insurance producers are
    
utilized pursuant to Section 123B-11, they shall report to the Director the premiums for direct business for risks resident or located within this State which such licensees have placed with or on behalf of a risk retention group not organized in this State.
        (3) To the extent that licensed insurance producers
    
are utilized pursuant to Section 123B-11, each such producer shall keep a complete and separate record of all policies procured from each such risk retention group, which record shall be open to examination by the Director, as provided in Section 506.1 of this Code. These records shall, for each policy and each kind of insurance provided thereunder, include the following:
            (a) the limit of the liability;
            (b) the time period covered;
            (c) the effective date;
            (d) the name of the risk retention group which
        
issued the policy;
            (e) the gross premium charged; and
            (f) the amount of return premiums, if any.
    D. Compliance With unfair claims practices provisions. Any risk retention group, its agents and representatives shall be subject to the unfair claims practices provisions of Sections 154.5 through 154.8 of this Code.
    E. Deceptive, false, or fraudulent practices. Any risk retention group shall comply with the laws of this State regarding deceptive, false, or fraudulent acts or practices. However, if the Director seeks an injunction regarding such conduct, the injunction must be obtained from a court of competent jurisdiction.
    F. Examination regarding financial condition. Any risk retention group must submit to an examination by the Director to determine its financial condition if the commissioner of insurance of the jurisdiction in which the group is organized and licensed has not initiated an examination or does not initiate an examination within 60 days after a request by the Director. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the NAIC's Examiner Handbook.
    G. Notice to purchasers. Every application form for insurance from a risk retention group and the front page and declaration page of every policy issued by a risk retention group shall contain in 10 point type the following notice:
"NOTICE
    This policy is issued by your risk retention group. Your risk retention group is not subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty fund protection is not available for your risk retention group".
    H. Prohibited acts regarding solicitation or sale. The following acts by a risk retention group are hereby prohibited:
        (1) the solicitation or sale of insurance by a risk
    
retention group to any person who is not eligible for membership in such group; and
        (2) the solicitation or sale of insurance by, or
    
operation of, a risk retention group that is in a hazardous financial condition or is financially impaired.
    I. Prohibition on ownership by an insurance company. No risk retention group shall be allowed to do business in this State if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies.
    J. Prohibited coverage. No risk retention group may offer insurance policy coverage prohibited by Articles IX or XI of this Code or declared unlawful by the Illinois Supreme Court; provided however, a risk retention group organized and licensed in a state other than this State that selects the law of this State to govern the validity, construction, or enforceability of policies issued by it is permitted to provide coverage under policies issued by it for penalties in the nature of compensatory damages including, without limitation, punitive damages and the multiplied portion of multiple damages, so long as coverage of those penalties is not prohibited by the law of the state under which the risk retention group is organized.
    K. Delinquency proceedings. A risk retention group not organized in this State and doing business in this State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a conservation, rehabilitation, liquidation, or other delinquency proceeding commenced by the Director or by another state insurance commissioner if there has been a finding of financial impairment after an examination under subsection F of Section 123B-4 of this Article.
    L. Compliance with injunctive relief. A risk retention group shall comply with an injunctive order issued in another state by a court of competent jurisdiction or by a United States District Court based on a finding of financial impairment or hazardous financial condition.
    M. Penalties. A risk retention group that violates any provision of this Article will be subject to fines and penalties applicable to licensed insurers generally, including revocation of its license or the right to do business in this State, or both.
    N. (Blank).
(Source: P.A. 99-512, eff. 1-1-17.)

    (215 ILCS 5/123B-5) (from Ch. 73, par. 735B-5)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-5. Compulsory associations.
    A. No risk retention group shall be required or permitted to join or contribute financially to the Illinois Insurance Guaranty Fund, or any other plan, pool, association or guaranty or insolvency fund or any similar mechanism, in this State, nor shall any risk retention group, or its insureds or claimants against its insureds, receive any benefit from any such fund or any such plan, pool, association or guaranty or insolvency fund for claims arising under the insurance policies issued by such risk retention group.
    B. When a purchasing group obtains insurance covering its members' risks from an insurer not authorized in this State or a risk retention group, no such risks, wherever resident or located, shall be covered by an insurance guaranty fund or similar mechanism in this State.
    C. When a purchasing group obtains insurance covering its members' risks from an authorized insurer, only risks resident or located in this State shall be covered by the State guaranty fund subject to the provisions of Article XXXIV.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-6) (from Ch. 73, par. 735B-6)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-6. Countersignatures not required. Notwithstanding any contrary provision of this Code, a policy of insurance issued to a risk retention group or any member of that group shall not be required to be countersigned.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-7) (from Ch. 73, par. 735B-7)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-7. Purchasing groups - exemption from certain laws relating to the group purchase of insurance. Any purchasing group meeting the criteria established under the provisions of the federal Liability Risk Retention Act of 1986 shall be exempt from any law of this State prohibiting the creation of risk purchasing of groups for the purchase of insurance; any countersignature requirements as provided in this Code; and any prohibition of group purchasing or any law that would discriminate against a purchasing group or its members, prohibit a purchasing group from obtaining insurance on a group basis or because the group has not been in existence for a minimum period of time or because any member has not belonged to the group for a minimum period of time, require that a purchasing group must have a minimum number of members, common ownership or affiliation, or certain legal form, or require that a certain percentage of a purchasing group must obtain insurance on a group basis. In addition, an insurer shall be exempt from any law of this State which prohibits providing, or offering to provide, to a purchasing group or its members advantages based on their loss and expense experience not afforded to other persons with respect to rates, policy forms, coverages or other matters. A purchasing group shall be subject to all other applicable laws of this State.
(Source: P.A. 99-512, eff. 1-1-17.)

    (215 ILCS 5/123B-8) (from Ch. 73, par. 735B-8)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-8. Notice and registration requirements of purchasing groups.
    A. A purchasing group that intends to do business in this State shall, prior to doing business, furnish notice to the Director, on a form prescribed by the Director, that shall:
        (1) identify the state in which the group is
    
domiciled;
        (2) specify the lines and classifications of
    
liability insurance which the purchasing group intends to purchase;
        (3) identify the insurance company from which the
    
group intends to purchase its insurance and the domicile of such company;
        (4) specify the method by which, and the person or
    
persons, if any, through whom insurance will be offered to its members whose risks are resident or located in this State;
        (5) identify the principal place of business of the
    
group;
        (6) identify all other states in which the group
    
intends to do business; and
        (7) provide such other information as may be required
    
by the Director to verify that the purchasing group is qualified under subsection (10) of Section 123B-2 of this Article.
    B. A purchasing group shall, within 10 days, notify the Director of any changes in any item set forth in subsection A of this Section.
    C. The purchasing group shall register with and designate the Director as its agent solely for the purpose of receiving service of legal documents or process, for which a filing fee of $100 payable to the Director shall be required, except that such requirements shall not apply in the case of a purchasing group:
        (1) which in any state of the United States:
            (a) was domiciled before April 2, 1986; and
            (b) is domiciled on and after October 27, 1986,
        
in any state of the United States;
        (2) which:
            (a) before October 27, 1986, purchased insurance
        
from an insurance carrier licensed in any state; and
            (b) since October 27, 1986, purchased its
        
insurance from an insurance carrier licensed in any state;
        (3) which was a purchasing group under the
    
requirements of the Product Liability Risk Retention Act of 1981 before October 27, 1986; and
        (4) which does not purchase insurance that was not
    
authorized for purposes of an exemption under that Act, as in effect before October 27, 1986.
    D. Any purchasing group which was doing business in this State prior to August 3, 1987, shall, within 30 days after that date, furnish notice to the Director pursuant to the provisions of subsection A of this Section and furnish such information as may be required pursuant to subsection B of this Section.
(Source: P.A. 87-1090.)

    (215 ILCS 5/123B-9) (from Ch. 73, par. 735B-9)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-9. Restrictions on insurance purchased by purchasing groups.
    A. A purchasing group may not purchase insurance from a risk retention group that is not organized in a state or from an insurer not admitted in the state in which the purchasing group is located, unless the purchase is effected through a licensed surplus line producer acting pursuant to the surplus lines laws and regulations of such state.
    B. No purchasing group may offer insurance policy coverage prohibited by this Code or declared unlawful by the Illinois Supreme Court.
    C. A purchasing group which obtains liability insurance from an insurer not admitted in this State or a risk retention group shall inform each of the members of such group which has a risk resident or located in this State that such risk is not protected by an insurance insolvency guaranty fund in this State, and that such risk retention group or such insurer may not be subject to all insurance laws and regulations of this State.
    D. No purchasing group may purchase insurance providing for a deductible or an aggregate limit unless the deductible or aggregate limit applies separately to each individual member of the purchasing group.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-10) (from Ch. 73, par. 735B-10)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-10. Administrative and procedural authority regarding risk retention groups and purchasing groups. The Director is authorized to make use of any of the powers established under this Code to enforce the laws of this State so long as those powers are not specifically preempted by the Product Liability Risk Retention Act of 1981, as amended by the Risk Retention Amendments of 1986. This includes, but is not limited to, the Director's administrative authority to investigate, issue subpoenas, conduct depositions and hearings, issue orders (including without limitation orders pursuant to Article XII 1/2 and Section 401.1), and impose penalties. With regard to any investigation, administrative proceedings, or litigation, the Director can rely on the procedural law and regulations of this State.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-11) (from Ch. 73, par. 735B-11)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-11. Duty on producers to obtain license.
    A. Any person offering, acting or seeking to solicit, sell, purchase, administer or otherwise service a liability insurance contract between a purchasing group located in this State and a risk retention group or insurance company, and any person offering, acting or seeking to solicit, sell, purchase, administer or otherwise service membership contracts, certificates or agreements for enrollment in any purchasing group to any resident of this State, must obtain a license to act as an insurance producer for casualty lines of insurance under Article XXXI; provided, however, that the foregoing provisions of this subsection A, and the following provisions of this Section 123B-11, shall not apply, if:
        (1) such purchasing group is composed entirely of
    
industrial insureds (as defined in subsection F of Section 123C-1);
        (2) any such purchasing group, that obtains liability
    
insurance from an insurer or risk retention group for one or more members of such group which has risks resident or located in this State, shall file a report in writing with the Director not later than April 1 of each year, in the form prescribed by the Director, signed and sworn to by an officer of such group, setting forth such information as the Director may require to determine whether taxes due this State with respect to the purchase of such insurance have properly been paid; and
        (3) such purchasing group filing a report under
    
paragraph (2) shall furnish to each insurer or risk retention group whose name is set forth in such report a written statement, showing:
            (a) the name and address of the purchasing group
        
making such report;
            (b) such additional information as the Director
        
may require with respect to the liability insurance obtained by such purchasing group from such insurer or risk retention group; and
            (c) that such information has been filed with the
        
Director.
        The written statement required under the preceding
    
sentence shall be furnished in a separate mailing by first-class mail to the insurer or risk retention group on or before April 1 of the year following the calendar year for which the report under paragraph (2) was made and shall be in such form as the Director may prescribe.
    B. Any such person shall be subject to all requirements of and regulations under Article XXXI, except that:
        (1) such person shall be exempt from any residency
    
requirement imposed by statute or rule, if he or she states in writing that the activities to be carried out under the license will be limited to those described in subsection A of this Section; and
        (2) where such person does not qualify for the
    
exemption set forth in paragraph (1) of subsection B of this Section, all residency requirements under the laws of this State shall be applicable; and
        (3) where such person engages in activities, as a
    
licensed insurance producer, beyond those described in subsection A of this Section, all books, records, statements and accounts required to be established and maintained with respect to activities described in subsection A shall be established and maintained on a segregated basis, separate and apart from all other books, records, statements and accounts regarding the licensee's other transactions. All premiums, commissions or other funds collected as a result of the activities described in subsection A shall be segregated from all other funds of the licensee, shall be held in separate accounts and shall in no event be commingled with any other funds held by the licensee; and
        (4) in addition to any other statutory bonding
    
requirements, any person required to be licensed by this Section shall file with his license application, and thereafter maintain, a fidelity bond in favor of the people of this State executed by a surety company and payable to any party injured by the licensee's breach of a fiduciary duty under the terms of the bond. Such bond shall be continuous in form and maintained in the amount of the greater of $50,000 or 5% of premiums or contributions projected to be received or collected by the applicant from Illinois residents during the next succeeding year as a result of activities under this Section, but not to exceed $1,000,000. Such bond shall remain in force and effect until the surety is released from liability by the Director or until the bond is cancelled by the surety. The surety may cancel the bond and be released from further liability thereunder upon 30 days' written notice in advance to the Director. Such cancellation shall not affect any liability incurred or accrued thereunder before the termination of the 30 day period. Upon receipt of any notice of cancellation, the Director shall immediately notify the licensee.
    C. Activities described under subsection A of this Section shall require licensing if carried out, in whole or in part, within this State either directly or indirectly by the use of the mails, advertising or other means of communication with a terminal located in this State.
    D. In addition to any other lawful duties, any person engaging in the activities described in subsection A of this Section shall be obligated to exercise reasonable and customary skill and diligence to ascertain that:
        (1) any purchasing group or purchasing group member,
    
to or for whom an offer or solicitation is made, receives a written disclosure that the liability insurance coverage being offered may not be subject to all of the insurance laws and regulations of this State and that, if such company is not otherwise authorized to transact business in this State, insolvency guaranty fund protection is not available for the purchasing group or purchasing group members; and that
        (2) any risk retention group or insurance company
    
which provides a liability insurance policy or certificate to any purchasing group member to or for whom an offer or solicitation is made is:
            (a) solvent, and has standards of solvency and
        
management which are adequate for the protection of policyholders and certificate holders; and
            (b) operating in a lawful manner under this
        
Article.
    E. Any insurance producer who breaches a fiduciary duty or who violates any provision of this Section will be subject to fine and revocation or suspension of its license in accordance with the procedures established under Article XXXI and may be held liable for civil damages to any person or group resulting from such violation or breach of a fiduciary duty.
    F. Any person retained or employed to solicit, offer, sell or purchase memberships in a purchasing group may be ordered to cease any such enrollment activity in this State whenever the Director has reason to believe that any such purchasing group has liability insurance coverage from a risk retention group or insurance company which is insolvent or in a hazardous financial condition. Orders entered under this paragraph shall be issued in accordance with the procedures set forth at Section 401.1.
    G. The Director may permit, on a reciprocal basis, a person licensed in another state to engage in the activities described in subsection A of this Section, whenever he is satisfied that the laws of such other state impose standards and duties on such licensee no less stringent than the standards and duties required by this Section.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-12) (from Ch. 73, par. 735B-12)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-12. Binding effect of orders issued in U.S. District Court. An order issued by any United States District Court enjoining a risk retention group from soliciting or selling insurance, or operating, in any state (or in all states or in any territory or possession of the United States) upon a finding that such a group is in a hazardous financial condition or financially impaired condition shall be enforceable in the courts of this State.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-13) (from Ch. 73, par. 735B-13)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-13. Rules and regulations. The Director may establish and from time to time amend such rules relating to risk retention groups as may be necessary or desirable to carry out the provisions of this Article.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-14) (from Ch. 73, par. 735B-14)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-14. Severability. If any clause, sentence, paragraph, Section or part of this Article or the application thereof to any person or circumstances, shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder of this Article, and the application thereof to other persons or circumstances, but shall be confined in its operation to the clause, sentence, paragraph, Section or part thereof directly involved in the controversy in which such judgment shall have been rendered and to the person or circumstances involved.
(Source: P.A. 85-131.)

    (215 ILCS 5/123B-15)
    (Section scheduled to be repealed on January 1, 2057)
    Sec. 123B-15. Article repeal. This Article is repealed on January 1, 2057.
(Source: P.A. 103-823, eff. 8-9-24.)


 
    (215 ILCS 5/Art. VIIC heading)
ARTICLE VIIC. DOMESTIC CAPTIVE INSURANCE COMPANIES
(Article scheduled to be repealed on January 1, 2027)

    (215 ILCS 5/123C-1) (from Ch. 73, par. 735C-1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-1. Definitions. As used in this Article:
    A. "Affiliate" or "Affiliated company" includes a parent entity that controls a captive insurance company and:
        (1) is an affiliate of another entity if the entity
    
directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the other entity.
        (2) is an affiliate of another entity if the entity
    
is an affiliate of and is controlled by the other entity directly or indirectly through one or more intermediaries.
A subsidiary or holding company of an entity is an affiliate of that entity.
    B. "Association" means any entity meeting the requirements set forth in either of the following paragraphs (1), (2) or (3):
        (1) any organized association of individuals, legal
    
representatives, corporations (whether for profit or not for profit), partnerships, trusts, associations, units of government or other organizations, or any combination of the foregoing, that has been in continuous existence for at least one year, the member organizations of which collectively:
            (a) own, control, or hold with power to vote
        
(directly or indirectly) all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; or
            (b) have complete voting control (directly or
        
indirectly) over an association captive insurance company organized as a mutual insurer;
        (2) any organized association of individuals, legal
    
representatives, corporations (whether for profit or not for profit), partnerships, trusts, associations, units of government or other organizations, or any combination of the foregoing:
            (a) whose member organizations are engaged in
        
businesses or activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and
            (b) whose member organizations:
                (i) directly or indirectly own or control,
            
and hold with power to vote, at least 80% of all of the outstanding voting securities of an association captive insurance company incorporated as a stock insurer; or
                (ii) directly or indirectly have at least 80%
            
of the voting control over an association captive insurance company organized as a mutual insurer; or
        (3) any risk retention group, as defined in
    
subsection (11) of Section 123B-2, domiciled in this State and organized under this Article; however, beginning 6 months after the effective date of this amendatory Act of 1995, a risk retention group shall no longer qualify as an association under this Article.
    Provided, however, that with respect to each of the associations described in paragraphs (1), (2) and (3) above, no member organization may (i) own, control, or hold with power to vote in excess of 25% of the voting securities of an association captive insurance company incorporated as a stock insurer, or (ii) have more than 25% of the voting control of an association captive insurance company organized as a mutual insurer.
    C. "Association captive insurance company" means any company that insures risks of (i) the member organizations of an association, and (ii) their affiliated companies.
    D. "Captive insurance company" means any pure captive insurance company, association captive insurance company or industrial insured captive insurance company organized under the provisions of this Article.
    E. "Director" means the Director of the Department of Insurance.
    F. "Industrial insured" means an insured which (together with its affiliates) at the time of its initial procurement of insurance from an industrial insured captive insurance company:
        (1) has available to it advice with respect to the
    
purchase of insurance through the use of the services of a full-time employee acting as an insurance manager or buyer or the services of a regularly and continuously retained qualified insurance consultant; and
        (2) pays aggregate annual premiums in excess of
        
$100,000 for insurance on all risks except for life, accident and health; and
        (3) either (i) has at least 25 full-time employees,
    
or (ii) has gross assets in excess of $3,000,000, or (iii) has annual gross revenues in excess of $5,000,000.
    G. "Industrial insured captive insurance company" means any company that insures risks of industrial insureds that are members of the industrial insured group, and their affiliated companies.
    H. "Industrial insured group" means any group of industrial insureds that collectively:
        (1) directly or indirectly (including ownership or
    
control through a company which is wholly owned by such group of industrial insureds) own or control, and hold with power to vote, all of the outstanding voting securities of an industrial insured captive insurance company incorporated as a stock insurer; or
        (2) directly or indirectly (including control through
    
a company which is wholly owned by such group of industrial insureds) have complete voting control over an industrial insured captive insurance company organized as a mutual insurer; provided, however, that no member organization may (i) own, control, or hold with power to vote in excess of 25% of the voting securities of an industrial insured captive insurance company incorporated as a stock insurer, or (ii) have more than 25% of the voting control of an industrial insured captive insurance company organized as a mutual insurer.
    I. "Member organization" means any individual, legal representative, corporation (whether for profit or not for profit), partnership, association, unit of government, trust or other organization that belongs to an association or an industrial insured group.
    J. "Parent" means a corporation, partnership, individual or other legal entity that directly or indirectly owns, controls, or holds with power to vote more than 50% of the outstanding voting securities of a company.
    K. "Personal risk liability" means liability to other persons for (i) damage because of injury to any person, (ii) damage to property, or (iii) other loss or damage, in each case resulting from any personal, familial, or household responsibilities or activities, but does not include legal liability for damages (including costs of defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of:
        (i) any business (whether for profit or not for
    
profit), trade, product, services (including professional services), premises, or operations; or
        (ii) any activity of any state or local government,
    
or any agency or political subdivision thereof.
    L. "Pure captive insurance company" means any company that insures only risks of its parent or affiliated companies or both.
    M. "Unit of government" includes any state, regional or local government, or any agency or political subdivision thereof, or any district, authority, public educational institution or school district, public corporation or other unit of government in this State or any similar unit of government in any other state.
    N. "Control" means the power to direct, or cause the direction of, the management and policies of an entity, other than the power that results from an official position with or corporate office held in the entity. The power may be possessed directly or indirectly by any means, including through the ownership of voting securities or by contract, other than a commercial contract for goods or non-management services.
    O. "Qualified independent actuary" means a person that is either:
        (1) a member in good standing with the Casualty
    
Actuarial Society; or
        (2) a member in good standing with the American
    
Academy of Actuaries who has been approved as qualified for signing casualty loss reserve opinions by the Casualty Practice Council of the American Academy of Actuaries.
    P. "Controlled unaffiliated business" means an entity:
        (1) that is not an affiliate;
        (2) that has an existing contractual relationship
    
with an affiliate under which the affiliate bears a potential financial loss; and
        (3) whose risks are managed by a captive
    
insurance company under Section 123C-24 of this Code.
    Q. "Operational risk" means any potential financial loss of an affiliate, except for a loss arising from an insurance policy issued by a captive or insurance affiliate.
    R. "Captive management company" means an entity providing administrative services to a captive insurance company.
    S. "Safety-Net Hospital" means an Illinois hospital that qualifies as a Safety-Net Hospital under Section 5-5e.1 of the Illinois Public Aid Code.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-2) (from Ch. 73, par. 735C-2)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-2. Authority of captives; restrictions.
    A. (Blank).
    A-5. A captive insurance company may not issue:
        (1) life insurance;
        (2) annuities;
        (3) accident and health insurance for the
    
company's parent and affiliates, except to insure employee benefits that are subject to the federal Employee Retirement Income Security Act of 1974 or, to the extent the parent company is a college or university, an accident or health plan offered to enrolled students of the college or university;
        (4) title insurance;
        (5) mortgage guaranty insurance;
        (6) financial guaranty insurance;
        (7) homeowner's insurance coverage;
        (8) personal automobile insurance; or
        (9) workers' compensation insurance, except to the
    
extent allowed in subsection A-10.
    A-10. A captive insurance company is authorized to issue a contractual reimbursement policy to:
        (1) the parent company or an affiliated certified
    
self-insurer authorized under the Workers' Compensation Act or a similar affiliated entity expressly authorized by analogous laws of another state; or
        (2) the parent company or an affiliate that is
    
insured by a workers' compensation insurance policy with a negotiated deductible endorsement.
    B. No captive insurance company shall do any insurance business in this State unless:
        (1) it first obtains from the Director a certificate
    
of authority authorizing it to do such insurance business in this State; and
        (2) it appoints a resident registered agent to accept
    
service of process and to otherwise act on its behalf in this State.
    C. No captive insurance company shall adopt a name that is the same as, deceptively similar to, or likely to be confused with or mistaken for, any other existing business name registered in this State.
    D. Each captive insurance company, or the organizations providing the principal administrative or management services to such captive insurance company, shall maintain a place of business in this State.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-3) (from Ch. 73, par. 735C-3)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-3. Minimum capital and surplus.
    A. The Department may not issue a certificate of authority to a captive insurance company unless the company possesses and maintains unencumbered capital and surplus in an amount determined by the Director after considering:
        (1) the amount of premium written by the captive
    
insurance company;
        (2) the characteristics of the assets held by the
    
captive insurance company;
        (3) the terms of reinsurance arrangements entered
    
into by the captive insurance company;
        (4) the type of business covered in policies
    
issued by the captive insurance company;
        (5) the underwriting practices and procedures of
    
the captive insurance company; and
        (6) any other criteria that has an impact on the
    
operations of the captive insurance company determined to be significant by the Director.
    B. The amount of capital and surplus determined by the Director under subsection A of this Section may not be less than $250,000 for a pure captive insurance company, $500,000 for an industrial insured captive insurance company, and $750,000 for an association captive insurance company.
    C. The capital and surplus required by subsection A of this Section must be in the form of:
        (1) United States currency;
        (2) an irrevocable letter of credit, in a form
    
approved by the Director and not secured by a guarantee from an affiliate, naming the Director as beneficiary for the security of the captive insurance company's policyholders and issued by a bank approved by the Director;
        (3) bonds of this State; or
        (4) bonds or other evidences of indebtedness of
    
the United States, the principal and interest of which are guaranteed by the United States.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-4)
    Sec. 123C-4. (Repealed).
(Source: 86-632. Repealed by P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-5) (from Ch. 73, par. 735C-5)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-5. Formation of captive insurance companies in this State; certificate of authority.
    A. A pure captive insurance company shall be incorporated as a stock insurer with its capital divided into shares and held by the stockholders.
    B. An association captive insurance company or an industrial insured captive insurance company may be incorporated:
        (1) as a stock insurer with its capital divided into
    
shares and held by the stockholders; or
        (2) as a mutual insurer without capital stock, the
    
governing body of which is elected by the member organizations of its association.
    C. No stock captive insurance company shall issue any shares of stock having a par value of less than $1 per share. The capital stock of a captive insurance company incorporated as a stock insurer shall be issued at not less than par value.
    D. The provisions of subsection (1) of Section 10, subsection (1) of Section 12, Sections 14, 14.1, 15 (excluding subsections (d) and (e) thereof), 18, 19, 20 and 21, subsections (3) and (4) of Section 23, and Section 25 shall apply to the organization of a stock captive insurance company.
    E. The provisions of subsection (1) of Section 40, subsections (1) and (2) of Section 42, Section 44, subsection (a) and (b) of Section 45, and Sections 48, 49, 50 and 52 shall apply to the organization of a mutual captive insurance company.
    F. (1) In order to receive a certificate of authority, at the same time as the documents referred to in subsections (a), (b) and (c) of Section 15 (in the case of a stock captive insurance company) or subsections (a) and (b) of Section 45 (in the case of a mutual captive insurance company) are delivered to the Director, the incorporators shall file with the Director any statements or documents required by the Director, including evidence of the following:
        (a) the amount and liquidity of its assets relative
    
to the risks to be assumed;
        (b) the expertise, experience, character, financial
    
responsibility, reputation and business qualifications of the officers, directors and persons who will manage it;
        (c) the overall soundness of its plan of operation
    
(which shall include (i) the lines of business to be written by the captive insurance company, (ii) the geographic areas in which the captive insurance company is to operate, (iii) the type of policy (occurrence or claims-made) to be offered by the captive insurance company, (iv) the net retention limits and reinsurance program, including whether the captive insurance company intends to assume reinsurance, and (v) in the case of an industrial insured captive insurance company, an investment policy specifying the type of investments to be made by such company and the diversity of such investments);
        (d) whether major operations functions, such as
    
underwriting, rating, claims administration, loss prevention programs, accounting and investment of funds, will be handled by the captive insurance company's employees or through contractual arrangements with other parties;
        (e) the scope of the loss prevention programs of its
    
parent, member organizations, or industrial insureds, as applicable; and
        (f) such other factors deemed relevant by the
    
Director in ascertaining whether the proposed captive insurance company will be able to meet its policy obligations.
    The Director may deny the incorporators' application for a certificate of authority if he determines, in the exercise of his discretion, either that the foregoing standards have not been satisfied or that the proposed captive insurance company is being organized for purposes inimical to the interests of policyholders.
    (2) If the Director is satisfied, on the basis of the documents and statements referred to in paragraph (1) of subsection F, that the captive insurance company meets the criteria set forth in paragraph (1) of subsection F, and that the captive insurance company meets all other requirements imposed by this Article (other than those set forth in Sections 123C-3 and 123C-4), he shall, at the same time as he effects the filing referred to in Section 18 (or, in the case of a mutual insurance company, Section 48) and issues the permit referred to in Section 20 (or, in the case of a mutual insurance company, Section 50), notify the captive insurance company in writing of his determination, which notification shall state that the Director will issue a certificate of authority upon receipt of evidence satisfactory to the Director that the company has fully collected the capital and surplus required by Sections 123C-3 and 123C-4. Upon receipt of evidence satisfactory to the Director that the required capital and surplus have been fully collected by the company, the Director shall grant a certificate of authority authorizing the captive insurance company to transact the kind or kinds of business specified therein.
(Source: P.A. 86-632.)

    (215 ILCS 5/123C-6) (from Ch. 73, par. 735C-6)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-6. Change in plan of operation; violations. Any material change in items (i) through (v) of the captive insurance company's plan of operations described in subparagraph (c) of paragraph (1) of subsection F of Section 123C-5 requires prior approval of the Director. Any material change which is not disapproved by the Director within 30 days after its submission shall be deemed approved. The provisions of Sections 401.1 and 403A shall apply to a captive insurance company's material failure to adhere to items (i) through (v) of its plan of operations described in subparagraph (c) of paragraph (1) of subsection F of Section 123C-5 (to the same extent and in the same manner as if such failure were a violation of this Code).
(Source: P.A. 85-131.)

    (215 ILCS 5/123C-7) (from Ch. 73, par. 735C-7)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-7. Directors - conflicts of interest.
    A. The provisions of Section 10 shall apply to stock captive insurance companies and all those having dealings therewith and the provisions of Section 40 shall apply to mutual captive insurance companies and all those having dealings therewith; provided that no residents or citizens of this State need be directors. No director may serve who has been convicted of fraud involving any financial institution or of a felony. The Director may waive the prohibition regarding a felony if he determines that the particular felony does not jeopardize the person's ability to act as a director.
    B. Every captive insurance company shall report to the Director within 30 days after any change in its executive officers or directors, including in its report a statement of the business and professional affiliations of any new executive officer or director. For purposes of this subsection B, the term "executive officer" includes only the following: chairman of the board of directors; president; executive or senior vice-president; secretary; and treasurer.
    C. No director, officer, or employee having any authority in the investment or disposition of the funds of a captive insurance company shall accept, except on behalf of the company, or be the beneficiary of, any fee, brokerage, gift, or other emolument because of any investment, loan, deposit, purchase, sale, payment, or exchange made by or for the company; but a director who is not otherwise an officer or employee of the company may receive reasonable compensation for services performed for sales or purchases made to or for the company in the ordinary course of its business and in the usual private professional or business capacity of such director.
    D. Any profit or gain received by or on behalf of any person in violation of subsection C of this Section shall inure to and be recoverable by the company. A suit to recover such profit may be instituted in any court of competent jurisdiction by the company, or by any stockholder of the company in its name and on its behalf if the company fails or refuses to bring such suit within 60 days after request in writing or if the company fails diligently to prosecute the same thereafter. No such suit shall be brought more than 2 years after the date such profit or gain was discovered.
(Source: P.A. 85-131.)

    (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 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 5/123C-9) (from Ch. 73, par. 735C-9)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-9. Reports, statements and mandatory reserves.
    A. Captive insurance companies shall not be required to make any annual report except as provided in this Article.
    B. (1) On or before March 1 of each year, each captive insurance company shall submit to the Director a report of its financial condition, verified by oath of 2 of its executive officers and including (i) a balance sheet reporting assets, liabilities, capital and surplus, (ii) a statement of gain or loss from operations, (iii) a statement of changes in financial position, (iv) a statement of changes in capital and surplus, (v) in the case of industrial insured captive insurance companies, an analysis of loss reserve development, information on risks ceded and assumed under reinsurance agreements, on forms prescribed by the Director, and a schedule of its invested assets on forms prescribed by the Director, and (vi) a statement of actuarial opinion by a qualified independent actuary concerning the reasonableness of the captive insurance company's loss and loss adjustment expense reserves in such form and of such content as specified in the National Association of Insurance Commissioners Annual Statement Instructions: Property and Casualty.
    (2) In addition, prior to March 1 of each year, each association captive insurance company shall submit to the Director such additional data or information, which the Director may from time to time require, on a form specified by the Director.
    (3) On or before June 1 of each year, each captive insurance company shall submit to the Director a report of its financial condition at last year's end with an independent certified public accountant's opinion of the company's financial condition.
    (4) Unless the Director permits otherwise, the reports of financial condition referred to in paragraphs (1) and (3) of this subsection B are to be prepared in accordance with the Accounting Practices and Procedures Manual adopted by the National Association of Insurance Commissioners. The Director shall have authority to extend the time for filing any report or statement by any company for reasons which he considers good and sufficient.
    C. In addition, any captive insurance company may be required by the Director, when he considers such 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 of 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. No company shall be required to file more than 4 supplemental summary statements during any consecutive 12 month period.
    D. Every captive insurance company shall, at all times, maintain reserves in an amount estimated in the aggregate to provide for the payment of all losses and claims incurred, whether reported or unreported, which are unpaid and for which such company may be liable, and to provide for the expenses of adjustment or settlement of such losses and claims. The aggregate reserves shall be reduced by reinsurance ceded which meets the requirements of Section 123C-13. For the purpose of such reserves, the company shall keep a complete and itemized record showing all losses and claims on which it has received notice, including all notices received by it of the occurrence of any event which may result in a loss. Such record shall be opened in chronological receipt order, with each notice of loss or claim identified by appropriate number or coding.
    E. Every captive insurance company shall maintain an unearned premium reserve on all policies in force which reserve shall be charged as a liability. The portions of the gross premiums in force, after deducting reinsurance qualifying under Section 123C-13, which shall be held as a premium reserve, shall never be less in the aggregate than the company's actual liability to all its insureds for the return of gross unearned premiums. In the calculation of the company's actual liability to all its insureds, the reserve shall be computed pursuant to the method commonly referred to as the monthly pro rata method; provided, however, that the Director may require that such reserve shall be equal to the unearned portions of the gross premiums in force, after deducting reinsurance qualifying under Section 123C-13, in which case the reserve shall be computed on each respective risk from the date of the issuance of the policy.
    E-5. A captive insurance company may make a written application to the Director for filing its annual report required under this Section on a fiscal year's end. If an alternative filing date is granted, the company shall file:
        (1) the annual report, including a statement of
    
actuarial opinion by a qualified independent actuary concerning the reasonableness of the captive insurance company's loss and loss adjustment expense reserves in such form and of such content as specified in the National Association of Insurance Commissioners Annual Statement Instructions: Property and Casualty, no later than the 60th day after the date of the company's fiscal year's end;
        (2) the report of its financial condition at last
    
year's end with an independent certified public accountant's opinion of the company's financial condition; and
        (3) its balance sheet, income statement, and
    
statement of cash flows, verified by 2 of its executive officers, before March 1 of each year to provide sufficient detail to support a premium tax return.
    F. The reports required by this Section shall be prepared and filed on a calendar year basis.
    G. Notwithstanding the requirements of this Section, a captive insurance company may prepare and issue financial statements prepared in accordance with generally accepted accounting principles.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-10) (from Ch. 73, par. 735C-10)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-10. Examinations and investigations; fees.
    A. The provisions of Sections 132 through 132.7 shall apply to captive insurance companies. The expenses and charges of any examination conducted pursuant to those Sections shall be paid by the company examined.
    B. When necessary to supplement its evaluation or examination procedures, the Department may retain independent actuaries deemed competent by the Director, qualified loss reserve consultants, independent risk managers, independent certified public accountants, or qualified examiners of insurance companies deemed competent by the Director, or any combination of the foregoing. The Director may also accept as a part of the Department's examination of any company or person (a) a report by an independent actuary deemed competent by the Director or (b) a report of an audit made by an independent certified public accountant. Neither those persons so designated nor any members of their immediate families shall be officers of, connected with, or financially interested in any company other than as policyholders, nor shall they be financially interested in any other corporation or person affected by the examination, investigation or hearing. The reasonable expenses and charges of persons so retained or designated shall be paid directly by the company.
(Source: P.A. 89-97, eff. 7-7-95.)

    (215 ILCS 5/123C-11) (from Ch. 73, par. 735C-11)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-11. Grounds and procedures for suspension or revocation of certificate of authority.
    A. The certificate of authority of a captive insurance company to do an insurance business in this State may be suspended or revoked by the Director for any of the following reasons:
        (1) insolvency or impairment of required capital or
    
surplus to policy holders;
        (2) failure to meet the requirements of Sections
    
123C-3 or 123C-4;
        (3) refusal or failure to submit an annual report, as
    
required by Section 123C-9, or any other report or statement required by law or by lawful order of the Director;
        (4) failure to comply with the provisions of its own
    
charter or bylaws (or, in the case of an industrial insured captive, with the provisions of the investment policy set forth in its plan of operation as approved from time to time by the Director);
        (5) failure to submit to examination or any legal
    
obligation relative thereto, as required by Section 123C-10;
        (6) refusal or failure to pay expenses, charges, and
    
taxes as required by Sections 408, 409, 123C-10, and 123C-17;
        (7) use of methods that, although not otherwise
    
specifically prohibited by law, nevertheless render its operation detrimental or its condition unsound with respect to the public or to its policyholders; or
        (8) failure otherwise to comply with the laws of this
    
State.
    B. If the Director finds, upon examination, hearing, or other evidence, that any captive insurance company has committed any of the acts specified in subsection A, he may suspend or revoke such certificate of authority if he deems it in the best interest of the public and the policyholders of such captive insurance company, notwithstanding any other provision of this Article.
    C. The provisions of Articles XIII and XIII 1/2 shall apply to and govern the conservation, rehabilitation, liquidation and dissolution of captive insurance companies.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-12) (from Ch. 73, par. 735C-12)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-12. Legal investments.
    A. The provisions of Article VIII and of Sections 131.2 and 131.3 shall apply to association captive insurance companies.
    B. No pure captive insurance company or industrial insured captive insurance company shall be subject to any restrictions on allowable investments whatever, including those limitations contained in Articles VIII and VIII 1/2; provided, however, that the Director may prohibit or limit any investment or type of investment that threatens the solvency or liquidity of any such company; and provided further that an industrial insured captive insurance company must adhere to the investment policy set forth in its plan of operation as approved from time to time by the Director.
    C. A captive insurance company may make loans to its affiliates with the prior approval of the Director. Each loan must be evidenced by a note approved by the Director. A captive insurance company may not make a loan of the minimum capital and surplus funds required by this Article.
    D. The Director may prohibit or limit an investment that threatens the solvency or liquidity of a captive insurance company.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-13) (from Ch. 73, par. 735C-13)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-13. Reinsurance.
    A. Any captive insurance company may provide reinsurance on risks ceded by any other insurer; provided, however, that the risks so assumed are the same as the captive insurance company could legally insure on a direct basis.
    The provisions of Section 174.1 shall not apply to any captive insurance company providing reinsurance.
    B. Subject to the provisions of Article XI, any captive insurance company may cede, and may take credit for in the establishment of reserves, all or any part of its risks. Furthermore, in addition to Section 173.1, any pure or industrial insured captive insurance company may take credit, as either an asset or a deduction from liability, for reinsurance so ceded to the extent:
        (1) The reinsurer satisfies all of the following (a)
    
through (g):
            (a) the principal business of the reinsurer
        
(other than investments in subsidiaries and other investment activities) is to accept reinsurance from captive insurance companies organized under Article VIIC, of which the company accepting the reinsurance directly or indirectly owns, controls, or holds with power to vote more than 80% of the outstanding voting securities if organized as a stock company or more than 80% of the voting control if organized as a mutual company and to provide insurance related services;
            (b) is licensed to transact insurance or
        
reinsurance in its jurisdiction of domicile;
            (c) submits to this State's authority to examine
        
its books and records and agrees to pay the cost thereof;
            (d) files annually with the Director a copy of
        
its most recent audited financial statements;
            (e) maintains a surplus as regards policyholders
        
in an amount that is not less than $20,000,000;
            (f) files with the Department the following:
                (i) evidence of its submission to the
            
jurisdiction of any court of competent jurisdiction in any state of the United States and its agreement to comply with all requirements necessary to give the court jurisdiction and to abide by the final decision of the court or of any appellate court in the event of an appeal; and
                (ii) an instrument designating 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;
            (g) has not been the subject of an order of the
        
Director entered after notice and hearing prohibiting the reinsurer from utilizing this paragraph (1); or
        (2) the taking of credit by the captive insurance
    
company has otherwise received the prior approval of the Director.
    C. A captive insurance company shall provide notice to the Director of a reinsurance agreement to which the company becomes a party not later than the 30th day after the date of the execution of the agreement.
    D. A captive insurance company shall provide notice of a termination of a previously filed reinsurance agreement to the Director not later than the 30th day after the date of termination.
    E. Notwithstanding Section 123C-15 of this Code, a captive insurance company, with the Director's approval, may accept risks from and cede risks to or take credit for reserves on risks ceded to:
        (1) a captive reinsurance pool composed only of
    
other captive insurance companies holding a certificate of authority under this Article or a similar law of another jurisdiction; or
        (2) an affiliated captive insurance company
    
holding a certificate of authority under this Article or a similar law of another jurisdiction.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-14) (from Ch. 73, par. 735C-14)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-14. Rating organizations; memberships; rate or policy filing. No captive insurance company shall be required to join a rating organization. No captive insurance company shall be required to file its premium rates or policy forms with, or to seek approval of such rates or forms from, the Director or any other authority of this State.
(Source: P.A. 85-131.)

    (215 ILCS 5/123C-15) (from Ch. 73, par. 735C-15)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-15. Exemption from compulsory associations. No captive insurance company shall be permitted or required to join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this State, nor shall any captive insurance company, nor its insureds nor any claimants against the insureds, nor its parent nor any affiliated company, nor any member organization of its association, receive any benefit from any such plan, pool, association, or guaranty or insolvency fund for claims arising out of the operations of such captive insurance company. Each association captive insurance company and each industrial insured captive insurance company shall inform each insured, in both the application for insurance and in the policy issued to such insured, that (i) the captive insurance company is not subject to all of the insurance laws and regulations of this State, and (ii) state insurance insolvency guaranty funds are not available to such insured for claims arising out of the operations of such captive insurance company.
(Source: P.A. 85-131.)

    (215 ILCS 5/123C-16) (from Ch. 73, par. 735C-16)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-16. Tax.
    A. Every captive insurance company organized under the provisions of this Article and doing business in this State shall, for the privilege of doing business in this State, pay to the Director for the State treasury the State tax imposed under Section 409 to the same extent and in the same manner as a domestic insurance company using a tax form prescribed by the Director on or before March 15 of each year.
    B. Domestic captive insurance companies shall be insurance companies subject to the rules now provided for such companies under the Illinois Income Tax Act.
    C. A domestic captive insurance company that has engaged one or more administrative or management service organizations in order to comply with subsection D of Section 123C-2 shall be deemed to meet the requirements of Section 409(4)(a) through (d) provided that the company and such organizations when viewed collectively as a group:
        (a) maintain a place of business in this State; and
        (b) maintain in this State personnel knowledgeable of
    
and responsible for the company's operations, books, records, administration and annual statement; and
        (c) conduct in this State substantially all of the
    
company's underwriting, policy issuing and servicing operations relating to the company's policyholders and certificate holders; and
        (d) comply with the provisions of Section 133(2)
    
with respect to such domestic captive insurance company's books, records, documents, accounts, vouchers and securities.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-17) (from Ch. 73, par. 735C-17)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-17. Fees.
    A. The Director shall charge, collect, and give proper acquittances for the payment of the following fees and charges with respect to a captive insurance company:
        1. For filing all documents submitted for the
    
incorporation or organization or certification of a captive insurance company, $2,000.
        2. For filing requests for approval of changes in the
    
elements of a plan of operations, $200.
    B. Except as otherwise provided in subsection A of this Section and in Section 123C-10, the provisions of Section 408 shall apply to captive insurance companies.
    C. Any funds collected from captive insurance companies pursuant to this Section shall be treated in the manner provided in subsection (11) of Section 408.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-18) (from Ch. 73, par. 735C-18)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-18. Additional powers, rights, and obligations. In addition to the powers and duties set forth in the other provisions of this Article VIIC and to the extent not inconsistent with the provisions of this Article VIIC:
        A. The provisions of Article XXVI, subsection E of
    
Section 123B-3, subsection A of Section 123B-4, subsection A of Section 123B-8, and Sections 2.1, 131.4 through 131.12, 131.20, 131.20a(2)(except as otherwise provided by subsection B of Section 123C-12), 131.22, 133, 141.1, 141.2, 144.1, 144.2, 147, 148, 149, 154.5, 154.6, 154.7, 154.8, 155, 186.1, 186.2, 401, 401.1, 402, 403, 403A, 407, 407.1, 407.2, 4l2, 415 and subsections (1) and (3) of Section 441 shall apply to captive insurance companies and all those having dealings therewith.
        B. The provisions of subsection (2) of Section 9,
    
Section 11, subsection (2) of Section 12, and Sections 27.1, 28, 28.2, 28.2a, 29, 30, 31, 32, 33, 34, and 35 shall apply to stock captive insurance companies and all those having dealings therewith.
        C. The provisions of subsection (2) of Section 39,
    
Section 41, subsections (1) and (2) of Section 42, and Sections 54, 55, 56, 57, 58, 59, and 60 shall apply to mutual captive insurance companies and all those having dealings therewith.
        D. The Director and each captive insurance company
    
and all those having dealings therewith shall have the authorities, powers, rights, duties and obligations set forth in Section 144 (excluding paragraph (f) of subsection (4) of Section 144); provided, however, that:
            (i) subsection (1) of Section 144 shall not apply
        
to pure captive insurance companies; and
            (ii) the Director may exempt any association
        
captive insurance company and any industrial insured captive insurance company from the requirements of subsection (1) of Section 144, on terms and conditions established by the Director, upon a showing by any such captive insurance company and a determination by the Director that the limitations of subsection (1) of Section 144 are not necessary to protect the interests of policyholders in light of such captive insurance company's financial condition and the nature of the risks insured by such company.
        E. Nothing in this Article or Code shall be deemed to
    
prohibit the by-laws of a captive insurance company from providing for the allocation of underwriting or investment income or loss to the respective accounts of its members, or to prohibit a captive insurance company, if its by-laws so provide and the requirements of this Article are otherwise met, from distributing to a withdrawing member, whether by way of ordinary or liquidating distributions and whether the withdrawal of such member is voluntary or otherwise, on terms and conditions set forth in the by-laws, that member's share of the company's surplus, as well as that portion of the underwriting and investment income allocated to such withdrawing member for the period that such withdrawing member was a member of the mutual company; provided that (i) no such distribution may be made except out of earned, as distinguished from contributed, surplus, (ii) no such distribution shall be made if the surplus of the captive insurance company is less than the original surplus required for the kind or kinds of business authorized to be transacted by such company, or if the payment of such distribution would reduce its surplus to less than the minimum, and (iii) no such distribution shall be made without the approval of the Director if such distribution, together with other such distributions made within the period of 12 consecutive months ending on the date on which the proposed distribution is scheduled for payment or distribution, exceeds the greater of: (i) 10% of the company's surplus as regards policyholders as of the 31st day of December next preceding, or (ii) the net income of the company for the 12-month period ending the 31st day of December next preceding. For the purposes of this subsection, net income includes net realized capital gains in an amount not to exceed 20% of net unrealized capital gains. The right of a member of a captive insurance company to receive distributions under this Section shall be included within the provisions of paragraph (i) of subsection (1) of Section 205 in the event of liquidation or dissolution of such captive insurance company.
(Source: P.A. 100-863, eff. 8-14-18.)

    (215 ILCS 5/123C-19) (from Ch. 73, par. 735C-19)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-19. Letters of credit.
    A. Any letter of credit used to meet the requirements set forth in Sections 123C-3 and 123C-4:
        (1) (blank);
        (2) may not be allowed to expire without the prior
    
written approval of the Director and shall provide for 30 days' advance written notice to the Director of the proposed expiration of the letter of credit; and
        (3) must be provided pursuant to arrangements,
    
acceptable to the Director, wherein all funds obtained by the company under the letter of credit are free of claims of any party which may arise on account of the company's resort to the letter of credit.
    B. If letters of credit are used to provide surplus in excess of the amounts required in Section 123C-4:
        (1) the aggregate amount of all such letters of
    
credit shall not exceed the policyholder surplus of the company;
        (2) without the prior written approval of the
    
Director, no such letter of credit may be allowed to expire, in any period of 12 consecutive months ending on the date of such expiration, in an amount greater than the greater of (a) 10% of the company's surplus as regards policyholders as of the 31st day of December next preceding, or (b) the net income of the company for the 12 month period ending the 31st day of December next preceding. For purposes of this Section, net income includes net realized capital gains in an amount not to exceed 20% of net unrealized capital gains; and
        (3) each such letter of credit shall provide for 30
    
days' advance written notice to the Director of the proposed expiration of the letter of credit.
    C. (Blank).
    D. (Blank).
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-20) (from Ch. 73, par. 735C-20)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-20. Laws applicable. No provisions of this Code, other than those contained in this Article or contained in specific references contained in this Article, shall apply to domestic captive insurance companies.
(Source: P.A. 85-131.)

    (215 ILCS 5/123C-21) (from Ch. 73, par. 735C-21)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-21. Severability. If any clause, sentence, paragraph, Section or part of this Article or the application thereof to any person or circumstances, shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder of this Article, and the application thereof to other persons or circumstances, but shall be confined in its operation to the clause, sentence, paragraph, Section or part thereof directly involved in the controversy in which such judgment shall have been rendered and to the person or circumstances involved.
(Source: P.A. 85-131.)

    (215 ILCS 5/123C-22) (from Ch. 73, par. 735C-22)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 123C-22. Subordinated indebtedness. A captive insurance company organized under this Article may borrow or assume a liability for the repayment of a sum of money upon a written agreement for the loan or advance, with interest at a rate not exceeding the corporate base rate as reported by the largest bank (measured by assets) with its head office located in Chicago, Illinois, as in effect on the first business day of the month, plus 3 percent per annum. Such rate shall be fixed on the execution of the loan and apply for the term of the loan. Such loan and interest thereon shall be repaid only out of surplus of the company in excess of such minimum surplus as is stipulated in and by the agreement. The agreement shall first be submitted to and approved by (A) not less than a majority of the Board of Directors of a stock company or a mutual company, and (B) the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he is satisfied that the financial condition of the company warrants such action. No loan or advance made under this Section or interest accruing thereon shall form a part of the legal liabilities of the company until authorized for payment by the Director but, until such authorization, all statements published by the company or filed with the Director shall show the amount thereof then remaining unpaid as a special surplus or capital account at the election of the company. Such account shall be considered in determining whether initial minimum capital and surplus requirements have been met. Nothing in this Section shall be construed to mean that a company may not otherwise borrow money, but the amount so borrowed with accrued interest thereon shall be carried by the company as a liability.
(Source: P.A. 86-632.)

    (215 ILCS 5/123C-23)
    Sec. 123C-23. Approval of captive reinsurance pools. Before determining whether to approve a captive insurance company's participation in a captive reinsurance pool under Section 123C-13 of this Code, the Director may:
        (1) require the captive insurance company provide to
    
the Director evidence that the captive reinsurance pool:
            (a) is composed only of other captive
        
insurance companies holding a certificate of authority under this Article or a similar law of another jurisdiction; and
            (b) will be able to meet the pool's financial
        
obligations; and
        (2) impose any other limitation or requirement on
    
the captive insurance company that is necessary and proper to provide adequate security for the captive insurance company.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-24)
    Sec. 123C-24. Standards for risk management of controlled unaffiliated business. The Director may adopt rules establishing standards to ensure that an affiliated company is able to exercise control of the risk management function of any controlled unaffiliated business to be insured by the captive insurance company.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-25)
    Sec. 123C-25. Captive managers. Before providing captive management services to a licensed captive insurance company, a captive management company shall register with the Director by providing the information required on a form adopted by the Director.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-26)
    Sec. 123C-26. Dividends.
    A. A captive insurance company shall notify the Director in writing when issuing policyholder dividends.
    B. A captive insurance company, with the Director's approval, may issue dividends or distributions to the holders of an equity interest in the captive insurance company. The Director shall adopt rules to implement this subsection B.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-27)
    Sec. 123C-27. Rulemaking authority. The Director may adopt reasonable rules as necessary to implement the purposes and provisions of this Article.
(Source: P.A. 100-1118, eff. 11-27-18.)

    (215 ILCS 5/123C-28)
    Sec. 123C-28. Confidentiality.
    A. Any information filed by an applicant or captive insurance company under this Article is confidential and privileged for all purposes, including for purposes of the Freedom of Information Act, a response to a subpoena, or evidence in a civil action. Except as provided by subsections B and C of this Section, the information may not be disclosed without the prior written consent of the applicant or captive insurance company to which the information pertains.
    B. If the recipient of the information described by subsection A of this Section has the legal authority to maintain the confidential or privileged status of the information and verifies that authority in writing, the Director or his or her designee may disclose the information to any of the following entities functioning in an official capacity:
        (1) a director of insurance or an insurance
    
department of another state;
        (2) an authorized law enforcement official;
        (3) a State's Attorney of this State;
        (4) the Attorney General;
        (5) a grand jury;
        (6) the National Association of Insurance
    
Commissioners if the captive insurance company is affiliated with an insurance company that is part of an insurance holding company system as described in Article VIII 1/2 of this Code;
        (7) another state or federal regulator if the
    
applicant or captive insurance company to which the information relates operates in the entity's jurisdiction;
        (8) an international insurance regulator or
    
analogous financial agency if the captive insurance company is affiliated with an insurance company that is part of an insurance holding company system as described in Article VIII 1/2 of this Code and the holding company system operates in the entity's jurisdiction; or
        (9) members of a supervisory college described by
    
Section 131.20c of this Code, if the captive insurance company is affiliated with an insurance company that is part of an insurance holding company system as described in Article VIII 1/2 of this Code.
    C. The Director may use information described by subsection A of this Section in the furtherance of a legal or regulatory action relating to the administration of this Code.
(Source: P.A. 100-1118, eff. 11-27-18.)


 
    (215 ILCS 5/Art. VIID heading)
ARTICLE VIID. NONPROFIT RISK ORGANIZATIONS

(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-1)
    Sec. 123D-1. Purpose; construction. The purpose of this Article is to provide for the organization of and issuance of a certificate of authority to nonprofit risk organizations that insure nonprofit organizations and that will qualify, and continue to qualify, as a qualified charitable risk pool, as defined in subsection (n) of Section 501 of the Internal Revenue Code.
(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-5)
    Sec. 123D-5. Definitions. As used in this Article:
    "Member" means a nonprofit organization that participates as an insured in a nonprofit risk organization.
    "Nonmember charitable organization" has the meaning set forth in subsection (n) of Section 501 of the Internal Revenue Code.
    "Nonprofit organizations" means organizations described in paragraph (3) of subsection (c), and exempt from taxation under subsection (a), of Section 501 of the Internal Revenue Code.
    "Nonprofit risk organization" means a nonprofit company organized to do business solely with nonprofit organizations as a qualified charitable risk pool under subsection (n) of Section 501 of the Internal Revenue Code that is organized in accordance with this Article.
    "Startup capital" has the meaning set forth in subsection (n) of Section 501 of the Internal Revenue Code.
(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-10)
    Sec. 123D-10. Organization of nonprofit risk organizations.
    (a) A company organized pursuant to Articles III or IV, including such companies organized as a risk retention group in this State pursuant to Article VIIB of this Code, that satisfies the requirements of this Article may be organized as a nonprofit risk organization.
    (b) Notwithstanding any contrary provision in subsection A of Section 123B-3 of this Code, a nonprofit risk organization may be organized as a reciprocal insurance company and qualify for organization under Article VIIB as a risk retention group.
    (c) No nonprofit risk organization issued a certificate of authority pursuant to this Article shall be converted into a corporation or other entity organized for pecuniary profit or into a for-profit organization of any kind.
(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-15)
    Sec. 123D-15. Conduct of insurance business by nonprofit risk organizations.
    (a) The Director may, pursuant to this Article, issue a certificate of authority to write the kinds of insurance enumerated in Classes 2 and 3 of Section 4 to a nonprofit risk organization that is a company organized pursuant to Articles III or IV, including such companies organized as a risk retention group in this State pursuant to Article VIIB, if such organization:
        (1) complies with the applicable requirements of
    
Articles III or IV and VIIB, if organized as a risk retention group; and
        (2) has an initial paid-up capital and surplus at
    
least equal to the amount of applicable paid-up capital and surplus required by Articles III or IV for a newly organized company doing the same kind or kinds of insurance business.
Thereafter, every such nonprofit risk organization shall maintain capital and surplus at least equal to the amount of applicable capital and surplus required to be maintained by companies under Articles III or IV doing the same kind or kinds of insurance business.
    (b) Every certificate of authority to engage in an insurance business issued by the Director to any nonprofit risk organization pursuant to the provisions of this Article shall specify the company's name, the location of its principal office, the name and principal address of its attorney-in-fact, if any, and the kind or kinds of insurance business that it is authorized to engage in this State.
(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-20)
    Sec. 123D-20. Relevant criteria.
    (a) A nonprofit risk organization must meet all of the following criteria:
        (1) Be organized and operated solely to insure risks
    
of its members.
        (2) Directly provide information to its members with
    
respect to loss control and risk management.
        (3) Be comprised solely of members.
        (4) Be organized under this Article.
        (5) Be exempt from Illinois income taxes with respect
    
to its activities or operations in furtherance of the powers conferred upon it by this Article.
        (6) Obtain at least $1,000,000 in startup capital
    
from nonmember charitable organizations. The startup capital may take the form of advancements or borrowings in the form permitted by Section 56 or 76 of this Code, as applicable. Startup capital may be used to satisfy the financial requirements contained in this Article applicable to a nonprofit risk organization only to the extent the Director determines that it complies with those requirements.
        (7) Be controlled by a board of directors elected by
    
its members.
        (8) Require in its organizational documents that:
            (A) each member of the nonprofit risk
        
organization shall at all times be an organization described in paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code and exempt from tax under subsection (a) of Section 501 of the Internal Revenue Code;
            (B) any member that receives a final
        
determination that it no longer qualifies as an organization described in paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code shall immediately notify the nonprofit risk organization of the determination and the effective date of the determination; and
            (C) each policy of insurance issued by the
        
nonprofit risk organization shall provide that the policy does not cover the insured with respect to events occurring after the date the final determination was issued to the insured.
        (b) An organization shall not cease to qualify as a
    
nonprofit risk organization solely by reason of the failure of any of its members to continue to be an organization described in paragraph (3) of subsection (c) of Section 501 of the Internal Revenue Code if, within a reasonable period of time after the nonprofit risk organization is notified as required under subparagraph (8)(B) of subsection (a) of this Section, the nonprofit risk organization takes such action as may be reasonably necessary to remove the member from the nonprofit risk organization.
(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-25)
    Sec. 123D-25. Applicability of other provisions of this Code. Except as otherwise provided in this Article, where inconsistent with this Article, or where the context otherwise requires, all of the provisions of this Code and the rules of the Director relating to all insurers and those relating to a company organized pursuant to Articles III or IV or a risk retention group organized in this State pursuant to Article VIIB transacting the same kind or kinds of insurance shall be applicable to a nonprofit risk organization organized and issued a certificate of authority pursuant to this Article. Where any of such provisions of law refer to a corporation, company, or insurer, those references, when read in connection with and applicable to this Article, shall mean such a nonprofit risk organization.
(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-30)
    Sec. 123D-30. Residual market participation exemption; security funds. A nonprofit risk organization shall not be permitted or required to join or contribute financially to any plan, pool, association, or guaranty or insolvency fund in this State, nor shall any nonprofit risk organization, nor its insureds nor any claimants against the insureds, nor its parent nor any affiliated company, nor any member organization of its association, receive any benefit from any such plan, pool association, or guaranty or insolvency fund for claims arising out of the operations of the nonprofit risk organization. Each nonprofit risk organization must inform each insured, in both the application for insurance and in the policy issued to the insured, that (i) the nonprofit risk organization is not subject to all of the insurance laws and rules of this State, and (ii) State insurance insolvency guaranty funds are not available to the insured for claims arising out of the operations of the nonprofit risk organization.
(Source: P.A. 93-918, eff. 1-1-05.)

    (215 ILCS 5/123D-35)
    Sec. 123D-35. Rules. The Director shall adopt such rules as may be necessary for the implementation of this Article.
(Source: P.A. 93-918, eff. 1-1-05.)


 
    (215 ILCS 5/Art. VIII heading)
ARTICLE VIII. INVESTMENTS OF DOMESTIC COMPANIES

    (215 ILCS 5/124) (from Ch. 73, par. 736)
    Sec. 124. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.1) (from Ch. 73, par. 736.1)
    Sec. 124.1. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.2) (from Ch. 73, par. 736.2)
    Sec. 124.2. (Repealed).
(Source: P.A. 89-97, eff. 7-7-95. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.3) (from Ch. 73, par. 736.3)
    Sec. 124.3. (Repealed).
(Source: P.A. 87-757. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.4) (from Ch. 73, par. 736.4)
    Sec. 124.4. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.5) (from Ch. 73, par. 736.5)
    Sec. 124.5. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.6) (from Ch. 73, par. 736.6)
    Sec. 124.6. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.7) (from Ch. 73, par. 736.7)
    Sec. 124.7. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.7a) (from Ch. 73, par. 736.7a)
    Sec. 124.7a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.7b) (from Ch. 73, par. 736.7b)
    Sec. 124.7b. (Repealed).
(Source: P.A. 85-1186. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.7c) (from Ch. 73, par. 736.7c)
    Sec. 124.7c. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.8) (from Ch. 73, par. 736.8)
    Sec. 124.8. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.9) (from Ch. 73, par. 736.9)
    Sec. 124.9. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.9a) (from Ch. 73, par. 736.9a)
    Sec. 124.9a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.10) (from Ch. 73, par. 736.10)
    Sec. 124.10. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.10a) (from Ch. 73, par. 736.10a)
    Sec. 124.10a. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.10b) (from Ch. 73, par. 736.10b)
    Sec. 124.10b. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.11) (from Ch. 73, par. 736.11)
    Sec. 124.11. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.12) (from Ch. 73, par. 736.12)
    Sec. 124.12. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.13) (from Ch. 73, par. 736.13)
    Sec. 124.13. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.13a) (from Ch. 73, par. 736.13a)
    Sec. 124.13a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.13b) (from Ch. 73, par. 736.13b)
    Sec. 124.13b. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.13c) (from Ch. 73, par. 736.13c)
    Sec. 124.13c. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.13d) (from Ch. 73, par. 736.13d)
    Sec. 124.13d. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.13e) (from Ch. 73, par. 736.13e)
    Sec. 124.13e. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.14) (from Ch. 73, par. 736.14)
    Sec. 124.14. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.15) (from Ch. 73, par. 736.15)
    Sec. 124.15. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/124.17) (from Ch. 73, par. 736.17)
    Sec. 124.17. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125a) (from Ch. 73, par. 737a)
    Sec. 125a. (Repealed).
(Source: P.A. 84-805. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125b) (from Ch. 73, par. 737b)
    Sec. 125b. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.1a) (from Ch. 73, par. 737.1a)
    Sec. 125.1a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.2a) (from Ch. 73, par. 737.2a)
    Sec. 125.2a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.2b) (from Ch. 73, par. 737.2b)
    Sec. 125.2b. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.2c) (from Ch. 73, par. 737.2c)
    Sec. 125.2c. (Repealed).
(Source: Laws 1963, p. 3139. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.2d) (from Ch. 73, par. 737.2d)
    Sec. 125.2d. (Repealed).
(Source: P.A. 76-710. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.2e) (from Ch. 73, par. 737.2e)
    Sec. 125.2e. (Repealed).
(Source: P.A. 77-34. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.2f) (from Ch. 73, par. 737.2f)
    Sec. 125.2f. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.2g) (from Ch. 73, par. 737.2g)
    Sec. 125.2g. (Repealed).
(Source: P.A. 87-575. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.3a) (from Ch. 73, par. 737.3a)
    Sec. 125.3a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.4a) (from Ch. 73, par. 737.4a)
    Sec. 125.4a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.4b) (from Ch. 73, par. 737.4b)
    Sec. 125.4b. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.5b) (from Ch. 73, par. 737.5b)
    Sec. 125.5b. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.6a) (from Ch. 73, par. 737.6a)
    Sec. 125.6a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.9a) (from Ch. 73, par. 737.9a)
    Sec. 125.9a. (Repealed).
(Source: P.A. 87-1090. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.9b) (from Ch. 73, par. 737.9b)
    Sec. 125.9b. (Repealed).
(Source: P.A. 87-108. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.9c)
    Sec. 125.9c. (Repealed).
(Source: P.A. 89-97, eff. 7-7-95. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.10a) (from Ch. 73, par. 737.10a)
    Sec. 125.10a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.10c) (from Ch. 73, par. 737.10c)
    Sec. 125.10c. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.10d) (from Ch. 73, par. 737.10d)
    Sec. 125.10d. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.11a) (from Ch. 73, par. 737.11a)
    Sec. 125.11a. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.12a) (from Ch. 73, par. 737.12a)
    Sec. 125.12a. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.12b) (from Ch. 73, par. 737.12b)
    Sec. 125.12b. (Repealed).
(Source: P.A. 86-1475. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.12c) (from Ch. 73, par. 737.12c)
    Sec. 125.12c. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.14a) (from Ch. 73, par. 737.14a)
    Sec. 125.14a. (Repealed).
(Source: P.A. 86-1475. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.15a) (from Ch. 73, par. 737.15a)
    Sec. 125.15a. (Repealed).
(Source: P.A. 89-97, eff. 7-7-95. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.15b) (from Ch. 73, par. 737.15b)
    Sec. 125.15b. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.16a) (from Ch. 73, par. 737.16a)
    Sec. 125.16a. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.17a) (from Ch. 73, par. 737.17a)
    Sec. 125.17a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.18a) (from Ch. 73, par. 737.18a)
    Sec. 125.18a. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.18b) (from Ch. 73, par. 737.18b)
    Sec. 125.18b. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.19a) (from Ch. 73, par. 737.19a)
    Sec. 125.19a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.20a) (from Ch. 73, par. 737.20a)
    Sec. 125.20a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.21a) (from Ch. 73, par. 737.21a)
    Sec. 125.21a. (Repealed).
(Source: P.A. 85-1186. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.22a) (from Ch. 73, par. 737.22a)
    Sec. 125.22a. (Repealed).
(Source: P.A. 86-1156. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.23a) (from Ch. 73, par. 737.23a)
    Sec. 125.23a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/125.24a) (from Ch. 73, par. 737.24a)
    Sec. 125.24a. (Repealed).
(Source: P.A. 83-695. Repealed by P.A. 90-418, eff. 8-15-97.)


 
    (215 ILCS 5/Art. VIII Pt. 1 heading)
1. GENERAL PROVISIONS

    (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 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 5/126.2)
    Sec. 126.2. Definitions. For purposes of this Article:
    A. "Acceptable collateral" means:
        (1) As to securities lending transactions, and for
    
the purpose of calculating counterparty exposure amount, cash, cash equivalents, letters of credit, direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or any agency of the United States, or by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, and as to lending foreign securities, sovereign debt rated 1 by the SVO;
        (2) As to repurchase transactions, cash, cash
    
equivalents and direct obligations of, or securities that are fully guaranteed as to principal and interest by, the government of the United States or an agency of the United States, or by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; and
        (3) As to reverse repurchase transactions, cash and
    
cash equivalents.
    B. "Acceptable private mortgage insurance" means insurance written by a private insurer protecting a mortgage lender against loss occasioned by a mortgage loan default and issued by a licensed mortgage insurance company, with an SVO 1 designation or a rating issued by a nationally recognized statistical rating organization equivalent to an SVO 1 designation, that covers losses to an 80% loan-to-value ratio.
    C. "Accident and health insurance" means protection which provides payment of benefits for covered sickness or accidental injury, excluding credit insurance, disability insurance, accidental death and dismemberment insurance and long-term care insurance.
    D. "Accident and health insurer" means a licensed life or health insurer or health service corporation whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95% of total premium considerations or total statutory required reserves, respectively.
    E. "Admitted assets" means assets defined by Section 3.1 of this Code permitted to be reported as admitted assets on the statutory financial statement of the insurer most recently required to be filed with the Director, but excluding assets of separate accounts, the investments of which are not subject to the provisions of this Article except to the extent that the provisions of Article XIV 1/2 so provide.
    F. "Affiliate" means, as to any person, another person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the person.
    G. "Asset-backed security" means a security or other instrument, excluding shares in a mutual fund, evidencing an interest in, or the right to receive payments from, or payable from distributions on, an asset, a pool of assets or specifically divisible cash flows which are legally transferred to a trust or another special purpose bankruptcy-remote business entity, on the following conditions:
        (1) The trust or other business entity is established
    
solely for the purpose of acquiring specific types of assets or rights to cash flows, issuing securities and other instruments representing an interest in or right to receive cash flows from those assets or rights, and engaging in activities required to service the assets or rights and any credit enhancement or support features held by the trust or other business entity; and
        (2) The assets of the trust or other business entity
    
consist solely of interest bearing obligations or other contractual obligations representing the right to receive payment from the cash flows from the assets or rights. However, the existence of credit enhancements, such as letters of credit or guarantees, or support features such as swap agreements, shall not cause a security or other instrument to be ineligible as an asset-backed security.
    H. "Business entity" includes a sole proprietorship, corporation, limited liability company, association, partnership, joint stock company, joint venture, mutual fund, trust, joint tenancy or other similar form of business organization, whether organized for profit or not for profit.
    I. "Cap" means an agreement obligating the seller to make payments to the buyer, with each payment based on the amount by which a reference price or level or the performance or value of one or more underlying interests exceeds a predetermined number, sometimes called the strike rate or strike price.
    J. "Capital and surplus" means the sum of the capital and surplus of the insurer required to be shown on the statutory financial statement of the insurer most recently required to be filed with the Director.
    K. "Cash equivalents" means short-term, highly rated and highly liquid investments or securities readily convertible to known amounts of cash without penalty and so near maturity that they present insignificant risk of change in value. Cash equivalents include government money market mutual funds and class one money market mutual funds. For purposes of this definition:
        (1) "Short-term" means investments with a remaining
    
term to maturity of 90 days or less; and
        (2) "Highly rated" means an investment rated "P-1" by
    
Moody's Investors Service, Inc., or "A-1" by Standard and Poor's division of The McGraw Hill Companies, Inc. or its equivalent rating by a nationally recognized statistical rating organization recognized by the SVO.
    L. "Class one bond mutual fund" means a mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office or any successor publication.
    M. "Class one money market mutual fund" means a money market mutual fund that at all times qualifies for investment using the bond class one reserve factor under the Purposes and Procedures of the Securities Valuation Office or any successor publication.
    N. "Code" means the Illinois Insurance Code.
    O. "Collar" means an agreement to receive payments as the buyer of an option, cap or floor and to make payments as the seller of a different option, cap or floor.
    P. "Commercial mortgage loan" means a mortgage loan, other than a residential mortgage loan.
    Q. "Construction loan" means a loan of less than 3 years in term, made for financing the cost of construction of a building or other improvement to real estate, that is secured by the real estate.
    R. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract (other than a commercial contract for goods or nonmanagement services), or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote or holds proxies representing 10% or more of the voting securities of another person. This presumption may be rebutted by a showing that control does not exist in fact. The Director may determine, after furnishing all interested persons notice and an opportunity to be heard and making specific findings of fact to support the determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
    S. "Counterparty exposure amount" means:
        (1) The amount of credit risk attributable to a
    
derivative instrument entered into with a business entity other than through a qualified exchange, qualified foreign exchange, or cleared through a qualified clearinghouse ("over-the-counter derivative instrument"). The amount of credit risk equals:
            (a) The market value of the over-the-counter
        
derivative instrument if the liquidation of the derivative instrument would result in a final cash payment to the insurer; or
            (b) Zero if the liquidation of the derivative
        
instrument would not result in a final cash payment to the insurer.
        (2) If over-the-counter derivative instruments are
    
entered into under a written master agreement which provides for netting of payments owed by the respective parties, and the domicile of the counterparty is either within the United States or if not within the United States, within a foreign jurisdiction listed in the Purposes and Procedures of the Securities Valuation Office as eligible for netting, the net amount of credit risk shall be the greater of zero or the net sum of:
            (a) The market value of the over-the-counter
        
derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment to the insurer; and
            (b) The market value of the over-the-counter
        
derivative instruments entered into under the agreement, the liquidation of which would result in a final cash payment by the insurer to the business entity.
        (3) For open transactions, market value shall be
    
determined at the end of the most recent quarter of the insurer's fiscal year and shall be reduced by the market value of acceptable collateral held by the insurer or placed in escrow by one or both parties.
    T. "Covered" means that an insurer owns or can immediately acquire, through the exercise of options, warrants or conversion rights already owned, the underlying interest in order to fulfill or secure its obligations under a call option, cap or floor it has written, or has set aside, pursuant to a custodial or escrow agreement, cash or cash equivalents with a market value equal to the amount required to fulfill its obligations under a put option it has written, in an income generation transaction.
    U. "Credit tenant loan" means a mortgage loan which is made primarily in reliance on the credit standing of a major tenant, structured with an assignment of the rental payments to the lender with real estate pledged as collateral in the form of a first lien.
    V. (1) "Derivative instrument" means an agreement,
    
option, instrument or a series or combination thereof:
            (a) To make or take delivery of, or assume or
        
relinquish, a specified amount of one or more underlying interests, or to make a cash settlement in lieu thereof; or
            (b) That has a price, performance, value or cash
        
flow based primarily upon the actual or expected price, level, performance, value or cash flow of one or more underlying interests.
        (2) Derivative instruments include options, warrants
    
used in a hedging transaction and not attached to another financial instrument, caps, floors, collars, swaps, forwards, futures and any other agreements, options or instruments substantially similar thereto or any series or combination thereof and any agreements, options or instruments permitted under rules adopted under Section 126.8. Derivative instruments shall not include an investment authorized by Sections 126.11 through 126.17, 126.19 and 126.24 through 126.30.
    W. "Derivative transaction" means a transaction involving the use of one or more derivative instruments.
    X. "Direct" or "directly," when used in connection with an obligation, means the designated obligor is primarily liable on the instrument representing the obligation.
    Y. "Dollar roll transaction" means 2 simultaneous transactions with settlement dates no more than 96 days apart, so that in one transaction an insurer sells to a business entity, and in the other transaction the insurer is obligated to purchase from the same business entity, substantially similar securities of the following types:
        (1) Asset-backed securities issued, assumed or
    
guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation or their respective successors; and
        (2) Other asset-backed securities referred to in
    
Section 106 of Title I of the Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. 77r1), as amended.
    Z. "Domestic jurisdiction" means the United States, Canada, any state, any province of Canada or any political subdivision of any of the foregoing.
    AA. "Equity interest" means any of the following that are not rated credit instruments: common stock; preferred stock; trust certificate; equity investment in an investment company other than a money market mutual fund or a class one bond mutual fund; investment in a common trust fund of a bank regulated by a federal or state agency; an ownership interest in minerals, oil or gas, the rights to which have been separated from the underlying fee interest in the real estate where the minerals, oil or gas are located; instruments which are mandatorily, or at the option of the issuer, convertible to equity; limited partnership interests and those general partnership interests authorized under Section 126.5(D); member interests in limited liability companies; warrants or other rights to acquire equity interests that are created by the person that owns or would issue the equity to be acquired; or instruments that would be rated credit instruments except for the provisions of subsection RRR(2) of this Section.
    BB. "Equivalent securities" means:
        (1) In a securities lending transaction, securities
    
that are identical to the loaned securities in all features including the amount of the loaned securities, except as to certificate number if held in physical form, but if any different security shall be exchanged for a loaned security by recapitalization, merger, consolidation or other corporate action, the different security shall be deemed to be the loaned security;
        (2) In a repurchase transaction, securities that are
    
identical to the purchased securities in all features including the amount of the purchased securities, except as to the certificate number if held in physical form; or
        (3) In a reverse repurchase transaction, securities
    
that are identical to the sold securities in all features including the amount of the sold securities, except as to the certificate number if held in physical form.
    CC. "Floor" means an agreement obligating the seller to make payments to the buyer in which each payment is based on the amount by which a predetermined number, sometimes called the floor rate or price, exceeds a reference price, a level, or the performance or value of one or more underlying interests.
    DD. "Foreign currency" means a currency other than that of a domestic jurisdiction.
    EE.  (1) "Foreign investment" means an investment in a
    
foreign jurisdiction, or an investment in a person, real estate or asset domiciled in a foreign jurisdiction, that is substantially of the same type as those eligible for investment under this Article, other than under Sections 126.17 and 126.30. An investment shall not be deemed to be foreign if the issuing person, qualified primary credit source or qualified guarantor is a domestic jurisdiction or a person domiciled in a domestic jurisdiction, unless:
            (a) The issuing person is a shell business
        
entity; and
            (b) The investment is not assumed, accepted,
        
guaranteed, or insured or otherwise backed by a domestic jurisdiction or a person, that is not a shell business entity, domiciled in a domestic jurisdiction.
        (2) For purposes of this definition:
            (a) "Shell business entity" means a business
        
entity having no economic substance, except as a vehicle for owning interests in assets issued, owned or previously owned by a person domiciled in a foreign jurisdiction;
            (b) "Qualified guarantor" means a guarantor
        
against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction; and
            (c) "Qualified primary credit source" means the
        
credit source to which an insurer looks for payment as to an investment and against which an insurer has a direct claim for full and timely payment, evidenced by a contractual right for which an enforcement action can be brought in a domestic jurisdiction.
    FF. "Foreign jurisdiction" means a jurisdiction other than a domestic jurisdiction.
    GG. "Forward" means an agreement (other than a future) to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of, one or more underlying interests.
    HH. "Future" means an agreement, traded on a qualified exchange or qualified foreign exchange, to make or take delivery of, or effect a cash settlement based on the actual or expected price, level, performance or value of, one or more underlying interests and includes an insurance future.
    II. "Government money market mutual fund" means a money market mutual fund that at all times:
        (1) Invests only in obligations issued, guaranteed,
    
or insured by the federal government of the United States or collateralized repurchase agreements composed of these obligations; and
        (2) Qualifies for investment without a reserve under
    
the Purposes and Procedures of the Securities Valuation Office or any successor publication.
    JJ. "Government sponsored enterprise" means a:
        (1) Governmental agency; or
        (2) Corporation, limited liability company,
    
association, partnership, joint stock company, joint venture, trust or other entity or instrumentality organized under the laws of any domestic jurisdiction to accomplish a public policy or other governmental purpose.
    KK. "Guaranteed or insured," when used in connection with an obligation acquired under this Article, means the guarantor or insurer has agreed to:
        (1) Perform or insure the obligation of the obligor
    
or purchase the obligation; or
        (2) Be unconditionally obligated until the obligation
    
is repaid to maintain in the obligor a minimum net worth, fixed charge coverage, stockholders' equity or sufficient liquidity to enable the obligor to pay the obligation in full.
    LL. "Hedging transaction" means:
        (1) A derivative transaction that is entered into and
    
maintained to reduce:
            (a) the risk of a change in the value, yield,
        
price, cash flow, or quantity of assets or liabilities that the insurer has acquired or incurred or anticipates acquiring or incurring; or
            (b) the currency exchange rate risk or the degree
        
of exposure as to assets or liabilities that the insurer has acquired or incurred or anticipates acquiring or incurring; or
        (2) Such other derivative transactions as may be
    
specified to constitute hedging transactions in rules adopted pursuant to Section 126.8.
    MM. "High grade investment" means a rated credit instrument; rated 1, 2, P1, P2, PSF1 or PSF2 by the SVO.
    NN. "Income" means, as to a security, interest, accrual of discount, dividends or other distributions, such as rights, tax or assessment credits, warrants and distributions in kind.
    OO. "Income generation transaction" means (1) a derivative transaction involving the writing of covered call options, covered put options, covered caps or covered floors that is intended to generate income or enhance return, or (2) such other derivative transactions as may be specified to constitute income generation transactions in rules adopted pursuant to Section 126.8.
    PP. "Initial margin" means the amount of cash, securities or other consideration initially required to be deposited to establish a futures position.
    QQ. "Insurance future" means a future relating to an index or pool that is based on insurance-related items.
    RR. "Insurance futures option" means an option on an insurance future.
    SS. "Investment company" means an investment company as defined in Section 3(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended, and a person described in Section 3(c) of that Act.
    TT. "Investment company series" means an investment portfolio of an investment company that is organized as a series company and to which assets of the investment company have been specifically allocated.
    UU. "Investment practices" means transactions of the types described in Section 126.16, 126.18, 126.29 or 126.31.
    VV. "Investment subsidiary" means a subsidiary of an insurer engaged or organized to engage exclusively in the ownership and management of assets authorized as investments for the insurer if such subsidiary agrees to limit its investment in any asset so that its investments will not cause the amount of the total investment of the insurer to exceed any of the investment limitations or avoid any other provisions of this Article applicable to the insurer. As used in this subsection, the total investment of the insurer shall include:
        (1) Direct investment by the insurer in an asset; and
        (2) The insurer's proportionate share of an
    
investment in an asset by an investment subsidiary of the insurer, which shall be calculated by multiplying the amount of the subsidiary's investment by the percentage of the insurer's ownership interest in the subsidiary.
    WW. "Investment strategy" means the techniques and methods used by an insurer to meet its investment objectives, such as active bond portfolio management, passive bond portfolio management, interest rate anticipation, growth investing and value investing.
    XX. "Letter of credit" means a clean, irrevocable and unconditional letter of credit issued or confirmed by, and payable and presentable at, a financial institution on the list of financial institutions meeting the standards for issuing letters of credit under the Purposes and Procedures of the Securities Valuation Office or any successor publication. To constitute acceptable collateral for the purposes of Sections 126.16 and 126.29, a letter of credit must have an expiration date beyond the term of the subject transaction.
    YY. "Limited liability company" means a business organization, excluding partnerships and ordinary business corporations, organized or operating under the laws of the United States or any state thereof that limits the personal liability of investors to the equity investment of the investor in the business entity.
    ZZ. "Lower grade investment" means a rated credit instrument rated 4, 5, 6, P4, P5, P6, PSF4, PSF5, or PSF6 by the SVO.
    AAA. "Market value" means:
        (1) As to cash and letters of credit, the amounts
    
thereof; and
        (2) As to a security as of any date, the price for
    
the security on that date obtained from a generally recognized source or the most recent quotation from such a source or, to the extent no generally recognized source exists, the price for the security as determined in good faith by the insurer, plus accrued but unpaid income thereon to the extent not included in the price as of that date.
    BBB. "Medium grade investment" means a rated credit instrument rated 3, P3, or PSF 3 by the SVO.
    CCC. "Money market mutual fund" means a mutual fund that meets the conditions of 17 Code of Federal Regulations Par. 270.2a-7, under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended or renumbered.
    DDD. "Mortgage loan" means an obligation secured by a mortgage, deed of trust, trust deed or other consensual lien on real estate.
    EEE. "Multilateral development bank" means an international development organization of which the United States is a member.
    FFF. "Mutual fund" means an investment company or, in the case of an investment company that is organized as a series company, an investment company series, that, in either case, is registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended.
    GGG. "NAIC" means the National Association of Insurance Commissioners.
    HHH. "Obligation" means a bond, note, debenture, trust certificate including an equipment trust certificate, production payment, negotiable bank certificate of deposit, bankers' acceptance, credit tenant loan, loan secured by financing net leases and other evidence of indebtedness for the payment of money (or participations, certificates or other evidences of an interest in any of the foregoing), whether constituting a general obligation of the issuer or payable only out of certain revenues or certain funds pledged or otherwise dedicated for payment.
    III. "Option" means an agreement giving the buyer the right to buy or receive (a "call option"), sell or deliver (a "put option"), enter into, extend or terminate or effect a cash settlement based on the actual or expected price, level, performance or value of one or more underlying interests and includes an insurance futures option.
    JJJ. "Person" means an individual, a business entity, a multilateral development bank or a government or quasi governmental body, such as a political subdivision or a government sponsored enterprise.
    KKK. "Potential exposure" means the amount determined in accordance with the NAIC Annual Statement Instructions.
    LLL. "Preferred stock" means preferred, preference or guaranteed stock of a business entity authorized to issue the stock, that has a preference in liquidation over the common stock of the business entity.
    MMM. "Qualified bank" means:
        (1) A national bank, state bank or trust company that
    
at all times is no less than adequately capitalized as determined by standards adopted by United States banking regulators and that either is regulated by state banking laws or is a member of the Federal Reserve System; or
        (2) A bank or trust company incorporated or organized
    
under the laws of a country other than the United States that is regulated as a bank or trust company by that country's government or an agency thereof and that at all times is no less than adequately capitalized as determined by the standards adopted by international banking authorities.
    NNN. "Qualified business entity" means a business entity that is:
        (1) An issuer of obligations or preferred stock that
    
are rated 1 or 2 by the SVO or an issuer of obligations, preferred stock or derivative instruments that are rated the equivalent of 1 or 2 by the SVO or by a nationally recognized statistical rating organization recognized by the SVO;
        (2) A primary dealer in United States government
    
securities, recognized by the Federal Reserve Bank of New York; or
        (3) With respect to securities lending arrangements
    
under Sections 126.16 and 126.29, an affiliate of an entity that is a qualified business entity pursuant to paragraph (1) or (2) of this subsection NNN, whose arrangement with the insurer is guaranteed by the affiliated entity that is a qualified business entity under paragraph (1) or (2).
    OOO. "Qualified clearinghouse" means a clearinghouse for, and subject to the rules of, a qualified exchange or a qualified foreign exchange, which provides clearing services, including acting as a counterparty to each of the parties to a transaction such that the parties no longer have credit risk as to each other.
    PPP. "Qualified exchange" means:
        (1) A securities exchange registered as a national
    
securities exchange, or a securities market regulated under the Securities Exchange Act of 1934 (15 U.S.C. 78 et seq.), as amended;
        (2) A board of trade or commodities exchange
    
designated as a contract market by the Commodity Futures Trading Commission or any successor thereof;
        (3) Private Offerings, Resales and Trading through
    
Automated Linkages (PORTAL);
        (4) A designated offshore securities market as
    
defined in Securities Exchange Commission Regulation S, 17 C.F.R. Part 230, as amended; or
        (5) A qualified foreign exchange.
    QQQ. "Qualified foreign exchange" means a foreign exchange, board of trade or contract market located outside the United States, its territories or possessions:
        (1) That has received regulatory comparability relief
    
under Commodity Futures Trading Commission (CFTC) Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC's Regulations, 17 C.F.R. Part 30);
        (2) That is, or its members are, subject to the
    
jurisdiction of a foreign futures authority that has received regulatory comparability relief under CFTC Rule 30.10 (as set forth in Appendix C to Part 30 of the CFTC's Regulations, 17 C.F.R. Part 30) as to futures transactions in the jurisdiction where the exchange, board of trade or contract market is located; or
        (3) Upon which foreign stock index futures contracts
    
are listed that are the subject of no-action relief issued by the CFTC's Office of General Counsel, provided that an exchange, board of trade or contract market that qualifies as a "qualified foreign exchange" only under this subsection shall only be a "qualified foreign exchange" as to foreign stock index futures contracts that are the subject of no-action relief.
    RRR.  (1) "Rated credit instrument" means an obligation
    
or other instrument which gives its holder a contractual right to receive cash or another rated credit instrument from another entity, if the instrument:
            (a) Is rated or required to be rated by the SVO;
            (b) In the case of an instrument with a maturity
        
of 397 days or less, is issued, guaranteed, or insured by an entity that is rated by, or another instrument of such entity is rated by, the SVO or by a nationally recognized statistical rating organization recognized by the SVO;
            (c) In the case of an instrument with a maturity
        
of 90 days or less, the instrument has been issued, assumed, accepted, guaranteed, or insured by a qualified bank;
            (d) Is a share of a class one bond mutual fund; or
            (e) Is a share of a money market mutual fund.
        (2) However, "rated credit instrument" does not mean:
            (a) An instrument that is mandatorily, or at the
        
option of the issuer, convertible to an equity interest; or
            (b) A security that has a par value and whose
        
terms provide that the issuer's net obligation to repay all or part of the security's par value is determined by reference to the performance of an equity, a commodity, a foreign currency or an index of equities, commodities, foreign currencies or combinations thereof.
    SSS. "Real estate" means:
        (1)  (a) Real property;
            (b) Interests in real property, such as
        
leaseholds, minerals and oil and gas that have not been separated from the underlying fee interest;
            (c) Improvements and fixtures located on or in
        
real property; and
            (d) The seller's equity in a contract providing
        
for a deed of real estate.
        (2) As to a mortgage on a leasehold estate, real
    
estate shall include the leasehold estate only if it has an unexpired term (including renewal options exercisable at the option of the lessee) extending beyond the scheduled maturity date of the obligation that is secured by a mortgage on the leasehold estate by a period equal to at least 20% of the original term of the obligation or 10 years, whichever is greater.
    TTT. "Replication transaction" means a derivative transaction that is intended to replicate the performance of one or more assets that an insurer is authorized to acquire under this Article. A derivative transaction that is entered into as a hedging transaction shall not be considered a replication transaction.
    UUU. "Repurchase transaction" means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, either within a specified period of time or upon demand.
    VVV. "Required liabilities" means total liabilities required to be reported on the statutory financial statement of the insurer most recently required to be filed with the Director.
    WWW. "Residential mortgage loan" means a loan primarily secured by a mortgage on real estate improved with a one to four family residence.
    XXX. "Reverse repurchase transaction" means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price, either within a specified period of time or upon demand.
    YYY. "Secured location" means the contiguous real estate owned by one person.
    ZZZ. "Securities lending transaction" means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or equivalent securities to the insurer, either within a specified period of time or upon demand.
    AAAA. "Series company" means an investment company that is organized as a series company, as defined in Rule 18f-2(a) adopted under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended.
    BBBB. "Sinking fund stock" means preferred stock that:
        (1) Is subject to a mandatory sinking fund or similar
    
arrangement that will provide for the redemption (or open market purchase) of the entire issue over a period not longer than 40 years from the date of acquisition; and
        (2) Provides for mandatory sinking fund installments
    
(or open market purchases) commencing not more than 10.5 years from the date of issue, with the sinking fund installments providing for the purchase or redemption, on a cumulative basis commencing 10 years from the date of issue, of at least 2.5% per year of the original number of shares of that issue of preferred stock.
    CCCC. "Special rated credit instrument" means a rated credit instrument that is:
        (1) An instrument that is structured so that, if it
    
is held until retired by or on behalf of the issuer, its rate of return, based on its purchase cost and any cash flow stream possible under the structure of the transaction, may become negative due to reasons other than the credit risk associated with the issuer of the instrument; however, a rated credit instrument shall not be a special rated credit instrument under this subsection if it is:
            (a) A share in a class one bond mutual fund;
            (b) An instrument, other than an asset-backed
        
security, with payments of par value fixed as to amount and timing, or callable but in any event payable only at par or greater, and interest or dividend cash flows that are based on either a fixed or variable rate determined by reference to a specified rate or index;
            (c) An instrument, other than an asset-backed
        
security, that has a par value and is purchased at a price no greater than 110% of par;
            (d) An instrument, including an asset-backed
        
security, whose rate of return would become negative only as a result of a prepayment due to casualty, condemnation or economic obsolescence of collateral or change of law;
            (e) An asset-backed security that relies on
        
collateral that meets the requirements of subparagraph (b) of this paragraph, the par value of which collateral:
                (i) Is not permitted to be paid sooner than
            
one half of the remaining term to maturity from the date of acquisition;
                (ii) Is permitted to be paid prior to
            
maturity only at a premium sufficient to provide a yield to maturity for the investment, considering the amount prepaid and reinvestment rates at the time of early repayment, at least equal to the yield to maturity of the initial investment; or
                (iii) Is permitted to be paid prior to
            
maturity at a premium at least equal to the yield of a treasury issue of comparable remaining life; or
            (f) An asset-backed security that relies on cash
        
flows from assets that are not prepayable at any time at par, but is not otherwise governed by subparagraph (e) of this paragraph, if the asset-backed security has a par value reflecting principal payments to be received if held until retired by or on behalf of the issuer and is purchased at a price no greater than 105% of such par amount.
        (2) An asset-backed security that:
            (a) Relies on cash flows from assets that are
        
prepayable at par at any time;
            (b) Does not make payments of par that are fixed
        
as to amount and timing; and
            (c) Has a negative rate of return at the time of
        
acquisition if a prepayment threshold assumption is used with such prepayment threshold assumption defined as either:
                (i) Two (2) times the prepayment expectation
            
reported by a recognized, publicly available source as being the median of expectations contributed by broker dealers or other entities, except insurers, engaged in the business of selling or evaluating such securities or assets. The prepayment expectation used in this calculation shall be, at the insurer's election, the prepayment expectation for pass-through securities of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Government National Mortgage Association, or for other assets of the same type as the assets that underlie the asset- backed security, in either case with a gross weighted average coupon comparable to the gross weighted average coupon of the assets that underlie the asset-backed security; or
                (ii) Another prepayment threshold assumption
            
specified by the Director by rule promulgated under Section 126.8.
        (3) For purposes of subparagraph 2 of this
    
subsection, if the asset-backed security is purchased in combination with one or more other asset-backed securities that are supported by identical underlying collateral, the insurer may calculate the rate of return for these specific combined asset-backed securities in combination. The insurer must maintain documentation demonstrating that such securities were acquired and are continuing to be held in combination.
    DDDD. "State" means a state, territory or possession of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico.
    EEEE. "Substantially similar securities" means securities that meet all criteria for substantially similar securities specified in the NAIC Accounting Practices and Procedures Manual, as amended, and in an amount that constitutes good delivery form as determined from time to time by the PSA The Bond Market Trade Association.
    FFFF. "Subsidiary" means, as to any person, an affiliate controlled by such person, directly or indirectly through one or more intermediaries.
    GGGG. "SVO" means the Securities Valuation Office of the NAIC or any successor office established by the NAIC.
    HHHH. "Swap" means an agreement to exchange or to net payments at one or more times based on the actual or expected price, level, performance or value of one or more underlying interests.
    IIII. "Underlying interest" means the assets, liabilities, other interests or a combination thereof underlying a derivative instrument, such as any one or more securities, currencies, rates, indices, commodities or derivative instruments.
    JJJJ. "Unrestricted surplus" means the amount by which total admitted assets exceed 125% of the insurer's required liabilities.
    KKKK. "Warrant" means an instrument that gives the holder the right to purchase an underlying financial instrument at a given price and time or at a series of prices and times outlined in the warrant agreement. Warrants may be issued alone or in connection with the sale of other securities, for example, as part of a merger or recapitalization agreement, or to facilitate divestiture of the securities of another business entity.
(Source: P.A. 90-418, eff. 8-15-97; 90-794, eff. 8-14-98.)

    (215 ILCS 5/126.3)
    Sec. 126.3. General investment qualifications.
    A. Insurers may acquire, hold or invest in investments or engage in investment practices as set forth in this Article. Insurers may also acquire, hold or invest in investments not conforming to the requirements of this Article that are not otherwise prohibited by this Code. Investments not conforming to this Article shall not be admitted assets unless they are acquired under other authority of this Code.
    B. Subject to subsection C of this Section, an insurer shall not acquire or hold an investment as an admitted asset unless at the time of acquisition it is:
        (1) Eligible for the payment or accrual of interest
    
or discount (whether in cash or other forms of income or securities), eligible to receive dividends or other distributions or is otherwise income producing; or
        (2) Acquired under Section 126.15B, 126.15C, 126.16,
    
126.18, 126.20, 126.28C, 126.29, 126.31, or 126.32 or under the authority of Sections of the Code other than this Article.
    C. An insurer may acquire or hold as admitted assets investments that do not otherwise qualify as provided in this Article if the insurer has not acquired them for the purpose of circumventing any limitations contained in this Article, if the insurer acquires the investments in the following circumstances and the insurer complies with the provisions of Sections 126.5 and 126.7 as to the investments:
        (1) As payment on account of existing indebtedness or
    
in connection with the refinancing, restructuring or workout of existing indebtedness, if taken to protect the insurer's interest in that investment;
        (2) As realization on collateral for indebtedness;
        (3) In connection with an otherwise qualified
    
investment or investment practice, as interest on or a dividend or other distribution related to the investment or investment practice or in connection with the refinancing of the investment, in each case for no additional or only nominal consideration;
        (4) Under a lawful and bona fide agreement of
    
recapitalization or voluntary or involuntary reorganization in connection with an investment held by the insurer; or
        (5) Under a bulk reinsurance, merger or consolidation
    
transaction approved by the Director if the assets constitute admissible investments for the ceding, merged or consolidated companies.
    D. An investment or portion of an investment acquired by an insurer under subsection C of this Section shall become a nonadmitted asset 3 years (or 5 years in the case of mortgage loans and real estate) from the date of its acquisition, unless within that period the investment has become a qualified investment under a Section of this Article other than subsection C of this Section, but an investment acquired under an agreement of bulk reinsurance, merger or consolidation may be qualified for a longer period if so provided in the plan for reinsurance, merger or consolidation as approved by the Director. Upon application by the insurer and a showing that the nonadmission of an asset held under subsection C of this Section would injure the interests of the insurer, the Director may extend the period for admissibility for an additional reasonable period of time.
    E. Except as provided in subsections F and H of this Section, an investment shall qualify under this Article if, on the date the insurer committed to acquire the investment or on the date of its acquisition, it would have qualified under this Article. For the purposes of determining limitations contained in this Article, an insurer shall give appropriate recognition to any commitments to acquire investments.
    F.  (1) An investment held as an admitted asset by an
    
insurer on the effective date of this amendatory Act of 1997 which qualified immediately prior to the effective date of this amendatory Act of 1997 shall remain qualified as an admitted asset under this Article.
        (2) Each specific transaction constituting an
    
investment practice of the type described in this Article immediately prior to the effective date of this amendatory Act of 1997 that was lawfully entered into by an insurer and was in effect on the effective date of this amendatory Act of 1997 shall continue to be permitted under this Article until its expiration or termination under its terms.
    G. Unless otherwise specified, an investment limitation computed on the basis of an insurer's admitted assets or capital and surplus shall relate to the amount required to be shown on the statutory balance sheet of the insurer most recently required to be filed (annual or last quarter) with the Director. Solely for purposes of computing any limitation under this Article based upon admitted assets, the insurer shall deduct from the amount of its admitted assets the amount of the liability recorded on such statutory balance sheet for:
        (1) The return of acceptable collateral received in a
    
reverse repurchase transaction or a securities lending transaction;
        (2) Cash received in a dollar roll transaction; and
        (3) The amount reported as borrowed money in such
    
statutory balance sheet to the extent not included in paragraphs (1) and (2) of this subsection.
    H. An investment qualified, in whole or in part, for acquisition or holding as an admitted asset may be qualified or requalified at the time of acquisition or a later date, in whole or in part, under any other Section, if the relevant conditions contained in the other Section are satisfied at the time of qualification or requalification.
    I. An insurer shall maintain documentation demonstrating that investments were acquired in accordance with this Article, and specifying the Section of this Article under which they were acquired.
    J. An insurer shall not enter into an agreement to purchase securities in advance of their issuance for resale to the public as part of a distribution of the securities by the issuer or otherwise guarantee the distribution, except that an insurer may acquire privately placed securities with registration rights.
    K. Notwithstanding the provisions of this Article, the Director, for good cause, may order an insurer to nonadmit, limit, dispose of, withdraw from or discontinue an investment or investment practice in accordance with Article XXIV. The authority of the Director under this subsection is in addition to any other authority of the Director.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.4)
    Sec. 126.4. Authorization of investments by the board of directors.
    A. Within 3 months after the effective date of this amendatory Act of 1997, an insurer's board of directors shall adopt a written plan for acquiring and holding investments and for engaging in investment practices that specifies guidelines as to the quality, maturity and diversification of investments and other specifications including investment strategies intended to assure that the investments and investment practices are appropriate for the business conducted by the insurer, its liquidity needs and its capital and surplus. The board shall review and assess the insurer's technical investment and administrative capabilities and expertise before adopting a written plan concerning an investment strategy or investment practice.
    B. Investments acquired and held under this Article shall be acquired and held under the supervision and direction of the board of directors of the insurer. The board of directors shall evidence by formal resolution, at least annually, that it has determined whether all investments have been made in accordance with delegations, standards, limitations and investment objectives prescribed by the board or a committee of the board charged with the responsibility to direct its investments.
    C. On no less than a quarterly basis, and more often if deemed appropriate, an insurer's board of directors or committee of the board of directors shall:
        (1) Receive and review a summary report on the
    
insurer's investment portfolio, its investment activities and investment practices engaged in under delegated authority, in order to determine whether the investment activity of the insurer is consistent with its written plan; and
        (2) Review and revise, as appropriate, the written
    
plan.
    D. In discharging its duties under this Section, the board of directors shall require that records of any authorizations or approvals, other documentation as the board may require and reports of any action taken under authority delegated under the plan referred to in subsection A of this Section shall be made available on a regular basis to the board of directors.
    E. In discharging their duties under this Section, the directors of an insurer shall perform their duties in good faith and with that degree of care that ordinarily prudent individuals in like positions would use under similar circumstances.
    F. If an insurer does not have a board of directors, all references to the board of directors in this Article shall be deemed to be references to the governing body of the insurer having authority equivalent to that of a board of directors.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.5)
    Sec. 126.5. Prohibited investments. An insurer shall not, directly or indirectly:
    A. Invest in an obligation or security or make a guarantee for the benefit of or in favor of an officer or director of the insurer, except as provided in Section 126.6;
    B. Invest in an obligation or security, make a guarantee for the benefit of or in favor of, or make other investments in a business entity of which 10% or more of the voting securities or equity interests are owned directly or indirectly by or for the benefit of one or more officers or directors of the insurer, except pursuant to a transaction entered into in compliance with Section 131.20a of this Code or provided in Section 126.6;
    C. Engage on its own behalf or through one or more affiliates in a transaction or series of transactions designed to evade the prohibitions of this Article;
    D.  (1) Invest in a partnership as a general partner,
    
except that an insurer may make an investment as a general partner:
            (a) If all other partners in the partnership are
        
subsidiaries of the insurer or other insurance company affiliates of the insurer;
            (b) For the purpose of:
                (i) Meeting cash calls committed to prior to
            
the effective date of this amendatory Act of 1997;
                (ii) Completing those specific projects or
            
activities of the partnership in which the insurer was a general partner as of the effective date of this amendatory Act of 1997 that had been undertaken as of that date; or
                (iii) Making capital improvements to property
            
owned by the partnership on the effective date of this amendatory Act of 1997 if the insurer was a general partner as of that date; or
            (c) In accordance with Section 126.3C;
        (2) This subsection shall not prohibit a subsidiary
    
or other affiliate of the insurer from becoming a general partner; or
    E. Invest in or lend its funds upon the security of shares of its own stock, except as authorized by other provisions of this Code. However, no such shares shall be admitted assets of the insurer.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.6)
    Sec. 126.6. Loans to officers and directors.
    A.  (1) Except as provided in Section 126.6B, an insurer shall not directly or indirectly, unless it has notified the Director in writing of its intention to enter into the transaction at least 30 days prior thereto, or any shorter period as the Director may permit, and the Director has not disapproved it within that period:
        (a) Make a loan to or other investment in an officer
    
or director of the insurer or a person in which the officer or director has any direct or indirect financial interest;
        (b) Make a guarantee for the benefit of or in favor
    
of an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest; or
        (c) Enter into an agreement for the purchase or sale
    
of property from or to an officer or director of the insurer or a person in which the officer or director has any direct or indirect financial interest.
    (2) For purposes of this Section, an officer or director shall not be deemed to have a financial interest by reason of an interest that is held directly or indirectly through the ownership of equity interests representing less than 2% of all outstanding equity interests issued by a person that is a party to the transaction, or solely by reason of that individual's position as a director or officer of a person that is a party to the transaction.
    (3) This subsection does not permit an investment that is prohibited by Section 126.5.
    (4) This subsection does not apply to a transaction between an insurer and any of its subsidiaries or affiliates that is entered into in compliance with Section 131.20a of this Code, other than a transaction between an insurer and its officer or director.
    B. An insurer may make, without the prior written approval of the Director:
        (1) Policy loans in accordance with the terms of the
    
policy or contract and Section 126.19;
        (2) Advances to officers or directors for expenses
    
reasonably expected to be incurred in the ordinary course of the insurer's business or guarantees associated with credit or charge cards issued or credit extended for the purpose of financing these expenses;
        (3) Loans secured by the principal residence of an
    
existing or new officer of the insurer made in connection with the officer's relocation at the insurer's request, if the loans comply with the requirements of Section 126.15 or 126.28 and the terms and conditions otherwise are the same as those generally available from unaffiliated third parties;
        (4) Secured loans to an existing or new officer of
    
the insurer made in connection with the officer's relocation at the insurer's request, if the loans:
            (a) Do not have a term exceeding 2 years;
            (b) Are required to finance mortgage loans
        
outstanding at the same time on the prior and new residences of the officer;
            (c) Do not exceed an amount equal to the equity
        
of the officer in the prior residence; and
            (d) Are required to be fully repaid upon the
        
earlier of the end of the 2 year period or the sale of the prior residence; and
        (5) Loans and advances to officers or directors made
    
in compliance with state or federal law specifically related to the loans and advances by a regulated non-insurance subsidiary or affiliate of the insurer in the ordinary course of business and on terms no more favorable than available to other customers of the entity.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.7)
    Sec. 126.7. Valuation of investments. For the purposes of this Article, the value or amount of an investment acquired or held, or an investment practice engaged in, under this Article, unless otherwise specified in this Code, shall be the value at which assets of an insurer are required to be reported for statutory accounting purposes as determined in accordance with procedures prescribed in published accounting and valuation standards of the NAIC, including the Purposes and Procedures of the Securities Valuation Office, the Valuation of Securities manual, the Accounting Practices and Procedures manual, the Annual Statement Instructions or any successor valuation procedures officially adopted by the NAIC. The Director shall promulgate rules for determining and calculating values to be used in financial statements submitted to the Department for investments not subject to published National Association of Insurance Commissioners valuation standards.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.8)
    Sec. 126.8. Rules. The Director may, in accordance with Section 401 of this Code, promulgate rules implementing the provisions of this Article.
(Source: P.A. 90-418, eff. 8-15-97.)


 
    (215 ILCS 5/Art. VIII Pt. 2 heading)
2. LIFE AND HEALTH INSURERS

    (215 ILCS 5/126.9)
    Sec. 126.9. Applicability. This Part shall apply to the investments and investment practices of companies authorized to transact business under Class 1 of Section 4 of this Code and other companies whose investments and investment practices are regulated as life insurers under this Code, subject to the provisions of Section 126.1B.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.10)
    Sec. 126.10. General 3% diversification, medium and lower grade investments, and Canadian investments.
    A. General 3% diversification.
        (1) Except as otherwise specified in this Article, an
    
insurer shall not acquire, directly or indirectly through an investment subsidiary, an investment under this Article if, as a result of and after giving effect to the investment, the insurer would hold more than 3% of its admitted assets in investments of all kinds issued, assumed, accepted, guaranteed, or insured by a single person.
        (2) This 3% limitation shall not apply to the
    
aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.
        (3) Asset-backed securities shall not be subject to
    
the limitations of paragraph (1) of this subsection, however, except as permitted by subsection A(4) of this Section, an insurer shall not acquire an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity, then held by the insurer would exceed 3% of its admitted assets.
        (4) A company's investments in mortgage related
    
securities, as defined by the Secondary Mortgage Market Enhancement Act of 1984 (United States Public Law 98-440) [12 U.S.C. 24, 1451, 1454 et seq.], that are backed by any single pool of mortgages and made pursuant to the authority of that Act, shall not exceed 5% of its admitted assets.
    B. Medium and lower grade investments.
        (1) An insurer shall not acquire, directly or
    
indirectly through an investment subsidiary, an investment under Sections 126.11, 126.14, and 126.17 or counterparty exposure under Section 126.18D if, as a result of and after giving effect to the investment:
            (a) The aggregate amount of medium and lower
        
grade investments then held by the insurer would exceed 20% of its admitted assets;
            (b) The aggregate amount of lower grade
        
investments then held by the insurer would exceed 10% of its admitted assets;
            (c) The aggregate amount of investments rated 5
        
or 6 by the SVO then held by the insurer would exceed 3% of its admitted assets;
            (d) The aggregate amount of investments rated 6
        
by the SVO then held by the insurer would exceed 1% of its admitted assets; or
            (e) The aggregate amount of lower grade
        
investments then held by the insurer that receive as cash income less than the equivalent yield for Treasury issues with a comparative average life, would exceed 1% of its admitted assets.
        (2) An insurer shall not acquire, directly or
    
indirectly through an investment subsidiary, an investment under Sections 126.11, 126.14, and 126.17 or counterparty exposure under Section 126.18D if, as a result of and after giving effect to the investment:
            (a) The aggregate amount of medium and lower
        
grade investments issued, assumed, accepted, guaranteed, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer would exceed 1% of its admitted assets; or
            (b) The aggregate amount of lower grade
        
investments issued, assumed, accepted, guaranteed, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer would exceed 0.5% of its admitted assets.
        (3) If an insurer attains or exceeds the limit of any
    
one rating category referred to in this subsection, the insurer shall not thereby be precluded from acquiring investments in other rating categories subject to the specific and multi-category limits applicable to those investments.
    C. Canadian investments.
        (1) An insurer shall not acquire, directly or
    
indirectly through an investment subsidiary, a Canadian investment authorized by this Article, if as a result of and after giving effect to the investment, the aggregate amount of these investments then held by the insurer would exceed 40% of its admitted assets, or if the aggregate amount of Canadian investments not acquired under Section 126.11B then held by the insurer would exceed 25% of its admitted assets.
        (2) However, as to an insurer that is authorized to
    
do business in Canada or that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of paragraph (1) of this subsection shall be increased by the greater of:
            (a) The amount the insurer is required by
        
Canadian law to invest in Canada or to be denominated in Canadian currency; or
            (b) 115% of the amount of its reserves and other
        
obligations under contracts on lives or risks resident or located in Canada.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.11)
    Sec. 126.11. Rated credit instruments. Subject to the limitations of subsection F of this Section, an insurer may acquire rated credit instruments:
    A. Subject to the limitations of Section 126.10B, but not to the limitations of Section 126.10A, except for that of subsection (4) of Section 126.10A, an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
        (1) The United States; or
        (2) A government sponsored enterprise of the United
    
States, if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States.
    B.  (1) Subject to the limitations of Section 126.10B,
    
but not to the limitations of Section 126.10A, an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
            (a) Canada; or
            (b) A government sponsored enterprise of Canada,
        
if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by Canada or are otherwise backed or supported by the full faith and credit of Canada;
        (2) However, an insurer shall not acquire an
    
instrument under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this subsection would exceed 40% of its admitted assets.
    C.  (1) Subject to the limitations of Section 126.10B,
    
but not to the limitations of Section 126.10A, an insurer may acquire rated credit instruments, excluding asset-backed securities:
            (a) Issued by a government money market mutual
        
fund, a class one money market mutual fund or a class one bond mutual fund;
            (b) Issued, assumed, guaranteed, or insured by a
        
government sponsored enterprise of the United States other than those eligible under subsection A of this Section;
            (c) Issued, assumed, guaranteed, or insured by a
        
state, if the instruments are general obligations of the state; or
            (d) Issued by a multilateral development bank;
        (2) However, an insurer shall not acquire an
    
instrument of any one fund, any one enterprise or entity or any one state under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer in any one fund, enterprise, entity, or state under this subsection would exceed 10% of its admitted assets.
    D. Subject to the limitations of Section 126.10, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if, as a result of and after giving effect to the investment:
        (1) The aggregate amount of preferred stocks then
    
held by the insurer under this subsection does not exceed 33 1/3% of its admitted assets; and
        (2) The aggregate amount of preferred stocks then
    
held by the insurer under this subsection which are not sinking fund stocks or rated P1 or P2 by the SVO does not exceed 15% of its admitted assets.
    E. Subject to the limitations of Section 126.10, in addition to those investments eligible under subsections A, B, C and D of this Section, an insurer may acquire rated credit instruments that are not foreign investments.
    F. An insurer shall not acquire special rated credit instruments under this Section if, as a result of and after giving effect to the investment, the aggregate amount of special rated credit instruments then held by the insurer would exceed 5% of its admitted assets. The Director may, by rule, identify certain special rated credit instruments that will be exempt from the limitation imposed by this subsection.
(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 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 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 5/126.13)
    Sec. 126.13. Equity interests.
    A. Subject to the limitations of Section 126.10, an insurer may acquire directly or indirectly through an investment subsidiary, equity interests in business entities organized under the laws of any domestic jurisdiction.
    B. An insurer shall not acquire directly or indirectly through an investment subsidiary an investment 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 would exceed 20% of its admitted assets or, except for mutual funds, the amount of equity interests then held by the insurer that are not listed on a qualified exchange would exceed 5% of its admitted assets. An accident and health insurer shall not be subject to this Section but shall be subject to the same aggregate limitation on equity interests as a property and casualty insurer under Section 126.26 and also to the provisions of Section 126.22 of this Article.
    C. An insurer shall not acquire under this Section any investments that the insurer may acquire under Section 126.15.
    D. An insurer shall not short sell equity interests unless the insurer covers the short sale by owning the equity interest or an unrestricted right to the equity interest exercisable within 6 months of the short sale.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.14)
    Sec. 126.14. Tangible personal property under lease.
    A.  (1) Subject to the limitations of Section 126.10, an insurer may acquire tangible personal property or equity interests therein located or used wholly or in part within a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments.
    (2) Investments acquired under paragraph (1) of this subsection shall be eligible only if:
        (a) The property is subject to a lease or other
    
agreement with a person whose rated credit instruments in the amount of the purchase price of the personal property the insurer could then acquire under Section 126.11; and
        (b) The lease or other agreement provides the insurer
    
the right to receive rental, purchase or other fixed payments for the use or purchase of the property, and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefits to the insurer resulting from ownership of the property, shall be adequate to return the cost of the insurer's investment in the property, plus a return deemed adequate by the insurer.
    B. The insurer shall compute the amount of each investment under this Section on the basis of the out of pocket purchase price and applicable related expenses paid by the insurer for the investment, net of each borrowing made to finance the purchase price and expenses, to the extent the borrowing is without recourse to the insurer.
    C. An insurer shall not acquire directly or indirectly through an investment subsidiary an investment under this Section if, as a result of and after giving effect to the investment, the aggregate amount of all investments then held by the insurer under this Section would exceed:
        (1) 2% of its admitted assets; or
        (2) 0.5% of its admitted assets as to any single item
    
of tangible personal property.
    D. For purposes of determining compliance with the limitations of Section 126.10, investments acquired by an insurer under this Section shall be aggregated with those acquired under Section 126.11, and each lessee of the property under a lease referred to in this Section shall be deemed the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in subsection B of this Section.
    E. Nothing in this Section is applicable to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates under a cost sharing arrangement or agreement permitted under Section 131.20a(1)(a)(iv).
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.15)
    Sec. 126.15. Mortgage loans and real estate.
    A. Mortgage loans.
        (1) Subject to the limitations of Section 126.10, an
    
insurer may acquire, either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments, obligations secured by mortgages on real estate situated within a domestic jurisdiction, but a mortgage loan which is secured by other than a first lien shall not be acquired under this subsection (1) unless the insurer is the holder of the first lien. The obligations held by the insurer and any obligations with an equal lien priority, shall not, at the time of acquisition of the obligation, exceed:
            (a) 90% of the fair market value of the real
        
estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;
            (b) 80% of the fair market value of the real
        
estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest, has an amortization period of 30 years or less and periodic payments made no less frequently than annually. Each periodic payment shall be sufficient to assure that at all times the outstanding principal balance of the mortgage loan shall be not greater than the outstanding principal balance that would be outstanding under a mortgage loan with the same original principal balance, with the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans permitted under this subsection are permitted notwithstanding the fact that they provide for a payment of the principal balance prior to the end of the period of amortization of the loan. For residential mortgage loans, the 80% limitation may be increased to 97% if acceptable private mortgage insurance has been obtained; or
            (c) 75% of the fair market value of the real
        
estate for mortgage loans that do not meet the requirements of subparagraph (a) or (b) of this paragraph.
        (2) For purposes of paragraph (1) of this subsection,
    
the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.
        (3) Subject to the limitations of Section 126.10, an
    
insurer may acquire, either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments, obligations secured by a second mortgage on real estate situated within a domestic jurisdiction, other than as authorized in subsection (1) of this Section 126.15. The obligation held by the insurer shall be the sole second lien priority obligation and shall not, at the time of acquisition of the obligation, exceed 70% of the amount by which the fair market value of the real estate exceeds the amount outstanding under the first mortgage.
        (4) A mortgage loan that is held by an insurer under
    
Section 126.3F or acquired under this Section and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC Accounting Practices and Procedures Manual or successor publication shall continue to qualify as a mortgage loan under this Article.
        (5) Subject to the limitations of Section 126.10,
    
credit lease transactions that do not qualify for investment under Section 126.11 with the following characteristics shall be exempt from the provisions of paragraph (1) of this subsection:
            (a) The loan amortizes over the initial fixed
        
lease term at least in an amount sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;
            (b) The lease payments cover or exceed the total
        
debt service over the life of the loan;
            (c) A tenant or its affiliated entity, whose
        
rated credit instruments have a SVO 1 or 2 designation or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO, has a full faith and credit obligation to make the lease payments;
            (d) The insurer holds or is the beneficial holder
        
of a first lien mortgage on the real estate;
            (e) The expenses of the real estate are passed
        
through to the tenant, excluding exterior, structural, parking and heating, ventilation and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and
            (f) There is a perfected assignment of the rents
        
due pursuant to the lease to, or for the benefit of, the insurer.
    B. Income producing real estate.
        (1) An insurer may acquire, manage and dispose of
    
real estate situated in a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments. The real estate shall be income producing or intended for improvement or development for investment purposes under an existing program (in which case the real estate shall be deemed to be income producing).
        (2) The real estate may be subject to mortgages,
    
liens or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsections D(2) and D(3) of this Section.
    C. Real estate for the accommodation of business.
    An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the insurer's (which may include its affiliates) business operations, including home office, branch office and field office operations.
        (1) Real estate acquired under this subsection may
    
include excess space for rent to others, if the excess space, valued at its fair market value, would otherwise be a permitted investment under subsection B of this Section and is so qualified by the insurer;
        (2) The real estate acquired under this subsection
    
may be subject to one or more mortgages, liens or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsection D(4) of this Section; and
        (3) For purposes of this subsection, business
    
operations shall not include that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds. An insurer may acquire real estate used for these purposes under subsection B of this Section.
    D. Quantitative limitations.
        (1) An insurer shall not acquire an investment under
    
subsection A of this Section if, as a result of and after giving effect to the investment, the aggregate amount of all investments then held by the insurer under subsection A of this Section would exceed:
            (a) 1% of its admitted assets in mortgage loans
        
covering any one secured location;
            (b) 0.25% of its admitted assets in construction
        
loans covering any one secured location; or
            (c) 2% of its admitted assets in construction
        
loans in the aggregate.
        (2) An insurer shall not acquire an investment under
    
subsection B of this Section if, as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment, the aggregate amount of investments then held by the insurer under subsection B of this Section plus the guarantees then outstanding would exceed:
            (a) 1% of its admitted assets in one parcel or
        
group of contiguous parcels of real estate, except that this limitation shall not apply to that portion of real estate used for the direct provision of health care services by an accident and health insurer for its insureds, such as hospitals, medical clinics, medical professional buildings or other health facilities used for the purpose of providing health services; or
            (b) 15% of its admitted assets in the aggregate,
        
but not more than 5% of its admitted assets in real estate to be improved or developed.
        (3) An insurer shall not acquire an investment under
    
subsections A or B of this Section if, as a result of and after giving effect to the investment and any guarantees made by the insurer in connection with the investment, the aggregate amount of all investments then held by the insurer under subsections A and B of this Section plus the guarantees then outstanding would exceed 45% of its admitted assets. However, an insurer may exceed this limitation by no more than 30% of its admitted assets if:
            (a) This increased amount is invested only in
        
residential mortgage loans;
            (b) The insurer has no more than 10% of its
        
admitted assets invested in mortgage loans other than residential mortgage loans;
            (c) The loan-to-value ratio of each residential
        
mortgage loan does not exceed 60% at the time the mortgage loan is qualified under this increased authority, and the fair market value is supported by an appraisal no more than 2 years old, prepared by an independent appraiser;
            (d) A single mortgage loan qualified under this
        
increased authority shall not exceed 0.5% of its admitted assets;
            (e) The insurer files with the Director, and
        
receives approval from the Director for, a plan that is designed to result in a portfolio of residential mortgage loans that is sufficiently geographically diversified; and
            (f) The insurer agrees to file annually with the
        
Director records that demonstrate that its portfolio of residential mortgage loans is geographically diversified in accordance with the plan.
        (4) The limitations of Section 126.10 shall not apply
    
to an insurer's acquisition of real estate under subsection C of this Section. An insurer shall not acquire real estate under subsection C of this Section if, as a result of and after giving effect to the acquisition, the aggregate amount of real estate then held by the insurer under subsection C of this Section would exceed 10% of its admitted assets. With the permission of the Director, additional amounts of real estate may be acquired under subsection C of this Section.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.16)
    Sec. 126.16. Securities lending and repurchase, reverse repurchase, and dollar roll transactions. An insurer may enter into securities lending, repurchase, reverse repurchase, and dollar roll transactions with business entities, subject to the following requirements:
    A. The insurer's board of directors shall adopt a written plan that is consistent with the requirements of the written plan in Section 126.4A that specifies guidelines and objectives to be followed, such as:
        (1) A description of how cash received will be
    
invested or used for general corporate purposes of the insurer;
        (2) Operational procedures to manage interest rate
    
risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and
        (3) The extent to which the insurer may engage in
    
these transactions.
    B. The insurer shall enter into a written agreement for all transactions authorized in this Section other than dollar roll transactions. The written agreement shall require that each transaction terminate no more than one year from its inception or upon the earlier demand of the insurer. The agreement shall be with the business entity counterparty, but for securities lending transactions, the agreement may be with an agent acting on behalf of the insurer, if the agent is a qualified business entity, and if the agreement:
        (1) Requires the agent to enter into separate
    
agreements with each counterparty that are consistent with the requirements of this Section; and
        (2) Prohibits securities lending transactions
    
pursuant to the agreement with the agent or its affiliates.
    C. Cash received in a transaction under this Section shall be invested in accordance with this Article and in a manner that recognizes the liquidity needs of the transaction or used by the insurer for its general corporate purposes. For so long as the transaction remains outstanding, the insurer, its agent or custodian shall maintain, as to acceptable collateral received in a transaction under this Section, either physically or through the book entry systems of the Federal Reserve, Depository Trust Company, Participants Trust Company or other securities depositories approved by the Director:
        (1) Possession of the acceptable collateral;
        (2) A perfected security interest in the acceptable
    
collateral; or
        (3) In the case of a jurisdiction outside of the
    
United States, title to, or rights of a secured creditor to, the acceptable collateral.
    D. The limitations of Sections 126.10 and 126.17 shall not apply to the business entity counterparty exposure created by transactions under this Section. For purposes of calculations made to determine compliance with this subsection, no effect will be given to the insurer's future obligation to resell securities, in the case of a repurchase transaction, or to repurchase securities, in the case of a reverse repurchase transaction. An insurer shall not enter into a transaction under this Section if, as a result of and after giving effect to the transaction:
        (1) The aggregate amount of securities then loaned or
    
sold to, or purchased from, any one business entity counterparty under this Section would exceed 5% of its admitted assets. In calculating the amount sold to or purchased from a business entity counterparty under repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement; or
        (2) The aggregate amount of all securities then
    
loaned, sold to or purchased from all business entities under this Section would exceed 40% of its admitted assets.
    E. In a dollar roll transaction, the insurer shall receive cash in an amount at least equal to the market value of the securities transferred by the insurer in the transaction as of the transaction date.
    F. The Director may promulgate reasonable rules for investments and transactions under this Section including, but not limited to, rules which impose financial solvency standards, valuation standards, and reporting requirements.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.17)
    Sec. 126.17. Foreign investments and foreign currency exposure.
    A. Subject to the limitations of Section 126.10, an insurer may acquire directly or indirectly through an investment subsidiary, foreign investments, or engage in investment practices with persons of or in foreign jurisdictions, of substantially the same types as those that an insurer is permitted to acquire under this Article, other than of the type permitted under Section 126.12, if, as a result and after giving effect to the investment:
        (1) The aggregate amount of foreign investments then
    
held by the insurer under this subsection does not exceed 20% of its admitted assets; and
        (2) The aggregate amount of foreign investments then
    
held by the insurer under this subsection in a single foreign jurisdiction does not exceed 10% of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 3% of its admitted assets as to any other foreign jurisdiction.
    B. Subject to the limitations of Section 126.10, an insurer may acquire investments, or engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired under subsection A of this Section, or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency, if, as a result of and after giving effect to the transaction:
        (1) The aggregate amount of investments then held by
    
the insurer under this subsection denominated in foreign currencies does not exceed 10% of its admitted assets; and
        (2) The aggregate amount of investments then held by
    
the insurer under this subsection denominated in the foreign currency of a single foreign jurisdiction does not exceed 10% of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 3% of its admitted assets as to any other foreign jurisdiction.
        (3) However, an investment shall not be considered
    
denominated in a foreign currency if the acquiring insurer enters into one or more contracts in transactions permitted under Section 126.18 in which the business entity counterparty agrees to exchange, or grants to the insurer the option to exchange, all payments made on the foreign currency denominated investment (or amounts equivalent to the payments that are or will be due to the insurer in accordance with the terms of such investment) for United States currency during the period the contract or contracts are in effect to insulate the insurer against loss caused by diminution of the value of payments owed to the insurer due to future changes in currency exchange rates.
    C. In addition to investments permitted under subsections A and B of this Section, an insurer that is authorized to do business in a foreign jurisdiction, and that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction, subject to the limitations of Section 126.10. However, investments made under this subsection in obligations of foreign governments, their political subdivisions and government sponsored enterprises shall not be subject to the limitations of Section 126.10 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer under this subsection shall not exceed the greater of:
        (1) The amount the insurer is required by the law of
    
the foreign jurisdiction to invest in the foreign jurisdiction; or
        (2) 115% of the amount of its reserves, net of
    
reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.
    D. In addition to investments permitted under subsections A and B of this Section, an insurer that is not authorized to do business in a foreign jurisdiction, but which has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction subject to the limitations of Section 126.10. However, investments made under this subsection in obligations of foreign governments, their political subdivisions and government sponsored enterprises shall not be subject to the limitations of Section 126.10 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer under this subsection shall not exceed 105% of the amount of its reserves, net of reinsurance, and other obligations under the contracts on lives or risks resident or located in the foreign jurisdiction.
    E. Investments acquired under this Section shall be aggregated with investments of the same types made under all other Sections of this Article, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in the other Sections. Investments in obligations of foreign governments, their political subdivisions and government sponsored enterprises of these persons, except for those exempted under subsections C and D of this Section, shall be subject to the limitations of Section 126.10.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.18)
    Sec. 126.18. Derivative transactions. An insurer may, directly or indirectly through an investment subsidiary, engage in derivative transactions under this Section under the following conditions:
    A. General conditions.
        (1) An insurer may use derivative instruments under
    
this Section to engage in hedging transactions and income generation transactions.
        (2) An insurer may use derivative instruments for
    
replication transactions only after the Director promulgates reasonable rules that set forth methods of disclosure, reserving for risk-based capital, and determining the asset valuation reserve for these investments. Any asset being replicated is subject to all the provisions and limitations on the making thereof specified in this Article with respect to investments by the insurer as if the transaction constituted a direct investment by the insurer in the replicated asset.
        (3) With respect to all hedging transactions, an
    
insurer shall be able to demonstrate to the Director the intended hedging characteristics and the ongoing effectiveness of the derivative transaction or combination of the transactions through cash flow testing or other appropriate analyses.
        (4) The Director may promulgate reasonable rules for
    
investments and transactions under this Section including, but not limited to, rules which impose financial solvency standards, valuation standards, and reporting requirements.
    B. Limitations on hedging transactions.
    An insurer may enter into hedging transactions under this Section if, as a result of and after giving effect to the transaction:
        (1) The aggregate statement value of options, caps,
    
floors and warrants not attached to another financial instrument purchased and used in hedging transactions then engaged in by the insurer does not exceed 7.5% of its admitted assets;
        (2) The aggregate statement value of options, caps
    
and floors written in hedging transactions then engaged in by the insurer does not exceed 3% of its admitted assets; and
        (3) The aggregate potential exposure of collars,
    
swaps, forwards and futures used in hedging transactions then engaged in by the insurer does not exceed 6.5% of its admitted assets.
    C. Limitations on income generation transactions.
    An insurer may enter into the following types of income generation transactions subject to the quantitative limits of subsection C(5):
        (1) Sales of covered call options on noncallable
    
fixed income securities, callable fixed income securities if the option expires by its terms prior to the end of the noncallable period or derivative instruments based on fixed income securities;
        (2) Sales of covered call options on equity
    
securities, if the insurer holds in its portfolio, or can immediately acquire through the exercise of options, warrants or conversion rights already owned, the equity securities subject to call during the complete term of the call option sold;
        (3) Sales of covered puts on investments that the
    
insurer is permitted to acquire under this Article, if the insurer has escrowed, or entered into a custodian agreement segregating, cash or cash equivalents with a market value equal to the amount of its purchase obligations under the put during the complete term of the put option sold; or
        (4) Sales of covered caps or floors, if the insurer
    
holds in its portfolio the investments generating the cash flow to make the required payments under the caps or floors during the complete term that the cap or floor is outstanding.
        (5) If as a result of and after giving effect to the
    
transactions, the aggregate statement value of the fixed income assets that are subject to call or that generate the cash flows for payments under the caps or floors, plus the face value of fixed income securities underlying a derivative instrument subject to call, plus the amount of the purchase obligations under the puts, does not exceed 10% of its admitted assets.
    D. Counterparty exposure. An insurer shall include all counterparty exposure amounts in determining compliance with the limitations of Section 126.10.
    E. Additional transactions. Pursuant to rules promulgated under Section 126.8, the Director may approve additional transactions involving the use of derivative instruments in excess of the limits of subsection B of this Section or for other risk management purposes.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.19)
    Sec. 126.19. Policy loans. A life insurer may lend to a policyholder on the security of the cash surrender value of the policyholder's policy a sum not exceeding the legal reserve that the insurer is required to maintain on the policy.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.20)
    Sec. 126.20. Additional investment authority.
    A. Solely for the purpose of acquiring investments that exceed the quantitative limitations of Sections 126.10 through 126.17, an insurer may acquire under this subsection an investment, or engage in investment practices described in Section 126.16, but an insurer shall not acquire an investment, or engage in investment practices described in Section 126.16, under this subsection if, as a result of and after giving effect to the transaction:
        (1) The aggregate amount of investments then held by
    
an insurer under this subsection would exceed 3% of its admitted assets; or
        (2) The aggregate amount of investments as to one
    
limitation in Sections 126.10 through 126.17 then held by the insurer under this subsection would exceed 1% of its admitted assets.
    B.  (1) In addition to the authority provided under
    
subsection A of this Section, an insurer may acquire under this subsection an investment of any kind, or engage in investment practices described in Section 126.16, that are not specifically prohibited by this Article, without regard to the categories, conditions, standards or other limitations of Sections 126.10 through 126.17 if, as a result of and after giving effect to the transaction, the aggregate amount of investments then held under this subsection would not exceed the lesser of:
            (a) 10% of its admitted assets; or
            (b) 75% of its capital and surplus.
        (2) However, an insurer shall not acquire any
    
investment or engage in any investment practice under this subsection if, as a result of and after giving effect to the transaction, the aggregate amount of all investments in any one person then held by the insurer under this subsection would exceed 3% of its admitted assets.
    C. In addition to the investments acquired under subsections A and B of this Section, an insurer may acquire under this subsection an investment of any kind, or engage in investment practices described in Section 126.16, that are not specifically prohibited by this Article without regard to any limitations of Sections 126.10 through 126.17 if:
        (1) The Director grants prior approval;
        (2) The insurer demonstrates that its investments are
    
being made in a prudent manner and that the additional amounts will be invested in a prudent manner; and
        (3) As a result of and after giving effect to the
    
transaction the aggregate amount of investments then held by the insurer under this subsection does not exceed the greater of:
            (a) 25% of its capital and surplus; or
            (b) 100% of capital and surplus less 10% of its
        
admitted assets.
    D. Under this Section, an insurer shall not acquire or engage in an investment practice prohibited under Section 126.5 or an investment that is a derivative transaction.
(Source: P.A. 90-418, eff. 8-15-97.)


 
    (215 ILCS 5/Art. VIII Pt. 3 heading)
3. PROPERTY AND CASUALTY INSURERS

    (215 ILCS 5/126.21)
    Sec. 126.21. Applicability. This Part 3 shall apply to the investments and investment practices of property and casualty insurers authorized to transact the kinds of insurance in either or both Class 2 or Class 3 of Section 4 of this Code, subject to the provisions of Section 126.1B.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.22)
    Sec. 126.22. Reserve requirements.
    A. Reserve requirements.
        (1) Subject to all other limitations and
    
requirements of this Article, a property and casualty insurer shall maintain an amount at least equal to the lesser of $250,000,000 or 100% of adjusted loss reserves and loss adjustment expense reserves, 100% of adjusted unearned premium reserves and 100% of statutorily required policy and contract reserves in:
            (a) Cash and cash equivalents;
            (b) High and medium grade investments that
        
qualify under Sections 126.24 or 126.25;
            (c) Equity interests that qualify under Section
        
126.26 and that are traded on a qualified exchange;
            (d) Investments of the type set forth in Section
        
126.30 if the investments are rated in the highest generic rating category by a nationally recognized statistical rating organization recognized by the SVO for rating foreign jurisdictions and if any foreign currency exposure is effectively hedged through the maturity date of the investments;
            (e) Qualifying investments of the type set forth
        
in subparagraphs (b), (c) or (d) of this paragraph that are acquired under Section 126.32;
            (f) Interest and dividends receivable on
        
qualifying investments of the type set forth in subparagraphs (a) through (e) of this subsection; or
            (g) Reinsurance recoverable on paid losses.
        (2) Reserve Requirement Amount:
            (a) For purposes of determining the amount of
        
assets to be maintained under this subsection, the calculation of adjusted loss reserves and loss adjustment expense reserves, adjusted unearned premium reserves and statutorily required policy and contract reserves shall be based on the amounts reported as of the most recent annual or quarterly statement date.
            (b) Adjusted loss reserves and loss adjustment
        
expense reserves shall be equal to the sum of the amounts derived from the following calculations:
                (i) The result of each amount reported by the
            
insurer as losses and loss adjustment expenses unpaid for each accident year for each individual line of business; multiplied by
                (ii) The discount factor that is applicable
            
to the line of business and accident year published by the Internal Revenue Service under Internal Revenue Code Section 846 (26 U.S.C. 846), as amended, for the calendar year that corresponds to the most recent annual statement of the insurer; minus
                (iii) Accrued retrospective premiums
            
discounted by an average discount factor. The discount factor shall be calculated by dividing the losses and loss adjustment expenses unpaid after discounting (the product of Items (i) and (ii) in this subparagraph) by loss and loss adjustment expense reserves before discounting Item (i) of this subparagraph.
                (iv) For purposes of these calculations, the
            
losses and loss adjustment expenses unpaid shall be determined net of anticipated salvage and subrogation, and gross of any discount for the time value of money or tabular discount.
            (c) Adjusted unearned premium reserves shall be
        
equal to the result of the following calculation:
                (i) The amount reported by the insurer as
            
unearned premium reserves; minus
                (ii) The admitted asset amounts reported by
            
the insurer as:
                    (I) Premiums in and agents' balances in
                
the course of collection, accident and health premiums due and unpaid and uncollected premiums for accident and health premiums;
                    (II) Premiums, agents' balances and
                
installments booked but deferred and not yet due;
                    (III) Bills receivable, taken for
                
premium; and
                    (IV) Equities and deposits in pools and
                
associations.
            (d) Statutorily required policy and contract
        
reserves shall also include contingency reserves required for mortgage guaranty insurers, municipal bond insurers, and other financial guaranty insurers.
    B. Monitoring and reporting. A property and casualty insurer shall supplement its annual statement with a reconciliation and summary of its assets and reserve requirements as required in subsection A of this Section. A reconciliation and summary showing that an insurer's assets as required in subsection A of this Section are greater than or equal to its undiscounted reserves referred to in subsection A of this Section shall be sufficient to satisfy this requirement. Upon prior notification, the Director may require an insurer to submit such a reconciliation and summary with any quarterly statement filed during the calendar year.
    C. Notification requirements and mandatory safeguards. If a property and casualty insurer's assets and reserves do not comply with subsection A of this Section, the insurer shall notify the Director immediately of the amount by which the reserve requirements exceed the annual statement value of the qualifying assets, explain why the deficiency exists and within 30 days of the date of the notice propose a plan of action to remedy the deficiency.
    D. Authority of the Director.
        (1) If the Director determines that an insurer is not
    
in compliance with subsection A of this Section, the Director shall require the insurer to eliminate the condition causing the noncompliance within a specified time from the date the notice of the Director's requirement is mailed or delivered to the insurer.
        (2) If an insurer fails to comply with the Director's
    
requirement under paragraph (1) of this subsection, the insurer is deemed to be in hazardous financial condition, and the Director shall take one or more of the actions authorized by law as to insurers in hazardous financial condition.
    E. An insurer subject to this Section must comply with the requirements of this Section after December 31, 1997.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.23)
    Sec. 126.23. General 5% diversification, medium and lower grade investments, and Canadian investments.
    A. General 5% diversification.
        (1) Except as otherwise specified in this Article, an
    
insurer shall not acquire directly or indirectly through an investment subsidiary an investment under this Article if, as a result of and after giving effect to the investment, the insurer would hold more than 5% of its admitted assets in investments of all kinds issued, assumed, accepted, guaranteed, or insured by a single person.
        (2) This 5% limitation shall not apply to the
    
aggregate amounts insured by a single financial guaranty insurer with the highest generic rating issued by a nationally recognized statistical rating organization.
        (3) Asset-backed securities shall not be subject to
    
the limitations of paragraph (1) of this subsection, however, except as permitted by subsection A(4) of this Section, an insurer shall not acquire an asset-backed security if, as a result of and after giving effect to the investment, the aggregate amount of asset-backed securities secured by or evidencing an interest in a single asset or single pool of assets held by a trust or other business entity, then held by the insurer would exceed 5% of its admitted assets.
        (4) A company's investments in mortgage related
    
securities, as defined by the Secondary Mortgage Market Enhancement Act of 1984 (United States Public Law 98-440, 12 U.S.C. 24, 1451, 1454 et seq.), that are backed by any single pool of mortgages and made pursuant to the authority of that Act, shall not exceed 5% of its admitted assets.
    B. Medium and lower grade investments.
        (1) An insurer shall not acquire, directly or
    
indirectly through an investment subsidiary, an investment under Sections 126.24, 126.27, and 126.30 or counterparty exposure under Section 126.31D if, as a result of and after giving effect to the investment:
            (a) The aggregate amount of all medium and lower
        
grade investments then held by the insurer would exceed 20% of its admitted assets;
            (b) The aggregate amount of lower grade
        
investments then held by the insurer would exceed 10% of its admitted assets;
            (c) The aggregate amount of investments rated 5
        
or 6 by the SVO then held by the insurer would exceed 5% of its admitted assets;
            (d) The aggregate amount of investments rated 6
        
by the SVO then held by the insurer would exceed 1% of its admitted assets; or
            (e) The aggregate amount of lower grade
        
investments then held by the insurer that receive as cash income less than the equivalent yield for Treasury issues with a comparative average life, would exceed 1% of its admitted assets.
        (2) An insurer shall not acquire, directly or
    
indirectly through an investment subsidiary, an investment under Sections 126.24, 126.27, and 126.30 or counterparty exposure under Section 126.31D if, as a result of and after giving effect to the investment:
            (a) The aggregate amount of medium and lower
        
grade investments issued, assumed, accepted, guaranteed, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer would exceed 1% of its admitted assets; or
            (b) The aggregate amount of lower grade
        
investments issued, assumed, accepted, guaranteed, or insured by any one person or, as to asset-backed securities secured by or evidencing an interest in a single asset or pool of assets, then held by the insurer would exceed 0.5% of its admitted assets.
        (3) If an insurer attains or exceeds the limit of any
    
one rating category referred to in this subsection, the insurer shall not thereby be precluded from acquiring investments in other rating categories subject to the specific and multi-category limits applicable to those investments.
    C. Canadian investments.
            (1) An insurer shall not acquire, directly or
        
indirectly through an investment subsidiary, any Canadian investments authorized by this Article, if as a result of and after giving effect to the investment, the aggregate amount of these investments then held by the insurer would exceed 40% of its admitted assets, or if the aggregate amount of Canadian investments not acquired under Section 126.24B then held by the insurer would exceed 25% of its admitted assets.
            (2) However, as to an insurer that is authorized
        
to do business in Canada or that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in Canada and denominated in Canadian currency, the limitations of paragraph (1) of this subsection shall be increased by the greater of:
                (a) The amount the insurer is required by
            
Canadian law to invest in Canada or to be denominated in Canadian currency; or
                (b) 125% of the amount of its reserves and
            
other obligations under contracts on risks resident or located in Canada.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.24)
    Sec. 126.24. Rated credit instruments. Subject to the limitations of subsection F of this Section, an insurer may acquire rated credit instruments:
    A. Subject to the limitations of Section 126.23B, but not to the limitations of Section 126.23A except for the limitation of subsection (4) of Section 126.23A, an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
        (1) The United States; or
        (2) A government sponsored enterprise of the United
    
States, if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by the United States or are otherwise backed or supported by the full faith and credit of the United States.
        B.  (1) Subject to the limitations of Section
    
126.23B, but not to the limitations of Section 126.23A, an insurer may acquire rated credit instruments issued, assumed, guaranteed, or insured by:
            (a) Canada; or
            (b) A government sponsored enterprise of Canada,
        
if the instruments of the government sponsored enterprise are assumed, guaranteed, or insured by Canada or are otherwise backed or supported by the full faith and credit of Canada;
        (2) However, an insurer shall not acquire an
    
instrument under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer under this subsection would exceed 40% of its admitted assets.
        C.  (1) Subject to the limitations of Section
    
126.23B, but not to the limitations of Section 126.23A, an insurer may acquire rated credit instruments, excluding asset-backed securities:
            (a) Issued by a government money market mutual
        
fund, a class one money market mutual fund or a class one bond mutual fund;
            (b) Issued, assumed, guaranteed, or insured by a
        
government sponsored enterprise of the United States other than those eligible under subsection A of this Section;
            (c) Issued, assumed, guaranteed, or insured by a
        
state, if the instruments are general obligations of the state; or
            (d) Issued by a multilateral development bank.
        (2) However, an insurer shall not acquire an
    
instrument of any one fund, any one enterprise or entity, or any one state under this subsection if, as a result of and after giving effect to the investment, the aggregate amount of investments then held by the insurer in any one fund, enterprise, entity, or state under this subsection would exceed 10% of its admitted assets.
    D. Subject to the limitations of Section 126.23, an insurer may acquire preferred stocks that are not foreign investments and that meet the requirements of rated credit instruments if, as a result of and after giving effect to the investment:
        (1) The aggregate amount of preferred stocks then
    
held by the insurer under this subsection does not exceed 33 1/3% of its admitted assets; and
        (2) The aggregate amount of preferred stocks then
    
held by the insurer under this subsection which are not sinking fund stocks or rated P1 or P2 by the SVO does not exceed 15% of its admitted assets.
    E. Subject to the limitations of Section 126.23 in addition to those investments eligible under subsections A, B, C and D of this Section, an insurer may acquire rated credit instruments that are not foreign investments.
    F. An insurer shall not acquire special rated credit instruments under this Section if, as a result of and after giving effect to the investment, the aggregate amount of special rated credit instruments then held by the insurer would exceed 5% of its admitted assets. The Director may, by rule, identify certain special rated credit instruments that are exempt from the limitation imposed by this subsection.
(Source: P.A. 90-418, eff. 8-15-97.)

    (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 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 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 5/126.26)
    Sec. 126.26. Equity Interests.
    A. Subject to the limitations of Section 126.23, an insurer may acquire directly, or indirectly through an investment subsidiary, equity interests in business entities organized under the laws of any domestic jurisdiction.
    B. An insurer shall not acquire directly, or indirectly through an investment subsidiary, an investment 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 would exceed the greater of 25% of its admitted assets or 100% of its surplus as regards policyholders.
    C. An insurer shall not acquire under this Section any investments that the insurer may acquire under Section 126.28.
    D. An insurer shall not short sell equity interests unless the insurer covers the short sale by owning the equity interest or an unrestricted right to the equity interest exercisable within 6 months of the short sale.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.27)
    Sec. 126.27. Tangible personal property under lease.
    A.  (1) Subject to the limitations of Section 126.23, an insurer may acquire tangible personal property or equity interests therein located or used wholly or in part within a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments.
        (2) Investments acquired under paragraph (1) of this
    
subsection shall be eligible only if:
            (a) The property is subject to a lease or other
        
agreement with a person whose rated credit instruments in the amount of the purchase price of the personal property the insurer could then acquire under Section 126.24; and
            (b) The lease or other agreement provides the
        
insurer the right to receive rental, purchase or other fixed payments for the use or purchase of the property, and the aggregate value of the payments, together with the estimated residual value of the property at the end of its useful life and the estimated tax benefits to the insurer resulting from ownership of the property, shall be adequate to return the cost of the insurer's investment in the property, plus a return deemed adequate by the insurer.
    B. The insurer shall compute the amount of each investment under this Section on the basis of the out of pocket purchase price and applicable related expenses paid by the insurer for the investment, net of each borrowing made to finance the purchase price and expenses, to the extent the borrowing is without recourse to the insurer.
    C. An insurer shall not acquire directly or indirectly through an investment subsidiary an investment under this Section if, as a result of and after giving effect to the investment, the aggregate amount of all investments then held by the insurer under this Section would exceed:
        (1) 2% of its admitted assets; or
        (2) 0.5% of its admitted assets as to any single item
    
of tangible personal property.
    D. For purposes of determining compliance with the limitations of Section 126.23, investments acquired by an insurer under this Section shall be aggregated with those acquired under Section 126.24, and each lessee of the property under a lease referred to in this Section shall be deemed the issuer of an obligation in the amount of the investment of the insurer in the property determined as provided in subsection B of this Section.
    E. Nothing in this Section is applicable to tangible personal property lease arrangements between an insurer and its subsidiaries and affiliates under a cost sharing arrangement or agreement permitted under Section 131.20a(1)(a)(iv) of this Code.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.28)
    Sec. 126.28. Mortgage loans and real estate.
    A. Mortgage loans.
    (1) Subject to the limitations of Section 126.23, an insurer may acquire, either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments, obligations secured by mortgages on real estate situated within a domestic jurisdiction, but a mortgage loan which is secured by other than a first lien shall not be acquired under this subsection (1) unless the insurer is the holder of the first lien. The obligations held by the insurer and any obligations with an equal lien priority, shall not, at the time of acquisition of the obligation, exceed:
            (a) 90% of the fair market value of the real
        
estate, if the mortgage loan is secured by a purchase money mortgage or like security received by the insurer upon disposition of the real estate;
            (b) 80% of the fair market value of the real
        
estate, if the mortgage loan requires immediate scheduled payment in periodic installments of principal and interest, has an amortization period of 30 years or less and periodic payments made no less frequently than annually. Each periodic payment shall be sufficient to assure that at all times the outstanding principal balance of the mortgage loan shall be not greater than the outstanding principal balance which would be outstanding under a mortgage loan with the same original principal balance, with the same interest rate and requiring equal payments of principal and interest with the same frequency over the same amortization period. Mortgage loans permitted under this subsection are permitted notwithstanding the fact that they provide for a payment of the principal balance prior to the end of the period of amortization of the loan. For residential mortgage loans, the 80% limitation may be increased to 97% if acceptable private mortgage insurance has been obtained; or
            (c) 75% of the fair market value of the real
        
estate for mortgage loans that do not meet the requirements of subparagraph (a) or (b) of this paragraph.
        (2) For purposes of paragraph (1) of this subsection,
    
the amount of an obligation required to be included in the calculation of the loan-to-value ratio may be reduced to the extent the obligation is insured by the Federal Housing Administration or guaranteed by the Administrator of Veterans Affairs, or their successors.
        (3) Subject to the limitations of Section 126.23, an
    
insurer may acquire, either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments, obligations secured by a second mortgage on real estate situated within a domestic jurisdiction, other than as authorized in subsection (1) of this Section 126.28. The obligation held by the insurer shall be the sole second lien priority obligation and shall not, at the time of acquisition of the obligation, exceed 70% of the amount by which the fair market value of the real estate exceeds the amount outstanding under the first mortgage.
        (4) A mortgage loan that is held by an insurer under
    
Section 126.3F or acquired under this Section and is restructured in a manner that meets the requirements of a restructured mortgage loan in accordance with the NAIC Accounting Practices and Procedures Manual or successor publication shall continue to qualify as a mortgage loan under this Article.
        (5) Subject to the limitations of Section 126.23,
    
credit lease transactions that do not qualify for investment under Section 126.24 with the following characteristics shall be exempt from the provisions of paragraph (1) of this subsection:
            (a) The loan amortizes over the initial fixed
        
lease term at least in an amount sufficient so that the loan balance at the end of the lease term does not exceed the original appraised value of the real estate;
            (b) The lease payments cover or exceed the total
        
debt service over the life of the loan;
            (c) A tenant or its affiliated entity, whose
        
rated credit instruments have a SVO 1 or 2 designation or a comparable rating from a nationally recognized statistical rating organization recognized by the SVO, has a full faith and credit obligation to make the lease payments;
            (d) The insurer holds or is the beneficial holder
        
of a first lien mortgage on the real estate;
            (e) The expenses of the real estate are passed
        
through to the tenant, excluding exterior, structural, parking and heating, ventilation and air conditioning replacement expenses, unless annual escrow contributions, from cash flows derived from the lease payments, cover the expense shortfall; and
            (f) There is a perfected assignment of the rents
        
due pursuant to the lease to, or for the benefit of, the insurer.
    B. Income producing real estate.
        (1) An insurer may acquire, manage and dispose of
    
real estate situated in a domestic jurisdiction either directly or indirectly through limited partnership interests and general partnership interests not otherwise prohibited by Section 126.5D, joint ventures, stock of an investment subsidiary or membership interests in a limited liability company, trust certificates, or other similar instruments. The real estate shall be income producing or intended for improvement or development for investment purposes under an existing program (in which case the real estate shall be deemed to be income producing).
        (2) The real estate may be subject to mortgages,
    
liens or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsections D(2) and D(3) of this Section.
    C. Real estate for the accommodation of business.
    An insurer may acquire, manage, and dispose of real estate for the convenient accommodation of the insurer's (which may include its affiliates) business operations, including home office, branch office and field office operations.
        (1) Real estate acquired under this subsection may
    
include excess space for rent to others, if the excess space, valued at its fair market value, would otherwise be a permitted investment under subsection B of this Section and is so qualified by the insurer;
        (2) The real estate acquired under this subsection
    
may be subject to one or more mortgages, liens or other encumbrances, the amount of which shall, to the extent that the obligations secured by the mortgages, liens or encumbrances are without recourse to the insurer, be deducted from the amount of the investment of the insurer in the real estate for purposes of determining compliance with subsection D(4) of this Section; and
        (3) For purposes of this subsection, business
    
operations shall not include that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95% of total premium considerations or total statutory required reserves, respectively. An insurer may acquire real estate used for these purposes under subsection B of this Section.
    D. Quantitative limitations.
        (1) An insurer shall not acquire an investment under
    
subsection A of this Section if, as a result of and after giving effect to the investment, the aggregate amount of all investments then held by the insurer under subsection A of this Section would exceed:
            (a) 1% of its admitted assets in mortgage loans
        
covering any one secured location;
            (b) 0.25% of its admitted assets in construction
        
loans covering any one secured location; or
            (c) 1% of its admitted assets in construction
        
loans in the aggregate.
        (2) An insurer shall not acquire an investment under
    
subsection B of this Section if, as a result of and after giving effect to the investment and any outstanding guarantees made by the insurer in connection with the investment, the aggregate amount of investments then held by the insurer under subsection B of this Section plus the guarantees then outstanding would exceed:
            (a) 1% of its admitted assets in any one parcel
        
or group of contiguous parcels of real estate, except that this limitation shall not apply to that portion of real estate used for the direct provision of health care services by an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95% of total premium considerations or total statutory required reserves, respectively, such as hospitals, medical clinics, medical professional buildings or other health facilities used for the purpose of providing health services; or
            (b) The lesser of 10% of its admitted assets or
        
40% of its surplus as regards policyholders in the aggregate, except for an insurer whose insurance premiums and required statutory reserves for accident and health insurance constitute at least 95% of total premium considerations or total statutory required reserves, respectively, this limitation shall be increased to 15% of its admitted assets in the aggregate.
        (3) An insurer shall not acquire an investment under
    
subsection A or B of this Section if, as a result of and after giving effect to the investment and any guarantees it has made in connection with the investment, the aggregate amount of all investments then held by the insurer under subsections A and B of this Section plus the guarantees then outstanding would exceed 25% of its admitted assets.
        (4) The limitations of Section 126.23 shall not apply
    
to an insurer's acquisition of real estate under subsection C of this Section. An insurer shall not acquire real estate under subsection C of this Section if, as a result of and after giving effect to the acquisition, the aggregate amount of all real estate then held by the insurer under subsection C of this Section would exceed 10% of its admitted assets. With the permission of the Director, additional amounts of real estate may be acquired under subsection C of this Section.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.29)
    Sec. 126.29. Securities lending and repurchase, reverse repurchase, and dollar roll transactions. An insurer may enter into securities lending, repurchase, reverse repurchase, and dollar roll transactions with business entities, subject to the following requirements:
    A. The insurer's board of directors shall adopt a written plan that is consistent with the requirements of the written plan in Section 126.4A that specifies guidelines and objectives to be followed, such as:
        (1) A description of how cash received will be
    
invested or used for general corporate purposes of the insurer;
        (2) Operational procedures to manage interest rate
    
risk, counterparty default risk, the conditions under which proceeds from reverse repurchase transactions may be used in the ordinary course of business and the use of acceptable collateral in a manner that reflects the liquidity needs of the transaction; and
        (3) The extent to which the insurer may engage in
    
these transactions.
    B. The insurer shall enter into a written agreement for all transactions authorized in this Section other than dollar roll transactions. The written agreement shall require that each transaction terminate no more than one year from its inception or upon the earlier demand of the insurer. The agreement shall be with the business entity counterparty, but for securities lending transactions, the agreement may be with an agent acting on behalf of the insurer, if the agent is a qualified business entity, and if the agreement:
        (1) Requires the agent to enter into separate
    
agreements with each counterparty that are consistent with the requirements of this Section; and
        (2) Prohibits securities lending transactions
    
pursuant to the agreement with the agent or its affiliates.
    C. Cash received in a transaction under this Section shall be invested in accordance with this Article and in a manner that recognizes the liquidity needs of the transaction or used by the insurer for its general corporate purposes. For so long as the transaction remains outstanding, the insurer, its agent or custodian shall maintain, as to acceptable collateral received in a transaction under this Section, either physically or through the book entry systems of the Federal Reserve, Depository Trust Company, Participants Trust Company or other securities depositories approved by the Director:
        (1) Possession of the acceptable collateral;
        (2) A perfected security interest in the acceptable
    
collateral; or
        (3) In the case of a jurisdiction outside of the
    
United States, title to, or rights of a secured creditor to, the acceptable collateral.
    D. The limitations of Sections 126.23 and 126.30 shall not apply to the business entity counterparty exposure created by transactions under this Section. For purposes of calculations made to determine compliance with this subsection, no effect will be given to the insurer's future obligation to resell securities, in the case of a repurchase transaction, or to repurchase securities, in the case of a reverse repurchase transaction. An insurer shall not enter into a transaction under this Section if, as a result of and after giving effect to the transaction:
        (1) The aggregate amount of securities then loaned or
    
sold to, or purchased from, any one business entity counterparty under this Section would exceed 5% of its admitted assets. In calculating the amount sold to or purchased from a business entity counterparty under repurchase or reverse repurchase transactions, effect may be given to netting provisions under a master written agreement; or
        (2) The aggregate amount of all securities then
    
loaned, sold to or purchased from all business entities under this Section would exceed 40% of its admitted assets but the limitation of this subsection shall not apply to reverse repurchase transactions for so long as the borrowing is used to meet operational liquidity requirements resulting from an officially declared catastrophe and subject to a plan approved by the Director.
    E. In a dollar roll transaction, the insurer shall receive cash in an amount at least equal to the market value of the securities transferred by the insurer in the transaction as of the transaction date.
    F. The Director may promulgate reasonable rules for investments and transactions under this Section including, but not limited to, rules which impose financial solvency standards, valuation standards, and reporting requirements.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.30)
    Sec. 126.30. Foreign investments and foreign currency exposure.
    A. Subject to the limitations of Section 126.23, an insurer may acquire directly or indirectly through an investment subsidiary, foreign investments, or engage in investment practices with persons of or in foreign jurisdictions, of substantially the same types as those that an insurer is permitted to acquire under this Article, other than of the type permitted under Section 126.25, if, as a result and after giving effect to the investment:
        (1) the aggregate amount of foreign investments then
    
held by the insurer under this subsection does not exceed 20% of its admitted assets; and
        (2) the aggregate amount of foreign investments then
    
held by the insurer under this subsection in a single foreign jurisdiction does not exceed 10% of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 5% of its admitted assets as to any other foreign jurisdiction.
    B. Subject to the limitations of Section 126.23, an insurer may acquire investments, or engage in investment practices denominated in foreign currencies, whether or not they are foreign investments acquired under subsection A of this Section, or additional foreign currency exposure as a result of the termination or expiration of a hedging transaction with respect to investments denominated in a foreign currency, if, as a result of and after giving effect to the transaction:
        (1) the aggregate amount of investments then held by
    
the insurer under this subsection denominated in foreign currencies does not exceed 15% of its admitted assets; and
        (2) the aggregate amount of investments then held by
    
the insurer under this subsection denominated in the foreign currency of a single foreign jurisdiction does not exceed 10% of its admitted assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1 or 5% of its admitted assets as to any other foreign jurisdiction.
     However, an investment shall not be considered denominated in a foreign currency if the acquiring insurer enters into one or more contracts in transactions permitted under Section 126.31 in which the business entity counterparty agrees to exchange, or grants to the insurer the option to exchange, all payments made on the foreign currency denominated investment (or amounts equivalent to the payments that are or will be due to the insurer in accordance with the terms of such investment) for United States currency during the period the contract or contracts are in effect to insulate the insurer against loss caused by diminution of the value of payments owed to the insurer due to future changes in currency exchange rates.
    C. In addition to investments permitted under subsections A and B of this Section, an insurer that is authorized to do business in a foreign jurisdiction, and that has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in that foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction, subject to the limitations of Section 126.23. However, investments made under this subsection in obligations of foreign governments, their political subdivisions and government sponsored enterprises shall not be subject to the limitations of Section 126.23 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer under this subsection shall not exceed the greater of:
        (1) the amount the insurer is required by law to
    
invest in the foreign jurisdiction; or
        (2) 125% of the amount of its reserves, net of
    
reinsurance, and other obligations under the contracts.
    D. In addition to investments permitted under subsections A and B of this Section, an insurer that is not authorized to do business in a foreign jurisdiction but which has outstanding insurance, annuity or reinsurance contracts on lives or risks resident or located in a foreign jurisdiction and denominated in foreign currency of that jurisdiction, may acquire foreign investments respecting that foreign jurisdiction, and may acquire investments denominated in the currency of that jurisdiction subject to the limitations set forth of Section 126.24. However, investments made under this subsection in obligations of foreign governments, their political subdivisions and government sponsored enterprises shall not be subject to the limitations of Section 126.23 if those investments carry an SVO rating of 1 or 2. The aggregate amount of investments acquired by the insurer under this subsection shall not exceed 105% of the amount of its reserves, net of reinsurance, and other obligations under the contracts on risks resident or located in the foreign jurisdiction.
    E. Investments acquired under this Section shall be aggregated with investments of the same types made under all other Sections of this Article, and in a similar manner, for purposes of determining compliance with the limitations, if any, contained in the other Sections. Investments in obligations of foreign governments, their political subdivisions and government sponsored enterprises of these persons, except for those exempted under subsections C and D of this Section, shall be subject to the limitations of Section 126.23.
(Source: P.A. 90-418, eff. 8-15-97; 91-357, eff. 7-29-99.)

    (215 ILCS 5/126.31)
    Sec. 126.31. Derivative transactions. An insurer may, directly or indirectly through an investment subsidiary, engage in derivative transactions under this Section under the following conditions:
    A. General conditions.
        (1) An insurer may use derivative instruments under
    
this Section to engage in hedging transactions and income generation transactions.
        (2) An insurer may use derivative instruments for
    
replication transactions only after the Director promulgates reasonable rules that set forth methods of disclosure, reserving for risk-based capital, and determining the asset valuation reserve for these investments. Any asset being replicated is subject to all the provisions and limitations on the making thereof specified in this Article with respect to investments by the insurer as if the transaction constituted a direct investment by the insurer in the replicated asset.
        (3) With respect to all hedging transactions, an
    
insurer shall be able to demonstrate to the Director the intended hedging characteristics and the ongoing effectiveness of the derivative transaction or combination of transactions through cash flow testing or other appropriate analyses.
        (4) The Director may promulgate reasonable rules for
    
investments and transactions under this Section including, but not limited to, rules which impose financial solvency standards, valuation standards, and reporting requirements.
    B. Limitations on hedging transactions. An insurer may enter into hedging transactions under this Section if, as a result of and after giving effect to the transaction:
        (1) The aggregate statement value of options, caps,
    
floors and warrants not attached to another financial instrument purchased and used in hedging transactions then engaged in by the insurer does not exceed 7.5% of its admitted assets;
        (2) The aggregate statement value of options, caps
    
and floors written in hedging transactions then engaged in by the insurer does not exceed 3% of its admitted assets; and
        (3) The aggregate potential exposure of collars,
    
swaps, forwards and futures used in hedging transactions then engaged in by the insurer does not exceed 6.5% of its admitted assets.
    C. Limitations on income generation transactions. An insurer may enter into the following types of income generation transactions subject to the quantitative limits of subsection C(4):
        (1) Sales of covered call options on noncallable
    
fixed income securities, callable fixed income securities if the option expires by its terms prior to the end of the noncallable period or derivative instruments based on fixed income securities;
        (2) Sales of covered call options on equity
    
securities, if the insurer holds in its portfolio, or can immediately acquire through the exercise of options, warrants or conversion rights already owned, the equity securities subject to call during the complete term of the call option sold; or
        (3) Sales of covered puts on investments that the
    
insurer is permitted to acquire under this Article, if the insurer has escrowed, or entered into a custodian agreement segregating, cash or cash equivalents with a market value equal to the amount of its purchase obligations under the put during the complete term of the put option sold.
        (4) If as a result of and after giving effect to the
    
transactions, the aggregate statement value of the fixed income assets that are subject to call plus the face value of fixed income securities underlying a derivative instrument subject to call, plus the amount of the purchase obligations under the puts, does not exceed 10% of its admitted assets.
    D. Counterparty exposure. An insurer shall include all counterparty exposure amounts in determining compliance with the limitations of Section 126.23.
    E. Additional transactions. Pursuant to rules promulgated under Section 126.8, the Director may approve additional transactions involving the use of derivative instruments in excess of the limits of subsection B of this Section or for other risk management purposes.
(Source: P.A. 90-418, eff. 8-15-97.)

    (215 ILCS 5/126.32)
    Sec. 126.32. Additional investment authority.
    A. Under this Section, an insurer may acquire investments or engage in investment practices of any kind that are not specifically prohibited by Section 126.5 and are not derivative instruments without regard to any limitation in Sections 126.23 through 126.30, but an insurer shall not acquire an investment or engage in an investment practice under this Section if, as a result of and after giving effect to the transaction, the aggregate amount of the investments then held by the insurer under this Section would exceed the greater of:
        (1) Its unrestricted surplus; or
        (2) The lesser of:
            (a) 10% of its admitted assets; or
            (b) 50% of its surplus as regards policyholders.
    B. An insurer shall not acquire any investment or engage in any investment practice under subsection A(2) of this Section if, as a result of and after giving effect to the transaction the aggregate amount of all investments in any one person then held by the insurer under that subsection would exceed 5% of its admitted assets.
(Source: P.A. 90-418, eff. 8-15-97.)


 
    (215 ILCS 5/Art. VIII.25 heading)
ARTICLE VIII 1/4. RISK MANAGEMENT AND
OWN RISK AND SOLVENCY ASSESSMENT
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129)
    Sec. 129. Short title. This Article may be cited as the Risk Management and Own Risk and Solvency Assessment Law.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.1)
    Sec. 129.1. Purpose and scope. The purpose of this Article is to provide the requirements for maintaining a risk management framework and completing an own risk and solvency assessment (ORSA) and provide guidance and instructions for filing an ORSA summary report with the Director.
    The requirements of this Article shall apply to all insurers domiciled in this State unless exempt pursuant to Section 129.7.
    The General Assembly finds and declares that an ORSA summary report will contain confidential and sensitive information related to an insurer or insurance group's identification of risks material and relevant to the insurer or insurance group filing the report. This information will include proprietary and trade secret information that has the potential for harm and competitive disadvantage to the insurer or insurance group if the information is made public. It is the intent of this General Assembly that the ORSA summary report shall be a confidential document filed with the Director, that the ORSA summary report shall be shared only as stated herein and to assist the Director in the performance of his or her duties, and that in no event shall an ORSA summary report be subject to public disclosure.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.2)
    Sec. 129.2. Definitions. In this Article:
    "Insurance group", for the purpose of conducting an ORSA, means those insurers and affiliates included within an insurance holding company system as defined in Section 131.1 of this Code.
    "Insurer" has the same meaning as set forth in Section 2 of this Code, except that it shall not include agencies, authorities, or instrumentalities of the United States or its possessions or territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.
    "Own risk and solvency assessment" or "ORSA" means a confidential internal assessment, appropriate to the nature, scale, and complexity of an insurer or insurance group, conducted by that insurer or insurance group of the material and relevant risks associated with the insurer or insurance group's current business plan, and the sufficiency of capital resources to support those risks.
    "ORSA Guidance Manual" means the current version of the Own Risk and Solvency Assessment Guidance Manual developed and adopted by the National Association of Insurance Commissioners (NAIC) and as amended from time to time. A change in the ORSA Guidance Manual shall be effective on the January 1 following the calendar year in which the changes have been adopted by the NAIC.
    "ORSA summary report" means a confidential high-level summary of an insurer or insurance group's ORSA.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.3)
    Sec. 129.3. Risk management framework. An insurer shall maintain a risk management framework to assist the insurer with identifying, assessing, monitoring, managing, and reporting on its material and relevant risks. The requirement of this Section may be satisfied if the insurance group of which the insurer is a member maintains a risk management framework applicable to the operations of the insurer.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.4)
    Sec. 129.4. ORSA requirement. Subject to Section 129.7 of this Code, an insurer, or the insurance group of which the insurer is a member, shall regularly conduct an ORSA consistent with a process comparable to the ORSA Guidance Manual. The ORSA shall be conducted no less than annually but also at any time when there are significant changes to the risk profile of the insurer or the insurance group of which the insurer is a member.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.5)
    Sec. 129.5. ORSA summary report.
    (a) Upon the Director's request, and no more than once each year, an insurer shall submit to the Director an ORSA summary report or any combination of reports that together contain the information described in the ORSA Guidance Manual, applicable to the insurer and the insurance group of which it is a member. Notwithstanding any request from the Director, if the insurer is a member of an insurance group, the insurer shall submit the report or reports required by this subsection (a) if the Director is the lead state commissioner of the insurance group as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.
    (b) The report or reports shall include a signature of the insurer or insurance group's chief risk officer or other executive having responsibility for the oversight of the insurer's enterprise risk management process attesting to the best of his or her belief and knowledge that the insurer applies the enterprise risk management process described in the ORSA summary report and that a copy of the report has been provided to the insurer's board of directors or the appropriate committee thereof.
    (c) An insurer may comply with subsection (a) of this Section by providing the most recent and substantially similar report or reports provided by the insurer or another member of an insurance group of which the insurer is a member to the commissioner of another state or to a supervisor or regulator of a foreign jurisdiction, if that report provides information that is comparable to the information described in the ORSA Guidance Manual. Any such report in a language other than English must be accompanied by a translation of that report into the English language.
    (d) The first filing of the ORSA summary report shall be in 2015.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.6)
    Sec. 129.6. Contents of ORSA summary report.
    (a) The ORSA summary report shall be prepared consistent with the ORSA Guidance Manual, subject to the requirements of subsection (b) of this Section. Documentation and supporting information shall be maintained and made available upon examination or upon the request of the Director.
    (b) The review of the ORSA summary report, and any additional requests for information, shall be made using similar procedures currently used in the analysis and examination of multi-state or global insurers and insurance groups.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.7)
    Sec. 129.7. Exemption.
    (a) An insurer shall be exempt from the requirements of this Article if:
        (1) the insurer has annual direct written and
    
unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $500,000,000; and
        (2) the insurance group of which the insurer is a
    
member has annual direct written and unaffiliated assumed premium, including international direct and assumed premium, but excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, less than $1,000,000,000.
    (b) If an insurer qualifies for exemption pursuant to item (1) of subsection (a) of this Section, but the insurance group of which the insurer is a member does not qualify for exemption pursuant to item (2) of subsection (a) of this Section, then the ORSA summary report that may be required pursuant to Section 129.5 of this Code shall include every insurer within the insurance group. This requirement may be satisfied by the submission of more than one ORSA summary report for any combination of insurers, provided any combination of reports includes every insurer within the insurance group.
    (c) If an insurer does not qualify for exemption pursuant to item (1) of subsection (a) of this Section, but the insurance group of which it is a member qualifies for exemption pursuant to item (2) of subsection (a) of this Section, then the only ORSA summary report that may be required pursuant to Section 129.5 shall be the report applicable to that insurer.
    (d) An insurer that does not qualify for exemption pursuant to subsection (a) of this Section may apply to the Director for a waiver from the requirements of this Article based upon unique circumstances. In deciding whether to grant the insurer's request for waiver, the Director may consider the type and volume of business written, ownership and organizational structure, and any other factor the Director considers relevant to the insurer or insurance group of which the insurer is a member. If the insurer is part of an insurance group with insurers domiciled in more than one state, the Director shall coordinate with the lead state commissioner and with the other domiciliary commissioners in considering whether to grant the insurer's request for a waiver.
    (e) Notwithstanding the exemptions stated in this Section, the following provisions shall apply:
        (1) The Director may require that an insurer maintain
    
a risk management framework, conduct an ORSA, and file an ORSA summary report based on unique circumstances, including, but not limited to, the type and volume of business written, ownership and organizational structure, federal agency requests, and international supervisor requests.
        (2) The Director may require that an insurer maintain
    
a risk management framework, conduct an ORSA, and file an ORSA summary report if the insurer has risk-based capital for a company action level event as set forth in Section 35A-15 of this Code, meets one or more of the standards of an insurer deemed to be in hazardous financial condition as defined in Section 186.1 of this Code, or otherwise exhibits qualities of a troubled insurer as determined by the Director.
    (f) If an insurer that qualifies for an exemption pursuant to subsection (a) of this Section subsequently no longer qualifies for that exemption due to changes in premium as reflected in the insurer's most recent annual statement or in the most recent annual statements of the insurers within the insurance group of which the insurer is a member, the insurer shall have one year following the year the threshold is exceeded to comply with the requirements of this Article.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.8)
    Sec. 129.8. Confidentiality.
    (a) Documents, materials, or other information, including the ORSA summary report, in the possession or control of the Department that are obtained by, created by, or disclosed to the Director or any other person under this Article, is recognized by this State as being proprietary and to contain trade secrets. All such documents, materials, or other information shall be confidential by law and privileged, shall not be subject to the Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the Director is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the Director's official duties. The Director shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer.
    (b) Neither the Director nor any person who received documents, materials, or other ORSA-related information, through examination or otherwise, while acting under the authority of the Director or with whom such documents, materials, or other information are shared pursuant to this Article shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (a) of this Section.
    (c) In order to assist in the performance of regulatory duties, the Director may:
        (1) upon request, share documents, materials, or
    
other ORSA-related information, including the confidential and privileged documents, materials, or information subject to subsection (a) of this Section, including proprietary and trade secret documents and materials with other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in the Section 131.20c of this Code, with the NAIC, and with any third-party consultants designated by the Director, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; and
        (2) receive documents, materials, or other
    
ORSA-related information, including otherwise confidential and privileged documents, materials, or information, including proprietary and trade-secret information or documents, from regulatory officials of other foreign or domestic jurisdictions, including members of any supervisory college as defined in the Section 131.20c of this Code, and from the NAIC, and shall maintain as confidential or privileged any documents, materials, 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.
    (d) The Director shall enter into a written agreement with the NAIC or a third-party consultant governing sharing and use of information provided pursuant to this Article, consistent with this Section that shall:
        (1) specify procedures and protocols regarding the
    
confidentiality and security of information shared with the NAIC or a third-party consultant pursuant to this Article, including procedures and protocols for sharing by the NAIC with other state regulators from states in which the insurance group has domiciled insurers; the agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the ORSA-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality;
        (2) specify that ownership of information shared with
    
the NAIC or a third-party consultant pursuant to this Article remains with the Director and the NAIC's or a third-party consultant's use of the information is subject to the direction of the Director;
        (3) prohibit the NAIC or third-party consultant from
    
storing the information shared pursuant to this Article in a permanent database after the underlying analysis is completed;
        (4) require prompt notice to be given to an insurer
    
whose confidential information in the possession of the NAIC or a third-party consultant pursuant to this Article is subject to a request or subpoena to the NAIC or a third-party consultant for disclosure or production;
        (5) require the NAIC or a third-party consultant to
    
consent to intervention by an insurer in any judicial or administrative action in which the NAIC or a third-party consultant may be required to disclose confidential information about the insurer shared with the NAIC or a third-party consultant pursuant to this Article; and
        (6) in the case of an agreement involving a
    
third-party consultant, provide for the insurer's written consent.
    (e) The sharing of information and documents by the Director pursuant to this Article shall not constitute a delegation of regulatory authority or rulemaking, and the Director is solely responsible for the administration, execution, and enforcement of the provisions of this Article.
    (f) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials, or other ORSA-related information shall occur as a result of disclosure of such ORSA-related information or documents to the Director under this Section or as a result of sharing as authorized in this Article.
    (g) Documents, materials, or other information in the possession or control of the NAIC or any third-party consultants pursuant to this Article shall be confidential by law and privileged, shall not be subject to the Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/129.9)
    Sec. 129.9. Sanctions. Any insurer failing, without just cause, to timely file the ORSA summary report as required in this Article shall be required, after notice and hearing, to pay a penalty of $200 for each day's delay, to be recovered by the Director, and the penalty so recovered shall be paid into the General Revenue Fund of this State. The Director may reduce the penalty if the insurer demonstrates to the Director that the imposition of the penalty would constitute a financial hardship to the insurer.
(Source: P.A. 98-910, eff. 7-1-15.)


 
    (215 ILCS 5/Art. VIII.33 heading)
ARTICLE VIII 1/3. CORPORATE GOVERNANCE ANNUAL DISCLOSURE LAW
(Source: P.A. 101-600, eff. 12-6-19.)

    (215 ILCS 5/130.1)
    Sec. 130.1. Short title. This Article may be cited as the Corporate Governance Annual Disclosure Law.
(Source: P.A. 101-600, eff. 12-6-19.)

    (215 ILCS 5/130.2)
    Sec. 130.2. Purpose and scope. The purpose of this Article is to:
        (1) provide the Director a summary of an insurer's or
    
insurance group's corporate governance structure, policies, and practices to permit the Director to gain and maintain an understanding of the insurer's corporate governance framework;
        (2) outline the requirements for completing a
    
corporate governance annual disclosure with the Director;
        (3) provide for the confidential treatment of the
    
corporate governance annual disclosure and related information that will contain confidential and sensitive information related to an insurer's or insurance group's internal operations and proprietary and trade-secret information that, if made public, could potentially cause the insurer or insurance group competitive harm or disadvantage.
    Nothing in this Article shall be construed to prescribe or impose corporate governance standards and internal procedures beyond that which is required under applicable State corporate law. Notwithstanding the foregoing, nothing in this Article shall be construed to limit the Director's authority or the rights or obligations of third parties under Sections 131.21, 132 through 132.7, and 401 through 403. The requirements of this Article apply to all insurers domiciled in this State.
(Source: P.A. 101-600, eff. 12-6-19.)

    (215 ILCS 5/130.3)
    Sec. 130.3. Definitions. As used in this Article:
    "Director" means the Director of Insurance.
    "Corporate governance annual disclosure" means a confidential report filed by the insurer or insurance group made in accordance with the requirements of this Article.
    "Insurance group" means those insurers and affiliates included within an insurance holding company system as defined in Section 131.1.
    "Insurer" has the same meaning given to "company" in Section 2, except that it does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.
    "ORSA summary report" means the own risk and solvency assessment report filed in accordance with Article VIII 1/4.
(Source: P.A. 101-600, eff. 12-6-19.)

    (215 ILCS 5/130.4)
    Sec. 130.4. Disclosure requirement.
    (a) An insurer, or the insurance group of which the insurer is a member, shall, no later than June 1 of each calendar year, submit to the Director a corporate governance annual disclosure that contains the information described in subsection (b) of Section 130.5. Notwithstanding any request from the Director made pursuant to subsection (c), if the insurer is a member of an insurance group, the insurer shall submit the report required by this Section to the Director of the lead state for the insurance group, in accordance with the laws of the lead state, as determined by the procedures outlined in the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.
    (b) The corporate governance annual disclosure must include a signature of the insurer's or insurance group's chief executive officer or corporate secretary attesting to the best of that individual's belief and knowledge that the insurer has implemented the corporate governance practices and that a copy of the disclosure has been provided to the insurer's board of directors or the appropriate committee thereof.
    (c) An insurer not required to submit a corporate governance annual disclosure under this Section shall do so upon the Director's request.
    (d) For purposes of completing the corporate governance annual disclosure, the insurer or insurance group may provide information regarding corporate governance at the ultimate controlling parent level, an intermediate holding company level, or the individual legal entity level, depending upon how the insurer or insurance group has structured its system of corporate governance. The insurer or insurance group is encouraged to make the corporate governance annual disclosure at the level at which the insurer's or insurance group's risk appetite is determined, the level at which the earnings, capital, liquidity, operations, and reputation of the insurer are overseen collectively and at which the supervision of those factors is coordinated and exercised, or the level at which legal liability for failure of general corporate governance duties would be placed. If the insurer or insurance group determines the level of reporting based on these criteria, it shall indicate which of the 3 criteria was used to determine the level of reporting and explain any subsequent changes in the level of reporting.
    (e) The review of the corporate governance annual disclosure and any additional requests for information shall be made through the lead state as determined by the procedures within the most recent Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.
    (f) Insurers providing information substantially similar to the information required by this Article in other documents provided to the Director, including proxy statements filed in conjunction with the requirements of Section 131.13 or other State or federal filings provided to the Department, are not required to duplicate that information in the corporate governance annual disclosure but are only required to cross-reference the document in which the information is included.
(Source: P.A. 101-600, eff. 12-6-19; 102-135, eff. 7-23-21.)

    (215 ILCS 5/130.5)
    Sec. 130.5. Contents of corporate governance annual disclosure.
    (a) The insurer or insurance group has discretion over the responses to the corporate governance annual disclosure inquiries if the corporate governance annual disclosure contains the material information necessary to permit the Director to gain an understanding of the insurer's or insurance group's corporate governance structure, policies, and practices. The Director may request additional information that he or she deems material and necessary to provide the Director with a clear understanding of the corporate governance policies, the reporting or information system, or controls implementing those policies.
    (b) Notwithstanding subsection (a), the corporate governance annual disclosure shall be prepared in a manner consistent with rules adopted by the Director. Documentation and supporting information shall be maintained and made available upon examination or upon the request of the Director.
    (c) The Director may retain, at the insurer's expense, third-party consultants, including attorneys, actuaries, accountants, and other experts not otherwise a part of the Director's staff, as may be reasonably necessary to assist the Director in reviewing the corporate governance annual disclosure and related information or the insurer's compliance with this Article. Any persons retained shall be under the direction and control of the Director and shall act only in an advisory capacity.
(Source: P.A. 101-600, eff. 12-6-19.)

    (215 ILCS 5/130.6)
    Sec. 130.6. Confidentiality.
    (a) Documents, materials, or other information, including the corporate governance annual disclosure, in the possession or control of the Department that are obtained by, created by, or disclosed to the Director or any other person under this Article are recognized by this State as being proprietary and to contain trade secrets. All such documents, materials, or other information shall be confidential by law and privileged, shall not be subject to the Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the Director is authorized to use the documents, materials, or other information in furtherance of any regulatory or legal action brought as a part of the Director's official duties. The Director shall not otherwise make the documents, materials, or other information public without the prior written consent of the insurer.
    (b) Neither the Director nor any person who received documents, materials, or other corporate governance annual disclosure-related information through examination or otherwise, while acting under the authority of the Director or with whom such documents, materials, or other information are shared pursuant to this Article, shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (a).
    (c) In order to assist in the performance of the Director's regulatory duties, the Director may:
        (1) upon request, share documents, materials, or
    
other corporate governance annual disclosure-related information, including the confidential and privileged documents, materials, and information subject to subsection (a), including proprietary and trade-secret documents and materials with other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in subsection (c) of Section 131.20, with the National Association of Insurance Commissioners, and with third-party consultants, if the recipient agrees in writing to maintain the confidentiality and privileged status of the corporate governance annual disclosure-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality; and
        (2) receive documents, materials, or other
    
corporate governance annual disclosure-related information, including otherwise confidential and privileged documents, materials, and information, including proprietary and trade-secret information and documents from regulatory officials of other state, federal, and international financial regulatory agencies, including members of any supervisory college as defined in subsection (c) of Section 131.20, and from the National Association of Insurance Commissioners, and shall maintain as confidential or privileged any documents, materials, 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.
    (d) A written agreement with the National Association of Insurance Commissioners or a third-party consultant governing sharing and use of information provided pursuant to this Article shall:
        (1) include specific procedures and protocols for
    
maintaining the confidentiality and security of corporate governance annual disclosure-related information shared with the National Association of Insurance Commissioners or a third-party consultant pursuant to this Article, including procedures and protocols for sharing by the National Association of Insurance Commissioners only with other state regulators from states in which the insurance group has domiciled insurers; the agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the corporate governance annual disclosure-related documents, materials, or other information and has verified in writing the legal authority to maintain confidentiality;
        (2) specify that ownership of the corporate
    
governance annual disclosure-related information shared with the National Association of Insurance Commissioners or a third-party consultant remains with the Director and that the National Association of Insurance Commissioners' or third-party consultant's use of the information is subject to the direction of the Director;
        (3) prohibit the National Association of Insurance
    
Commissioners or a third-party consultant from storing the information shared pursuant to this Article in a permanent database after the underlying analysis is completed;
        (4) require the National Association of Insurance
    
Commissioners or a third-party consultant to provide prompt notice to the Director and to the insurer or insurance group regarding any subpoena, request for disclosure, or request for production of the insurer's or insurance group's corporate governance annual disclosure-related information;
        (5) require the National Association of Insurance
    
Commissioners or a third-party consultant to consent to intervention by an insurer in any judicial or administrative action in which the National Association of Insurance Commissioners or a third-party consultant may be required to disclose confidential information about the insurer shared with the National Association of Insurance Commissioners or a third-party consultant pursuant to this Article; and
        (6) require the National Association of Insurance
    
Commissioners or a third-party consultant to obtain written consent of the insurer before making any of the insurer's corporate governance annual disclosure-related information public.
    (e) The sharing of information and documents by the Director pursuant to this Article shall not constitute a delegation of regulatory authority or rulemaking, and the Director is solely responsible for the administration, execution, and enforcement of this Article.
    (f) No waiver of any applicable privilege or claim of confidentiality in the documents, proprietary and trade-secret materials, or other corporate governance annual disclosure-related information shall occur as a result of disclosure of such information or documents to the Director under this Section or as a result of sharing as authorized in this Article.
    (g) Documents, materials, or other information in the possession or control of the National Association of Insurance Commissioners or any third-party consultants pursuant to this Article shall be confidential by law and privileged, shall not be subject to the Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.
(Source: P.A. 101-600, eff. 12-6-19.)

    (215 ILCS 5/130.7)
    Sec. 130.7. Sanctions. Any insurer failing, without just cause, to timely file the corporate governance annual disclosure as required in this Article shall be required, after notice and a hearing, to pay a penalty of $200 for each day's delay, to be recovered by the Director. Any penalty recovered shall be paid into the General Revenue Fund. The Director may reduce the penalty if the insurer demonstrates to the Director that the imposition of the penalty would constitute a financial hardship to the insurer.
(Source: P.A. 101-600, eff. 12-6-19.)


 
    (215 ILCS 5/Art. VIII.5 heading)
ARTICLE VIII 1/2. INSURANCE HOLDING COMPANY SYSTEMS

    (215 ILCS 5/131.1)
    Sec. 131.1. Definitions. As used in this Article, the following terms have the respective meanings set forth in this Section unless the context requires otherwise:
    (a) An "affiliate" of, or person "affiliated" with, a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.
    (a-5) "Acquiring party" means such person by whom or on whose behalf the merger or other acquisition of control referred to in Section 131.4 is to be affected and any person that controls such person or persons.
    (a-10) "Associated person" means, with respect to an acquiring party, (1) any beneficial owner of shares of the company to be acquired, owned, directly or indirectly, of record or beneficially by the acquiring party, (2) any affiliate of the acquiring party or beneficial owner, and (3) any other person acting in concert, directly or indirectly, pursuant to any agreement, arrangement, or understanding, whether written or oral, with the acquiring party or beneficial owner, or any of their respective affiliates, in connection with the merger, consolidation, or other acquisition of control referred to in Section 131.4 of this Code.
    (a-15) "Company" has the same meaning as "company" as defined in Section 2 of this Code, except that it does not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state.
    (b) "Control" (including the terms "controlling", "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, the holding of shareholders' or policyholders' proxies by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is solely the result of an official position with or corporate office held by the person. Control is presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds shareholders' proxies representing 10% or more of the voting securities of any other person, or holds or controls sufficient policyholders' proxies to elect the majority of the board of directors of the domestic company. This presumption may be rebutted by a showing made in the manner as the Director may provide by rule. The Director may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.
    (b-5) "Enterprise risk" means any activity, circumstance, event, or series of events involving one or more affiliates of a company that, if not remedied promptly, is likely to have a material adverse effect upon the financial condition or liquidity of the company or its insurance holding company system as a whole, including, but not limited to, anything that would cause the company's risk-based capital to fall into company action level as set forth in Article IIA of this Code or would cause the company to be in hazardous financial condition as set forth in Article XII 1/2 of this Code.
    (b-10) "Exchange Act" means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.
    (b-12) "Group capital calculation instructions" means the group capital calculation instructions as adopted by the NAIC and as amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC.
    (b-15) "Group-wide supervisor" means the regulatory official authorized to engage in conducting and coordinating group-wide supervision activities who is determined or acknowledged by the Director under Section 131.20d of this Code to have sufficient contacts with an internationally active insurance group.
    (c) "Insurance holding company system" means two or more affiliated persons, one or more of which is an insurance company as defined in paragraph (e) of Section 2 of this Code.
    (c-5) "Internationally active insurance group" means an insurance holding company system that:
        (1) includes an insurer registered under Section 4 of
    
this Code; and
        (2) meets the following criteria:
            (A) premiums written in at least 3 countries;
            (B) the percentage of gross premiums written
        
outside the United States is at least 10% of the insurance holding company system's total gross written premiums; and
            (C) based on a 3-year rolling average, the total
        
assets of the insurance holding company system are at least $50,000,000,000 or the total gross written premiums of the insurance holding company system are at least $10,000,000,000.
    (d) (Blank).
    (d-1) "NAIC" means the National Association of Insurance Commissioners.
    (d-2) "NAIC Liquidity Stress Test Framework" is a separate NAIC publication which includes a history of the NAIC's development of regulatory liquidity stress testing, the scope criteria applicable for a specific data year, and the liquidity stress test instructions, and reporting templates for a specific data year, such scope criteria, instructions, and reporting template being as adopted by the NAIC and as amended by the NAIC from time to time in accordance with the procedures adopted by the NAIC.
    (d-5) "Non-operating holding company" is a general business corporation functioning solely for the purpose of forming, owning, acquiring, and managing subsidiary business entities and having no other business operations not related thereto.
    (d-10) "Own", "owned," or "owning" means shares (1) with respect to which a person has title or to which a person's nominee, custodian, or other agent has title and which such nominee, custodian, or other agent is holding on behalf of the person or (2) with respect to which a person (A) has purchased or has entered into an unconditional contract, binding on both parties, to purchase the shares, but has not yet received the shares, (B) owns a security convertible into or exchangeable for the shares and has tendered the security for conversion or exchange, (C) has an option to purchase or acquire, or rights or warrants to subscribe to, the shares and has exercised such option, rights, or warrants, or (D) holds a securities futures contract to purchase the shares and has received notice that the position will be physically settled and is irrevocably bound to receive the underlying shares. To the extent that any affiliates of the stockholder or beneficial owner are acting in concert with the stockholder or beneficial owner, the determination of shares owned may include the effect of aggregating the shares owned by the affiliate or affiliates. Whether shares constitute shares owned shall be decided by the Director in his or her reasonable determination.
    (e) "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but does not include any securities broker performing no more than the usual and customary broker's function or joint venture partnership exclusively engaged in owning, managing, leasing or developing real or tangible personal property other than capital stock.
    (e-5) "Policyholders' proxies" are proxies that give the holder the right to vote for the election of the directors and other corporate actions not in the day to day operations of the company.
    (f) (Blank).
    (f-3) "Scope criteria", as detailed in the NAIC Liquidity Stress Test Framework, are the designated exposure bases along with minimum magnitudes thereof for the specified data year, used to establish a preliminary list of insurers considered scoped into the NAIC Liquidity Stress Test Framework for that data year.
    (f-5) "Securityholder" of a specified person is one who owns any security of such person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing.
    (g) "Subsidiary" of a specified person is an affiliate controlled by such person directly, or indirectly through one or more intermediaries.
    (h) "Voting Security" is a security which gives to the holder thereof the right to vote for the election of directors and includes any security convertible into or evidencing a right to acquire a voting security.
(Source: P.A. 102-394, eff. 8-16-21; 102-578, eff. 7-1-22 (See Section 5 of P.A. 102-672 for effective date of P.A. 102-578); 102-813, eff. 5-13-22.)

    (215 ILCS 5/131.2) (from Ch. 73, par. 743.2)
    Sec. 131.2. Subsidiaries. A domestic company, either by itself or in cooperation with one or more persons, may organize or acquire one or more subsidiaries. The subsidiaries may conduct any kind of business or businesses and their authority to do so shall not be limited by reason of the fact that they are subsidiaries of a domestic company. In addition to investments in common stock, preferred stock, debt obligations and other securities of subsidiaries permitted under all other sections of this Code, a domestic company, other than a company subject to Articles XVIII or XIX, may also:
        (a) invest, in common stock, preferred stock, debt
    
obligations, and other securities of one or more subsidiaries, amounts which do not exceed the lesser of 10% of the company's assets or 50% of the company's surplus as regards policyholders, but after such investments the company's surplus as regards policyholders must be reasonable in relation to the company's outstanding liabilities and adequate to its financial needs. In calculating the amount of such investments, there must be included (i) total net monies or other consideration expended and obligations assumed in the acquisition or formation of a subsidiary, including all organizational expenses and contributions to capital and surplus of the subsidiary whether or not represented by the purchase of capital stock or issuance of other securities, and (ii) all amounts expended in acquiring additional common stock, preferred stock, debt obligations, and other securities, and all contributions to the capital or surplus of a subsidiary subsequent to its acquisition or formation;
        (b) invest any amount in common stock, preferred
    
stock, debt obligations and other securities of one or more direct subsidiaries acting only as a non-operating holding company or engaged or organized exclusively for the ownership and management of assets authorized as investments for the company, provided that each subsidiary agrees to limit its investments in any asset so that such investments will not cause the amount of the total investment of the company to exceed the amount the company could have invested in such asset. For the purpose of this clause, "the total investment of the company" will include (i) any direct investment by the company in an asset and (ii) the company's proportionate share of any investment in such asset by any subsidiary of the company, which must be calculated by multiplying the amount of the subsidiary's investment by the percentage of the company's ownership of such subsidiary;
        (c) invest in common stock of one or more insurance
    
corporation subsidiaries any amount by which the investing company's capital and surplus exceeds the minimum capital and surplus required of a new company under Section 13 to qualify for a certificate of authority to write the kind or kinds of insurance which the company is authorized to write, if the company is a stock company, and if the company is other than a stock company, the company may invest the amount by which the company's surplus exceeds the minimum surplus required of a new company under Section 43 or 66 to qualify for a certificate of authority to write the kind or kinds of insurance which the company is authorized to write;
        (d) with the approval of the Director, invest any
    
greater amount in common stock, preferred stock, debt obligations, or other securities of one or more subsidiaries, but after such investment the company's surplus as regards policyholders must be reasonable in relation to the company's outstanding liabilities and adequate to its financial needs.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.3) (from Ch. 73, par. 743.3)
    Sec. 131.3. (1) Investments in common stock, preferred stock, debt obligations or other securities of subsidiaries made under Section 131.2 of this Article are subject to Sections 126.3, 126.4, 126.5, 126.6, 126.7, and 133 of this Code but are not subject to any other of the otherwise applicable restrictions or prohibitions contained in this Code applicable to such investments of a domestic company subject to this Code.
    (2) If a company ceases to control a subsidiary, it must dispose of any investment therein made under this section within 3 years from the time of the cessation of control or within such further time as the Director may prescribe, unless at any time after the investment is made, the investment meets the requirements for investment under any other section of this Code, and the company has notified the Director thereof.
    (3) Whether any investment made pursuant to this Section meets the applicable requirements of this Section is to be determined before the investment is made by calculating the applicable investment limitations as though the investment had already been made, taking into account the then outstanding principal balance on all previous investments in debt obligations, and the value of all previous investments in equity securities as of the day they were made, net of any return of capital invested, not including dividends.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.4) (from Ch. 73, par. 743.4)
    Sec. 131.4. Acquisition of control of or merger with domestic company.
    (a) No person other than the issuer may make a tender for or a request or invitation for tenders of, or enter into an agreement to exchange securities for, or seek to acquire or acquire shareholders' proxies to vote or seek to acquire or acquire in the open market, or otherwise, any voting security of a domestic company or acquire policyholders' proxies of a domestic company or any entity that controls a domestic company, for consideration if, after the consummation thereof, that person would, directly or indirectly, (or by conversion or by exercise of any right to acquire) be in control of the company, and no person may enter into an agreement to merge or consolidate with or otherwise to acquire control of a domestic company, unless the offer, request, invitation, or agreement is conditioned on receiving the approval of the Director based on Section 131.8 of this Article and no such acquisition of control or a merger with a domestic company may be consummated unless the person has filed with the Director and has sent to the company a statement containing the information required by Section 131.5 and the Director has approved the transaction or granted an exemption. Prior to the acquisition, the Director may conclude that a statement need not be filed by the acquiring party if the acquiring party demonstrates to the satisfaction of the Director that:
        (1) such transaction will not result in the change of
    
control of the domestic company; or
        (2) (blank);
        (3) the acquisition of, or attempt to acquire control
    
of, such other person is subject to requirements in the jurisdiction of its domicile which are substantially similar to those contained in this Section and Sections 131.5 through 131.12; or
        (4) the control of the policyholders' proxies is
    
being acquired solely by virtue of the holders official office and not as the result of any agreement or for any consideration.
    The purpose of this Section is to afford to the Director the opportunity to review acquisitions in order to determine whether or not the acquisition would be adverse to the interests of the existing and future policyholders of the company.
    (b) For purposes of this Section, any controlling person of a domestic company seeking to divest its controlling interest in the domestic company in any manner shall file with the Director, with a copy to the company, confidential notice of its proposed divestiture at least 30 days prior to the cessation of control. The Director shall determine those instances in which the party or parties seeking to divest or to acquire a controlling interest in a company shall be required to file for and obtain approval of the transaction. The information shall remain confidential until the conclusion of the transaction unless the Director, in his or her discretion, determines that confidential treatment shall interfere with enforcement of this Section. If the statement referred to in subsection (a) of this Section is otherwise filed in connection with the proposed divestiture or related acquisition, this subsection (b) shall not apply.
    (c) For purposes of this Section, a domestic company shall include any person controlling a domestic company unless the person, as determined by the Director, is either directly or through its affiliates primarily engaged in business other than the business of insurance. For the purposes of this Section, "person" shall not include any securities broker holding, in the usual and customary broker's function, less than 20% of the voting securities of an insurance company or of any person that controls an insurance company.
(Source: P.A. 98-609, eff. 1-1-14; 99-642, eff. 7-28-16.)

    (215 ILCS 5/131.5) (from Ch. 73, par. 743.5)
    Sec. 131.5. Statement; contents. In order to seek the approval of the Director pursuant to Section 131.8, the applicant must file a statement with the Director under oath or affirmation which contains as a minimum the following information:
        (1) The name and address of each acquiring party, and
            (a) if such person is an individual, his
        
principal occupation and all offices and positions held during the past 5 years, and any conviction of crimes, other than minor traffic violations, during the past 10 years;
            (b) if such person is not an individual, a report
        
of the nature of its business operations during the past 5 years or for such lesser period as the person and any predecessors thereof has been in existence; an informative description of the business intended to be conducted by the person and the person's subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of the person, or who perform or will perform functions appropriate to such positions. The list must include for each individual the information required by subsection (1)(a).
        (2) The source, nature and amount of the
    
consideration used or to be used in effecting the merger, consolidation or other acquisition of control, a description of any transaction wherein funds were or are to be obtained for any such purpose, including any pledge of the company's own securities or the securities of any of its subsidiaries or affiliates, and the identity of persons furnishing such consideration. However, where a source of such consideration is a loan made in the lender's ordinary course of business, the identity of the lender must remain confidential, if the person filing the statement so requests.
        (3) Financial information as to the earnings and
    
financial condition of each acquiring party for the preceding 5 fiscal years of each acquiring party (or for such lesser period as the acquiring party and any predecessors thereof have been in existence) audited by an independent certified public accountant in accordance with generally accepted auditing standards and similar unaudited information as of a date not earlier than 90 days prior to the filing of the statement.
        (4) Any plans or proposals which each acquiring party
    
may have to liquidate such company, to sell its assets or merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management.
        (5) The number of shares of any security referred to
    
in Section 131.4 which each acquiring party proposes to acquire, the terms of the offer, request, invitation, agreement, or acquisition referred to in Section 131.4, and a statement as to the method by which the fairness of the proposal was arrived.
        (6) The amount of each class of any security referred
    
to in Section 131.4 which is beneficially owned or concerning which there is a right to acquire beneficial ownership by each acquiring party.
        (7) A full description of any existing contracts,
    
arrangements or understandings with respect to any security referred to in Section 131.4 in which any acquiring party is involved, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or guarantees of profits, division of losses or profits, or the giving or withholding of proxies. The description must identify the persons with whom such contracts, arrangements or understandings have been entered into.
        (8) A description of the acquisition of any security
    
or policyholders' proxy referred to in Section 131.4 during the 12 calendar months preceding the filing of the statement, by any acquiring party, including the dates of acquisition, names of the acquiring parties, and consideration paid or agreed to be paid therefor.
        (9) A description of any recommendations to acquire
    
any security referred to in Section 131.4 made during the 12 calendar months preceding the filing of the statement, by any acquiring party, or by anyone based upon interviews or at the suggestion of such acquiring party.
        (10) Copies of all tender offers for, requests or
    
invitations for tenders of, exchange offers for, and agreements to acquire or exchange any securities referred to in Section 131.4, and (if distributed) of additional soliciting material relating thereto.
        (11) The terms of any agreement, contract or
    
understanding made with, or proposed to be made with, any broker-dealer as to solicitation of securities referred to in Section 131.4 for tender, and the amount of any fees, commissions or other compensation to be paid to broker-dealers with regard thereto.
        (12) Beginning July 1, 2014, an agreement by the
    
person required to file the statement referred to in this Section 131.5 that the person will provide the annual report specified in subsection (a) of Section 131.14b for so long as control exists.
        (13) Beginning July 1, 2014, an acknowledgement by
    
the person required to file the statement referred to in this Section 131.5 that the person and all subsidiaries within its control in the insurance holding company system shall provide information to the Director upon request as necessary to evaluate enterprise risk to the company.
        (14) Any additional information as the Director may
    
by rule or regulation prescribe as necessary or appropriate for the protection of policyholders or in the public interest.
        (15) With respect to each acquiring party, the
    
following information:
            (A) the name and address of all associated
        
persons and a detailed description of every agreement, arrangement, and understanding between the acquiring party and all associated persons in connection with the merger, consolidation, or other acquisition of control;
            (B) the class or series and number of shares of
        
securities of the company that are directly or indirectly owned beneficially and of record by the acquiring party or the associated persons or both; and
            (C) a detailed description of each proxy,
        
contract, arrangement, understanding, or relationship pursuant to which the acquiring party or the associated persons, or both, have a right to vote, or cause or direct the vote of, any securities of the company.
(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 5/131.6) (from Ch. 73, par. 743.6)
    Sec. 131.6. (1) If the person required to file the statement referred to in Section 131.5 is a partnership, limited partnership, syndicate or other group, the Director may require that the information be given with respect to each partner of such partnership or limited partnership, each member of such syndicate or group, and each person who controls such partner or member. If any partner, member or person is a corporation or the person required to file the statement referred to in Section 131.5 is a corporation, the Director may require that the information be given with respect to the corporation, each officer and director of the corporation, and each person who is directly or indirectly the beneficial owner of more than 10% of the outstanding voting securities of the corporation.
    (2) If any material change occurs in the facts set forth in the statement filed with the Director and sent to the company under Section 131.5, an amendment setting forth the change, together with copies of all documents and other material relevant to the change, must be filed with the Director and sent to the company within 2 business days after the person learns of the change.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.7) (from Ch. 73, par. 743.7)
    Sec. 131.7. If any offer, request, invitation, agreement or acquisition referred to in Section 131.4 is proposed to be made by means of a registration statement under the Securities Act of 1933 or in circumstances requiring the disclosure of similar information under the Securities Exchange Act of 1934, or under a state law requiring similar registration or disclosure, the person required to file the statement referred to in Section 131.4 may utilize such documents in furnishing the information called for by that statement.
(Source: P.A. 77-673.)

    (215 ILCS 5/131.8) (from Ch. 73, par. 743.8)
    Sec. 131.8. (1) After the statement required by Section 131.5 has been filed, the Director shall approve any merger, consolidation or other acquisition of control referred to in Section 131.4 unless the Director finds that:
        (a) after the change of control, the domestic company
    
referred to in Section 131.4 would not be able to satisfy the requirements for the issuance of a license to write the line or lines of insurance for which it is presently licensed;
        (b) the effect of the merger, consolidation or other
    
acquisition of control would be substantially to lessen competition in insurance in this State or tend to create a monopoly therein. In applying the competitive standard in this paragraph:
            (i) the informational requirements of subsection
        
(3)(a) and the standards of subsection (4)(b) of Section 131.12a shall apply,
            (ii) the merger or other acquisition shall not be
        
found substantially to lessen competition in insurance in this State or tend to create a monopoly therein if the Director finds that any of the situations meeting the criteria provided by subsection (4)(c) of Section 131.12a exist, and
            (iii) the Director may condition the approval of
        
the merger or other acquisition on the removal of the basis of disapproval within a specified period of time;
        (c) the financial condition of any acquiring party is
    
such as might jeopardize the financial stability of the domestic company or jeopardize the interests of its policyholders;
        (d) the plans or proposals which the acquiring party
    
has to liquidate the domestic company, sell its assets or consolidate or merge it with any person, or to make any other material change in its business or corporate structure or management, are unfair and unreasonable to policyholders of such company and not in the public interest; or
        (e) the competence, experience and integrity of those
    
persons who would control the operation of the domestic company are such that it would not be in the best interests of policyholders of such company and of the insurance buying public to permit the merger, consolidation or other acquisition of control.
    (2) The Director may hold a public hearing on any merger, consolidation or other acquisition of control referred to in Section 131.4 if the Director determines that the statement filed as required by Section 131.5 does not demonstrate compliance with the standards referred to in subsection (1), of this Section, or if he determines that such acquisition of control is likely to be hazardous or prejudicial to the insurance buying public.
    (3) The public hearing referred to in subsection (2) must be held within 60 days after the statement required by Section 131.5 is filed, and at least 20 days' notice thereof must be given by the Director to the person filing the statement and to the domestic company. Not less than 7 days' notice of such hearing must be given by the person filing the statement to such other persons as may be designated by the Director and by the company to its shareholders. The Director must make a determination within 60 days after the conclusion of the hearing. At the hearing, the person filing the statement, the domestic company, any person to whom notice of the hearing was sent, and any other person whose interests may be affected thereby has the right to present evidence, examine and cross-examine witnesses, and offer oral and written arguments and in connection therewith is entitled to conduct discovery proceedings in the same manner as is presently allowed in the Circuit Courts of this State. All discovery proceedings must be concluded not later than 3 days prior to the commencement of the public hearing.
    (4) If the proposed acquisition of control will require the approval of more than one state insurance commissioner, the public hearing referred to in subsection (2) of this Section may be held on a consolidated basis upon request of the person filing the statement referred to in Section 131.5 of this Code. Such person shall file the statement referred to in Section 131.5 of this Code with the National Association of Insurance Commissioners (NAIC) within 5 days after making the request for a public hearing. A commissioner may opt out of a consolidated hearing and shall provide notice to the applicant of the opt out within 10 days after the receipt of the statement referred to in Section 131.5 of this Code. A hearing conducted on a consolidated basis shall be public and shall be held within the United States before the commissioners of the states in which the companies are domiciled. Such commissioners shall hear and receive evidence. A commissioner may attend such hearing in person or by telecommunication.
    (5) In connection with a change of control of a domestic company, any determination by the Director that the person acquiring control of the company shall be required to maintain or restore the capital of the company to the level required by the laws and regulations of this State shall be made not later than 60 days after the filing of the statement required by Section 131.5 of this Code.
(Source: P.A. 102-394, eff. 8-16-21.)

    (215 ILCS 5/131.8a) (from Ch. 73, par. 743.8a)
    Sec. 131.8a. The Director may retain at the applicant's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the Director's staff as may be reasonably necessary to assist in reviewing an acquisition proposed under Section 131.4.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.9) (from Ch. 73, par. 743.9)
    Sec. 131.9. All statements, amendments or other material filed under Section 131.5 must be delivered to the domestic company within 10 business days after the acquiring party has made the filing with the Director. The domestic company shall then send to its securityholders the summary of the proposed acquisition within 5 business days of such delivery. The notice shall contain an address where a copy of the statement filed with the Director can be obtained upon request. The expenses of the mailing and any requests for the statement and the mailing of the notice of hearing by the company required under subsection (2) of Section 131.8 must be borne by the person making the filing. As security for the payment of the expenses, the person may be required to file with the Director an acceptable bond or other deposit in an amount to be determined by the Director.
(Source: P.A. 84-805.)

    (215 ILCS 5/131.9a)
    Sec. 131.9a. (Repealed).
(Source: P.A. 98-609, eff. 1-1-14. Repealed by P.A. 102-394, eff. 8-16-21.)

    (215 ILCS 5/131.10) (from Ch. 73, par. 743.10)
    Sec. 131.10. Sections 131.4 through 131.12 do not apply to:
    (1) any transaction which is subject to Article X of this Code dealing with merger, consolidation or plans of exchange;
    (2) any offer, request, invitation, agreement or acquisition which the Director by order exempts therefrom as (a) not having been made or entered into for the purpose and not having the effect of changing or influencing the control of a domestic company, or (b) as otherwise not comprehended within the purposes of Sections 131.4 through 131.12.
(Source: P.A. 80-545.)

    (215 ILCS 5/131.11) (from Ch. 73, par. 743.11)
    Sec. 131.11. The following are violations of Sections 131.4 through 131.12:
        (1) the failure to file any statement, amendment, or
    
other material required to be filed under Sections 131.4 or 131.5; or
        (2) the effectuation or any attempt to effectuate an
    
acquisition of control of, divestiture of, or merger or consolidation with, a domestic company unless the Director has given his approval.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.12) (from Ch. 73, par. 743.12)
    Sec. 131.12. The courts of this State are hereby vested with jurisdiction over every person not resident, domiciled, or authorized to do business in this State who files a statement with the Director under Section 131.4, and over all actions involving such person arising out of violations of Sections 131.4, 131.5, 131.6, or 131.11, and each such person is deemed to have performed acts equivalent to and constituting an appointment by such a person of the Director to be his true and lawful attorney upon whom may be served all lawful process in any action, suit or proceeding arising out of violations of Sections 131.4, 131.5, 131.6, or 131.11. Copies of all such lawful process must be served on the Director and transmitted by registered or certified mail by the Director to such person at his last known address.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.12a) (from Ch. 73, par. 743.12a)
    Sec. 131.12a. Acquisitions involving companies not otherwise covered.
    (1) Definitions. The following definitions shall apply for the purposes of this Section only:
    (a) "Acquisition" means any agreement, arrangement or activity the consummation of which results in a person acquiring directly or indirectly the control of another person or control of the insurance in force of another person, and includes but is not limited to the acquisition of voting securities, the acquisition of assets, the transaction of bulk reinsurance and the act of merging or consolidating.
    (b) An "involved company" includes a company which either acquires or is acquired, is affiliated with an acquirer or acquired or is the result of a merger.
 
    (2) Scope.
    (a) Except as exempted in paragraph (b) of this subsection (2), this Section applies to any acquisition in which there is a change in control of a company authorized to do business in this State.
    (b) This Section shall not apply to the following:
        (i) an acquisition subject to approval or disapproval
    
by the Director pursuant to Section 131.8;
        (ii) a purchase of securities solely for investment
    
purposes so long as such securities are not used by voting or otherwise to cause or attempt to cause the substantial lessening of competition in any insurance market in this State. If a purchase of securities results in a presumption of control under subsection (b) of Section 131.1, it is not solely for investment purposes unless the commissioner of the company's state of domicile accepts a disclaimer of control or affirmatively finds that control does not exist and such disclaimer action or affirmative finding is communicated by the domiciliary commissioner to the Director of this State;
        (iii) the acquisition of a person by another person
    
when both persons are neither directly nor through affiliates primarily engaged in the business of insurance, if pre-acquisition notification is filed with the Director in accordance with subsection (3)(a) of this Section, 30 days prior to the proposed effective date of the acquisition. However, such pre-acquisition notification is not required for exclusion from this Section if the acquisition would otherwise be excluded from this Section by any other subparagraph of subsection (2)(b);
        (iv) the acquisition of already affiliated persons;
        (v) an acquisition if, as an immediate result of the
    
acquisition,
            (A) in no market would the combined market share
        
of the involved companies exceed 5% of the total market,
            (B) there would be no increase in any market
        
share, or
            (C) in no market would the combined market share
        
of the involved companies exceed 12% of the total market, and the market share increase by more than 2% of the total market.
        For the purpose of this subparagraph (b)(v), "market"
    
means direct written insurance premium in this State for a line of business as contained in the annual statement required to be filed by companies licensed to do business in this State;
        (vi) an acquisition for which a pre-acquisition
    
notification would be required pursuant to this Section due solely to the resulting effect on the ocean marine insurance line of business;
        (vii) an acquisition of a company whose domiciliary
    
commissioner affirmatively finds that such company is in failing condition; there is a lack of feasible alternative to improving such condition; the public benefits of improving such company's condition through the acquisition exceed the public benefits that would arise from not lessening competition; and such findings are communicated by the domiciliary commissioner to the Director of this State.

 
    (3) Pre-acquisition Notification; Waiting Period. An acquisition covered by subsection (2) may be subject to an order pursuant to subsection (5) unless the acquiring person files a pre-acquisition notification and the waiting period has expired. The acquired person may file a pre-acquisition notification. The Director shall give confidential treatment to information submitted under this subsection in the same manner as provided in Section 131.22 of this Article.
    (a) The pre-acquisition notification shall be in such form and contain such information as prescribed by the Director, which shall conform substantially to the form of notification adopted by the National Association of Insurance Commissioners relating to those markets which, under subsection (b)(v) of Section (2), cause the acquisition not to be exempted from the provisions of this Section. The Director may require such additional material and information as he deems necessary to determine whether the proposed acquisition, if consummated, would violate the competitive standard of subsection (4). The required information may include an opinion of an economist as to the competitive impact of the acquisition in this State accompanied by a summary of the education and experience of such person indicating his or her ability to render an informed opinion.
    (b) The waiting period required shall begin on the date of the receipt by the Director of a pre-acquisition notification and shall end on the earlier of the 30th day after the date of such receipt, or termination of the waiting period by the Director. Prior to the end of the waiting period, the Director on a one time basis may require the submission of additional needed information relevant to the proposed acquisition, in which event the waiting period shall end on the earlier of the 30th day after the receipt of such additional information by the Director or termination of the waiting period by the Director.
 
    (4) Competitive Standard.
    (a) The Director may enter an order under subsection (5)(a) with respect to an acquisition if there is substantial evidence that the effect of the acquisition may be substantially to lessen competition in any line of insurance in this State or tend to create a monopoly therein or if the company fails to file adequate information in compliance with subsection (3).
    (b) In determining whether a proposed acquisition would violate the competitive standard of paragraph (a) of this subsection the Director shall consider the following:
        (i) any acquisition covered under subsection (2)
    
involving 2 or more companies competing in the same market is prima facie evidence of violation of the competitive standards:
            (A) if the market is highly concentrated and the
        
involved companies possess the following shares of the market:
              Company  A                Company  B
                  4%                    4% or more
                 10%                    2% or more
                 15%                    1% or more
            (B) if the market is not highly concentrated and
        
the involved companies possess the following shares of the market:
              Company  A                Company  B
                  5%                    5% or more
                 10%                    4% or more
                 15%                    3% or more
                 19%                    1% or more
        A highly concentrated market is one in which the
    
share of the 4 largest companies is 75% or more of the market. Percentages not shown in the tables are to be interpolated proportionately to the percentages that are shown. If more than 2 companies are involved, exceeding the total of the 2 columns in the table is prima facie evidence of violation of the competitive standard in paragraph (a) of this subsection. For the purpose of this subparagraph, the company with the largest share of the market shall be deemed to be Company A.
        (ii) There is a significant trend toward increased
    
concentration when the aggregate market share of any grouping of the largest companies in the market from the 2 largest to the 8 largest has increased by 7% or more of the market over a period of time extending from any base year 5-10 years prior to the acquisition up to the time of the acquisition. Any acquisition covered under subsection (2) involving 2 or more companies competing in the same market is prima facie evidence of violation of the competitive standard in paragraph (a) of this subsection if:
            (A) there is a significant trend toward increased
        
concentration in the market,
            (B) one of the companies involved is one of the
        
companies in a grouping of such large companies showing the requisite increase in the market share, and
            (C) another involved company's market is 2% or
        
more.
        (iii) For the purpose of subsection (4)(b):
            (A) The term "company" includes any company or
        
group of companies under common management, ownership or control.
            (B) The term "market" means the relevant product
        
and geographic markets. In determining the relevant product and geographical markets, the Director shall give due consideration to, among other things, the definitions or guidelines, if any, promulgated by the National Association of Insurance Commissioners and to information, if any, submitted by parties to the acquisition. In the absence of sufficient information to the contrary, the relevant product market is assumed to be the direct written insurance premium for a line of business with such line being that used in the annual statement required to be filed by companies doing business in this State and the relevant geographical market is assumed to be this State.
            (C) The burden of showing prima facie evidence of
        
violation of the competitive standard rests upon the Director.
        (iv) Even though an acquisition is not prima facie
    
violative of the competitive standard under subparagraph (b)(i) and (b)(ii) of this subsection the Director may establish the requisite anticompetitive effect based upon other substantial evidence. Even though an acquisition is prima facie violative of the competitive standard under subparagraphs (b)(i) and (b)(ii) of this subsection (4), a party may establish the absence of the requisite anticompetitive effect based upon other substantial evidence. Relevant factors in making a determination under this paragraph include, but are not limited to, the following: market shares, volatility of ranking of market leaders, number of competitors, concentration, trend of concentration in the industry, and ease of entry and exit into the market.
    (c) An order may not be entered under subsection (5)(a) if:
        (i) the acquisition will yield substantial economies
    
of scale or economies in resource utilization that cannot be feasibly achieved in any other way, and the public benefits which would arise from such economies exceed the public benefits which would arise from not lessening competition; or
        (ii) the acquisition will substantially increase the
    
availability of insurance, and the public benefits of such increase exceed the public benefits which would arise from not lessening competition.

 
    (5) Orders and Penalties:
        (a)(i) If an acquisition violates the standard of
    
this Section, the Director may enter an order
            (A) requiring an involved company to cease and
        
desist from doing business in this State with respect to the line or lines of insurance involved in the violation, or
            (B) denying the application of an acquired or
        
acquiring company for a license to do business in this State.
        (ii) Such an order shall not be entered unless there
    
is a hearing, notice of such hearing is issued prior to the end of the waiting period and not less than 15 days prior to the hearing, and the hearing is concluded and the order is issued no later than 60 days after the end of the waiting period. Every order shall be accompanied by a written decision of the Director setting forth his findings of fact and conclusions of law.
        (iii) (Blank).
        (iv) An order pursuant to this paragraph shall not
    
apply if the acquisition is not consummated.
    (b) Any person who violates a cease and desist order of the Director under paragraph (a) and while such order is in effect may after notice and hearing and upon order of the Director be subject at the discretion of the Director to any one or more of the following:
        (i) a monetary penalty of not more than $10,000 for
    
every day of violation or
        (ii) suspension or revocation of such person's
    
license.
    (c) Any company or other person who fails to make any filing required by this Section and who also fails to demonstrate a good faith effort to comply with any such filing requirement shall be subject to a civil penalty of not more than $50,000.
 
    (6) Inapplicable Provisions. Subsections (2) and (3) of Section 131.23 and Section 131.25 do not apply to acquisitions covered under subsection (2).
(Source: P.A. 98-609, eff. 1-1-14.)

    (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 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 5/131.14) (from Ch. 73, par. 743.14)
    Sec. 131.14. Every company subject to registration must file a registration statement on a form and in a format prescribed by the Director, which shall contain the following current information:
        (1) the capital structure, general financial
    
condition, ownership and management of the company and any person controlling the company;
        (2) the identity and relationship of every member of
    
the insurance holding company system;
        (3) the following agreements in force, relationships
    
subsisting, and transactions currently outstanding or that have occurred during the last calendar year between such company and its affiliates:
            (a) loans, other investments, or purchases, sales
        
or exchanges of securities of the affiliates by the company or of the company by its affiliates;
            (b) purchases, sales, or exchanges of assets;
            (c) transactions not in the ordinary course of
        
business;
            (d) guarantees or undertakings for the benefit of
        
an affiliate which result in an actual contingent exposure of the company's assets to liability, other than insurance contracts entered into in the ordinary course of the company's business;
            (e) all management agreements, service contracts,
        
and cost-sharing arrangements;
            (f) reinsurance agreements;
            (f-5) dividends and other distributions to
        
shareholders;
            (g) any pledge of the company's own securities,
        
securities of any subsidiary or controlling affiliate, to secure a loan made to any member of the insurance holding company system; and
            (h) consolidated tax allocation agreements;
        (4) (blank);
        (5) financial statements of or within an insurance
    
holding company system, including all affiliates, if requested by the Director; financial statements may include, but are not limited to, annual audited financial statements filed with the U.S. Securities and Exchange Commission (SEC) pursuant to the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended; a company required to file financial statements pursuant to this paragraph (5) may satisfy the request by providing the Director with the most recently filed parent corporation financial statements that have been filed with the SEC;
        (6) statements that the company's or its parent
    
company's board of directors or a committee thereof oversees corporate governance and internal controls and that the company's officers or senior management have approved and implemented and continue to maintain and monitor corporate governance and internal controls; and
        (7) other matters concerning transactions between
    
registered companies and any affiliates as may be included from time to time in any registration forms adopted or approved by the Director.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.14a)
    Sec. 131.14a. Summary filing. Every company subject to registration must file a summary outlining all items in the current registration statement representing changes from the prior registration statement.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.14b)
    Sec. 131.14b. Enterprise risk filings.
    (a) Annual enterprise risk report. The ultimate controlling person of every company subject to registration shall also file an annual enterprise risk report. The report shall, to the best of the ultimate controlling person's knowledge and belief, identify the material risks within the insurance holding company system that could pose enterprise risk to the company. The report shall be filed with the lead state commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners.
    (b) Group capital calculation. Except as provided in this subsection, the ultimate controlling person of every insurer subject to registration shall concurrently file with the registration an annual group capital calculation as directed by the lead state commissioner. The report shall be completed in accordance with the NAIC Group Capital Calculation Instructions, which may permit the lead state commissioner to allow a controlling person who is not the ultimate controlling person to file the group capital calculation. The report shall be filed with the lead state commissioner of the insurance holding company system as determined by the commissioner in accordance with the procedures within the Financial Analysis Handbook adopted by the NAIC. Insurance holding company systems described in the following are exempt from filing the group capital calculation:
        (1) an insurance holding company system that has
    
only one insurer within its holding company structure, that only writes business and is only licensed in Illinois, and that assumes no business from any other insurer;
        (2) an insurance holding company system that is
    
required to perform a group capital calculation specified by the United States Federal Reserve Board; the lead state commissioner shall request the calculation from the Federal Reserve Board under the terms of information sharing agreements in effect; if the Federal Reserve Board cannot share the calculation with the lead state commissioner, the insurance holding company system is not exempt from the group capital calculation filing;
        (3) an insurance holding company system whose
    
non-U.S. group-wide supervisor is located within a reciprocal jurisdiction as described in paragraph (C-10) of subsection (1) of Section 173.1 that recognizes the U.S. state regulatory approach to group supervision and group capital; and
        (4) an insurance holding company system:
            (i) that provides information to the lead state
        
that meets the requirements for accreditation under the NAIC financial standards and accreditation program, either directly or indirectly through the group-wide supervisor, who has determined such information is satisfactory to allow the lead state to comply with the NAIC group supervision approach, as detailed in the NAIC Financial Analysis Handbook; and
            (ii) whose non-U.S. group-wide supervisor that
        
is not in a reciprocal jurisdiction recognizes and accepts, as specified by the commissioner in regulation, the group capital calculation as the world-wide group capital assessment for U.S. insurance groups who operate in that jurisdiction.
    Notwithstanding the provisions of paragraphs (3) and (4) of this subsection, a lead state commissioner shall require the group capital calculation for U.S. operations of any non-U.S. based insurance holding company system where, after any necessary consultation with other supervisors or officials, it is deemed appropriate by the lead state commissioner for prudential oversight and solvency monitoring purposes or for ensuring the competitiveness of the insurance marketplace.
    Notwithstanding the exemptions from filing the group capital calculation stated in paragraphs (1) through (4) of this subsection, the lead state commissioner has the discretion to exempt the ultimate controlling person from filing the annual group capital calculation or to accept a limited group capital filing or report in accordance with criteria as specified by the Director in regulation.
    (c) Liquidity stress test. The ultimate controlling person of every insurer subject to registration and also scoped into the NAIC Liquidity Stress Test Framework shall file the results of a specific year's liquidity stress test. The filing shall be made to the lead state insurance commissioner of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners:
        (1) The NAIC Liquidity Stress Test Framework
    
includes scope criteria applicable to a specific data year. These scope criteria are reviewed at least annually by the NAIC Financial Stability Task Force or its successor. Any change to the NAIC Liquidity Stress Test Framework or to the data year for which the scope criteria are to be measured shall be effective on January 1 of the year following the calendar year when such changes are adopted. Insurers meeting at least one threshold of the scope criteria are considered scoped into the NAIC Liquidity Stress Test Framework for the specified data year unless the lead state insurance commissioner, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should not be scoped into the Framework for that data year. Similarly, insurers that do not trigger at least one threshold of the scope criteria are considered scoped out of the NAIC Liquidity Stress Test Framework for the specified data year, unless the lead state insurance commissioner, in consultation with the NAIC Financial Stability Task Force or its successor, determines the insurer should be scoped into the Framework for that data year.
        The lead state insurance commissioner, in
    
consultation with the Financial Stability Task Force or its successor, shall assess the regulator's wish to avoid having insurers scoped in and out of the NAIC Liquidity Stress Test Framework on a frequent basis as part of the determination for an insurer.
        (2) The performance of, and filing of the results
    
from, a specific year's liquidity stress test shall comply with the NAIC Liquidity Stress Test Framework's instructions and reporting templates for that year and any lead state insurance commissioner determinations, in conjunction with the NAIC Financial Stability Task Force or its successor, provided within the Framework.
(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); 102-813, eff. 5-13-22.)

    (215 ILCS 5/131.14c)
    Sec. 131.14c. Violations. The failure to file a registration statement or any summary of the registration statement or enterprise risk filing required by this Article within the time specified for filing shall be a violation of this Article.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.14d)
    Sec. 131.14d. (Repealed).
(Source: P.A. 98-609, eff. 1-1-14. Repealed by P.A. 102-394, eff. 8-16-21.)

    (215 ILCS 5/131.15) (from Ch. 73, par. 743.15)
    Sec. 131.15. No information need be disclosed on the registration statement filed under Section 131.14 if the information is not material for the purposes of Sections 131.13 through 131.19. Unless the Director by rule, regulation or order provides otherwise, sales, purchases, exchanges, loans or extensions of credit, investments, or guarantees involving one-half of one percent or less of a company's admitted assets as of the 31st day of December next preceding, are not deemed material for purposes of Sections 131.13 through 131.19. The description of materiality provided in this Section shall not apply for purposes of subsections (b) and (c) of Section 131.14b.
(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 5/131.16) (from Ch. 73, par. 743.16)
    Sec. 131.16. Reporting material changes or additions; penalty for late registration statement.
    (1) Each registered company must keep current the information required to be included in its registration statement by reporting all material changes or additions on amendment forms designated by the Director within 15 days after the end of the month in which it learns of each change or addition, or within a longer time thereafter as the Director may establish. Any transaction which has been submitted to the Director pursuant to Section 131.20a need not be reported to the Director under this subsection; except each registered company must report all dividends and other distributions to shareholders within 5 business days following the declaration, and no less than 10 business days prior to payment thereof.
    (2) On or before May 1 each year, each company subject to registration under this Article shall file a statement in a format as designated by the Director. This statement shall include information previously included in an amendment under subsection (1) of this Section, transactions and agreements submitted under Section 131.20a, and any other material transactions which are required to be reported.
    (2.5) Any person within an insurance holding company system subject to registration shall be required to provide complete and accurate information to a company where the information is reasonably necessary to enable the company to comply with the provisions of this Article.
    (3) Any company failing, without just cause, to file any registration statement, any summary of changes to a registration statement, or any Enterprise Risk Filing or any person within an insurance holding company system who fails to provide complete and accurate information to a company as required in this Code shall be required to pay a penalty of up to $1,000 for each day's delay, to be recovered by the Director of Insurance of the State of Illinois, using the notice and hearing procedure in subsection (2) of Section 403A of this Code, and the penalty so recovered shall be paid into the General Revenue Fund of the State of Illinois. The maximum penalty under this section is $50,000. The Director may reduce the penalty if the company demonstrates to the Director that the imposition of the penalty would constitute a financial hardship to the company.
(Source: P.A. 98-609, eff. 1-1-14; 98-910, eff. 7-1-15.)

    (215 ILCS 5/131.17) (from Ch. 73, par. 743.17)
    Sec. 131.17. (1) The Director must terminate the registration of any company which demonstrates that it no longer is a member of an insurance holding company system.
    (2) The Director may require or allow 2 or more affiliated companies subject to registration to file a consolidated registration statement.
    (3) A company which is authorized to do business in this State and which is part of an insurance holding company system may register on behalf of any affiliated company which is required to register under Section 131.13 and to file all information and material required to be filed under this Article unless the Director requires a separate registration by the affiliated company.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.18) (from Ch. 73, par. 743.18)
    Sec. 131.18. Sections 131.13 through 131.19 do not apply to any company, information, or transaction if and to the extent that the Director by rule, regulation, or order may exempt the same from Sections 131.13 through 131.19.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.19) (from Ch. 73, par. 743.19)
    Sec. 131.19. Disclaimer of affiliation. Any person may file with the Director a disclaimer of affiliation with any authorized company or a disclaimer may be filed by the company or any member of an insurance holding company system. The disclaimer shall fully disclose all material relationships and bases for affiliation between the person and the company as well as the basis for disclaiming the affiliation. A disclaimer of affiliation shall be deemed to have been granted unless the Director, within 30 days following receipt of a complete disclaimer, notifies the filing party that the disclaimer is disallowed. In the event of disallowance, the disclaiming party may request an administrative hearing, which shall be granted. The disclaiming party shall be relieved of its duty to register under Section 131.13 of this Code if approval of the disclaimer has been granted by the Director or if the disclaimer is deemed to have been approved.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.20) (from Ch. 73, par. 743.20)
    Sec. 131.20. Standards for transactions with affiliates; adequacy of surplus.
    (1) Transactions with their affiliates by companies subject to registration are subject to the following standards:
        (a) the terms are fair and reasonable;
        (a-5) agreements for cost sharing services and
    
management shall include such provisions as may be required by rules and regulations issued by the Director;
        (b) charges or fees for services performed are
    
reasonable;
        (c) expenses incurred and payment received must be
    
allocated to the company in conformity with customary insurance accounting practices consistently applied;
        (d) the books, accounts, and records of each party
    
must be so maintained as to clearly and accurately disclose the precise nature and details of the transactions, including accounting information necessary to support the reasonableness of the charges or fees to the respective parties; and
        (e) the company's surplus as regards policyholders
    
following any transactions with affiliates or dividends or distributions to securityholders or affiliates must be reasonable in relation to the company's outstanding liabilities and adequate to meet its financial needs.
    (2) For purposes of this Article, in determining whether a company's surplus as regards policyholders is reasonable in relation to the company's outstanding liabilities and adequate to meet its needs, the following factors, among others, may be considered:
        (a) the size of the company as measured by its
    
assets, capital and surplus, reserves, premium writings, insurance in force and other appropriate criteria;
        (b) the extent to which the company's business is
    
diversified among several lines of insurance;
        (c) the number and size of risks insured in each line
    
of business;
        (d) the extent of the geographical dispersion of the
    
company's insured risks;
        (e) the nature and extent of the company's
    
reinsurance program;
        (f) the quality, diversification, and liquidity of
    
the company's investment portfolio;
        (g) the recent past and projected future trend in the
    
size of the company's investment portfolio;
        (h) the surplus as regards policyholders maintained
    
by companies comparable to the registrant in respect of the factors enumerated in this paragraph;
        (i) the adequacy of the company's reserves;
        (j) the quality of the company's earnings and the
    
extent to which the reported earnings include extraordinary items; and
        (k) the quality and liquidity of investments in
    
affiliates. The Director may discount any such investment or treat any such investment as a non-admitted asset for purposes of determining the adequacy of surplus as regards policyholders whenever the investment so warrants.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.20a) (from Ch. 73, par. 743.20a)
    Sec. 131.20a. Prior notification of transactions; dividends and distributions.
    (1) (a) The following transactions listed in items (i) through (vii) involving a domestic company and any person in its insurance holding company system, including amendments or modifications (other than termination) of affiliate agreements previously filed pursuant to this Section, which are subject to any materiality standards contained in this Section, may not be entered into unless the company has notified the Director in writing of its intention to enter into such transaction at least 30 days prior thereto, or such period as the Director may permit, and the Director has not disapproved it within such period. The notice for amendments or modifications (other than termination) shall include the reasons for the change and the financial impact on the domestic company. Informal notice shall be reported, within 30 days after a termination of a previously filed agreement, to the Director for determination of the type of filing required, if any.
        (i) Sales, purchases, exchanges of assets, loans or
    
extensions of credit, guarantees, investments, or any other transaction, except dividends, that involves the transfer of assets from or liabilities to a company (A) equal to or exceeding the lesser of 3% of the company's admitted assets or 25% of its surplus as regards policyholders as of the 31st day of December next preceding or (B) that is proposed when the domestic company is not eligible to declare and pay a dividend or other distribution pursuant to the provisions of Section 27.
        (ii) Loans or extensions of credit to any person that
    
is not an affiliate (A) that involve the lesser of 3% of the company's admitted assets or 25% of the company's surplus, each as of the 31st day of December next preceding, made with the agreement or understanding that the proceeds of such transactions, in whole or in substantial part, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the company making such loans or extensions of credit or (B) that are proposed when the domestic company is not eligible to declare and pay a dividend or other distribution pursuant to the provisions of Section 27.
        (iii) Reinsurance agreements or modifications
    
thereto, including all reinsurance pooling agreements, reinsurance agreements in which the reinsurance premium or a change in the company's liabilities, or the projected reinsurance premium or a change in the company's liabilities in any of the next 3 years, equals or exceeds 5% of the company's surplus as regards policyholders, as of the 31st day of December next preceding, including those agreements that may require as consideration the transfer of assets from a company to a nonaffiliate, if an agreement or understanding exists between the company and nonaffiliate that any portion of those assets will be transferred to one or more affiliates of the company.
        (iv) All management agreements; service contracts,
    
other than agency contracts; tax allocation agreements; all reinsurance allocation agreements related to reinsurance agreements required to be filed under this Section; and all cost-sharing arrangements.
        (v) Direct or indirect acquisitions or investments in
    
a person that controls the company, or in an affiliate of the company, in an amount which, together with its present holdings in such investments, exceeds 2.5% of the company's surplus as regards policyholders. Direct or indirect acquisitions or investments in subsidiaries acquired pursuant to Section 131.2 of this Article (or authorized under any other Section of this Code), or in non-subsidiary insurance affiliates that are subject to the provisions of this Article, are exempt from this requirement.
        (vi) Any series of the previously described
    
transactions that are substantially similar to each other, that take place within any 180 day period, and that in total are equal to or exceed the lesser of 3% of the domestic company's admitted assets or 25% of its policyholders surplus, as of the 31st day of the December next preceding.
        (vii) Any other material transaction that the
    
Director by rule determines might render the company's surplus as regards policyholders unreasonable in relation to the company's outstanding liabilities and inadequate to its financial needs or may otherwise adversely affect the interests of the company's policyholders or shareholders.
    Nothing herein contained shall be deemed to authorize or permit any transactions that, in the case of a company not a member of the same holding company system, would be otherwise contrary to law.
    (b) Any transaction or contract otherwise described in paragraph (a) of this subsection that is between a domestic company and any person that is not its affiliate and that precedes or follows within 180 days or is concurrent with a similar transaction between that nonaffiliate and an affiliate of the domestic company and that involves amounts that are equal to or exceed the lesser of 3% of the domestic company's admitted assets or 25% of its surplus as regards policyholders at the end of the prior year may not be entered into unless the company has notified the Director in writing of its intention to enter into the transaction at least 30 days prior thereto or such shorter period as the Director may permit, and the Director has not disapproved it within such period.
    (c) A company may not enter into transactions which are part of a plan or series of like transactions with any person within the holding company system if the purpose of those separate transactions is to avoid the statutory threshold amount and thus avoid the review that would occur otherwise. If the Director determines that such separate transactions were entered into for such purpose, he may exercise his authority under subsection (2) of Section 131.24.
    (d) The Director, in reviewing transactions pursuant to paragraph (a), shall consider whether the transactions comply with the standards set forth in Section 131.20 and whether they may adversely affect the interests of policyholders.
    (e) The Director shall be notified within 30 days of any investment of the domestic company in any one corporation if the total investment in that corporation by the insurance holding company system exceeds 10% of that corporation's voting securities.
    (f) Except for those transactions subject to approval under other Sections of this Code, any such transaction or agreements which are not disapproved by the Director may be effective as of the date set forth in the notice required under this Section.
    (g) If a domestic company enters into a transaction described in this subsection without having given the required notification, the Director, using the notice and hearing procedure in subsection (2) of Section 403A of this Code, may cause the company to pay a civil forfeiture of not more than $250,000. Each transaction so entered shall be considered a separate offense.
    (2) No domestic company subject to registration under Section 131.13 may pay any extraordinary dividend or make any other extraordinary distribution to its shareholders until: (a) 30 days after the Director has received notice of the declaration thereof and has not within such period disapproved the payment, or (b) the Director approves such payment within the 30-day period. For purposes of this subsection, an extraordinary dividend or distribution is any dividend or distribution of cash or other property whose fair market value, together with that of other dividends or distributions, made within the period of 12 consecutive months ending on the date on which the proposed dividend is scheduled for payment or distribution exceeds the greater of: (a) 10% of the company's surplus as regards policyholders as of the 31st day of December next preceding, or (b) the net income of the company for the 12-month period ending the 31st day of December next preceding, but does not include pro rata distributions of any class of the company's own securities.
    Notwithstanding any other provision of law, the company may declare an extraordinary dividend or distribution which is conditional upon the Director's approval, and such a declaration confers no rights upon security holders until: (a) the Director has approved the payment of the dividend or distribution, or (b) the Director has not disapproved the payment within the 30-day period referred to above.
(Source: P.A. 98-609, eff. 1-1-14; 98-910, eff. 7-1-15.)

    (215 ILCS 5/131.20b)
    Sec. 131.20b. Controlled companies; management; directors.
    (1) Notwithstanding the control of a domestic company by any person, the officers and directors of the company shall not thereby be relieved of any obligation or liability to which they would otherwise be subject by law, and the company shall be managed so as to assure its separate operating identity consistent with this Article.
    (2) Nothing in this Section shall preclude a domestic company from having or sharing a common management or a cooperative or joint use of personnel, property, or services with one or more affiliated persons under arrangements meeting the standards and requirements of Sections 131.20 and 131.20a.
    (3) Not less than one-third of the directors of a domestic company, and not less than one-third of the members of each committee of the board of directors of any domestic company, that is a member of an insurance holding company system shall be persons who are not officers or employees of the company or of any entity controlling, controlled by, or under common control with the company and who are not beneficial owners of a controlling interest in the voting stock of the company or any such entity. At least one such person shall be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof.
    (3.5) The board of directors of a domestic company or ultimate controlling company shall establish one or more committees comprised solely of directors who are not officers or employees of the company or of any entity controlling, controlled by, or under common control with the company and who are not beneficial owners of a controlling interest in the voting stock of the company or any such entity. The committee or committees shall have responsibility for nominating candidates for director for election by shareholders or policyholders, evaluating the performance of officers deemed to be principal officers of the company, and recommending to the board of directors the selection and compensation of the principal officers.
    (4) Subsections (3) and (3.5) of this Section do not apply to a domestic company if the ultimate controlling company or the person controlling the company, such as a company, a mutual insurance holding company, or a publicly held corporation, has a board of directors and committees thereof that meet the requirements of subsections (3) and (3.5) with respect to such controlling entity or are subject to and meet the requirements of the corporate governance rules of a national securities exchange, such as the New York Stock Exchange, or an inter-dealer quotation system, such as the National Association of Securities Dealers Automatic Quotation.
    (5) (Blank).
    (6) A company may make application to the Director for a waiver from the requirements of this Section, if the company's annual direct written and assumed premium, excluding premiums reinsured with the Federal Crop Insurance Corporation and Federal Flood Program, is less than $300,000,000. A company may also make application to the Director for a waiver from the requirements of this Section based upon unique circumstances. The Director may consider various factors, including, but not limited to, the type of business entity, volume of business written, availability of qualified board members, or the ownership or organizational structure of the entity.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.20c)
    Sec. 131.20c. Supervisory colleges.
    (a) With respect to any company registered under Section 131.13 of this Code, and in accordance with subsection (c) of this Section, the Director shall also have the power to participate in a supervisory college for any domestic company that is part of an insurance holding company system with international operations in order to determine compliance by the company with this Article. The powers of the Director with respect to supervisory colleges include, but are not limited to:
        (1) initiating the establishment of a supervisory
    
college;
        (2) clarifying the membership and participation of
    
other supervisors in the supervisory college;
        (3) clarifying the functions of the supervisory
    
college and the role of other regulators, including the establishment of a group-wide supervisor;
        (4) coordinating the ongoing activities of the
    
supervisory college, including planning meetings, supervisory activities, and processes for information sharing; and
        (5) establishing a crisis management plan.
    (b) Each registered company subject to this Section shall be liable for and shall pay the reasonable expenses of the Director's participation in a supervisory college in accordance with subsection (c) of this Section, including reasonable travel expenses. For purposes of this Section, a supervisory college may be convened as either a temporary or permanent forum for communication and cooperation between the regulators charged with the supervision of the company or its affiliates, and the Director may establish a regular assessment to the company for the payment of these expenses.
    (c) In order to assess the business strategy, financial position, legal and regulatory position, risk exposure, risk management, and governance processes, and as part of the examination of individual companies in accordance with Section 131.21 of this Code, the Director may participate in a supervisory college with other regulators charged with supervision of the company or its affiliates, including other state, federal, and international regulatory agencies. The Director may enter into agreements in accordance with Section 131.22 of this Code providing the basis for cooperation between the Director and the other regulatory agencies and the activities of the supervisory college. Nothing in this Section shall delegate to the supervisory college the authority of the Director to regulate or supervise the company or its affiliates within its jurisdiction.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.20d)
    Sec. 131.20d. Group-wide supervision of internationally active insurance groups.
    (a) The Director is authorized to act as the group-wide supervisor for any internationally active insurance group in accordance with the provisions of this Section.
    (b) The Director may otherwise acknowledge another regulatory official as the group-wide supervisor where the internationally active insurance group:
        (1) does not have substantial insurance operations
    
in the United States;
        (2) has substantial insurance operations in the
    
United States, but not in this State; or
        (3) has substantial insurance operations in the
    
United States and this State, but the Director has determined pursuant to the factors set forth in subsections (d) and (h) that the other regulatory official is the appropriate group-wide supervisor.
    (c) An insurance holding company system that does not otherwise qualify as an internationally active insurance group may request that the Director make a determination or acknowledgment as to a group-wide supervisor pursuant to this Section.
    (d) In cooperation with other state, federal, and international regulatory agencies, the Director will identify a single group-wide supervisor for an internationally active insurance group. The Director may determine that the Director is the appropriate group-wide supervisor for an internationally active insurance group that conducts substantial insurance operations concentrated in this State. However, the Director may acknowledge that a regulatory official from another jurisdiction is the appropriate group-wide supervisor for the internationally active insurance group. A regulatory official identified under this Section as the group-wide supervisor may determine that it is appropriate to acknowledge another supervisor to serve as the group-wide supervisor. The acknowledgment of the group-wide supervisor shall be made after consideration of the factors listed in paragraphs (1) through (5) of this subsection, and shall be made in cooperation with and subject to the acknowledgment of other regulatory officials involved with supervision of members of the internationally active insurance group, and in consultation with the internationally active insurance group. The Director shall consider the following factors when making a determination or acknowledgment under this subsection:
        (1) the place of domicile of the insurance
    
companies within the internationally active insurance group that hold the largest share of the group's written premiums, assets, or liabilities;
        (2) the place of domicile of the top-tiered
    
insurance company or companies in the insurance holding company system of the internationally active insurance group;
        (3) the location of the executive offices or
    
largest operational offices of the internationally active insurance group;
        (4) whether another regulatory official is acting
    
or is seeking to act as the group-wide supervisor under a regulatory system that the Director determines to be:
            (A) substantially similar to the system of
        
regulation provided under the laws of this State; or
            (B) otherwise sufficient in terms of providing
        
for group-wide supervision, enterprise risk analysis, and cooperation with other regulatory officials; and
        (5) whether another regulatory official acting or
    
seeking to act as the group-wide supervisor provides the Director with reasonably reciprocal recognition and cooperation.
    (e) Notwithstanding any other provision of law, when another regulatory official is acting as the group-wide supervisor of an internationally active insurance group, the Director shall acknowledge that regulatory official as the group-wide supervisor. However, in the event of a material change in the internationally active insurance group that results in:
        (1) the internationally active insurance group's
    
insurance companies domiciled in this State holding the largest share of the group's premiums, assets, or liabilities; or
        (2) this State being the place of domicile of the
    
top-tiered insurance company or companies in the insurance holding company system of the internationally active insurance group, the Director shall make a determination or acknowledgment as to the appropriate group-wide supervisor for such an internationally active insurance group pursuant to subsection (d).
    (f) The Director is authorized to collect from any company registered pursuant to Section 131.13 all information necessary to determine whether the Director may act as the group-wide supervisor of an internationally active insurance group or if the Director may acknowledge another regulatory official to act as the group-wide supervisor. Before issuing a determination that an internationally active insurance group is subject to group-wide supervision by the Director, the Director shall notify the company registered pursuant to Section 131.13 and the ultimate controlling person within the internationally active insurance group. The internationally active insurance group shall have not less than 30 days to provide the Director with additional information pertinent to the pending determination. The Department shall publish on its Internet website the identity of internationally active insurance groups that the Director has determined are subject to group-wide supervision by the Director.
    (g) If the Director is the group-wide supervisor for an internationally active insurance group, the Director is authorized to engage in any of the following group-wide supervision activities:
        (1) assess the enterprise risks within the
    
internationally active insurance group to ensure that:
            (A) the material financial condition and
        
liquidity risks to the members of the internationally active insurance group that are engaged in the business of insurance are identified by management; and
            (B) reasonable and effective mitigation
        
measures are in place;
        (2) request, from any member of an internationally
    
active insurance group subject to the Director's supervision, information necessary and appropriate to assess enterprise risk, including, but not limited to, information about the members of the internationally active insurance group regarding:
            (A) governance, risk assessment, and management;
            (B) capital adequacy; and
            (C) material intercompany transactions;
        (3) coordinate and, through the authority of the
    
regulatory officials of the jurisdictions where members of the internationally active insurance group are domiciled, compel development and implementation of reasonable measures designed to ensure that the internationally active insurance group is able to timely recognize and mitigate enterprise risks to members of such internationally active insurance group that are engaged in the business of insurance;
        (4) communicate with other state, federal, and
    
international regulatory agencies for members within the internationally active insurance group and share relevant information subject to the confidentiality provisions of Section 131.22, through supervisory colleges as set forth in Section 131.20c or otherwise;
        (5) enter into agreements with or obtain
    
documentation from any company registered under Section 131.13, any member of the internationally active insurance group, and any other state, federal, and international regulatory agencies for members of the internationally active insurance group, providing the basis for or otherwise clarifying the Director's role as group-wide supervisor, including provisions for resolving disputes with other regulatory officials. Such agreements or documentation shall not serve as evidence in any proceeding that any company or person within an insurance holding company system not domiciled or incorporated in this State is doing business in this State or is otherwise subject to jurisdiction in this State; and
        (6) other group-wide supervision activities,
    
consistent with the authorities and purposes enumerated above, as considered necessary by the Director.
    (h) If the Director acknowledges that another regulatory official from a jurisdiction that is not accredited by the NAIC is the group-wide supervisor, the Director is authorized to reasonably cooperate, through supervisory colleges or otherwise, with group-wide supervision undertaken by the group-wide supervisor, provided that:
        (1) the Director's cooperation is in compliance with
    
the laws of this State; and
        (2) the regulatory official acknowledged as the
    
group-wide supervisor also recognizes and cooperates with the Director's activities as a group-wide supervisor for other internationally active insurance groups where applicable. Where such recognition and cooperation is not reasonably reciprocal, the Director is authorized to refuse recognition and cooperation.
    (i) The Director is authorized to enter into agreements with or obtain documentation from any company registered under Section 131.13, any affiliate of the company, and other state, federal, and international regulatory agencies for members of the internationally active insurance group that provide the basis for or otherwise clarify a regulatory official's role as group-wide supervisor.
    (j) The Department may adopt regulations necessary for the administration of this Section.
    (k) A registered company subject to this Section shall be liable for and shall pay the reasonable expenses of the Director's participation in the administration of this Section, including the engagement of attorneys, actuaries, and any other professionals and all reasonable travel expenses.
(Source: P.A. 102-394, eff. 8-16-21.)

    (215 ILCS 5/131.21) (from Ch. 73, par. 743.21)
    Sec. 131.21. Examination.
    (1) Subject to the limitation contained in this section and in addition to the powers which the Director has under Sections 132 through 132.7 and 401 through 403 of this Code relating to the examination of companies, the Director shall have the power to examine any company registered under Section 131.13 of this Code and its affiliates to ascertain the financial condition of the company, including the enterprise risk to the company by the ultimate controlling party, or by any entity or combination of entities within the insurance holding company system, or by the insurance holding company system on a consolidated basis.
    (1.5) The Director may order any company registered under Section 131.13 of this Code to produce such records, books, or other information papers in the possession of the company or its affiliates as are reasonably necessary to determine compliance with this Article. To determine compliance with this Article, the Director may order any company registered under Section 131.13 of this Code to produce information not in the possession of the company if the company can obtain access to such information pursuant to contractual relationships, statutory obligations, or other methods. In the event the company cannot obtain the information requested by the Director, the company shall provide the Director a detailed explanation of the reason that the company cannot obtain the information and the identity of the holder of the information. Whenever the Director determines that the detailed explanation is without merit, the Director may require, after notice and hearing, the company to pay a penalty of up to $1,000 for each day's delay, or may suspend or revoke the company's license.
    (2) The Director may retain at the registered company's expense any attorneys, actuaries, accountants and other experts not otherwise a part of the Director's staff as may be reasonably necessary to assist in the conduct of the examination under subsection (1). Any persons so retained are under the direction and control of the Director and may act in a purely advisory capacity.
    (3) Each registered company producing for examination records, books and papers under subsection (1.5) is liable for and must pay the expense of the examination in accordance with Section 408 of this Code.
    (4) The Director may retain at the registered company's expense any attorneys, actuaries, accountants, and other experts not otherwise a part of the Director's staff as may be reasonably necessary to assist in the conduct of the examination under subsection (1) of this Section. Any persons so retained are under the direction and control of the Director and may act in a purely advisory capacity.
    (5) In the event the company fails to comply with an order, the Director shall have the power to examine the affiliates to obtain the information. The Director shall also have the power to issue subpoenas, to administer oaths, and to examine under oath any person for purposes of determining compliance with this Section. Upon the failure or refusal of any 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. Every person shall be obliged to attend as a witness at the place specified in the subpoena, when subpoenaed, anywhere within the State. He or she shall be entitled to the same fees and mileage, if claimed, as a witness in the Circuit Court, which fees, mileage, and actual expense, if any, necessarily incurred in securing the attendance of witnesses, and their testimony, shall be itemized and charged against, and be paid by, the company being examined.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.22)
    Sec. 131.22. Confidential treatment.
    (a) Documents, materials, or other information in the possession or control of the Department that are obtained by or disclosed to the Director or any other person in the course of an examination or investigation made pursuant to this Article and all information reported or provided to the Department pursuant to paragraphs (12) and (13) of Section 131.5 and Sections 131.13 through 131.21 are recognized by this State as being proprietary and to contain trade secrets, and shall be confidential by law and privileged, shall not be subject to the Illinois Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action. However, the Director is authorized to use the documents, materials, or other information in the furtherance of any regulatory or legal action brought as a part of the Director's official duties. The Director shall not otherwise make the documents, materials, or other information public without the prior written consent of the company to which it pertains unless the Director, after giving the company and its affiliates who would be affected thereby prior written notice and an opportunity to be heard, determines that the interest of policyholders, shareholders, or the public shall be served by the publication thereof, in which event the Director may publish all or any part in such manner as may be deemed appropriate.
    (b) Neither the Director nor any person who received documents, materials, or other information while acting under the authority of the Director or with whom such documents, materials, or other information are shared pursuant to this Article shall be permitted or required to testify in any private civil action concerning any confidential documents, materials, or information subject to subsection (a) of this Section.
    (c) In order to assist in the performance of the Director's duties, the Director:
        (1) may share documents, materials, or other
    
information, including the confidential and privileged documents, materials, or information subject to subsection (a) of this Section, including proprietary and trade secret documents and materials, with other state, federal, and international regulatory agencies, with the NAIC and its affiliates and subsidiaries, with third-party consultants, and with state, federal, and international law enforcement authorities and regulatory agencies, including members of any supervisory college allowed by this Article, provided that the recipient agrees in writing to maintain the confidentiality and privileged status of the document, material, or other information, and has verified in writing the legal authority to maintain confidentiality;
        (1.5) notwithstanding paragraph (1) of this
    
subsection (c), may only share confidential and privileged documents, material, or information reported pursuant to subsection (a) of Section 131.14b with commissioners of states having statutes or regulations substantially similar to subsection (a) of this Section and who have agreed in writing not to disclose such information;
        (1.7) notwithstanding paragraph (1) of this
    
subsection (c), may only share confidential and privileged documents, material, or information reported pursuant to Section 131.14b with the Illinois Insurance Guaranty Fund regarding any member company defined in Section 534.5 if the member company has an authorized control level event as defined in Section 35A-25; the Director may disclose the information described in this subsection so long as the Fund agrees in writing to hold that information confidential, in a manner consistent with this Code, and uses that information to prepare for the possible liquidation of the member company; access to the information disclosed by the Director to the Fund shall be limited to the Fund's staff and its counsel; the board of directors of the Fund may have access to the information disclosed by the Director to the Fund once the member company is subject to a delinquency proceeding under Article XIII subject to any terms and conditions established by the Director; and
        (2) may receive documents, materials, or information,
    
including otherwise confidential and privileged documents, materials, or information, including proprietary and trade secret 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; any such documents, materials, or information, while in the Director's possession, shall not be subject to the Illinois Freedom of Information Act and shall not be subject to subpoena.
    (c-5) Written agreements with the NAIC or third-party consultants governing sharing and use of information provided pursuant to this Article consistent with subsection (c) shall:
        (1) specify procedures and protocols regarding the
    
confidentiality and security of information shared with the NAIC and its affiliates and subsidiaries or third-party consultants pursuant to this Article, including procedures and protocols for sharing by the NAIC with other state, federal, or international regulators; the agreement shall provide that the recipient agrees in writing to maintain the confidentiality and privileged status of the documents, materials, or other information and has verified in writing the legal authority to maintain such confidentiality;
        (2) specify that ownership of information shared with
    
the NAIC and its affiliates and subsidiaries or third-party consultants pursuant to this Article remains with the Director and the NAIC's or third-party consultant's use of the information is subject to the direction of the Director;
        (3) require prompt notice to be given to a company
    
whose confidential information in the possession of the NAIC or third-party consultant pursuant to this Article is subject to a request or subpoena for disclosure or production;
        (4) require the NAIC and its affiliates and
    
subsidiaries or third-party consultants to consent to intervention by a company in any judicial or administrative action in which the NAIC and its affiliates and subsidiaries or third-party consultants may be required to disclose confidential information about the company shared with the NAIC and its affiliates and subsidiaries or third-party consultants pursuant to this Article; and
        (5) excluding documents, material, or information
    
reported pursuant to subsection (c) of Section 131.14b, prohibit the NAIC or third-party consultant from storing the information shared pursuant to this Code in a permanent database after the underlying analysis is completed.
    (d) The sharing of documents, materials, or information by the Director pursuant to this Article shall not constitute a delegation of regulatory authority or rulemaking, and the Director is solely responsible for the administration, execution, and enforcement of the provisions of this Article.
    (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 subsection (c) of this Section.
    (f) Documents, materials, or other information in the possession or control of the NAIC or third-party consultant pursuant to this Article shall be confidential by law and privileged, shall not be subject to the Illinois Freedom of Information Act, shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any private civil action.
(Source: P.A. 102-394, eff. 8-16-21; 102-578, eff. 7-1-22 (See Section 5 of P.A. 102-672 for effective date of P.A. 102-578); 102-813, eff. 5-13-22; 102-929, eff. 5-27-22.)

    (215 ILCS 5/131.22a)
    Sec. 131.22a. Restrictions on insurer publishing. The group capital calculation and resulting group capital ratio required under subsection (b) of Section 131.14b and the liquidity stress test along with its results and supporting disclosures required under subsection (c) of Section 131.14b are regulatory tools for assessing group risks and capital adequacy and group liquidity risks, respectively, and are not intended as a means to rank insurers or insurance holding company systems generally. Therefore, except as otherwise may be required under the provisions of this Code, the making, publishing, disseminating, circulating, or placing before the public, or causing directly or indirectly to be made, published, disseminated, circulated, or placed before the public in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station or any electronic means of communication available to the public, or in any other way as an advertisement, announcement, or statement containing a representation or statement with regard to the group capital calculation, group capital ratio, the liquidity stress test results, or supporting disclosures for the liquidity stress test of any insurer or any insurer group, or of any component derived in the calculation by any insurer, broker, or other person engaged in any manner in the insurance business would be misleading and is therefore prohibited; however, if any materially false statement with respect to the group capital calculation, resulting group capital ratio, an inappropriate comparison of any amount to an insurer's or insurance group's group capital calculation or resulting group capital ratio, liquidity stress test result, supporting disclosures for the liquidity stress test, or an inappropriate comparison of any amount to an insurer's or insurance group's liquidity stress test result or supporting disclosures is published in any written publication and the insurer is able to demonstrate to the Director with substantial proof the falsity of such statement or the inappropriateness, as the case may be, then the insurer may publish announcements in a written publication if the sole purpose of the announcement is to rebut the materially false statement.
(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 5/131.23) (from Ch. 73, par. 743.23)
    Sec. 131.23. Injunctions; prohibitions against voting securities; sequestration of voting securities.
    (1) Whenever it appears to the Director that any company or any director, officer, employee or agent thereof has committed or is about to commit a violation of this Article or of any rule, regulation, or order issued by the Director hereunder, the Director may apply to the Circuit Court for the county in which the principal office of the company is located or to the Circuit Court for Sangamon County for an order enjoining the company or the director, officer, employee or agent thereof from violating or continuing to violate this Article or any rule, regulation or order, and for any other equitable relief as the nature of the case and the interests of the company's policyholders, creditors or the public may require. In any proceeding, the validity of the rule, regulation or order alleged to have been violated may be determined by the Court.
    (2) No security or shareholder's or policyholder's proxy which is the subject of any agreement or arrangement regarding acquisition, or which is acquired or to be acquired, in contravention of this Article or of any rule, regulation or order issued by the Director hereunder may be voted at any shareholders' meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of securities shall be taken as though such securities (including securities that may be voted pursuant to such proxies) were not issued and outstanding; but no action taken at any such meeting may be invalidated by the voting of such securities or proxies, unless the action would materially affect control of the company or unless any court of this State has so ordered. If the Director has reason to believe that any security or shareholder's or policyholder's proxy of the company has been or is about to be acquired in contravention of this Article or of any rule, regulation or order issued by the Director hereunder the company or the Director may apply to the Circuit Court for Sangamon County or to the Circuit Court for the county in which the company has its principal place of business (a) to enjoin the further pursuit or use of any offer, request, invitation, agreement or acquisition made in contravention of Sections 131.4 through 131.12 or any rule, regulation, or order issued by the Director thereunder; (b) to enjoin the voting of any security or proxy so acquired; (c) to void any vote of such security or proxy already cast at any meeting of shareholders; and (d) for any other equitable relief as the nature of the case and the interests of the company's policyholders, creditors, or the public may require.
    (3) In any case where a person has acquired or is proposing to acquire any voting securities or shareholder's or policyholder's proxy in violation of this Article or any rule, regulation or order issued by the Director hereunder, the Circuit Court for Sangamon County or the Circuit Court for the county in which the company has its principal place of business may, on such notice as the court deems appropriate, upon the application of the company or the Director seize or sequester any voting securities or shareholder's or policyholder's proxy of the company owned directly or indirectly by such person, and issue any orders with respect thereto as may be appropriate to effectuate this Article. Notwithstanding any other provisions of law, for the purposes of this Article, the situs of the ownership of the securities of domestic companies is deemed to be in this State.
    (4) If the Director has reason to believe that any shareholders' or policyholders' proxies have been or are about to be acquired in contravention of this Article or of any rule, regulations or order issued by the Director hereunder, the Director may apply to the Circuit Court for Sangamon County or to the Circuit Court for the county in which the company has its principal place of business (a) to enjoin further pursuit or use of any offer, request, invitation, agreement or acquisition made in contravention of Section 131.4 through 131.12 and (b) for any other equitable relief as the nature of the case and the interests of the company's policyholders, creditors or the public may require.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.24) (from Ch. 73, par. 743.24)
    Sec. 131.24. Sanctions.
    (1) Every director or officer of an insurance holding company system who knowingly violates, participates in, or assents to, or who knowingly permits any of the officers or agents of the company to engage in transactions or make investments which have not been properly filed or approved or which violate this Article, shall pay, in their individual capacity, a civil forfeiture of not more than $100,000 per violation, after notice and hearing before the Director. In determining the amount of the civil forfeiture, the Director shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and such other matters as justice may require.
    (2) Whenever the Director determines that any company subject to this Article or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract which is subject to Section 131.20, and any one of Sections 131.16, 131.20a, 141, 141.1, or 174 of this Code and which would not have been approved had such approval been requested or would have been disapproved had required notice been given, the Director may order the company to cease and desist immediately any further activity under that transaction or contract. After notice and hearing the Director may also order (a) the company to void any such contracts and restore the status quo if such action is in the best interest of the policyholders or the public, and (b) any affiliate of the company, which has received from the company dividends, distributions, assets, loans, extensions of credit, guarantees, or investments in violation of any such Section, to immediately repay, refund or restore to the company such dividends, distributions, assets, extensions of credit, guarantees or investments.
    (3) Whenever the Director determines that any company or any director, officer, employee or agent thereof has committed a willful violation of this Article, the Director may cause criminal proceedings to be instituted in the Circuit Court for the county in which the principal office of the company is located or in the Circuit Court of Sangamon or Cook County against such company or the responsible director, officer, employee or agent thereof. Any company which willfully violates this Article commits a business offense and may be fined up to $500,000. Any individual who willfully violates this Article commits a Class 4 felony and may be fined in his individual capacity not more than $500,000 or be imprisoned for not less than one year nor more than 3 years, or both.
    (4) Any officer, director, or employee of an insurance holding company system who willfully and knowingly subscribes to or makes or causes to be made any false statements or false reports or false filings with the intent to deceive the Director in the performance of his duties under this Article, commits a Class 3 felony and upon conviction thereof, shall be imprisoned for not less than 2 years nor more than 5 years or fined $500,000 or both. Any fines imposed shall be paid by the officer, Director, or employee in his individual capacity.
    (5) Whenever the Director determines that any person has committed a violation of Section 131.14b of this Code which prevents the full understanding of the enterprise risk to the company by affiliates or by the insurance holding company system, the violation may serve as an independent basis, after an opportunity for a hearing, for disapproving dividends or distributions and for placing the company under an order of supervision in accordance with Article XII 1/2 of this Code.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.25) (from Ch. 73, par. 743.25)
    Sec. 131.25. Receivership. Whenever it appears to the Director that any person has committed a violation of this Article which so impairs the financial condition of a domestic company as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors or the public, then the Director may proceed against the company under Article XIII of this Code.
(Source: P.A. 83-749.)

    (215 ILCS 5/131.25a) (from Ch. 73, par. 743.25a)
    Sec. 131.25a. Recovery upon order of liquidation or rehabilitation of domestic insurer.
    (a) If an order for liquidation or rehabilitation of a domestic insurer has been entered, the receiver shall have the right subject to the limitations set forth in subsections (b) and (c) of this Section to recover on behalf of the insurer any or all of the following made during the 3 years before the filing of the petition for liquidation, conservation, or rehabilitation:
        (1) From any parent corporation, holding company,
    
person, or affiliate who otherwise controlled the insurer, the amount of distributions, other than distributions of shares of the same class, paid by the insurer on its capital stock.
        (2) From any director, officer, or employee, the
    
amount of any payment in the form of a bonus, termination settlement, or extraordinary lump sum salary adjustment made by the insurer or a subsidiary.
    (b) No distribution shall be recoverable if the parent or affiliate shows that the distribution or payment was lawful and reasonable when paid and that the insurer did not know and reasonably could not have known that the distribution might adversely affect the ability of the insurer to fulfill its contractual obligations.
    (c) The maximum amount recoverable under this Section shall be the amount in excess of all other available assets of the impaired or insolvent insurer needed to pay the contractual obligations of that insurer and reimburse any guaranty funds.
    (d) Any person who was a parent corporation, holding company, or who otherwise controlled the insurer or affiliate at the time the distributions were paid shall be liable up to the amount of distributions the person received. Any person who otherwise controlled the insurer at the time the distributions were declared shall be liable up to the amount of distributions the person would have received had the distributions been paid immediately. If 2 or more persons are liable with respect to the same distributions, they shall be jointly and severally liable.
    (e) To the extent any person liable under subsection (d) is insolvent or otherwise fails to pay claims due, its parent corporations, holding company, or person who otherwise controlled it at the time the distribution was paid shall be jointly and severally liable for any resulting deficiency in the amount recovered.
(Source: P.A. 87-1090.)

    (215 ILCS 5/131.26) (from Ch. 73, par. 743.26)
    Sec. 131.26. Revocation, suspension, or non-renewal of company's license. Whenever the Director determines that any person has committed a violation of this Article which makes the continued operation of a company contrary to the interests of policyholders or the public, the Director may, after notice and hearing suspend, revoke or refuse to renew the company's license or authority to do business in this State for such period as the Director finds is required for the protection of policyholders or the public. Any such determination must be accompanied by specific findings of fact and conclusions of law.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.27) (from Ch. 73, par. 743.27)
    Sec. 131.27. Judicial review.
    (1) Any order or decision made, issued or executed by the Director under this Article whereby any person or company is aggrieved is subject to review by the Circuit Court of Sangamon County or the Circuit Court of Cook County.
    The Administrative Review Law, as now or hereafter amended, and the rules adopted pursuant thereto, applies to and governs all proceedings for review of final administrative decisions of the Director provided for in this Section. The term "administrative decision" is defined as in Section 3-101 of the Code of Civil Procedure.
    (2) The filing of an appeal pursuant to this Section shall stay the application of any rule, regulation, order, or other action of the Director to the appealing party unless the court, after giving the party notice and an opportunity to be heard, determines that a stay would be detrimental to the interest of policyholders, shareholders, creditors, or the public.
    (3) Any person aggrieved by any failure of the Director to act or make a determination required by this Article may petition the circuit courts of Sangamon County or Cook County for a writ in the nature of a mandamus or a peremptory mandamus directing the Director to act or make a determination.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.28) (from Ch. 73, par. 743.28)
    Sec. 131.28. Separability of provisions.
    If any provisions of this Article or the application thereof to any person or circumstances is held invalid, the invalidity does not affect other provisions or applications of this Article which can be given effect without the invalid provision or application, and for this purpose the provisions of this Article are separable.
(Source: P.A. 77-673.)

    (215 ILCS 5/131.29)
    Sec. 131.29. Rulemaking power. The Director may adopt such administrative rules as are necessary to implement the provisions of this Article.
(Source: P.A. 98-609, eff. 1-1-14.)

    (215 ILCS 5/131.30)
    Sec. 131.30. Conflict with other laws. This Article supersedes all laws and parts of laws of this State inconsistent with this Code with respect to matters covered by this Code.
(Source: P.A. 98-609, eff. 1-1-14.)


 
    (215 ILCS 5/Art. IX heading)
ARTICLE IX. PROVISIONS APPLICABLE TO ALL COMPANIES

    (215 ILCS 5/132) (from Ch. 73, par. 744)
    Sec. 132. Market conduct actions and market analysis.
    (a) Definitions. As used in this Section:
    "Data call" means a written solicitation by the Director to 2 or more regulated companies or persons seeking existing data or other existing information to be provided within a reasonable time period for a narrow and targeted regulatory oversight purpose for market analysis. "Data call" does not include an information request in a market conduct action or any data or information that the Director shall or may specifically require under any other law, except as provided by the other law.
    "Desk examination" means an examination that is conducted by market conduct surveillance personnel at a location other than the regulated company's or person's premises. "Desk examination" includes an examination performed at the Department's offices with the company or person providing requested documents by hard copy, microfiche, or discs or other electronic media for review without an on-site examination.
    "Market analysis" means a process whereby market conduct surveillance personnel collect and analyze information from filed schedules, surveys, required reports, data calls, and other sources to develop a baseline understanding of the marketplace and to identify patterns or practices of regulated persons that deviate significantly from the norm or that may pose a potential risk to insurance consumers.
    "Market conduct action" means any activity, other than market analysis, that the Director may initiate to assess and address the market and nonfinancial practices of regulated persons, including market conduct examinations. The Department's consumer complaint process outlined in 50 Ill. Adm. Code 926 is not a market conduct action for purposes of this Section; however, the Department may initiate market conduct actions based on information gathered during that process. "Market conduct action" includes:
        (1) correspondence with the company or person;
        (2) interviews with the company or person;
        (3) information gathering;
        (4) policy and procedure reviews;
        (5) interrogatories;
        (6) review of company or person self-evaluations and
    
voluntary compliance programs;
        (7) self-audits; and
        (8) market conduct examinations.
    "Market conduct examination" or "examination" means any type of examination, other than a financial examination, that assesses a regulated person's compliance with the laws, rules, and regulations applicable to the examinee. "Market conduct examination" includes comprehensive examinations, targeted examinations, and follow-up examinations, which may be conducted as desk examinations, on-site examinations, or a combination of those 2 methods.
    "Market conduct surveillance" means market analysis or a market conduct action.
    "Market conduct surveillance personnel" means those individuals employed or retained by the Department and designated by the Director to collect, analyze, review, or act on information in the insurance marketplace that identifies patterns or practices of persons subject to the Director's jurisdiction. "Market conduct surveillance personnel" includes all persons identified as an examiner in the insurance laws or rules of this State if the Director has designated them to assist her or him in ascertaining the nonfinancial business practices, performance, and operations of a company or person subject to the Director's jurisdiction.
    "On-site examination" means an examination conducted at the company's or person's home office or the location where the records under review are stored.
    "SOFR rate" means the Secured Overnight Financing Rate published by the Federal Reserve Bank of New York every business day.
    (b) Companies and persons subject to surveillance. The Director, for the purposes of ascertaining the nonfinancial business practices, performance, and operations of any person subject to the Director's jurisdiction or within the marketplace, may engage in market conduct actions or market analysis relating to:
        (1) any company transacting or being organized to
    
transact business in this State;
        (2) any person engaged in or proposing to be engaged
    
in the organization, promotion, or solicitation of shares or capital contributions to or aiding in the formation of a company;
        (3) any person having a written or oral contract
    
pertaining to the management or control of a company as general agent, managing agent, or attorney-in-fact;
        (4) any licensed or registered producer, firm,
    
pharmacy benefit manager, administrator, or any person making application for any license, certificate, or registration;
        (5) any person engaged in the business of adjusting
    
losses or financing premiums; or
        (6) any person, organization, trust, or corporation
    
having custody or control of information reasonably related to the operation, performance, or conduct of a company or person subject to the Director's jurisdiction, but only as to the operation, performance, or conduct of a company or person subject to the Director's jurisdiction.
    (c) Market analysis and market conduct actions.
        (1) The Director may perform market analysis by
    
gathering and analyzing information from data currently available to the Director, information from surveys, data call responses, or reports that are submitted to the Director, information collected by the NAIC, and information from a variety of other sources to develop a baseline understanding of the marketplace and to identify for further review companies or practices that deviate from the norm or that may pose a potential risk to insurance consumers. The Director shall use the most recent NAIC Market Regulation Handbook as a guide in performing market analysis. The Director may also employ other guidelines or procedures as the Director may deem appropriate.
        (2) The Director may initiate a market conduct action
    
subject to the following:
            (A) If the Director determines that further
        
inquiry into a particular person or practice is needed, then the Director may consider undertaking a market conduct action. The Director shall inform the examinee of the initiation of the market conduct action and shall use the most recent NAIC Market Regulation Handbook as a guide in performing the market conduct action. The Director may also employ other guidelines or procedures as the Director may deem appropriate.
            (B) For an examination, the Director shall
        
conduct a pre-examination conference with the examinee to clarify expectations before commencement of the examination. At the pre-examination conference, the Director or the market conduct surveillance personnel shall disclose the basis of the examination, including the statutes, regulations, or business practices at issue. The Director shall provide at least 30 days' advance notice of the date of the pre-examination conference unless circumstances warrant that the examination proceed more quickly.
            (C) The Director may coordinate a market conduct
        
action and findings of this State with market conduct actions and findings of other states.
        (3) Nothing in this Section requires the Director to
    
undertake market analysis before initiating any market conduct action.
        (4) Nothing in this Section restricts the Director to
    
the type of market conduct action he or she initially selected.
        (5) A regulated person is required to respond to a
    
market analysis data call or to an information request in a market conduct action on the terms and conditions established by the Director. The Department shall establish reasonable timelines that are commensurate with the volume and nature of the data required to be collected in the information request.
        (6) Without limiting the contents of any examination
    
report, market conduct actions taken as a result of a market analysis shall focus primarily on the general business practices and compliance activities of companies or persons rather than identifying infrequent or unintentional random errors that do not cause significant consumer harm. The Director may give a company or person an opportunity to resolve matters that are identified as a result of a market analysis to the Director's satisfaction before undertaking a market conduct action against the company or person.
    (d) Access to books and records. Every examinee and its officers, directors, and agents must provide to the Director convenient and free access at all reasonable hours at its office or location to all books, records, and documents and any or all papers relating to the business, performance, operations, and affairs of the examinee. The officers, directors, and agents of the examinee must facilitate the market conduct action and aid in the action so far as it is in their power to do so. The Director and any authorized market conduct surveillance personnel have the power to administer oaths and examine under oath any person relevant to the business of the examinee. A failure to produce requested books, records, or documents by the deadline shall not be a violation until after the later of:
        (1) 5 business days after the initial response
    
deadline set by the Director or authorized personnel; or
        (2) an extended deadline granted by the Director or
    
authorized personnel.
    (e) Examination report. The market conduct surveillance personnel designated by the Director under Section 402 must make a full and true report of every examination made by them that contains only facts ascertained from the books, papers, records, documents, and other evidence obtained by investigation and examined by them or ascertained from the testimony of officers, agents, or other persons examined under oath concerning the business, affairs, conduct, and performance of the examinee. The report of examination must be verified by the oath of the examiner in charge thereof, and when so verified is prima facie evidence in any action or proceeding in the name of the State against the examinee, its officers, directors, or agents upon the facts stated therein.
    (f) Examinee response to examination report. The Department and the examinee shall comply with the following timeline, unless a mutual agreement is reached to modify the timeline:
        (1) The Department shall deliver a draft report to
    
the examinee as soon as reasonably practicable. Nothing in this Section prevents the Department from sharing an earlier draft of the report with the examinee before confirming that the examination is completed.
        (2) If the examinee chooses to respond with written
    
submissions or rebuttals, then the examinee must do so within 30 days after receipt of any draft report delivered after the completion of the examination.
        (3) As soon as reasonably practicable after receipt
    
of any written submissions or rebuttals, the Department shall issue a final report. Whenever the Department has made substantive changes to a previously shared draft report, unless those changes remove part or all of an alleged violation or were proposed by the examinee, the Department shall deliver the revised version to the examinee as a new draft and shall allow the examinee 30 days to respond before the Department issues a final report.
        (4) The examinee shall, within 10 days after the
    
issuance of the final report, accept the final report or request a hearing in writing, unless granted an extension by mutual agreement. Failure to take either action within 10 days or the mutually agreed extension shall be deemed an acceptance of the final report. If the examinee accepts the examination report, the Director shall continue to hold the content of the examination report as private and confidential for a period of 30 days. Thereafter, the Director shall open the final report for public inspection.
    (g) Hearing; final examination report. Notwithstanding anything to the contrary in this Code or Department rules, if the examinee requests a hearing, then the following procedures apply:
        (1) The examinee must request the hearing in writing
    
and must specify the issues in the final report that the examinee is challenging. The examinee is limited to challenging the issues that were previously challenged in the examinee's written submission and rebuttal or supplemental submission and rebuttal pursuant to paragraphs (2) and (3) of subsection (f).
        (2) Except as permitted in paragraphs (3) and (8) of
    
this subsection, the hearing shall be limited to the written arguments submitted by the parties to the designated hearing officer. The designated hearing officer may, however, grant a live hearing upon the request of either party.
        (3) Discovery is limited to the market conduct
    
surveillance personnel's work papers that are relevant to the issues the examinee is challenging. The relevant market conduct surveillance personnel's work papers shall be admitted into the record. No other forms of discovery, including depositions and interrogatories, are allowed, except upon written agreement of the examinee and the Department when necessary to conduct a fair hearing or as otherwise provided in this subsection.
        (4) Only the examinee and the Department may submit
    
written arguments.
        (5) The examinee must submit its written argument and
    
any supporting evidence within 30 days after the Department serves a formal notice of hearing.
        (6) The Department must submit its written response
    
and any supporting evidence within 30 days after the examinee submits its written argument.
        (7) The designated hearing officer may allow
    
additional written submissions if necessary or useful to the fair resolution of the hearing.
        (8) If either the examinee or the Department submit
    
written testimony or affidavits, then the opposing party shall be given the opportunity to cross-examine the witness and to submit the cross-examination to the hearing officer before a decision.
        (9) The Director shall issue a decision accompanied
    
by findings and conclusions. The Director's order is a final administrative decision and shall be served upon the examinee together with a copy of the final report within 90 days after the conclusion of the hearing. The hearing is deemed concluded on the later of the last date of any live hearing or the final deadline date for written submissions to the hearing officer, including any continuances or supplemental briefings permitted by the hearing officer.
        (10) Any portion of the final examination report that
    
was not challenged by the examinee is incorporated into the decision of the Director.
        (11) Findings of fact and conclusions of law in the
    
Director's final administrative decision are prima facie evidence in any legal or regulatory action.
        (12) If an examinee has requested a hearing, then the
    
Director shall continue to hold the final report and any related decision as private and confidential for a period of 49 days after the final administrative decision. After the 49-day period expires, the Director shall open the final report and any related decision for public inspection if a court of competent jurisdiction has not stayed its publication.
    (h) Disclosure. So long as the recipient agrees to and verifies in writing its legal authority to hold the information confidential in a manner consistent with this Section, nothing in this Section prevents the Director from disclosing at any time the content of an examination report, preliminary examination report, or results, or any matter relating to a report or results, to:
        (1) the insurance regulatory authorities of any other
    
state; or
        (2) any agency or office of the federal government.
    (i) Confidentiality.
        (1) The Director and any other person in the course
    
of market conduct surveillance shall keep confidential all documents, including working papers, third-party models, or products; complaint logs; copies of any documents created, produced, obtained by, or disclosed to the Director, market conduct surveillance personnel, or any other person in the course of market conduct surveillance conducted pursuant to this Section; and all documents obtained by the NAIC pursuant to this Section. The documents shall remain confidential after the termination of the market conduct surveillance, are not subject to subpoena, are not subject to discovery or admissible as evidence in private civil litigation, are not subject to disclosure under the Freedom of Information Act, and must not be made public at any time or used by the Director or any other person, except as provided in paragraphs (3), (4), and (6) of this subsection (i) and in subsection (k).
        (2) The Director and any other person in the course
    
of market conduct surveillance shall keep confidential any self-evaluation or voluntary compliance program documents disclosed to the Director or other person by an examinee and the data collected via the NAIC market conduct annual statement. The documents are not subject to subpoena, are not subject to discovery or admissible as evidence in private civil litigation, are not subject to disclosure under the Freedom of Information Act, and they shall not be made public or used by the Director or any other person, except as provided in paragraphs (3) and (4) of this subsection (i), in subsection (k), or in Section 155.35. Nothing in this Section shall supersede the restrictions on disclosure under Section 155.35.
        (3) Notwithstanding paragraphs (1) and (2) of this
    
subsection (i), and consistent with paragraph (5) of this subsection (i), in order to assist in the performance of the Director's duties, the Director may:
            (A) share documents, materials, communications,
        
or other information, including the confidential and privileged documents, materials, or information described in this subsection (i), with other State, federal, alien, and international regulatory agencies and law enforcement authorities and the NAIC, its affiliates, and subsidiaries, if the recipient agrees to and verifies in writing its legal authority to maintain the confidentiality and privileged status of the document, material, communication, or other information;
            (B) receive documents, materials, communications,
        
or information, including otherwise confidential and privileged documents, materials, or information, from the NAIC and its affiliates or subsidiaries, and from regulatory and law enforcement officials of other State, federal, alien, or international jurisdictions, authorities, and agencies, and shall maintain as confidential or privileged any document, material, communication, 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, communication, or information; and
            (C) enter into agreements governing the sharing
        
and use of information consistent with this Section.
        (4) Nothing in this Section limits:
            (A) the Director's authority to use, if
        
consistent with subsection (5) of Section 188.1, as applicable, any final or preliminary examination report, any market conduct surveillance or examinee work papers or other documents, or any other information discovered or developed during the course of any market conduct surveillance in the furtherance of any legal or regulatory action initiated by the Director that the Director may, in the Director's sole discretion, deem appropriate; however, confidential or privileged information about a company or person that is used in the legal or regulatory action shall not be made public except by order of a court of competent jurisdiction or with the written consent of the company or person; or
            (B) the ability of an examinee to conduct
        
discovery in accordance with paragraph (3) of subsection (g).
        (5) Disclosure to or by the Director of documents,
    
materials, communications, or information required as part of any type of market conduct surveillance does not waive any applicable privilege or claim of confidentiality in the documents, materials, communications, or information.
        (6) Notwithstanding the confidentiality requirements
    
of this Section or otherwise imposed by State law, if the Director performs a data call, other than the collection of data for the NAIC market conduct annual statement, the Director may make the results of the data call available for public inspection in an aggregated format that does not disclose information or data attributed to any specific company or person, including the name of any company or person who responded to the data call, so long as the Director provides all companies or persons that responded to the data call 15 days' notice identifying the information to be publicly released. Nothing in this Section requires the Director to publish results from any data call.
    (j) Corrective actions.
        (1) As a result of any market conduct action, the
    
Director may take any action the Director considers necessary or appropriate in accordance with the report of examination or any hearing thereon for acts in violation of any law, rule, or prior lawful order of the Director. No corrective action, including a penalty, shall be ordered with respect to violations in transactions with consumers or other entities that are isolated occurrences or that occur with such low frequency as to fall below a reasonable margin of error. Such actions include, but are not limited to:
            (A) requiring the regulated person to undertake
        
corrective actions to cease and desist an identified violation or institute processes and practices to comply with applicable standards;
            (B) requiring reimbursement or restitution of any
        
actual losses or damages to persons harmed by the regulated person's violation with interest from the date that the actual loss or damage was incurred, which shall be calculated at the SOFR rate applicable on the date that the actual loss or damage was incurred plus 2%; and
            (C) imposing civil penalties as provided in this
        
subsection (j).
        (2) The Director may order a penalty of up to $2,000
    
for each violation of any law, rule, or prior lawful order of the Director. Any failure to respond to an information request in a market conduct action or violation of subsection (d) may carry a fine of up to $1,000 per day up to a maximum of $50,000. Fines and penalties shall be consistent, reasonable, and justifiable, and the Director may consider reasonable criteria in ordering the fines and penalties, including, but not limited to, consumer harm, the intentionality of any violations, or remedial actions already undertaken by the examinee. The Director shall communicate to the examinee the basis for any assessed fine or penalty.
        (3) If any other provision of this Code or any other
    
law or rule under the Director's jurisdiction prescribes an amount or range of monetary penalty for a violation of a particular statute or rule or a maximum penalty in the aggregate for repeated violations, the Director shall assess penalties pursuant to the terms of the statute or rule allowing the largest penalty.
        (4) If any other provision of this Code or any other
    
law or rule under the Director's jurisdiction prescribes or specifies a method by which the Director is to determine a violation, then compliance with the process set forth herein shall be deemed to comply with the method prescribed or specified in the other provision.
        (5) If the Director imposes any sanctions or
    
corrective actions described in subparagraphs (A) through (C) of paragraph (1) of this subsection (j) based on the final report, the Director shall include those actions in a proposed stipulation and consent order enclosed with the final report issued to the examinee under subsection (f). The examinee shall have 10 days to sign the order or request a hearing in writing on the actions proposed in the order regardless of whether the examinee requests a hearing on the contents of the report under subsection (f). If the examinee does not sign the order or request a hearing on the proposed actions or the final report within 10 days, the Director may issue a final order imposing the sanctions or corrective actions. Nothing in this Section prevents the Department from sharing an earlier draft of the proposed order with the examinee before issuing the final report.
        (6) If the examinee accepts the order and the final
    
report, the Director shall hold the content of the order and report as private and confidential for a period of 30 days. Thereafter, the Director shall open the order and report for public inspection.
        (7) If the examinee makes a timely request for a
    
hearing on the order, the request must specify the sanctions or corrective actions in the order that the examinee is challenging. Any hearing shall follow the procedures set forth in paragraphs (2) through (7) of subsection (g).
        (8) If the examinee has also requested a hearing on
    
the contents of the report, then that hearing shall be consolidated with the hearing on the order. The Director shall not impose sanctions or corrective actions under this Section until the conclusion of the hearing.
        (9) The Director shall issue a decision accompanied
    
by findings and conclusions along with any corrective actions or sanctions. Any sanctions or corrective actions shall be based on the final report accepted by the examinee or adopted by the Director under paragraph (9) of subsection (g). The Director's order is a final administrative decision and shall be served upon the examinee together with a copy of the final report within 90 days after the conclusion of the hearing or within 10 days after the examinee's acceptance of the proposed order and final report, as applicable. The hearing is deemed concluded on the later of the last date of any live hearing or the final deadline date for written submissions to the hearing officer, including any continuances or supplemental briefings permitted by the hearing officer.
        (10) If an examinee has requested a hearing under
    
this subsection (i), the Director shall continue to hold the final order and examination report as private and confidential for a period of 49 days after the final administrative decision. After the 49-day period expires, the Director shall open the final order and examination report if a court of competent jurisdiction has not stayed their publication.
    (k) National market conduct databases. The Director shall collect and report market data to the NAIC's market information systems, including, but not limited to, the Complaint Database System, the Examination Tracking System, and the Regulatory Information Retrieval System, or other successor NAIC products as determined by the Director. Information collected and maintained by the Department for inclusion in these NAIC market information systems shall be compiled in a manner that meets the requirements of the NAIC. Confidential or privileged information collected, reported, or maintained under this subsection (k) shall be subject to the protections and restrictions on disclosure in subsection (i).
    (l) Immunity of market conduct surveillance personnel.
        (1) No cause of action shall arise nor shall any
    
liability be imposed against the Director, the Director's authorized representatives, market conduct surveillance personnel, or an examiner appointed by the Director for any statements made or conduct performed in good faith while carrying out the provisions of this Section.
        (2) 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, the Director's authorized representative, market conduct surveillance personnel, 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.
        (3) A person identified in paragraph (1) of this
    
subsection (l) 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. As used in this paragraph, a proceeding is substantially justified if it had a reasonable basis in law or fact at the time it was initiated.
        (4) This subsection (l) does not abrogate or modify
    
in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in paragraph (1) of this subsection (l).
(Source: P.A. 103-897, eff. 1-1-25.)

    (215 ILCS 5/132.1) (from Ch. 73, par. 744.1)
    Sec. 132.1. Purpose. The purpose of Sections 132.1 through 132.7 of this Code is to provide an effective system for the financial examination of the activities, operations, financial condition, and affairs of all persons transacting the business of insurance in this State and all persons otherwise subject to the jurisdiction of the Director. The provisions are intended to enable the Director to adopt a flexible system of examinations that directs resources as may be deemed appropriate and necessary for the administration of the insurance and insurance related laws of this State.
(Source: P.A. 87-108.)

    (215 ILCS 5/132.2) (from Ch. 73, par. 744.2)
    Sec. 132.2. Definitions. As used in Sections 132.1 through 132.7, the terms set forth in this Section have the following meanings:
    "Company" means any person engaging in or proposing or attempting to engage in any transaction or kind of insurance or surety business and any person or group of persons who may otherwise be subject to the administrative, regulatory, or taxing authority of the Director.
    "Examiner" means any individual or firm having been authorized by the Director to conduct an examination under this Code.
    "Insurer" means any company licensed or authorized by the Director to provide any insurance contracts, whether by indemnity, guaranty, suretyship, or otherwise; including, but not limited to, those companies licensed or authorized by the Director under the following Acts:
        (1) The Voluntary Health Services Plans Act.
        (2) (Blank).
        (3) The Dental Service Plan Act.
        (4) (Blank).
        (5) The Farm Mutual Insurance Company Act of 1986.
        (6) The Limited Health Service Organization Act.
        (7) The Health Maintenance Organization Act.
    "Person" means any individual, aggregation of individuals, trust, association, partnership, or corporation, or any affiliate thereof.
(Source: P.A. 90-372, eff. 7-1-98; 90-655, eff. 7-30-98.)

    (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 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 5/132.4) (from Ch. 73, par. 744.4)
    Sec. 132.4. Conduct of examinations.
    (a) Upon determining that an examination should be conducted, the Director or his designee shall issue an examination warrant appointing one or more examiners to perform the examination and instructing them as to the scope of the examination. In conducting the examination, the examiner shall observe those guidelines and procedures set forth in the Examiners' Handbook adopted by the National Association of Insurance Commissioners. The Director may also employ other guidelines or procedures as the Director may deem appropriate.
    (b) Every company or person from whom information is sought and its officers, directors, and agents must provide to the examiners appointed under subsection (a) timely, convenient, and free access, at all reasonable hours at its offices, to all books, records, accounts, papers, documents, and any or all computer or other recordings relating to the property, assets, business, and affairs of the company being examined. The officers, directors, employees, and agents of the company or person must facilitate the examination and aid in the examination so far as it is in their power to do so. The refusal of any company or its officers, directors, employees, and agents to submit to examination or to comply with any reasonable written request of the examiners shall be grounds for suspension, refusal, or nonrenewal of any license or authority held by the company to engage in an insurance or other business subject to the Director's jurisdiction. Any proceedings for suspension, revocation, or refusal of any license or authority shall be conducted under the procedures set forth in Section 401.1 of this Code. Evidence of refusal to submit to examination or to comply with reasonable written requests of examiners shall establish a rebuttable presumption that the conduct of the company's business and affairs is hazardous to its policyholders and the public and may cause irreparable loss and injury to others so long as the refusal to submit or to comply with the examination continues.
    (c) The Director or any of his examiners 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. Subpoenas may be enforced under the provisions of Section 403 of this Code.
    (d) When making an examination, the Director may retain, in consultation with the company being examined, attorneys, appraisers, independent actuaries, independent certified public accountants, or other professionals and specialists as examiners, the cost of which shall be borne by the company that is the subject of the examination.
    (e) Nothing contained in this Act shall be construed to limit the Director's authority to terminate or suspend any examination in order to pursue other legal or regulatory action under the insurance laws of this State. Findings of fact and conclusions made in the course of any examination shall be prima facie evidence in any legal or regulatory action.
    (f) Nothing contained in this Code 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 company work papers 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 his sole discretion, deem appropriate.
(Source: P.A. 87-108.)

    (215 ILCS 5/132.5) (from Ch. 73, par. 744.5)
    Sec. 132.5. Examination reports.
    (a) General description. All examination reports shall be comprised of only facts appearing upon the books, records, or other documents of the company, its agents, or other persons examined or as ascertained from the testimony of its officers, agents, or other persons examined concerning its affairs and the conclusions and recommendations as the examiners find reasonably warranted from those facts.
    (b) Filing of examination report. No later than 60 days following completion of the examination, the examiner in charge shall file with the Department a verified written report of examination under oath. Upon receipt of the verified report, the Department shall transmit the report to the company examined, together with a notice that affords the company examined a reasonable opportunity of not more than 30 days to make a written submission or rebuttal with respect to any matters contained in the examination report.
    (c) Adoption of the report on examination. Within 30 days of the end of the period allowed for the receipt of written submissions or rebuttals, the Director shall fully consider and review the report, together with any written submissions or rebuttals and any relevant portions of the examiners work papers and enter an order:
        (1) Adopting the examination report as filed or with
    
modification or corrections. If the examination report reveals that the company is operating in violation of any law, regulation, or prior order of the Director, the Director may order the company to take any action the Director considers necessary and appropriate to cure the violation.
        (2) Rejecting the examination report with directions
    
to the examiners to reopen the examination for purposes of obtaining additional data, documentation, or information and refiling under subsection (b).
        (3) Calling for an investigatory hearing with no less
    
than 20 days notice to the company for purposes of obtaining additional documentation, data, information, and testimony.
    (d) Order and procedures. All orders entered under paragraph (1) of subsection (c) shall be accompanied by findings and conclusions resulting from the Director's consideration and review of the examination report, relevant examiner work papers, and any written submissions or rebuttals. The order shall be considered a final administrative decision and may be appealed in accordance with the Administrative Review Law. The order shall be served upon the company by certified mail, together with a copy of the adopted examination report. Within 30 days of the issuance of the adopted report, the company shall file affidavits executed by each of its directors stating under oath that they have received a copy of the adopted report and related orders.
    Any hearing conducted under paragraph (3) of subsection (c) by the Director or an authorized representative shall be conducted as a nonadversarial confidential investigatory proceeding as necessary for the resolution of any inconsistencies, discrepancies, or disputed issues apparent upon the face of the filed examination report or raised by or as a result of the Director's review of relevant work papers or by the written submission or rebuttal of the company. Within 20 days of the conclusion of any hearing, the Director shall enter an order under paragraph (1) of subsection (c).
    The Director shall not appoint an examiner as an authorized representative to conduct the hearing. The hearing shall proceed expeditiously with discovery by the company limited to the examiner's work papers that tend to substantiate any assertions set forth in any written submission or rebuttal. The Director or his representative may issue subpoenas for the attendance of any witnesses or the production of any documents deemed relevant to the investigation, whether under the control of the Department, the company, or other persons. The documents produced shall be included in the record, and testimony taken by the Director or his representative shall be under oath and preserved for the record. Nothing contained in this Section shall require the Department to disclose any information or records that would indicate or show the existence or content of any investigation or activity of a criminal justice agency.
    The hearing shall proceed with the Director or his representative posing questions to the persons subpoenaed. Thereafter, the company and the Department may present testimony relevant to the investigation. Cross-examination shall be conducted only by the Director or his representative. The company and the Department shall be permitted to make closing statements and may be represented by counsel of their choice.
    (e) Publication and use. Upon the adoption of the examination report under paragraph (1) of subsection (c), the Director shall continue to hold the content of the examination report as private and confidential information for a period of 35 days, except to the extent provided in subsection (b). Thereafter, the Director may open the report for public inspection so long as no court of competent jurisdiction has stayed its publication.
    Nothing contained in this Code shall prevent or be construed as prohibiting the Director from disclosing the content of an examination report, preliminary examination report or results, or any matter relating thereto, to the insurance department 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, so long as the agency or office receiving the report or matters relating thereto agrees in writing to hold it confidential and in a manner consistent with this Code.
    In the event the Director determines that regulatory action is appropriate as a result of any examination, he may initiate any proceedings or actions as provided by law.
    (f) Confidentiality of ancillary information. All 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 any examination must be given confidential treatment, are not subject to subpoena, and may not be made public by the Director or any other persons, except to the extent provided in subsection (e). Access may also be granted to the National Association of Insurance Commissioners. Those parties must agree in writing before receiving the information to provide to it the same confidential treatment as required by this Section, unless the prior written consent of the company to which it pertains has been obtained.
    (g) Disclosure. Nothing contained in this Code shall prevent or be construed as prohibiting the Director from disclosing the information described in subsections (e) and (f) to the Illinois Insurance Guaranty Fund regarding any member company defined in Section 534.5 if the member company has an authorized control level event as defined in Section 35A-25. The Director may disclose the information described in this subsection so long as the Fund agrees in writing to hold that information confidential, in a manner consistent with this Code, and uses that information to prepare for the possible liquidation of the member company. Access to the information disclosed by the Director to the Fund shall be limited to the Fund's staff and its counsel. The Board of Directors of the Fund may have access to the information disclosed by the Director to the Fund once the member company is subject to a delinquency proceeding under Article XIII subject to any terms and conditions established by the Director.
(Source: P.A. 102-929, eff. 5-27-22; 103-897, eff. 1-1-25.)

    (215 ILCS 5/132.6) (from Ch. 73, par. 744.6)
    Sec. 132.6. Conflict of interest.
    (a) No examiner may be appointed by the Director if that examiner, either directly or indirectly, has a conflict of interest, is affiliated with the management of, or owns a pecuniary interest in any person subject to examination. This Section shall not be construed to automatically preclude an examiner from being:
        (1) A policyholder or claimant under an insurance
    
policy.
        (2) A grantor of a mortgage or similar instrument on
    
the examiner's residence to a regulated entity if done under customary terms and in the ordinary course of business.
        (3) An investment owner in shares of regulated
    
diversified investment companies.
        (4) A settlor or beneficiary of a "blind trust" into
    
which any otherwise impermissible holdings have been placed.
    (b) Notwithstanding the provisions of this Section, the Director may retain from time to time, on an individual basis, qualified actuaries, certified public accountants, or other similar individuals who are independently practicing their professions, even though those persons may from time to time be similarly employed or retained by persons subject to examination under this Code.
(Source: P.A. 87-108.)

    (215 ILCS 5/132.7) (from Ch. 73, par. 744.7)
    Sec. 132.7. Immunity from liability.
    (a) 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 Code.
    (b) 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 in the course of an examination if the act of communication or delivery was performed in good faith and without fraudulent intent or the intent to deceive.
    (c) This Section does not abrogate or modify in any way any common law or statutory privilege or immunity heretofore enjoyed by any person identified in subsection (a).
    (d) Persons identified in subsection (a) shall be entitled to an award of attorney's fees and costs if they are a prevailing party in a civil action for libel, slander, or any other relevant tort arising out of their activities in carrying out the provisions of this Code 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 has a reasonable basis in law or fact at the time that it was initiated.
(Source: P.A. 87-108.)

    (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 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 5/134) (from Ch. 73, par. 746)
    Sec. 134. Falsification of Records-Sentence.
    Any officer, director, agent or employee of any company who makes or causes to be made any false entry in any book, report or statement of such company with intent to injure or defraud such company, or any other company or person, or to deceive any officer of such company, or the Director or any agent or examiner appointed to examine the affairs of such company and any person who with like intent aids or abets any officer, director, agent or employee in any violation of this Section shall be guilty of a Class 4 felony.
(Source: P.A. 77-2830.)

    (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 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 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 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 5/137) (from Ch. 73, par. 749)
    Sec. 137. Every Insurance Company doing business in this state which is required to file a statement or report with the Securities and Exchange Commission, shall at the request of the Director, file a copy of such statement or report with the Department.
(Source: P.A. 80-514.)

    (215 ILCS 5/139) (from Ch. 73, par. 751)
    Sec. 139. Penalties for late or false annual statement.
    (1) Any company failing, without just cause, to file its financial statements as required in this Code shall be required, after notice and hearing, to pay a penalty of up to $1,000 for each day's delay, to be recovered by the Director of Insurance of the State of Illinois using the notice and hearing procedure in subsection (2) of Section 403A of this Code, and the penalty so recovered shall be paid into the General Revenue fund of the State of Illinois. The Director may reduce the penalty if the company demonstrates to the Director that the imposition of the penalty would constitute a financial hardship to the company.
    Any statement which is not materially complete when filed shall not be considered to have been properly filed until those deficiencies which make the filing incomplete have been corrected and filed.
    (2) Any director, officer, agent or employee of any company, who subscribes to, makes or concurs in making or publishing any annual or other statement required by law, knowing the same to contain any material statement which is false shall, after notice and hearing, be guilty of a business offense and shall be fined not more than $50,000.
    The penalty shall be paid into the General Revenue fund of the State of Illinois.
(Source: P.A. 98-910, eff. 7-1-15.)

    (215 ILCS 5/140) (from Ch. 73, par. 752)
    Sec. 140. Vouchers for disbursements.
    No domestic company shall make any disbursement of one hundred dollars or more unless the same be evidenced by a voucher or receipt signed or check endorsed by or on behalf of the person receiving the money and describing the consideration for the payment, and if the expenditure be in connection with any matter pending before any legislative or public body or before any department or officer of any state or government the voucher shall describe the nature of the matter and the interest of the company therein, or if such voucher cannot be obtained, the expenditure shall be evidenced by affidavit describing its character and object and stating the reasons for not obtaining such voucher, receipt or check.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/141) (from Ch. 73, par. 753)
    Sec. 141. Agency contracts. (1) Any domestic company which contracts with any person (different legal entities, directly or indirectly owned or controlled by the same person shall be considered as a person within the meaning of this Section) whereby such person is granted the right or privilege to solicit, procure, write or produce a major part of the insurance business for such company and collect premiums therefor shall file such contract with the Director within 15 days from the execution of such contract or within 60 days following the end of any calendar quarter in which such person produces a major portion of the company's insurance business. For purposes of this Section, any person who produces in excess of five percent (5%) of a company's insurance premium volume during any one calendar quarter shall be deemed as having been granted the privilege of producing a major portion of such company's business. Failure of the Director to disapprove any such contract within thirty days after the same shall be filed with him, shall constitute his approval thereof. A company may continue to accept business from such person until such contract is disapproved by the Director. Such disapproval shall be in writing, stating the reasons therefor and a copy thereof delivered to the company.
    (2) The Director shall not approve any such contract which
    (a) subjects the company to excessive charges for expenses or commissions;
    (b) vests in the agent or agency company any control over the management of the affairs of the insurance company to the exclusion of the board of directors of the insurance company;
    (c) gives to such person, the right to solicit, procure, write or produce a major part of the insurance business for such insurance company and collect and hold the premiums for such unreasonable period as may jeopardize the security of policyholders; or
    (d) fails to require such person to make available to the Director or his designees all books, records and documents pertaining to such person's insurance business.
    (3) The Director shall not approve any contract with any person if such person or its officers and directors are of known bad character or have been affiliated directly or indirectly through ownership, control, management, reinsurance transactions or other insurance or business relationships with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance.     (4) The Director, for the purpose of ascertaining the assets, conditions and affairs of any person having a contract as provided in subsection (1), may examine the books, records, documents and assets of such person.
    (5) The Director may, after a hearing held pursuant to Section 401, withdraw his approval of any agency contract theretofore approved by him, if he finds that the basis of his original approval no longer exist, or that the contract has, in actual operation, shown itself to be subject to disapproval on any of the grounds referred to in subsections (2) and (3) above.
(Source: P.A. 84-714.)

    (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 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 5/141b)
    Sec. 141b. Third party access to files. Any contract with a third party ("administrator") to provide claim services for a property and casualty company must contain the following provisions:
        (1) Upon liquidation or rehabilitation of the
    
insurer, the files and any data related thereto become the sole property of the estate. The administrator shall have reasonable access and right to copy files at the administrator's expense.
        (2) In the event electronic files are used, the
    
administrator must keep all data in such a format that it is easily separated from other data maintained by the administrator and timely transferred to the liquidator upon the entry of an order or liquidation. "Timely transferred", in this context, means the claim file data must be transferred to the liquidator within 10 days after the entry of an order of liquidation.
    The provisions of this Section shall apply to all contracts entered into after the effective date of this amendatory Act of the 100th General Assembly, and any existing contracts shall have one year to come into compliance with this Section.
(Source: P.A. 100-410, eff. 8-25-17.)

    (215 ILCS 5/141.01) (from Ch. 73, par. 753.01)
    Sec. 141.01. No company authorized to do business in Illinois shall cancel, terminate or refuse to renew any policy on the ground that the company's contract with the agent through whom such policy was obtained has been terminated. This provision shall not alter any contract between the agent and the company regarding ownership of expirations where the agent is able to place the policy with another insurer with similar coverage to the satisfaction of the insured.
(Source: P.A. 80-1374.)

    (215 ILCS 5/141.02) (from Ch. 73, par. 753.02)
    Sec. 141.02. (1) Definitions. For purposes of this Section an independent insurance agent is any licensed agent representing an insurance company on an independent contractor basis and not as an employee. This term shall include only those agents not obligated by contract to place insurance accounts with any insurance company or group of companies. This Section shall only apply to contracts which have been effective for more than one year between an independent insurance agent and any company authorized in this State for the purpose of transacting the kind or kinds of business enumerated in Class 2 or Class 3 of Section 4 of this Code, except accident and health insurance.
    (2) Rehabilitation. In an effort to avoid termination, the company and agent may endeavor to reach mutual agreement on a written plan for rehabilitation for a period of time agreed by them. Any written plan agreed upon shall identify the problem areas and specify what the agent must do in an effort to avoid termination.
    (3) Notice of Termination. Contracts between the independent insurance agent and any company shall not be terminated by the company except by signed mutual agreement at the time of written termination notice or unless the company provides 180 days written notice to the independent insurance agent prior to the effective date of termination. The effective date of termination shall be 180 days from the date of mailing of the termination notice. The company must maintain proof of mailing of the termination notice on a recognized U.S. Post Office form.
    (4) Renewals following termination. A. During the 180 days notice or other mutually agreed time period the independent insurance agent shall not write or bind any new business on behalf of the terminating company without specific written approval.
    B. The terminating company shall, following the date of termination, renew all policies written by the independent insurance agent for one policy term or for a period of one year if the policy period is longer than one year unless:
    (a) the policies do not meet the insurer's underwriting standards; or
    (b) the independent insurance agent notifies the insurer in writing that the policy has been placed with another insurer.
    C. If a renewal policy does not meet the underwriting requirements, the terminating insurer must give the independent insurance agent 60 days notice of its intention not to renew.
    D. The rate of commission and renewal terms shall be in accordance with those in effect immediately prior to termination. The commission must be paid only through the first renewal subsequent to the effective date of the termination.
    (5) Paragraphs (1) through (4) of this Section shall not apply to terminations for abandonment, insolvency of the terminating company, gross and willful misconduct, refusal, suspension, revocation or termination of the agent's license by the Director of Insurance, sale or material change of ownership of agency, fraud, material misrepresentation or failure to pay such independent insurance agent's account less the independent insurance agent's commission and any disputed items within 30 days after written demand by the company.
(Source: P.A. 85-334.)

    (215 ILCS 5/141.03) (from Ch. 73, par. 753.03)
    Sec. 141.03. Insurance companies authorized to do business in this State shall not refuse to do business with an independent insurance agent representing an insurance company as an independent contractor and not as an employee solely on account of the volume of insurance written by that agent prior to affiliation with such company.
(Source: P.A. 84-742.)

    (215 ILCS 5/141.1) (from Ch. 73, par. 753.1)
    Sec. 141.1. Management contracts and service agreements. All agreements or contracts under which any person, organization or corporation is delegated management duties or control of any domestic company, or which transfer a substantial part of any major function of a domestic company such as adjustment of losses, production of business, investment of assets or general servicing of the company's business must be filed with the Department on or before the effective date of such contract or agreement. The Director may upon notice review these arrangements entered by foreign companies.
    There shall be exempted from the filing requirement of this Section contracts by groups of affiliated companies on a "pooled" funds basis or service company management basis, where costs to the individual member companies are charged on an actually incurred or closely estimated basis. However, these contracts must be reduced to written form.
    Sections 141.1, 141.2, and 141.3 shall not apply to any power of attorney or other authority authorized by Section 67 of this Code.
(Source: P.A. 91-357, eff. 7-29-99.)

    (215 ILCS 5/141.2) (from Ch. 73, par. 753.2)
    Sec. 141.2. Grounds for disapproval.
    The Director must disapprove any such management contract or service agreement if, at any time, he finds:
    (1) that the service or management charges are based upon criteria unrelated either to the managed company's profits or to the reasonable customary and usual charges for such services or are based on factors unrelated to the value of such services to the company; or
    (2) that management personnel or other employees of the insurance company are to be performing management functions and receiving any remuneration therefor through the management or service contract in addition to the compensation by way of salary received directly from the insurance company for their services; or
    (3) that the contract would transfer substantial control of the company or any of the powers vested in the board of directors, by statute, articles of incorporation or by-laws, or substantially all of the basic functions of the insurance company management; or
    (4) that the contract contains provisions which would be clearly detrimental to the best interests of policyholders, stockholders or members of the company; or
    (5) that the officers and directors of the management firm are of known bad character or have been affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance.
    If the Director disapproves of any management contract or service agreement, notice of such action shall be given to the company assigning the reasons therefor in writing. The Director shall grant any party to the contract a hearing upon request according to Article XXIV of this Code.
(Source: P.A. 77-1040.)

    (215 ILCS 5/141.3) (from Ch. 73, par. 753.3)
    Sec. 141.3. Supplement to annual statement.
    Any company which has a management contract shall file with its annual statement a supplement on forms prescribed by the Director which discloses the following: Salaries, commissions, or any valuable consideration paid to each officer and director of the management company or to any shareholder who owns, directly or indirectly, 10% of the shares of either the managed insurance company or the management company.
    Any changes in the officers or directors of the managing company are to be reported to the Director in accordance with Section 155.04.
(Source: Laws 1967, p. 1818.)

    (215 ILCS 5/141.4)
    Sec. 141.4. Disclosure of material transactions.
    (a) An insurer domiciled in this State shall file a report with the Director disclosing material acquisitions and dispositions of assets or material nonrenewals, cancellations, or revisions of ceded reinsurance agreements unless the acquisitions and dispositions of assets or the material nonrenewals, cancellations, or revisions of ceded reinsurance agreements have been otherwise submitted to the Director for review, approval, or information purposes. The report must be filed no later than 15 days after the end of the calendar month in which a reportable transaction occurs. A copy of the report, including any exhibits or other attachments filed as a part of the report, shall be filed with the National Association of Insurance Commissioners. All reports obtained by or disclosed to the Director under this Section shall be given confidential treatment and shall not be subject to subpoena and shall not be made public by the Director, the National Association of Insurance Commissioners, or any other person, except to insurance departments of other states, without the prior written consent of the insurer to which it pertains unless the Director, after giving the insurer who would be affected notice and an opportunity to be heard, determines that the interests of policyholders, shareholders, or the public will be served by publication, in which event the Director may publish all or any part in the manner the Director may deem appropriate.
    (b) Asset acquisitions or dispositions that are not material do not have to be reported under this Section. For purposes of this Section, a material acquisition (or the aggregate of any series of related acquisitions during any 30 day period) or disposition (or the aggregate of any series of related dispositions during any 30 day period) is one that is nonrecurring and not in the ordinary course of business and involves more than 5% of the reporting insurer's total admitted assets as reported in its most recent statutory financial statement filed with the Director. Asset acquisitions subject to this Section include, but are not limited to, every purchase, lease, exchange, merger, consolidation, succession, or other acquisition other than the construction or development of real property by or for the reporting insurer or the acquisition of materials for that purpose. Asset dispositions subject to this Section include, but are not limited to, every sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment (whether for the benefit of creditors or otherwise), abandonment, destruction, or other disposition. All of the following information shall be disclosed in the report of a material acquisition or disposition of assets:
        (1) Date of the transaction.
        (2) Manner of acquisition or disposition.
        (3) Description of the assets involved.
        (4) Nature and amount of the consideration received
    
or given.
        (5) Purpose of, or reason for, the transaction.
        (6) Manner by which the amount of consideration was
    
determined.
        (7) Gain or loss recognized or realized as a result
    
of the transaction.
        (8) Name of the person from whom the assets were
    
acquired or to whom they were disposed.
    Insurers shall report acquisitions and dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers that utilizes a pooling arrangement or a 100% reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 total direct plus assumed written premiums during a calendar year that are not subject to a pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5% of the insurer's capital and surplus.
    (c) Ceded reinsurance agreement nonrenewals, cancellations, or revisions that are not material do not have to be reported under this Section. For purposes of this Section, a material nonrenewal, cancellation, or revision is one that affects:
        (1) For property and casualty business, including
    
accident and health business written by a property and casualty insurer:
            (A) more than 50% of the insurer's total ceded
        
written premium; or
            (B) more than 50% of the insurer's total ceded
        
indemnity and loss adjustment reserves.
        (2) For life, annuity, and accident and health
    
business: more than 50% of the total reserve credit taken for business ceded, on an annual basis, as indicated in the insurer's most recent annual statement.
        (3) Property and casualty or life, annuity, and
    
accident and health business:
            (A) an authorized reinsurer representing more
        
than 10% of total cession is replaced by one or more unauthorized reinsurers; or
            (B) previously established collateral
        
requirements have been reduced or waived as respects one or more unauthorized reinsurer representing collectively more than 10% of a total cession.
    With respect to property and casualty business, including accident and health business written by a property and casualty insurer, no filing shall be required if the insurer's total ceded written premium represents, on an annualized basis, less than 10% of its total written premium for direct and assumed business. With respect to life, annuity, and accident and health business, no filing shall be required if the total reserve credit taken for business ceded represents, on an annualized basis, less than 10% of the statutory reserve requirement prior to any cession.
    All of the following information shall be disclosed in the report of a material nonrenewal, cancellation, or revision of ceded reinsurance agreements:
        (1) Effective date of the nonrenewal, cancellation or
    
revision.
        (2) The description of the transaction with an
    
identification of the initiator thereof.
        (3) Purpose of, or reason for, the transaction.
        (4) The identity of the replacement insurers, if
    
applicable.
    Insurers shall report all material nonrenewals, cancellations, or revisions of ceded reinsurance agreements on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers that utilizes a pooling arrangement or 100% reinsurance agreement that affects the solvency and integrity of the insurer's reserves and the insurer ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1,000,000 of total direct plus assumed written premiums during a calendar year that are not subject to the pooling arrangement and the net income of the business not subject to the pooling arrangement represents less than 5% of the insurer's capital and surplus.
(Source: P.A. 89-97, eff. 7-7-95.)

    (215 ILCS 5/142) (from Ch. 73, par. 754)
    Sec. 142. Notice of amendment or change in by-laws. Subject to the provisions of section 292.1 applicable to fraternal benefit societies, notice of any amendment or change in a company's by-laws setting forth such amendment or change, certified by its president, secretary, or officer corresponding thereto, shall be delivered to the Director within thirty days after such amendment or change.
(Source: P.A. 86-753.)

    (215 ILCS 5/143) (from Ch. 73, par. 755)
    Sec. 143. Policy forms.
    (1) Life, accident and health. No company transacting the kind or kinds of business enumerated in Classes 1 (a), 1 (b) and 2 (a) of Section 4 shall issue or deliver in this State a policy or certificate of insurance or evidence of coverage, attach an endorsement or rider thereto, incorporate by reference bylaws or other matter therein or use an application blank in this State until the form and content of such policy, certificate, evidence of coverage, endorsement, rider, bylaw or other matter incorporated by reference or application blank has been filed electronically with the Director, either through the System for Electronic Rate and Form Filing (SERFF) or as otherwise prescribed by the Director, and approved by the Director. Any such endorsement or rider that unilaterally reduces benefits and is to be attached to a policy subsequent to the date the policy is issued must be filed with, reviewed, and formally approved by the Director prior to the date it is attached to a policy issued or delivered in this State. It shall be the duty of the Director to disapprove or withdraw any such policy, certificate, endorsement, rider, bylaw or other matter incorporated by reference or application blank filed if it contains deficiencies, provisions which encourage misrepresentation or are unjust, unfair, inequitable, ambiguous, misleading, inconsistent, deceptive, contrary to law or to the public policy of this State, or contains exceptions and conditions that unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the policy. In all cases the Director shall approve, withdraw, or disapprove any such form within 60 days after submission unless the Director extends by not more than an additional 30 days the period within which the form shall be approved, withdrawn, or disapproved by giving written notice to the insurer of such extension before expiration of the initial 60 days period. The Director shall withdraw approval of a policy, certificate, evidence of coverage, endorsement, rider, bylaw, or other matter incorporated by reference or application blank if it is subsequently determined that such policy, certificate, evidence of coverage, endorsement, rider, bylaw, other matter, or application blank is misrepresentative, unjust, unfair, inequitable, ambiguous, misleading, inconsistent, deceptive, contrary to law or public policy of this State, or contains exceptions or conditions which unreasonably or deceptively affect the risk purported to be assumed in the general coverage of the policy or evidence of coverage.
    If a previously approved policy, certificate, evidence of coverage, endorsement, rider, bylaw or other matter incorporated by reference or application blank is withdrawn for use, the Director shall serve upon the company an order of withdrawal of use, either personally or by mail, and if by mail, such service shall be completed if such notice be deposited in the post office, postage prepaid, addressed to the company's last known address specified in the records of the Department of Insurance. The order of withdrawal of use shall take effect 30 days from the date of mailing but shall be stayed if within the 30-day period a written request for hearing is filed with the Director. Such hearing shall be held at such time and place as designated in the order given by the Director. The hearing may be held either in the City of Springfield, the City of Chicago or in the county where the principal business address of the company is located. The action of the Director in disapproving or withdrawing such form shall be subject to judicial review under the Administrative Review Law.
    This subsection shall not apply to riders or endorsements issued or made at the request of the individual policyholder relating to the manner of distribution of benefits or to the reservation of rights and benefits under his life insurance policy.
    (2) Casualty, fire, and marine. The Director shall require the filing of all policy forms issued or delivered by any company transacting the kind or kinds of business enumerated in Classes 2 (except Class 2 (a)) and 3 of Section 4 in an electronic format either through the System for Electronic Rate and Form Filing (SERFF) or as otherwise prescribed and approved by the Director. In addition, he may require the filing of any generally used riders, endorsements, certificates, application blanks, and other matter incorporated by reference in any such policy or contract of insurance. Companies that are members of an organization, bureau, or association may have the same filed for them by the organization, bureau, or association. If the Director shall find from an examination of any such policy form, rider, endorsement, certificate, application blank, or other matter incorporated by reference in any such policy so filed that it (i) violates any provision of this Code, (ii) contains inconsistent, ambiguous, or misleading clauses, or (iii) contains exceptions and conditions that will unreasonably or deceptively affect the risks that are purported to be assumed by the policy, he shall order the company or companies issuing these forms to discontinue their use. Nothing in this subsection shall require a company transacting the kind or kinds of business enumerated in Classes 2 (except Class 2 (a)) and 3 of Section 4 to obtain approval of these forms before they are issued nor in any way affect the legality of any policy that has been issued and found to be in conflict with this subsection, but such policies shall be subject to the provisions of Section 442.
    (3) This Section shall not apply (i) to surety contracts or fidelity bonds, (ii) to policies issued to an industrial insured as defined in Section 121-2.08 except for workers' compensation policies, nor (iii) to riders or endorsements prepared to meet special, unusual, peculiar, or extraordinary conditions applying to an individual risk.
(Source: P.A. 102-775, eff. 5-13-22.)

    (215 ILCS 5/143.01) (from Ch. 73, par. 755.01)
    Sec. 143.01. (a) A provision in a policy of vehicle insurance described in Section 4 excluding coverage for bodily injury to members of the family of the insured shall not be applicable when a third party acquires a right of contribution against a member of the injured person's family.
    (b) A provision in a policy of vehicle insurance excluding coverage for bodily injury to members of the family of the insured shall not be applicable when any person not in the household of the insured was driving the vehicle of the insured involved in the crash which is the subject of the claim or lawsuit.
    This subsection (b) applies to any action filed on or after its effective date.
(Source: P.A. 102-982, eff. 7-1-23.)

    (215 ILCS 5/143.1) (from Ch. 73, par. 755.1)
    Sec. 143.1. Periods of limitation tolled. Whenever any policy or contract for insurance, except life, accident and health, fidelity and surety, and ocean marine policies, contains a provision limiting the period within which the insured may bring suit, the running of such period is tolled from the date proof of loss is filed, in whatever form is required by the policy, until the date the claim is denied in whole or in part.
(Source: P.A. 82-352.)

    (215 ILCS 5/143.10) (from Ch. 73, par. 755.10)
    Sec. 143.10. No company shall cancel or refuse to issue or renew a policy on the sole basis that the insured or applicant for such policy was previously refused issuance or renewal of a policy by any insurer, or such insured's policy was cancelled on a prior date by any insurer.
(Source: P.A. 80-1374.)

    (215 ILCS 5/143.10a) (from Ch. 73, par. 755.10a)
    Sec. 143.10a. Loss Information.
    (1) All companies issuing policies to which Section 143.11 of this Code applies, except for those defined in subsections (a), (b) and (c) of Section 143.13 of this Code and to which subsection (o) of Section 19 of the Workers' Compensation Act applies, shall on or after January 1, 1987, provide the following loss information for the 3 previous policy years to the first named insured within 30 days of the insured's request. At the written request of the insured, the company shall send the loss information directly to the insured's producer. In addition, the company shall also send the loss information at the same time as any notice of cancellation or nonrenewal, except where the policy has been cancelled for nonpayment of premium, material misrepresentations or fraud on the part of the insured:
        (a) On closed claims, date and description of
    
occurrence, and total amounts of payments;
        (b) On open claims, date and description of
    
occurrence, total amount of payments and total reserves, if any; and
        (c) For any occurrence not included in (a) or (b) of
    
this subsection (1), the date and description of occurrence and total reserves, if any.
    (2) Should a named insured be required by a prospective insurer to provide detailed loss information in addition to that required under subsection (1) of this Section, the named insured may mail or deliver a written request to the insurer for such additional information, including specific loss reserves. No prospective insurer shall request, however, more detailed information than required by it to underwrite the same line or class of insurance. The insurer shall provide such information to the first named insured as soon as possible, but in no event later than 20 days of receipt of such request. Coverage under the existing policy shall automatically be extended at the same terms and conditions by the same number of days it takes the insurer to provide the insured with this additional information.
    (3) The Director may promulgate regulations to exclude the automatic providing of the loss information at the time of cancellation or renewal as outlined in subsection (1) of this Section for any line or class of insurance where it can be shown that the information is not needed for that line or class of insurance.
    (4) If a company fails to provide the information as required by this Section with such frequency so as to indicate a practice of refusing to provide such information, such failure shall constitute an unfair trade practice as defined in Section 424 and subject to those hearing and penalty provisions as set forth in Sections 425 through 434.
    (5) Information provided under subsection (2) of this Section shall not be subject to discovery by any party other than the insured, the insurer, and the prospective insurer.
(Source: P.A. 93-155, eff. 7-10-03.)

    (215 ILCS 5/143.10b) (from Ch. 73, par. 755.10b)
    Sec. 143.10b. Loss information, private passenger automobile.
    (1) All companies issuing a "policy of automobile insurance" as defined in paragraph (a) of Section 143.13 of this Code shall, on or after January 1, 1990, provide the following loss information for the 5 previous policy years to the named insured within 30 days of the insured's written request:
        (a) on closed claims, date and description of
    
occurrence, and total amount of payments;
        (b) on open claims, date and description of
    
occurrence and total amount of payments;
        (c) for any occurrence not included in (a) or (b) of
    
this subsection, the date and description of occurrence.
    (2) If a company fails to provide the information as required by this Section with such frequency so as to indicate a practice of refusing to provide such information, such failure shall constitute an unfair trade practice as defined in Section 424 and subject to those hearing and penalty provisions as set forth in Sections 425 through 434 of this Code.
(Source: P.A. 90-196, eff. 1-1-98.)

    (215 ILCS 5/143.10c) (from Ch. 73, par. 755.10c)
    Sec. 143.10c. No insurance company that is authorized to do business in this State and which issues policies for personal multiperil property coverage, commonly known as homeowners insurance, may refuse to issue or renew a homeowners insurance policy to the owner or tenant of any single family dwelling, or to any owner of or tenant residing in a multi-unit residential dwelling which contains from 2 to 4 units in a single building, solely on the grounds that a space heater is being used inside the dwelling.
    For purposes of this Section space heater means a heat radiating device used to warm rooms of a house or apartment and which is approved by Underwriters' Laboratories and uses gas, electricity or oil as its primary source of energy.
(Source: P.A. 86-174; 86-1028.)

    (215 ILCS 5/143.10d)
    Sec. 143.10d. (Repealed).
(Source: P.A. 102-328, eff. 1-1-22. Repealed by P.A. 103-11, eff. 6-9-23.)

    (215 ILCS 5/143.10e)
    Sec. 143.10e. Home property insurance; dog breeds.
    (a) With respect to homeowner's insurance policies and renter's insurance policies issued, renewed, modified, altered, or amended on or after the effective date of this amendatory Act of the 103rd General Assembly, no insurer shall refuse to issue or renew, cancel, charge or impose an increased premium or rate for a policy or contract, or exclude, limit, restrict, or reduce coverage under a policy or contract based solely upon harboring or owning any dog of a specific breed or mixture of breeds.
    (b) Notwithstanding the provisions of subsection (a), an insurer may cancel or refuse to issue or renew any homeowner's or renter's insurance policy or impose a reasonably increased premium for such policy based on the determination of an individual dog as a dangerous or vicious dog under the Animal Control Act, as determined by underwriting and actuarial principles reasonably derived from actual loss experience of such insurer with that individual dog and any anticipated loss given such loss exposure.
(Source: P.A. 103-11, eff. 12-9-23.)

    (215 ILCS 5/143.11) (from Ch. 73, par. 755.11)
    Sec. 143.11. Cancellation Provisions. All companies authorized to transact in this State the kinds of business enumerated in Section 4 of the "Illinois Insurance Code" shall include in their policies, except life, accident and health, fidelity and surety, and ocean marine policies, a cancellation provision setting out the manner in which such policies may be cancelled. However, nothing contained in Section 143.12 through Section 143.24 shall apply to contracts of reinsurance or to contracts procured by agents under the authority of Section 445.
(Source: P.A. 80-1365.)

    (215 ILCS 5/143.11a) (from Ch. 73, par. 755.11a)
    Sec. 143.11a. Termination of Lines of Business. No company authorized to transact, in this State, the kinds of business enumerated in Section 4 of this Code, except life, accident and health, fidelity and surety, and ocean marine policies, may terminate any line of insurance without notifying the Director of the action as well as reasons for the action, 90 days before termination of any policy is effective. The notice shall include all data relied upon by the company as the basis for such action and shall disclose whether the company offers and will continue to offer such kinds of insurance in any other State. For the purposes of this Section, termination of a line of insurance shall mean cancellation or non-renewal of a substantial portion of any type of business for the purpose of withdrawing from the market.
(Source: P.A. 84-1431.)

    (215 ILCS 5/143.11b)
    Sec. 143.11b. Assignment or transfer of property and casualty policies. An assignment or transfer of a policy of insurance to which Section 143.11 applies among or between insurers within an insurance holding company system or insurers under common management or control, or as a result of a merger, acquisition, or restructuring of an insurance company, is not a nonrenewal for purposes of the notification requirements under Sections 143.12 through 143.24. However, in the event of an increase in the renewal premium of 30% or more, change in deductibles or change in coverage that materially alters any policy to which subsection b of Section 143.17a applies, the company shall adhere to the provisions set forth in subsection b of Section 143.17a. A company making an assignment or transfer of a policy among or between insurers within an insurance holding company system or insurers under common management or control, or as a result of a merger, acquisition, or restructuring of an insurance company, shall have delivered to the named insured notice of such assignment or transfer at least 60 days prior to the renewal date. An exact and unaltered copy of the notice shall also be sent to the insured's producer, if known, and agent of record. The assignment or transfer of a policy or policies of insurance among or between insurers shall not occur without the producer or agent of record, or both, having a signed agency contract with the entity to which the policy or policies are to be assigned or transferred. If there is not a signed agency contract, all of the notice requirements of Sections 143.17 and 143.17a shall apply. Nothing in this Section shall contravene any existing producer and company contract rights. For purposes of this Section, the insured's producer, if known, and agent of record may opt to accept notification of assignment or transfer of policies electronically.
(Source: P.A. 93-713, eff. 1-1-05.)

    (215 ILCS 5/143.12) (from Ch. 73, par. 755.12)
    Sec. 143.12. "Short rate" cancellation. Notice required. No agent, broker or other representative or employee of any insurance company shall recommend, advise, suggest or require the cancellation of any insurance policy of the insurer which he represents, or of any other insurer at any time other than the policy anniversary or expiration date, unless he informs the insured in writing of the additional cost of such cancellation before the insured is requested or required to take action to cancel or terminate the policy which is then in force.
(Source: P.A. 79-686.)

    (215 ILCS 5/143.12a) (from Ch. 73, par. 755.12a)
    Sec. 143.12a. Automobile insurance; pro rata refund of unearned premium.
    (a) In the event of the cancellation of a policy of automobile insurance, as defined in Section 143.13, by either the company or the policyholder, the company shall refund the unearned premium pro rated to the date of cancellation. In no event may the refund of unearned premium be computed by use of a short rate table. Refund of the premium shall be without prejudice to any claim arising prior to the cancellation.
    (b) The refund shall be made by the company within 30 days from the following:
        (1) the date of the notice of cancellation by the
    
company; or
        (2) the date the company receives the request for
    
cancellation from the policyholder.
(Source: P.A. 86-1408.)

    (215 ILCS 5/143.13) (from Ch. 73, par. 755.13)
    Sec. 143.13. Definition of terms used in Sections 143.11 through 143.24.
    (a) "Policy of automobile insurance" means a policy delivered or issued for delivery in this State, insuring a natural person as named insured or one or more related individuals resident of the same household and under which the insured vehicles therein designated are motor vehicles of the private passenger, station wagon, or any other 4-wheeled motor vehicle with a load capacity of 1500 pounds or less which is not used in the occupation, profession or business of the insured or not used as a public or livery conveyance for passengers nor rented to others. Policy of automobile insurance shall also mean a named non-owner's automobile policy.
    Policy of automobile insurance does not apply to policies of automobile insurance issued under the Illinois Automobile Insurance Plan, to any policy covering garages, automobile sales agencies, repair shops, service stations or public parking place operation hazards. "Policy of automobile insurance" does not include a policy, binder, or application for which the applicant gives or has given for the initial premium a check or credit card charge that is subsequently dishonored for payment, unless the check or credit card charge was dishonored through no fault of the payor.
    (b) "Policy of fire and extended coverage insurance" means a policy delivered or issued for delivery in this State, that includes but is not limited to, the perils of fire and extended coverage, and covers real property used principally for residential purposes up to and including a 4 family dwelling or any household or personal property that is usual or incidental to the occupancy to any premises used for residential purposes.
    (c) "All other policies of personal lines" means any other policy of insurance issued to a natural person for personal or family protection.
    (d) "Renewal" or "to renew" means (1) any change to an entire line of business in accordance with subsection b-5 of Section 143.17 and (2) the issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer or the issuance and delivery of a certificate or notice extending the term of a policy beyond its policy period or term; however, any successive policies issued by the same insurer to the same insured, for the same or similar coverage, shall be considered a renewal policy.
    Any policy with a policy period or term of less than 6 months or any policy with no fixed expiration date shall be considered as if written for successive policy periods or terms of 6 months for the purpose of "renewal" or "to renew" as defined in this paragraph (d) and for the purpose of any non-renewal notice required by Section 143.17 of this Code.
    (e) "Nonpayment of premium" means failure of the named insured to discharge, when due, any of his obligations in connection with the payment of premiums or any installment of such premium that is payable directly to the insurer or to its agent. Premium shall mean the premium that is due for an individual policy which shall not include any membership dues or other consideration required to be a member of any organization in order to be eligible for such policy. The term "nonpayment of premium" does not include a check, credit card charge, or money order that an applicant gives or has given to any person for the initial premium payment for a policy, binder, or application and that is subsequently dishonored for payment, and any policy, binder, or application in connection therewith is void and of no effect and not subject to the cancellation provisions of this Code.
    (f) "A policy delivered or issued for delivery in this State" shall include but not be limited to all binders of insurance, whether written or oral, and all applications bound for future delivery by a duly licensed resident agent. A written binder of insurance issued for a term of 60 days or less, which contains on its face a specific inception and expiration date and which a copy has been furnished to the insured, shall not be subject to the non-renewal requirements of Section 143.17 of this Code.
    (g) "Cancellation" or "cancelled" means the termination of a policy by an insurer prior to the expiration date of the policy. A policy of automobile or fire and extended coverage insurance which expires by its own terms on the policy expiration date unless advance premiums are received by the insurer for succeeding policy periods shall not be considered "cancelled" or a "cancellation" effected by the insurer in the event such premiums are not paid on or before the policy expiration date.
    (h) "Commercial excess and umbrella liability policy" means a policy written over one or more underlying policies for an insured:
        (1) that has at least 25 full-time employees at the
    
time the commercial excess and umbrella liability policy is written and procures the insurance of any risk or risks, other than life, accident and health, and annuity contracts, as described in clauses (a) and (b) of Class 1 of Section 4 and clause (a) of Class 2 of Section 4, by use of the services of a full-time employee acting as an insurance manager or buyer; or
        (2) whose aggregate annual premiums for all property
    
and casualty insurance on all risks is at least $50,000.
(Source: P.A. 91-552, eff. 8-14-99; 91-597, eff. 1-1-00; 92-16, eff. 6-28-01.)

    (215 ILCS 5/143.13a)
    Sec. 143.13a. Coverage for permissive drivers. Any policy of private passenger automobile insurance must provide the same limits of bodily injury liability, property damage liability, uninsured and underinsured motorist bodily injury, and medical payments coverage to all persons insured under that policy, whether or not an insured person is a named insured or permissive user under the policy. If the policy insures more than one private passenger automobile, the limits available to the permissive user shall be the limits associated with the vehicle used by the permissive user when the loss occurs.
(Source: P.A. 95-395, eff. 1-1-08.)

    (215 ILCS 5/143.14) (from Ch. 73, par. 755.14)
    Sec. 143.14. Notice of cancellation.
    (a) No notice of cancellation of any policy of insurance, to which Section 143.11 applies, shall be effective unless mailed by the company to the named insured at the last mailing address known by the company. The company shall maintain proof of mailing of such notice on a recognized U.S. Post Office form or a form acceptable to the U.S. Post Office or other commercial mail delivery service. Notification shall also be sent to the insured's broker if known, or the agent of record, if known, and to the mortgagee or lien holder listed on the policy. For purposes of this Section, the mortgage or lien holder, insured's broker, if known, or the agent of record may opt to accept notification electronically.
    (b) Whenever a financed insurance contract is cancelled, the insurer shall return whatever gross unearned premiums are due under the insurance contract or contracts not to exceed the unpaid balance due the premium finance company directly to the premium finance company effecting the cancellation for the account of the named insured. The return premium must be mailed to the premium finance company within 60 days. The request for the unearned premium by the premium finance company shall be in the manner of a monthly account, current accounting by producer, policy number, unpaid balance and name of insured for each cancelled amount. In the event the insurance contract or contracts are subject to audit, the insurer shall retain the right to withhold the return of the portion of premium that can be identified to the contract or contracts until the audit is completed. Within 30 days of the completion of the audit, if a premium retained by the insurer after crediting the earned premium would result in a surplus, the insurer shall return the surplus directly to the premium finance company. If the audit should result in an additional premium due the insurer, the obligation for the collection of this premium shall fall upon the insurer and not affect any other contract or contracts currently being financed by the premium finance company for the named insured.
    (c) Whenever a premium finance agreement contains a power of attorney enabling the premium finance company to cancel any insurance contract or contracts in the agreement, the insurer shall honor the date of cancellation as set forth in the request from the premium finance company without requiring the return of the insurance contract or contracts. The insurer may mail to the named insured an acknowledgment of the notice of cancellation from the premium finance company but the named insured shall not incur any additional premium charge for any extension of coverage. The insurer need not maintain proof of mailing of this notice.
    (d) All statutory regulatory and contractual restrictions providing that the insurance contract may not be cancelled unless the required notice is mailed to a governmental agency, mortgagee, lienholder, or other third party shall apply where cancellation is effected under a power of attorney under a premium finance agreement. The insurer shall have the right for a premium charge for this extension of coverage.
(Source: P.A. 100-475, eff. 1-1-18.)

    (215 ILCS 5/143.15) (from Ch. 73, par. 755.15)
    Sec. 143.15. Mailing of cancellation notice. All notices of cancellation of insurance as defined in subsections (a), (b) and (c) of Section 143.13 must be mailed at least 30 days prior to the effective date of cancellation to the named insured; however, if cancellation is for nonpayment of premium, the notice of cancellation must be mailed at least 10 days before the effective date of the cancellation to the last mailing address known to the company. All notices of cancellation to the named insured shall include a specific explanation of the reason or reasons for cancellation. For purposes of this Section, the mortgagee or lien holder, if known, may opt to accept notification electronically.
(Source: P.A. 100-475, eff. 1-1-18.)

    (215 ILCS 5/143.16) (from Ch. 73, par. 755.16)
    Sec. 143.16. Mailing of cancellation notice. All notices of cancellation of insurance to which Section 143.11 applies, except for those defined in subsections (a), (b) and (c) of Section 143.13 must be mailed at least 30 days prior to the effective date of cancellation during the first 60 days of coverage. After the coverage has been effective for 61 days or more, all notices must be mailed at least 60 days prior to the effective date of cancellation. However, where cancellation is for nonpayment of premium, the notice of cancellation must be mailed at least 10 days before the effective date of the cancellation. All such notices shall include a specific explanation of the reason or reasons for cancellation and shall be mailed to the named insured at the last mailing address known to the company. For purposes of this Section, the mortgagee or lien holder, if known, may opt to accept notification electronically.
(Source: P.A. 100-475, eff. 1-1-18.)

    (215 ILCS 5/143.16a) (from Ch. 73, par. 755.16a)
    Sec. 143.16a. Cancellation of Casualty policies. No policy to which Section 143.11 applies, except for those defined in subsection (a) or (b) of Section 143.13, that has been in effect for 60 days may be cancelled except for one of the following reasons:
    (a) Nonpayment of premium;
    (b) The policy was obtained through a material misrepresentation;
    (c) Any insured violated any of the terms and conditions of the policy;
    (d) The risk originally accepted has measurably increased;
    (e) Certification to the Director of the loss of reinsurance by the insurer which provided coverage to the insurer for all or a substantial part of the underlying risk insured; or
    (f) A determination by the Director that the continuation of the policy could place the insurer in violation of the insurance laws of this State.
(Source: P.A. 84-1005.)

    (215 ILCS 5/143.16b) (from Ch. 73, par. 755.16b)
    Sec. 143.16b. Premium Refunds for Drought Insurance. Whenever a person has submitted payment of premium for the purchase of drought insurance described in clause (b) of Class 3 of Section 4 of this Code to an insurer or one of its subsidiaries, employees, agents, or producers, the insurer shall have a duty, within 10 business days of receipt of such premium payment, to either:
    (a) refund the premium payment in full; or
    (b) accept the premium payment, and provide to the person who has offered such payment policy coverage in full conformity with representations of any application, declaration, binder, or contract of policy coverage issued by the insurer or one of its subsidiaries, employees, agents or producers.
    This Section shall not apply to insurance provided, guaranteed or reinsured pursuant to the Federal Crop Insurance Program.
(Source: P.A. 86-285.)

    (215 ILCS 5/143.17) (from Ch. 73, par. 755.17)
    Sec. 143.17. Notice of intention not to renew.
    a. No company shall fail to renew any policy of insurance, as defined in subsections (a), (b), (c), and (h) of Section 143.13, to which Section 143.11 applies, unless it shall send by mail to the named insured at least 30 days advance notice of its intention not to renew. The company shall maintain proof of mailing of such notice on a recognized U.S. Post Office form or a form acceptable to the U. S. Post Office or other commercial mail delivery service. The nonrenewal shall not become effective until at least 30 days from the proof of mailing date of the notice to the name insured. Notification shall also be sent to the insured's broker, if known, or the agent of record, if known, and to the last known mortgagee or lien holder. For purposes of this Section, the mortgagee or lien holder, insured's broker, or the agent of record may opt to accept notification electronically. However, where cancellation is for nonpayment of premium, the notice of cancellation must be mailed at least 10 days before the effective date of the cancellation.
    b. This Section does not apply if the company has manifested its willingness to renew directly to the named insured. Such written notice shall specify the premium amount payable, including any premium payment plan available, and the name of any person or persons, if any, authorized to receive payment on behalf of the company. If no person is so authorized, the premium notice shall so state.
    b-5. This Section does not apply if the company manifested its willingness to renew directly to the named insured. However, no company may impose changes in deductibles or coverage for any policy forms applicable to an entire line of business enumerated in subsections (a), (b), (c), and (h) of Section 143.13 to which Section 143.11 applies unless the company mails to the named insured written notice of the change in deductible or coverage at least 60 days prior to the renewal or anniversary date. Notice shall also be sent to the insured's broker, if known, or the agent of record.
    c. Should a company fail to comply with (a) or (b) of this Section, the policy shall terminate only on the effective date of any similar insurance procured by the insured with respect to the same subject or location designated in both policies.
    d. Renewal of a policy does not constitute a waiver or estoppel with respect to grounds for cancellation which existed before the effective date of such renewal.
    e. In all notices of intention not to renew any policy of insurance, as defined in Section 143.11 the company shall provide the named insured a specific explanation of the reasons for nonrenewal.
    f. For purposes of this Section, the insured's broker, if known, or the agent of record and the mortgagee or lien holder may opt to accept notification electronically.
(Source: P.A. 100-475, eff. 1-1-18.)

    (215 ILCS 5/143.17a) (from Ch. 73, par. 755.17a)
    Sec. 143.17a. Notice of intention not to renew.
    (a) A company intending to nonrenew any policy of insurance to which Section 143.11 applies, except for those defined in subsections (a), (b), (c), and (h) of Section 143.13, must mail written notice to the named insured at least 60 days prior to the expiration date of the current policy. The notice to the named insured shall provide a specific explanation of the reasons for nonrenewal. A company may not extend the current policy period for purposes of providing notice of its intention not to renew required under this subsection (a).
    (b) A company intending to renew any policy of insurance to which Section 143.11 applies, except for those defined in subsections (a), (b), (c), and (h) of Section 143.13, with an increase in premium of 30% or more or with changes in deductibles or coverage that materially alter the policy must mail or deliver to the named insured written notice of such increase or change in deductible or coverage at least 60 days prior to the renewal or anniversary date. If a company has failed to provide notice of intention to renew required under this subsection (b) at least 60 days prior to the renewal or anniversary date, but does so no less than 31 days prior to the renewal or anniversary date, the company may extend the current policy at the current terms and conditions for the period of time needed to equal the 60 day time period required to provide notice of intention to renew by this subsection (b). The increase in premium shall be the renewal premium based on the known exposure as of the date of the quotation compared to the premium as of the last day of coverage for the current year's policy, annualized. The premium on the renewal policy may be subsequently amended to reflect any change in exposure or reinsurance costs not considered in the quotation.
    (c) A company that has failed to provide notice of intention to nonrenew under subsection (a) of this Section and has failed to provide notice of intention to renew as prescribed under subsection (b) of this Section must renew the expiring policy under the same terms and conditions for an additional year or until the effective date of any similar insurance is procured by the insured, whichever is earlier. The company may increase the renewal premium. However, such increase must be less than 30% of the expiring term's premium and notice of such increase must be delivered to the named insured on or before the date of expiration of the current policy period.
    (d) Under subsection (a), the company shall maintain proof of mailing of the notice of intention not to renew to the named insured on one of the following forms: a recognized U.S. Post Office form or a form acceptable to the U.S. Post Office or other commercial mail delivery service. Under subsections (b) and (c), proof of mailing or proof of receipt of the notice of intention to renew to the named insured may be proven by a sworn affidavit by the company as to the usual and customary business practices of mailing notice pursuant to this Section or may be proven consistent with Illinois Supreme Court Rule 236. For all notice requirements under this Section, notice shall also be sent to the named insured's producer, if known, or the producer of record. Notification shall also be sent to the mortgagee or lien holder listed on the policy.
    (e) Renewal of a policy does not constitute a waiver or estoppel with respect to grounds for cancellation that existed before the effective date of such renewal.
    (f) For purposes of this Section, the named insured's producer, if known, or the producer of record and the mortgagee or lien holder may opt to accept notification electronically.
(Source: P.A. 100-475, eff. 1-1-18.)

    (215 ILCS 5/143.18) (from Ch. 73, par. 755.18)
    Sec. 143.18. Liability of Company or Agents Regarding Statements Made In Notices Or Information. There shall be no liability on the part of and no cause of action of any nature shall arise against any company, its authorized representative, its agents, its employees, or any firm, person or corporation furnishing to the company information as to reasons for cancellation, or nonrenewal, for any statement made by any of them in any written notice of cancellation or nonrenewal, or any other communications, oral or written, specifying the reasons for cancellation or nonrenewal, or for the providing of information pertaining thereto.
(Source: P.A. 79-686.)

    (215 ILCS 5/143.19) (from Ch. 73, par. 755.19)
    Sec. 143.19. Cancellation of automobile insurance policy; grounds. After a policy of automobile insurance as defined in Section 143.13(a) has been effective for 60 days, or if such policy is a renewal policy, the insurer shall not exercise its option to cancel such policy except for one or more of the following reasons:
        a. Nonpayment of premium;
        b. The policy was obtained through a material
    
misrepresentation;
        c. Any insured violated any of the terms and
    
conditions of the policy;
        d. The named insured failed to disclose fully his
    
motor vehicle crashes and moving traffic violations for the preceding 36 months if called for in the application;
        e. Any insured made a false or fraudulent claim or
    
knowingly aided or abetted another in the presentation of such a claim;
        f. The named insured or any other operator who either
    
resides in the same household or customarily operates an automobile insured under such policy:
            1. has, within the 12 months prior to the notice
        
of cancellation, had his driver's license under suspension or revocation;
            2. is or becomes subject to epilepsy or heart
        
attacks, and such individual does not produce a certificate from a physician testifying to his unqualified ability to operate a motor vehicle safely;
            3. has a crash record, conviction record
        
(criminal or traffic), physical, or mental condition which is such that his operation of an automobile might endanger the public safety;
            4. has, within the 36 months prior to the notice
        
of cancellation, been addicted to the use of narcotics or other drugs; or
            5. has been convicted, or had pretrial release
        
revoked, during the 36 months immediately preceding the notice of cancellation, for any felony, criminal negligence resulting in death, homicide or assault arising out of the operation of a motor vehicle, operating a motor vehicle while in an intoxicated condition or while under the influence of drugs, being intoxicated while in, or about, an automobile or while having custody of an automobile, leaving the scene of a crash without stopping to report, theft or unlawful taking of a motor vehicle, making false statements in an application for an operator's or chauffeur's license or has been convicted or pretrial release has been revoked for 3 or more violations within the 12 months immediately preceding the notice of cancellation, of any law, ordinance, or regulation limiting the speed of motor vehicles or any of the provisions of the motor vehicle laws of any state, violation of which constitutes a misdemeanor, whether or not the violations were repetitions of the same offense or different offenses;
        g. The insured automobile is:
            1. so mechanically defective that its operation
        
might endanger public safety;
            2. used in carrying passengers for hire or
        
compensation (the use of an automobile for a car pool shall not be considered use of an automobile for hire or compensation);
            3. used in the business of transportation of
        
flammables or explosives;
            4. an authorized emergency vehicle;
            5. changed in shape or condition during the
        
policy period so as to increase the risk substantially; or
            6. subject to an inspection law and has not been
        
inspected or, if inspected, has failed to qualify.
    Nothing in this Section shall apply to nonrenewal.
(Source: P.A. 101-652, eff. 1-1-23; 102-982, eff. 7-1-23; 102-1104, eff. 1-1-23.)

    (215 ILCS 5/143.19.1) (from Ch. 73, par. 755.19.1)
    Sec. 143.19.1. Limits on exercise of right of nonrenewal. After a policy of automobile insurance, as defined in Section 143.13, has been effective or renewed for 5 or more years, the company shall not exercise its right of non-renewal unless:
        a. The policy was obtained through a material
    
misrepresentation; or
        b. Any insured violated any of the terms and
    
conditions of the policy; or
        c. The named insured failed to disclose fully his
    
motor vehicle crashes and moving traffic violations for the preceding 36 months, if such information is called for in the application; or
        d. Any insured made a false or fraudulent claim or
    
knowingly aided or abetted another in the presentation of such a claim; or
        e. The named insured or any other operator who either
    
resides in the same household or customarily operates an automobile insured under such a policy:
            1. Has, within the 12 months prior to the notice
        
of non-renewal had his drivers license under suspension or revocation; or
            2. Is or becomes subject to epilepsy or heart
        
attacks, and such individual does not produce a certificate from a physician testifying to his unqualified ability to operate a motor vehicle safely; or
            3. Has a crash record, conviction record
        
(criminal or traffic), or a physical or mental condition which is such that his operation of an automobile might endanger the public safety; or
            4. Has, within the 36 months prior to the notice
        
of non-renewal, been addicted to the use of narcotics or other drugs; or
            5. Has been convicted or pretrial release has
        
been revoked, during the 36 months immediately preceding the notice of non-renewal, for any felony, criminal negligence resulting in death, homicide or assault arising out of the operation of a motor vehicle, operating a motor vehicle while in an intoxicated condition or while under the influence of drugs, being intoxicated while in or about an automobile or while having custody of an automobile, leaving the scene of a crash without stopping to report, theft or unlawful taking of a motor vehicle, making false statements in an application for an operators or chauffeurs license, or has been convicted or pretrial release has been revoked for 3 or more violations within the 12 months immediately preceding the notice of non-renewal, of any law, ordinance or regulation limiting the speed of motor vehicles or any of the provisions of the motor vehicle laws of any state, violation of which constitutes a misdemeanor, whether or not the violations were repetitions of the same offense or different offenses; or
        f. The insured automobile is:
            1. So mechanically defective that its operation
        
might endanger public safety; or
            2. Used in carrying passengers for hire or
        
compensation (the use of an automobile for a car pool shall not be considered use of an automobile for hire or compensation); or
            3. Used in the business of transportation of
        
flammables or explosives; or
            4. An authorized emergency vehicle; or
            5. Changed in shape or condition during the
        
policy period so as to increase the risk substantially; or
            6. Subject to an inspection law and it has not
        
been inspected or, if inspected, has failed to qualify; or
        g. The notice of the intention not to renew is mailed
    
to the insured at least 60 days before the date of nonrenewal as provided in Section 143.17.
(Source: P.A. 101-652, eff. 1-1-23; 102-982, eff. 7-1-23.)

    (215 ILCS 5/143.19.2)
    Sec. 143.19.2. Volunteer driver protection.
    (a) For the purpose of this Section, "volunteer driver" means a person who transports by vehicle individuals or goods without compensation above reimbursement for expenses, where the driving services are performed for a nationally affiliated charitable nonprofit organization operating in Area Agencies on Aging areas number 3 or 12, as designated by the Department on Aging, that allows older individuals to transfer their automobiles to the organization in exchange for personal transportation services.
    (b) An insurer may not refuse to issue vehicle insurance to a person solely because the applicant is a volunteer driver. An insurer may not impose a surcharge or otherwise increase the rate for a vehicle policy solely on the basis that the named insured or any member of the insured's household or a person who customarily operates the insured's vehicle is a volunteer driver. This Section shall not prohibit an insurer from taking any actions upon factors other than the volunteer status of the insured driver.
(Source: P.A. 97-285, eff. 8-9-11.)

    (215 ILCS 5/143.19.3)
    Sec. 143.19.3. Prohibition of rate increase for persons involved in emergency use of vehicles.
    (a) No insurer authorized to transact or transacting business in this State, or controlling or controlled by or under common control by or with an insurer authorized to transact or transacting business in this State, that sells a personal policy of automobile insurance in this State shall increase the policy premium, cancel the policy, or refuse to renew the policy solely because the insured or any other person who customarily operates an automobile covered by the policy has been involved in a crash while operating an automobile in response to an emergency when the insured was responding to a call to duty as a volunteer EMS provider, as defined in Section 1-220 of the Illinois Vehicle Code.
    (b) The provisions of subsection (a) also apply to all personal umbrella policies.
(Source: P.A. 102-982, eff. 7-1-23.)

    (215 ILCS 5/143.19a) (from Ch. 73, par. 755.19a)
    Sec. 143.19a. No policy of insurance as defined in subsection a. of Section 143.13 of this Act may be cancelled where the sole basis for such cancellation is the payment by the insurance company of a claim or claims against such policy.
(Source: P.A. 80-1127.)

    (215 ILCS 5/143.19b) (from Ch. 73, par. 755.19b)
    Sec. 143.19b. No policy of insurance as defined in subsection (a) of Section 143.13 of this Code may be nonrenewed where the sole basis for nonrenewal was the reporting of a claim or claims against such policy and such claim or claims were closed without payment.
(Source: P.A. 86-437.)

    (215 ILCS 5/143.20) (from Ch. 73, par. 755.20)
    Sec. 143.20. Notice to Insured as to Eligibility of Illinois Automobile Insurance Plan.
    When a policy of automobile insurance is cancelled other than for nonpayment of premium or in the event of the renewal of a policy of automobile insurance to which Section 143.17 applies, the company shall notify the named insured of his possible eligibility for insurance through the Illinois Automobile Insurance Plan. Such notice shall accompany or be included in the notice of cancellation or in the notice of intent not to renew.
(Source: P.A. 80-1136.)

    (215 ILCS 5/143.20a) (from Ch. 73, par. 755.20a)
    Sec. 143.20a. Cancellation of Fire and Marine Policies. (1) Policies covering property, except policies described in subsection (b) of Section 143.13, of this Code, issued for the kinds of business enumerated in Class 3 of Section 4 of this Code may be cancelled 10 days following receipt of written notice by the named insureds if the insured property is found to consist of one or more of the following:
    (a) Buildings to which, following a fire loss, permanent repairs have not commenced within 60 days after satisfactory adjustment of loss, unless such delay is a direct result of a labor dispute or weather conditions.
    (b) Buildings which have been unoccupied 60 consecutive days, except buildings which have a seasonal occupancy and buildings which are undergoing construction, repair or reconstruction and are properly secured against unauthorized entry.
    (c) Buildings on which, because of their physical condition, there is an outstanding order to vacate, an outstanding demolition order, or which have been declared unsafe in accordance with applicable law.
    (d) Buildings on which heat, water, sewer service or public lighting have not been connected for 30 consecutive days or more.
    (2) All notices of cancellation under this Section shall be sent by certified mail and regular mail to the address of record of the named insureds.
    (3) All cancellations made pursuant to this Section shall be on a pro rata basis.
(Source: P.A. 103-426, eff. 8-4-23.)

    (215 ILCS 5/143.21) (from Ch. 73, par. 755.21)
    Sec. 143.21. Cancellation of Fire and Extended Coverage Policy - Grounds. After a policy of fire and extended coverage insurance, as defined in paragraph (b) of Section 143.13, has been effective for 60 days, or if such policy is a renewal policy, the company shall not exercise its right to cancel except for one or more of the following reasons:
    a. For nonpayment of premium;
    b. When a policy was obtained by misrepresentation or fraud; or
    c. For any act which measurably increases the risk originally accepted.
(Source: P.A. 86-437.)

    (215 ILCS 5/143.21.1) (from Ch. 73, par. 755.21.1)
    Sec. 143.21.1. After a policy of fire and extended coverage, as defined in Section 143.13, has been effective or renewed for 5 or more years, the company shall not exercise its right of non-renewal unless:
    1. The policy was obtained by misrepresentation or fraud; or
    2. The risk originally accepted has measurably increased; or
    3. The insured has received 60 days notice of the intention of the company not to renew as provided in Section 143.17.
(Source: P.A. 80-1126.)

    (215 ILCS 5/143.21a) (from Ch. 73, par. 755.21a)
    Sec. 143.21a. Nonrenewal of Fire and Extended Coverage Policy - Grounds. A policy of fire and extended coverage insurance, as defined in subsection (b) of Section 143.13, may not be nonrenewed for any of the following reasons:
        (a) age of property,
        (b) location of property,
        (c) age, sex, race, color, ancestry, marital status,
    
or occupation of occupants.
(Source: P.A. 91-357, eff. 7-29-99.)

    (215 ILCS 5/143.21b) (from Ch. 73, par. 755.21b)
    Sec. 143.21b. No policy of insurance as defined in subsection b. of Section 143.13 of this Act may be cancelled where the sole basis for such cancellation is the payment by the insurance company of a claim or claims against such policy.
(Source: P.A. 80-1364.)

    (215 ILCS 5/143.21c) (from Ch. 73, par. 755.21c)
    Sec. 143.21c. Earthquake insurance; notice. In response to all applications for homeowners insurance, pursuant to subsection (b) of Section 143.13 of this Act, received by the insurance company for coverage on property located in the New Madrid Seismic Zone, as defined by the United States Geological Survey in Illinois, susceptible to Modified Mercalli intensity VII or greater damage, information shall be provided by the insurance company to the applicant regarding the availability of insurance for loss caused by earthquake.
(Source: P.A. 86-1197; 87-322.)

    (215 ILCS 5/143.21d)
    Sec. 143.21d. Sewer backup and sump pump overflow coverage; notice.
    (a) In response to all applications for homeowners insurance, as defined in paragraph (2) of Section 523, received by an insurance company, the insurance company shall provide the applicant information regarding the availability of coverage for loss caused by a sewer backup or overflow from a sump pump, including the coverage limits and costs thereof.
    (b) At least 30 days prior to each renewal of any policy of homeowners insurance, as defined in paragraph (2) of Section 523, the insurance company shall provide the insured with information regarding the insured's existing coverage and available coverage for loss caused by a sewer backup or overflow from a sump pump, including the coverage limits and costs thereof.
(Source: P.A. 103-858, eff. 1-1-25.)

    (215 ILCS 5/143.22) (from Ch. 73, par. 755.22)
    Sec. 143.22. Notice to Insured as to Eligibility of Illinois Fair Plan Association. When a policy containing fire and extended coverage insurance is cancelled or nonrenewed other than for nonpayment of premium or evidence of incendiarism and if the location of the insured property is within the State of Illinois the company shall notify the named insured of his eligibility for the FAIR Plan and shall explain the procedure to make application to the FAIR Plan. Such notice shall accompany or be included in the notice of cancellation or the notice of intent not to renew.
(Source: P.A. 86-437.)

    (215 ILCS 5/143.23) (from Ch. 73, par. 755.23)
    Sec. 143.23. Cancellation and Nonrenewal Policies - Hearing. A named insured who wishes to appeal the reasons for cancellation or nonrenewal pursuant to Sections 143.16a and 143.19 through 143.24, shall at least 20 days prior to the effective date of cancellation or nonrenewal, mail or deliver to the Director of Insurance a written request for a hearing which shall clearly state the basis for the appeal. This Section does not apply to cancellation in the case of nonpayment of premium. The notice of cancellation or nonrenewal to which this Section applies shall advise the named insured of his right to appeal and the procedure to follow for such appeal.
    Within 10 days after receipt of request for a hearing and upon 10 days notice to the parties, the Director shall call a hearing. Within 20 days of conclusion of the hearing, the Director shall issue his written findings to the parties. The policy will remain in force until such time as the Director has given his findings. If the Director finds for the named insured, he shall order the insurer to rescind its notice of cancellation, or in the case of a nonrenewal order the notice of nonrenewal withdrawn. If the Director finds for the Company he shall order that the cancellation or nonrenewal be effective at least 30 days from the date of his order. The company is entitled to a premium for any extension of coverage and such extension may be contingent upon the payment of the premium.
    Costs of the hearing may be assessed against the losing party but shall not exceed $100.
(Source: P.A. 86-437; 87-757.)

    (215 ILCS 5/143.23a) (from Ch. 73, par. 755.23a)
    Sec. 143.23a. When any person has filed a complaint with the Director alleging cancellation, non-renewal or refusal to issue a fire and extended coverage policy, as defined in Section 143.13 of this Code, by any insurer, such person, upon written request to the insurer, to which the insurer shall respond within 21 days, shall have access to the complete file of such insurer pertaining to such person's application or policy. There shall be no liability on the part of, and no cause of action shall rise against, any insurer or authorized representative, or its agents or employees, or the director or his authorized representative for any statement made by them or any information contained in the files revealed in compliance with the provisions of this Section.
(Source: P.A. 80-1374.)

    (215 ILCS 5/143.24) (from Ch. 73, par. 755.24)
    Sec. 143.24. Limited Nonrenewal of Automobile Insurance Policy. A policy of automobile insurance, as defined in subsection (a) of Section 143.13, may not be nonrenewed for any of the following reasons:
    a. Age;
    b. Sex;
    c. Race;
    d. Color;
    e. Creed;
    f. Ancestry;
    g. Occupation;
    h. Marital Status;
    i. Employer of the insured;
    j. Physical disability as defined in Section 143.24a of this Act.
(Source: P.A. 99-143, eff. 7-27-15.)

    (215 ILCS 5/143.24a) (from Ch. 73, par. 755.24a)
    Sec. 143.24a. (a) No insurer, licensed to issue a policy of automobile insurance, as defined in subsection (a) of Section 143.13, shall fail or refuse to accept an application from a person with a physical disability for such insurance, refuse to issue such insurance to an applicant with a physical disability therefor solely because of a physical disability, or issue or cancel such insurance under conditions less favorable to persons with physical disabilities than persons without physical disabilities; nor shall a physical disability itself constitute a condition or risk for which a higher premium may be required of a person with a physical disability for such insurance.
    (b) As used in this Section, "physical disability" refers only to an impairment of physical ability because of amputation or loss of function which impairment has been compensated for, when necessary, by vehicle equipment adaptation or modification; or an impairment of hearing which impairment has been compensated for, when necessary, either by sensory equipment adaptation or modification, or an impairment of speech; provided, that the insurer may require an applicant with a physical disability for such insurance on the renewal of such insurance to furnish proof that he or she has qualified for a new or renewed drivers license since the occurrence of the disabling condition.
(Source: P.A. 99-143, eff. 7-27-15.)

    (215 ILCS 5/143.24b) (from Ch. 73, par. 755.24b)
    Sec. 143.24b. Any insurer insuring any person or entity against damages arising out of a vehicular crash shall disclose the dollar amount of liability coverage under the insured's personal private passenger automobile liability insurance policy upon receipt of the following: (a) a certified letter from a claimant or any attorney purporting to represent any claimant which requests such disclosure and (b) a brief description of the nature and extent of the injuries, accompanied by a statement of the amount of medical bills incurred to date and copies of medical records. The disclosure shall be confidential and available only to the claimant, his attorney and personnel in the office of the attorney entitled to access to the claimant's files. The insurer shall forward the information to the party requesting it by certified mail, return receipt requested, within 30 days of receipt of the request.
(Source: P.A. 102-982, eff. 7-1-23.)

    (215 ILCS 5/143.24c)
    Sec. 143.24c. Hate crimes; coverage refusal.
    (a) This Section applies to policies of insurance if the insured or proposed insured is (1) an individual, (2) a religious organization described in clause (i) of subparagraph (A) of paragraph (1) of subsection (b) of Section 170 of Title 26 of the United States Code, (3) an educational organization described in clause (ii) of subparagraph (A) of paragraph (1) of subsection (b) of Section 170 of Title 26 of the United States Code, or (4) any other nonprofit organization described in clause (vi) of subparagraph (A) of paragraph (1) of subsection (b) of Section 170 of Title 26 of the United States Code that is organized and operated for religious, charitable, or educational purposes.
    (b) An insurer issuing policies subject to this Section may not cancel, refuse to issue, or refuse to renew the policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.
    (c) As it relates to this Section, if determined by a law enforcement agency, a "hate crime" may include any of the following:
        (1) By force or threat of force, willfully injuring,
    
intimidating, interfering with, oppressing, or threatening any other person in the free exercise or enjoyment of any right or privilege secured to him or her by the Constitution or laws of this State or by the Constitution or laws of the United States because of the other person's race, color, religion, ancestry, national origin, disability, gender, or sexual orientation or because he or she perceives that the other person has one or more of those characteristics. This offense, however, does not include speech alone, except upon a showing that the speech itself threatened violence against a specific person or group of persons and that the defendant had the apparent ability to carry out the threat.
        (2) Knowingly defacing, damaging, or destroying the
    
real or personal property of any other person for the purpose of intimidating or interfering with the free exercise or enjoyment of any right or privilege secured to the other person by the Constitution or laws of this State or by the Constitution or laws of the United States because of the other person's race, color, religion, ancestry, national origin, disability, gender, or sexual orientation or because he or she perceives that the other person has one or more of those characteristics.
    (d) Nothing in this Section prevents an insurer subject to this Section from taking any of the actions specified in subsection (b) on the basis of criteria not otherwise made invalid by this Section or any other law or rule.
(Source: P.A. 92-669, eff. 1-1-03.)

    (215 ILCS 5/143.24d)
    Sec. 143.24d. (Repealed).
(Source: P.A. 98-864, eff. 1-1-15. Repealed by P.A. 100-439, eff. 8-25-17.)

    (215 ILCS 5/143.25) (from Ch. 73, par. 755.25)
    Sec. 143.25. The Director of insurance may order any of the following if it is determined to be in the public interest:
    (a) Some or all companies issuing policies of insurance as defined in subsections (a) and (b) of Section 143.13 annually disclose by postal zip code area the number of policies applied for, the number of policies issued including renewals, the number of policies cancelled or nonrenewed for some or all areas of the State, and loss data.
    (b) The Illinois FAIR Plan created by Article XXXIII of the Code annually disclose by postal zip code area the number of policies it has written including renewals and cancellations for some or all areas of the State.
    (c) The Illinois FAIR Plan created by Article XXXIII annually disclose by classification the earned premiums and losses of the Plan.
(Source: P.A. 81-217.)

    (215 ILCS 5/143.25a) (from Ch. 73, par. 755.25a)
    Sec. 143.25a. Prior to the first renewal of any policy of automobile insurance as defined in subsection (a) of Section 143.13 of this Code, an insurance company shall notify an individual planning to purchase such renewal policy of the availability of higher deductibles for collision and comprehensive coverage and that a premium savings could result if the higher deductibles were purchased.
(Source: P.A. 86-783.)

    (215 ILCS 5/143.26) (from Ch. 73, par. 755.26)
    Sec. 143.26. No company issuing policies of automobile insurance, as defined in Section 143.13 of this Code, in this State, and no officer, director, agent, clerk, employee or broker of such company shall cancel or refuse to issue or renew a policy of automobile insurance to any applicant for such insurance solely on the grounds that an agent or broker for such company is not located in geographical proximity to the residence of the applicant.
(Source: P.A. 80-1369.)

    (215 ILCS 5/143.26a) (from Ch. 73, par. 755.26a)
    Sec. 143.26a. Automobile insurance sales requirements.
    (a) Every company authorized to issue policies of automobile insurance as defined in Section 143.13 must, upon request, provide the names and addresses of its authorized producers reasonably determined to be located nearest to the residence of the person making the request.
    (b) No company or authorized licensed producer may refuse to accept an application for automobile insurance from any applicant solely on the grounds that the applicant is eligible for placement only under the Illinois Automobile Insurance Plan.
(Source: P.A. 86-1408.)

    (215 ILCS 5/143.27) (from Ch. 73, par. 755.27)
    Sec. 143.27. No insurance company may give to any named insured any notice of cancellation or nonrenewal of a policy of fire and extended coverage insurance, as defined in subsection (b) of Section 143.13, covering property which is capable of being rehabilitated, without allowing the named insured a reasonable period of time in which to repair defects in the insured property or relevant portion thereof, to an extent reasonably sufficient to facilitate continued coverage thereon. The time reasonably allowable therefor (which in no event shall exceed ninety days) and the degree of sufficiency of such rehabilitative efforts which insurance companies shall accept, may be determined by a certificate from a licensed contractor or architect and such rehabilitative efforts shall be in compliance with local municipal building codes. The notice of need for repair shall be from the insurance company, which may be sent to the insured at any time during the policy term, and which notice shall commence the time period established under this Section.
(Source: P.A. 81-857.)

    (215 ILCS 5/143.28) (from Ch. 73, par. 755.28)
    Sec. 143.28. The rates and premium charges for all policies of automobile insurance, as described in sub-section (a) of Section 143.13 of this Code, shall include appropriate reductions for insured automobiles which are equipped with anti-theft mechanisms or devices approved by the Director. To implement the provisions of this Section, the Director shall promulgate rules and regulations.
(Source: P.A. 91-798, eff. 7-9-00; 92-125, eff. 7-20-01.)

    (215 ILCS 5/143.29) (from Ch. 73, par. 755.29)
    Sec. 143.29. (a) The rates and premium charges for every policy of automobile liability insurance shall include appropriate reductions as determined by the insurer for any insured over age 55 upon successful completion of the National Safety Council's Defensive Driving Course or a motor vehicle crash prevention course, including an eLearning course, that is found by the Secretary of State to meet or exceed the standards of the National Safety Council's Defensive Driving Course's 8 hour classroom safety instruction program.
    (b) The premium reduction shall remain in effect for the qualifying insured for a period of 3 years from the date of successful completion of the crash prevention course, except that the insurer may elect to apply the premium reduction beginning either with the last effective date of the policy or the next renewal date of the policy if the reduction will result in a savings as though applied over a full 3 year period. An insured who has completed the course of instruction prior to July 1, 1982 shall receive the insurance premium reduction for only the period remaining within the 3 years from course completion. The period of premium reduction for an insured who has repeated the crash prevention course shall be based upon the last such course the insured has successfully completed.
    (c) Any crash prevention course approved by the Secretary of State under this Section shall be taught by an instructor approved by the Secretary of State, shall consist of at least 8 hours of classroom or eLearning equivalent instruction and shall provide for a certificate of completion. Records of certification of course completion shall be maintained in a manner acceptable to the Secretary of State.
    (d) Any person claiming eligibility for a rate or premium reduction shall be responsible for providing to his insurance company the information necessary to determine eligibility.
    (e) This Section shall not apply to:
        (1) any motor vehicle which is a part of a fleet or
    
is used for commercial purposes unless there is a regularly assigned principal operator.
        (2) any motor vehicle subject to a higher premium
    
rate because of the insured's previous motor vehicle claim experience or to any motor vehicle whose principal operator has been convicted of violating any of the motor vehicle laws of this State, until that operator shall have maintained a driving record free of crashes and moving violations for a continuous one year period, in which case such driver shall be eligible for a reduction the remaining 2 years of the 3 year period.
        (3) any motor vehicle whose principal operator has
    
had his drivers license revoked or suspended for any reason by the Secretary of State within the previous 36 months.
        (4) any policy of group automobile insurance under
    
which premiums are broadly averaged for the group rather than determined individually.
(Source: P.A. 102-397, eff. 1-1-22; 102-982, eff. 7-1-23.)

    (215 ILCS 5/143.30) (from Ch. 73, par. 755.30)
    Sec. 143.30. Selection of glass replacement or glass repair companies.
    With reference to every policy of automobile insurance as defined in Section 143.13(a):
    (a) An automobile insurer authorized to do business in this State shall not unreasonably restrict access to automobile glass repair or replacement facilities by its policyholders.
    (b) An automobile insurer may enter into an agreement or agreements with automobile glass repair or replacement facilities for the purpose of containing the cost of automobile glass repair or replacement claims.
    (c) An insurer, or a producer acting on its behalf, shall disclose to an insured, either orally or in writing, that the insured may freely choose an automobile glass repair or replacement facility.
    (d) No such insurance company, producer, or adjuster may engage in any act or practice of intimidation, coercion, or threat against any insured person to use a particular facility to provide such services.
    (e) If a policyholder selects an automobile glass repair or replacement facility, the insurer shall provide payment to the facility based on a competitive price, as established by that insurer through competitive bids or market surveys to determine a fair and reasonable market price for similar services. Reasonable deviation from this market price is allowed based on the facts in each case.
(Source: P.A. 87-1110.)

    (215 ILCS 5/143.31)
    Sec. 143.31. Uniform medical claim and billing forms.
    (a) The Director shall prescribe by rule, after consultation with providers of health care or treatment, insurers, hospital, medical, and dental service corporations, and other prepayment organizations, insurance claim and billing forms that the Director determines will provide for uniformity and simplicity in insurance claims handling. The claim forms shall include, but need not be limited to, information regarding the medical diagnosis, treatment, and prognosis of the patient, together with the details of charges incident to the providing of care, treatment, or services, sufficient for the purpose of meeting the proof requirements of an insurance policy or a hospital, medical, or dental service contract.
    (b) An insurer or a provider of health care treatment may not refuse to accept a claim or bill submitted on duly promulgated uniform claim and billing forms. An insurer, however, may accept claims and bills submitted on any other form.
    (c) After receipt and adjudication or readjudication of any claim or bill with all required documentation from an insured or provider, or a notification under 42 U.S.C. 300gg-136, an accident and health insurer shall send explanation of benefits paid statements or claims summary statements to an insured in a format and written in a manner that promotes understanding by the insured by setting forth all of the following:
        (1) The total dollar amount submitted to the insurer
    
for payment.
        (2) Any reduction in the amount paid due to the
    
application of any co-payment, coinsurance, or deductible, along with an explanation of the amount of the co-payment, coinsurance, or deductible applied under the insured's policy.
        (3) Any reduction in the amount paid due to the
    
application of any other policy limitation, penalty, or exclusion set forth in the insured's policy, along with an explanation thereof.
        (4) The total dollar amount paid.
        (5) The total dollar amount remaining unpaid.
        (6) If applicable under 42 U.S.C. 300gg-111 or 42
    
U.S.C. 300gg-115, other information required for any explanation of benefits described in either of those Sections.
    (d) The Director may issue an order directing an accident and health insurer to comply with subsection (c).
    (e) An accident and health insurer does not violate subsection (c) by using a document that the accident and health insurer is required to use by the federal government or the State.
    (f) The adoption of uniform claim forms and uniform billing forms by the Director under this Section does not preclude an insurer, hospital, medical, or dental service corporation, or other prepayment organization from obtaining any necessary additional information regarding a claim from the claimant, provider of health care or treatment, or certifier of coverage, as may be required.
    (g) On and after January 1, 1996 when billing insurers or otherwise filing insurance claims with insurers subject to this Section, providers of health care or treatment, medical services, dental services, pharmaceutical services, or medical equipment must use the uniform claim and billing forms adopted by the Director under this Section.
(Source: P.A. 103-656, eff. 1-1-25.)

    (215 ILCS 5/143.32)
    Sec. 143.32. Replacement of child restraint systems. A policy of automobile insurance, as defined in Section 143.13, that is amended, delivered, issued, or renewed after the effective date of this amendatory Act of the 91st General Assembly must include coverage for replacement of a child restraint system that was in use by a child during a crash to which coverage is applicable. As used in this Section, "child restraint system" has the meaning given that term in the Child Passenger Restraint Act.
(Source: P.A. 102-982, eff. 7-1-23.)

    (215 ILCS 5/143.33)
    Sec. 143.33. Electronic posting of policies.
    (a) Policies and endorsements used by a company for transacting insurance as classified in Class 2 and Class 3 of Section 4 of this Code that do not contain personally identifiable information may be mailed, issued, delivered, or posted on the insurer's Internet website. If the insurer elects to post the insurance policies and endorsements on its Internet website in lieu of mailing, issuing, or delivering them to the insured, then the insurer must comply with all of the following conditions:
        (1) The policy and endorsements must be easily
    
accessible to the insured and the producer of record and remain that way for as long as the policy is in force;
        (2) After the expiration of the policy, the insurer
    
must archive its expired policies and endorsements for the longer of 5 years or other period required by law, and make them available upon request;
        (3) The policies and endorsements must be posted in a
    
manner that enables the insured and the producer of record to print and save the policy and endorsements using programs or applications that are widely available on the Internet and free to use;
        (4) At the time of issuance of the original policy
    
and any renewals of that policy, the insurer provides to the insured in the manner it customarily provides declarations pages to the insured, and to the producer of record, the following information clearly displayed in or simultaneously with a declarations page:
            (A) a description of the exact policy and
        
endorsement forms purchased by the insured;
            (B) a method by which the insured may obtain from
        
the insurer, upon request and without charge, a paper copy of their policy and endorsements; and
            (C) the Internet address where their policy and
        
endorsements are posted.
        (5) The insurer provides to the insured in the manner
    
it customarily provides declarations pages to the insured, and to the producer of record, notice of any changes to the forms or endorsements; the insured's right to obtain from the insurer, upon request and without charge, a paper copy of these forms or endorsements; and the Internet address where these forms or endorsements are posted.
    (b) Nothing in this Section shall prevent an insurer that posts its policies and endorsements electronically in accordance with this Section from offering a discount to an insured who elects to receive notices and documents electronically in accordance with the provisions of the federal Electronic Signatures in Global and National Commerce Act.
    (c) Nothing in this Section affects the timing or content of any disclosure or other document required to be provided or made available to any insured under any statute, rule, regulation, or rule of law.
(Source: P.A. 98-521, eff. 8-23-13.)

    (215 ILCS 5/143.34)
    Sec. 143.34. Electronic notices and documents.
    (a) As used in this Section:
    "Delivered by electronic means" includes:
        (1) delivery to an electronic mail address at which a
    
party has consented to receive notices or documents; or
        (2) posting on an electronic network or site
    
accessible via the Internet, mobile application, computer, mobile device, tablet, or any other electronic device, together with separate notice of the posting, which shall be provided by electronic mail to the address at which the party has consented to receive notice or by any other delivery method that has been consented to by the party.
    "Party" means any recipient of any notice or document required as part of an insurance transaction, including, but not limited to, an applicant, an insured, a policyholder, or an annuity contract holder.
    (b) Subject to the requirements of this Section, any notice to a party or any other document required under applicable law in an insurance transaction or that is to serve as evidence of insurance coverage may be delivered, stored, and presented by electronic means so long as it meets the requirements of the Uniform Electronic Transactions Act.
    (c) Delivery of a notice or document in accordance with this Section shall be considered equivalent to any delivery method required under applicable law, including delivery by first class mail; first class mail, postage prepaid; certified mail; certificate of mail; or certificate of mailing.
    (d) A notice or document may be delivered by electronic means by an insurer to a party under this Section if:
        (1) the party has affirmatively consented to that
    
method of delivery and has not withdrawn the consent;
        (2) the party, before giving consent, is provided
    
with a clear and conspicuous statement informing the party of:
            (A) the right of the party to withdraw consent to
        
have a notice or document delivered by electronic means, at any time, and any conditions or consequences imposed in the event consent is withdrawn;
            (B) the types of notices and documents to which
        
the party's consent would apply;
            (C) the right of a party to have a notice or
        
document delivered in paper form; and
            (D) the procedures a party must follow to
        
withdraw consent to have a notice or document delivered by electronic means and to update the party's electronic mail address;
        (3) the party:
            (A) before giving consent, is provided with a
        
statement of the hardware and software requirements for access to, and retention of, a notice or document delivered by electronic means; and
            (B) consents electronically, or confirms consent
        
electronically, in a manner that reasonably demonstrates that the party can access information in the electronic form that will be used for notices or documents delivered by electronic means as to which the party has given consent; and
        (4) after consent of the party is given, the insurer,
    
in the event a change in the hardware or software requirements needed to access or retain a notice or document delivered by electronic means creates a material risk that the party will not be able to access or retain a subsequent notice or document to which the consent applies:
            (A) provides the party with a statement that
        
describes:
                (i) the revised hardware and software
            
requirements for access to and retention of a notice or document delivered by electronic means; and
                (ii) the right of the party to withdraw
            
consent without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and
            (B) complies with paragraph (2) of this
        
subsection (d).
    (e) Delivery of a notice or document in accordance with this Section does not affect requirements related to content or timing of any notice or document required under applicable law.
    (f) If a provision of this Section or applicable law requiring a notice or document to be provided to a party expressly requires verification or acknowledgment of receipt of the notice or document, the notice or document may be delivered by electronic means only if the method used provides for verification or acknowledgment of receipt.
    (g) The legal effectiveness, validity, or enforceability of any contract or policy of insurance executed by a party may not be denied solely because of the failure to obtain electronic consent or confirmation of consent of the party in accordance with subparagraph (B) of paragraph (3) of subsection (d) of this Section.
    (h) A withdrawal of consent by a party does not affect the legal effectiveness, validity, or enforceability of a notice or document delivered by electronic means to the party before the withdrawal of consent is effective.
    A withdrawal of consent by a party is effective within a reasonable period of time after receipt of the withdrawal by the insurer.
    Failure by an insurer to comply with paragraph (4) of subsection (d) of this Section and subsection (j) of this Section may be treated, at the election of the party, as a withdrawal of consent for purposes of this Section.
    (i) This Section does not apply to a notice or document delivered by an insurer in an electronic form before the effective date of this amendatory Act of the 99th General Assembly to a party who, before that date, has consented to receive notice or document in an electronic form otherwise allowed by law.
    (j) If the consent of a party to receive certain notices or documents in an electronic form is on file with an insurer before the effective date of this amendatory Act of the 99th General Assembly and, pursuant to this Section, an insurer intends to deliver additional notices or documents to the party in an electronic form, then prior to delivering such additional notices or documents electronically, the insurer shall:
            (1) provide the party with a statement that
        
describes:
                (A) the notices or documents that shall be
            
delivered by electronic means under this Section that were not previously delivered electronically; and
                (B) the party's right to withdraw consent to
            
have notices or documents delivered by electronic means without the imposition of any condition or consequence that was not disclosed at the time of initial consent; and
            (2) comply with paragraph (2) of subsection (d)
        
of this Section.
    (k) An insurer shall deliver a notice or document by any other delivery method permitted by law other than electronic means if:
        (1) the insurer attempts to deliver the notice or
    
document by electronic means and has a reasonable basis for believing that the notice or document has not been received by the party; or
        (2) the insurer becomes aware that the electronic
    
mail address provided by the party is no longer valid.
    (l) A producer shall not be subject to civil liability for any harm or injury that occurs as a result of a party's election to receive any notice or document by electronic means or by an insurer's failure to deliver a notice or document by electronic means unless the harm or injury is caused by the willful and wanton misconduct of the producer.
    (m) This Section shall not be construed to modify, limit, or supersede the provisions of the federal Electronic Signatures in Global and National Commerce Act, as amended.
    (n) Nothing in this Section shall prevent an insurer from posting on the insurer's Internet site any standard policy and any endorsements to such a policy that does not contain personally identifiable information, in accordance with Section 143.33 of this Code, in lieu of delivery to a policyholder, insured, or applicant for insurance by any other method.
(Source: P.A. 102-38, eff. 6-25-21.)

    (215 ILCS 5/143a)
    Sec. 143a. Uninsured and hit-and-run motor vehicle coverage.
    (1) No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle that is designed for use on public highways and that is either required to be registered in this State or is principally garaged in this State shall be renewed, delivered, or issued for delivery in this State unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in Section 7-203 of the Illinois Vehicle Code for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. Uninsured motor vehicle coverage does not apply to bodily injury, sickness, disease, or death resulting therefrom, of an insured while occupying a motor vehicle owned by, or furnished or available for the regular use of the insured, a resident spouse or resident relative, if that motor vehicle is not described in the policy under which a claim is made or is not a newly acquired or replacement motor vehicle covered under the terms of the policy. The limits for any coverage for any vehicle under the policy may not be aggregated with the limits for any similar coverage, whether provided by the same insurer or another insurer, applying to other motor vehicles, for purposes of determining the total limit of insurance coverage available for bodily injury or death suffered by a person in any one crash. No policy shall be renewed, delivered, or issued for delivery in this State unless it is provided therein that any dispute with respect to the coverage and the amount of damages shall be submitted for arbitration to the American Arbitration Association and be subject to its rules for the conduct of arbitration hearings as to all matters except medical opinions. As to medical opinions, if the amount of damages being sought is equal to or less than the amount provided for in Section 7-203 of the Illinois Vehicle Code, then the current American Arbitration Association Rules shall apply. If the amount being sought in an American Arbitration Association case exceeds that amount as set forth in Section 7-203 of the Illinois Vehicle Code, then the Rules of Evidence that apply in the circuit court for placing medical opinions into evidence shall govern. Alternatively, disputes with respect to damages and the coverage shall be determined in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the 2 arbitrators so named shall select a third arbitrator. If such arbitrators are not selected within 45 days from such request, either party may request that the arbitration be submitted to the American Arbitration Association. Any decision made by the arbitrators shall be binding for the amount of damages not exceeding $75,000 for bodily injury to or death of any one person, $150,000 for bodily injury to or death of 2 or more persons in any one motor vehicle crash, or the corresponding policy limits for bodily injury or death, whichever is less. All 3-person arbitration cases proceeding in accordance with any uninsured motorist coverage conducted in this State in which the claimant is only seeking monetary damages up to the limits set forth in Section 7-203 of the Illinois Vehicle Code shall be subject to the following rules:
        (A) If at least 60 days' written notice of the
    
intention to offer the following documents in evidence is given to every other party, accompanied by a copy of the document, a party may offer in evidence, without foundation or other proof:
            (1) bills, records, and reports of hospitals,
        
doctors, dentists, registered nurses, licensed practical nurses, physical therapists, and other healthcare providers;
            (2) bills for drugs, medical appliances, and
        
prostheses;
            (3) property repair bills or estimates, when
        
identified and itemized setting forth the charges for labor and material used or proposed for use in the repair of the property;
            (4) a report of the rate of earnings and time
        
lost from work or lost compensation prepared by an employer;
            (5) the written opinion of an opinion witness,
        
the deposition of a witness, and the statement of a witness that the witness would be allowed to express if testifying in person, if the opinion or statement is made by affidavit or by certification as provided in Section 1-109 of the Code of Civil Procedure;
            (6) any other document not specifically covered
        
by any of the foregoing provisions that is otherwise admissible under the rules of evidence.
        Any party receiving a notice under this paragraph (A)
    
may apply to the arbitrator or panel of arbitrators, as the case may be, for the issuance of a subpoena directed to the author or maker or custodian of the document that is the subject of the notice, requiring the person subpoenaed to produce copies of any additional documents as may be related to the subject matter of the document that is the subject of the notice. Any such subpoena shall be issued in substantially similar form and served by notice as provided by Illinois Supreme Court Rule 204(a)(4). Any such subpoena shall be returnable not less than 5 days before the arbitration hearing.
        (B) Notwithstanding the provisions of Supreme Court
    
Rule 213(g), a party who proposes to use a written opinion of an expert or opinion witness or the testimony of an expert or opinion witness at the hearing may do so provided a written notice of that intention is given to every other party not less than 60 days prior to the date of hearing, accompanied by a statement containing the identity of the witness, his or her qualifications, the subject matter, the basis of the witness's conclusions, and his or her opinion.
        (C) Any other party may subpoena the author or maker
    
of a document admissible under this subsection, at that party's expense, and examine the author or maker as if under cross-examination. The provisions of Section 2-1101 of the Code of Civil Procedure shall be applicable to arbitration hearings, and it shall be the duty of a party requesting the subpoena to modify the form to show that the appearance is set before an arbitration panel and to give the time and place set for the hearing.
        (D) The provisions of Section 2-1102 of the Code of
    
Civil Procedure shall be applicable to arbitration hearings under this subsection.
    (2) No policy insuring against loss resulting from liability imposed by law for property damage arising out of the ownership, maintenance, or use of a motor vehicle shall be renewed, delivered, or issued for delivery in this State with respect to any private passenger or recreational motor vehicle that is designed for use on public highways and that is either required to be registered in this State or is principally garaged in this State, unless coverage is made available in the amount of the actual cash value of the motor vehicle described in the policy or the corresponding policy limit for uninsured motor vehicle property damage coverage, whichever is less, subject to a maximum $250 deductible, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of property damage to the motor vehicle described in the policy.
    There shall be no liability imposed under the uninsured motorist property damage coverage required by this subsection if the owner or operator of the at-fault uninsured motor vehicle or hit-and-run motor vehicle cannot be identified. This subsection shall not apply to any policy which does not provide primary motor vehicle liability insurance for liabilities arising from the maintenance, operation, or use of a specifically insured motor vehicle.
    Each insurance company providing motor vehicle property damage liability insurance shall advise applicants of the availability of uninsured motor vehicle property damage coverage, the premium therefor, and provide a brief description of the coverage. That information need be given only once and shall not be required in any subsequent renewal, reinstatement or reissuance, substitute, amended, replacement or supplementary policy. No written rejection shall be required, and the absence of a premium payment for uninsured motor vehicle property damage shall constitute conclusive proof that the applicant or policyholder has elected not to accept uninsured motorist property damage coverage.
    An insurance company issuing uninsured motor vehicle property damage coverage may provide that:
        (i) Property damage losses recoverable thereunder
    
shall be limited to damages caused by the actual physical contact of an uninsured motor vehicle with the insured motor vehicle.
        (ii) There shall be no coverage for loss of use of
    
the insured motor vehicle and no coverage for loss or damage to personal property located in the insured motor vehicle.
        (iii) Any claim submitted shall include the name and
    
address of the owner of the at-fault uninsured motor vehicle, or a registration number and description of the vehicle, or any other available information to establish that there is no applicable motor vehicle property damage liability insurance.
    Any dispute with respect to the coverage and the amount of damages shall be submitted for arbitration to the American Arbitration Association and be subject to its rules for the conduct of arbitration hearings or for determination in the following manner: Upon the insured requesting arbitration, each party to the dispute shall select an arbitrator and the 2 arbitrators so named shall select a third arbitrator. If such arbitrators are not selected within 45 days from such request, either party may request that the arbitration be submitted to the American Arbitration Association. Any arbitration proceeding under this subsection seeking recovery for property damages shall be subject to the following rules:
        (A) If at least 60 days' written notice of the
    
intention to offer the following documents in evidence is given to every other party, accompanied by a copy of the document, a party may offer in evidence, without foundation or other proof:
            (1) property repair bills or estimates, when
        
identified and itemized setting forth the charges for labor and material used or proposed for use in the repair of the property;
            (2) the written opinion of an opinion witness,
        
the deposition of a witness, and the statement of a witness that the witness would be allowed to express if testifying in person, if the opinion or statement is made by affidavit or by certification as provided in Section 1-109 of the Code of Civil Procedure;
            (3) any other document not specifically covered
        
by any of the foregoing provisions that is otherwise admissible under the rules of evidence.
        Any party receiving a notice under this paragraph (A)
    
may apply to the arbitrator or panel of arbitrators, as the case may be, for the issuance of a subpoena directed to the author or maker or custodian of the document that is the subject of the notice, requiring the person subpoenaed to produce copies of any additional documents as may be related to the subject matter of the document that is the subject of the notice. Any such subpoena shall be issued in substantially similar form and served by notice as provided by Illinois Supreme Court Rule 204(a)(4). Any such subpoena shall be returnable not less than 5 days before the arbitration hearing.
        (B) Notwithstanding the provisions of Supreme Court
    
Rule 213(g), a party who proposes to use a written opinion of an expert or opinion witness or the testimony of an expert or opinion witness at the hearing may do so provided a written notice of that intention is given to every other party not less than 60 days prior to the date of hearing, accompanied by a statement containing the identity of the witness, his or her qualifications, the subject matter, the basis of the witness's conclusions, and his or her opinion.
        (C) Any other party may subpoena the author or maker
    
of a document admissible under this subsection, at that party's expense, and examine the author or maker as if under cross-examination. The provisions of Section 2-1101 of the Code of Civil Procedure shall be applicable to arbitration hearings, and it shall be the duty of a party requesting the subpoena to modify the form to show that the appearance is set before an arbitration panel and to give the time and place set for the hearing.
        (D) The provisions of Section 2-1102 of the Code of
    
Civil Procedure shall be applicable to arbitration hearings under this subsection.
    (3) For the purpose of the coverage, the term "uninsured motor vehicle" includes, subject to the terms and conditions of the coverage, a motor vehicle where on, before, or after the date of the crash the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified in the policy because of the entry by a court of competent jurisdiction of an order of rehabilitation or liquidation by reason of insolvency on or after the date of the crash. An insurer's extension of coverage, as provided in this subsection, shall be applicable to all crashes occurring after July 1, 1967 during a policy period in which its insured's uninsured motor vehicle coverage is in effect. Nothing in this Section may be construed to prevent any insurer from extending coverage under terms and conditions more favorable to its insureds than is required by this Section.
    (4) In the event of payment to any person under the coverage required by this Section and subject to the terms and conditions of the coverage, the insurer making the payment shall, to the extent thereof, be entitled to the proceeds of any settlement or judgment resulting from the exercise of any rights of recovery of the person against any person or organization legally responsible for the property damage, bodily injury or death for which the payment is made, including the proceeds recoverable from the assets of the insolvent insurer. With respect to payments made by reason of the coverage described in subsection (3), the insurer making such payment shall not be entitled to any right of recovery against the tortfeasor in excess of the proceeds recovered from the assets of the insolvent insurer of the tortfeasor.
    (5) This amendatory Act of 1967 (Laws of Illinois 1967, page 875) shall not be construed to terminate or reduce any insurance coverage or any right of any party under this Code in effect before July 1, 1967. Public Act 86-1155 shall not be construed to terminate or reduce any insurance coverage or any right of any party under this Code in effect before its effective date.
    (6) Failure of the motorist from whom the claimant is legally entitled to recover damages to file the appropriate forms with the Safety Responsibility Section of the Department of Transportation within 120 days of the date of the crash shall create a rebuttable presumption that the motorist was uninsured at the time of the injurious occurrence.
    (7) An insurance carrier may upon good cause require the insured to commence a legal action against the owner or operator of an uninsured motor vehicle before good faith negotiation with the carrier. If the action is commenced at the request of the insurance carrier, the carrier shall pay to the insured, before the action is commenced, all court costs, jury fees and sheriff's fees arising from the action.
    The changes made by Public Act 90-451 apply to all policies of insurance amended, delivered, issued, or renewed on and after January 1, 1998 (the effective date of Public Act 90-451).
    (8) The changes made by Public Act 98-927 apply to all policies of insurance amended, delivered, issued, or renewed on and after January 1, 2015 (the effective date of Public Act 98-927).
(Source: P.A. 102-775, eff. 5-13-22; 102-982, eff. 7-1-23; 103-154, eff. 6-30-23.)

    (215 ILCS 5/143a-2) (from Ch. 73, par. 755a-2)
    Sec. 143a-2. (1) Additional uninsured motor vehicle coverage. No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in this State with respect to any motor vehicle designed for use on public highways and required to be registered in this State unless uninsured motorist coverage as required in Section 143a of this Code is included in an amount equal to the insured's bodily injury liability limits unless specifically rejected by the insured as provided in paragraph (2) of this Section. Each insurance company providing the coverage must provide applicants with a brief description of the coverage and advise them of their right to reject the coverage in excess of the limits set forth in Section 7-203 of the Illinois Vehicle Code. The provisions of this amendatory Act of 1990 apply to policies of insurance applied for after June 30, 1991.
    (2) Right of rejection of additional uninsured motorist coverage. Any named insured or applicant may reject additional uninsured motorist coverage in excess of the limits set forth in Section 7-203 of the Illinois Vehicle Code by making a written request for limits of uninsured motorist coverage which are less than bodily injury liability limits or a written rejection of limits in excess of those required by law. This election or rejection shall be binding on all persons insured under the policy. In those cases where the insured has elected to purchase limits of uninsured motorist coverage which are less than bodily injury liability limits or to reject limits in excess of those required by law, the insurer need not provide in any renewal, reinstatement, reissuance, substitute, amended, replacement or supplementary policy, coverage in excess of that elected by the insured in connection with a policy previously issued to such insured by the same insurer unless the insured subsequently makes a written request for such coverage.
    (3) The original document indicating the applicant's selection of uninsured motorist coverage limits shall constitute sufficient evidence of the applicant's selection of uninsured motorist coverage limits. For purposes of this Section any reproduction of the document by means of photograph, photostat, microfiche, computerized optical imaging process, or other similar process or means of reproduction shall be deemed the equivalent of the original document.
    (4) For the purpose of this Code the term "underinsured motor vehicle" means a motor vehicle whose ownership, maintenance or use has resulted in bodily injury or death of the insured, as defined in the policy, and for which the sum of the limits of liability under all bodily injury liability insurance policies or under bonds or other security required to be maintained under Illinois law applicable to the driver or to the person or organization legally responsible for such vehicle and applicable to the vehicle, is less than the limits for underinsured coverage provided the insured as defined in the policy at the time of the crash. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under the applicable bodily injury insurance policies, bonds or other security maintained on the underinsured motor vehicle.
     On or after July 1, 1983, no policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be renewed or delivered or issued for delivery in this State with respect to any motor vehicle designed for use on public highways and required to be registered in this State unless underinsured motorist coverage is included in such policy in an amount equal to the total amount of uninsured motorist coverage provided in that policy where such uninsured motorist coverage exceeds the limits set forth in Section 7-203 of the Illinois Vehicle Code.
    The changes made to this subsection (4) by this amendatory Act of the 93rd General Assembly apply to policies issued or renewed on or after December 1, 2004.
    (5) Scope. Nothing herein shall prohibit an insurer from setting forth policy terms and conditions which provide that if the insured has coverage available under this Section under more than one policy or provision of coverage, any recovery or benefits may be equal to, but may not exceed, the higher of the applicable limits of the respective coverage, and the limits of liability under this Section shall not be increased because of multiple motor vehicles covered under the same policy of insurance. Insurers providing liability coverage on an excess or umbrella basis are neither required to provide, nor are they prohibited from offering or making available coverages conforming to this Section on a supplemental basis. Notwithstanding the provisions of this Section, an insurer shall not be prohibited from solely providing a combination of uninsured and underinsured motorist coverages where the limits of liability under each coverage is in the same amount.
    (6) Subrogation against underinsured motorists. No insurer shall exercise any right of subrogation under a policy providing additional uninsured motorist coverage against an underinsured motorist where the insurer has been provided with written notice in advance of a settlement between its insured and the underinsured motorist and the insurer fails to advance a payment to the insured, in an amount equal to the tentative settlement, within 30 days following receipt of such notice.
    (7) A policy which provides underinsured motor vehicle coverage may include a clause which denies payment until the limits of liability or portion thereof under all bodily injury liability insurance policies applicable to the underinsured motor vehicle and its operators have been partially or fully exhausted by payment of judgment or settlement. A judgment or settlement of the bodily injury claim in an amount less than the limits of liability of the bodily injury coverages applicable to the claim shall not preclude the claimant from making an underinsured motorist claim against the underinsured motorist coverage. Any such provision in a policy of insurance shall be inapplicable if the insured, or the legal representative of the insured, and the insurer providing underinsured motor vehicle coverage agree that the insured has suffered bodily injury or death as the result of the negligent operation, maintenance, or use of an underinsured motor vehicle and, without arbitration, agree also on the amount of damages that the insured is legally entitled to collect. The maximum amount payable pursuant to such an underinsured motor vehicle insurance settlement agreement shall not exceed the amount by which the limits of the underinsured motorist coverage exceed the limits of the bodily injury liability insurance of the owner or operator of the underinsured motor vehicle. Any such agreement shall be final as to the amount due and shall be binding upon both the insured and the underinsured motorist insurer regardless of the amount of any judgment, or any settlement reached between any insured and the person or persons responsible for the crash. No such settlement agreement shall be concluded unless: (i) the insured has complied with all other applicable policy terms and conditions; and (ii) before the conclusion of the settlement agreement, the insured has filed suit against the underinsured motor vehicle owner or operator and has not abandoned the suit, or settled the suit without preserving the rights of the insurer providing underinsured motor vehicle coverage in the manner described in paragraph (6) of this Section.
(Source: P.A. 102-982, eff. 7-1-23.)

    (215 ILCS 5/143b) (from Ch. 73, par. 755b)
    Sec. 143b. Any insurance carrier whose payment to its insured is reduced by a deductible amount under a policy providing collision coverage is subrogated to its insured's entire collision loss claim including the deductible amount unless the deductible amount has been otherwise recovered by the insured, but if the deductible amount has been otherwise recovered by the insured it shall not be included in the subrogated loss claim and shall be excluded from the amount of loss pleaded. If the deductible amount is included in the subrogated loss claim the insurance carrier shall pay the full pro rata deductible share to its insured out of the net recovery on the subrogated claim. Administrative expenses of the insurance carrier cannot be deducted from the gross recovery, and only incurred expenses of the carrier, such as attorney's fees, collection fees and adjuster's fees, may be deducted therefrom to determine the net recovery. When the insurance carrier is recovering directly from a third party a claim by means of installments, the insured shall receive his full pro rata deductible share as soon as such amount is collected and before any part of such recovery is applied to any other use.
(Source: P.A. 83-588.)

    (215 ILCS 5/143c) (from Ch. 73, par. 755c)
    Sec. 143c. No insurance policy authorized under Class 1, 2 or 3 of Section 4 of this Code shall be delivered in this State unless the policyholder or certificate holder is provided written notice of:
    (1) the address of the complaint department of the
    
insurance company; and
    (2) the address of the Public Service Division of the
    
Department of Insurance or its successor.
    The Director may, by rule, exempt certain types of insurance policies from the provisions of this Section whenever the application of this Section in such cases would be unwarranted or unduly burdensome in view of any benefit to the public.
(Source: P.A. 80-823.)

    (215 ILCS 5/143d) (from Ch. 73, par. 755d)
    Sec. 143d. Customer affairs and information department.
    (a) Every company licensed to issue policies of insurance as defined in subsections (a) and (b) of Section 143.13 shall establish a customer affairs and information department to respond to policyholder inquiries and complaints. The department shall be staffed by an employee or employees generally knowledgeable in the affairs and operations of the company. The department shall be located in either the home, regional, or branch office of the company and must, during regular business hours, either maintain a toll free telephone number or permit policyholders to call a designated telephone number at the company's expense. The telephone numbers shall be made available to policyholders in accordance with Section 143(c).
    (b) The customer affairs and information department shall provide information and services that may reasonably be requested by policyholders who are residents of this State and must respond promptly to complaints made by policyholder. Companies must provide a written response to written inquiries and complaints within 21 days of receipt.
    (c) Records of the customer affairs and information department shall be maintained in compliance with Department of Insurance regulations.
(Source: P.A. 86-1407.)

    (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 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 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 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 5/144.2) (from Ch. 73, par. 756.2)
    Sec. 144.2. Notification of insurance business.
    (a) Upon notice by the Director, a company having direct premium income must file with the Director supplemental information regarding its insurance business. The Director shall by rule establish standards to determine the companies to be given notice.
    (b) The notice prescribed by this Section may require the company to provide information concerning, but not limited to, the following:
        (1) adequacy of rates;
        (2) marketing methodology and acquisition expenses;
        (3) underwriting standards;
        (4) recordkeeping and statistical systems;
        (5) claim systems and claim reserving systems;
        (6) reinsurance; and
        (7) the general financial condition of the company.
(Source: P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/145) (from Ch. 73, par. 757)
    Sec. 145. Deposits.
    When any company is required by the laws of this State or of any state or country, or by other competent authority, to make a deposit with an insurance supervising official or other financial officer and the company desires to make such deposit in this State the Director shall accept such deposit, if made in securities authorized for investment by Article VIII of this Code. So long as the company continues solvent and complies with the laws of this State it may collect the income on such securities. The company may substitute therefor other like securities as prescribed by this Code for deposit. If the value of securities deposited by any company shall decline below the amount so required, the company shall make a further deposit.
(Source: Laws 1959, p. 1431.)

    (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 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 5/147) (from Ch. 73, par. 759)
    Sec. 147. Deceptive statements as to assets prohibited.
    No company doing business in this State or agent thereof, shall state or represent by advertisement in any newspaper, periodical, magazine or over the radio, or by any sign, circular, card, policy of insurance or certificate of renewal thereof or otherwise that any funds or assets are owned by such company which are not actually owned by it and available for the payment of losses and claims and held for the protection of its policyholders and creditors.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/147.1) (from Ch. 73, par. 759.1)
    Sec. 147.1. Sale of insurance company shares.
    (1) No shares of the capital stock of a domestic stock company shall be sold or offered for sale to the public in this State by an issuer, underwriter, dealer or controlling person in respect of such shares without first procuring from the Director a permit so to do.
    (2) Unless the context otherwise indicates the following terms as used in this Section shall have the following meanings:
        (a) The word "issuer" shall mean every company which
    
shall have issued or proposes to issue any such shares of capital stock.
        (b) The word "underwriter" shall mean any person who
    
has purchased such shares of capital stock from an issuer or controlling person with a view to, or sells such shares of capital stock for an issuer or a controlling person in connection with, the distribution thereof, or participates or has a participation in the direct or indirect underwriting of such distribution; but such term shall not include a person whose interest is limited to a commission or discount from an underwriter or dealer not in excess of the usual and customary distributor's or seller's commission or discount or not in excess of any applicable statutory maximum commission or discount. An underwriter shall be deemed to be no longer an underwriter of an issue of shares of capital stock after he has completely disposed of his allotment of such shares or, if he did not purchase the shares, after he has ceased to sell such shares for the issuer or controlling person.
        (c) The word "dealer" shall mean any person other
    
than an issuer, a controlling person, a bank organized under the banking laws of this State or of the United States, a trust company organized under the laws of this State, an insurance company or a salesman, who engages in this State, either for all or part of his time, directly or indirectly, as agent, broker or principal, in the business of offering, selling, buying and selling, or otherwise dealing or trading in shares of capital stock of insurance companies.
        (d) The words "controlling person" shall mean any
    
person selling such shares of capital stock, or group of persons acting in concert in the sale of such shares, owning beneficially (and in the absence of knowledge, or reasonable grounds of belief, to the contrary, record ownership shall for the purposes hereof be presumed to be beneficial ownership) either:
            (i) 25% or more of the outstanding voting shares
        
of the issuer of such shares where no other person owns or controls a greater percentage of such shares, or
            (ii) such number of outstanding number of shares
        
of the issuer as would enable such person, or group of persons, to elect a majority of the Board of Directors of such issuer.
        (e) The word "salesman" shall mean an individual,
    
other than an issuer, an underwriter, a dealer or a controlling person, employed or appointed or authorized by an issuer, an underwriter, a dealer or a controlling person to sell such shares in this State. The partners or officers of an issuer, an underwriter, a dealer or a controlling person shall not be deemed to be a salesman within the meaning of this definition.
    (3) The provisions of this Section shall not apply to any of the following transactions:
        (a) The sale in good faith, whether through a dealer
    
or otherwise, of such shares by a vendor who is not an issuer, underwriter, dealer or controlling person in respect of such shares, and who, being the bona fide owner of such shares deposes thereof for his own account; provided, that such sale is not made directly or indirectly for the benefit of the issuer or of an underwriter or controlling person.
        (b) The sale, issuance or exchange by an issuer of
    
its shares to or with its own shareholders, if no commission or other remuneration is paid or given directly or indirectly for or on account of the procuring or soliciting of such sale or exchange (other than a fee paid to underwriters based on their undertaking to purchase any shares not purchased by shareholders in connection with such sale or exchange), or the issuance by an issuer of its shares to a holder of convertible securities pursuant to a conversion provision granted at the time of issuance of such convertible securities, provided that no commission or other remuneration is paid or given directly or indirectly thereon on account of the procuring or soliciting of such conversion and no consideration from the holder in addition to the surrender or cancellation of the convertible security is required to effect the conversion.
        (c) The sale of such shares to any corporation, bank,
    
savings institution, trust company, insurance company, building and loan association, dealer, pension fund or pension trust, employees profit sharing trust or to any association engaged as a substantial part of its business or operations in purchasing or holding securities, or to any trust in respect of which a bank or trust company is trustee or co-trustee.
        (d) The sale of such shares by an executor,
    
administrator, guardian, receiver or trustee in insolvency or bankruptcy or at any judicial sale or at a public sale by auction held at an advertised time and place or the sale of such shares in good faith and not for the purpose of avoiding the provisions of this Section by a pledgee of such shares pledged for a bona fide debt.
        (e) Such other transaction as may be declared by
    
ruling of the Director to be exempt from the provisions of this Section.
    (4) Prior to the issuance of any permit under this Section, there shall be delivered to the Director two copies of the following:
        (a) the prospectus which is to be used in connection
    
with the sale of such shares;
        (b) the underwriting and selling agreements, if any;
        (c) the subscription agreement;
        (d) the depository agreement under which the
    
subscription proceeds are to be held;
        (e) any and all other documents, agreements,
    
contracts and other papers of whatever nature which are to be used in connection with or relative to the sale of such shares, which may be required by the Director.
    (5) The Director shall within a reasonable time examine the documents submitted to him and unless he finds from said documents that the sale of said shares is inequitable or would work or tend to work a fraud or deceit upon the purchasers thereof, he shall issue a permit authorizing the sale of said shares.
    (6) The Director shall have the power to prescribe such rules and regulations relating to the sale, issuance, and offering of said shares as will effectuate the purpose of this Section to the end that no inequity, fraud or deceit will be perpetrated upon the purchasers thereof.
    (7) If the Director finds that any of the provisions of this Section or of the rules and regulations adopted pursuant hereto have been violated or that the sale, issuance or offering of any such shares is inequitable or works or tends to work a fraud or deceit upon the purchasers thereof he may refuse to issue a permit to sell, issue or offer such shares or may, after notice and hearing, revoke such permit. The action of the Director in refusing, after due application therefor in form prescribed by the Director, or revoking, any such permit shall be subject to judicial review in the manner prescribed by the insurance laws of this State.
    (8) Any person who violates any of the provisions of this Section shall be guilty of a business offense and, upon conviction thereof shall be fined not less than $1,000 nor more than the greater of either $5,000 or twice the whole amount, received upon the sale of shares in violation of this Section and may in addition, if a natural person, be convicted of a Class A misdemeanor.
(Source: P.A. 99-642, eff. 7-28-16.)

    (215 ILCS 5/147.2) (from Ch. 73, par. 759.2)
    Sec. 147.2. Civil remedies.) (A) Every sale of a security made in violation of Sections 20, 32 or 147.1 of this Code or the rules and regulations adopted pursuant thereto and every sale of any security for which a prospectus is required to be filed with the Department which is made without a copy of the prospectus as filed having been given to such prospective purchaser prior to payment of all or part of the purchase price shall be voidable at the election of the purchaser. Any person who offers or sells a security by means of a prospectus or oral communication which contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading, (the purchaser not knowing of such untruth or omission), and who shall not sustain the burden of proof that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission, shall be liable to the person purchasing such security from him, who may bring a civil action in any circuit court. Upon tender to the seller or into court of the securities sold or, where the securities were not received, of any contract made in respect of such sale, the issuer, controlling person, underwriter, dealer or other person by or on behalf of whom said sale was made, and each underwriter, dealer or salesman who shall have participated or aided in any way in making such sale, and in case such issuer, controlling person, underwriter or dealer is a corporation or unincorporated association or organization, each of its officers and directors (or persons performing similar functions) who shall have participated or aided in making such sale, shall be jointly and severally liable to such purchaser for (1) the full amount paid, together with interest from the date of payment for the securities sold at the legal rate of interest less any income or other amounts received by such purchaser on such securities or for any damages if he no longer owns the security and (2) the reasonable fees of such purchaser's attorney incurred in any action brought for recovery of the amounts recoverable hereunder.
    (B) Notice of any election provided for in subsection (A) of this Section shall be given by the purchaser, within 6 months after the purchaser shall have knowledge that the sale of the securities to him is voidable, to each person from whom recovery will be sought, by registered letter addressed to the person to be notified at his last known address with proper postage affixed, or by personal service.
    (C) No purchaser shall have any right or remedy under this Section who shall fail, within 15 days from the date of receipt thereof, to accept an offer to repurchase the securities purchased by him for a price equal to the full amount paid therefor plus interest thereon and less any income thereon as set forth in subsection (A) of this Section or for damages if he no longer owns the security. Every offer of repurchase provided for in this subsection shall be in writing, shall be delivered to the purchaser or sent by registered mail addressed to the purchaser at his last known address, and shall offer to repurchase the securities sold for a price equal to the full amount paid therefor plus interest thereon and less any income thereon as set forth in subsection (A) of this Section. Such offer shall continue in force for 15 days from the date on which it was received by the purchaser, shall advise the purchaser of his rights and the period of time limited for acceptance thereof, and shall contain such further information, if any, as the Director may prescribe. Any agreement not to accept or refusing or waiving any such offer made during or prior to said 15 days shall be void.
    (D) No action shall be brought for relief under this Section or upon or because of any of the matters for which relief is granted by this Section after 3 years from the date of sale.
    (E) The term purchaser as used in this Section shall include the personal representative or representatives of the purchaser.
    (F) The term security does not include any insurance or endowment policy or annuity contract under which an insurance company promises to pay money either in a lump sum or periodically for life or for some other specified period.
    (G) The rights and remedies provided by this Act are in addition to any other rights or remedies that may exist.
    This Section shall not apply to insurance stock sales made prior to the effective date of this Act.
(Source: P.A. 81-1509.)

    (215 ILCS 5/147.3)
    Sec. 147.3. Issuance of capital notes by domestic companies.
    (a) A domestic company may at any time or from time to time issue capital notes pursuant to this Section in an aggregate principal amount not exceeding (1) 25% of its total adjusted capital (including the aggregate principal amount of outstanding capital notes and outstanding surplus notes or guaranty fund certificates and guaranty capital shares) as of the end of the immediately preceding calendar year less (2) the aggregate principal amount of outstanding capital notes and outstanding surplus notes or guaranty fund certificates and guaranty capital shares; provided, however, that capital notes shall not be issued for an aggregate principal amount that would cause the aggregate principal amount for all of the insurer's capital notes scheduled to mature in any calendar year to exceed 5%, or the aggregate principal amount of all of the insurer's capital notes scheduled to mature in any 3 consecutive calendar years to exceed 12%, of the insurer's total adjusted capital as of the end of the calendar year immediately preceding the issuance of the capital notes. The aggregate amount of capital notes and surplus notes or guaranty fund certificates and guaranty capital shares is at all times limited to 33 1/3% of total adjusted capital. Any aggregate amount in excess of this limit shall reduce the amount of capital notes included in the insurer's total adjusted capital.
    (b) No insurer shall issue capital notes pursuant to this Section unless the form and terms thereof shall have been approved by the Director. The term of any capital note shall be no less than 5 years.
    (c) An insurer with a capital note outstanding shall file a report with the Director at the same time that the insurer files its Annual Statement and at such other times as the Director determines necessary. The Director may by rule establish times for and the content of these reports.
    (d) The insurer shall not pay or redeem the principal amount of any capital notes, make any sinking fund payment, or pay any interest on the notes, and the principal, payment, and interest shall not become due or payable if, based on the preceding year-end annual statement filed with the Director:
        (1)(A) The insurer's total adjusted capital is less
    
than the insurer's company action level RBC or (B) the insurer's total adjusted capital is less than the product of 1.25 and its company action level RBC and there is a negative trend, as determined in accordance with the Article IIA of this Code; or
        (2) the aggregate of all payments or redemptions made
    
during a calendar year would, if made immediately prior to the preceding year-end, have caused (A) the insurer's total adjusted capital to be less than the insurer's company action level RBC or (B) the insurer's total adjusted capital at such time to be less than the product of 1.25 and its company action level RBC and there is a negative trend, as determined in accordance with Article IIA of this Code.
    Notwithstanding items (1) and (2), upon request by the insurer, the Director may approve, in whole or in part, any payment or redemption on the capital notes if and at such time or times as in his or her judgment the financial condition of the insurer warrants. The amount of the redemptions or payments of principal amounts of any capital notes that cannot be made as the result of the provisions of this subsection may accumulate at the rate of interest of the capital notes.
    (e) Capital notes issued pursuant to this Section:
        (1) may provide (A) for interest payments at fixed or
    
adjustable rates, sinking fund payments, and payments and redemptions of principal, in each case in accordance with the terms of the capital note and without the prior approval of the Director except to the extent that such approval is required pursuant to this subsection or subsection (d) of this Section, (B) that the capital notes automatically become due and payable in the event the insurer becomes subject to an order of rehabilitation, liquidation, or conservation granted pursuant to a proceeding under Article XIII of this Code, and (C) for such other features as the Director determines are appropriate for capital notes issued according to this Section; and
        (2) shall provide that if at the end of any calendar
    
year the total amount of the insurer's total adjusted capital (including the aggregate principal amount of outstanding capital notes and outstanding surplus notes or guaranty fund certificates and guaranty capital shares) is less than 3 times the aggregate principal amount of capital notes outstanding and surplus notes or guaranty fund certificates and guaranty capital shares, the Director may notify the insurer that the financial condition of the insurer does not warrant the payment or redemption or sinking fund payment, in whole or in part, on the capital notes. Such action by the Director shall, without any action on the part of the insurer or any other person, automatically defer payment or redemption until such time as the Director finds that the financial condition warrants payment or redemption. The amount of redemptions or payments of principal amounts of any capital notes so deferred may accumulate at the rate of interest of the capital notes.
    (f) The outstanding principal of a capital note issued pursuant to this Section shall be considered part of the insurer's total adjusted capital, but shall not be considered part of the insurer's surplus; provided, however, (1) that, in the case of any capital note maturing 15 years or less from the year in which the capital note is issued, one-fifth of the aggregate principal amount of the capital note shall be subtracted from total adjusted capital in each year starting with the fifth year immediately preceding the calendar year in which the capital note is scheduled to mature; and (2) that, in the case of any capital note maturing more than 15 years from the year in which the capital note is issued, one-tenth of the aggregate principal amount of the capital note shall be subtracted from total adjusted capital in each year starting with the tenth year immediately preceding the calendar year in which the capital note is scheduled to mature, and further provided that, in no event shall the amount included in total adjusted capital for any capital note exceed the principal amount, at issue, of the outstanding capital note less the aggregate of all sinking fund payments made on the capital note. The insurer shall disclose the aggregate principal amount of capital notes then outstanding as a liability on its financial statements filed with the Director pursuant to this Code.
    (g) As used in this Section, the terms "total adjusted capital", "company action level RBC", and "authorized control level RBC" shall have the meanings given those terms in Article IIA of this Code.
(Source: P.A. 90-831, eff. 8-14-97.)

    (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 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 5/149) (from Ch. 73, par. 761)
    Sec. 149. Misrepresentation and defamation prohibited.
    (1) No company doing business in this State, and no officer, director, agent, clerk or employee thereof, broker, or any other person, shall make, issue or circulate or cause or knowingly permit to be made, issued or circulated any estimate, illustration, circular, or verbal or written statement of any sort misrepresenting the terms of any policy issued or to be issued by it or any other company or the benefits or advantages promised thereby or any misleading estimate of the dividends or share of the surplus to be received thereon, or shall by the use of any name or title of any policy or class of policies misrepresent the nature thereof.
    (2) No such company or officer, director, agent, clerk or employee thereof, or broker shall make any misleading representation or comparison of companies or policies, to any person insured in any company for the purpose of inducing or tending to induce a policyholder in any company to lapse, forfeit, change or surrender his insurance, whether on a temporary or permanent plan.
    (3) No such company, officer, director, agent, clerk or employee thereof, broker or other person shall make, issue or circulate or cause or knowingly permit to be made, issued or circulated any pamphlet, circular, article, literature or verbal or written statement of any kind which contains any false or malicious statement calculated to injure any company doing business in this State in its reputation or business.
    (4) No such company, or officer, director, agent, clerk or employee thereof, no agent, broker, solicitor, or company service representative, and no other person, firm, corporation, or association of any kind or character, shall make, issue, circulate, use, or utter, or cause or knowingly permit to be made, issued, circulated, used, or uttered, any policy or certificate of insurance, or endorsement or rider thereto, or matter incorporated therein by reference, or application blanks, or any stationery, pamphlet, circular, article, literature, advertisement or advertising of any kind or character, visual, or aural, including radio advertising and television advertising, or any other verbal or written statement or utterance (a) which tends to create the impression or from which it may be implied or inferred, directly or indirectly, that the company, its financial condition or status, or the payment of its claims, or the merits, desirability, or advisability of its policy forms or kinds or plans of insurance are approved, endorsed, or guaranteed by the State of Illinois or United States Government or the Director or the Department or are secured by Government bonds or are secured by a deposit with the Director, or (b) which uses or refers to any deposit with the Director or any certificate of deposit issued by the Director or any facsimile, reprint, photograph, photostat, or other reproduction of any such certificate of deposit.
    (5) Any company, officer, director, agent, clerk or employee thereof, broker, or other person who violates any of the provisions of this Section, or knowingly participates in or abets such violation, is guilty of a business offense and shall be required to pay a penalty of not less than $200 nor more than $10,000, to be recovered in the name of the People of the State of Illinois either by the Attorney General or by the State's Attorney of the county in which the violation occurs. The penalty so recovered shall be paid into the county treasury if recovered by the State's Attorney or into the State treasury if recovered by the Attorney General.
    (6) No company shall be held guilty of having violated any of the provisions of this Section by reason of the act of any agent, solicitor or employee, not an officer, director or department head thereof, unless an officer, director or department head of such company shall have knowingly permitted such act or shall have had prior knowledge thereof.
    (7) Any person, association, organization, partnership, business trust or corporation not authorized to transact an insurance business in this State which disseminates in or causes to be disseminated in this State any advertising, invitations to inquire, questionnaires or requests for information designed to result in a solicitation for the purchase of insurance by residents of this State is also subject to the sanctions of this Section. The phrase "designed to result in a solicitation for the purchase of insurance" includes but is not limited to:
        (a) the use of any form or document which provides
    
either generalized or specific information or recommendations regardless of the insurance needs of the recipient or the availability of any insurance policy or plan; or
        (b) any offer to provide such information or
    
recommendation upon subsequent contacts or solicitation either by the entity generating the material or some other person; or
        (c) the use of a coupon, reply card or request to
    
write for further information; or
        (d) the use of an application for insurance or an
    
offer to provide insurance coverage for any purpose; or
        (e) the use of any material which, regardless of the
    
form and content used or the information imparted, is intended to result, in the generation of leads for further solicitations or the preparation of a mailing list which can be sold to others for such purpose.
(Source: P.A. 93-32, eff. 7-1-03.)

    (215 ILCS 5/150.1) (from Ch. 73, par. 762.1)
    Sec. 150.1. No company doing business in this State shall enter into a group contract for an annuity or pension plan to cover employees of the State, its agencies, instrumentalities, political subdivisions or municipal corporations prior to the time such employees are granted membership in any established retirement system or pension fund, by whatever name called, created by and operating pursuant to any of the provisions of the "Illinois Pension Code" if such employees are eligible for coverage under such statute; provided that this provision shall not apply to any contract entered into by a company for such annuity or pension plan for any such group of employees prior to the effective date of this amendatory Act.
(Source: Laws 1967, p. 3002.)

    (215 ILCS 5/151) (from Ch. 73, par. 763)
    Sec. 151. Payment or acceptance of rebates prohibited. (1) No company doing business in this State and no insurance agent or broker shall offer, promise, allow, give, set off or pay, directly or indirectly, any rebate of or part of the premium payable on the policy, or on any policy or agent's commission thereon or earnings, profits, dividends or other benefits founded, arising, accruing or to accrue thereon or therefrom, or any special advantage in date of policy or age of issue, or any paid employment or contract for services of any kind or any other valuable consideration or inducement to or for insurance on any risk in this State, now or hereafter to be written, or for or upon any renewal of any such insurance, which is not specified in the policy contract of insurance, or offer, promise, give, option, sell, purchase any stocks, bonds, securities or property or any dividends or profits accruing or to accrue thereon, or other thing of value whatsoever as inducement to insurance or in connection therewith, or any renewal thereof which is not specified in the policy. Nothing in this Section shall prevent a company from paying a bonus to policyholders or otherwise abating their premiums in whole or in part out of surplus accumulated from nonparticipating insurance nor prevent a company which transacts industrial life insurance on a weekly payment plan from returning to policyholders who have made premium payments for a period of at least one year directly to the company at its home or district offices the percentage of premium which the company would otherwise have paid for the weekly collection of such premium nor shall this Section be construed to prevent the taking of a bona fide obligation, with interest at six per centum per annum, in payment of any premium.
    Nothing in this Section shall prevent a company from offering a child passenger restraint system or a discount from the purchase price of a child passenger restraint system to policyholders, when the purpose of such restraint system is the safety of a child and compliance with the "Child Passenger Protection Act", approved June 27, 1983, as amended.
    (2) No insured person or party or applicant for insurance shall directly or indirectly receive or accept, or agree to receive or accept any rebate of premium or of any part thereof or all or any part of any agent's or broker's commission thereon, or any favor or advantage, or share in any benefit to accrue under any policy of insurance, or any valuable consideration or inducement, other than such as is specified in the policy.
(Source: P.A. 83-1320.)

    (215 ILCS 5/152) (from Ch. 73, par. 764)
    Sec. 152. Rebates- Penalties.
    (1) Any company or any person violating any of the provisions of section 151 shall be guilty of a Class B misdemeanor.
    (2) No agent or broker for any company doing business in this State violating any of the provisions of section 151 shall be entitled to receive any commission for the sale of any policy on which any rebate, as defined in such section, shall have been given or offered, and if any such company has paid any commission to any agent or broker for the sale of any policy on which such rebate has been given or offered, the full amount thereof may be recovered by such company from such agent or broker.
    (3) No company shall be held guilty of having violated the provisions of section 151 by reason of an act of any agent, general agent, representative, broker or employee not an officer, director or department head thereof, unless an officer, director or department head of such company shall have knowingly permitted such act, or shall have had prior knowledge thereof.
(Source: P.A. 77-2699.)

    (215 ILCS 5/153) (from Ch. 73, par. 765)
    Sec. 153. Rebates- Immunity from prosecution.
    No person shall be excused from testifying or from producing any books, papers, contracts, agreements or documents at the trial or hearing of any person or company charged with violating any of the provisions of section 151 on the ground that such testimony or evidence may tend to incriminate himself but no person shall be prosecuted for any act concerning which he shall be compelled so to testify or produce evidence, documentary or otherwise, and no testimony so given or evidence produced shall be received against him upon any criminal investigation or proceeding except for perjury committed in so testifying.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/154) (from Ch. 73, par. 766)
    Sec. 154. Misrepresentations and false warranties.
    No misrepresentation or false warranty made by the insured or in his behalf in the negotiation for a policy of insurance, or breach of a condition of such policy shall defeat or avoid the policy or prevent its attaching unless such misrepresentation, false warranty or condition shall have been stated in the policy or endorsement or rider attached thereto, or in the written application therefor. No such misrepresentation or false warranty shall defeat or avoid the policy unless it shall have been made with actual intent to deceive or materially affects either the acceptance of the risk or the hazard assumed by the company. With respect to a policy of insurance as defined in subsection (a), (b), or (c) of Section 143.13, except life, accident and health, fidelity and surety, and ocean marine policies, a policy or policy renewal shall not be rescinded after the policy has been in effect for one year or one policy term, whichever is less. This Section shall not apply to policies of marine or transportation insurance.
(Source: P.A. 89-413, eff. 6-1-96.)

    (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 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 5/154.6) (from Ch. 73, par. 766.6)
    Sec. 154.6. Acts constituting improper claims practice. Any of the following acts by a company, if committed without just cause and in violation of Section 154.5, constitutes an improper claims practice:
    (a) Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue;
    (b) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies;
    (c) Failing to adopt and implement reasonable standards for the prompt investigations and settlement of claims arising under its policies;
    (d) Not attempting in good faith to effectuate prompt, fair and equitable settlement of claims submitted in which liability has become reasonably clear;
    (e) Compelling policyholders to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them;
    (f) Engaging in activity which results in a disproportionate number of meritorious complaints against the insurer received by the Insurance Department;
    (g) Engaging in activity which results in a disproportionate number of lawsuits to be filed against the insurer or its insureds by claimants;
    (h) Refusing to pay claims without conducting a reasonable investigation based on all available information;
    (i) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;
    (j) Attempting to settle a claim for less than the amount to which a reasonable person would believe the claimant was entitled, by reference to written or printed advertising material accompanying or made part of an application or establishing unreasonable caps or limits on paint or materials when estimating vehicle repairs;
    (k) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured;
    (l) Making a claims payment to a policyholder or beneficiary omitting the coverage under which each payment is being made;
    (m) Delaying the investigation or payment of claims by requiring an insured, a claimant, or the physicians of either to submit a preliminary claim report and then requiring subsequent submission of formal proof of loss forms, resulting in the duplication of verification;
    (n) Failing in the case of the denial of a claim or the offer of a compromise settlement to promptly provide a reasonable and accurate explanation of the basis in the insurance policy or applicable law for such denial or compromise settlement;
    (o) Failing to provide forms necessary to present claims within 15 working days of a request with such explanations as are necessary to use them effectively;
    (p) Failing to adopt and implement reasonable standards to verify that a repairer designated by the insurance company to provide an estimate, perform repairs, or engage in any other service in connection with an insured loss on a vehicle is duly licensed under Section 5-301 of the Illinois Vehicle Code;
    (q) Failing to provide as a persistent tendency a notification on any written estimate prepared by an insurance company in connection with an insured loss that Illinois law requires that vehicle repairers must be licensed in accordance with Section 5-301 of the Illinois Vehicle Code;
    (r) Failing to pay the replacement vehicle use or occupation tax, title, and transfer fees required by Section 154.9 of this Code;
    (s) Engaging in any other acts which are in substance equivalent to any of the foregoing.
(Source: P.A. 102-69, eff. 7-1-22.)

    (215 ILCS 5/154.7) (from Ch. 73, par. 766.7)
    Sec. 154.7. Statement of Charges.) (1) Whenever the Director finds that any company doing business in this State is engaging in any improper claims practice as defined in Section 154.5, and that a proceeding in respect thereto would be in the public interest, he shall issue and serve upon such company a statement of the charges in that respect and a notice of hearing thereon pursuant to Article XXIV, which notice shall set a hearing date not less than 10 days from the date of the notice.
    (2) The failure of a company to appear at a hearing after receipt of a statement of the charges and notice of hearing is considered a waiver of notice and hearing, a stipulation that the charges against the company are true, immediately suspends such company's Certificate of Authority for 30 days, and subjects the company to any other applicable provisions of this Code. The Director must notify the company of any suspension or action taken under this Section.
(Source: P.A. 80-926.)

    (215 ILCS 5/154.8) (from Ch. 73, par. 766.8)
    Sec. 154.8. Cease and desist order; suspension of certificate; civil penalty; judicial review.
    (1) If, after a hearing pursuant to Section 154.7, the Director finds that company has engaged in an improper claims practice, he shall order such company to cease and desist from such practices and, in the exercise of reasonable discretion, may suspend the company's certificate of authority for a period not to exceed 6 months or impose a civil penalty of up to $250,000, or both. Pursuant to Section 401, the Director shall adopt reasonable rules establishing standards for the implementation of this Section.
    (2) Any order of the Director pursuant to this Section is subject to judicial review under Section 407 of this Code.
(Source: P.A. 101-81, eff. 7-12-19.)

    (215 ILCS 5/154.9)
    Sec. 154.9. Payment of applicable use or occupation tax, title, and transfer fees on a private passenger total loss claim.
    (a) When an insurer determines that an insured's or third-party claimant's private passenger automobile is a total loss that is covered under the terms of a personal automobile policy issued or renewed on or after July 1, 2022 by the insurer, the insurer shall pay any use or occupation tax imposed by the State or a unit of local government and title and transfer fees as provided for in this Section. As used in this Section, "private passenger vehicle" means a private passenger motor vehicle, station wagon, or any other 4-wheeled motor vehicle with a load capacity of 1,500 pounds or less that is not used in the occupation, profession, or business of the insured or third-party claimant, not used as a public or livery conveyance for passengers, nor rented to others.
    (b) If the insurer elects to replace the insured vehicle, the insurer shall pay any use or occupation tax imposed by the State or a unit of local government tax and title and transfer fees on the replacement vehicle.
    (c) If a cash settlement is provided for the total loss private passenger vehicle, the insurer shall reimburse the insured or third-party claimant for any use or occupation tax imposed by the State or a unit of local government and title and transfer fees if the replacement vehicle is purchased or leased within 30 days after the receipt of the cash settlement by the insured or third-party claimant and the insured or third-party claimant substantiates such purchase and the payment of such taxes and fees by submission of appropriate documentation to the insurer within 33 days after the receipt of the settlement or receipt of the required reimbursement form from the insurer, whichever is later.
        (1) With respect to leased vehicles, use or
    
occupation taxes and title and transfer fees shall be deemed to be incurred by the insured or the third-party claimant at the time the lease is entered into, but only if such use or occupation taxes and title and transfer fees are included in the cost of the lease or are paid directly by the insured or third-party claimant.
        (2) The insurer is not required to reimburse the
    
insured or third-party claimant for any use or occupation taxes and title or transfer fees in excess of the amount payable based on the value of the total loss vehicle at the time of the loss or for taxes and title or transfer fees not actually paid by the insured or third-party claimant.
        (3) In lieu of this reimbursement procedure, the
    
insurer may directly pay the required amount of any use or occupation taxes and title and transfer fees to the claimant at the time of settlement.
        (4) If an insurer requires a particular form be
    
used to apply for reimbursement of any use or occupation taxes and title or transfer fees, the form must be delivered to the insured or third-party claimant at or before the time of settlement.
    (d) The Department may adopt rules establishing uniform standards for implementation of this Section, including, but not limited to, prescribing the method of determining the market value of the insured's or third-party claimant's vehicle.
(Source: P.A. 102-69, eff. 7-1-22.)

    (215 ILCS 5/154.10)
    Sec. 154.10. Description of the determination of a total loss of a vehicle. Upon the determination of a total loss of an insured vehicle, the insurance company shall provide the insured with a brief description of how that determination was made, including any available repair estimate, estimated vehicle salvage value, assessed market value, and other costs and calculations used. This Section applies to policies issued or renewed on or after July 1, 2025.
(Source: P.A. 103-615, eff. 1-1-25.)

    (215 ILCS 5/155) (from Ch. 73, par. 767)
    Sec. 155. Attorney fees.
    (1) In any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
        (a) 60% of the amount which the court or jury finds
    
such party is entitled to recover against the company, exclusive of all costs;
        (b) $60,000;
        (c) the excess of the amount which the court or jury
    
finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.
    (2) Where there are several policies insuring the same insured against the same loss whether issued by the same or by different companies, the court may fix the amount of the allowance so that the total attorney fees on account of one loss shall not be increased by reason of the fact that the insured brings separate suits on such policies.
(Source: P.A. 93-485, eff. 1-1-04.)

    (215 ILCS 5/155.01) (from Ch. 73, par. 767.1)
    Sec. 155.01. Interlocking directorates - when prohibited.
    Any person may be a director in two or more companies which are competitors, provided no person at the same time shall be a director in two or more companies where the effect may be to substantially lessen competition generally or tend to create a monopoly. Whenever the Director has reason to believe that there is a violation of this Section, the Director shall proceed with respect to any person or company deemed by him to be in violation of this Section, in accordance with the provisions of Article XXIV and shall have power to issue an order directing such person or company to cease and desist from such violation within such time, or extension thereof, as may be specified by the Director. Any such order of the Director shall be subject to review in accordance with the provisions of Article XXIV.
(Source: Laws 1947, p. 1143.)

    (215 ILCS 5/155.03) (from Ch. 73, par. 767.3)
    Sec. 155.03. Defense of ultra vires.
    No company doing business in this State shall assert by way of defense or otherwise, in any suit, action or claim arising directly or indirectly out of the issuance or delivery of any policy or certificate of insurance, that such company was without capacity or power to issue such policy or certificate or that such policy or certificate is void, invalid or unenforceable because of such lack of capacity, if the coverage under the policy or certificate was afforded with the express knowledge or the consent or acquiescence of the company.
(Source: Laws 1959, p. 1970.)

    (215 ILCS 5/155.04) (from Ch. 73, par. 767.4)
    Sec. 155.04. Standards for companies and officials.
    (1) The Director shall not approve any declaration of organization or Articles of Incorporation or issue a Certificate of Authority to any company until he has found that:
        (a) the company has submitted a sound plan of
    
operation;
        (b) the incorporators, directors, and proposed
    
officers are of known good character and that there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions or other insurance of business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance;
        (c) the general experience of the incorporators,
    
directors, and proposed officers is enough to ensure the reasonable promise of a successful operation; and
        (d) no financial concerns related to the company, its
    
ownership, its associated group, or its affiliates have been identified that raise the possibility that the company will have solvency concerns or problems generating the necessary levels of capital and surplus.
     The Director may require, in substantially the same form, the information required under Section 131.5 of this Code.
    (2) All companies licensed to do business in this state must notify the Director within 30 days of the appointment or election of any new officers or directors.
    (3) Except in cases where the Director deems that any officer or director meets the standards set forth in this section, he shall, after notice and hearing afforded to the officer or director, and after a finding that the officer or director is incompetent or untrustworthy or of known bad character, order the removal of the person. If a company does not comply with a removal order within 30 days, the Director shall suspend that company's Certificate of Authority until such time as the order is complied with.
    (4) It shall be unlawful for a company to borrow money or receive a loan or advance from anyone convicted of a felony, anyone who is untrustworthy or of known bad character or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation or corruption.
(Source: P.A. 104-334, eff. 8-15-25.)

    (215 ILCS 5/155.05) (from Ch. 73, par. 767.5)
    Sec. 155.05. Payment of insurance in burial benefits prohibited.
    No company, officer, director, agent or broker and no other person, firm, association or corporation shall advertise, solicit, negotiate, issue, effect or deliver in this State any policy or contract of insurance or any series or combination of related or separate contracts, assignments, endorsements or agreements for the purpose of making, or as part of a plan which has the effect of making the proceeds of the policy, in event of death, payable other than in lawful money of the United States or for the purpose or as part of a plan which has the effect of depriving the family or representative of the deceased of the advantages of open competition and unrestricted choice in the procuring and purchasing in the open market of supplies and services in connection with the burial of the deceased.
(Source: Laws 1947, p. 1152.)

    (215 ILCS 5/155.06) (from Ch. 73, par. 767.6)
    Sec. 155.06. Emergency by-laws may be adopted.
    The board of directors of any domestic insurance company may adopt emergency by-laws to be approved by the Director, which will become operative during an emergency resulting from an attack upon the United States by nuclear, chemical, bacteriological or biological weapons. The emergency by-laws may include provisions relating to a line of succession of the officers, the manner in which vacancies on the board of directors shall be filled, how and when the emergency board of directors may transact business, alternate locations for the principal and regional offices, emergency maintenance of books and records, and any other measures reasonably related to the interim management of company affairs. If emergency by-laws are adopted, copies shall be sent to the shareholders, or similar body in other than stock companies, who may repeal or modify them at the annual meeting or at any special meeting called for that purpose.
(Source: Laws 1965, p. 418.)

    (215 ILCS 5/155.07) (from Ch. 73, par. 767.7)
    Sec. 155.07. Change of location of offices.
    Where an emergency exists, as defined in Section 155.06, the board of directors of a domestic insurance company may change the location of the company's principal and regional offices, but must give written notice to the Director within 10 days after such change stating the address of the new and former locations.
(Source: Laws 1965, p. 418.)

    (215 ILCS 5/155.08) (from Ch. 73, par. 767.8)
    Sec. 155.08. Statutory provisions operative during emergency.
    In the event that any domestic company has not adopted emergency by-laws, the following provisions shall become operative during an emergency as defined in Section 155.06:
    (1) The board of directors acting during such period may take any and every action reasonably necessary to enable the company to meet the exigencies of the emergency and to continue the business.
    (2) A quorum of the emergency board of directors shall consist of a majority of the available surviving directors. If less than three directors are able to convene, company officers may temporarily substitute as acting directors until formal elections can be conducted or the regular directors become available to resume their duties.
    (3) The line of succession of the officers for the purpose of filling temporary vacancies of company offices and maintaining a quorum of three acting directors on the board in time of emergency shall be president, secretary, and treasurer followed by the vice-presidents ranked according to their seniority in the company.
(Source: Laws 1965, p. 418.)

    (215 ILCS 5/155.10) (from Ch. 73, par. 767.10)
    Sec. 155.10. (Repealed).
(Source: P.A. 86-1154; 86-1156. Repealed by P.A. 89-97, eff. 7-7-95.)

    (215 ILCS 5/155.14) (from Ch. 73, par. 767.14)
    Sec. 155.14. (Repealed).
(Source: P.A. 77-305. Repealed by P.A. 89-97, eff. 7-7-95.)

    (215 ILCS 5/155.15) (from Ch. 73, par. 767.15)
    Sec. 155.15. (Repealed).
(Source: P.A. 77-305. Repealed by P.A. 89-97, eff. 7-7-95.)

    (215 ILCS 5/155.16) (from Ch. 73, par. 767.16)
    Sec. 155.16. (Repealed).
(Source: P.A. 77-305. Repealed by P.A. 89-97, eff. 7-7-95.)

    (215 ILCS 5/155.17) (from Ch. 73, par. 767.17)
    Sec. 155.17. Every domestic or foreign company authorized to write insurance for motor vehicle bodily injury shall not base the rates for such insurance upon divisions or districts within any municipality which has a population of 2,000,000 or more.
(Source: P.A. 77-1882.)

    (215 ILCS 5/155.18) (from Ch. 73, par. 767.18)
    Sec. 155.18. (a) This Section shall apply to insurance on risks based upon negligence by a physician, hospital or other health care provider, referred to herein as medical liability insurance. This Section shall not apply to contracts of reinsurance, nor to any farm, county, district or township mutual insurance company transacting business under an Act entitled "An Act relating to local mutual district, county and township insurance companies", approved March 13, 1936, as now or hereafter amended, nor to any such company operating under a special charter.
    (b) The following standards shall apply to the making and use of rates pertaining to all classes of medical liability insurance:
        (1) Rates shall not be excessive or inadequate, as
    
herein defined, nor shall they be unfairly discriminatory. No rate shall be held to be excessive unless such rate is unreasonably high for the insurance provided, and a reasonable degree of competition does not exist in the area with respect to the classification to which such rate is applicable.
        No rate shall be held inadequate unless it is
    
unreasonably low for the insurance provided and continued use of it would endanger solvency of the company.
        (2) Consideration shall be given, to the extent
    
applicable, to past and prospective loss experience within and outside this State, to a reasonable margin for underwriting profit and contingencies, to past and prospective expenses both countrywide and those especially applicable to this State, and to all other factors, including judgment factors, deemed relevant within and outside this State.
        Consideration may also be given in the making and use
    
of rates to dividends, savings or unabsorbed premium deposits allowed or returned by companies to their policyholders, members or subscribers.
        (3) The systems of expense provisions included in the
    
rates for use by any company or group of companies may differ from those of other companies or groups of companies to reflect the operating methods of any such company or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.
        (4) Risks may be grouped by classifications for the
    
establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that have a probable effect upon losses or expenses. Such classifications or modifications of classifications of risks may be established based upon size, expense, management, individual experience, location or dispersion of hazard, or any other reasonable considerations and shall apply to all risks under the same or substantially the same circumstances or conditions. The rate for an established classification should be related generally to the anticipated loss and expense factors of the class.
    (c) Every company writing medical liability insurance shall file with the Director of Insurance the rates and rating schedules it uses for medical liability insurance.
         (1) This filing shall occur at least annually and
    
as often as the rates are changed or amended.
         (2) For the purposes of this Section any change in
    
premium to the company's insureds as a result of a change in the company's base rates or a change in its increased limits factors shall constitute a change in rates and shall require a filing with the Director.
     (3) It shall be certified in such filing by an officer of the company and a qualified actuary that the company's rates are based on sound actuarial principles and are not inconsistent with the company's experience.
    (d) If after a hearing the Director finds:
        (1) that any rate, rating plan or rating system
    
violates the provisions of this Section applicable to it, he may issue an order to the company which has been the subject of the hearing specifying in what respects such violation exists and stating when, within a reasonable period of time, the further use of such rate or rating system by such company in contracts of insurance made thereafter shall be prohibited;
        (2) that the violation of any of the provisions of
    
this Section applicable to it by any company which has been the subject of hearing was wilful, he may suspend or revoke, in whole or in part, the certificate of authority of such company with respect to the class of insurance which has been the subject of the hearing.
(Source: P.A. 103-426, eff. 8-4-23.)

    (215 ILCS 5/155.18a)
    Sec. 155.18a. (Repealed).
(Source: P.A. 94-677, eff. 8-25-05. Repealed by P.A. 103-426, eff. 8-4-23.)

    (215 ILCS 5/155.19) (from Ch. 73, par. 767.19)
    Sec. 155.19. All claims filed after December 31, 1976 with any insurer and all suits filed after December 31, 1976 in any court in this State, alleging liability on the part of any physician, hospital or other health care provider for medically related injuries, shall be reported to the Director of Insurance in such form and under such terms and conditions as may be prescribed by the Director. The Director shall maintain complete and accurate records of all such claims and suits including their nature, amount, disposition and other information as he may deem useful or desirable in observing and reporting on health care provider liability trends in this State. The Director shall release to appropriate disciplinary and licensing agencies any such data or information which may assist such agencies in improving the quality of health care or which may be useful to such agencies for the purpose of professional discipline.
    With due regard for appropriate maintenance of the confidentiality thereof, the Director may release from time to time to the Governor, the General Assembly and the general public statistical reports based on such data and information.
    The Director may promulgate such rules and regulations as may be necessary to carry out the provisions of this Section.
(Source: P.A. 103-426, eff. 8-4-23.)

    (215 ILCS 5/155.20) (from Ch. 73, par. 767.20)
    Sec. 155.20. All final arbitration decisions rendered in relation to disputes or controversies arising out of injuries allegedly caused by reason of hospital or health care provider malpractice shall be recognized by any insurance company doing business in the State of Illinois and all findings of facts relating to liability and awards of damages in relation thereto which are a part of the final arbitration decision shall be binding on such insurance companies.
(Source: P.A. 79-1435.)

    (215 ILCS 5/155.21) (from Ch. 73, par. 767.21)
    Sec. 155.21. A company writing medical liability insurance shall not refuse to offer insurance to a physician, hospital or other health care provider on the grounds that the physician, hospital or health care provider has entered or intends to enter an arbitration agreement pursuant to the Health Care Arbitration Act.
    As used in this Section, medical liability insurance means insurance on risks based upon negligence by a physician, hospital or other health care provider.
(Source: P.A. 95-331, eff. 8-21-07.)

    (215 ILCS 5/155.22) (from Ch. 73, par. 767.22)
    Sec. 155.22. No company authorized to transact in this State the kinds of business described in Classes 2 and 3 of Section 4, and no officer, director, agent, clerk, employee or broker of such company shall upon proper application refuse to provide insurance solely on the basis of the specific geographic location of the risk sought to be insured unless such refusal is for a business purpose which is not a mere pretext for unfair discrimination.
(Source: P.A. 84-1431.)

    (215 ILCS 5/155.22a)
    Sec. 155.22a. Coverage for subjects of abuse.
    (a) No company authorized to transact life, health, disability income, or property and casualty insurance in this State may:
        (1) Deny, refuse to issue, refuse to renew, refuse to
    
reissue, cancel, or otherwise terminate an insurance policy or restrict coverage on an individual because that individual is or has been the subject of abuse or because that individual seeks or has sought: (i) medical or psychological treatment for abuse; or (ii) protection or shelter from abuse;
        (2) Charge a different rate for the same coverage for
    
an insurance policy because an individual insured under such policy has a history of or is a subject of abuse;
        (3) Deny a claim by an insured as a result of his or
    
her status as being or having been a subject of abuse, except as otherwise permitted or required by the laws of this State; or
        (4) Ask an insured or an applicant for insurance
    
whether that individual is or has been a subject of abuse or whether that individual seeks or has sought: (i) medical or psychological treatment specifically for abuse; or (ii) protection or shelter from abuse.
    (b) No company authorized to transact life, health, disability income, or property and casualty insurance in this State may fail to maintain strict confidentiality of information, as defined in the Insurance Information and Privacy Protection Article of this Code, relating to an applicant's or insured's abuse status or to a medical or psychological condition that the company knows is abuse-related. Disclosure of such abuse-related information shall be subject to the disclosure limitations and conditions contained in Section 1014 of this Code.
    (c) Nothing in this Section shall be construed to prohibit a company specified in subsection (a) from (i) refusing to insure, refusing to continue to insure, limiting the amount, extent, or kind of coverage available to an individual, or charging a different rate for the same coverage on the basis of that individual's physical or mental condition regardless of the underlying cause of such condition; (ii) declining to issue a life insurance policy insuring an individual who is or has been the subject of abuse if the perpetrator of the abuse is the applicant or would be the owner of the insurance policy; or (iii) inquiring about a physical or mental condition, even if that condition was caused by or is related in any manner to abuse.
    (d) As used in this Section, "abuse" means the occurrence of one or more of the following acts between family members, current or former household members, or current or former intimate partners:
        (1) Attempting to cause or intentionally, knowingly,
    
or recklessly causing another person, including a minor child, to be harassed or intimidated or subject to bodily injury, physical harm, rape, sexual assault, or involuntary sexual intercourse; or
        (2) Knowingly engaging in a course of conduct or
    
repeatedly committing acts without proper authority that place the person toward whom such acts are directed, including a minor child, in a reasonable fear of bodily injury or physical harm; or
        (3) Subjecting another person, including a minor
    
child, to false imprisonment.
    (e) No company specified in subsection (a) above shall be held civilly or criminally liable for any cause of action that may be brought because of compliance with this Section. Nothing in this Section, however, shall preclude the jurisdiction of any administrative agency to carry out its statutory authority.
(Source: P.A. 93-200, eff. 1-1-04.)

    (215 ILCS 5/155.22b)
    Sec. 155.22b. Rating, claims handling, and underwriting decisions.
    (a) No company issuing a policy of property and casualty insurance may use the fact that an applicant or insured incurred bodily injury as a result of a battery or other violent act committed against him or her by a spouse or person in the same household as a sole reason for a rating, underwriting, or claims handling decision.
    (b) If a policy excludes property coverage for intentional acts, the insurer may not deny payment to an innocent co-insured who did not cooperate in or contribute to the creation of the loss if the loss arose out of a pattern of criminal domestic violence and the perpetrator of the loss is criminally prosecuted for the act causing the loss. Payment to the innocent co-insured may be limited to his or her ownership interest in the property as reduced by any payments to a mortgagor or other secured interest.
(Source: P.A. 93-200, eff. 1-1-04.)

    (215 ILCS 5/155.23) (from Ch. 73, par. 767.23)
    Sec. 155.23. Fraud reporting.
        (1) The Director is authorized to promulgate
    
reasonable rules requiring insurers, as defined in Section 155.24, doing business in the State of Illinois to report factual information in their possession that is pertinent to suspected fraudulent insurance claims, fraudulent insurance applications, or premium fraud after he has made a determination that the information is necessary to detect fraud or arson. Claim information may include:
        (a) Dates and description of accident or loss.
        (b) Any insurance policy relevant to the accident or
    
loss.
        (c) Name of the insurance company claims adjustor and
    
claims adjustor supervisor processing or reviewing any claim or claims made under any insurance policy relevant to the accident or loss.
        (d) Name of claimant's or insured's attorney.
        (e) Name of claimant's or insured's physician, or any
    
person rendering or purporting to render medical treatment.
        (f) Description of alleged injuries, damage or loss.
        (g) History of previous claims made by the claimant
    
or insured.
        (h) Places of medical treatment.
        (i) Policy premium payment record.
        (j) Material relating to the investigation of the
    
accident or loss, including statements of any person, proof of loss, and any other relevant evidence.
        (k) any facts evidencing fraud or arson.
    The Director shall establish reporting requirements for application and premium fraud information reporting by rule.
    (2) The Director of Insurance may designate one or more data processing organizations or governmental agencies to assist him in gathering such information and making compilations thereof, and may by rule establish the form and procedure for gathering and compiling such information. The rules may name any organization or agency designated by the Director to provide this service, and may in such case provide for a fee to be paid by the reporting insurers directly to the designated organization or agency to cover any of the costs associated with providing this service. After determination by the Director of substantial evidence of false or fraudulent claims, fraudulent applications, or premium fraud, the information shall be forwarded by the Director or the Director's designee to the proper law enforcement agency or prosecutor. Insurers shall have access to, and may use, the information compiled under the provisions of this Section. Insurers shall release information to, and shall cooperate with, any law enforcement agency requesting such information.
    In the absence of malice, no insurer, or person who furnishes information on its behalf, is liable for damages in a civil action or subject to criminal prosecution for any oral or written statement made or any other action taken that is necessary to supply information required pursuant to this Section.
(Source: P.A. 92-233, eff. 1-1-02.)

    (215 ILCS 5/155.24) (from Ch. 73, par. 767.24)
    Sec. 155.24. Motor Vehicle Theft and Motor Insurance Fraud Reporting and Immunity Law.
    (a) As used in this Section:
        (1) "authorized governmental agency" means the
    
Illinois State Police, a local governmental police department, a county sheriff's office, a State's Attorney, the Attorney General, a municipal attorney, a United States district attorney, a duly constituted criminal investigative agency of the United States government, the Illinois Department of Insurance, the Illinois Department of Professional Regulation and the office of the Illinois Secretary of State;
        (2) "relevant" means having a tendency to make the
    
existence of any information that is of consequence to an investigation of motor vehicle theft or insurance fraud investigation or a determination of such issue more probable or less probable than it would be without such information;
        (3) information will be "deemed important" if within
    
the sole discretion of the authorized governmental agency such information is requested by that authorized governmental agency;
        (4) "Illinois authorized governmental agency" means
    
an authorized governmental agency as defined in item (1) that is a part of the government of the State of Illinois or any of the counties or municipalities of this State or any other authorized entity; and
        (5) For the purposes of this Section and Section
    
155.23, "insurer" means insurance companies, insurance support organizations, self-insured entities, and other providers of insurance products and services doing business in the State of Illinois.
    (b) Upon written request to an insurer by an authorized governmental agency, an insurer or agent authorized by an insurer to act on its behalf shall release to the requesting authorized governmental agency any or all relevant information deemed important to the authorized governmental agency which the insurer may possess relating to any specific motor vehicle theft or motor vehicle insurance fraud. Relevant information may include, but is not limited to:
        (1) Insurance policy information relevant to the
    
motor vehicle theft or motor vehicle insurance fraud under investigation, including any application for such a policy.
        (2) Policy premium payment records which are
    
available.
        (3) History of previous claims made by the insured.
        (4) Information relating to the investigation of the
    
motor vehicle theft or motor vehicle insurance fraud, including statements of any person, proofs of loss and notice of loss.
    (c) When an insurer knows or reasonably believes to know the identity of a person whom it has reason to believe committed a criminal or fraudulent act relating to a motor vehicle theft or a motor vehicle insurance claim or has knowledge of such a criminal or fraudulent act which is reasonably believed not to have been reported to an authorized governmental agency, then for the purpose of notification and investigation, the insurer or an agent authorized by an insurer to act on its behalf shall notify an authorized governmental agency of such knowledge or reasonable belief and provide any additional relevant information in accordance with subsection (b) of this Section. When the motor vehicle theft or motor vehicle claim that gives rise to the suspected criminal or fraudulent act has already generated an incident report to an Illinois authorized governmental agency, the insurer shall report the suspected criminal or fraudulent act to that agency. When no prior incident report has been made, the insurer shall report the suspected criminal or fraudulent act to the Attorney General or State's Attorney in the county or counties where the incident is claimed to have occurred. When the incident that gives rise to the suspected criminal or fraudulent act is claimed to have occurred outside the State of Illinois, but the suspected criminal or fraudulent act occurs within the State of Illinois, the insurer shall make the report to the Attorney General or State's Attorney in the county or counties where the suspected criminal or fraudulent act occurred. When the fraud occurs in multiple counties the report shall also be sent to the Attorney General.
    (d) When an insurer provides any of the authorized governmental agencies with notice pursuant to this Section it shall be deemed sufficient notice to all authorized governmental agencies for the purpose of this Act.
    (e) The authorized governmental agency provided with information pursuant to this Section may release or provide such information to any other authorized governmental agency.
    (f) Any insurer providing information to an authorized governmental agency pursuant to this Section shall have the right to request and receive relevant information from such authorized governmental agency, and receive within a reasonable time after the completion of the investigation, not to exceed 30 days, the information requested.
    (g) Any information furnished pursuant to this Section shall be privileged and not a part of any public record. Except as otherwise provided by law, any authorized governmental agency, insurer, or an agent authorized by an insurer to act on its behalf which receives any information furnished pursuant to this Section, shall not release such information to public inspection. Such evidence or information shall not be subject to subpoena duces tecum in a civil or criminal proceeding unless, after reasonable notice to any insurer, agent authorized by an insurer to act on its behalf and authorized governmental agency which has an interest in such information and a hearing, the court determines that the public interest and any ongoing investigation by the authorized governmental agency, insurer, or any agent authorized by an insurer to act on its behalf will not be jeopardized by obedience to such a subpoena duces tecum.
    (h) No insurer, or agent authorized by an insurer on its behalf, authorized governmental agency or their respective employees shall be subject to any civil or criminal liability in a cause of action of any kind for releasing or receiving any information pursuant to this Section. Nothing herein is intended to or does in any way or manner abrogate or lessen the common and statutory law privileges and immunities of an insurer, agent authorized by an insurer to act on its behalf or authorized governmental agency or any of their respective employees.
(Source: P.A. 102-538, eff. 8-20-21.)

    (215 ILCS 5/155.25) (from Ch. 73, par. 767.25)
    Sec. 155.25. Reports by certain property and casualty insurers.
    (A) The Director shall promulgate rules and regulations which shall require, at the request of the Director, any insurer licensed to write medical liability insurance in this State to file a report on a form furnished by the Director showing its direct experience in this State. All experience shall be on a direct basis, prior to reinsurance, and shall be required only in the aggregate. Individual claim reports shall not be required.
    (B) The reports required under subsection (A) shall include the following data for the previous year ending on the 31st of December:
        (1) Direct premium written for the prior 12 months.
        (2) Direct premium earned for the prior 12 months.
        (3) (a) Incurred claims by accident year, showing the
    
most recent 8 accident years, and a subtotal combining all accident years prior to the most recent 8, valued as of the most recent December 31, valued as of the prior December 31, each developed as the sum of, and with figures provided for under division (b) of this paragraph (3).
        (b) Show for each such item, the difference between 2
    
valuations:
            (i) dollar amount of claim payments, cumulated
        
from the beginning of each accident year, where the dollar amount of claim payments shall be separately reported for closed claims under paragraph (3) (a) and for open and reopened claims under paragraph (3) (a), plus
            (ii) reserves for reported claims as of the
        
valuation dates, open or reopened, plus
            (iii) reserves for claims incurred but not
        
reported as the valuation dates, plus
            (iv) any other loss reserves carried by the
        
company as of the valuation dates and not reported in (3) (ii) or (3) (iii).
            (v) number of claims, cumulated from the
        
beginning of each accident year, showing the most recent 8 accident years, and a subtotal combining all accident years prior to the most recent 8 valued as of the most recent December 31, land valued as of the prior December 31, with figures provided for the number of closed claims under paragraph (3) (a) and the number of open and unopened claims under paragraph (3) (a). Show for each such item, the difference between the 2 valuations.
        (4) Actual incurred expenses allocated separately to
    
loss adjustment, commissions, or other acquisition costs, general office expenses, taxes, licenses and fees, and all other expenses.
        (5) Net underwriting gain or loss.
(Source: P.A. 87-1090.)

    (215 ILCS 5/155.25a) (from Ch. 73, par. 767.25a)
    Sec. 155.25a. Notwithstanding the provisions of subsection (D) of Section 123B-9, a purchasing group may purchase insurance providing for a group aggregate limit from an insurer licensed to write medical liability insurance in this State if (1) such group is domiciled in Illinois and all or substantially all of such group's members are residents of Illinois, (2) each insured in the purchasing group is specifically informed prior to issuance of the policy to such insured of the existence of the group aggregate limit, and (3) either (a) the amount of the group aggregate limit is determined by the Director in his discretion to be sufficiently high (when considered in conjunction with other factors such as each individual insured's per claim limit and each individual insured's aggregate limit), such that the risk that the group aggregate limit will be exhausted is not substantial, or (b) (i) each individual insured's aggregate limit is not more than 300% of such individual insured's per claim limit and (ii) the group aggregate limit (at the time of the insured's claim) is equal to or exceeds the amount set forth in the following table:
Number of InsuredsRequired Purchasing
in PurchasingGroup Aggregate Limit
Group
Less than 10Individual claim limit X
Number of Insureds
10 to 24The sum of (i) 3 X the
individual claim limit,
plus (ii) the individual
claim limit X the Number
of Insureds X 2/3
25 to 50The sum of (i) 7 X the
individual claim
limit, plus (ii) the individual
claim limit X the Number of
Insureds X 1/2
Over 50The sum of (i) 17 X the individual
claim limit, plus (ii) the
individual claim limit X the
Number of Insureds X 3/10.
(Source: P.A. 86-632.)

    (215 ILCS 5/155.26) (from Ch. 73, par. 767.26)
    Sec. 155.26. No insurance company authorized to do business in Illinois may increase the premium rates for a renewal policy which insures an individual with a personal lines automobile insurance policy against any loss or liability resulting from or incident to the ownership, maintenance or use of any motor vehicle if the sole basis for the proposed increase is that the insured was convicted of no more than one offense for speeding where such speeding was not in excess of 10 miles an hour over the posted speed limit, and no claim for recovery of damages or loss has been paid by the insurer because of such offense.
(Source: P.A. 85-332.)

    (215 ILCS 5/155.27) (from Ch. 73, par. 767.27)
    Sec. 155.27. No insurance company authorized to transact business in this State may impose a surcharge upon an applicant for a policy of automobile insurance or refuse to insure the applicant solely based upon the identity of the applicant's prior automobile insurance carrier, unless the applicant fails to provide the company with the applicant's loss experience with the prior carrier within 21 calendar days after the application for automobile insurance is filed.
(Source: P.A. 86-1408.)

    (215 ILCS 5/155.28) (from Ch. 73, par. 767.28)
    Sec. 155.28. (a) Any individual who is a potential applicant for a policy of personal automobile insurance as defined in subsection (a) of Section 143.13 of this Code shall be provided an oral estimate of premium charges based on the information provided to an insurance producer or designated representative who maintains an office within any municipality with 500,000 or more inhabitants. Such an estimate shall be given by any such insurance producer or designated representative of an insurer but shall not be binding.
    (b) No such insurer, insurance producer or designated representative shall require that an individual described in subsection (a) of this Section shall be present in person in order to obtain the estimate described in subsection (a).
    (c) Nothing in this Section shall be construed to prohibit an insurer, insurance producer or designated representative from requiring that an individual be present in person to complete a final application for a policy of personal automobile insurance as defined in subsection (a) of Section 143.13 of this Code.
(Source: P.A. 86-1408.)

    (215 ILCS 5/155.29) (from Ch. 73, par. 767.29)
    Sec. 155.29. (a) Purpose. The purpose of this Section is to regulate the use of aftermarket crash parts by requiring disclosure when any use of an aftermarket non-original equipment manufacturer's crash part is proposed and by requiring that the manufacturers of such aftermarket crash parts be identified.
    (b) Definitions. As used in this Section the following terms have the following meanings:
    "Aftermarket crash part" means a replacement for any of the nonmechanical sheet metal or plastic parts that generally constitute the exterior of a motor vehicle, including inner and outer panels.
    "Non-original equipment manufacturer (Non-OEM) aftermarket crash part" means an aftermarket crash part not made for or by the manufacturer of the motor vehicle.
    "Repair facility" means any motor vehicle dealer, garage, body shop, or other commercial entity that undertakes the repair or replacement of those parts that generally constitute the exterior of a motor vehicle.
    "Installer" means an individual who actually does the work of replacing or repairing parts of a motor vehicle.
    (c) Identification. Any aftermarket crash part supplied by a non-original equipment manufacturer for use in this State after the effective date of this Act shall have affixed thereto or inscribed thereon the logo or name of its manufacturer. The manufacturer's logo or name shall be visible after installation whenever practicable.
    (d) Disclosure. No insurer shall specify the use of non-OEM aftermarket crash parts in the repair of an insured's motor vehicle, nor shall any repair facility or installer use non-OEM aftermarket crash parts to repair a vehicle unless the customer is advised of that fact in writing. In all instances where an insurer intends that non-OEM aftermarket crash parts be used in the repair of a motor vehicle, the insurer shall provide the customer with the following information:
        (1) a written estimate that clearly identifies each
    
non-OEM aftermarket crash part; and
        (2) a disclosure settlement incorporated into or
    
attached to the estimate that reads as follows: "This estimate has been prepared based on the use of crash parts supplied by a source other than the manufacturer of your motor vehicle. Warranties applicable to these replacement parts are provided by the manufacturer or distributor of these parts rather than the manufacturer of your vehicle."
(Source: P.A. 86-1234; 86-1475.)

    (215 ILCS 5/155.30) (from Ch. 73, par. 767.30)
    Sec. 155.30. For purposes of determining premium rates to be charged for personal multi-peril property insurance policies covering real property used principally for residential purposes or any household or personal property that is usual or incidental to the occupancy of any premises used for residential purposes (commonly known as "homeowners" or "renters" insurance), an insurance company authorized to do business in this State shall not treat a child placed in the household by the Illinois Department of Children and Family Services or a private child welfare agency differently from a natural or adopted child of the policy owner. An insurance company authorized to do business in this State shall not consider a policy owner's acceptance of the placement of a foster child in his or her household as a use of the family dwelling for a business purpose.
(Source: P.A. 86-1482.)

    (215 ILCS 5/155.31)
    Sec. 155.31. Day care and group day care homes; coverage.
    (a) No insurer providing insurance coverage, as defined in subsection (b) of Section 143.13 of this Code, shall nonrenew or cancel an insurance policy on a day care home or group day care home, as defined in the Child Care Act of 1969, solely on the basis that the insured operates a duly licensed day care home or group day care home on the insured premises.
    (b) An insurer providing such insurance coverage to a licensed day care home or licensed group day care home may provide such coverage with a separate policy or endorsement to a policy of fire and extended coverage insurance, as defined in subsection (b) of Section 143.13.
    (c) Notwithstanding subsections (a) and (b) of this Section, the insurer providing such coverage shall be allowed to cancel or nonrenew an insurance policy on a day care home or group day care home based upon the authority provided under Sections 143.21 and 143.21.1 of this Code.
(Source: P.A. 90-401, eff. 1-1-98; 90-655, eff. 7-30-98.)

    (215 ILCS 5/155.32)
    Sec. 155.32. Policy explanations; language other than English.
    (a) A company, as defined in Section 132.2 of this Code, may conduct transactions in a language other than English through an employee or agent acting as interpreter or through an interpreter provided by the customer.
    (b) An insurance carrier licensed to provide insurance as defined in subsections (a) and (b) of Section 143.13 of this Code may provide insurance policies, endorsements, riders, and any explanatory or advertising material in a language other than English. In the event of a dispute or complaint regarding the insurance or advertising material, the English language version of the insurance coverage shall control the resolution of the dispute or complaint.
(Source: P.A. 92-578, eff. 6-26-02.)

    (215 ILCS 5/155.33)
    Sec. 155.33. Illinois Health Insurance Portability and Accountability Act. The provisions of this Code are subject to the Illinois Health Insurance Portability and Accountability Act as provided in Section 15 of that Act.
(Source: P.A. 90-30, eff. 7-1-97; 90-655, eff. 7-30-98.)

    (215 ILCS 5/155.34)
    Sec. 155.34. (Repealed).
(Source: P.A. 90-655, eff. 7-30-98. Repealed by P.A. 93-502, eff. 1-1-04.)

    (215 ILCS 5/155.35)
    Sec. 155.35. Insurance compliance self-evaluative privilege.
    (a) To encourage insurance companies and persons conducting activities regulated under this Code, both to conduct voluntary internal audits of their compliance programs and management systems and to assess and improve compliance with State and federal statutes, rules, and orders, an insurance compliance self-evaluative privilege is recognized to protect the confidentiality of communications relating to voluntary internal compliance audits. The General Assembly hereby finds and declares that protection of insurance consumers is enhanced by companies' voluntary compliance with this State's insurance and other laws and that the public will benefit from incentives to identify and remedy insurance and other compliance issues. It is further declared that limited expansion of the protection against disclosure will encourage voluntary compliance and improve insurance market conduct quality and that the voluntary provisions of this Section will not inhibit the exercise of the regulatory authority by those entrusted with protecting insurance consumers.
    (b)(1) An insurance compliance self-evaluative audit document is privileged information and is not admissible as evidence in any legal action in any civil, criminal, or administrative proceeding, except as provided in subsections (c) and (d) of this Section. Documents, communications, data, reports, or other information created as a result of a claim involving personal injury or workers' compensation made against an insurance policy are not insurance compliance self-evaluative audit documents and are admissible as evidence in civil proceedings as otherwise provided by applicable rules of evidence or civil procedure, subject to any applicable statutory or common law privilege, including, but not limited to, the work product doctrine, the attorney-client privilege, or the subsequent remedial measures exclusion.
    (2) If any company, person, or entity performs or directs the performance of an insurance compliance audit, an officer or employee involved with the insurance compliance audit, or any consultant who is hired for the purpose of performing the insurance compliance audit, may not be examined in any civil, criminal, or administrative proceeding as to the insurance compliance audit or any insurance compliance self-evaluative audit document, as defined in this Section. This subsection (b)(2) does not apply if the privilege set forth in subsection (b)(1) of this Section is determined under subsection (c) or (d) not to apply.
    (3) A company may voluntarily submit, in connection with examinations conducted under this Article, an insurance compliance self-evaluative audit document to the Director, or his or her designee, as a confidential document under subsection (i) of Section 132 or subsection (f) of Section 132.5 of this Code without waiving the privilege set forth in this Section to which the company would otherwise be entitled; provided, however, that the provisions in Sections 132 and 132.5 permitting the Director to make confidential documents public and grant access to the National Association of Insurance Commissioners shall not apply to the insurance compliance self-evaluative audit document so voluntarily submitted. Nothing contained in this subsection shall give the Director any authority to compel a company to disclose involuntarily or otherwise provide an insurance compliance self-evaluative audit document.
    (c)(1) The privilege set forth in subsection (b) of this Section does not apply to the extent that it is expressly waived by the company that prepared or caused to be prepared the insurance compliance self-evaluative audit document.
    (2) In a civil or administrative proceeding, a court of record may, after an in camera review, require disclosure of material for which the privilege set forth in subsection (b) of this Section is asserted, if the court determines one of the following:
        (A) the privilege is asserted for a fraudulent
    
purpose;
        (B) the material is not subject to the privilege; or
        (C) even if subject to the privilege, the material
    
shows evidence of noncompliance with State and federal statutes, rules and orders and the company failed to undertake reasonable corrective action or eliminate the noncompliance within a reasonable time.
    (3) In a criminal proceeding, a court of record may, after an in camera review, require disclosure of material for which the privilege described in subsection (b) of this Section is asserted, if the court determines one of the following:
        (A) the privilege is asserted for a fraudulent
    
purpose;
        (B) the material is not subject to the privilege;
        (C) even if subject to the privilege, the material
    
shows evidence of noncompliance with State and federal statutes, rules and orders and the company failed to undertake reasonable corrective action or eliminate such noncompliance within a reasonable time; or
        (D) the material contains evidence relevant to
    
commission of a criminal offense under this Code, and all of the following factors are present:
            (i) the Director, State's Attorney, or Attorney
        
General has a compelling need for the information;
            (ii) the information is not otherwise available;
        
and
            (iii) the Director, State's Attorney, or Attorney
        
General is unable to obtain the substantial equivalent of the information by any means without incurring unreasonable cost and delay.
    (d)(1) Within 30 days after the Director, State's Attorney, or Attorney General makes a written request by certified mail for disclosure of an insurance compliance self-evaluative audit document under this subsection, the company that prepared or caused the document to be prepared may file with the appropriate court a petition requesting an in camera hearing on whether the insurance compliance self-evaluative audit document or portions of the document are privileged under this Section or subject to disclosure. The court has jurisdiction over a petition filed by a company under this subsection requesting an in camera hearing on whether the insurance compliance self-evaluative audit document or portions of the document are privileged or subject to disclosure. Failure by the company to file a petition waives the privilege.
    (2) A company asserting the insurance compliance self-evaluative privilege in response to a request for disclosure under this subsection shall include in its request for an in camera hearing all of the information set forth in subsection (d)(5) of this Section.
    (3) Upon the filing of a petition under this subsection, the court shall issue an order scheduling, within 45 days after the filing of the petition, an in camera hearing to determine whether the insurance compliance self-evaluative audit document or portions of the document are privileged under this Section or subject to disclosure.
    (4) The court, after an in camera review, may require disclosure of material for which the privilege in subsection (b) of this Section is asserted if the court determines, based upon its in camera review, that any one of the conditions set forth in subsection (c)(2)(A) through (C) is applicable as to a civil or administrative proceeding or that any one of the conditions set forth in subsection (c)(3)(A) through (D) is applicable as to a criminal proceeding. Upon making such a determination, the court may only compel the disclosure of those portions of an insurance compliance self-evaluative audit document relevant to issues in dispute in the underlying proceeding. Any compelled disclosure will not be considered to be a public document or be deemed to be a waiver of the privilege for any other civil, criminal, or administrative proceeding. A party unsuccessfully opposing disclosure may apply to the court for an appropriate order protecting the document from further disclosure.
    (5) A company asserting the insurance compliance self-evaluative privilege in response to a request for disclosure under this subsection (d) shall provide to the Director, State's Attorney, or Attorney General, as the case may be, at the time of filing any objection to the disclosure, all of the following information:
        (A) The date of the insurance compliance
    
self-evaluative audit document.
        (B) The identity of the entity conducting the audit.
        (C) The general nature of the activities covered by
    
the insurance compliance audit.
        (D) An identification of the portions of the
    
insurance compliance self-evaluative audit document for which the privilege is being asserted.
    (e) (1) A company asserting the insurance compliance self-evaluative privilege set forth in subsection (b) of this Section has the burden of demonstrating the applicability of the privilege. Once a company has established the applicability of the privilege, a party seeking disclosure under subsections (c)(2)(A) or (C) of this Section has the burden of proving that the privilege is asserted for a fraudulent purpose or that the company failed to undertake reasonable corrective action or eliminate the noncompliance with a reasonable time. The Director, State's Attorney, or Attorney General seeking disclosure under subsection (c)(3) of this Section has the burden of proving the elements set forth in subsection (c)(3) of this Section.
    (2) The parties may at any time stipulate in proceedings under subsections (c) or (d) of this Section to entry of an order directing that specific information contained in an insurance compliance self-evaluative audit document is or is not subject to the privilege provided under subsection (b) of this Section.
    (f) The privilege set forth in subsection (b) of this Section shall not extend to any of the following:
        (1) documents, communications, data, reports, or
    
other information required to be collected, developed, maintained, reported, or otherwise made available to a regulatory agency pursuant to this Code, or other federal or State law, rule, or order;
        (2) information obtained by observation or monitoring
    
by any regulatory agency; or
        (3) information obtained from a source independent of
    
the insurance compliance audit.
    (g) As used in this Section:
        (1) "Insurance compliance audit" means a voluntary,
    
internal evaluation, review, assessment, or audit not otherwise expressly required by law of a company or an activity regulated under this Code, or other State or federal law applicable to a company, or of management systems related to the company or activity, that is designed to identify and prevent noncompliance and to improve compliance with those statutes, rules, or orders. An insurance compliance audit may be conducted by the company, its employees, or by independent contractors.
        (2) "Insurance compliance self-evaluative audit
    
document" means documents prepared as a result of or in connection with and not prior to an insurance compliance audit. An insurance compliance self-evaluation audit document may include a written response to the findings of an insurance compliance audit. An insurance compliance self-evaluative audit document may include, but is not limited to, as applicable, field notes and records of observations, findings, opinions, suggestions, conclusions, drafts, memoranda, drawings, photographs, computer-generated or electronically recorded information, phone records, maps, charts, graphs, and surveys, provided this supporting information is collected or developed for the primary purpose and in the course of an insurance compliance audit. An insurance compliance self-evaluative audit document may also include any of the following:
            (A) an insurance compliance audit report prepared
        
by an auditor, who may be an employee of the company or an independent contractor, which may include the scope of the audit, the information gained in the audit, and conclusions and recommendations, with exhibits and appendices;
            (B) memoranda and documents analyzing portions or
        
all of the insurance compliance audit report and discussing potential implementation issues;
            (C) an implementation plan that addresses
        
correcting past noncompliance, improving current compliance, and preventing future noncompliance; or
            (D) analytic data generated in the course of
        
conducting the insurance compliance audit.
        (3) "Company" has the same meaning as provided in
    
Section 2 of this Code.
    (h) Nothing in this Section shall limit, waive, or abrogate the scope or nature of any statutory or common law privilege including, but not limited to, the work product doctrine, the attorney-client privilege, or the subsequent remedial measures exclusion.
(Source: P.A. 103-897, eff. 1-1-25.)

    (215 ILCS 5/155.36)
    Sec. 155.36. Managed Care Reform and Patient Rights Act. Insurance companies that transact the kinds of insurance authorized under Class 1(b) or Class 2(a) of Section 4 of this Code shall comply with Sections 25, 45, 45.1, 45.2, 45.3, 65, 70, 85, and 87, subsection (d) of Section 30, and the definitions of the term "emergency medical condition" and any other term in Section 10 of the Managed Care Reform and Patient Rights Act that is used in the other Sections listed in this Section. Except as provided by Section 85 of the Managed Care Reform and Patient Rights Act, no law or rule shall be construed to exempt any utilization review program from the requirements of Section 85 of the Managed Care Reform and Patient Rights Act with respect to any insurance described in this Section.
(Source: P.A. 103-426, eff. 8-4-23; 103-650, eff. 1-1-25; 103-656, eff. 1-1-25; 104-417, eff. 8-15-25.)

    (215 ILCS 5/155.37)
    Sec. 155.37. Drug formulary; notice.
    (a) Insurance companies that transact the kinds of insurance authorized under Class 1(b) or Class 2(a) of Section 4 of this Code and provide coverage for prescription drugs through the use of a drug formulary must notify insureds of any change in the formulary. A company may comply with this Section by posting changes in the formulary on its website.
    (b) No later than October 1, 2025, insurance companies that use a drug formulary shall post the formulary on their websites in a manner that is searchable and accessible to the general public without requiring an individual to create any account. This formulary shall adhere to a template developed by the Department by March 31, 2025, which shall take into consideration existing requirements for reporting of information established by the federal Centers for Medicare and Medicaid Services as well as display of cost-sharing information. This template and all formularies also shall do all the following:
        (1) include information on cost-sharing tiers and
    
utilization controls, such as prior authorization, for each covered drug;
        (2) indicate any drugs on the formulary that are
    
preferred over other drugs on the formulary;
        (3) include information to educate insureds about the
    
differences between drugs administered or provided under a policy's medical benefit and drugs covered under a drug benefit and how to obtain coverage information about drugs that are not covered under the drug benefit;
        (4) include information to educate insureds that
    
policies that provide drug benefits are required to have a method for enrollees to obtain drugs not listed in the formulary if they are deemed medically necessary by a clinician under Section 45.1 of the Managed Care Reform and Patient Rights Act;
        (5) include information on which medications are
    
covered, including both generic and brand name; and
        (6) include information on what tier of the plan's
    
drug formulary each medication is in.
    (c) No formulary may establish a step therapy requirement as prohibited by Section 87 of the Managed Care Reform and Patient Rights Act.
(Source: P.A. 103-650, eff. 1-1-25.)

    (215 ILCS 5/155.38)
    Sec. 155.38. (Repealed).
(Source: P.A. 92-651, eff. 7-11-02. Repealed by P.A. 93-114, eff. 10-1-03.)

    (215 ILCS 5/155.39)
    Sec. 155.39. Vehicle protection products.
    (a) As used in this Section:
    "Administrator" means a third party other than the warrantor who is designated by the warrantor to be responsible for the administration of vehicle protection product warranties.
    "Incidental costs" means expenses specified in the vehicle protection product warranty incurred by the warranty holder related to the failure of the vehicle protection product to perform as provided in the warranty. Incidental costs may include, without limitation, insurance policy deductibles, rental vehicle charges, the difference between the actual value of the stolen vehicle at the time of theft and the cost of a replacement vehicle, sales taxes, registration fees, transaction fees, and mechanical inspection fees.
    "Vehicle protection product" means a protective chemical, substance, device, system, or service that is (i) installed on or applied to a vehicle and (ii) designed to prevent loss or damage to a vehicle from a specific cause. The term "vehicle protection product" shall include, without limitation, protective chemicals, alarm systems, body part marking products, steering locks, window etch products, pedal and ignition locks, fuel and ignition kill switches, and electronic, radio, and satellite tracking devices. "Vehicle protection product" does not include fuel additives, oil additives, or other chemical products applied to the engine, transmission, or fuel system of a motor vehicle.
    "Vehicle protection product warrantor" or "warrantor" means a person who is contractually obligated to the warranty holder under the terms of a vehicle protection product warranty. "Warrantor" does not include an authorized insurer.
    "Vehicle protection product warranty" means a written warranty by a vehicle protection product warrantor that (i) is included, for no separate and identifiable consideration, with the purchase of a vehicle protection product sold or offered for sale in this State and (ii) provides if the vehicle protection product fails to prevent loss or damage to a vehicle from a specific cause, that the warranty holder shall be paid specified incidental costs by the warrantor as a result of the failure of the vehicle protection product to perform pursuant to the terms of the warranty.
    "Warranty reimbursement insurance policy" means a policy of insurance issued to the vehicle protection product warrantor to pay on behalf of the warrantor all covered contractual obligations incurred by the warrantor under the terms and conditions of the insured vehicle protection product warranties sold by the warrantor. The warranty reimbursement insurance policy shall be issued by an insurer authorized to do business in this State that has filed its policy form with the Department.
    (a-5) A vehicle protection product warrantor's liabilities under a vehicle protection product warranty shall be covered by a warranty reimbursement insurance policy.
    (b) No vehicle protection product warranty sold or offered for sale in this State shall be subject to the provisions of this Code. Vehicle protection product warranties are express warranties and not insurance.
    Vehicle protection product warrantors and related vehicle protection product sellers and warranty administrators are not required to comply with and are not subject to any other provision of this Code.
    (c) This Section applies to all vehicle protection products sold or offered for sale prior to, on, or after the effective date of this amendatory Act of the 93rd General Assembly. The enactment of this Section does not imply that vehicle protection products should have been subject to regulation under this Code prior to the enactment of this Section. The changes made to this Section by this amendatory Act of the 100th General Assembly do not imply that vehicle protection products and vehicle protection product warranties should have been subject to regulation under this Code prior to this amendatory Act of the 100th General Assembly.
(Source: P.A. 100-272, eff. 1-1-18.)

    (215 ILCS 5/155.40)
    Sec. 155.40. Auto insurance; application; false address.
    (a) An applicant for a policy of insurance that insures against any loss or liability resulting from or incident to the ownership, maintenance, or use of a motor vehicle shall not provide to the insurer to which the application for coverage is made any address for the applicant other than the address at which the applicant resides.
    (b) A person who knowingly violates this Section is guilty of a business offense. The penalty is a fine of not less than $1,001 and not more than $1,200.
(Source: P.A. 95-331, eff. 8-21-07.)

    (215 ILCS 5/155.41)
    Sec. 155.41. Slave era policies.
    (a) The General Assembly finds and declares all of the following:
        (1) Insurance policies from the slavery era have been
    
discovered in the archives of several insurance companies, documenting insurance coverage for slaveholders for damage to or death of their slaves, issued by a predecessor insurance firm. These documents provide the first evidence of ill-gotten profits from slavery, which profits in part capitalized insurers whose successors remain in existence today.
        (2) Legislation has been introduced in Congress for
    
the past 10 years demanding an inquiry into slavery and its continuing legacies.
        (3) The Director of Insurance and the Department of
    
Insurance are entitled to seek information from the files of insurers licensed and doing business in this State, including licensed Illinois subsidiaries of international insurance corporations, regarding insurance policies issued to slaveholders by predecessor corporations. The people of Illinois are entitled to significant historical information of this nature.
    (b) The Department shall request and obtain information from insurers licensed and doing business in this State regarding any records of slaveholder insurance policies issued by any predecessor corporation during the slavery era.
    (c) The Department shall obtain the names of any slaveholders or slaves described in those insurance records, and shall make the information available to the public and the General Assembly.
    (d) Any insurer licensed and doing business in this State shall research and report to the Department with respect to any records within the insurer's possession or knowledge relating to insurance policies issued to slaveholders that provided coverage for damage to or death of their slaves.
    (e) Descendants of slaves, whose ancestors were defined as private property, dehumanized, divided from their families, forced to perform labor without appropriate compensation or benefits, and whose ancestors' owners were compensated for damages by insurers, are entitled to full disclosure.
(Source: P.A. 95-331, eff. 8-21-07.)

    (215 ILCS 5/155.42)
    Sec. 155.42. Identity theft insurance consumer fact sheet. The Department shall develop an appropriate consumer fact sheet to be provided to consumers, either via the Department's website or by hard copy if requested, regarding identity theft insurance. The fact sheet shall include at a minimum, information on what is generally covered under identity theft insurance and on how to protect himself or herself from identity theft.
(Source: P.A. 96-167, eff. 1-1-10.)

    (215 ILCS 5/155.43)
    Sec. 155.43. Misrepresentation of Senior-Specific Certification.
    (a) No insurance producer shall use a senior-specific certification or professional designation that indicates or implies in such a way as to mislead a purchaser or prospective purchaser that the insurance producer has a special certification or training in advising or servicing seniors in connection with the solicitation, sale, or purchase of a life insurance or annuity product or in the provision of advice as to the value of or the advisability of purchasing or selling a life insurance or annuity product, either directly or indirectly through publications, writings, or by issuing or promulgating analyses or reports related to a life insurance or annuity product.
    (b) "Use of senior-specific certifications or professional designations" includes, but is not limited to, all of the following:
        (1) Use of a certification or professional
    
designation by an insurance producer who has not actually earned or is otherwise ineligible to use such certification or designation.
        (2) Use of a nonexistent or self-conferred
    
certification or professional designation.
        (3) Use of a certification or professional
    
designation that indicates or implies a level of occupational qualifications obtained through education, training, or experience that the insurance producer using the certification or designation does not have.
        (4) Use of a certification or professional
    
designation that was obtained from a certifying or designating organization that:
            (i) is primarily engaged in the business of
        
instruction in sales or marketing;
            (ii) does not have reasonable standards or
        
procedures for assuring the competency of its certificate holders or designees;
            (iii) does not have reasonable standards or
        
procedures for monitoring and disciplining its certificate holders or designees for improper or unethical conduct; or
            (iv) does not have reasonable continuing
        
education requirements for its certificate holders or designees in order to maintain the certificate or designation.
    (c) There is a rebuttable presumption that a certifying or designating organization is not disqualified under this Section if the certification or designation issued from the organization does not primarily apply to sales or marketing and if the organization or the certification or designation in question has been accredited by any of the following entities:
        (i) the American National Standards Institute;
        (ii) the National Commission for Certifying Agencies;
    
or
        (iii) any organization included on the list
    
"Accrediting Agencies Recognized for Title IV Purposes" prepared by the United States Department of Education.
    (d) In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has a special certification or training in advising or servicing seniors, the Department of Insurance shall consider all of the following:
        (1) Use of one or more words, such as "senior",
    
"retirement", "elder", or like words combined with one or more words, such as "certified", "registered", "chartered", "advisor", "specialist", "consultant", "planner", or like words in the name of the certification or professional designation.
        (2) The manner in which the words listed in
    
paragraph (1) of subsection (b) are combined.
    (e) For purposes of this Section, a job title within an organization that is licensed or registered by a State or federal financial services regulatory agency is not a certification or professional designation, unless it is used in a manner that would confuse or mislead a reasonable consumer, if the job title indicates seniority or standing within the organization or specifies an individual's area of specialization within the organization. For purposes of this subsection (e), "financial services regulatory agency" includes, but is not limited to, an agency that regulates insurers, insurance producers, broker-dealers, investment advisers, or investment companies.
(Source: P.A. 97-527, eff. 8-23-11.)

    (215 ILCS 5/155.44)
    Sec. 155.44. Financial requirements; large deductible agreements for workers' compensation insurance.
    (a) An insurer shall:
        (1) require full collateralization of the outstanding
    
obligations owed under a large deductible agreement by using one of the following methods:
            (A) a surety bond issued by a surety insurer
        
authorized to transact business by the Department and whose financial strength and size ratings from A.M. Best Company are not less than "A" and "V", respectively;
            (B) an irrevocable letter of credit issued by a
        
financial institution with an office physically located within the State and the deposits of which are federally insured; or
            (C) cash or securities held in trust by a third
        
party or by the insurer and subject to a trust agreement for the express purpose of securing the policyholder's obligation under a large deductible agreement, provided that if the assets are held by the insurer those assets are not commingled with the insurer's other assets; and
        (2) limit the size of the policyholder's obligations
    
under a large deductible agreement to no greater than 20% of the total net worth of the policyholder at each policy inception, as determined by an audited financial statement as of the most recently available fiscal year end.
    (b) As used in this Section, "insurer" means any insurer authorized to issue a workers' compensation policy covering risks located in this State that has an A.M. Best Company rating below "A-" and does not have at least $200,000,000 in surplus.
    (c) As used in this Section, "large deductible agreement" means any combination of one or more policies, endorsements, contracts, or security agreements which provide for the policyholder to bear the risk of loss of $100,000 or greater per claim or occurrence covered under a policy of workers' compensation insurance and which may be subject to the aggregate limit of policyholder reimbursement obligations.
    (d) Except when approved by the Director of Insurance, any insurer determined to be in a financially hazardous condition pursuant to Article XII 1/2 or XIII of this Code by the Director of Insurance in this State or the equivalent in any other state is prohibited from issuing or renewing a policy that includes a large deductible agreement.
    (e) This Section applies to large deductible agreements issued or renewed by any insurer on or after January 1, 2016.
(Source: P.A. 99-369, eff. 8-14-15.)

    (215 ILCS 5/155.45)
    Sec. 155.45. Certificates of insurance.
    (a) In this Section:
        "Certificate of insurance" means a document prepared
    
by an insurer or insurance producer as evidence of property or casualty insurance coverage. "Certificate of insurance" does not include a policy of insurance, an insurance binder, a policy endorsement, or a motor vehicle insurance identification or information card.
        "Department" means the Department of Insurance.
        "Director" means the Director of Insurance.
        "Insurance producer" means a person required to be
    
licensed under the laws of this State to sell, solicit, or negotiate insurance.
        "Insurer" means a company, firm, partnership,
    
association, order, society, or system making any kind or kinds of insurance and shall include associations operating as Lloyds, reciprocal or inter-insurers, or individual underwriters.
        "Person" means any individual, aggregation of
    
individuals, trust, association, partnership, or corporation, or any affiliate thereof.
        "Property or casualty insurance" means the kinds of
    
insurance described in either or both Class 2 or Class 3 of Section 4 of this Code.
    (b) This Section applies to a certificate of insurance that is issued in connection with a contract related to property, operations, or risks located in this State, regardless of the location of the policyholder, insurer, insurance producer, or person that requests or requires the issuance of the certificate of insurance.
    (c) The use of a certificate of insurance form that is unfair, misleading, or deceptive or violates any law is an unfair and deceptive act or practice in the business of insurance under Article XXVI of this Code.
    (d) A certificate of insurance may not amend, extend, or alter the coverage provided under, or confer to a person any rights in addition to the rights expressly provided in, the policy of property or casualty insurance to which the certificate of insurance refers.
    (e) A person may not prepare, issue, request, or require the issuance of a certificate of insurance that:
        (1) contains false or misleading information
    
concerning the policy of property or casualty insurance to which the certificate of insurance refers; or
        (2) alters, amends, or extends the coverage provided
    
by the policy of property or casualty insurance to which the certificate of insurance refers.
    (f) A certificate of insurance may not contain a warranty that the policy of property or casualty insurance to which the certificate of insurance refers complies with the insurance or indemnification requirements of a contract. The inclusion of a contract number or contract description in a certificate of insurance does not warrant that the policy of property or casualty insurance to which the certificate of insurance refers complies with the insurance or indemnification requirements of the contract.
    (g) A person is not entitled to notice of, cancellation of, nonrenewal of, or a material change in a policy of property or casualty insurance unless the person has notice rights under the terms of the policy of property or casualty insurance or an endorsement to the policy. The terms and conditions of notice described in this subsection (g) are governed by the policy of property or casualty insurance or an endorsement to the policy and are not altered by a certificate of insurance.
    (h) A certificate of insurance or any other document that is prepared, issued, requested, or required in violation of this Section is void.
    (i) The Director may refer a matter to the Department of Financial and Professional Regulation for review pursuant to the rules of that department if the Director has reason to believe that a certificate of insurance form as described in subsection (c) of this Section has been provided by a financial institution.
    (j) The Director may examine and investigate the activities of a person that the Director reasonably believes has violated the provisions of this Section. The Director shall have the power to enforce the provisions of this Section and impose any authorized penalty or remedy as provided under Section 401 of this Code upon any person who violates the provisions of this Section.
    (k) The Department may adopt rules to implement the provisions of this Section.
(Source: P.A. 98-819, eff. 1-1-15.)

    (215 ILCS 5/155.46)
    Sec. 155.46. Prohibition on denial of coverage or increase in premiums for living organ donors.
    (a) As used in this Section:
    "Human organ" means all or part of a human's liver, pancreas, kidney, intestine, lung, blood, plasma, skin, or bone marrow.
    "Living organ donor" means an individual who has donated all or part of a human organ and is not deceased.
    "Disability insurance policy" means a contract under which an entity promises to pay a person a sum of money if an illness or injury resulting in a disability prevents that person from working.
    "Life insurance policy" means a contract under which an entity promises to pay a designated beneficiary a sum of money upon the death of the insured.
    "Long-term care insurance policy" means a contract for which the only insurance protection provided under the contract is coverage of qualified long-term care services.
    (b) Notwithstanding any other provision of law, it is unlawful to refuse to insure, to refuse to continue to insure, to limit the amount, extent, or kind of coverage available for life insurance, disability insurance, or long-term care insurance to an individual, or to charge an individual a different rate for the same coverage, solely because of the individual's status as a living organ donor.
    (c) With respect to all other conditions, persons who are living organ donors shall be subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are persons who are not organ donors.
(Source: P.A. 101-179, eff. 1-1-20.)

    (215 ILCS 5/155.47)
    Sec. 155.47. Prohibited practices relating to substance use disorder treatment.
    (a) As used in this Section, "recovery support", "substance use disorder", and "treatment" have the meanings set forth in the Substance Use Disorder Act.
    (b) A company authorized to transact life insurance in this State may not, based solely on whether an individual has participated in a substance use treatment or recovery support program no less than 5 years before application:
        (1) deny coverage to the individual;
        (2) limit the amount, extent, or kind of coverage
    
available to the individual; or
        (3) charge the individual or a group to which the
    
individual belongs a rate that is different from the rate charged to other individuals or groups, respectively, for the same coverage, unless the charge is based on sound underwriting or actuarial principles reasonably related to actual or anticipated loss experience for a particular risk.
(Source: P.A. 102-107, eff. 1-1-22.)

    (215 ILCS 5/155.48)
    Sec. 155.48. Prohibited practices relating to prescription for or obtainment of opioid antagonist.
    (a) As used in this Section, "opioid antagonist" means any drug that binds to opioid receptors and blocks or otherwise inhibits the effects of opioids acting on those receptors to reverse the effects of an opioid overdose.
    (b) A company authorized to transact life insurance in this State may not, based solely on whether an individual has been prescribed or has obtained through a standing order an opioid antagonist:
        (1) deny coverage to the individual;
        (2) limit the amount, extent, or kind of coverage
    
available to the individual; or
        (3) charge the individual or a group to which the
    
individual belongs a rate that is different from the rate charged to other individuals or groups, respectively, for the same coverage, unless the charge is based on sound underwriting or actuarial principles reasonably related to actual or anticipated loss experience for a particular risk.
(Source: P.A. 102-107, eff. 1-1-22.)

    (215 ILCS 5/155.49)
    Sec. 155.49. Insurance company supplier diversity report.
    (a) Every company authorized to do business in this State or accredited by this State with assets of at least $50,000,000 shall submit a 2-page report on its voluntary supplier diversity program, or the company's procurement program if there is no supplier diversity program, to the Department. The report shall set forth all of the following:
        (1) The name, address, phone number, and email
    
address of the point of contact for the supplier diversity program for vendors to register with the program.
        (2) Local and State certifications the company
    
accepts or recognizes for minority-owned, women-owned, LGBT-owned, or veteran-owned business status.
        (3) On the second page, a narrative explaining the
    
results of the program and the tactics to be employed to achieve the goals of its voluntary supplier diversity program.
        (4) The voluntary goals for the calendar year for
    
which the report is made in each category for the entire budget of the company and the commodity codes or a description of particular goods and services for the area of procurement in which the company expects most of those goals to focus on in that year.
    Each company is required to submit a searchable report, in Portable Document Format (PDF), to the Department on or before April 1, 2024 and on or before April 1 every year thereafter.
    (b) For each report submitted under subsection (a), the Department shall publish the results on its Internet website for 5 years after submission. The Department is not responsible for collecting the reports or for the content of the reports.
    (c) The Department shall hold an annual insurance company supplier diversity workshop in July of 2024 and every July thereafter to discuss the reports with representatives of the companies and vendors.
    (d) The Department shall prepare a one-page template, not including the narrative section, for the voluntary supplier diversity reports.
    (e) The Department may adopt such rules as it deems necessary to implement this Section.
(Source: P.A. 103-426, eff. 8-4-23.)


 
    (215 ILCS 5/Art. IX.5 heading)
ARTICLE IX 1/2. CREDIT LIFE AND CREDIT ACCIDENT AND HEALTH INSURANCE

    (215 ILCS 5/155.51) (from Ch. 73, par. 767.51)
    Sec. 155.51. Purpose and scope.) (a) The purpose of this Article is to promote the public welfare by regulating credit life insurance and credit accident and health insurance. Nothing in this Article is intended to prohibit or discourage reasonable competition. The provisions of this Article are to be liberally construed.
    (b) All life insurance and all accident and health insurance sold, or otherwise made effective, in connection with loans or other credit transactions of less than 10 years duration is subject to this Article. Such insurance sold in connection with a loan or other credit transaction of 10 years duration or more is not subject to this Article.
(Source: P.A. 79-930.)

    (215 ILCS 5/155.52) (from Ch. 73, par. 767.52)
    Sec. 155.52. Definitions.
    For the purpose of this Article:
    (a) "Credit life insurance" means insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction;
    (b) "Credit Accident and health insurance" means insurance on a debtor to provide indemnity for payments becoming due on a specific loan or other credit transaction while the debtor is a person with a disability as defined in the policy;
    (c) "Creditor" means the lender of money or vendor or lessor of goods, services, property, rights or privileges, for which payment is arranged through a credit transaction or any successor to the right, title or interest of any such lender, vendor or lessor, and an affiliate, associate or subsidiary of any of them or any director, officer or employee of any of them or any other person in any way associated with any of them;
    (d) "Debtor" means a borrower of money or a purchaser or lessee of goods, services, property, rights or privileges for which payment is arranged through a credit transaction;
    (e) "Indebtedness" means the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction;
    (f) "Director" means the Director of Insurance of the State of Illinois.
(Source: P.A. 99-143, eff. 7-27-15.)

    (215 ILCS 5/155.53) (from Ch. 73, par. 767.53)
    Sec. 155.53. Forms of credit life insurance and credit accident and health insurance.) Credit life insurance and credit accident and health insurance shall be issued only in the following forms:
    (a) Individual policies of life insurance issued to debtors on the term plan;
    (b) Individual policies of accident and health insurance issued to debtors on a term plan or disability benefit provisions in individual policies of credit life insurance;
    (c) Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on the term plan;
    (d) Group policies of accident and health insurance issued to creditors on a term plan insuring debtors or disability benefit provisions in group credit life insurance policies to provide such coverage.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.54) (from Ch. 73, par. 767.54)
    Sec. 155.54. Amount of credit life insurance and credit accident and health insurance.) (a) Credit Life Insurance
    The amount of credit life insurance shall not exceed the initial indebtedness.
    Where an indebtedness is repayable in substantially equal installments, the amount of insurance shall at no time exceed the scheduled or actual amount of unpaid indebtedness, whichever is greater.
    (b) Credit Accident and Health Insurance
    The total amount of indemnity payable by credit accident and health insurance in the event of disability, as defined in the policy, shall not exceed the aggregate of the periodic scheduled unpaid installments of the indebtedness and the amount of each periodic indemnity payment shall not exceed the original indebtedness divided by the number of periodic installments.
(Source: P.A. 79-930.)

    (215 ILCS 5/155.55) (from Ch. 73, par. 767.55)
    Sec. 155.55. Term of credit life insurance and credit accident and health insurance.
    The term of any credit life insurance or credit accident and health insurance shall, subject to acceptance by the insurer, commence on the date when the debtor becomes obligated to the creditor, or the date from which interest or finance charges accrue, if later, except that, where a group policy provides coverage with respect to existing obligations, the insurance on a debtor with respect to such indebtedness shall commence on the effective date of the policy. Where evidence of insurability is required and such evidence is furnished more than 30 days after the date when the debtor becomes obligated to the creditor, the term of the insurance may commence on the date on which the insurer determines the evidence to be satisfactory, and in such event there shall be an appropriate refund or adjustment of any charge to the debtor for insurance. The term of such insurance shall not extend more than 15 days beyond the scheduled maturity date of the indebtedness except when extended without additional cost to the debtor. If the indebtedness is discharged due to renewal or refinancing prior to the scheduled maturity date, the insurance in force shall be terminated before any new insurance may be issued in connection with the renewed or refinanced indebtedness. In all cases of termination prior to scheduled maturity, a refund shall be paid or credited as provided in Section 155.58.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.56) (from Ch. 73, par. 767.56)
    Sec. 155.56. Provisions of policies and certificates of insurance; disclosure to debtors. (a) All credit life insurance and credit accident and health insurance sold shall be evidenced by an individual policy, or in the case of group insurance by a certificate of insurance, which individual policy or group certificate of insurance shall be delivered to the debtor.
    (b) Each individual policy or group certificate of credit life insurance, and/or credit accident and health insurance shall, in addition to other requirements of law, set forth, the name and home office address of the insurer, and the identity by name or otherwise of the person or persons insured, the rate or amount of payment, if any, by the debtor separately for credit life insurance and credit accident and health insurance, a description of the amount, term and coverage including any exceptions, limitations or restrictions, and shall state that the benefits shall be paid to the creditor to reduce or extinguish the unpaid indebtedness and, wherever the amount of insurance may exceed the unpaid indebtedness, that any such excess shall be payable to a beneficiary, other than the creditor, named by the debtor or to his estate.
    (c) Said individual policy or group certificate of insurance shall be delivered to the insured debtor at the time the indebtedness is incurred except as hereinafter provided.
    (d) If said individual policy or group certificate of insurance is not delivered to the debtor at the time the indebtedness is incurred, a copy of the application for such policy or a notice of proposed insurance, signed by the debtor and setting forth the name and home office address of the insurer, the identity by name or otherwise of the person or persons insured, the rate or amount of payment by the debtor, if any, separately for credit life insurance and credit accident and health insurance, a description of the amount, term and coverage provided, shall be delivered to the debtor at the time such indebtedness is incurred. The copy of the application for, or notice of proposed insurance shall refer exclusively to insurance coverage, and shall be separate and apart from the loan, sale or other credit statement of account, instrument or agreement, unless the information required by this subsection is prominently set forth therein. Upon acceptance of the insurance by the insurer and within 30 days of the date upon which the indebtedness is incurred, the insurer shall cause the individual policy or group certificate of insurance to be delivered to the debtor. Said application or notice of proposed insurance shall state that upon acceptance by the insurer, the insurance shall become effective as provided in Section 155.55.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.57) (from Ch. 73, par. 767.57)
    Sec. 155.57. Filing, approval, and withdrawal of forms.
    (a) All policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders delivered or issued for delivery in this State and the schedules of premium rates pertaining thereto shall be filed with the Director.
    (b) The Director shall within a reasonable time after the filing of any such policies, certificates of insurance, notices of proposed insurance, applications for insurance, endorsements, and riders, disapprove any such form if the benefits provided therein are not reasonable in relation to the premium charge, or if it contains provisions which are unjust, unfair, inequitable, misleading, deceptive, or encourage misrepresentation of the coverage, or are contrary to any provision of this Code or of any rule or regulation promulgated thereunder.
    (c) If the Director notifies the insurer that the form is disapproved, it is unlawful thereafter for such insurer to issue or use such form. In such notice, the Director shall specify the reason for his disapproval and state that a hearing will be granted within 20 days after request in writing by the insurer. No such policy, certificate of insurance, notice of proposed insurance, nor any application, endorsement of rider, shall be issued or used until after it has been so filed and the Director has given his prior written approval thereto.
    (d) The Director may at any time, after giving not less than 20 days prior written notice to the insurer, withdraw his approval of any such form on any ground set forth in subsection (b) above. The written notice of withdrawal shall state the reason for the action. The insurer may request a hearing within 10 days after receipt of the notice of withdrawal by giving the Director written notice of such request, together with a statement of its objections. The Director must then conduct a hearing in accordance with Sections 402 and 403. The withdrawal shall be stayed pending the issuance of the Director's orders following the hearing.
    However, if it appears to the Director that the continued use of any such policy, certificate of insurance, notice of proposed insurance, application for insurance, endorsement, or rider by an insurer is hazardous to its policyholders or the public, the Director may take such action as is prescribed by Section 401.1.
    (e) It is not lawful for the insurer to issue such forms or use them after the effective date of such withdrawal.
    (f) If a group policy of credit life insurance or credit accident and health insurance has been or is delivered in another state before or after October 1, 1975 (the effective date of Public Act 79-930), the insurer shall be required to file only the group certificate and notice of proposed insurance delivered or issued for delivery in this State as specified in subsections (b) and (d) of Section 155.57 of this Article and such forms shall be approved by the Director if they conform with the requirements so specified in said subsections and if the schedules of premium rates applicable to the insurance evidenced by such certificate or notice are not in excess of the insurer's schedules of premium rates filed with the Director; provided, however, the premium rate in effect on existing group policies may be continued until the first policy anniversary date following October 1, 1975 (the effective date of Public Act 79-930).
    (g) Any order or final determination of the Director under the provisions of this Section shall be subject to judicial review.
(Source: P.A. 100-863, eff. 8-14-18.)

    (215 ILCS 5/155.58) (from Ch. 73, par. 767.58)
    Sec. 155.58. Premiums and refunds.
    (a) Each insurer issuing credit life insurance or credit accident and health insurance shall file with the Director its schedules of premium rates for use in connection with such insurance. Any insurer may revise such schedules from time to time, and shall file such revised schedules with the Director. No insurer shall issue any credit life insurance policy or credit accident and health insurance policy for which the premium rate exceeds that determined by the schedules of such insurer as then on file with the Director. The Director may require the filing of the schedule of premium rates for use in connection with and as a part of the specific policy filings as provided by Section 155.57.
    (b) Each individual policy, group certificate or notice of proposed insurance shall provide that in the event of termination of the insurance prior to the scheduled maturity date of the indebtedness, any refund of an amount paid by the debtor for insurance shall be paid or credited promptly to the person entitled thereto; provided, however, that the Director shall prescribe a minimum refund and no refund which would be less than such minimum need be made. The formula to be used in computing such refund shall be filed with and approved by the Director.
    (c) If a creditor requires a debtor to make any payment for credit life insurance or credit accident and health insurance and an individual policy or group certificate of insurance is not issued, the creditor shall immediately give written notice to such debtor and shall promptly make an appropriate credit to the account.
    (d) The amount charged to a debtor for credit life or credit health and accident insurance shall not exceed the premium charged by the insurer, as computed at the time the charge to the debtor is determined.
    (e) Nothing in this Article shall be construed to authorize any payments for insurance now prohibited under any statute, or rule thereunder, governing credit transactions.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.59) (from Ch. 73, par. 767.59)
    Sec. 155.59. Issuance of policies.
    All policies of credit life insurance and credit accident and health insurance shall be delivered or issued for delivery in this state only by an insurer authorized to do an insurance business herein, and shall be issued only through licensed agents or brokers.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.60) (from Ch. 73, par. 767.60)
    Sec. 155.60. Claims.
    (a) All claims shall be promptly reported to the insurer or its designated claim representative, and the insurer shall maintain adequate claim files. All claims shall be settled as soon as possible and in accordance with the terms of the insurance contract.
    (b) All claims shall be paid either by draft drawn upon the insurer or by check of the insurer to the order of the claimant to whom payment of the claim is due pursuant to the policy provisions, or upon direction of such claimant to one specified.
    (c) No plan or arrangement shall be used whereby any person, firm or corporation other than the insurer or its designated claim representative shall be authorized to settle or adjust claims. The creditor shall not be designated as claim representative for the insurer in adjusting claims; provided, that a group policyholder may, by arrangement with the group insurer, draw drafts or checks in payment of claims due to the group policyholder subjects to audit and review by the insurer.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.61) (from Ch. 73, par. 767.61)
    Sec. 155.61. Existing insurance-Choice of insurer.
    When credit life insurance or credit accident and health insurance is required as additional security for any indebtedness, the debtor shall, upon request to the creditor, have the option of furnishing the required amount of insurance through existing policies of insurance owned or controlled by him or of procuring and furnishing the required coverage through any insurer authorized to transact an insurance business within this state.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.62) (from Ch. 73, par. 767.62)
    Sec. 155.62. Enforcement.
    The Director may, issue such rules and regulations as he deems appropriate for the administration of this Article. Whenever the Director finds that there has been a violation of this Article or any rules or regulations issued pursuant thereto, and after written notice thereof and hearing given to the insurer or other person authorized or licensed by the Director, he shall set forth the details of his findings together with an order for compliance by a specified date. Such order shall be binding on the insurer and other person authorized or licensed by the Director on the date specified unless sooner withdrawn by the Director or a stay thereof has been ordered by a court of competent jurisdiction.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.63) (from Ch. 73, par. 767.63)
    Sec. 155.63. Judicial review.
    Any party to the proceeding affected by an order of the Director shall be entitled to judicial review by following the procedure set forth in Section 407 of the Illinois Insurance Code.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.64) (from Ch. 73, par. 767.64)
    Sec. 155.64. Penalties.
    In addition to any other penalty provided by law, any person who violates an order of the Director after it has become final, and while such order is in effect, shall, upon proof thereof to the satisfaction of the court, forfeit and pay to the State of Illinois a sum not to exceed $250.00 which may be recovered in a civil action, except that if such violation is found to be willful, the amount of such penalty shall be a sum not to exceed $1,000.00. The Director in his discretion, may revoke or suspend the license or certificate of authority of a person guilty of such violation. Such order for suspension or revocation shall be upon notice and hearing, and shall be subject to judicial review as provided in Section 155.63 of this Article.
(Source: Laws 1959, p. 1140.)

    (215 ILCS 5/155.65) (from Ch. 73, par. 767.65)
    Sec. 155.65. Separability provision.
    If any provision of this Article, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the Article, and the application of such provision to any person or circumstances other than those as to which it is held invalid, shall not be affected thereby.
(Source: Laws 1959, p. 1140.)


 
    (215 ILCS 5/Art. X heading)
ARTICLE X. MERGER, CONSOLIDATION OR PLANS OF EXCHANGE

    (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 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 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 alien stock corporation qualified to do business in Illinois and registered by the corporation department; and any foreign or 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 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 5/158) (from Ch. 73, par. 770)
    Sec. 158. Resolutions for merger or consolidation or adoption of a plan of exchange.     The Board of Directors, Trustees or other governing body of each domestic company desiring to merge or consolidate or to adopt a plan of exchange shall, by resolution, approve an agreement of merger or consolidation or plan of exchange, as the case may be, setting forth:
    (a) the names of the companies proposing to merge or consolidate or to adopt a plan of exchange, and the names of the states or countries under which each of the companies is incorporated or organized;
    (b) in the case of a merger, the name of the company into which they propose to merge, hereafter designated as the surviving company; in the case of a consolidation, the name of the company into which they propose to consolidate, hereafter designated as the new company, and the name of the state or country under the laws of which the new company is to be incorporated or organized;
    (c) the terms and conditions of the proposed merger or consolidation or plan of exchange, and the mode of carrying the same into effect;
    (d) the manner and basis of converting the shares of stock, if any, of each merging or consolidating company into shares, securities and obligations, if any are to be issued, of the surviving or new company as the case may be;
    (e) in the case of a merger, a statement of any changes in the articles of incorporation of the surviving company; in the case of consolidation, all the statements with respect to the new company required to be set forth in original articles of incorporation for a similar company formed under this Code; and
    (f) such other provisions with respect to the merger or consolidation or plan of exchange as are deemed necessary or advisable.
(Source: Laws 1967, p. 2406.)

    (215 ILCS 5/159) (from Ch. 73, par. 771)
    Sec. 159. Vote of shareholders and policyholders.
    (1) The agreement of merger or consolidation shall be submitted to a vote at a meeting of the shareholders, if any, of each domestic company and at a meeting of such policyholders of each domestic company, other than a fraternal benefit society, as are entitled to vote. The plan of exchange shall be submitted to a vote at a meeting of the shareholders of the company to be acquired. The meetings may be either annual, periodic or special. Written or printed notice shall be given not less than 20 days before each such meeting, either personally or by mail, to each shareholder of record and to each policyholder entitled to vote. If mailed, such notice is deemed to be delivered when deposited in the United States mail, with postage prepaid, addressed to the shareholder or policyholder, at his address as it appears on the records of the company. However, a domestic mutual company licensed in 2 or more States may give notice by publication in a newspaper of general circulation in the county in which the company has its principal office and in either of the two largest cities in each State in which the company shall be licensed to do business except as provided in paragraph (3). If the domestic mutual company is licensed in Illinois only, then such notice may be given by publication in a newspaper of general circulation in the 10 counties that have the largest concentration of its policyholders. Notice by publication as approved by the Director shall be published once weekly on 3 successive weeks, the last publication to be at least 20 days before such meeting and not more than 40 days before such meeting. Such notice, whether the meeting is annual, periodic or special, shall state the place, day, hour and purpose of the meeting. A copy or a summary of the agreement of merger or consolidation, or plan of exchange, as the case may be, shall be included in or enclosed with such notice. The shareholders or policyholders may vote in person or by proxy. Each shareholder entitled to vote at such meeting shall have one vote for each share of stock held by him. In the case of domestic companies other than fraternal benefit societies the affirmative vote of two-thirds of all outstanding shares, if any, and if policyholders are entitled to vote, two-thirds of the votes cast by such policyholders of each such company, as are represented at the meeting in person or by proxy, is necessary for the approval of any such agreement or plan.
    (2) In the event that a domestic fraternal benefit society is a party to the agreement of merger or consolidation, the board of managers, directors or trustees of such society shall submit the agreement to the supreme legislative and governing body of such society at any regular or special meeting thereof, provided a copy or summary of such agreement shall have been included in or enclosed with the notice of such meeting. Such notice shall be given as provided in the laws of the society for the convening of such supreme legislative and governing body in regular or special session, as the case may be. The affirmative votes of two-thirds of all members of such supreme legislative and governing body is necessary for the approval of the agreement.
    (3) The provisions of paragraph (1) relating to notice by publication shall not apply to a merger or consolidation between a mutual company and a stock company if the agreement provides that the stock company is the surviving company. In such case, notice either mailed or personal as provided by paragraph (1) shall be given to each shareholder of record and to each policyholder entitled to vote.
(Source: Laws 1968, p. 276.)

    (215 ILCS 5/160) (from Ch. 73, par. 772)
    Sec. 160. Execution of agreement or plan of exchange by domestic company.
    Upon such approval of an agreement of merger or consolidation or plan of exchange it shall be executed by any domestic company party thereto by its president or a vice-president and secretary or an assistant secretary, or the executive officers corresponding thereto.
(Source: Laws 1967, p. 2406.)

    (215 ILCS 5/161) (from Ch. 73, par. 773)
    Sec. 161. Approval and execution of agreement or plan of exchange by foreign or alien company.
    In the event that a foreign or 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 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 alien company as may be required by the laws of the domiciliary state or country of such foreign or 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 alien company is a party to the merger or consolidation and the laws of the state or country under which such foreign or 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 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 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 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 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 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 5/165) (from Ch. 73, par. 777)
    Sec. 165. Recording of certificate of merger or consolidation. Within 15 days after such merger or consolidation has become effective, the surviving or new company shall file for record with the recorder of the county in which the principal office of any of the companies parties to the agreement is located in this State, the agreement of merger or consolidation, or copy thereof, certified by the Director, any certificate of approval issued by the Director, or copy thereof, certified by him and a certificate of merger or consolidation, as the case may be, or a copy thereof, certified by the Director, or by the official of the state or country that issued such certificate. The certificate of merger or consolidation, or a copy thereof so certified, shall also be recorded with the recorder of each other county in this State in which any of the companies parties to the agreement, shall have real property at the time of such merger or consolidation, the title to which will be transferred by the merger or consolidation.
(Source: P.A. 83-358.)

    (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 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 5/167) (from Ch. 73, par. 779)
    Sec. 167. Rights of dissenting shareholders of domestic company.
    (1) If a shareholder entitled to vote of (a) a domestic company which is a party to a merger or consolidation or (b) a domestic insurance company to be acquired under a plan of exchange files with such company, prior to or at the meeting of shareholders at which the agreement of merger or consolidation or plan of exchange is submitted to a vote, a written objection to such agreement or plan, and does not vote in favor thereof, and such shareholder, within 20 days after the merger or consolidation or plan of exchange has become effective in this State makes written demand on the surviving or new company or on the domestic insurance company to be acquired under a plan of exchange for payment of the fair value of his shares as of the day prior to the date on which the vote of shareholders was taken approving the merger or consolidation or plan of exchange, such surviving or new company or domestic insurance company shall pay to such shareholder upon surrender of his certificate or certificates representing such shares, the fair value thereof. Any shareholder who makes such objection and demand shall cease to be a shareholder and shall have no rights with respect to such shares except the right to receive payment therefor. If within 30 days after the effective date, the value of such shares is agreed upon between the shareholder and the surviving or new company or the domestic insurance company to be acquired under a plan of exchange, as the case may be, and such agreement is approved in writing by the Director, payment therefor shall be made within 90 days after the effective date. If within 30 days after the effective date the surviving or new company or the domestic insurance company to be acquired under a plan of exchange, as the case may be, and the shareholders do not so agree, or any agreement as to value is not approved in writing by the Director, either such company or the shareholder may, within 90 days after the effective date, petition the circuit court of the county in which the principal office of the surviving or new company or domestic insurance company is located, to appraise the value of such shares. In the event the surviving or new company has no office in this State, then such petition may be filed in the circuit court of the county in which the principal office of the company in which such shareholder holds shares was located, immediately prior to such merger or consolidation. A copy of the petition shall be delivered or mailed by registered mail to the Director within 5 days after the filing thereof and proof of such delivery or mailing shall be filed with the court. The Director has the right to appear through the Attorney General and be heard upon all questions and issues in the proceeding. The practice, procedure and judgment in the circuit court upon such petition shall be the same, so far as practicable, as that under the eminent domain laws in this State.
    (2) Payment of the appraised value of such shares shall be made within 60 days after the entry of the judgment or order finding such appraised value and the judgment shall be payable only upon and simultaneously with the surrender to the surviving or new company or the domestic insurance company to be acquired under a plan of exchange of the certificate or certificates representing such shares. The right of a dissenting shareholder to be paid the fair value of his shares as herein provided shall cease if and when the Director revokes the approval to the merger or consolidation, as provided in Section 168, or if the merger or consolidation or plan of exchange be abandoned.
    (3) Every shareholder who did not vote in favor of such merger or consolidation or plan of exchange and who does not object in writing and demand payment of the value of his shares at the time and in the manner aforesaid, or does not file a petition within the time herein limited, is conclusively presumed to have assented to such merger or consolidation or plan of exchange and shall be bound by the terms thereof.
    (4) All shares of dissenting shareholders so acquired by a domestic insurance company party to a plan of exchange shall be cancelled by the board of directors of such company upon the plan of exchange becoming effective or at any time thereafter, and the capital stock of the company shall be decreased in accordance with Section 33.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/168) (from Ch. 73, par. 780)
    Sec. 168. Rights of dissenting policyholder of domestic company.
    (1) If not less than five per centum of all the policyholders in any domestic company who were entitled to vote with respect to any merger or consolidation and who did not vote in favor of such merger or consolidation at the meeting at which the agreement of merger or consolidation was adopted by the policyholders of such company, or if not less than five per centum of the members of any domestic fraternal benefit society party to a merger or consolidation shall file, at any time within thirty days after the agreement of merger or consolidation is effected, a petition with the Director for a hearing upon such agreement of merger or consolidation, the Director shall order a hearing upon said petition, fix the time and place of such hearing, and give written notice to the companies that are parties to the merger or consolidation, at least fifteen days before the date of such hearing. Any member or policyholder so petitioning may appear before the Director at such hearing, either in person or by an attorney, and be heard with reference to said agreement. If, upon such hearing being had, the Director finds that the interests of the members or policyholders, as the case may be, of such company are not properly protected, or if he finds that any reasonable objection exists to such agreement, he shall enter an order revoking the approval already given, and the agreement of merger or consolidation shall, thereupon, become null and void.
    (2) The Director shall have like power to revoke any approval of any such agreement if any officer, director or employee of any company party to such agreement shall, after reasonable notice, fail or refuse without reasonable cause to attend and testify at such hearing, or to produce any books or papers called for by said Director.
(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 alien company.
    The rights of any dissenting shareholder, member or policyholder of any foreign or 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 alien company.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/169.1) (from Ch. 73, par. 781.1)
    Sec. 169.1. Effect of exchange under plan of exchange.
    (1) Upon a plan of exchange becoming effective, the exchange provided for therein is considered to have been consummated and each shareholder of the domestic stock insurance company acquired ceases to be a shareholder of such company. The ownership of all shares of the issued and outstanding stock of such company, except shares payment of the value of which is required to be made by such company under Section 167, vests in the acquiring corporation automatically without any physical transfer or deposit of certificates representing such shares. All shares payment of the value of which is required to be made by such company under Section 167 are considered no longer outstanding shares of such company. The acquiring corporation thereupon becomes the sole shareholder of such domestic stock insurance company and has all the rights, privileges, immunities and powers and, except as otherwise provided herein, is subject to all of the duties and liabilities to the extent provided by law of a shareholder of an insurance company organized under the laws of this State.
    (2) Certificates representing shares of the domestic insurance company to be acquired prior to the plan of exchange becoming effective, except certificates representing shares payment of the value of which is required under Section 167, shall after the plan of exchange becomes effective, represent (a) shares of the issued and outstanding capital stock or other securities issued by the acquiring corporations and (b) the right, if any, to receive cash or other consideration upon such terms as are specified in the plan of exchange. However, the plan of exchange may specify that all such certificates shall after the plan of exchange becomes effective represent only the right to receive shares of stock or other securities issued by the acquiring corporation, or cash or other consideration or any combination thereof upon such terms as are specified in the plan of exchange.
(Source: Laws 1967, p. 2406.)

    (215 ILCS 5/169.2) (from Ch. 73, par. 781.2)
    Sec. 169.2. Acquiring and acquired corporations under a plan of exchange to be separate.
    The domestic stock insurance company acquired under a plan of exchange and the acquiring corporation are in all respects separate and distinct corporations, with neither corporation having any liability to the creditors or policyholders, if any, or shareholders of the other, for any acts or omissions of the officers, directors or shareholders of either or both of such corporations.
(Source: Laws 1967, p. 2406.)

    (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 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 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 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 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 5/171) (from Ch. 73, par. 783)
    Sec. 171. Certificates of fees and commissions paid.
    Whenever agreements of merger or consolidation or plans of exchange are filed with the Director, there shall also be filed a certificate executed by the president or a vice-president and attested by the secretary or an assistant secretary, or the executive officers corresponding thereto, and under the corporate seal of each of the companies party to the agreement of merger or consolidation or plan of exchange, verified by the affidavits of such officers, setting forth all fees, commissions or other compensations, or valuable considerations paid or to be paid, directly or indirectly, to any person in any manner securing, aiding, promoting or assisting in any such merger or consolidation or plan of exchange.
(Source: Laws 1967, p. 2406.)

    (215 ILCS 5/172) (from Ch. 73, par. 784)
    Sec. 172. Payment of fees to officer or director prohibited.
    (1) No director or officer of any company party to a merger or consolidation or plan of exchange, except as fully expressed in the agreement of merger or consolidation or plan of exchange shall receive any fee, commission, other compensation or valuable consideration whatever, directly or indirectly for in any manner aiding, promoting or assisting in such merger or consolidation or plan of exchange.
    (2) Any person violating the provisions of this Section shall be guilty of a Class A misdemeanor.
(Source: P.A. 77-2699.)


 
    (215 ILCS 5/Art. XI heading)
ARTICLE XI. REINSURANCE

    (215 ILCS 5/173) (from Ch. 73, par. 785)
    Sec. 173. Reinsurance authorized.
    (a) Subject to the provisions of this Article, any domestic company may, by a reinsurance agreement, accept any part or all of any risks of the kind which it is authorized to insure and it may cede all or any part of its risks to another solvent company having the power to make such reinsurance. It may take credit for the reserves on such ceded risks to the extent reinsured subject to the exceptions provided in Sections 173.1 through 173.5.
    (b) The purpose of this Article is to protect the interest of insureds, claimants, ceding insurers, assuming insurers, and the public generally. The legislature hereby declares its intent is to ensure adequate regulation of insurers and reinsurers and adequate protection for those to whom they owe obligations. In furtherance of that State interest, the legislature hereby provides a mandate that upon the insolvency of a non-U.S. insurer or reinsurer that provides security to fund its U.S. obligations in accordance with this Article, the assets representing the security shall be maintained in the United States and claims shall be filed and valued by the state insurance official with regulatory oversight, and the assets shall be distributed in accordance with the insurance laws of the state in which the trust is domiciled that are applicable to the liquidation of domestic U.S. insurance companies. The legislature declares that the matters contained in this Article are fundamental to the business of insurance in accordance with 15 U.S.C Sections 1011 through 1012.
(Source: P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/173.1) (from Ch. 73, par. 785.1)
    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 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 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 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 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 5/173.2) (from Ch. 73, par. 785.2)
    Sec. 173.2. Reserve credit for liability assumed.
    No credit shall be allowed as an admitted asset or as a deduction from liability, to any ceding company for reinsurance unless the reinsurance is payable by the assuming company on the basis of the liability of the ceding company under the contract or contracts reinsured without diminution because of the insolvency of the ceding company.
(Source: Laws 1965, p. 1077.)

    (215 ILCS 5/173.3) (from Ch. 73, par. 785.3)
    Sec. 173.3. Payment by assuming company.
    (1) No such credit shall be allowed for reinsurance unless the reinsurance agreement provides that payments by the assuming company shall be made directly to the ceding company or to its liquidator, receiver, or statutory successor, except where the contract specifically provides another payee of such reinsurance in the event of the insolvency of the ceding company or where the assuming company with the consent of the direct insured or insureds has assumed such policy obligations of the ceding company to the payees under such policies and in substitution for the obligations of the ceding company to such payees.
    (2) Except as provided in this Section, no assuming company may pay or settle, or agree to pay or settle, any policy claim, or any portion thereof, directly to or with a policyholder of any ceding company if an Order of Rehabilitation or Liquidation has been entered against such ceding company.
(Source: P.A. 77-1329.)

    (215 ILCS 5/173.4) (from Ch. 73, par. 785.4)
    Sec. 173.4. Assuming company may defend claims for insolvent ceding company.
    Such reinsurance agreement may provide that the liquidator or receiver of an insolvent ceding company shall give written notice of the pendency of a claim against the insolvent ceding company on the policy or bond reinsured within a reasonable time after such claim is filed in the insolvency proceeding and that during the pendency of such claim any assuming company may investigate such claim and interpose, at its own expense, in the proceeding where such claim is to be adjudicated any defense or defenses which it considers available to the ceding company or its liquidator or receiver. The expense thus incurred by the assuming company is chargeable against the insolvent ceding company as a part of the expense of liquidation to the extent of a proportionate share of the benefit which accrues to the ceding company solely as a result of the defense undertaken by the assuming company.
    Where two or more assuming companies are involved in the same claim and a majority in interest elect to interpose a defense to such claim, the expense shall be apportioned in accordance with the terms of the reinsurance agreement as though such expense had been incurred by the ceding company.
(Source: Laws 1965, p. 1077.)

    (215 ILCS 5/173.5) (from Ch. 73, par. 785.5)
    Sec. 173.5. Crediting of commissions from cancellable reinsurance.
    Where the parties to a reinsurance contract cancel such contract within 90 days of its effective date without providing for a runoff of the reinsurance in force at the date of cancellation, credit for commission shall be allowed on the financial statement of the ceding company only for that amount of such commission as is actually earned. In the case of any cancellation of reinsurance contracts involving more than 20% of the ceding company's premiums in force, the ceding company shall notify the Director thereof in writing, stating the estimated amount of gross unearned premiums and return commissions involved.
(Source: Laws 1965, p. 1077.)

    (215 ILCS 5/174) (from Ch. 73, par. 786)
    Sec. 174. Kinds of agreements requiring approval.
    (1) The following kinds of reinsurance agreements shall not be entered into by any domestic company unless such agreements are approved in writing by the Director:
        (a) Agreements of reinsurance of any such company
    
transacting the kind or kinds of business enumerated in Class 1 of Section 4, or as a Fraternal Benefit Society under Article XVII, a Mutual Benefit Association under Article XVIII, a Burial Society under Article XIX or an Assessment Accident and Assessment Accident and Health Company under Article XXI, cedes previously issued and outstanding risks to any company, or cedes any risks to a company not authorized to transact business in this State, or assumes any outstanding risks on which the aggregate reserves and claim liabilities exceed 20% of the aggregate reserves and claim liabilities of the assuming company, as reported in the preceding annual statement, for the business of either life or accident and health insurance.
        (b) Any agreement or agreements of reinsurance
    
whereby any company transacting the kind or kinds of business enumerated in either Class 2 or Class 3 of Section 4 cedes to any company or companies at one time, or during a period of six consecutive months more than 20% of the total amount of its net unearned premium reserve liability. The Director has the right to request additional filing review and approval of all contracts that contribute to the statutory threshold trigger. As used in this Section, "net unearned premium reserve liability" means a liability associated with existing or in-force business that is not ceded to any reinsurer before the effective date of the proposed reinsurance contract.
        (c) (Blank).
    (2) Requests for approval shall be filed at least 30 working days prior to the stated effective date of the agreement. An agreement which is not disapproved by the Director within 30 working days after its complete submission shall be deemed approved.
(Source: P.A. 104-334, eff. 10-14-25.)

    (215 ILCS 5/174.1) (from Ch. 73, par. 786.1)
    Sec. 174.1. Kinds of Agreements Prohibited. No domestic stock company with less than $5,000,000 capital and surplus nor domestic mutual or reciprocal company with less than $5,000,000 surplus may assume as reinsurance any of the kind or kinds of businesses enumerated in Class 2 or Class 3 of Section 4 of this Code, except Class 2(a), and except for facultative reinsurance of specific risks and assumption of risks from companies subject to "An Act relating to local, mutual district, county and township insurance companies", approved March 13, 1936, as amended. If approval of the Director is obtained prior to the reinsurance assumption, this prohibition shall not apply to any company organized and authorized to do business in Illinois between July 1, 1981, and June 30, 1983, until January 1, 1989.
(Source: P.A. 84-671.)

    (215 ILCS 5/175) (from Ch. 73, par. 787)
    Sec. 175. Conditions for approval.
    Any reinsurance agreement requiring the written approval of the Director under section 174 shall be approved by him if the terms thereof do not injuriously affect the rights of policyholders of any of the companies which are parties thereto. If the Director refuses to approve any such agreement, he shall grant the company a hearing upon request.
(Source: Laws 1965, p. 1077.)

    (215 ILCS 5/176) (from Ch. 73, par. 788)
    Sec. 176. Pending actions.
    Whenever a company agrees to assume and carry out directly with the policyholder any of the policy obligations of the ceding company under a reinsurance agreement, any claim existing or action or proceeding pending arising out of such policy, by or against the ceding company with respect to such obligations may be prosecuted to judgment as if such reinsurance agreement had not been made, or the assuming company may be substituted in place of the ceding company.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/177) (from Ch. 73, par. 789)
    Sec. 177. Transfer of deposits.
    The provisions of section 170 applicable to the transfer of deposits of legal reserves on policies of merged or consolidated companies shall apply to the transfer of deposits of such reserves of a ceding company in the case of a reinsurance agreement, and for the purposes of determining the conditions and requirements for such transfer the assuming company shall be regarded as a surviving or new company and the ceding company shall be regarded as a company that has been merged or consolidated.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/178)
    Sec. 178. (Repealed).
(Source: Laws 1937, p. 696. Repealed by P.A. 98-692, eff. 7-1-14; 98-969, eff. 1-1-15.)

    (215 ILCS 5/179) (from Ch. 73, par. 791)
    Sec. 179. Payment of fees to officer or director prohibited.
    (1) No director or officer of any company, party to a reinsurance agreement, except as fully expressed in the reinsurance agreement, shall receive any fee, commission, other compensation or valuable consideration whatever, directly or indirectly, for in any manner aiding, promoting or assisting in the negotiation of such reinsurance agreement.
    (2) Any person violating the provisions of this section shall be guilty of a Class A misdemeanor.
(Source: P.A. 77-2699.)

    (215 ILCS 5/179a)
    Sec. 179a. Managing general agent prohibition.
    (a) No managing general agent, as defined in Section 141a, shall receive any compensation or remuneration for, or in any manner profit from, obtaining or arranging reinsurance for a domestic company with respect to business underwritten by that managing general agent.
    (b) Any person violating the provisions of this Section is guilty of a Class A misdemeanor.
(Source: P.A. 88-364.)

    (215 ILCS 5/179b)
    Sec. 179b. Reinsurance committee. Each domestic company that cedes any reinsurance must establish and maintain a reinsurance committee with not fewer than 3 members, at least one of which must be a member of the company's board of directors. The committee shall review and approve all treaty reinsurance placements and review and approve guidelines for facultative placements for the company, with the exception of a reinsurance agreement in which the aggregate premium ceded in any one year is less than 1% of the company's annual gross written premium. The committee shall give special attention to reinsurers' financial strength and performance record.
(Source: P.A. 88-364.)


 
    (215 ILCS 5/Art. XI.5 heading)
ARTICLE XI 1/2. PROTECTED CELL COMPANIES

    (215 ILCS 5/179A-1)
    Sec. 179A-1. Short title. This Article may be cited as the Protected Cell Company Law.
(Source: P.A. 91-278, eff. 7-23-99.)

    (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 alien companies in order to utilize efficiencies available to 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 5/179A-10)
    Sec. 179A-10. Definitions.
    "Domestic company" means an insurance company domiciled in the State of Illinois.
    "Fully funded" means that, with respect to any exposure attributed to a protected cell, the market value of the protected cell assets, on the date on which the insurance securitization is effected, equals or exceeds the maximum possible exposure attributable to the protected cell with respect to those exposures.
    "General account" means the assets and liabilities of a protected cell company other than protected cell assets and protected cell liabilities.
    "Indemnity trigger" means a transaction term by which relief of the issuer's obligation to repay investors is triggered by its incurring a specified level of losses under its insurance or reinsurance contracts.
    "Market value" has the meaning given that term in Article VIII of this Code (Investments of Domestic Companies).
    "Non-indemnity trigger" means a transaction term by which relief of the issuer's obligation to repay investors is triggered solely by some event or condition other than the individual protected cell company incurring a specified level of losses under its insurance or reinsurance contracts.
    "Protected cell" means an identified pool of assets and liabilities of a domestic company segregated and insulated by means of this Article from the remainder of the company's assets and liabilities.
    "Protected cell account" means a specifically identified bank or custodial account established by a protected cell company for the purpose of segregating the protected cell assets of one protected cell from the protected cell assets of other protected cells and from the assets of the protected cell company's general account.
    "Protected cell assets" means all assets, contract rights, and general intangibles identified with and attributable to a specific protected cell of a protected cell company.
    "Protected cell company" means a domestic company that has one or more protected cells.
    "Protected cell company insurance securitization" means the issuance of debt instruments, the proceeds from which support the exposures attributed to the protected cell, by a protected cell company where repayment of principal or interest, or both, to investors pursuant to the transaction terms is contingent upon the occurrence or nonoccurrence of an event with respect to which the protected cell company is exposed to loss under insurance or reinsurance contracts it has issued.
    "Protected cell liabilities" means all liabilities and other obligations identified with and attributable to a specific protected cell of a protected cell company.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

    (215 ILCS 5/179A-15)
    Sec. 179A-15. Establishment of protected cells.
    (a) A domestic company may, with the prior written approval by the Director of a plan of operation submitted by the domestic company with respect to each protected cell, establish one or more protected cells in connection with an insurance securitization. Upon the written approval by the Director of the plan of operation, which shall include, but not be limited to, the specific business and investment guidelines of the protected cell, the protected cell company may, in accordance with the approved plan of operation, attribute to the protected cell insurance obligations with respect to its insurance business and obligations relating to the insurance securitization and assets to fund those obligations. A protected cell shall have its own distinct name or designation, which shall include the words "protected cell". The protected cell company shall transfer all assets attributable to a protected cell to one or more separately established and identified protected cell accounts bearing the name or designation of that protected cell. Protected cell assets shall be held in the protected cell accounts for the purpose of satisfying the obligations of that protected cell.
    (b) All attributions of assets and liabilities between a protected cell and the general account shall be in accordance with the plan of operation approved by the Director. No other attribution of assets or liabilities may be made by a protected cell company between the protected cell company's general account and its protected cells. Any attribution of assets and liabilities between the general account and a protected cell or from investors in the form of principal on a debt instrument issued by a protected cell company shall be in cash or in readily marketable securities with established market values.
    (c) The creation of a protected cell does not create, in respect of that protected cell, a legal person separate from the protected cell company. Amounts attributed to a protected cell under this Article, including assets transferred to a protected cell account, are owned by the protected cell company and the protected cell company may not be, nor hold itself out to be, a trustee with respect to those protected cell assets of that protected cell account. Notwithstanding the foregoing, the company may allow for a security interest to attach to protected cell assets or a protected cell account when in favor of a creditor of the protected cell and otherwise allowed under applicable law.
    (d) This Article shall not be construed to prohibit the protected cell company from contracting with or arranging for an investment advisor, commodity trading advisor, or other third party to manage the protected cell assets of a protected cell, provided that all remuneration, expenses, and other compensation of the third party advisor or manager are payable from the protected cell assets of that protected cell and not from the protected cell assets of other protected cells or the assets of the protected cell company's general account.
    (e) A protected cell company shall establish administrative and accounting procedures necessary to properly identify the one or more protected cells of the protected cell company and the protected cell assets and protected cell liabilities attributable to the protected cells. It shall be the duty of the directors of a protected cell company to:
        (1) keep protected cell assets and protected cell
    
liabilities separate and separately identifiable from the assets and liabilities of the protected cell company's general account; and
        (2) keep protected cell assets and protected cell
    
liabilities attributable to one protected cell separate and separately identifiable from protected cell assets and protected cell liabilities attributable to other protected cells.
    If this Section is violated, the remedy of tracing shall be applicable to protected cell assets when commingled with protected cell assets of other protected cells or the assets of the protected cell company's general account. The remedy of tracing shall not be construed as an exclusive remedy.
    (f) The protected cell company shall, when establishing a protected cell, attribute to the protected cell assets with a value at least equal to the reserves and other insurance liabilities attributed to that protected cell.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

    (215 ILCS 5/179A-20)
    Sec. 179A-20. Use and operation of protected cells.
    (a) The protected cell assets of any protected cell may not be charged with liabilities arising out of any other business the protected cell company may conduct. All contracts or other documentation reflecting protected cell liabilities shall clearly indicate that only the protected cell assets are available for the satisfaction of those protected cell liabilities.
    (b) The income, gains, and losses, realized or unrealized, from protected cell assets and protected cell liabilities must be credited to or charged against the protected cell without regard to other income, gains, or losses of the protected cell company, including income, gains, or losses of other protected cells. Amounts attributed to a protected cell and accumulations thereon may be invested and reinvested without regard to any requirements or limitations of Article VIII of this Code (Investments of Domestic Companies), and the investments in a protected cell or cells may not be taken into account in applying the investment limitations otherwise applicable to the investments of the protected cell company.
    (c) Assets attributed to a protected cell must be valued at their market value on the date of valuation, or if there is no readily available market, then as provided in the contract or the rules or other written documentation applicable to the protected cell.
    (d) A protected cell company shall, in respect of any of its protected cells, engage in fully funded indemnity-triggered insurance securitization to support in full the protected cell exposures attributable to that protected cell. A protected cell company insurance securitization that is not indemnity-triggered may qualify as an insurance securitization under the terms of this Article only after the Director adopts rules addressing the methods of:(i) funding of the portion of the risk that is not indemnity based, (ii) accounting, and disclosure, (iii) risk-based capital treatment, and (iv) assessing risk associated with such securitizations. A protected cell company insurance securitization that is not fully funded, whether indemnity triggered or non-indemnity triggered, is prohibited. Protected cell assets may be used to pay interest or other consideration on any outstanding debt or other obligation attributable to that protected cell, and nothing in this subsection shall be construed or interpreted to prevent a protected cell company from entering into a swap agreement or other transaction for the account of the protected cell that has the effect of guaranteeing such interest or other consideration.
    (e) In all protected cell company insurance securitizations, the contracts or other documentation effecting such transaction shall contain provisions identifying the protected cell to which the transaction will be attributed. In addition, the contracts or other documentation shall clearly disclose that the assets of that protected cell, and only those assets, are available to pay the obligations of that protected cell. Notwithstanding the foregoing, and subject to the provisions of this Article and any other applicable law or rule, the failure to include such language in the contracts or other documentation shall not be used as the sole basis by creditors, reinsurers, or other claimants to circumvent the provisions of this Article.
    (f) A protected cell company may attribute to a protected cell account only the insurance obligations relating to the protected cell company's general account. A protected cell may not issue insurance or reinsurance contracts directly to policyholders or reinsureds or have any obligation to the policyholders or reinsureds of the protected cell company's general account.
    (g) At the cessation of business of a protected cell, the protected cell company shall voluntarily close out the protected cell account in accordance with a plan approved by the Director.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

    (215 ILCS 5/179A-25)
    Sec. 179A-25. Reach of creditors and other claimants.
    (a) Protected cell assets are available only to the creditors of the protected cell company who are creditors in respect of that protected cell and entitled, in conformity with the provisions of this Article, to have recourse to the protected cell assets attributable to that protected cell. Protected cell assets shall be absolutely protected from the creditors of the protected cell company who are not creditors in respect of that protected cell and who, accordingly, are not entitled to have recourse to the protected cell assets attributable to that protected cell. Creditors with respect to a protected cell shall not be entitled to have recourse against the protected cell assets of other protected cells or the assets of the protected cell company's general account.
    Protected cell assets are available only to creditors of a protected cell company after all protected cell liabilities have been extinguished or otherwise provided for in accordance with the plan of operation relating to that protected cell.
    (b) When an obligation of a protected cell company to a person arises from a transaction, or is otherwise imposed, in respect of a protected cell:
        (1) that obligation of the protected cell company
    
shall extend only to the protected cell assets attributable to that protected cell, and the person shall, in respect of that obligation, be entitled to have recourse only to the protected cell assets attributable to that protected cell; and
        (2) that obligation of the protected cell company
    
shall not extend to the protected cell assets of any other protected cell or the assets of the company's general account, and that person shall not, in respect of that obligation, be entitled to have recourse to the protected cell assets of any other protected cell or the assets of the company's general account.
    (c) When an obligation of a protected cell company relates solely to the general account, the obligation of the protected cell company shall extend only to, and that creditor shall, in respect of that obligation, be entitled to have recourse only to, the assets of the protected cell company's general account.
    (d) The activities, assets, and obligations relating to a protected cell are not subject to the provisions of Article XXXIII1/2 (Illinois Life and Health Guaranty Association Law) or Article XXXIV (Illinois Insurance Guaranty Fund), and neither a protected cell nor a protected cell company shall be assessed by or otherwise be required to contribute to any guaranty fund or guaranty association in this State with respect to the activities, assets, or obligations of a protected cell. Nothing in this subsection shall affect the activities or obligations of a company's general account.
    (e) In no event shall the establishment of one or more protected cells alone constitute or be deemed to be a fraudulent conveyance, an intent by the protected cell company to defraud creditors, or the carrying out of business by the protected cell company for any other fraudulent purpose.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

    (215 ILCS 5/179A-30)
    Sec. 179A-30. Rehabilitation and liquidation of protected cell companies.
    (a) Notwithstanding any contrary provision in this Code, the rules promulgated under this Code, or any other applicable law or rule, upon any order of rehabilitation, conservation, or liquidation of a protected cell company, the receiver shall be bound to deal with the protected cell company's assets and liabilities, including protected cell assets and protected cell liabilities, in accordance with the requirements set forth in this Article.
    (b) With respect to amounts recoverable under a protected cell company insurance securitization, the amount recoverable by the receiver shall not be reduced or diminished as a result of the entry of an order of rehabilitation, conservation, or liquidation with respect to the protected cell company notwithstanding any provisions to the contrary in the contracts or other documentation governing the protected cell company insurance securitization.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

    (215 ILCS 5/179A-35)
    Sec. 179A-35. No transaction of an insurance business. A protected cell insurance securitization shall not be deemed to be an insurance or reinsurance contract. An investor in a protected cell company insurance securitization shall not, by sole means of such investment, be deemed to be transacting an insurance business in this State. The underwriters or selling agents (and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors) involved in a protected cell company insurance securitization shall not be deemed to be conducting an insurance or reinsurance agency, brokerage, intermediary, advisory, or consulting business by virtue of their activities in connection therewith.
(Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

    (215 ILCS 5/179A-40)
    Sec. 179A-40. Rules. The Director may promulgate reasonable rules as may be necessary to effectuate the purposes of this Article.
(Source: P.A. 91-278, eff. 7-23-99.)


 
    (215 ILCS 5/Art. XIE heading)
ARTICLE XIE. Special Purpose Reinsurance Vehicle Law

    (215 ILCS 5/179E-1)
    Sec. 179E-1. Short title. This Article may be cited as the Special Purpose Reinsurance Vehicle Law.
(Source: P.A. 92-124, eff. 7-20-01.)

    (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 alien companies to utilize efficiencies available to those 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 5/179E-10)
    Sec. 179E-10. Exemption from insurance laws within limitations.
    (a) An SPRV is subject to the following:
        (1) Articles I, XII 1/2, XXIV, XXV (Sections 408 and
    
412 only), and XXVIII (except for Sections 445, 445.1, 445.2, 445.3, 445.4, and 445.5) of this Code; and
        (2) Sections 132.1 through 134, 137 through 140,
    
155.01, 155.03, and 155.04 of this Code.
    (b) No other provisions of this Code apply to an SPRV organized under this Article, except as otherwise provided in this Article.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-15)
    Sec. 179E-15. Definitions. For purposes of this Article, the following terms have the indicated meanings:
    "Aggregate limit" means the maximum sum payable to the ceding insurer under an SPRV contract.
    "Ceding insurer" means one or more insurers or reinsurers under common control that enters into an SPRV contract with an SPRV.
    "Control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or non-management services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing, 10% or more of the voting securities of any other person. This presumption may be rebutted by a showing that control does not, in fact, exist. Notwithstanding the foregoing, for purposes of this Article, the fact that an SPRV exclusively provides reinsurance to a ceding insurer under an SPRV contract shall not by itself be sufficient grounds for a finding that the SPRV or the SPRV organizer or owner is controlled by or under common control with the ceding insurer.
    "Fair Value" means:
        (1) as to cash, the amount thereof; and
        (2) as to an asset other than cash:
            (A) the amount at which that asset could be
        
bought or sold in a current transaction between arms-length, willing parties;
            (B) quoted market price for the asset in active
        
markets should be used if available; and
            (C) if quoted market prices are not available, a
        
value determined using the best information available considering values of like assets and other valuation methods, such as present value of future cash flows, historical value of the same or similar assets or comparison to values of other asset classes the value of which have been historically related to the subject asset.
    "Fully funded" means that, with respect to an SPRV contract, the fair value of the assets held in trust by or on behalf of the SPRV under the SPRV contract on the date on which the SPRV contract is effected, equals or exceeds the aggregate limit as defined in this Article.
    "Indemnity trigger" means a transaction term by which the SPRV's obligation to pay the ceding insurer for losses covered by an SPRV contract is triggered by the ceding insurer incurring a specified level of losses.
    "Insolvency" or "insolvent" means that the SPRV is unable to pay its obligations when they are due, unless those obligations are the subject of a bona fide dispute.
    "Non-indemnity trigger" means a transaction term by which the SPRV's obligation to pay the ceding insurer under an SPRV contract arises from the occurrence or existence of some event or condition other than the ceding insurer incurring a specified level of losses under its insurance or reinsurance contracts.
    "Permitted investments" means those investments that meet the qualifications set forth in Section 179E-85.
    "Qualified U.S. financial institution" means, for purposes of meeting the requirements of a trustee under this Article, a financial institution that is eligible to act as a fiduciary of a trust, and that is:
        (1) organized or, in the case of a U.S. branch or
    
agency office of a foreign banking organization, licensed, under the laws of the United States or any state of the United States; and
        (2) regulated, supervised, and examined by federal or
    
state authorities having regulatory authority over banks and trust companies.
    "Special purpose reinsurance vehicle" or "SPRV" means an entity, domiciled in and organized under the laws of this State, that has received a limited certificate of authority from the Director under this Article exclusively for the limited purpose of entering into and effectuating SPRV insurance securitizations, SPRV contracts, and other related transactions permitted by this Article.
    "SPRV contract" means a contract between the SPRV and the ceding insurer pursuant to which the SPRV agrees to pay the ceding insurer an agreed amount upon the occurrence of a triggering event.
    "SPRV insurance securitization" means a package of related risk transfer instruments and facilitating administrative agreements by which proceeds are obtained by an SPRV through the issuance of securities, which proceeds are held in trust pursuant to the requirements of this Article to secure the obligations of the SPRV under an SPRV contract with one or more ceding insurers, wherein the SPRV's obligation to return the full initial investment to the holders of those securities, pursuant to the transaction terms, is contingent upon those funds not being used to pay the obligations of the SPRV to the ceding insurers under the SPRV Contract.
    "SPRV organizer" means one or more persons who have organized or intend to organize an SPRV under authority obtained pursuant to Section 179E-20.
    "SPRV securities" means the securities issued by an SPRV.
    "Triggering event" means an event or condition that, if and when it occurs or exists, obligates the SPRV to make a payment to the ceding insurer under the provisions of an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-20)
    Sec. 179E-20. Limited certificate of authority.
    (a) Within 30 days after receipt by the Director of a complete filing by the prospective SPRV organizer for authority to form or acquire an SPRV, which SPRV shall exist and operate expressly for the limited purposes set forth in this Article, the application shall be deemed approved and a limited certificate of authority shall be issued, unless before the expiration of the 30-day period the Director approves or disapproves the application in writing. A limited certificate of authority may not be issued unless the country or state of domicile of each ceding insurer has notified the Director in writing that they have not disapproved the transaction. A complete filing of the application must include the following:
        (1) an affidavit verifying that each prospective SPRV
    
organizer the SPRV meets the requirements as set forth in this Article;
        (2) a representation that the prospective SPRV
    
organizer intends to form an SPRV to operate in accordance with the requirements set forth in this Article;
        (3) the proposed name of the subject SPRV;
        (4) biographical descriptions of each SPRV organizer
    
setting forth their legal names, any names under which they have or are conducting their affairs, and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request;
        (5) the source and form of the minimum capital to be
    
contributed to the SPRV;
        (6) any persons with which the SPRV is or, upon
    
formation, will be affiliated as defined in Article VIII 1/2;
        (7) the names and biographical information of the
    
proposed members of the board of directors and principal officers of the SPRV, setting forth their legal names, any names under which they have or are conducting their affairs and any affiliations with other persons as defined in Article VIII 1/2, together with such other biographical information as the Director may request; and
        (8) a plan of operation, consisting of a description
    
of the contemplated insurance securitization, the SPRV contract, and related transactions, which plan of operation must include:
            (A) draft documentation or, at the discretion of
        
the Director, a written summary, of all material agreements that will be entered into to effectuate the insurance securitization and the related SPRV contract, including the names of the ceding insurers, the nature of the risks being assumed, and the maximum amounts, purpose, nature, and interrelationships of the various transactions required to effectuate the insurance securitization;
            (B) the investment strategy of the SPRV and a
        
representation that (i) the investment strategy complies with the investment requirements set forth in this Article and (ii) includes investment practices or other provisions to preserve asset values that will facilitate attainment of full funding during the term of the securitization with assets that can be monetized in response to a triggering event without a substantial loss in value;
            (C) a description of the method by which losses
        
covered by the SPRV contract that may develop after the termination of the contract period are to be addressed under the provisions of the SPRV contract; and
            (D) a representation that the trust agreement and
        
the trusts holding assets that secure the obligations of the SPRV under the SPRV contract and the SPRV contract with the ceding insurers in connection with the contemplated insurance securitization will be structured in accordance with the requirements set forth in this Article.
    (b) The Director may not approve the application or issue a limited certificate of authority until he or she has found that the proposed plan of operation provides a reasonable expectation of a successful operation, based on the proposed SPRV organizer, directors, and officers being of known good character and that there is no good reason to believe that they are affiliated, directly or indirectly, through ownership, control, management, reinsurance transactions, or other insurance or business relations with any person or persons known to have been involved in the improper manipulation of assets, accounts or reinsurance.
    (c) Upon approval by the Director of the application and the issuance of a limited certificate of authority, the SPRV may be acquired or formed and, in accordance with the approved plan of operation, the SPRV may enter into contracts and conduct other activities within the parameters set forth in the filed plan of operation.
    (d) The limited certificate of authority so issued shall state that the SPRV's authorization to be involved in the business of reinsurance is limited to only the reinsurance activities that the SPRV is allowed to conduct under this Article.
    (e) The SPRV organizer must provide a complete set of the documentation of the insurance securitization to the Director upon closing of the transactions including, but not limited to, an opinion of legal counsel with respect to compliance with this and any other applicable laws as of the effective date of the transaction. Any material change of the SPRV's plan of operation described in items (1) through (8) of subsection (a) including, but not limited to, the issuance of new securities to continue the securitization activities of the SPRV under this Article after expiration and full satisfaction of the initial securitization transactions, requires prior approval of the Director, however, a change in the counterparty to swap transactions for an existing securitization as allowed under this Article shall not be deemed a material change. Any material change that is not disapproved by the Director in writing within 15 days after its submission shall be deemed approved.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-25)
    Sec. 179E-25. Limited purpose of SPRV. This Article authorizes SPRVs to be created for the limited purpose of entering into insurance securitization transactions with investors and into related agreements to pay one or more ceding insurers agreed upon amounts under an SPRV contract upon the occurrence of triggering events related to the insurance business of the ceding insurer. An SPRV may not issue a contract for assumption of risk or indemnification of loss other than an SPRV contract as defined herein.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-30)
    Sec. 179E-30. Approved transactions and operation of SPRVs.
    (a) SPRVs authorized under this Article may at any given time enter into and effectuate SPRV contracts with one or more ceding insurers, provided that the SPRV contracts obligate the SPRV to indemnify the ceding insurer for losses and that contingent obligations of the SPRV under the SPRV contracts are securitized in full through a single SPRV insurance securitization and are fully funded and secured with assets held in trust in accordance with the requirements of this Article pursuant to agreements contemplated by this Article and invested in a manner that meets the criteria set forth in Section 179E-85 of this Article.
    (b) An SPRV may enter into such agreements with third parties and conduct such business as is necessary to fulfill its obligations and administrative duties incident to the insurance securitization and the SPRV contract. The agreements may include entering into swap agreements or other transactions that have the objective of leveling timing differences in funding up-front or ongoing transaction expenses or managing credit or interest rate risk of the investments in trust to assure that the assets held in trust will be sufficient to satisfy (i) payment or repayment of the securities issued pursuant to an insurance securitization transaction or (ii) the obligations of the SPRV under the SPRV contract. In fulfilling its function, the SPRV shall adhere to the following requirements and shall, to the extent of its powers, ensure that contracts obligating other parties to perform certain functions incident to its operations are substantively and materially consistent with the following requirements and guidelines:
        (1) An SPRV shall have a distinct name, which shall
    
include the designation "SPRV". The name of the SPRV may not be deceptively similar to, or likely to be confused with or mistaken for, any other existing business name registered in this State.
        (2) Unless otherwise provided in the plan of
    
operation, the principal place of business and office of any SPRV organized under this Article must be located in this State.
        (3) The assets of an SPRV must be preserved and
    
administered by or on behalf of the SPRV to satisfy the liabilities and obligations of the SPRV incident to the insurance securitization and other related agreements, including the SPRV contract.
        (4) Assets of the SPRV that are pledged to secure
    
obligations of the SPRV to a ceding insurer under an SPRV contract must be held in trust and administered by a qualified U.S. financial institution. The qualified U.S. financial institution may not control, be controlled by, or be under common control with, the SPRV or the ceding insurers.
        (5) The agreement governing any trust must create
    
one or more trust accounts into which all pledged assets must be deposited and held until distributed in accordance with the trust agreement. The pledged assets must be held by the trustee at the trustee's office in the United States and may be held in certificated or electronic form.
        (6) The provisions for withdrawal by ceding insurers
    
of assets from the trust shall be clean and unconditional, subject only to the following requirements:
            (A) the ceding insurer shall have the right to
        
withdraw assets from the trust account at any time, without notice to the SPRV, subject only to written notice to the trustee from the ceding insurer that funds in the amount requested are due and payable by the SPRV;
            (B) no other statement or document need be
        
presented in order to withdraw assets, except the ceding insurer may be required to acknowledge receipt of withdrawn assets;
            (C) the trust agreement must indicate that it is
        
not subject to any conditions or qualifications outside of the trust agreement;
            (D) the trust agreement may not contain
        
references to any other agreements or documents; and
            (E) no reference may be made to the fact that the
        
funds may represent reinsurance premiums or that the funds have been deposited for any specific purpose.
        (7) The trust agreement must be established for the
    
sole use and benefit of the ceding insurer at least to the full extent of the SPRV's obligations to the ceding insurer under the SPRV contract. If there is more than one ceding insurer, a separate trust agreement must be entered with each ceding insurer and a separate trust account must be maintained for each ceding insurer.
        (8) The trust agreement must provide for the trustee
    
to:
            (A) receive assets and hold all assets in a safe
        
place;
            (B) determine that all assets are in a form so
        
that the ceding insurer or the trustee, upon direction by the ceding insurer may, whenever necessary, negotiate any the assets, without consent or signature from the SPRV or any other person or entity;
            (C) furnish to the SPRV, the Director, and the
        
ceding insurer a statement of all assets in the trust account reported at fair value upon its inception and at intervals no less frequent than the end of each calendar quarter;
            (D) notify the SPRV and the ceding insurer,
        
within 10 days, of any deposits to or withdrawals from the trust account;
            (E) upon written demand of the ceding insurer,
        
immediately take any and all steps necessary to transfer absolutely and unequivocally all right, title, and interest in the assets held in the trust account to the ceding insurer and deliver physical custody of the assets to the ceding insurer; and
            (F) allow no substitutions or withdrawals of
        
assets from the trust account, except on written instructions from the ceding insurer.
        (9) The trust agreement must provide that at least 30
    
days, but not more than 45 days, before termination of the trust account, written notification of termination shall be delivered by the trustee to the ceding insurer.
        (10) The trust agreement may be made subject to and
    
governed by the laws of any state, in addition to the requirements for the trust as provided in this Article, provided that the state is disclosed in the plan of operation filed with and approved, or deemed approved, by the Director under Section 179E-20.
        (11) The trust agreement must prohibit invasion of
    
the trust corpus for the purpose of paying compensation to, or reimbursing the expenses of, the trustee.
        (12) The trust agreement must provide that the
    
trustee shall be liable for its own negligence, willful misconduct, or lack of good faith.
        (13) Notwithstanding the provisions of items (6)(C),
    
(6)(D), and (6)(E) of this subsection or item (14)(E) of this subsection, when a trust agreement is established in conjunction with an SPRV contract, then the trust agreement may provide that the ceding insurer must undertake to use and apply any amounts drawn upon the trust account, without diminution because of the insolvency of the ceding insurer or the SPRV, for the following purposes:
            (A) to pay or reimburse the ceding insurer
        
amounts due to the ceding insurer under the specific SPRV contract including, but not limited to, unearned premiums due to the ceding insurer, if not otherwise paid by the SPRV in accordance with the terms of the agreement; or
            (B) when the ceding insurer has received
        
notification of termination of the trust account, and when the SPRV's entire "obligations" under the specific SPRV contract remain unliquidated and undischarged 10 days prior to the termination date, to withdraw amounts equal to those obligations and deposit those amounts in a separate account, in the name of the ceding insurer, in any qualified U.S. financial institution, apart from its general assets, in trust for those uses and purposes specified in item (13)(A) of this subsection as may remain executory after the withdrawal and for any period after the termination date. "Obligations" within the meaning of this subsection may, without duplication, include:
                (i) losses and loss expenses paid by the
            
ceding insurer, but not recovered from the SPRV;
                (ii) reserves for losses reported and
            
outstanding;
                (iii) reserves for losses incurred but not
            
reported;
                (iv) reserves for loss expenses;
                (v) reserves for unearned premiums; and
                (vi) any other amounts that, together with
            
(iv), represent the aggregate limit remaining under the SPRV contract if the period of coverage or the agreed upon period of loss development has yet to expire.
        The provisions to be included in the trust agreement
    
pursuant to this item (13) may, in lieu thereof, be included in the underlying SPRV contract.
        (14) An SPRV contract must contain provisions that:
            (A) require the SPRV to enter into a trust
        
agreement specifying what recoverables or reserves, or both, the agreement is to cover and to establish a trust account for the benefit of the ceding insurer;
            (B) stipulate that assets deposited in the trust
        
account must be valued according to their current fair value, and may consist only of permitted investments;
            (C) require the SPRV, before depositing assets
        
with the trustee, to execute assignments, endorsements in blank, or transfer legal title to the trustee of all shares, obligations, or any other assets requiring assignments, in order that the ceding insurer, or the trustee upon the direction of the ceding insurer, may whenever necessary negotiate the assets without consent or signature from the SPRV or any other entity;
            (D) require that all settlements of account
        
between the ceding insurer and the SPRV be made in cash or its equivalent; and
            (E) stipulate that the SPRV and the ceding
        
insurer agree that the assets in the trust account, established under the provisions of the SPRV contract, may be withdrawn by the ceding insurer at any time, notwithstanding any other provisions in the SPRV contract, and shall be utilized and applied by the ceding insurer or any successor by operation of law of the ceding insurer, including (subject to the provisions of Section 179E-80), but without further limitation, any liquidator, rehabilitator, receiver, or conservator of the ceding insurer, without diminution because of insolvency on the part of the ceding insurer or the SPRV, only for the following purposes:
                (i) to transfer all of those assets into the
            
trust account for the benefit of the ceding insurer under the terms of the SPRV contract and in compliance with this Article; and
                (ii) to pay any other amounts the ceding
            
insurer claims are due under the SPRV contract.
        (15) The SPRV contract entered into by the SPRV may
    
contain provisions that give the SPRV the right to seek approval from the ceding insurer to withdraw from the trust all or part of the assets contained in it and transfer the assets to the SPRV, provided that:
            (A) at the time of the withdrawal, the SPRV
        
replaces the withdrawn assets with other qualified assets having a fair value equal to the fair value of the assets withdrawn and that meet the requirements of Section 179E-85; and
            (B) after the withdrawals and transfer, the fair
        
value of the assets in trust securing the obligations of the SPRV under the SPRV contract is no less than an amount needed to satisfy the fully funded requirement of the SPRV contract. The ceding insurer shall be the sole judge as to the application of these provisions, but shall not unreasonably nor arbitrarily withhold its approval.
        (16) The investors in the SPRV must agree, and be
    
contractually obligated to so do, that any obligation to repay principal, interest, or dividends on the securities issued by the SPRV shall be reduced upon the occurrence of a triggering event, to the extent that the assets of the SPRV held in trust for the benefit of the ceding insurer are remitted to the ceding insurer in fulfillment of the obligations of the SPRV under the SPRV contract.
        (17) Assets held by an SPRV in trust must be valued
    
at their fair value.
        (18) The proceeds from the sale of securities by the
    
SPRV to investors must be deposited with the trustee as contemplated by this Article, and must be held or invested by the trustee in accordance with the requirements of Section 179E-85.
        (19) An SPRV organized under this Article, may engage
    
only in fully funded indemnity triggered SPRV contracts to support in full the ceding insurers' exposures assumed by the SPRV, except that an SPRV may engage in an SPRV contract that is non-indemnity triggered after the Director, in accordance with the authority granted under Section 179E-100 of this Article, adopts rules addressing the treatment of the portion of the risk that is not indemnity based, including accounting, disclosure, risk-based capital treatment, and the manner in which risks associated with the non-indemnity based SPRV contract may be evaluated and managed. An SPRV may not at any time enter into an SPRV contract that is not fully funded, whether indemnity triggered or non-indemnity triggered. Assets of the SPRV may be used to pay interest or other consideration on any outstanding debt or other obligation of the SPRV, and nothing in this item shall be construed or interpreted to prevent an SPRV from entering into a swap agreement or other transaction that has the effect of guaranteeing interest or other consideration.
        (20) The contracts or other documentation relating to
    
an SPRV insurance securitization must contain provisions identifying the SPRV that will enter into the special purpose reinsurance securitization. The contracts or other documentation must clearly disclose that the assets of the SPRV, and only those assets, are available to pay the obligations of that SPRV. Notwithstanding the foregoing, and subject to the provisions of this Article and any other applicable law or rule, the failure to include this language in the contracts or other documentation may not be used as the sole basis by creditors, reinsurers, or other claimants to circumvent the provisions of this Article.
        (21) Under no circumstances may an SPRV be authorized
    
to:
            (A) issue or otherwise administer primary
        
insurance policies;
            (B) have any obligation to the policyholders or
        
reinsureds of the ceding insurer;
            (C) enter into an SPRV contract with a person
        
that is not licensed or otherwise authorized to conduct the business of insurance or reinsurance in at least its state or country of domicile; or
            (D) assume or retain exposure to insurance or
        
reinsurance losses for its own account that is not initially fully funded by proceeds from an SPRV securitization that meets the requirements of this Article.
        (22) At the cessation of business of an SPRV the
    
limited certificate of authority granted by the Director shall expire and the SPRV shall no longer be authorized to conduct activities under this Article unless and until a new certificate of authority is issued pursuant to a new filing in accordance with Section 179E-20.
        (23) It is unlawful for an SPRV to loan or otherwise
    
invest, or place any of its assets in custody, trust, or under management with, or to borrow money or receive a loan from (other than by issuance of the securities pursuant to an SPRV insurance securitization), or advance from, anyone convicted of a felony, anyone who is untrustworthy or of known bad character, or anyone convicted of a criminal offense involving the conversion or misappropriation of fiduciary funds or insurance accounts, theft, deceit, fraud, misrepresentation, or corruption.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-35)
    Sec. 179E-35. Powers.
    (a) An SPRV authorized under this Article shall have the necessary powers to enter into contracts and to conduct such other commercial activities as are necessary to fulfill the purposes of this Article. Those activities may include, but are not limited to, entering into SPRV contracts, issuing securities of the SPRV and complying with the terms thereof, entering into trust, swap, and other agreements as may be necessary to effectuate an insurance securitization in compliance with the limitations and pursuant to the authorities granted to the SPRV under this Article or the plan of operation approved or deemed approved by the Director.
    (b) An SPRV organized or doing business under this Article shall, by the name adopted by the SPRV, in law, be capable of suing or being sued, and may make or enforce contracts in relation to the business of the SPRV; may have and use a common seal, and in the name of the SPRV or by a trustee chosen by the board of directors, shall, in law, be capable of taking, purchasing, holding and disposing of real and personal property for carrying into effect the purposes of its organization; and may by its board of directors, trustees, officers, or managers, make by-laws and amendments thereto not inconsistent with the laws or the constitution of this State or of the United States, which by-laws shall define the manner of electing directors, trustees, or managers and officers of the SPRV, together with their qualifications and duties and fixing their term of office.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-40)
    Sec. 179E-40. Affiliation. Notwithstanding the provisions of Article VIII 1/2, the SPRV, the SPRV organizer, and subsequent debt or equity investors in SPRV securities shall not be deemed affiliates of the ceding insurer by virtue of the SPRV contract between the ceding insurer and the SPRV, the securities of the SPRV, or related agreements necessary to implement the SPRV insurance securitization. An SPRV may not be controlled by, may not control, and may not be under common control with any ceding insurer that is a party to an SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-45)
    Sec. 179E-45. Capitalization. An SPRV must have minimum initial capital of not less than $5,000. All of the initial capital must be received by the SPRV in cash. The minimum initial capital required and all other funds of the SPRV in excess of its minimum initial capital, including funds held in trust to secure the obligations of the SPRV pursuant to its obligations under the SPRV contracts, shall be invested as provided in Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-50)
    Sec. 179E-50. Dividends. An SPRV may not declare or pay dividends in any form to its owners unless the dividends do not decrease the capital of the SPRV below $5,000, and after giving effect to the dividends, the assets of the SPRV, including assets held in trust pursuant to the terms of the insurance securitization, are sufficient to meet its obligations. Dividends may be declared by the board of directors of the SPRV if the declaration of dividends would not violate the provisions of this Article or jeopardize the fulfillment of the obligations of the SPRV or the trustee pursuant to the SPRV insurance securitization, the SPRV contract or any related transaction.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-55)
    Sec. 179E-55. Records and financial reports.
    (a) The records of the SPRV must be maintained in this State and must be available for examination by the Department. The Director shall have the right to examine the records of an SPRV at any time. No later than 5 months after the fiscal year end of the SPRV, the SPRV must file with the Director an audit by a certified public accounting firm of the financial statements of the SPRV and the trust accounts.
    (b) No later than March 1 of each year, an SPRV organized under this Article must file with the Director a statement of operations, including, but not limited to, a statement of income, a balance sheet, and a detailed listing of invested assets, including identification of assets held in trust to secure the SPRV's obligations under the SPRV contract, for the year ending the previous December 31. The statements shall be prepared in accordance with Section 136 of this Code on such forms and shall reveal such information as shall be required by the Director.
    (c) An SPRV must keep its books and records in a manner so that its financial condition, affairs, and operations can be ascertained, its financial statements filed with the Director can be readily verified, and its compliance with the provisions of this Article can be determined. An SPRV may cause any or all of the books or records to be photographed, reproduced on film, or stored and reproduced electronically.
    (d) All original books, records, documents, accounts, and vouchers, or reproductions of those items, must be preserved and kept available in this State for the purpose of examination and until authority to destroy or otherwise dispose of the records is secured from the Director. The original records may, however, be kept and maintained outside this State if, according to a plan adopted by the SPRV's board of directors and approved by the Director, it maintains other suitable records.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-60)
    Sec. 179E-60. Officers and directors.
    (a) The directors of an SPRV shall elect such officers they deem necessary to carry out the purposes of the SPRV pursuant to this Article. The provisions of Section 10 of this Code relating to the indemnification of officers and directors apply to and govern SPRVs organized under this Article.
    (b) An SPRV authorized to do business in this State must notify the Director of the appointment or election of any new officers or directors within 30 days after the appointment or election.
    (c) If, after notice and hearing afforded to the officer or director, and after a finding that the officer or director is incompetent or untrustworthy or of known bad character, the Director shall order the removal of the person. If the SPRV does not comply with a removal order within 30 days, the Director may suspend that SPRV's limited certificate of authority until such time as the order is complied with.
    (d) An SPRV may not make loans to any SPRV organizer, owner, director, officer, manager, or affiliate.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-65)
    Sec. 179E-65. Fees and taxes. The Director may charge fees to reimburse the Director for expenses and costs incurred by the Department incident to the examination of financial statements and review of the plan of operation and to reimburse other such activities of the Director related to the formation and ongoing operation of an SPRV. An SPRV is not be subject to State premium or other State taxes incidental to the operation of its business as long as the business remains within the limitations of this Article.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-70)
    Sec. 179E-70. Dissolution. An SPRV operating under this Article may be dissolved by a vote of its board of directors at any time after the Director has approved that action. A voluntary dissolution may not be effected or allowed until and unless all of the obligations of the SPRV pursuant to the insurance securitization have been fully and finally satisfied pursuant to their terms. In the case of voluntary dissolution, the disposition of the affairs of the SPRV (including the settlement of all outstanding obligations) shall be made by the officers or directors of the SPRV, and when the liquidation has been completed and a final statement, in acceptable form, filed with and approved, or deemed approved, by the Director, the provisions for voluntary dissolution under the laws of this State shall be followed to dissolve the SPRV.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-75)
    Sec. 179E-75. Conservation, rehabilitation, or liquidation.
    (a) The provisions of Articles XIII and XIII 1/2 apply to an SPRV, except to the extent modified in this Section.
    (b) Notwithstanding the provisions of Section 188 of this Code, the Director may apply by petition to the Circuit Court of Cook County, the Circuit Court of Sangamon County, or the circuit court of the county in which an SPRV has or last had its principal office for an order authorizing the Director to conserve, rehabilitate or liquidate an SPRV domiciled in this State solely on one or more of the following grounds:
        (1) there has been embezzlement, wrongful
    
sequestration, dissipation, or diversion of the assets of the SPRV intended to be used to pay amounts owed to the ceding insurer or the holders of SPRV securities; or
        (2) the SPRV is insolvent and the holders of a
    
majority in outstanding principal amount of each class of SPRV securities request or consent to conservation, rehabilitation, or liquidation under this Article.
    The court shall not grant relief under item (1) of this subsection unless, after notice and a hearing, the Director, who has the burden of proof, establishes by clear and convincing evidence that the relief should be granted.
    (c) Notwithstanding any contrary provision in this Code, the rules promulgated under this Code, or any other applicable law or rule, upon any order of conservation, rehabilitation, or liquidation of the SPRV, the receiver shall be bound to deal with the SPRV's assets and liabilities, in accordance with the requirements set forth in this Article.
    (d) With respect to amounts recoverable under an SPRV contract, the amount recoverable by the receiver may not be reduced or diminished as a result of the entry of an order of conservation, rehabilitation, or liquidation with respect to the ceding insurer notwithstanding any provisions to the contrary in the contracts or other documentation governing the SPRV insurance securitization.
    (e) Notwithstanding the provisions of Article XIII and XIII 1/2 of this Code, any application, petition, or temporary restraining order or injunction issued under those Articles, with respect to a ceding insurer shall not prohibit the transaction of any business by an SPRV, including any payment by an SPRV made pursuant to an SPRV security, or any action or proceeding against an SPRV or its assets.
    (f) Notwithstanding the provisions of Articles XIII and XIII 1/2 of this Code, the commencement of a summary proceeding or other interim proceeding commenced before a formal delinquency proceeding with respect to an SPRV, and any order issued by the court thereunder, shall not prohibit:
        (1) the payment by an SPRV made pursuant to an SPRV
    
security or SPRV contract; or
        (2) the SPRV from taking any action required to make
    
the payment.
    (g) Notwithstanding any other provision of Articles XIII and XIII 1/2 of this Code or other State law:
        (1) a receiver of a ceding insurer may not avoid a
    
non-fraudulent transfer by a ceding insurer to an SPRV of money or other property made pursuant to an SPRV contract; and
        (2) a receiver of an SPRV may not void a
    
non-fraudulent transfer by the SPRV of money or other property made to a ceding insurer pursuant to an SPRV contract or made to or for the benefit of any holder of an SPRV security on account of the SPRV security.
    (h) With the exception of the fulfillment of the obligations under an SPRV contract, and notwithstanding any other provisions of this Article or other law of this State to the contrary, the assets of an SPRV, including assets held in trust, may not be consolidated with or included in the estate of a ceding insurer in any delinquency proceeding against the ceding insurer under this Article for any purpose, including, without limitation, distribution to creditors of the ceding insurer.
    (i) Notwithstanding any other provision of this Article:
        (1) A domiciliary receiver of an SPRV domiciled in
    
another state shall be vested by operation of law with the title to all of the assets, property, contracts, and rights of action, and all of the books, accounts, and other records of the SPRV located in this State. The domiciliary receiver shall have the immediate right to recover all of the vested property, assets, and causes of action of the SPRV located in this State.
        (2) An ancillary proceeding may not be commenced or
    
prosecuted in this State against an SPRV domiciled in another state.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-80)
    Sec. 179E-80. SPRV not subject to guaranty funds, residual market, or similar arrangements.
    (a) An SPRV or the activities, assets, and obligations relating to the SPRV are not subject to the provisions of Articles XXXIII 1/2 and XXXIV of this Code, and an SPRV may not be assessed by or otherwise be required to contribute to any guaranty fund or guaranty association in this State with respect to the activities, assets, or obligations of an SPRV or the ceding insurer.
    (b) An SPRV may not be required to participate in residual market, FAIR plan, or other similar plans to provide insurance coverage, take out policies, assume risks, make capital contributions, pay or be otherwise obligated for assessments, surcharges, or fees, or otherwise support or participate in such plans or arrangements.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-85)
    Sec. 179E-85. Asset and investment limitations.
    (a) Assets of the SPRV held in trust to secure obligations under the SPRV contract must at all times be held in:
        (1) cash and cash equivalents;
        (2) securities listed by the Securities Valuation
    
Office of the NAIC and qualifying as admitted assets under statutory accounting convention in its state of domicile; and
        (3) any other form of security acceptable to the
    
Director.
    (b) An SPRV may enter into swap agreements or other transactions that have the objective of leveling timing differences in funding of up-front or ongoing transaction expenses or managing credit or interest rate risk of the investments in the trust to ensure that the investments are sufficient to assure payment or repayment of:
        (1) the securities (and related interest or principal
    
payments) issued pursuant to an SPRV insurance securitization transaction; or
        (2) the SPRV's obligations under the SPRV contract.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-90)
    Sec. 179E-90. Credit for reinsurance for the SPRV contract. An SPRV contract meeting the requirements under this Article shall be granted credit for reinsurance treatment or shall otherwise qualify as an asset or a reduction from liability for reinsurance ceded by a domestic insurer to an assuming insurer under Section 173.1 of this Code for the benefit of the ceding insurer, provided and only to the extent that (i) the fair value of the assets held in trust for the benefit of the ceding insurer equal or exceed the obligations due and payable to the ceding insurer by the SPRV under the SPRV contract, (ii) the assets are held in trust in accordance with the requirements set forth in this Article, (iii) the assets are administered in the manner and pursuant to arrangements as set forth in this Article, and (iv) the assets are held or invested in one or more of the forms allowed in Section 179E-85.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-95)
    Sec. 179E-95. Insurance securitization deemed not to be transaction of insurance business. The securities issued by the SPRV under an SPRV insurance securitization shall not be deemed to be insurance or reinsurance contracts. An investor in securities issued pursuant to an SPRV insurance securitization or any holder of those securities shall not, by sole means of the investment or holding, be deemed to be transacting an insurance business in this State. The underwriters or selling agents (and their partners, directors, officers, members, managers, employees, agents, representatives, and advisors) involved in an SPRV insurance securitization shall not be deemed to be conducting an insurance or reinsurance agency, brokerage, intermediary, advisory, or consulting business by virtue of their activities in connection therewith.
(Source: P.A. 92-124, eff. 7-20-01.)

    (215 ILCS 5/179E-100)
    Sec. 179E-100. Authority to adopt rules. The Director may promulgate rules necessary to effectuate the purposes of this Article. Any rules so promulgated will not affect any existing SPRV insurance securitization in effect at the time of the promulgation.
(Source: P.A. 92-124, eff. 7-20-01.)


 
    (215 ILCS 5/Art. XII heading)
ARTICLE XII. DOMESTICATION OF
FOREIGN AND ALIEN COMPANIES

    (215 ILCS 5/180) (from Ch. 73, par. 792)
    Sec. 180. Companies that may domesticate.
    (1) Any domestic, foreign, or 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 5/181) (from Ch. 73, par. 793)
    Sec. 181. Articles of reorganization. (1) The board of directors, trustees or other governing body of any such company desiring to reorganize under this Article shall comply with all laws and requirements of its domiciliary state or country with reference to reorganization under the laws of another state or country.
    (2) Such board of directors, trustees or other governing body shall adopt a resolution approving articles of reorganization setting forth:
    (a) the name of the company; and if the name of the company upon reorganization is to be changed, the proposed name of the reorganized company;
    (b) the title of the act under which it was organized or incorporated;
    (c) the matters required to be set forth in original articles of incorporation of a similar domestic company;
    (d) that it shall be bound by all the terms and provisions of this Code, applicable to similar domestic companies organized or incorporated thereunder; and
    (e) such other particulars as are deemed necessary or advisable.
(Source: P.A. 86-632; 86-634; 86-1028.)

    (215 ILCS 5/182) (from Ch. 73, par. 794)
    Sec. 182. Execution of articles.
    The articles of reorganization shall be executed in duplicate by the president or vice-president, and secretary or assistant secretary of the company, or the executive officers corresponding thereto, and shall be acknowledged and sworn to.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/183) (from Ch. 73, par. 795)
    Sec. 183. Certificate of Reorganization - Date Reorganization Effected. (1) Upon the execution of the articles of reorganization there shall be delivered to the Director
    (a) two duplicate originals of the articles;
    (b) a copy of the resolution of the board of directors, trustees or other governing body, adopting said articles, duly certified by the secretary of the company or officer corresponding thereto;
    (c) information satisfactory to the Director that the company has complied with all the laws and requirements of the domiciliary state or country with reference to the proposed reorganization and the protection of policyholders; and
    (d) securities of the kind and amount, if any, required as a deposit of a similar domestic company doing the same kind or kinds of business proposed to be done by the reorganized company.
    (2) If the Director finds that the articles of reorganization are in accordance with the provisions of this Article, and that the company has complied with all provisions of this Code applicable to similar domestic companies, he shall approve the articles of reorganization and shall forthwith file one of the duplicate originals of the articles, together with the resolution and certificate of reorganization and certificate of authority, in his office, endorse upon the other duplicate original, his approval thereof, and deliver it together with a certificate of reorganization and a certificate of authority to the reorganized company. Upon such filing, the reorganization of the company shall be effected.
(Source: P.A. 85-131.)

    (215 ILCS 5/184) (from Ch. 73, par. 796)
    Sec. 184. Recording Articles of Reorganization. The articles of reorganization, approved by the Director and returned to the reorganized company, shall be recorded in the office of the recorder in the county where the principal office of the reorganized company is to be located.
(Source: P.A. 85-131.)

    (215 ILCS 5/185) (from Ch. 73, par. 797)
    Sec. 185. Board of directors, trustees, etc. to continue.
    The directors, trustees, or members of any other governing body of the company so reorganized, shall become the directors, trustees or members of the governing body of the reorganized company and shall hold office until their successors are elected or chosen in the manner provided therefor by the articles of reorganization.
(Source: Laws 1937, p. 696.)

    (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 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 5/185.2) (from Ch. 73, par. 797.2)
    Sec. 185.2. Conversion to Foreign Insurer. Any domestic insurer may, upon the approval of the Director, transfer its domicile to any other state in which it is admitted to transact the business of insurance, and upon such a transfer shall cease to be a domestic insurer. The Director shall approve any such proposed transfer unless he shall determine such transfer is not in the interest of the policyholders of this State.
(Source: P.A. 85-131.)


 
    (215 ILCS 5/Art. XII.5 heading)
ARTICLE XII 1/2. CORRECTIVE ORDERS

    (215 ILCS 5/186.1) (from Ch. 73, par. 798.1)
    Sec. 186.1. Supervision by the Director. (1)If the Director determines that any domestic insurance company is operating in a manner, that could lead to, or is in, a financial condition, which if continued would make it hazardous to the public, and its policyholders, the Director may issue an order:
    (a) notifying the company and its Board of Directors of his determination and setting forth the specific deficiencies leading to the determination;
    (b) setting forth the specific action required or prohibited to correct the cited deficiencies; and
    (c) ordering the company to comply with the Director's order within such reasonable time as the Director shall prescribe.
    (2) Operation or financial condition deficiencies supporting the Director's determination under subsection (1) may include, but are not limited to, the following:
    (a) The company has failed to maintain a relationship of policyholder surplus to premium writings or policyholder surplus to claim and unearned premium reserves which provides a reasonable margin of safety for the policyholders considering the classes of insurance the company is writing.
    (b) The company's asset liquidity is not adequate to provide orderly payment of its obligations.
    (c) The company's current or projected net income is inadequate to meet its present or projected obligations.
    (d) The company has a history of claim reserve inadequacy which affects the reliability of its financial statements.
    (e) The company has failed to maintain adequate books and records or has otherwise conducted its insurance operation in a manner which impairs the Director's ability to determine its true financial condition.
    (3) If a company fails to comply with the Director's order issued pursuant to subsection (1) within the time prescribed for such compliance the Director may institute proceedings for the conservation, rehabilitation or liquidation of the company under Article XIII of this Code.
    (4)(a) The Director may require that the company prepare and file a plan to correct the deficiencies cited by the Director in his order within such time as the Director may prescribe. A corrective order may require, prohibit or permit certain acts subject to conditions including the Director's prior approval. The scope of a corrective order may relate to but shall not be limited to:
    (i) the disposition, recovery or mix of assets;
    (ii) the assumption or cession of reinsurance, including reinsurance of outstanding risks;
    (iii) lending and borrowing;
    (iv) investments;
    (v) restricting underwriting and marketing activities.
    (b) The Director may require that any company under such corrective order direct any certified public accountants, consulting actuary or financial consultant retained by the company to prepare for the Director such reports, accounting data and such other reports as the Director may reasonably require to assist in carrying out the responsibilities of the Director under this Section.
    (5)(a) Any company subject to an order under subsections (1) or (4) may request a hearing before the Director to review that order. Such request shall be made in writing within 10 days of the receipt of such order, shall state the company's objections to the order, and shall be addressed to the Director. Such hearing shall be convened not less than 10 days nor more than 20 days after receipt of the written request for hearing unless otherwise agreed to by the company. The Director shall make a final determination within 10 days after the conclusion of the hearing. The Director shall hold all hearings under this subsection privately in accordance with subsection (6) of this Section. The pendency of a hearing or pendency of the Director's final determination shall not stay the effect of the Director's order.
    (b) After the Director's final determination pursuant to any hearing under this subsection, any party to the proceedings whose interests are affected by the Director's final determination shall be entitled to judicial review of such final determination pursuant to the provisions of the "Administrative Review Law".
    Notwithstanding the availability of administrative remedies or judicial review under the "Administrative Review Law", a company which is subject to an order of the Director under this Section shall be entitled to immediate judicial review and injunctive relief in the Circuit Court of Cook County or the Circuit Court of Sangamon County upon satisfying the court:
    (i) that accepting the facts set forth in the order as true, the order is arbitrary or capricious;
    (ii) that the company's interests are substantially impaired by the order; and
    (iii) that the company will suffer permanent injury in the absence of immediate injunctive relief.
    (6) All administrative and judicial proceedings arising under this Article shall be held privately unless a public hearing is requested by the company, and all records of the company, and all records of the Department concerning the company, so far as they pertain to or are a part of the record of the proceedings, shall be and remain confidential, unless the company requests otherwise. Such records shall not be subject to public disclosure under "The Illinois Freedom of Information Act", certified December 27, 1983, as amended, or otherwise, nor shall such records be subject to subpoena by third parties, unless the company and Director consent to such disclosure or release under subpoena.
    (7) The powers vested in the Director by this Section are additional to any and all other powers and remedies vested in the Director by law, and nothing herein contained shall prohibit the Director from proceeding under any other applicable law or under this Section in conjunction with any other law.
(Source: P.A. 84-715.)

    (215 ILCS 5/186.2) (from Ch. 73, par. 798.2)
    Sec. 186.2. (1) Any officer, manager, director, trustee, owner, employee, or agent of any insurer, or any other person with authority over or in charge of any segment of the company's affairs, shall cooperate with the Director in any proceeding under this Article or any investigation preliminary to the proceeding. The term "person" as used in this Section shall include any person who exercises control directly or indirectly over activities of the company through any holding company or other affiliate of the company. To "cooperate" shall include, but shall not be limited to, the following:
    (a) to reply promptly in writing to any inquiry from the Director of Insurance requesting such a reply; and
    (b) to make available to the Director any books, accounts, documents, or other records or information or property of or pertaining to the company and in such person's possession, custody or control.
    (2) No person shall obstruct or interfere with the Director in the conduct of any proceeding under Sections 186.1 and 186.2 or any investigation preliminary or incidental thereto.
    (3) This Section shall not be construed to abridge otherwise existing legal rights, including the right to contest any order issued under this Code.
    (4) Any person who obstructs or interferes with the Director in the conduct of any proceeding or investigation under this Article, or who violates any valid order issued under this Article shall be subject to civil forfeitures, fines or penalties pursuant to Sections 134, 149, 403A and 505.1 of this Code.
(Source: P.A. 84-715.)


 
    (215 ILCS 5/Art. XIII heading)
ARTICLE XIII. REHABILITATION, LIQUIDATION, CONSERVATION AND DISSOLUTION OF
COMPANIES

    (215 ILCS 5/187) (from Ch. 73, par. 799)
    Sec. 187. Scope of Article.
    (1) This Article shall apply to every corporation, association, society, order, firm, company, partnership, individual, and aggregation of individuals to which any Article of this Code is applicable, or which is subject to examination, visitation or supervision by the Director under any provision of this Code or under any law of this State, or which is engaging in or proposing or attempting to engage in or is representing that it is doing an insurance or surety business, or is undertaking or proposing or attempting to undertake to provide or arrange for health care services as a health care plan as defined in subsection (7) of Section 1-2 of the Health Maintenance Organization Act, including the exchanging of reciprocal or inter-insurance contracts between individuals, partnerships and corporations in this State, or which is in the process of organization for the purpose of doing or attempting or intending to do such business, anything as to any such corporation, association, society, order, firm, company, partnership, individual or aggregation of individuals provided in this Code or elsewhere in the laws of this State to the contrary notwithstanding.
    (2) The word "company" as used in this Article includes all of the corporations, associations, societies, orders, firms, companies, partnerships, and individuals specified in subsections (1), (4), and (5) of this Section and agents, managing general agents, brokers, premium finance companies, insurance holding companies, and all other non-risk bearing entities or persons engaged in any aspect of the business of insurance on behalf of an insurer against which a receivership proceeding has been or is being filed under this Article, including, but not limited to, entities or persons that provide management, administrative, accounting, data processing, marketing, underwriting, claims handling, or any other similar services to that insurer, whether or not those entities are licensed to engage in the business of insurance in Illinois, if the entity or person is an affiliate of that insurer.
    (3) The word "court" shall mean the court before which the conservation, rehabilitation, or liquidation proceeding of the company is pending, or the judge presiding in such proceedings.
    (4) The word "affiliate" as used in this Article means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.
    (5) The word "person" as used in this Article means an individual, an aggregation of individuals, a partnership, or a corporation.
    (6) The word "assets" as used in this Article includes all deposits and funds of a special or trust nature.
    (7) The words "receivership proceedings" mean any conservation, rehabilitation, liquidation, or ancillary receivership.
    (8) "Netting agreement", as used in this Article, means (a) a contract or agreement (including terms and conditions incorporated by reference therein), including a master agreement (which master agreement, together with all schedules, confirmations, definitions, and addenda thereto and transactions under any thereof, shall be treated as one netting agreement), that documents one or more transactions between the parties to the agreement for or involving one or more qualified financial contracts and that provides for the netting, liquidation, setoff, termination, acceleration, or close out under or in connection with one or more qualified financial contracts or present or future payment or delivery obligations or payment or delivery entitlements thereunder (including liquidation or close-out values relating to such obligations or entitlements) among the parties to the netting agreement; (b) any master agreement or bridge agreement for one or more master agreements described in paragraph (a) of this subsection (8); or (c) any security agreement or arrangement or other credit enhancement or guarantee or reimbursement obligation related to any contract or agreement described in paragraph (a) or (b) of this subsection (8); provided that any contract or agreement described in paragraphs (a) or (b) of this subsection (8) relating to agreements or transactions that are not qualified financial contracts shall be deemed to be a netting agreement only with respect to those agreements or transactions that are qualified financial contracts.
    (9) "Qualified financial contract" means any commodity contract, forward contract, repurchase agreement, securities contract, swap agreement, or any similar agreement that the Director determines by regulation, resolution, or order to be a qualified financial contract for the purposes of this Act.
        (a) "Commodity contract" means:
            (1) a contract for the purchase or sale of a
        
commodity for future delivery on, or subject to the rules of, a board of trade or contract market under the federal Commodity Exchange Act or a board of trade outside the United States;
            (2) an agreement that is subject to regulation
        
under Section 19 of the federal Commodity Exchange Act and that is commonly known to the commodities trade as a margin account, margin contract, leverage account, or leverage contract;
            (3) an agreement or transaction that is subject
        
to regulation under Section 4c(b) of the federal Commodity Exchange Act and that is commonly known to the commodities trade as a commodity option;
            (4) any combination of the agreements or
        
transactions referred to in this paragraph (a); or
            (5) any option to enter into an agreement or
        
transaction referred to in this paragraph (a).
        (b) "Forward contract", "repurchase agreement",
    
"securities contract", and "swap agreement" shall have the meanings set forth in the Federal Deposit Insurance Act, 12 U.S.C. § 1821(e)(8)(D), as amended from time to time.
(Source: P.A. 96-1450, eff. 8-20-10.)

    (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 alien company. Whenever any domestic company or any unauthorized foreign or 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 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 alien company.
    (1) Upon the filing by the Director of a verified complaint alleging (a) that with respect to a domestic, foreign, or 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 5/188.2)
    Sec. 188.2. Grounds for and provisions applicable to rehabilitation or liquidation of a domestic company that is a covered financial company under the federal Dodd-Frank Wall Street Reform and Consumer Protection Act.
    (a) The provisions of this Section apply in accordance with Title II of the federal Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203, with respect to an insurance company that is a covered financial company, as that term is defined under 12 U.S.C. 5381.
    (b) The Director may file a complaint for an order of rehabilitation or liquidation pursuant to Section 188 of this Code on any of the following grounds:
        (1) upon a determination and notification given by
    
the Secretary of the Treasury of the United States (in consultation with the President of the United States) that the insurance company is a financial company satisfying the requirements of 12 U.S.C. 5383(b), and the board of directors (or body performing similar functions) of the insurance company acquiesces or consents to the appointment of a receiver pursuant to 12 U.S.C. 5382(a)(1)(A)(i), with such consent to be considered as consent to an order of rehabilitation or liquidation;
        (2) upon an order of the United States District Court
    
for the District of Columbia under 12 U.S.C. 5382(a)(1)(A)(iv)(I) granting the petition of the Secretary of the Treasury of the United States concerning the insurance company under 12 U.S.C. 5382(a)(1)(A)(i); or
        (3) a petition by the Secretary of the Treasury of
    
the United States concerning the insurance company is granted by operation of law under 12 U.S.C. 5382(a)(1)(A)(v).
    (c) Notwithstanding any other provision in this Article, this Code, or any other law, after notice to the insurance company, the receivership court may grant an order on the complaint for rehabilitation or liquidation within 24 hours after the filing of a complaint pursuant to this Section.
    (d) If the receivership court does not make a determination on a complaint for rehabilitation or liquidation filed by the Director pursuant to this Section within 24 hours after its filing, then it shall be deemed granted by operation of law upon the expiration of the 24-hour period. At the time that an order is deemed granted under this Section, the provisions of Article XIII of this Code shall be deemed to be in effect, and the Director shall be deemed to be affirmed as receiver and have all of the applicable powers provided by this Code, regardless of whether an order has been entered. The receivership court shall expeditiously enter an order of rehabilitation or liquidation that:
        (1) is effective as of the date that it is deemed
    
granted by operation of law; and
        (2) conforms to the provisions for rehabilitation or
    
liquidation contained in Article XIII of this Code, as applicable.
    (e) Any order of rehabilitation or liquidation made pursuant to this Section shall not be subject to any stay or injunction pending appeal.
    (f) Nothing in this Section shall be construed to supersede or impair any other power or authority of the Director or the court under this Article or Code.
(Source: P.A. 98-136, eff. 8-2-13.)

    (215 ILCS 5/189) (from Ch. 73, par. 801)
    Sec. 189. Injunction. The court shall have jurisdiction, upon, or at any time after the filing of the complaint to issue an injunction restraining such company and its officers, agents, directors, employees and all other persons from transacting any company business or disposing of its property until the further order of the court. The court may also restrain all persons, companies, and entities from bringing or further prosecuting all actions and proceedings at law or in equity or otherwise, whether in this State or elsewhere, against the company or its assets or property or the Director except insofar as those actions or proceedings arise in or are brought in the conservation, rehabilitation, or liquidation proceeding. The court may issue such other injunctions or enter such other orders as may be deemed necessary to prevent interference with the proceedings, or with the Director's possession and control or title, rights or interests as herein provided or to prevent interference with the conduct of the business by the Director, and may issue such other injunctions or enter such other orders as may be deemed necessary to prevent waste of assets or the obtaining, asserting, or enforcing of preferences, judgments, attachments, or other like liens, including common law retaining liens, or the making of any levy against such company or its property and assets while in the possession and control of the Director. The court may issue any other injunctions or enter any other orders that are necessary to protect enrollees in accordance with subsection (c) of Section 5-6 of the Health Maintenance Organization Act. Any injunction issued under this article may be served and enforced as in other civil proceedings, but no bond or other security shall be required of the plaintiff, either for costs or for any injunction. The provisions of this Section are subject to the exclusion set forth in subsection (o) of Section 204 of this Article.
(Source: P.A. 100-89, eff. 8-11-17.)

    (215 ILCS 5/190) (from Ch. 73, par. 802)
    Sec. 190. Practice, hearing, order and appeal.
    (1) The defendant company shall appear within 10 days after the service of the summons as in this Article provided, exclusive of the day of service. If, on the return day of the summons the defendant shall enter its appearance in the action and apply for further time in which to answer, the court shall, upon request of the defendant, extend the time for answering for a period not to exceed 10 days from said return day. If the defendant fails to answer on the return day or within the time granted, or fails to appear, the court shall proceed to hear and determine the cause as herein provided.
    (2) The court, on the return day of the summons as originally fixed or extended hereunder, shall set the cause for hearing on some day not exceeding 20 days from the return day, or the extended return day as herein provided.
    (3) No motions or other pleadings, whether to dissolve, modify or continue any injunction or otherwise, shall be filed by, or permitted on behalf of the defendant prior to the filing of an answer to the complaint. All pleadings shall be filed within the time herein provided.
    (4) The pleadings and proceedings insofar as not otherwise regulated by this Article, shall be as in other civil proceedings.
    (5) Upon the hearing, at which the complaint and any exhibits filed therewith shall be received as prima facie evidence of the facts therein recited, the court shall enter an order either dismissing the complaint or finding that sufficient cause exists for rehabilitation or liquidation and directing the Director to take possession of the property, business and affairs of such company and to rehabilitate or liquidate the same as the case may be. The Director shall be responsible on his official bond for all assets coming into his possession.
    (6) An appeal, if taken from such order, shall be prosecuted on an expedited basis as provided for in such cases by Illinois Supreme Court Rule 307.
    (7) A claim for attorneys' fees incurred by the company in contesting its conservation, rehabilitation, or liquidation may be filed in the proceedings, and the claim may be allowed upon a showing that (i) the attorneys' fees incurred are reasonable; (ii) the board of directors of the company incurred such attorneys' fees based upon their best knowledge, information, and belief formed after reasonable inquiry indicating such contention is well grounded in fact and is warranted by existing law or a good faith argument of the extension, modification, or reversal of existing law; and (iii) the contention is not pursued for any improper purpose, including harassment, unnecessary delay in the proceedings, or waste of estate assets. Such claims, if allowed, shall be accorded a priority of distribution under paragraph (g) of subsection (1) of Section 205. This subsection (7) applies to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of 1993 and to all future liquidation, rehabilitation, or conservation proceedings.
(Source: P.A. 88-297; 88-670, eff. 12-2-94; 89-206, eff. 7-21-95.)

    (215 ILCS 5/190.1) (from Ch. 73, par. 802.1)
    Sec. 190.1. Appeal of order directing liquidation - special claims procedure.
    (1) Within 5 days of the effective date of this amendatory Act of 1982, or, if later, within 5 days after the filing of a notice of appeal of an order of liquidation, which order has not been stayed, the Director shall present for the circuit court's approval a plan for the continued performance of the defendant company's policy claims obligations, including the duty to defend insureds under liability insurance policies, during the pendency of an appeal. Such plan shall provide for the continued performance and payment of policy claims obligations in the normal course of events, notwithstanding the grounds alleged in support of the order of liquidation including the ground of insolvency. In the event the defendant company's financial condition will not, in the judgment of the Director, support the full performance of all policy claims obligations during the appeal pendency period, the plan may prefer the claims of certain policyholders and claimants over creditors and interested parties as well as other policyholders and claimants, as the Director finds to be fair and equitable considering the relative circumstances of such policyholders and claimants. The circuit court shall examine the plan submitted by the Director and if it finds the plan to be in the best interests of the parties, the circuit court shall approve the plan. No action shall lie against the Director or any of his deputies, agents, clerks, assistants or attorneys by any party based on preference in an appeal pendency plan approved by the circuit court.
    (2) The appeal pendency plan shall not supersede or affect the obligations of any insurance guaranty fund which under its own state law is required to pay covered claims obligations during the appeal pendency period.
(Source: P.A. 96-1000, eff. 7-2-10.)

    (215 ILCS 5/191) (from Ch. 73, par. 803)
    Sec. 191. Title to property of company. The Director and his successor and successors in office shall be vested by operation of law with the title to all property, contracts, and rights of action of the company as of the date of the order directing rehabilitation or liquidation. The Director is entitled to immediate possession and control of all property, contracts, and rights of action of the company, and is further authorized and directed to remove any and all records and property of the company to the Director's possession and control or to such other place as may be convenient for the purposes of efficient and orderly administration of the rehabilitation or liquidation. All persons, companies, and entities shall immediately release their possession and control of any and all property, contracts, and rights of action of the company to the Director including, but not limited to, bank accounts and bank records, premium and related records, and claim, underwriting, accounting, and litigation files. The entry of an order of rehabilitation or liquidation creates an estate that comprises all of the liabilities and assets of the company. The filing or recording of such order in the office of the recorder or the Registrar of Titles in any county of this State shall impart the same notice that a deed, bill of sale or other evidence of title duly filed for record by such company would have imparted.
(Source: P.A. 89-206, eff. 7-21-95.)

    (215 ILCS 5/192) (from Ch. 73, par. 804)
    Sec. 192. Duties of Director as rehabilitator; termination.
    (1) Upon the entry of an order directing rehabilitation, the Director shall immediately proceed to conduct the business of the company and take such steps towards removal of the causes and conditions which have made such proceedings necessary as may be expedient.
    (2) The Director is authorized to deal with the property and business of the company in his name as Director, or, if the Court shall so order, in the name of the company. The Director may, subject to the approval of the Court, sell or otherwise dispose of the real and personal property, or any part thereof, and sell or compromise all doubtful or uncollectible debts or claims owing to the company in any rehabilitation proceeding now pending or hereafter instituted, except that whenever the value of any real or personal property or the amount of any such debt owing to the company does not exceed $25,000, the Director may sell, dispose of, compromise, or compound the same upon such terms as the Director deems to be in the best interest of the company without obtaining approval of the court unless otherwise directed by the court. The Director may solicit contracts whereby a solvent company agrees to assume, in whole or in part, or upon a modified basis, the liabilities of a company in rehabilitation in a manner consistent with subsection (4) of Section 193 of this Code.
    (3) The Director may bring any action, claim, suit, or proceeding against any director or officer of the company or against any other person with respect to that person's dealings with the company including, but not limited to, prosecuting any action, claim, suit, or proceeding on behalf of the creditors, members, policyholders, or shareholders of the company. Nothing in this subsection shall be construed to affect the standing of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, or the Illinois Health Maintenance Organization Guaranty Association to sue or be sued under applicable law.
    (4) If at any time the Director finds that it is in the best interests of policyholders, creditors and the company to effect a plan of mutualization or rehabilitation, the Director may submit such plan to the court for its approval. Such plan, in addition to any other terms and provisions as may by the Director be deemed necessary or advisable, may include a provision imposing liens upon the net equities of policyholders of the company, and in the case of life companies, a provision imposing a moratorium upon the loan or cash surrender values of the policies, for such period and to such an extent as may be necessary. Notice of the hearing upon any such plan shall be given in the manner as may be fixed by the court and upon such hearing the court may either approve or disapprove the plan or modify it in such manner and to such extent as to the court shall seem appropriate.
    (5) Where in such proceedings the Court has entered an order for the filing of claims and it subsequently appears that the total amount of all allowable claims exceed the assets in the possession of the Rehabilitator, the Court may upon the application of the Director authorize a distribution of assets in accordance with the applicable provisions of Section 210. The Director may at such time apply under this Section for an order dissolving the company in accordance with the applicable provisions of Section 196.
    (6) If at any time the Director finds that the causes and conditions which made such proceeding necessary have been removed he may petition the court for an order terminating the conduct of the business by the Director and permitting such company to resume possession of its property and the conduct of its business and for a full discharge of all liability and responsibility of the Director. No order for the return to such company of its property and business shall be granted unless the court after a full hearing determines that the purposes of the proceeding have been fully accomplished.
(Source: P.A. 89-206, eff. 7-21-95; 90-381, eff. 8-14-97.)

    (215 ILCS 5/193) (from Ch. 73, par. 805)
    Sec. 193. Duties of Director as liquidator; sales; reinsurance.
    (1) Upon the entry of an order directing liquidation, the Director shall immediately proceed to liquidate the property, business, and affairs of the company. The Director is hereby authorized to deal with the property, business, and affairs of the company in his name as Director, or, if the court shall so order, in the name of the company.
    (2) The Director may, subject to the approval of the court, sell or otherwise dispose of the real and personal property, or any part thereof, and sell or compromise all debts or claims owing to the company, except that whenever the value of any real or personal property or the amount of any debt owing to the company does not exceed $25,000, the Director may sell, dispose of, compromise, or compound the same upon such terms as the Director deems to be in the best interest of the company without obtaining approval of the court.
    (3) The Director may bring any action, claim, suit, or proceeding against any director or officer of the company or against any other person with respect to that person's dealings with the company including, but not limited to, prosecuting any action, claim, suit, or proceeding on behalf of the creditors, members, policyholders, or shareholders of the company. Nothing in this subsection shall be construed to affect the standing of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, or the Illinois Health Maintenance Organization Guaranty Association to sue or be sued under applicable law.
    (4) In order to preserve so far as possible the rights and interests of the policyholders of the company whose contracts were cancelled by the liquidation order and of such other creditors as may be possible, the Director may solicit a contract or contracts whereby a solvent company or companies will agree to assume in whole, or in part, or upon a modified basis, the liabilities owing to said former policyholders or creditors. The Director may, subject to Section 531.08(h) of this Code or Section 6-8 of the Health Maintenance Organization Act, cede or reinsure all or so much as may be necessary of the in-force business to another company using assets of the liquidated company to pay therefor in preference to satisfying other obligations or creditors. The Director may assign any rights or interests of the company to receive reinsurance proceeds for losses to the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association or any similar organization in any other state. If, after a full hearing upon a petition filed by the Director, the court shall find that the Director endeavored to obtain the best contract for the benefit of said parties in interest, and if the said Director shall report to the court that he is ready and willing to enter into a contract and submit a copy thereof to the court, the court shall examine the procedure and acts of the Director, and if the court shall find that the best possible contract in the interests of said parties has been obtained and that it is best for the interests of said parties that said contract be entered into, the court shall by written order approve the acts of the Director and authorize him to execute said contract.
    (5) In recognition of the rights of policyholders whose "claims made" contracts were cancelled by the liquidation order, he may, in his discretion, permit such policyholders to purchase an extended discovery period which is subject to the limitations in this Article. The policyholder shall pay to the liquidator a premium which is appropriate for the rights purchased as determined by the liquidator and approved by the court. No extended discovery period purchased before or after the entry of the liquidation order shall extend the time to file claims as set by the court pursuant to Section 208 of this Code. Claims accruing by virtue of such extended discovery period shall be treated as any other claim under Article XXXIV of this Code, and shall be subject to the limitations, exclusions and conditions in the Illinois Insurance Guaranty Fund Act and in the laws governing similar organizations in other states.
    (6) The Director is authorized to cancel policies, bonds, and contracts of insurance subject to court approval.
    (7) All persons, companies, and entities shall immediately turn over to the Director all unearned premium that has been collected by or on behalf of the company and all earned premium owing the company unless otherwise directed in writing by the Director or by court order. Within 30 days of the date of a written request of the Director, those persons, companies, and entities shall submit affidavits verifying amounts collected by, on behalf of, or due and owing the company and further shall provide copies of all premium fund trust account information and such other applicable documentation as requested by the Director. Nothing in this subsection shall be construed to affect the rights of (i) the Illinois Life and Health Insurance Guaranty Association to collect premium under item (6) of Section 531.08 of this Code or (ii) the Illinois Health Maintenance Organization Guaranty Association to collect premium under item (11) of Section 6-8 of the Health Maintenance Organization Act.
    (8) The amount recoverable by the Director from a reinsurer shall not be reduced or diminished as a result of the entry of an order of liquidation notwithstanding any provision in the reinsurance contract or other such agreement. Payment made by a reinsurer to or on behalf of an insured of the company shall not diminish the reinsurer's obligation to the company except when the reinsurance agreement lawfully provides for payment to or on behalf of the company's insured by the reinsurer. All reinsurance contracts to which the company is a party, which do not contain the provisions required with respect to the obligation of a reinsurer in the event of insolvency of the reinsured to obtain credit for reinsurance or pursuant to other applicable statutes, shall contain or be construed to contain all of the following provisions:
        (a) Upon the entry of an order of liquidation and
    
notwithstanding the Director's failure to pay all or a portion of a claim, the reinsurance obligation shall be due and owing to the Director on the basis of claims allowed in the liquidation proceeding. The reinsurer shall submit the amounts due and owing directly to the company as ceding insurer or to the Director.
        (b) The Director shall give written notice or arrange
    
for the giving of written notice to reinsurers or their agents of the pendency of a claim against the company indicating the policy or bond reinsured within a reasonable time after the claim is filed. The reinsurer may interpose, at its own expense, in the proceeding where the claim is to be adjudicated, any defenses that it may deem available to the company or the Director.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

    (215 ILCS 5/194) (from Ch. 73, par. 806)
    Sec. 194. Rights and liabilities of creditors fixed upon liquidation.
    (a) The rights and liabilities of the company and of its creditors, policyholders, stockholders or members and all other persons interested in its assets, except persons entitled to file contingent claims, shall be fixed as of the date of the entry of the Order directing liquidation or rehabilitation unless otherwise provided by Order of the Court. The rights of claimants entitled to file contingent claims or to have their claims estimated shall be determined as provided in Section 209.
    (b) The Director may, within 2 years after the entry of an order for rehabilitation or liquidation or within such further time as applicable law permits, institute an action, claim, suit, or proceeding upon any cause of action against which the period of limitation fixed by applicable law has not expired at the time of filing of the complaint upon which the order is entered.
    (c) The time between the filing of a complaint for conservation, rehabilitation, or liquidation against the company and the denial of the complaint shall not be considered to be a part of the time within which any action may be commenced against the company. Any action against the company that might have been commenced when the complaint was filed may be commenced for at least 180 days after the complaint is denied.
    (d) Notwithstanding subsection (a) of this Section, policies of life, disability income, long-term care, health insurance or annuities covered by a guaranty association, or portions of such policies covered by one or more guaranty associations under applicable law shall continue in force, subject to the terms of the policy (including any terms restructured pursuant to a court-approved rehabilitation plan) to the extent necessary to permit the guaranty associations to discharge their statutory obligations. Policies of life, disability income, long-term care, health insurance or annuities, or portions of such policies not covered by one or more guaranty associations shall terminate as provided under subsection (a) of this Section and paragraph (6) of Section 193 of this Article, except to the extent the Director proposes and the court approves the use of property of the liquidation estate for the purpose of either (1) continuing the contracts or coverage by transferring them to an assuming reinsurer, or (2) distributing dividends under Section 210 of this Article. Claims incurred during the extension of coverage provided for in this Article shall be classified at priority level (d) under paragraph (1) of Section 205 of this Article.
(Source: P.A. 104-334, eff. 8-15-25.)

    (215 ILCS 5/195) (from Ch. 73, par. 807)
    Sec. 195. Borrowing on the pledge of assets.
    For the purpose of facilitating the rehabilitation, liquidation, conservation or dissolution provided for by this article, the Director may, subject to the approval of the court, borrow money and execute, acknowledge and deliver certificates of indebtedness upon such terms and entitled to such liens and priorities as may be fixed by the court, or notes or other evidence of indebtedness therefor and secure the repayment of the same by the mortgage, pledge, assignment, transfer in trust or hypothecation or any or all of the property whether real, personal or mixed of the company against which a proceeding has been brought under this article. Subject to the approval of the court, he shall also have power to take any and all other action necessary and proper to consummate any such loans and to provide for the repayment thereof. The Director shall incur no personal liability by virtue of any loan made pursuant to this section.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/196) (from Ch. 73, par. 808)
    Sec. 196. Order of dissolution. If the company against whom the complaint for liquidation is filed is a corporation and the complaint prays for dissolution of such company, the court shall have jurisdiction either before or after final liquidation of the property, business and affairs of such company, after service of summons and complaint as above stated and a full hearing, to enter a judgment dissolving such company, and if an order of liquidation has been entered against a company, the court shall have jurisdiction, upon the petition of the Director, to enter an order dissolving the company. The court may likewise, regardless of whether an order of liquidation is sought or has been obtained, upon proper complaint or petition by the Director, order dissolution of a company where it has failed to qualify for a certificate of authority authorizing it to commence the transaction of its business, or where a company has no assets and no means for payment of liabilities.
(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 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 5/198) (from Ch. 73, par. 810)
    Sec. 198. Service of summons and return.
    (1) Upon the filing of a complaint, summons shall forthwith issue, returnable in 3 days after its date, and a copy of the summons together with the complaint in any proceeding under this article shall be served upon the company named in such complaint by delivering the same to its president, vice president, secretary, treasurer, director, or to its managing agent, or if the company lack any of the aforesaid officers, or they cannot be found within the State, to the officer performing corresponding functions under another name; if it be a Lloyds, reciprocal or inter-insurance exchange, by delivering such summons and copy of the complaint to the duly designated attorney-in-fact.
    (2) When it is satisfactorily proved by the report of an examiner of the department made in accordance with the provisions of this Code, or by affidavit if anyone familiar with the facts, that the officers, directors, trustees or managing agents or members of any company named in said complaint upon whom service is required to be made as above provided, have, or if a Lloyds, reciprocal or inter-insurance exchange be named in the complaint, that the duly designated attorney-in-fact, has, departed from the State or keep themselves or himself concealed therein, or if such of the persons residing in this State and upon whom service is required to be made as above provided have resigned from their offices, or that service cannot be made immediately by the exercise of reasonable diligence, such service may be had by the mailing of a copy of the complaint and summons to the last known address of the company, or by publication in such form and in such manner as the court shall order.
(Source: Laws 1959, p. 1422.)

    (215 ILCS 5/199) (from Ch. 73, par. 811)
    Sec. 199. Removal of proceedings to Sangamon or Cook county.
    In the event an order is entered directing liquidation, rehabilitation or conservation, the Director may remove the property and assets of the company to the county of Sangamon or to the county of Cook. In the event of such removal or contemplated removal the court shall upon proper petition showing the necessity therefor, filed by the Director, order the clerk of the court wherein such proceeding was commenced to make a full transcript of the petition for removal and the order thereon and to transmit the same together with all papers theretofore filed in the cause, to the Clerk of the Circuit Court of the county of Sangamon or to the Clerk of the Circuit Court of the county of Cook, as the case may be, and the proceeding shall thereafter be conducted in the same manner as if it had been commenced in the county to which the cause is transferred.
(Source: Laws 1965, p. 3563.)

    (215 ILCS 5/200) (from Ch. 73, par. 812)
    Sec. 200. Examinations. The pendency of any proceeding under this Article shall in no way affect the power and authority of the Director to conduct any examination provided for in Sections 132 through 132.7, in connection with the business, conduct or affairs of the company sought to be liquidated, rehabilitated or conserved.
    An annual audit of any business having assets of more than $500,000 which is under liquidation or rehabilitation pursuant to this Act shall be performed by an independent outside certified public accountant, who is currently engaged in the conduct of audits under the Illinois State Auditing Act. The cost of this audit shall be paid by the Director out of the assets of the business being liquidated or rehabilitated.
    An annual audit of any special deputy appointed under Section 202 shall be conducted by an independent, outside certified public accountant performing the audits provided for in the preceding paragraph. The cost of this audit shall be allocated among the estates of the companies in conservation, rehabilitation, or liquidation on the basis of allocation methods established by the Director. The Illinois Auditor General may, at his option, participate in the audit of any special deputy.
    Copies of all audits prepared under this Section shall be promptly provided after completion to the Governor, to the Illinois Auditor General, and to the majority and minority leaders of the Senate and the House of Representatives.
(Source: P.A. 89-97, eff. 7-7-95.)

    (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 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 5/202) (from Ch. 73, par. 814)
    Sec. 202. Appointment of special deputies; employees and professional advisors; contracts; qualified immunity.
    (a) For the purpose of assisting the Director in the performance of the Director's duties under Articles VII, XIII, and XIII 1/2 of this Code, the Director has authority to appoint one or more special deputies as the Director's agent or agents, and clerks, assistants, attorneys, and other personnel as the Director may deem necessary and to delegate to each such person authority to assist the Director as the Director may consider appropriate. The compensation of each special deputy, clerk, assistant, attorney, and other designated personnel shall be fixed and paid by the Director. The Director shall also have the authority to retain and pay attorneys, actuaries, accountants, consultants, and such other persons as the Director may deem necessary and appropriate. The Director shall fix the rate of compensation of these attorneys, actuaries, accountants, consultants, and other persons subject to the approval of the court. The Director, however, has the authority to fix, without the approval of the court, the rate of compensation of attorneys, actuaries, accountants, consultants, and other persons that he considers necessary and appropriate if the Director determines that the projected expenditure for professional fees to each such person will not exceed $20,000 per company in any calendar year.
    (b) The special deputies may enter into leases or contracts for the procurement of real or personal property, and on such terms and conditions as the Director may deem necessary or advisable for the purpose of performing the Director's duties under Articles VII, XIII, and XIII 1/2 of this Code. Any such lease or contract that requires an aggregate expenditure in excess of $150,000 shall be subject to the approval of the court before which is pending the delinquency proceeding of the estate of the company on whose behalf the lease or contract is entered into. In the event that the lease or contract is entered into on behalf of 2 or more companies, the delinquency proceedings of the 2 or more companies shall be consolidated for the sole purpose of obtaining approval of the lease or contract from the court before which is pending the delinquency proceeding of the estate of the company that, in the judgment of the Director at the time of application for approval, is to bear the largest portion of the amounts to be expended under the lease or contract under the allocation methods established by the Director under subsection (c)(1) of this Section.
    (c) (1) The compensation of the persons appointed by the Director and the attorneys, actuaries, accountants, consultants, and other persons retained by the Director, the payments under the leases or contracts described in subsection (b) of this Section, and all other expenses of taking possession of the property and the administration of the company and its property shall be paid (i) out of the funds or assets of the company on whose behalf the compensation, payments, or expenses were incurred or (ii) in the event that the compensation, payments, or expenses were, in the judgment of the Director, incurred in behalf of 2 or more companies, out of the assets of those companies on the basis of allocation methods established by the Director.
    (2) Notwithstanding the foregoing provisions of this subsection (c), the salary of the special deputies, together with the salaries or fees of those clerks, assistants, attorneys, actuaries, accountants, consultants, or other persons appointed or retained by the Director under this Section, and the other expenses of taking possession of the property and the administration of the company and its property, may be paid out of amounts appropriated to the Department of Insurance. Any amounts paid under this Section from appropriated funds shall be repaid to the State treasury from any available funds or assets of the company on whose behalf the expenses were incurred, subject to the approval of the court before which is pending the delinquency proceeding of the company.
    (d) (1) For each calendar quarter or other period as the court may determine, the Director shall file with the court before which is pending the delinquency proceeding of each company in liquidation or rehabilitation a report for the period reflecting the company's (i) cash and invested assets held by the Director at the beginning of the period, (ii) cash receipts, (iii) cash disbursements for payments of salaries, compensation, professional fees, and all other expenses of administration of the company and its property, (iv) all other cash disbursements, and (v) cash and invested assets held by the Director at the end of the period; provided that the report need not be filed more than once for each calendar year if the cash and invested assets of the company are less than $250,000. For each such period, the Director shall file with the court a similar report for each company in conservation, except that this report shall reflect only those cash disbursements for payments of salaries, compensation, professional fees, and all other expenses of the administration of the company and its property.
    (2) No party to the proceedings may object to any aspect of that report unless the basis of the party's objection is set forth in a motion filed with the court not later than 30 days after the filing of the report. In the event that objections to the report are filed, the Director shall have 15 days to file a response to the objections, and a hearing on the matter shall be held at the earliest possible date consistent with the schedule of the court. Any hearing on objections shall be limited solely to the specific objections raised in the original motion.
    (e) (1) For purposes of this subsection (e):
    "Receiver" means the Director in his or her capacity as the liquidator, rehabilitator, or conservator of a company in liquidation, rehabilitation, or conservation.
    "Director as trustee" means the Director when appointed as trustee under this Article.
    "Employees" means all present and former special deputies appointed by the Director and all persons that the Director or special deputies may appoint or employ or may have appointed or employed to assist in the liquidation, rehabilitation, or conservation of a company. "Employees" shall not include any attorneys, accountants, auditors, or other professional persons or firms (or their employees) who are retained as independent contractors by either the Director or by any special deputy appointed under this Section.
    "Advisors" means all persons that the Director may appoint or may have appointed under Section 202.1.
    (2) If a cause of action is commenced against the receiver, the Director as trustee, employees, or advisors, either personally or in their official capacity, alleging property damage, property loss, personal injury, or other civil liability arising out of any act, error, or omission of the receiver, the Director as trustee, employees, or advisors committed within the scope of their duties or employment involving a company in liquidation, rehabilitation, or conservation, the receiver, the Director as trustee, employees, or advisors shall be indemnified out of the assets of the company for all expenses, attorneys' fees, judgments, settlements, decrees, fines, penalties, or amounts paid in satisfaction of or incurred in the defense of the cause of action unless it is determined upon a final adjudication on the merits that the act, error, or omission of the receiver, the Director as trustee, employees, advisors, or the court giving rise to the claim was not within the scope of his or her duties or employment or was caused by intentional, wilful, or wanton misconduct. Any payments out of the assets of the company under this subsection (e) shall be subject to the prior approval of the court before which is pending the delinquency proceeding of the company.
    The court shall be entitled to indemnification under Section 2 of the Representation and Indemnification of State Employees Act.
    Attorneys' fees and expenses incurred in defending an action against the receiver, the Director as trustee, employees, or advisors for which indemnity is available under this part (2) may, upon the approval of the receiver and the court before which is pending the delinquency proceeding of the company, be paid from the assets of the company's estate in advance of the final disposition of the action upon receipt of an undertaking by or on behalf of the receiver, the Director as trustee, employees, or advisors to pay that amount, if it shall ultimately be determined upon a final adjudication on the merits that he or she is not entitled to be indemnified under this part (2).
    Any indemnification, expense payments, and attorneys' fees from the company's assets for actions against the receiver, the Director as trustee, employees, or advisors under this part (2) shall be considered an administrative expense of the estate.
    In the event of actual or threatened litigation against the receiver, the Director as trustee, employees, or advisors for which indemnity is available under this part (2), a reasonable amount of funds, which in the judgment of the Director may be needed to provide indemnity, may be segregated and reserved from the assets of the company as security for the payment of indemnity until all applicable statutes of limitations shall have run and all actual or threatened actions against the receiver, the Director as trustee, employees, or advisors have been completely and finally resolved.
    (3) Nothing contained or implied in this subsection (e) shall operate, or be construed or applied, to deprive the Director, receiver, the Director as trustee, the company's estate, any employee, any advisor or the court of any defense, claim, or right of immunity heretofore available.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

    (215 ILCS 5/202.1) (from Ch. 73, par. 814.1)
    Sec. 202.1. The Director may, with the approval of the court, appoint an Advisory Committee, consisting of policyholders, claimants, or other creditors, including Guaranty Funds and Guaranty Associations, should the Director deem it necessary to the proper performance of his responsibilities under this Article and Article XIII 1/2. The Committee shall serve at the pleasure of the Director and shall serve without compensation other than reimbursement for travel and per diem living expenses incurred in attending committee meetings. No other committees of any nature shall be appointed by the Director or the court in any proceeding conducted under this Article and Article XIII 1/2.
(Source: P.A. 86-1155; 86-1156.)

    (215 ILCS 5/203) (from Ch. 73, par. 815)
    Sec. 203. Exemption from filing fees.
    The Director shall not be required to pay any fee to any public officer for filing, recording or in any manner authenticating any paper or instrument relating to any proceeding under this article, nor for services rendered by any public officer for serving any process; but such fees and costs may be taxed as costs against the defendant in the suit by order of the court and paid to such public officer.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/204) (from Ch. 73, par. 816)
    Sec. 204. Prohibited and voidable transfers and liens.
    (a)(1) A preference is a transfer of any of the property of a company to or for the benefit of a creditor, for or on account of an antecedent debt, made or suffered by the company within 2 years before the filing of a complaint under this Article, the effect of which may be to enable the creditor to obtain a greater percentage of this debt than another creditor of the same class would receive.
    (2) Any preference may be avoided by the Director as rehabilitator, liquidator, or conservator if:
        (A) the company was insolvent at the time of the
    
transfer; and
        (B) the transfer was made within 4 months before the
    
filing of the complaint; or the creditor receiving it was (i) an officer, or any employee or attorney or other person who was in fact in a position of comparable influence in the company to an officer whether or not that person held such a position, (ii) any shareholder holding, directly or indirectly, more than 5% of any class of any equity security issued by the company, or (iii) any other person, firm, corporation, association, or aggregation of individuals with whom the company did not deal at arm's length.
    (3) Where the preference is voidable, the Director as rehabilitator, liquidator, or conservator may recover the property or, if it has been converted, its value from any person who has received or converted the property; except where a bona fide purchaser or lienor has given less than fair equivalent value, the purchaser or lienor shall have a lien upon the property to the extent of the consideration actually given. Where a preference by way of lien or security title is voidable, the court may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass to the Director as rehabilitator or liquidator.
    (b)(1) A transfer of property other than real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee.
    (2) A transfer of real property shall be deemed to be made or suffered when it becomes so far perfected that no subsequent bona fide purchaser from the company could obtain rights superior to the rights of the transferee.
    (3) A transfer that creates an equitable lien shall not be deemed to be perfected if there are available means by which a legal lien could be created.
    (4) A transfer not perfected before the filing of a complaint shall be deemed to be made immediately before the filing of the complaint.
    (5) The provisions of this subsection apply whether or not there are or were creditors who might have obtained liens or persons who might have become bona fide purchasers.
    (c) For purposes of this Section:
        (1) A lien obtainable by legal or equitable
    
proceedings upon a simple contract is one arising in the ordinary course of the proceedings upon the entry or docketing of a judgment or decree, or upon attachment, garnishment, execution, or like process, whether before, upon, or after judgment or decree and whether before or upon levy. It does not include liens that, under applicable law, are given a special priority over other liens that are prior in time.
        (2) A lien obtainable by legal or equitable
    
proceedings could become superior to the rights of a transferee, or a purchaser could obtain rights superior to the rights of a transferee within the meaning of subsection (b) of this Section, if such consequences would follow only from the lien or purchase itself, or from the lien or purchase followed by any step wholly within the control of the respective lienholder or purchaser, with or without the aid of ministerial action by public officials. A lien could not, however, become superior and a purchase could not create superior rights for the purpose of subsection (b) of this Section through any acts subsequent to an obtaining of the lien or subsequent to a purchase that requires the agreement or concurrence of any third party or that requires any further judicial action or ruling.
    (d) A transfer of property for or on account of a new and contemporaneous consideration which is deemed under subsection (b) of this Section to be made or suffered after the transfer because of delay in perfecting it does not thereby become a transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect the transfer as against liens or bona fide purchasers' rights are performed within 21 days or any period expressly allowed by the law, whichever is less. A transfer to secure a future loan, if the loan is actually made, or a transfer that becomes security for a future loan, shall have the same effect as a transfer for or on account of a new and contemporaneous consideration.
    (e) If any lien deemed voidable under part (2) of subsection (a) of this Section has been dissolved by the furnishing of a bond or other obligation, the surety on which has been indemnified directly or indirectly by the transfer of or the creation of a lien upon any property of a company before the filing of a complaint under this Article, the indemnifying transfer or lien shall also be deemed voidable.
    (f) The property affected by any lien deemed voidable under subsections (a) and (e) of this Section shall be discharged from the lien, and that property and any of the indemnifying property transferred to or for the benefit of a surety shall pass to the Director as rehabilitator or liquidator, except that the court may, on due notice, order any such lien to be preserved for the benefit of the estate and the court may direct that such conveyance be executed as may be proper or adequate to evidence the title of the Director as rehabilitator or liquidator.
    (g) The court shall have summary jurisdiction over any proceeding by the Director as rehabilitator, liquidator, or conservator to hear and determine the rights of any parties under this Section. Reasonable notice of any hearings in the proceeding shall be given to all parties in interest, including the obligee of a releasing bond or other life obligation. Where an order is entered for the recovery of indemnifying property in kind or for the avoidance of an indemnifying lien, the court, upon application of any party in interest, shall in the same proceeding ascertain the value of the property or lien, and if the value is less than the amount for which the property is indemnity or than the amount of the lien, the transferee or lienholder may elect to retain the property or lien upon payment of its value, as ascertained by the court, to the Director as rehabilitator, liquidator, or conservator, within such reasonable times as the court shall fix.
    (h) The liability of the surety under the releasing bond or other similar obligation shall be discharged to the extent of the value of the indemnifying property recovered or the indemnifying lien nullified and avoided by the Director as rehabilitator, liquidator, or conservator. Where the property is retained under subsection (g) of this Section, the liability shall be discharged to the extent of the amount paid to the Director as rehabilitator, liquidator, or conservator.
    (i) If a creditor has been preferred and thereafter in good faith gives the company further credit without security of any kind, for property which becomes a part of the company's estate, the amount of the new credit remaining unpaid at the time of the petition may be set off against the preference which would otherwise be recoverable from the creditor.
    (j) If a company shall, directly or indirectly, within 4 months before the filing of a complaint under this Article, or at any time in contemplation of such a proceeding, pay money or transfer property to any attorney for services rendered or to be rendered, the transactions may be examined by the court on its own motion or shall be examined by the court on petition of the Director as rehabilitator, liquidator, or conservator and shall be held valid only to the extent of a reasonable amount to be determined by the court, and the excess may be recovered by the Director as rehabilitator, liquidator, or conservator for the benefit of the estate provided that where the attorney is in a position of influence in the company or an affiliate thereof payment of any money or the transfer of any property to the attorney for services rendered or to be rendered shall be governed by item (B) of part (2) of subsection (a) of this Section.
    (k)(1) An officer, director, manager, employee, shareholder, member, subscriber, attorney, or other person acting on behalf of the company who knowingly participates in giving any preference when that officer, director, manager, employee, shareholder, member, subscriber, attorney, or other person has reasonable cause to believe the company is or is about to become insolvent at the time of the preference shall be personally liable to the Director as rehabilitator, liquidator, or conservator for the amount of the preference. There is a reasonable cause to so believe if the transfer was made within 4 months before the date of filing of the complaint.
    (2) A person receiving any property from the company or the benefit thereof as a preference voidable under subsection (a) of this Section shall be personally liable therefor and shall be bound to account to the Director as rehabilitator, liquidator, or conservator.
    (3) Nothing in this Section shall prejudice any other claim by the Director as rehabilitator, liquidator, or conservator against any person.
    (l) For purposes of this Section, the company is presumed to have been insolvent on and during the 4 month period immediately preceding the date of the filing of the complaint.
    (m) The Director as rehabilitator, liquidator, or conservator may not avoid a transfer under this Section to the extent that the transfer was:
        (A) Intended by the company and the creditor to or
    
for whose benefit the transfer was made to be a contemporaneous exchange for new value given to the company, and was in fact a substantially contemporaneous exchange; or
        (B) In payment of a debt incurred by the company in
    
the ordinary course of business or financial affairs of the company and the transferee; made in the ordinary course of business or financial affairs of the company and the transferee; and made according to ordinary business terms;
        (C) In the case of a transfer by a company where the
    
Director has determined that an event described in Section 35A-25 or 35A-30 has occurred, specifically approved by the Director in writing pursuant to this subsection, whether or not the company is in receivership under this Article. Upon approval by the Director, such a transfer cannot later be found to constitute a prohibited or voidable transfer based solely upon a deviation from the statutory payment priorities established by law for any subsequent receivership; or
        (D) Of money or other property arising under or
    
in connection with any Federal Home Loan Bank security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.
    (n) The Director as rehabilitator, liquidator, or conservator may avoid any transfer of or lien upon the property of a company that the estate of the company or a policyholder, creditor, member, or stockholder of the company may have avoided, and the Director as rehabilitator, liquidator, or conservator may recover and collect the property so transferred or its value from the person to whom it was transferred unless the property was transferred to a bona fide holder for value before the filing of the complaint. The Director as rehabilitator, liquidator, or conservator shall be deemed a creditor for purposes of pursuing claims under the Uniform Fraudulent Transfer Act.
    (o) Notwithstanding any provision of this Article to the contrary, a Federal Home Loan Bank shall not be stayed, enjoined, or prohibited from exercising or enforcing any right or cause of action regarding collateral pledged under any security agreement or any pledge, security, collateral or guarantee agreement, or any other similar arrangement or credit enhancement relating to a Federal Home Loan Bank security agreement.
(Source: P.A. 100-89, eff. 8-11-17.)

    (215 ILCS 5/205) (from Ch. 73, par. 817)
    Sec. 205. Priority of distribution of general assets.
    (1) The priorities of distribution of general assets from the company's estate is to be as follows:
        (a) The costs and expenses of administration,
    
including, but not limited to, the following:
            (i) The reasonable expenses of the Illinois
        
Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, and the Illinois Health Maintenance Organization Guaranty Association and of any similar organization in any other state, including overhead, salaries, and other general administrative expenses allocable to the receivership (administrative and claims handling expenses and expenses in connection with arrangements for ongoing coverage), but excluding expenses incurred in the performance of duties under Section 547 or similar duties under the statute governing a similar organization in another state. For property and casualty insurance guaranty associations that guaranty certain obligations of any member company as defined by Section 534.5, expenses shall include, but not be limited to, loss adjustment expenses, which shall include adjusting and other expenses and defense and cost containment expenses. The expenses of such property and casualty guaranty associations, including the Illinois Insurance Guaranty Fund, shall be reimbursed as prescribed by Section 545, but shall be subordinate to all other costs and expenses of administration, including the expenses reimbursed pursuant to subparagraph (ii) of this paragraph (a).
            (ii) The expenses expressly approved or ratified
        
by the Director as liquidator or rehabilitator, including, but not limited to, the following:
                (1) the actual and necessary costs of
            
preserving or recovering the property of the insurer;
                (2) reasonable compensation for all services
            
rendered on behalf of the administrative supervisor or receiver;
                (3) any necessary filing fees;
                (4) the fees and mileage payable to witnesses;
                (5) unsecured loans obtained by the receiver;
            
and
                (6) expenses approved by the conservator or
        
rehabilitator of the insurer, if any, incurred in the course of the conservation or rehabilitation that are unpaid at the time of the entry of the order of liquidation.
        Any unsecured loan falling under item (5) of
    
subparagraph (ii) of this paragraph (a) shall have priority over all other costs and expenses of administration, unless the lender agrees otherwise. Absent agreement to the contrary, all other costs and expenses of administration shall be shared on a pro-rata basis, except for the expenses of property and casualty guaranty associations, which shall have a lower priority pursuant to subparagraph (i) of this paragraph (a).
        (b) Secured claims, including claims for taxes and
    
debts due the federal or any state or local government, that are secured by liens perfected prior to the filing of the complaint.
        (c) Claims for wages actually owing to employees for
    
services rendered within 3 months prior to the date of the filing of the complaint, not exceeding $1,000 to each employee unless there are claims due the federal government under paragraph (f), then the claims for wages shall have a priority of distribution immediately following that of federal claims under paragraph (f) and immediately preceding claims of general creditors under paragraph (g).
        (d) Claims by policyholders, beneficiaries, and
    
insureds, under insurance policies, annuity contracts, and funding agreements, liability claims against insureds covered under insurance policies and insurance contracts issued by the company, claims of obligees (and, subject to the discretion of the receiver, completion contractors) under surety bonds and surety undertakings (not to include mortgage or financial guaranty, or other forms of insurance offering protection against investment risk), claims by principals under surety bonds and surety undertakings for wrongful dissipation of collateral by the insurer or its agents, and claims incurred during any extension of coverage provided under subsection (5) of Section 193, and claims of the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and any similar organization in another state as prescribed in Section 545. For purposes of this Section, "funding agreement" means an agreement whereby an insurer authorized to write business under Class 1 of Section 4 of this Code may accept and accumulate funds and make one or more payments at future dates in amounts that are not based upon mortality or morbidity contingencies.
        (e) Claims by policyholders, beneficiaries, and
    
insureds, the allowed values of which were determined by estimation under paragraph (b) of subsection (4) of Section 209.
        (f) Any other claims due the federal government.
        (g) All other claims of general creditors not falling
    
within any other priority under this Section including claims for taxes and debts due any state or local government which are not secured claims and claims for attorneys' fees incurred by the company in contesting its conservation, rehabilitation, or liquidation.
        (h) Claims of guaranty fund certificate holders,
    
guaranty capital shareholders, capital note holders, and surplus note holders.
        (i) Proprietary claims of shareholders, members, or
    
other owners.
    Every claim under a written agreement, statute, or rule providing that the assets in a separate account are not chargeable with the liabilities arising out of any other business of the insurer shall be satisfied out of the funded assets in the separate account equal to, but not to exceed, the reserves maintained in the separate account under the separate account agreement, and to the extent, if any, the claim is not fully discharged thereby, the remainder of the claim shall be treated as a priority level (d) claim under paragraph (d) of this subsection to the extent that reserves have been established in the insurer's general account pursuant to statute, rule, or the separate account agreement.
    For purposes of this provision, "separate account policies, contracts, or agreements" means any policies, contracts, or agreements that provide for separate accounts as contemplated by Section 245.21.
    To the extent that any assets of an insurer, other than those assets properly allocated to and maintained in a separate account, have been used to fund or pay any expenses, taxes, or policyholder benefits that are attributable to a separate account policy, contract, or agreement that should have been paid by a separate account prior to the commencement of receivership proceedings, then upon the commencement of receivership proceedings, the separate accounts that benefited from this payment or funding shall first be used to repay or reimburse the company's general assets or account for any unreimbursed net sums due at the commencement of receivership proceedings prior to the application of the separate account assets to the satisfaction of liabilities or the corresponding separate account policies, contracts, and agreements.
    To the extent, if any, reserves or assets maintained in the separate account are in excess of the amounts needed to satisfy claims under the separate account contracts, the excess shall be treated as part of the general assets of the insurer's estate.
    (2) Within 120 days after the issuance of an Order of Liquidation with a finding of insolvency against a domestic company, the Director shall make application to the court requesting authority to disburse funds to the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states from time to time out of the company's marshaled assets as funds become available in amounts equal to disbursements made by the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states for covered claims obligations on the presentation of evidence that such disbursements have been made by the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states.
    The Director shall establish procedures for the ratable allocation and distribution of disbursements to the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and similar organizations in other states. In determining the amounts available for disbursement, the Director shall reserve sufficient assets for the payment of the expenses of administration described in paragraph (1)(a) of this Section. All funds available for disbursement after the establishment of the prescribed reserve shall be promptly distributed. As a condition to receipt of funds in reimbursement of covered claims obligations, the Director shall secure from the Illinois Insurance Guaranty Fund, the Illinois Life and Health Insurance Guaranty Association, the Illinois Health Maintenance Organization Guaranty Association, and each similar organization in other states, an agreement to return to the Director on demand funds previously received as may be required to pay claims of secured creditors and claims falling within the priorities established in paragraphs (a), (b), (c), and (d) of subsection (1) of this Section in accordance with such priorities.
    (3) The changes made in this Section by this amendatory Act of the 100th General Assembly apply to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of the 100th General Assembly and to all future liquidation, rehabilitation, or conservation proceedings.
    (4) The provisions of this Section are severable under Section 1.31 of the Statute on Statutes.
(Source: P.A. 100-410, eff. 8-25-17; 101-652, eff. 1-1-23.)

    (215 ILCS 5/205.1)
    Sec. 205.1. Policyholder collateral, deductible reimbursements, and other policyholder obligations.
    (a) Any collateral held by, for the benefit of, or assigned to the insurer or the Director as rehabilitator or liquidator to secure the obligations of a policyholder under a deductible agreement shall not be considered an asset of the estate and shall be maintained and administered by the Director as rehabilitator or liquidator as provided in this Section and notwithstanding any other provision of law or contract to the contrary.
    (b) If the collateral is being held by, for the benefit of, or assigned to the insurer or subsequently the Director as rehabilitator or liquidator to secure obligations under a deductible agreement with a policyholder, subject to the provisions of this Section, the collateral shall be used to secure the policyholder's obligation to fund or reimburse claims payment within the agreed deductible amount.
    (c) If a claim that is subject to a deductible agreement and secured by collateral is not covered by any guaranty association or the Illinois Insurance Guaranty Fund and the policyholder is unwilling or unable to take over the handling and payment of the non-covered claims, the Director as rehabilitator or liquidator shall adjust and pay the non-covered claims utilizing the collateral but only to the extent the available collateral after allocation under subsection (d), is sufficient to pay all outstanding and anticipated claims. If the collateral is exhausted and the insured is not able to provide funds to pay the remaining claims within the deductible after all reasonable means of collection against the insured have been exhausted, the Director's obligation to pay such claims from the collateral as the rehabilitator or liquidator terminates, and the remaining claims shall be claims against the insurer's estate subject to complying with other provisions in this Article for the filing and allowance of such claims. When the liquidator determines that the collateral is insufficient to pay all additional and anticipated claims, the liquidator may file a plan for equitably allocating the collateral among claimants, subject to court approval.
    (d) To the extent that the Director as rehabilitator or liquidator is holding collateral provided by a policyholder that was obtained to secure a deductible agreement and to secure other obligations of the policyholder to pay the insurer, directly or indirectly, amounts that become assets of the estate, such as reinsurance obligations under a captive reinsurance program or adjustable premium obligations under a retrospectively rated insurance policy where the premium due is subject to adjustment based upon actual loss experience, the Director as rehabilitator or liquidator shall equitably allocate the collateral among such obligations and administer the collateral allocated to the deductible agreement pursuant to this Section. With respect to the collateral allocated to obligations under the deductible agreement, if the collateral secured reimbursement obligations under more than one line of insurance, then the collateral shall be equitably allocated among the various lines based upon the estimated ultimate exposure within the deductible amount for each line. The Director as rehabilitator or liquidator shall inform the guaranty association or the Illinois Insurance Guaranty Fund that is or may be obligated for claims against the insurer of the method and details of all the foregoing allocations.
    (e) Regardless of whether there is collateral, if the insurer has contractually agreed to allow the policyholder to fund its own claims within the deductible amount pursuant to a deductible agreement, either through the policyholder's own administration of its claims or through the policyholder providing funds directly to a third party administrator who administers the claims, the Director as rehabilitator or liquidator shall allow such funding arrangement to continue and, where applicable, will enforce such arrangements to the fullest extent possible. The funding of such claims by the policyholder within the deductible amount will act as a bar to any claim for such amount in the liquidation proceeding, including but not limited to any such claim by the policyholder or the third party claimant. The funding will extinguish both the obligation, if any, of any guaranty association or the Illinois Insurance Guaranty Fund to pay such claims within the deductible amount, as well as the obligations, if any, of the policyholder or third party administrator to reimburse the guaranty association or the Illinois Insurance Guaranty Fund. No charge of any kind shall be made by the Director as rehabilitator or liquidator against any guaranty association or the Illinois Insurance Guaranty Fund on the basis of the policyholder funding of claims payment made pursuant to the mechanism set forth in this subsection.
    (f) If the insurer has not contractually agreed to allow the policyholder to fund its own claims within the deductible amount, to the extent a guaranty association or the Illinois Insurance Guaranty Fund is required by applicable state law to pay any claims for which the insurer would be or would have been entitled to reimbursement from the policyholder under the terms of the deductible agreement and to the extent the claims have not been paid by a policyholder or third party, the Director as rehabilitator or liquidator shall promptly bill the policyholder for such reimbursement and the policyholder will be obligated to pay such amount to the Director as rehabilitator or liquidator for the benefit of the guaranty association or the Illinois Insurance Guaranty Fund that paid such claims. Neither the insolvency of the insurer, nor its inability to perform any of its obligations under the deductible agreement, shall be a defense to the policyholder's reimbursement obligation under the deductible agreement. When the policyholder reimbursements are collected, the Director as rehabilitator or liquidator shall promptly reimburse the guaranty association or the Illinois Insurance Guaranty Fund for claims paid that were subject to the deductible. If the policyholder fails to pay the amounts due within 60 days after such bill for such reimbursements is due, the Director as rehabilitator or liquidator shall use the collateral to the extent necessary to reimburse the guaranty association or the Illinois Insurance Guaranty Fund, and, at the same time, may pursue other collections efforts against the policyholder. If more than one guaranty association or the Illinois Insurance Guaranty Fund has a claim against the same collateral and the available collateral (after allocation under subsection (d)), along with billing and collection efforts, are together insufficient to pay each guaranty association or the Illinois Insurance Guaranty Fund in full, then the Director as rehabilitator or liquidator will pro-rate payments to each guaranty association or the Illinois Insurance Guaranty Fund based upon the relationship the amount of claims each guaranty association or the Illinois Insurance Guaranty Fund has paid bears to the total of all claims paid by such guaranty association or the Illinois Insurance Guaranty Fund.
    (g) Director's duties and powers as rehabilitator or liquidator.
        (1) The Director as rehabilitator or liquidator is
    
entitled to deduct from reimbursements owed to guaranty associations or the Illinois Insurance Guaranty Fund or collateral to be returned to a policyholder reasonable actual expenses incurred in fulfilling the responsibilities under this provision, not to exceed 3% of the collateral or the total deductible reimbursements actually collected by the Director as rehabilitator or liquidator.
        (2) With respect to claim payments made by any
    
guaranty association or the Illinois Insurance Guaranty Fund, the Director as rehabilitator or liquidator shall promptly provide the court, with a copy to the guaranty associations or the Illinois Insurance Guaranty Fund, with a complete report of the Director's deductible billing and collection activities as rehabilitator or liquidator including copies of the policyholder billings when rendered, the reimbursements collected, the available amounts and use of collateral for each policyholder, and any pro-ration of payments when it occurs. If the Director as rehabilitator or liquidator fails to make a good faith effort within 120 days of receipt of claims payment reports to collect reimbursements due from a policyholder under a deductible agreement based on claim payments made by one or more guaranty associations or the Illinois Insurance Guaranty Fund, then after such 120 day period such guaranty associations or the Illinois Insurance Guaranty Fund may pursue collection from the policyholders directly on the same basis as the Director as rehabilitator or liquidator, and with the same rights and remedies, and will report any amounts so collected from each policyholder to the Director as rehabilitator or liquidator. To the extent that guaranty associations or the Illinois Insurance Guaranty Fund pay claims within the deductible amount, but are not reimbursed by either the Director as rehabilitator, liquidator, or conservator under this Section or by policyholder payments from the guaranty associations' or the Illinois Insurance Guaranty Fund's own collection efforts, the guaranty association or the Illinois Insurance Guaranty Fund shall have a claim in the insolvent insurer's estate for such un-reimbursed claims payments.
        (3) The Director as rehabilitator or liquidator shall
    
periodically adjust the collateral being held as the claims subject to the deductible agreement are run-off, provided that adequate collateral is maintained to secure the entire estimated ultimate obligation of the policyholder plus a reasonable safety factor, and the Director as rehabilitator or liquidator shall not be required to adjust the collateral more than once a year. The guaranty associations or the Illinois Insurance Guaranty Fund shall be informed of all such collateral reviews, including but not limited to the basis for the adjustment. Once all claims covered by the collateral have been paid and the Director as rehabilitator or liquidator is satisfied that no new claims can be presented, the Director as rehabilitator or liquidator will release any remaining collateral to the policyholder.
    (h) The Illinois Circuit Court having jurisdiction over the liquidation proceedings shall have jurisdiction to resolve disputes arising under this provision.
    (i) Nothing in this Section is intended to limit or adversely affect any right the guaranty associations or the Illinois Insurance Guaranty Fund may have under applicable state law to obtain reimbursement from certain classes of policyholders for claims payments made by such guaranty associations or the Illinois Insurance Guaranty Fund under policies of the insolvent insurer, or for related expenses the guaranty associations or the Illinois Insurance Guaranty Fund incur.
    (j) This Section applies to all receivership proceedings under Article XIII that either (1) commence on or after the effective date of this amendatory Act of the 93rd General Assembly or (2) are on file or open on the effective date of this amendatory Act of the 93rd General Assembly and in which an Order of Liquidation is entered on or after May 1, 2004. However, this Section applies to rehabilitation proceedings only to the extent that guaranty associations are required to pay claims and does not apply to receivership proceedings in which only an order of conservation has been entered.
    (k) For purposes of this Section, a "deductible agreement" is any combination of one or more policies, endorsements, contracts, or security agreements, which provide for the policyholder to bear the risk of loss within a specified amount per claim or occurrence covered under a policy of insurance, and may be subject to the aggregate limit of policyholder reimbursement obligations. This Section shall not apply to first party claims, or to claims funded by a guaranty association or the Illinois Insurance Guaranty Fund in excess of the deductible unless subsection (e) above applies. The term "non-covered claim" shall mean a claim that is subject to a deductible agreement and is not covered by a guaranty association or the Illinois Insurance Guaranty Fund.
(Source: P.A. 93-1028, eff. 8-25-04; 94-248, eff. 7-19-05.)

    (215 ILCS 5/206) (from Ch. 73, par. 818)
    Sec. 206. Set-offs or counterclaims.
    In all cases of mutual debts or mutual credits between the company and another person, such credits and debts shall be set off or counterclaimed and the balance only shall be allowed or paid, provided, however, that no set-off or counterclaim shall be allowed in favor of any person where
    (a) the obligation of the company to such person was purchased by or transferred to such person with a view of its being used as a set-off or counterclaim, or
    (b) the obligation of such person is to pay an assessment levied against the members or subscribers of any company which issued assessable policies, or to pay a balance upon a subscription to the shares of a stock company.
    No set-off shall be allowed in favor of an insurance agent or broker against his account with the company, for the unearned portion of the premium on any cancelled policy, unless that policy was cancelled prior to the entry of the Order of Liquidation or Rehabilitation, and unless the unearned portion of the premium on that cancelled policy was refunded or credited to the assured or his representative prior to the entry of the Order of Liquidation or Rehabilitation.
(Source: Laws 1967, p. 789.)

    (215 ILCS 5/206.1)
    Sec. 206.1. Qualified financial contracts.
    (a) Notwithstanding any other provision of this Article, including any other provision of this Article permitting the modification of contracts, or other law of a state, no person shall be stayed or prohibited from exercising:
        (1) a contractual right to cause the termination,
    
liquidation, acceleration, or close out of obligations under or in connection with any netting agreement or qualified financial contract with an insurer because of:
            (A) the insolvency, financial condition, or
        
default of the insurer at any time, provided that the right is enforceable under an applicable law other than this Code; or
            (B) the commencement of a formal delinquency
        
proceeding under this Code;
        (2) any right under a pledge, security, collateral,
    
reimbursement or guarantee agreement or arrangement, any other similar security agreement or arrangement, or other credit enhancement relating to one or more netting agreements or qualified financial contracts;
        (3) subject to any provision of Section 206 of this
    
Article, any right to set off or net out any termination value, payment amount, or other transfer obligation arising under or in connection with one or more qualified financial contracts where the counterparty or its guarantor is organized under the laws of the United States or a state or a foreign jurisdiction approved by the Securities Valuation Office of the National Association of Insurance Commissioners as eligible for netting; or
        (4) if a counterparty to a master netting agreement
    
or a qualified financial contract with an insurer subject to a proceeding under this Article terminates, liquidates, closes out or accelerates the agreement or contract, then damages shall be measured as of the date or dates of termination, liquidation, close out, or acceleration; the amount of a claim for damages shall be actual direct compensatory damages calculated in accordance with subsection (f) of this Section.
    (b) Upon termination of a netting agreement or qualified financial contract, the net or settlement amount, if any, owed by a nondefaulting party to an insurer against which an application or petition has been filed under this Code shall be transferred to or on the order of the receiver for the insurer, even if the insurer is the defaulting party, notwithstanding any walkaway clause in the netting agreement or qualified financial contract.
    For the purposes of this subsection (b), the term "walkaway clause" means a provision in a netting agreement or a qualified financial contract that, after calculation of a value of a party's position or an amount due to or from one of the parties in accordance with its terms upon termination, liquidation, or acceleration of the netting agreement or qualified financial contract, either does not create a payment obligation of a party or extinguishes a payment obligation of a party in whole or in part solely because of the party's status as a nondefaulting party. Any limited 2-way payment or first method provision in a netting agreement or qualified financial contract with an insurer that has defaulted shall be deemed to be a full 2-way payment or second method provision as against the defaulting insurer. Any such property or amount shall, except to the extent that it is subject to one or more secondary liens or encumbrances or rights of netting or setoff, be a general asset of the insurer.
    (c) In making any transfer of a netting agreement or qualified financial contract of an insurer subject to a proceeding under this Code, the receiver shall either:
        (1) transfer to one party (other than an insurer
    
subject to a proceeding under this Article) all netting agreements and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding, including:
            (A) all rights and obligations of each party
        
under each netting agreement and qualified financial contract; and
            (B) all property, including any guarantees or
        
other credit enhancement, securing any claims of each party under each netting agreement and qualified financial contract; or
        (2) transfer none of the netting agreements,
    
qualified financial contracts, rights, obligations, or property referred to in paragraph (1) of this subsection (c) (with respect to the counterparty and any affiliate of the counterparty).
    (d) If a receiver for an insurer makes a transfer of one or more netting agreements or qualified financial contracts, then the receiver shall use its best efforts to notify any person who is party to the netting agreements or qualified financial contracts of the transfer by 12:00 noon (the receiver's local time) on the business day following the transfer. For the purposes of this subsection (d), "business day" means a day other than a Saturday, Sunday, or any day on which either the New York Stock Exchange or the Federal Reserve Bank of New York is closed.
    (e) Notwithstanding any other provision of this Article, a receiver may not avoid a transfer of money or other property arising under or in connection with a netting agreement or qualified financial contract (or any pledge, security, collateral, or guarantee agreement or any other similar security arrangement or credit support document relating to a netting agreement or qualified financial contract) that is made before the commencement of a formal delinquency proceeding under this Article.
    (f) The following provisions shall apply concerning disaffirmance and repudiation:
        (1) In exercising the rights of disaffirmance or
    
repudiation of a receiver with respect to any netting agreement or qualified financial contract to which an insurer is a party, the receiver for the insurer shall either:
            (A) disaffirm or repudiate all netting agreements
        
and qualified financial contracts between a counterparty or any affiliate of the counterparty and the insurer that is the subject of the proceeding; or
            (B) disaffirm or repudiate none of the netting
        
agreements and qualified financial contracts referred to in subparagraph (A) (with respect to the person or any affiliate of the person).
        (2) Notwithstanding any other provision of this
    
Article, any claim of a counterparty against the estate arising from the receiver's disaffirmance or repudiation of a netting agreement or qualified financial contract that has not been previously affirmed in the liquidation or immediately preceding a conservation or rehabilitation case shall be determined and shall be allowed or disallowed as if the claim had arisen before the date of the filing of the petition for liquidation or, if a conservation or rehabilitation proceeding is converted to a liquidation proceeding, as if the claim had arisen before the date of the filing of the petition for conservation or rehabilitation. The amount of the claim shall be the actual direct compensatory damages determined as of the date of the disaffirmance or repudiation of the netting agreement or qualified financial contract. The term "actual direct compensatory damages" does not include punitive or exemplary damages, damages for lost profit or lost opportunity, or damages for pain and suffering, but does include normal and reasonable costs of cover or other reasonable measures of damages utilized in the derivatives, securities, or other market for the contract and agreement claims.
    (g) The term "contractual right", as used in this Section, includes any right set forth in a rule or bylaw of a derivatives clearing organization, as defined in the Commodity Exchange Act; a multilateral clearing organization, as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991; a national securities exchange; a national securities association; a securities clearing agency; a contract market designated under the Commodity Exchange Act; a derivatives transaction execution facility registered under the Commodity Exchange Act; or a board of trade, as defined in the Commodity Exchange Act or in a resolution of the governing board thereof and any right, whether or not evidenced in writing, arising under statutory or common law or under law merchant or by reason of normal business practice.
    (h) The provisions of this Section shall not apply to persons who are affiliates of the insurer that is the subject of the proceeding.
    (i) All rights of counterparties under this Article shall apply to netting agreements and qualified financial contracts entered into on behalf of the general account or separate accounts if the assets of each separate account are available only to counterparties to netting agreements and qualified financial contracts entered into on behalf of that separate account.
(Source: P.A. 96-1450, eff. 8-20-10.)

    (215 ILCS 5/207.1) (from Ch. 73, par. 819.1)
    Sec. 207.1. Contingent Liability Policies.
    Upon the entry of an order of liquidation any provision in the policies of a company providing for a contingent liability of the policyholders shall become void.
(Source: P.A. 76-715.)

    (215 ILCS 5/208) (from Ch. 73, par. 820)
    Sec. 208. Time to file claims.
    (1) When in a liquidation, rehabilitation, or conservation proceeding against an insurer under this Article an order has been entered for the filing of claims, all persons who may have claims against such insurer shall present the same to the Liquidator, Rehabilitator or Conservator, as the case may be, at a place specified in the notice for filing of claims within such time as may be fixed by order of the Court. The Director shall notify all persons who may have claims against such insurer as disclosed by its books and records, to present the same to him within the time as fixed. The last date for the filing of proof of claim shall be specified in the notice. Such notice shall be given in a manner determined by the Court. The Director shall also cause a notice specifying the last day for filing of claims to be published once a week for three consecutive weeks in a newspaper published in the county where such proceedings are pending and in such other newspapers as he may deem advisable.
    (2) Proofs of claim on good cause shown may be filed after the date specified, but except as provided in subsection (3), no such claim shall share in the distribution of assets until all allowed claims proofs of which have been filed before said date, have been paid in full.
    (3) The Director may deem proofs of claim filed after the date specified as timely filed when the claimant shows to the Director's reasonable satisfaction that (i) the claimant had no actual knowledge of the date before it had passed, (ii) a proof of claim was not sent to the claimant until after the date had passed, and (iii) the Director knew of the claimant's existence and correct address before the date had passed. Any such claim shall share in the distribution of assets under Section 205.
(Source: P.A. 88-297.)

    (215 ILCS 5/209) (from Ch. 73, par. 821)
    Sec. 209. Proof and allowance of claims.
    (1) The following provisions shall apply concerning proof and allowance of claims:
        (a) Proof of claim shall consist of a statement
    
signed by the claimant or on behalf of the claimant that includes all of the following that are applicable:
            (i) the particulars of the claim including the
        
consideration given for it;
            (ii) the identity and amount of the security on
        
the claim;
            (iii) the payments made on the debt, if any;
            (iv) that the sum claimed is justly owing and
        
that there is no setoff, counterclaim, or defense to the claim;
            (v) any right of priority of payment or other
        
specific right asserted by the claimant;
            (vi) the name and address of the claimant and the
        
attorney, if any, who represents the claimant; and
            (vii) the claimant's social security or federal
        
employer identification number.
        (b) The Director may require that a prescribed form
    
be used and may require that other information and documents be included.
        (c) At any time the Director may require the claimant
    
to present information or evidence supplementary to that required under paragraph (a) and may take testimony under oath, require production of affidavits or depositions, or otherwise obtain additional information or evidence.
    (2) Whenever a claim is based upon a document, the document, unless lost or destroyed, shall be filed with the proof of claim. If the document is lost or destroyed, a statement of that fact and of the circumstances of the loss or destruction shall be included in the proof of claim. A claim may be allowed even if contingent or unliquidated as of the date fixed by the court pursuant to subsection (a) of Section 194 if it is filed in accordance with this subsection. Except as otherwise provided in subsection (7), a proof of claim required under this Section must identify a known loss or occurrence.
    (3) Upon the liquidation, rehabilitation, or conservation of any company which has issued policies insuring the lives of persons, the Director shall, within a reasonable time, after the last day set for the filing of claims, make a list of the persons who have not filed proofs of claim with him and whose rights have not been reinsured, to whom it appears from the books of the company, there are owing amounts on such policies and he shall set opposite the name of each person such amount so owing to such person. The Director shall incur no personal liability by reason of any mistake in such list. Each person whose name shall appear upon said list shall be deemed to have duly filed prior to the last day set for filing of claims a proof of claim for the amount set opposite his name on said list.
    (4)(a) When a Liquidation, Rehabilitation, or Conservation Order has been entered in a proceeding against an insurer under this Code, any insured under an insurance policy shall have the right to file a contingent claim. The Court at the time of the entry of the Order of Liquidation, Rehabilitation or Conservation shall fix the final date for the liquidation of insureds' contingent claims, but in no event shall said date be more than 3 years after the last day fixed for the filing of claims, provided, such date may be extended by the Court on petition of the Director should the Director determine that such extension will not delay distribution of assets under Section 210. Such a contingent claim shall be allowed if such claim is liquidated and the insured claimant presents evidence of payment of such claim to the Director on or before the last day fixed by the Court.
    (b) When an insured has been unable to liquidate its claim under paragraph (a) of this subsection (4), the insured may have its claim allowed by estimation if (i) it may be reasonably inferred from the proof presented upon the claim that a claim exists under the policy; (ii) the insured has furnished suitable proof, unless the court for good cause shown shall otherwise direct, that no further valid claims against the insurer arising out of the cause of action other than those already presented can be made, and (iii) the total liability of the insurer to all claimants arising out of the same act shall be no greater than its total liability would be were it not in liquidation, rehabilitation, or conservation.
    (5) The obligation of the insurer, if any, to defend or continue the defense of any claim or suit under a liability insurance policy shall terminate on the entry of the Order of Liquidation, Rehabilitation or Conservation, except during the appeal of an Order of Liquidation as provided by Section 190.1 or, unless upon the petition of the Director, the court directs otherwise. Insureds may include in contingent claims reasonable attorneys fees for services rendered subsequent to the date of Liquidation, Rehabilitation or Conservation in defense of claims or suits covered by the insured's policy provided such attorneys fees have actually been paid by the assured and evidence of payment presented in the manner required for insured's contingent claims.
    (6) When a liquidation, rehabilitation, or conservation order has been entered in a proceeding against an insurer under this Code, any person who has a cause of action against an insured of the insurer under an insurance policy issued by the insurer shall have the right to file a claim in the proceeding, regardless of the fact that the claim may be contingent, and the claim may be allowed by estimation (a) if it may be reasonably, inferred from proof presented upon the claim that the claimant would be able to obtain a judgment upon the cause of action against the insured; and (b) if the person has furnished suitable proof, unless the court for good cause shown shall otherwise direct, that no further valid claims against the insurer arising out of the cause of action other than those already presented can be made, and (c) the total liability of the insurer to all claimants arising out of the same act shall be no greater than its total liability would be were it not in liquidation, rehabilitation, or conservation.
    (7) Contingent or unliquidated general creditors' and ceding insurers' claims that are not made absolute and liquidated by the last day fixed by the court pursuant to subsection (4) may be determined and allowed by estimation. Any such estimate shall be based upon an actuarial evaluation made with reasonable actuarial certainty or upon another accepted method of valuing claims with reasonable certainty and, with respect to ceding insurers' claims, may include an estimate of incurred but not reported losses.
    (7.5) (a) The estimation and allowance of the loss development on a known loss or occurrence shall trigger a reinsurer's obligation to pay pursuant to its reinsurance contract with the insolvent company, provided that the allowance is made in accordance with paragraph (b) of subsection (4) or subsection (6). The Director shall have the authority to exercise all available remedies on behalf of the insolvent company to marshal these reinsurance recoverables.
    (b) That portion of any estimated and allowed contingent claim that is attributable to claims incurred but not reported to the insolvent company's reinsured shall not be billable to the insolvent company's reinsurers, except to the extent that (A) such claims develop into known losses or occurrences and become billable under paragraph (a) of this subsection or (B) the reinsurance contract specifically provides for the payment of such losses or reserves.
    (c) Notwithstanding any other provision of this Code, the liquidator may negotiate a voluntary commutation and release of all obligations arising from reinsurance contracts or other agreements.
    (8) No judgment against such an insured or an insurer taken after the date of the entry of the liquidation, rehabilitation, or conservation order shall be considered in the proceedings as evidence of liability, or of the amount of damages, and no judgment against an insured or an insurer taken by default, or by collusion prior to the entry of the liquidation order shall be considered as conclusive evidence in the proceeding either of the liability of such insured to such person upon such cause of action or of the amount of damages to which such person is therein entitled.
    (9) The value of securities held by secured creditors shall be determined by converting the same into money according to the terms of the agreement pursuant to which such securities were delivered to such creditors, or by such creditors and the Director by agreement, or by the court, and the amount of such value shall be credited upon the claims of such secured creditors and their claims allowed only for the balance.
    (10) Claims of creditors or policyholders who have received preferences voidable under Section 204 or to whom conveyances or transfers, assignments or incumbrances have been made or given which are void under Section 204, shall not be allowed unless such creditors or policyholders shall surrender such preferences, conveyances, transfers, assignments or incumbrances.
    (11)(a) When the Director denies a claim or allows a claim for less than the amount requested by the claimant, written notice of the determination and of the right to object shall be given promptly to the claimant or the claimant's representative by first class mail at the address shown on the proof of claim. Within 60 days from the mailing of the notice, the claimant may file his written objections with the Director. If no such filing is made on a timely basis, the claimant may not further object to the determination.
    (b) Whenever objections are filed with the Director and he does not alter his determination as a result of the objection and the claimant continues to object, the Director shall petition the court for a hearing as soon as practicable and give notice of the hearing by first class mail to the claimant or his representative and to any other persons known by the Director to be directly affected, not less than 10 days before the date of the hearing.
    (12) The Director shall review all claims duly filed in the liquidation, rehabilitation, or conservation proceeding, unless otherwise directed by the court, and shall make such further investigation as he considers necessary. The Director may compound, compromise, or in any other manner negotiate the amount for which claims will be recommended to the court. Unresolved disputes shall be determined under subsection (11).
    (13)(a) The Director shall present to the court reports of claims reviewed under subsection (12) with his recommendations as to each claim.
    (b) The court may approve or disapprove any recommendations contained in the reports of claims filed by the Director, except that the Director's agreements with claimants shall be accepted as final by the court on claims settled for $10,000 or less.
    (14) The changes made in this Section by this amendatory Act of 1993 apply to all liquidation, rehabilitation, or conservation proceedings that are pending on the effective date of this amendatory Act of 1993 and to all future liquidation, rehabilitation, or conservation proceedings, except that the changes made to the provisions of this Section by this amendatory Act of 1993 shall not apply to any company ordered into liquidation on or before January 1, 1982.
    (15) The changes made in this Section by this amendatory Act of the 93rd General Assembly do not apply to any company ordered into liquidation on or before January 1, 2004.
(Source: P.A. 96-1450, eff. 8-20-10.)

    (215 ILCS 5/210) (from Ch. 73, par. 822)
    Sec. 210. Distribution of assets; priorities; unpaid dividends.
    (1) Any time after the last day fixed for the filing of proofs of claims in the liquidation of a company, the court may, upon the application of the Director authorize him to declare out of the funds remaining in his hands, one or more dividends upon all claims allowed in accordance with the priorities established in Section 205.
    (2) Where there has been no adjudication of insolvency, the Director shall pay all allowed claims in full in accordance with the priorities set forth in Section 205. The director shall not be chargeable for any assets so distributed to any claimant who has failed to file a proper proof of claim before such distribution has been made.
    (3) When subsequent to an adjudication of insolvency, pursuant to Section 208, a surplus is found to exist after the payment in full of all allowed claims falling within the priorities set forth in paragraphs (a), (b), (c), (d), (e), (f) and (g) of subsection (1) of Section 205 and which have been duly filed prior to the last date fixed for the filing thereof, and after the setting aside of a reserve for all additional costs and expenses of the proceeding, the court shall set a new date for the filing of claims. After the expiration of the new date, all allowed claims filed on or before said new date together with all previously allowed claims falling within the priorities set forth in paragraphs (h) and (i) of subsection (1) of Section 205 shall be paid in accordance with the priorities set forth in Section 205.
    (4) Dividends remaining unclaimed or unpaid in the hands of the Director for 6 months after the final order of distribution may be by him deposited in one or more savings and loan associations, State or national banks, trust companies or savings banks to the credit of the Director, whomsoever he may be, in trust for the person entitled thereto, but no such person shall be entitled to any interest upon such deposit. All such deposits shall be entitled to priority of payment in case of the insolvency or voluntary or involuntary liquidation of the depositary on an equality with any other priority given by the banking law. Any such funds together with interest, if any, paid or credited thereon, remaining and unclaimed in the hands of the Director in Trust after 2 years shall be presumed abandoned and reported and delivered to the State Treasurer and become subject to the provisions of the Revised Uniform Unclaimed Property Act.
(Source: P.A. 100-22, eff. 1-1-18.)

    (215 ILCS 5/211.1)
    Sec. 211.1. Termination of proceedings.
    (a) When all assets justifying the expense of collection and distribution have been marshaled and distributed under this Code, the Director as liquidator shall petition the court to terminate the liquidation proceedings and to close the estate. The court may grant such other relief as may be appropriate, including a full discharge of all liability and responsibility of the liquidator, a reservation of assets for administrative expenses incurred in the closing of the estate, and the maintenance and destruction of records.
    (b) Subject to the approval of the court, after the completion of all postclosure activities for which moneys were reserved, the Director is authorized to destroy company records and documents notwithstanding any other applicable statutes and any remaining reserved assets that are provided for in subsection (a) and that may not be practicably or economically distributed to claimants shall be deposited into a segregated account to be known as the Closed Estate Fund Trust Account. The Director may use moneys held in the account for paying the administrative expenses of companies subject to this Article that lack sufficient assets to allow the Director to perform his duties and obligations under this Article. An annual audit of the Closed Estate Fund Trust Account shall be performed in accordance with Section 200 of this Code regardless of its balance.
    (c) The Director may petition the court to reopen the proceedings for good cause shown, including the marshaling of additional assets, and the court may enter such other orders as may be deemed appropriate.
(Source: P.A. 88-297; 89-206, eff. 7-21-95.)

    (215 ILCS 5/212.1)
    Sec. 212.1. Subpoena and document production. The court shall have jurisdiction, upon, or at any time after the filing of the complaint, upon the petition of the Director to subpoena witnesses and compel their attendance, administer oaths, examine any person under oath and compel any person to subscribe to his or her testimony after it has been correctly reduced to writing, and to require the production of any books, papers, records, or other documents.
(Source: P.A. 88-297.)

    (215 ILCS 5/213.5)
    Sec. 213.5. Severability. The provisions of this Article are severable under Section 1.31 of the Statute on Statutes.
(Source: P.A. 89-206, eff. 7-21-95.)

    (215 ILCS 5/221) (from Ch. 73, par. 833)
    Sec. 221. Continuation of existing proceedings. Every proceeding heretofore commenced under "An Act in relation to delinquent insurance companies, associations and societies," approved June 26, 1925, as from time to time amended, which is repealed by this Code shall be continued as if said Act had not been repealed, but assessments against members or subscribers of any company which has issued assessable policies or contracts of insurance may be made in accordance with Section 193.
(Source: P.A. 83-333.)


 
    (215 ILCS 5/Art. XIII.5 heading)
ARTICLE XIII 1/2. UNIFORM PROVISIONS FOR LIQUIDATION

    (215 ILCS 5/221.1) (from Ch. 73, par. 833.1)
    Sec. 221.1. Definitions.
    For the purposes of Sections 221.1 to 221.10, both inclusive, the following terms have the following meanings;
    (1) "Reciprocal State" means a state wherein:
    (a) it is provided by law that the insurance supervisory or other administrative agency of the state shall conduct or wind up the affairs of delinquent companies under judicial supervision and shall be vested with title to all of the assets of any domestic company against which a delinquency proceeding has been commenced, and
    (b) in substance and effect the provisions of Sections 221.1 to 221.10, both inclusive are in force.
    (2) "Insurer" means any person, firm, corporation, association, or aggregation of persons doing or proposing to do an insurance business and subject to the insurance supervisory authority of, or to liquidation, rehabilitation, reorganization or conservation by, the commissioner of insurance or equivalent insurance supervisory official of the state.
    (3) "Delinquency proceeding" means any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing or conserving such insurer.
    (4) "Domiciliary state" means the state in which an insurer is incorporated or organized or, in the case of an insurer incorporated or organized in a foreign country, the state in which such insurer, having become authorized to do business in such state has, at the commencement of delinquency proceedings the largest amount of its trusteed assets and deposits for the benefit of its policy holder or policy holders and creditors in the United States; and "domiciliary insurer" means an insurer in its domiciliary state.
    (5) "Ancillary state" means any state other than a domiciliary state.
    (6) "General Assets" means all property, real or personal, not specifically mortgaged, pledged, deposited as security or otherwise encumbered, and as to such specifically encumbered property the term includes all in excess of the amount necessary to discharge the sum or sums secured.
    (7) "Preferred claim" means any claim with respect to which the law of a state or of the United States accords priority of payment from the general assets of the insurer.
    (8) "Special deposit claim" means any claims secured generally by a deposit of a fund or property or bond which deposit has been made to secure the payment of all claims of a particular description or all claims of persons resident in a particular state. The term does not include claims which are secured by deposit for the benefit or protection of all claimants against the insurer in the United States.
    (9) "Secured claim" means any claim secured individually by mortgage, trust, deed, pledge, deposit as security, escrow or otherwise. The term also includes claims which prior to the commencement of delinquency proceedings in the state of the insurer's domicile have become liens upon specific assets by reason of judicial process.
    (10) "State" means any state or territory of the United States, and the District of Columbia.
    (11) "Foreign country" means territory outside of any state, as defined.
    (12) "Receiver" means receiver, liquidator, rehabilitator or conservator as the context may require.
    In addition to and notwithstanding any other provisions of law, this Article shall apply to the administration by the Director of the affairs of delinquent domestic companies with respect to matters affecting or related to reciprocal states, and shall also apply to matters affecting or related to this State in the administration by the Director of the affairs of delinquent companies domiciled in reciprocal states and authorized to transact business in this State.
(Source: Laws 1941, vol. 1, p. 832.)

    (215 ILCS 5/221.2) (from Ch. 73, par. 833.2)
    Sec. 221.2. Ancillary delinquency proceedings.
    After the commencement of delinquency proceedings in a reciprocal state against an insurer domiciliary in such state, a court of competent jurisdiction in this State shall on the petition of the Director of Insurance of this State appoint such Director of Insurance as ancillary receiver in this State of such insurer. The Director of Insurance shall file such petition (a) if he finds that there are sufficient assets of such insurer located in this State to justify the appointment of an ancillary receiver or (b) if 10 or more persons resident in a state having claims against such insurer file a petition or petitions in writing with the Director requesting the appointment of such ancillary receiver. As ancillary receiver the Director shall have the right to sue for and reduce to possession the assets of such insurer in this State, and, subject to the rights of the domiciliary receiver, he shall have the same powers and be subject to the same duties with respect to such assets, as are possessed by a receiver of a domiciliary insurer under the laws of this State. The domiciliary receiver of an insurer domiciled in a reciprocal state shall, except as to special deposits and security on secured claims pursuant to Section 221.7, be vested by operation of law with the title to all of the assets, property, contracts, agents' balances, and all of the books, accounts and other records of the insurer located in this State; and shall have the immediate right to recover balances due from resident agents and to obtain possession of any books and records of the insurer found in this State.
(Source: P.A. 89-206, eff. 7-21-95.)

    (215 ILCS 5/221.3) (from Ch. 73, par. 833.3)
    Sec. 221.3. Filing and proving of claims of non-residents against delinquent domiciliary insurers.
    In any delinquency proceeding begun in this state against a domiciliary insurer of this state, claimants residing in a reciprocal ancillary state may file claims either with the ancillary receiver, if any, or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceedings.
    In any such proceeding controverted claims belonging to claimants residing in ancillary states may either (a) be proved in this state as provided by law, or (b) if ancillary proceedings have been commenced in such ancillary state, may be proved in such ancillary proceedings. In the event a claimant elects to prove his claim in ancillary proceedings, and, if notice of the claim and opportunity to appear and be heard is afforded the domiciliary receiver of this state, such claim, when allowed by the court in the ancillary state, shall be accepted in this state as final and conclusive as to its amount, and shall also be accepted as final and conclusive as to its priority, if any, as against special deposits or other security located within the ancillary state.
(Source: Laws 1941, vol. 1, p. 832.)

    (215 ILCS 5/221.4) (from Ch. 73, par. 833.4)
    Sec. 221.4. Proof of claims of residents in connection with delinquency proceedings in other states.
    If a delinquency proceeding is commenced in a reciprocal state against an insurer domiciliary in such state, claimants against such insurer who reside within this State may file claims either with the ancillary receiver, if any, appointed in this State or with the domiciliary receiver. All such claims must be filed on or before the last date fixed for the filing of claims in the domiciliary delinquency proceeding.
    In any such proceeding controverted claims belonging to claimants residing in this State may either (a) be proved in the domiciliary state as provided by the law of such state, or (b) if ancillary proceedings have been commenced in this State, be proved in such ancillary proceedings. In the event that any such claimant elects to prove his claim in this State, he shall file his claim with the ancillary receiver in the manner provided by the law of this State for the proving of claims against domiciliary insurers, and he shall give, or cause to be given, at least 40 days prior to the date of hearing, notice to the receiver in the domiciliary state, either by mail or otherwise in writing that such claim is being made to such ancillary receiver and the nature and the amount thereof. The domiciliary receiver shall be entitled to appear or to be represented in any proceeding in this State involving the adjudication of the claim. The allowance of the claim by the courts of this State shall be final and conclusive both as to its amount and also as to its priority, if any, against special deposits or other security located within this State.
(Source: P.A. 89-206, eff. 7-21-95.)

    (215 ILCS 5/221.5) (from Ch. 73, par. 833.5)
    Sec. 221.5. Priority of preferred claims.
    In any delinquency proceeding against a domiciliary insurer of this state, claims owing to residents of ancillary reciprocal states shall be deemed preferred claims if, and only if, like claims are preferred under the laws of this state. All such claims whether owing to residents or non-residents shall be given equal priority of payment from general assets. No law of an ancillary state providing for preferred claims against the general assets of insurers shall be recognized as against the assets of delinquent domiciliary insurers of this state regardless of where such assets may be located.
    In any delinquency proceeding against an insurer domiciliary in a reciprocal state, claims owing to residents of this state shall be preferred if, and only if, like claims are preferred by the laws of such other state.
(Source: Laws 1941, vol. 1, p. 832.)

    (215 ILCS 5/221.6) (from Ch. 73, par. 833.6)
    Sec. 221.6. Priority of special deposit claims.
    The owners of special deposit claims against an insurer for which a receiver has been appointed in a delinquency proceeding in this or any reciprocal state shall be given priority against their several special deposits in accordance with the provisions of the statutes requiring the creation and maintenance of such special deposits. If there be a deficiency in any such special deposit so that the claims secured thereby are not fully discharged therefrom, the claimants may share in the general assets, but such sharing shall be deferred until general creditors, and also claimants against other special deposits who have received a small percentage from their respective special deposits, have been paid percentages of their claims equal to the percentage paid from such special deposit, it being the purpose and intent of this provision to equalize to this extent the advantage gained by the security provided by such special deposits.
(Source: Laws 1941, vol. 1, p. 832.)

    (215 ILCS 5/221.7) (from Ch. 73, par. 833.7)
    Sec. 221.7. Priority of secured claims.
    The owner of a secured claim against an insurer for which a receiver has been appointed in a delinquency proceeding in this or any reciprocal state may surrender his security and file his claim as a general creditor, or such secured claim may be discharged by resort to the security, in which case the deficiency, if any, shall be treated as a claim against the general assets of the insurer on the same basis as claims of unsecured creditors. If the amount of the deficiency has been adjudicated in ancillary proceedings as provided in this Article, that amount shall be conclusive; otherwise the amount of such deficiency shall be ascertained and determined in the delinquency proceeding in the domiciliary state of such insurer.
(Source: P.A. 89-206, eff. 7-21-95.)

    (215 ILCS 5/221.8) (from Ch. 73, par. 833.8)
    Sec. 221.8. Right of domiciliary receiver to residium of assets of insurers domiciled in ancillary states.
    The ancillary receiver of assets in this State of insurers domiciliary in reciprocal states and subject to delinquency proceedings therein shall, as soon as practicable, arrange the liquidation or other disposition of special deposit claims and secured claims proved in the ancillary proceedings in this State, and all remaining assets, after payment of expenses he shall promptly transfer to the domiciliary receiver.
    The domiciliary receiver of a reciprocal state may sue the ancillary receiver of this State in the courts of this State for the purpose of collecting or obtaining any assets of the insurer to which he or she may be entitled under the laws of this State, and, if no ancillary receiver be appointed in this State, such domiciliary receiver may collect or reduce to possession, in this State, and may sue in the courts of this State to obtain, any assets of such delinquent insurer located in this State, to which he or she may be entitled under the laws of this State.
(Source: P.A. 89-206, eff. 7-21-95.)

    (215 ILCS 5/221.9) (from Ch. 73, par. 833.9)
    Sec. 221.9. Attachment and garnishment of assets.
    In the event of the commencement of delinquency proceedings in any reciprocal state no action or proceeding in the nature of an attachment, garnishment, execution or otherwise, shall be commenced in the courts of this state against such delinquent insurer or its assets.
(Source: Laws 1941, vol. 1, p. 832.)

    (215 ILCS 5/221.10) (from Ch. 73, par. 833.10)
    Sec. 221.10. Declaration of purpose.
    The purpose of Sections 221.1 to 221.10, both inclusive is to promote uniformity in the liquidation, rehabilitation, reorganization or conservation of insurers doing business in more than one state. It is intended that Sections 221.1 to 221.10, both inclusive shall be liberally construed to the end that so far as possible the assets of such insurers shall be equally and uniformly conserved in all states, and that claimants against such insurers shall receive equal and uniform treatment irrespective of residence or the place of the acts or contracts upon which their claims are based. The provisions of Sections 221.1 to 221.10, both inclusive shall be effective only with respect to this state and other states in which (a) it is provided by law that only the Insurance Commissioner or equivalent supervisory official of the State shall be vested with title to the assets of, and shall wind up the affairs of, delinquent insurers under judicial supervision; and (b) in substance and effect the provisions of Sections 221.1 to 221.10, both inclusive, are in force. The provisions of Sections 221.1 to 221.10, both inclusive, insofar as applicable to any insurer incorporated or organized in a foreign country, shall apply only to the assets, liabilities and business of such insurer within the several states.
(Source: Laws 1941, vol. 1, p. 832.)

    (215 ILCS 5/221.11) (from Ch. 73, par. 833.11)
    Sec. 221.11. Proceedings governed by Civil Practice Law and Supreme Court Rules.) The rules of practice, the course and method of procedure in circuit courts as established by the Civil Practice Law and Supreme Court Rules and any amendments thereto are adopted for the purposes of this Article except where other procedures or rules are in this Article expressly provided. Appeals may be taken as in other civil cases.
(Source: P.A. 82-783.)

    (215 ILCS 5/221.12) (from Ch. 73, par. 833.12)
    Sec. 221.12. Sections 211, 212, 213, 214, 215, 216, 217, 218, 219 and 220, each inclusive, are repealed; provided, however, that every proceeding heretofore commenced under such sections shall be continued as though such sections had not been repealed.
(Source: Laws 1941, vol. 1, p. 832.)

    (215 ILCS 5/221.13) (from Ch. 73, par. 833.13)
    Sec. 221.13. Uniformity of interpretation.
    Sections 221.1 to 221.12 each inclusive, of this Article shall be so interpreted and construed as to effectuate their general purpose to make uniform the law of those states that enact the Uniform Reciprocal Liquidation Act.
(Source: Laws 1941, vol. 1, p. 832.)


 
    (215 ILCS 5/Art. XIV heading)
ARTICLE XIV. LEGAL RESERVE LIFE INSURANCE

    (215 ILCS 5/222) (from Ch. 73, par. 834)
    Sec. 222. Scope of article.
    This article shall apply to all stock and mutual legal reserve life companies, and to the extent provided in section 281 to assessment legal reserve life companies, authorized to transact in this State the kind or kinds of business described in Class 1 of section 4.
(Source: Laws 1937, p. 696.)

    (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 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 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 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 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 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 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.
GuaranteeWeighting
DurationFactors
(Years)
10 or less.50
More than 10, but not more than 20.45
More than 20.35
                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.
GuaranteeWeighting Factor
Durationfor Plan Type
(Years) A    B   C
5 or less.........................80  .60 .50
More than 5, but not
more than 10.......................75  .60 .50
More than 10, but not
more than 20.......................65  .50 .45
More than 20.......................45  .35 .35
                    (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 5/224) (from Ch. 73, par. 836)
    Sec. 224. Standard provisions for life policies.
    (1) After the first day of July, 1937, no policy of life insurance other than industrial, group or annuities and pure endowments with or without return of premiums or of premiums and interest, may be issued or delivered in this State, unless such policy contains in substance the following provisions:
        (a) A provision that all premiums after the first
    
shall be payable in advance either at the home office of the company or to an agent of the company, upon delivery of a receipt signed by one or more of the officers who shall be designated in the policy, when such receipt is requested by the policyholder.
        (b) A provision that the insured is entitled to a
    
grace period either of 30 days or of one month within which the payment of any premium after the first may be made, subject at the option of the company to an interest charge not in excess of 6% per annum for the number of days of grace elapsing before the payment of the premium, during which period of grace the policy shall continue in force, but in case the policy becomes a claim during the grace period before the overdue premium is paid, or the deferred premiums of the current policy year, if any, are paid, the amount of such premium or premiums with interest thereon may be deducted in any settlement under the policy.
        (c) A provision that the policy, together with the
    
application therefor, a copy of which shall be endorsed upon or attached to the policy and made a part thereof, shall constitute the entire contract between the parties and that after it has been in force during the lifetime of the insured a specified time, not later than 2 years from its date, it shall be incontestable except for nonpayment of premiums and except at the option of the company, with respect to provisions relative to benefits in the event of total and permanent disability, and provisions which grant additional insurance specifically against death by accident and except for violations of the conditions of the policy relating to naval or military service in time of war or for violation of an express condition, if any, relating to aviation, (except riding as a fare-paying passenger of a commercial air line flying on regularly scheduled routes between definitely established airports) in which case the liability of the company shall be fixed at a definitely determined amount not less than the full reserve for the policy and any dividend additions; provided that the application therefor need not be attached to or made a part of any policy containing a clause making the policy incontestable from date of issue.
        (d) A provision that if it is found at any time
    
before final settlement under the policy that the age of the insured (or the age of the beneficiary, if considered in determining the premium) has been misstated, the amount payable under the policy shall be such as the premium would have purchased at the correct age or ages, according to the company's published rate at date of issue.
        (e) A provision that the policy shall participate
    
annually in the surplus of the company beginning not later than the end of the third policy year; and any policy containing provision for annual participation beginning at the end of the first policy year, may also provide that each dividend be paid subject to the payment of the premiums for the next ensuing year; and the insured under any annual dividend policy shall have the right each year to have the dividend arising from such participation either paid in cash, or applied in reduction of premiums, or applied to the purchase of paid-up additional insurance, or be left to accumulate to the credit of the policy, with interest at such rate as may be determined from time to time by the company, but not less than a guaranteed minimum rate specified in the policy, and payable at the maturity of the policy, but withdrawable on any anniversary date, subject to such further provisions as the policy may provide regarding the application of dividends toward the payment of any premiums unpaid at the end of the grace period; and if the insured fails to notify the company in writing of his election within the period of grace allowed for the payment of premium, the policy shall further provide which of such options are effective.
        (f) A provision that after the policy has been in
    
force 3 full years the company at any time, while the policy is in force, will advance, on proper assignment or pledge of the policy and on the sole security thereof, at a specified maximum fixed or adjusted rate of interest in accordance with Section 229.5, a sum equal to, or at the option of the insured less than the amount required by Section 229.3 under the conditions specified thereby and with notification as required by Section 229.5; and that the company will deduct from such loan value any indebtedness not already deducted in determining such value and any unpaid balance of the premium for the current policy year, and may collect interest in advance on the loan to the end of the current policy year; and any policy may also provide that if the interest on the loan is not paid when due it shall be added to the existing loan and shall bear interest at the same rate. No condition other than as provided herein or in Sections 229.3 and 229.5 shall be exacted as a prerequisite to any such loan. This clause shall not apply to term insurance.
        (g) A provision for nonforfeiture benefits and cash
    
surrender values in accordance with the requirements of paragraph (1) of Section 229.1 or, Section 229.2.
        (h) A table showing in figures the loan values and
    
the options available under the policy each year, upon default in premium payments, during at least the first 20 years of the policy; the policy to contain a provision that the company will furnish upon request an extension of such table beyond the years shown in the policy.
        (i) A provision that in event of default in premium
    
payments the value of the policy is applied to the purchase of other insurance as provided in this Section, and if such insurance is in force and the original policy is not surrendered to the company and cancelled, the policy may be reinstated within 3 years from such default, upon evidence of insurability satisfactory to the company and payment of arrears of premiums and the payment or reinstatement of any other indebtedness to the company upon the policy, with interest on the premiums at a rate not exceeding 6% per annum payable annually and with interest on the indebtedness at a rate not exceeding the rate prescribed by Section 229.5.
        (j) A provision that when a policy is a claim by the
    
death of the insured settlement shall be made upon receipt of due proof of death and not later than 2 months after the receipt of such proof. The policy may require that due proof of the death of the insured shall consist of a certified copy of the death certificate of the insured, or other lawful evidence providing equivalent information, and proof of the claimant's interest in the proceeds.
        (k) If the policy provides for payment of its
    
proceeds in installments, a table showing the amount and period of such installments shall be included in the policy.
        (l) Interest shall accrue on the proceeds payable
    
because of the death of the insured, from date of death, at the rate of 10% annually on the total amount payable or the face amount if payments are to be made in installments until the total payment or first installment is paid, unless payment is made within 31 days from the latest of the following to occur:
            (1) the date that due proof of death is received
        
by the company;
            (2) the date that the company receives sufficient
        
information to determine its liability, the extent of the liability, and the appropriate payee legally entitled to the proceeds; or
            (3) the date that legal impediments to payment of
        
proceeds that depend on the action of parties other than the company are resolved and sufficient evidence of the same is provided to the company; legal impediments to payment include, but are not limited to, (A) the establishment of guardianships and conservatorships, (B) the appointment and qualification of trustees, executors, and administrators, and (C) the submission of information required to satisfy State and federal reporting requirements.
    This provision need not appear in the policy, however,
    
the company shall notify the beneficiary at the time of claim of this provision. The payment of interest shall apply to all policies now in force, as well as those written after the effective date of this amendment.
        (m) Title on the face and on the back of the policy
    
briefly describing its form.
        (n) A provision, or a notice attached to the policy,
    
to the effect that during a period of ten days from the date the policy is delivered to the policy owner, it may be surrendered to the insurer together with a written request for cancellation of the policy and in such event, the insurer will refund any premium paid therefor, including any policy fees or other charges. The Director may by rule exempt specific types of policies from the requirements of this subsection.
    (2) In the case of the replacement of life insurance, as defined in the rule promulgated by the Director, the replacing insurer shall either (1) delay the issuance of its policy for not less than 20 days from the date it has transmitted a policy summary to the existing insurer, or (2) provide in a form titled "Notice Regarding Replacement of Life Insurance", as well as in its policy, or in a separate notice delivered with the policy, that the insured has the right to an unconditional refund of all premiums paid, and that such right may be exercised within a period of 20 days commencing from the date of delivery of such policy. Where option (2) is exercised, the replacing insurer shall also transmit a policy summary to the existing insurer within 3 working days after the date the replacement policy is issued.
    (3) Any of the foregoing provisions or portions thereof not applicable to single premium or nonparticipating or term policies shall to that extent not be incorporated therein. This Section shall not apply to policies of reinsurance nor to policies issued or granted pursuant to the nonforfeiture provisions prescribed in subparagraph (g) of paragraph (1) of this Section.
(Source: P.A. 97-527, eff. 8-23-11.)

    (215 ILCS 5/224.05)
    Sec. 224.05. Military personnel in military service; no lapse of life insurance policy.
    (a) Except as provided in subsection (b), this Section shall apply to any individual life insurance policy insuring the life of a resident of Illinois who is a member of any component of the U.S. Armed Forces or the National Guard of any state, the District of Columbia, a commonwealth, or a territory of the United States who has entered any full-time training or duty which the service member was ordered to report by the President, Governor of a state, commonwealth, or territory of the United States, or other appropriate military authority, if the life insurance policy meets both of the following conditions:
        (1) The policy has been in force for at least 180
    
days.
        (2) The policy has been brought within the
    
"Servicemembers Civil Relief Act," 117 Stat. 2835 (2003), 50 U.S.C. App. 541 and following.
    (b) This Section does not apply to any policy that was cancelled or that had lapsed for the nonpayment of premiums prior to the commencement of the insured's period of military service.
    (c) An individual life insurance policy described in this Section shall not lapse or be forfeited for the nonpayment of premiums during the military service of a service member in excess of 29 consecutive days during the 2-year period subsequent to the end of the member's period of military service.
    (d) In order to be eligible for the benefits granted to service members under this Section, a service member must provide the life insurance company with a copy of the orders calling the service member to military service and of any orders further extending the service member's period of service.
    (e) This Section does not limit a life insurance company's enforcement of provisions in the insured's policy relating to naval or military service in time of war.
    (f) A violation of this Section constitutes a civil rights violation under the Illinois Human Rights Act.
    All proceeds from the collection of any civil penalty imposed under this subsection shall be deposited into the Illinois Military Family Relief Fund.
(Source: P.A. 97-913, eff. 1-1-13.)

    (215 ILCS 5/224.1) (from Ch. 73, par. 836.1)
    Sec. 224.1. Employer insurable interest. Notwithstanding any other Section of this Code, an employer or an employer sponsored trust for the benefit of its employees has an insurable interest in the lives of the employer's directors, officers, managers, nonmanagement employees, and retired employees and may insure those lives on an individual or group basis with the consent of the insured. The consent requirement will be satisfied if the insured is provided written notice of the coverage and does not reject such coverage within 30 days of receipt of such notice. The extent of the employer's or the trust's insurable interest for nonmanagement and retired employees shall be limited to an amount commensurate with the employer's projected unfunded liabilities to nonmanagement and retired employees for welfare benefit plans, as defined by the Employee Retirement Income Security Act of 1974, Public Law 93-406, 88 Stat. 829, calculated according to accepted actuarial principles. An insurable interest must exist at the time the contract of life or disability insurance becomes effective, but need not exist at the time the loss occurs. An employer shall not retaliate in any manner against an employee or a retired employee for refusing consent to be insured. The proceeds of any policy or certificate issued pursuant to this Section are exempt from the claims of any creditor or dependent of the insured. As used herein, "employer" means an individual, sole proprietorship, partnership, firm, corporation, association, or any other legal entity that has one or more employees and is legally doing business in this State.
(Source: P.A. 87-936.)

    (215 ILCS 5/225) (from Ch. 73, par. 837)
    Sec. 225. Prohibited Provisions for Life Policies. (1) After the effective date of this Code no policy of life insurance may be issued or delivered in this State if it includes any of the following provisions:
    (a) A provision limiting the time within which any action may be commenced to less than 3 years after the cause of action accrues.
    (b) A provision by which the policy purports to be issued or take effect more than 6 months before the original application for the insurance was made, but this provision does not apply in any case of a transfer from one form of policy to another in connection with which the policy owner receives credit for any reserve accumulation under the form of policy from which the transfer was made.
    (c) A provision for any mode of settlement at maturity after the expiration of the contestable period of the policy of less value than the amount insured plus dividend additions, if any, less any indebtedness to the company on or secured by the policy, and less any premium that may by the terms of the policy be deducted, except as permitted by clause (c) of subsection (1) of Section 224.
    (d) A provision for forfeiture of the policy for failure to repay any loan on the policy, or to pay interest on such loan, while the total indebtedness on the policy, including interest, is less than the loan value thereof.
    (e) A provision to the effect that the agent soliciting the insurance is the agent of the person insured under the policy, or making the acts or representations of such agent binding upon the person so insured under the policy.
    (f) A provision limiting the amount payable under a policy by reason of death occurring after the expiration of the contestable period to less than the face amount thereof on account of the kind or character of disease causing the insured's death.
    (2) The provisions of this section do not apply to policies of reinsurance, nor to policies issued or granted under the nonforfeiture provisions prescribed in clause (g) of subsection (1) of Section 224.
(Source: P.A. 83-345.)

    (215 ILCS 5/226) (from Ch. 73, par. 838)
    Sec. 226. Standard provisions for annuities and pure endowment contracts. (1) After the effective date of this Section and any amendments thereto no annuity or pure endowment contract, except in case of reversionary annuities, survivorship annuities or annuities contracted by an employer on behalf of his employees, shall be issued or delivered in this State unless it contains in substance the following provisions:
    (a) A provision that there shall be a period of grace, either of thirty days or of one month, within which any stipulated payment to the company falling due after the first year may be made, subject at the option of the company, to an interest charge thereon at a rate to be specified in the contract but not exceeding six per centum per annum for the number of days of grace elapsing before such payment, during which period of grace, the contract shall continue in full force; but in case a claim arises under the contract on account of death during the said period of grace before the overdue payment to the company or the deferred payments of the current contract year, if any, are made, the amount of such payments, with interest on any overdue payments, may be deducted from any amount payable under the contract in settlement.
    (b) If statements, other than those relating to age and identity, are required as a condition to issuing the contract, a provision that the contract shall be incontestable after it has been in force during the lifetime of the person or each of the persons as to whom such statements are required, for a period of two years from its date of issue, except where stipulated payments to the company have not been made and except for violations of the conditions of the contract relating to military or naval service in time of war and except, at the option of the company, with respect to provisions relative to benefits in the event of total and permanent disability and provisions which grant insurance specifically against death by accident.
    (c) A provision that such a contract shall constitute the entire contract between the parties, but if the company desires to make the application a part of the contract it may do so, provided a copy of such application shall be endorsed upon or attached to such contract when issued, and in such case such contract shall contain a provision that it, together with the application therefor, shall constitute the entire contract between the parties.
    (d) A provision that if the age or ages of the person or persons upon whose life or lives the contract is based, or any of them, have been misstated, the amount payable under the contract shall be such as the stipulated payments to the company would have purchased at the correct age or ages.
    (e) If the contract is participating, a provision that the divisible surplus shall be apportioned annually and dividends shall be payable in cash or shall be applicable to any stipulated payment or payments to the company under the contract.
    (f) A provision that after the contract has been in force for three years, if it shall, by its terms, lapse because any stipulated payment to the company shall not have been made, the reserve on such contract, exclusive of the reserve on account of total and permanent disability and additional accidental death benefits, computed according to the standard adopted by the company and in accordance with section 223, shall after deducting not more than one-fifth of the said entire reserve and any indebtedness to the company under the contract, be applied as a net single payment according to said standard, for the purchase of a paid-up annuity or a pure endowment contract, which may be nonparticipating and which shall be payable by the company under the same terms and conditions as the original contract, except as to amount.
    (g) A provision that the contract may be reinstated at any time within one year from the date of default in making stipulated payments to the company, but all overdue stipulated payments and any indebtedness to the company on the contract shall be paid or reinstated, with interest thereon at a rate to be specified in the contract but not exceeding six per centum per annum payable annually, and in cases where applicable, a company may also include a requirement of evidence of insurability satisfactory to the company.
    (h) A provision, or a notice attached to the contract, to the effect that during a period of 10 days from the date the contract is delivered to the contract-owner it may be surrendered to the insurer together with a written request for cancellation of the contract, and that in such event, with the exception of a variable annuity contract, the insurer will refund any premium paid for the contract, including any contract fees or other charges. Cancellation under a variable annuity contract shall entitle a person to an amount equal to the sum of (i) the difference between the premiums paid including any contract fees or other services and the amounts allocated to any separate accounts under the contract and (ii) the cash value of the contract or, if the contract does not have a cash value, the reserve for the contract, on the date the return contract is received by the insurer or its agent. The Director may by rule exempt specific types of contracts from this paragraph.
    (2) Any overpayment by the company on account of misstatement of age, shall be charged against the current or next succeeding payment or payments to be made by the company under the contract, with interest thereon at a rate to be specified in the contract but not exceeding six per centum per annum.
    (3) A company may provide, in lieu of the paid-up values provided in clause (f) of subsection (1), for a paid-up annuity or pure endowment contract in an amount bearing the same proportion to the original annuity or pure endowment contract as the number of stipulated payments which shall have been made to the company shall bear to the total number of stipulated payments required to be made to the company under contract, and if there be any indebtedness to the company under the contract the amount of such paid-up annuity or pure endowment shall be reduced by an amount bearing the same proportion to such paid-up annuity or pure endowment as such indebtedness bears to the cash value on such paid-up annuity or pure endowment, computed according to the standard adopted by the company in accordance with section 223.
(Source: P.A. 82-594.)

    (215 ILCS 5/226.1) (from Ch. 73, par. 838.1)
    Sec. 226.1. Entitled annuity payment options. Annuity contracts and funding agreements may be issued without a life contingency annuity payment option in the following circumstances: (1) to fund benefits under an employee benefit plan as defined in the Employee Retirement Income Security Act of 1974, as now or hereafter amended; (2) to fund the activities of an organization exempt from taxation under Internal Revenue Code Section 501(c), as now or hereafter amended; (3) to fund a program of a governmental entity or of an agency or instrumentality thereof; (4) to fund an agreement providing for periodic payments entered into in satisfaction of a claim; or (5) to fund a program of an institution having assets in excess of $25,000,000.
(Source: P.A. 92-875, eff. 1-3-03.)

    (215 ILCS 5/227) (from Ch. 73, par. 839)
    Sec. 227. Standard provisions for reversionary or survivorship annuity contracts.
    (1) After the effective date of this Code no contract for a reversionary annuity or survivorship annuity shall be issued or delivered in this State unless it contains in substance the following provisions:
    (a) The provisions of clauses (a), (b), (c), (d) and (e) of subsection (1) of section 226, except that under said clause (a) the company may at its option provide for an equitable reduction of the amount of the annuity payments in settlement of an overdue or deferred payment in lieu of providing for a deduction of such payments from an amount payable upon a settlement under the contract.
    (b) A provision that the contract may be reinstated at any time within three years from the date of default in making stipulated payments to the company, upon production of evidence of insurability satisfactory to the company, provided that all overdue payments and any indebtedness to the company on account of the contract shall be paid or reinstated with interest thereon at a rate to be specified in the contract but not exceeding six per centum per annum payable annually.
    (2) Any of the foregoing provisions or portions thereof contained in this section and in section 226 not applicable to non-participating contracts nor to contracts for which a single stipulated payment to the company is made, shall, to that extent, not be incorporated therein.
    (3) The provisions of this section and section 226 shall not apply to contracts of re-insurance nor to contracts for deferred annuities or reversionary annuities included in life insurance policies.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/228) (from Ch. 73, par. 840)
    Sec. 228. Industrial Life Insurance Defined. As used in this Code "industrial life insurance" means either that form of life insurance under which the premiums are payable monthly or more often if the face amount of insurance provided in the policy does not exceed $2,500 and the words "industrial policy" are printed in prominent type on the face of the policy. Any life company authorized to do business in this State may issue industrial policies.
(Source: P.A. 82-498.)

    (215 ILCS 5/229) (from Ch. 73, par. 841)
    Sec. 229. Standard Provisions for Industrial Life Insurance. (1) After the effective date of this Section and any amendments thereto, no policy of industrial life insurance shall be issued or delivered in this State, unless the same shall contain in substance the following provisions, and shall be subject to the other provisions of this section:
    (a) A provision that the insured is entitled to a grace period of four weeks within which the payment of any premium after the first, may be made, during which period of grace the policy shall continue in full force but in case the policy becomes a claim during said grace period before the overdue premiums are paid, the amount of overdue premiums may be deducted in any settlement under the policy.
    (b) A provision that the policy shall contain the entire contract between the parties, nothing to be incorporated therein by reference to any constitution, bylaws, rules, application or other writing unless endorsed upon or attached to the policy.
    (c) A provision that the policy shall be incontestable after it shall have been in force during the lifetime of the insured for a specified period, not more than two years from its date, except for nonpayment of premiums and except for violation of the conditions of the policy relating to naval or military service in time of war and except as to provisions relating to benefits in the event of total and permanent disability and those granting additional insurance specifically against death by accident.
    (d) A provision that if it shall be found at any time before final settlement on the policy that the age of the insured (or the age of any other person considered in determining the premium) has been misstated, the amount payable under the policy shall be such as the premium would have purchased at the correct age or ages at the time the policy was issued.
    (e) If a participating policy a provision indicating the conditions under which the company shall annually ascertain and apportion any divisible surplus accruing on the policy.
    (f) A provision for nonforfeiture benefits in accordance with the requirements of section 229.1 (2) or section 229.2.
    (g) If more than one option is provided, a provision as to which of such options shall apply in the event of the insured's failure to notify the company of his selection of an option.
    (h) A provision for cash surrender values in accordance with the requirements of section 229.1 (2) or section 229.2.
    (i) A provision that the policy may be reinstated, if not surrendered for its cash value or if the period of extended term insurance has not expired, within one year from the date of default in payment of premiums upon presentation of evidence satisfactory to the company of the insurability of the insured and the payment of arrears of premiums and the payment or reinstatement of any other indebtedness to the company upon said policy, with interest on said premiums and indebtedness at a rate not exceeding six per centum per annum payable annually.
    (j) A table showing in figures the nonforfeiture options available under the policy every year upon default in payment of premiums during at least the first twenty years of the policy, and a provision that the company will furnish upon request an extension of such table beyond the years shown in the policy.
    (k) A provision that when a policy shall become a claim by the death of the insured, settlement shall be made upon receipt of due proof of death and not later than two months after the receipt of such proof.
    (l) Title on the face of the policy clearly and correctly describing its form.
    (m) A provision, or a notice attached to the policy, to the effect that during a period of 10 days from the date the policy is delivered to the policy owner it may be surrendered to the insurer together with a written request for cancellation of the policy, and that in such event the insurer will refund any premium paid for the policy, including any policy fees or other charges. The Director may by rule exempt specific types of policies from this paragraph.
    (2) Any of the provisions of subsection (1) or portions thereof not applicable to nonparticipating or term policies shall to that extent not be incorporated therein. The provisions of this section shall not apply to policies issued or granted pursuant to the nonforfeiture provisions prescribed in clauses (f), (g) and (h) of subsection (1).
    (3) Upon proper written request, a named beneficiary shall be designated in, or be endorsed on, the policy, to receive the benefits thereof on the death of the insured, and there shall be reserved the power to change the beneficiary at any time upon proper written request to the company at its home office, accompanied by the policy for endorsement of the change thereon by the company. The company shall have the right to refuse to designate a beneficiary if evidence satisfactory to the company of such beneficiary's insurable interest in the life of the insured is not furnished on request. The policy may provide in substance that any payment thereunder may be made or any nonforfeiture benefit may be granted to the insured or to the insured's estate or to any relative by blood or connection by marriage of the insured, or, to the extent of such portion of any payment under the policy as may reasonably appear to the company to be due to such person, to any other person equitably entitled thereto by reason of having incurred expense occasioned by the maintenance or illness or burial of the insured. If the policy shall be in force at the death of the insured, the proceeds thereof shall be payable to the named beneficiary if living, but unless proof of claim in the manner and form required by the policy, accompanied by delivery of the policy for surrender, has been made by such beneficiary within fifteen days after the death of the insured, then upon the expiration of said fifteen days, or if the beneficiary is the estate of the insured, or is a minor, or is not legally qualified to give a valid release or dies before the insured, the company may pay to any person permitted by the policy.
(Source: P.A. 82-594.)

    (215 ILCS 5/229.1) (from Ch. 73, par. 841.1)
    Sec. 229.1. Non-forfeiture benefits and cash surrender values in policies issued prior to the operative date of section 229.2.
    (1) This subsection shall apply only to policies of life insurance (other than Industrial life insurance) issued prior to the operative date of section 229.2 (the Standard Non-forfeiture Law.)
    The non-forfeiture benefit referred to in clause (g) of section 224 shall be available to the insured in event of default in premium payments, after premiums shall have been paid for three years, and shall be a stipulated form of insurance, effective from the due date of the defaulted premium, the net value of which shall not be less than the reserve at the date of default on the policy and on dividend additions thereto, if any, exclusive of the reserve on account of total and permanent disability and additional accidental death benefits (the policy to specify the mortality table, rate of interest and method of valuation adopted for computing such reserve), less a specified maximum percentage (not more than two and one-half) of the amount insured by the policy and of existing dividend additions thereto, if any, and less any existing indebtedness to the company on or secured by the policy, the exact percentage to be specified for each year for which required values are not included in the policy; if more than one option is provided, the policy to specify which of such options shall apply in the event of the insured's failure to notify the company of his selection of an option. The policy shall provide that it may be surrendered to the company at its home office within the period of grace after the due date of the defaulted premium for a specified cash value not less than the above prescribed minimum value of the stipulated form of insurance; and any policy may also provide that the company may defer payment for not more than six months after the application therefor is made. Provided that any policy may also contain a provision that in event of default in a premium payment before such options become available the reserve on any dividend additions then in force may at the option of the company be paid in cash or applied as a net premium to the purchase of paid-up term insurance for any amount not in excess of the face of the original policy. This subsection shall not apply to term insurance of twenty years or less, but such term policy shall specify the mortality table, rate of interest and method of valuation adopted for computing reserves.
    (2) This subsection shall apply only to policies of Industrial life insurance issued prior to the operative date of section 229.2 (the Standard Non-forfeiture Law).
    The non-forfeiture benefit referred to in clause (f) of section 229, shall be available in event of default in premium payments after premiums shall have been paid for five full years, and shall be a stipulated form of insurance effective from the due date of the defaulted premium, the net value of which shall not be less than the reserve on the policy at the end of the last completed quarter of the policy year for which premiums have been paid, and all dividend additions thereto, if any, exclusive of any reserve on total and permanent disability and additional accidental death benefits, (the policy to specify the mortality table, rate of interest and method of valuation adopted for computing such reserve), less a maximum percentage (not more than two and one-half per centum) of the amount insured by the policy and of existing dividend additions thereto, if any, and less any existing indebtedness to the company on or secured by the policy. The policy shall also specify said percentage, or other rule of calculation so as to permit determination of the values, to be specified for each year for which required values are not included in the policy. The cash surrender value referred to in clause (h) of section 229, shall be available upon surrender of the policy to the company at its home office within the period of grace after the due date of the defaulted premium and shall be not less than the above prescribed minimum value of the stipulated form of insurance; provided that the company may defer payment for not more than six months after the application therefor is made. This subsection shall not apply to term insurance of twenty years or less but such term policy shall specify the mortality table, rate of interest and method of valuation adopted for computing reserves.
(Source: Laws 1943, Vol. 1, p. 824.)

    (215 ILCS 5/229.2) (from Ch. 73, par. 841.2)
    Sec. 229.2. Standard Non-forfeiture Law for Life Insurance.
    (1) No policy of life insurance, except as stated in subsection (8), shall be delivered or issued for delivery in this State unless it contains in substance the following provisions or corresponding provisions which in the opinion of the Director are at least as favorable to the defaulting or surrendering policyholder and are essentially in compliance with subsection (7) of this law:
    (i) That, in the event of default in any premium payment, the company will grant, upon proper request not later than 60 days after the due date of the premium in default, a paid-up nonforfeiture benefit on a plan stipulated in the policy, effective as of such due date, of such amount as may be hereinafter specified. In lieu of such stipulated paid-up nonforfeiture benefit, the company may substitute, upon proper request not later than 60 days after the due date of the premium in default, an actuarially equivalent alternative paid-up nonforfeiture benefit which provides a greater amount or longer period of death benefits or, if applicable, a greater amount or earlier payment of endowment benefits.
    (ii) That, upon surrender of the policy within 60 days after the due date of any premium payment in default after premiums have been paid for at least 3 full years in the case of Ordinary insurance or 5 full years in the case of Industrial insurance, the company will pay, in lieu of any paid-up nonforfeiture benefit, a cash surrender value of such amount as may be hereinafter specified.
    (iii) That a specified paid-up nonforfeiture benefit shall become effective as specified in the policy unless the person entitled to make such election elects another available option not later than 60 days after the due date of the premium in default.
    (iv) That, if the policy shall have become paid-up by completion of all premium payments or if it is continued under any paid-up nonforfeiture benefit which became effective on or after the third policy anniversary in the case of Ordinary insurance or the fifth policy anniversary in the case of Industrial insurance, the company will pay, upon surrender of the policy within 30 days after any policy anniversary, a cash surrender value of such amount as may be hereinafter specified.
    (v) In the case of policies which cause on a basis guaranteed in the policy unscheduled changes in benefits or premiums, or which provide an option for changes in benefits or premiums other than a change to a new policy, a statement of the mortality table, interest rate, and method used in calculating cash surrender values and the paid-up nonforfeiture benefits available under the policy. In the case of all other policies, a statement of the mortality table and interest rate used in calculating the cash surrender values and the paid-up nonforfeiture benefits available under the policy, together with a table showing the cash surrender value, if any, and paid-up nonforfeiture benefit, if any, available under the policy on each policy anniversary either during the first 20 policy years or during the term of the policy, whichever is shorter, such values and benefits to be calculated upon the assumption that there are no dividends or paid-up additions credited to the policy and that there is no indebtedness to the company on the policy.
    (vi) A statement that the cash surrender values and the paid-up nonforfeiture benefits available under the policy are not less than the minimum values and benefits required by or pursuant to the insurance law of the state in which the policy is delivered; an explanation of the manner in which the cash surrender values and the paid-up nonforfeiture benefits are altered by the existence of any paid-up additions credited to the policy or any indebtedness to the company on the policy; if a detailed statement of the method of computation of the values and benefits shown in the policy is not stated therein, a statement that such method of computation has been filed with the insurance supervisory official of the state in which the policy is delivered; and a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefit available under the policy on any policy anniversary beyond the last anniversary for which such values and benefits are consecutively shown in the policy.
    Any of the foregoing provisions or portions thereof not applicable by reason of the plan of insurance may, to the extent inapplicable, be omitted from the policy.
    The company shall reserve the right to defer the payment of any cash surrender value for a period of 6 months after demand therefor with surrender of the policy.
    (2) (i) Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary, whether or not required by subsection (1), shall be an amount not less than the excess, if any, of the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, including any existing paid-up additions, if there had been no default, over the sum of (i) the then present value of the adjusted premiums as defined in subsections 4, 4(a), 4(b) and 4(c), corresponding to premiums which would have fallen due on and after such anniversary, and (ii) the amount of any indebtedness to the company on the policy.
    (ii) For any policy issued on or after the operative date of subsection 4(c), which provides supplemental life insurance or annuity benefits at the option of the insured for an identifiable additional premium by rider or supplemental policy provision, the cash surrender value shall be an amount not less than the sum of the cash surrender value as determined in paragraph (i) for an otherwise similar policy issued at the same age without such rider or supplemental policy provision and the cash surrender value as determined in such paragraph for a policy which provides only the benefits otherwise provided by such rider or supplemental policy provision.
    (iii) For any family policy issued on or after the operative date of subsection 4(c), which defines a primary insured and provides term insurance on the life of the spouse of the primary insured expiring before the spouse attains age 71, the cash surrender value shall be an amount not less than the sum of the cash surrender value as determined in paragraph (i) for an otherwise similar policy issued at the same age without such term insurance on the life of the spouse and the cash surrender value as determined in such paragraph for a policy which provides only the benefits otherwise provided by such term insurance on the life of the spouse.
    (iv) Any cash surrender value available within 30 days after any policy anniversary under any policy paid up by completion of all premium payments or any policy continued under any paid-up nonforfeiture benefit, whether or not required by subsection (1), shall be an amount not less than the present value, on such anniversary, of the future guaranteed benefits provided for by the policy, including any existing paid-up additions, decreased by any indebtedness to the company on the policy.
    (3) Any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment due on any policy anniversary shall be such that its present value as of such anniversary shall be at least equal to the cash surrender value then provided for by the policy, or if none is provided for, that cash surrender value which would have been required by this section in the absence of the condition that premiums shall have been paid for at least a specified period.
    (4) This subsection (4) shall not apply to policies issued on or after the operative date of subsection (4c). Except as provided in the third paragraph of this subsection, the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premium specified in the policy for each policy year, excluding any extra premiums charged because of impairments or special hazards, that the present value, at the date of issue of the policy, of all such adjusted premiums shall be equal to the sum of (i) the then present value of the future guaranteed benefits provided for by the policy; (ii) 2% of the amount of insurance, if the insurance be uniform in amount, or of the equivalent uniform amount, as hereinafter defined, if the amount of insurance varies with duration of the policy; (iii) 40% of the adjusted premium for the first policy year; (iv) 25% of either the adjusted premium for the first policy year or the adjusted premium for a whole life policy of the same uniform or equivalent uniform amount with uniform premiums for the whole of life issued at the same age for the same amount of insurance, whichever is less. Provided, however, that in applying the percentages specified in (iii) and (iv) above, no adjusted premium shall be deemed to exceed 4% of the amount of insurance or uniform amount equivalent thereto. The date of issue of a policy for the purpose of this subsection shall be the date as of which the rated age of the insured is determined.
    In the case of a policy providing an amount of insurance varying with duration of the policy, the equivalent uniform amount thereof for the purpose of this subsection shall be deemed to be the level amount of insurance, provided by an otherwise similar policy, containing the same endowment benefit or benefits, if any, issued at the same age and for the same term, the amount of which does not vary with duration and the benefits under which have the same present value at the inception of the insurance as the benefits under the policy; provided, however, that in the case of a policy providing a varying amount of insurance issued on the life of a child under age 10, the equivalent uniform amount may be computed as though the amount of insurance provided by the policy prior to the attainment of age 10 were the amount provided by such policy at age 10.
    The adjusted premiums for any policy providing term insurance benefits by rider or supplemental policy provision shall be equal to (a) the adjusted premiums for an otherwise similar policy issued at the same age without such term insurance benefits, increased, during the period for which premiums for such term insurance benefits are payable, by (b) the adjusted premiums for such term insurance, the foregoing items (a) and (b) being calculated separately and as specified in the first 2 paragraphs of this subsection except that, for the purposes of (ii), (iii) and (iv) of the first such paragraph, the amount of insurance or equivalent uniform amount of insurance used in the calculation of the adjusted premiums referred to in (b) shall be equal to the excess of the corresponding amount determined for the entire policy over the amount used in the calculation of the adjusted premiums in (a).
    Except as otherwise provided in subsections (4a) and (4b), all adjusted premiums and present values referred to in this section shall for all policies of Ordinary insurance be calculated on the basis of the Commissioners 1941 Standard Ordinary Mortality Table, provided that for any category of Ordinary insurance issued on female risks adjusted premiums and present values may be calculated according to an age not more than 3 years younger than the actual age of the insured, and such calculations for all policies of Industrial insurance shall be made on the basis of the 1941 Standard Industrial Mortality Table. All calculations shall be made on the basis of the rate of interest, not exceeding 3 1/2% per annum, specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits. Provided, however, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than 130% of the rates of mortality according to such applicable table. Provided, further, that for insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the Director.
    (4a) This subsection (4a) shall not apply to Ordinary policies issued on or after the operative date of subsection (4c). In the case of Ordinary policies issued on or after the operative date of this subsection (4a) as defined herein, all adjusted premiums and present values referred to in this Section shall be calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that such rate of interest shall not exceed 3 1/2% per annum except that a rate of interest not exceeding 5 1/2% per annum may be used for policies issued on or after September 8, 1977, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding 6 1/2% per annum may be used and provided that for any category of Ordinary insurance issued on female risks, adjusted premiums and present values may be calculated according to an age not more than 6 years younger than the actual age of the insured. Provided, however, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1958 Extended Term Insurance Table. Provided, however, that for insurance issued on a substandard basis, the calculation for any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the Director. After the effective date of this subsection (4a), any company may file with the Director written notice of its election to comply with the provisions of this subsection after a specified date before January 1, 1966. After the filing of such notice, then upon such specified date (which shall be the operative date of this subsection for such company), this subsection shall become operative with respect to the Ordinary policies thereafter issued by such company. If a company makes no such election, the operative date of this subsection for such company shall be January 1, 1966.
    (4b) This subsection (4b) shall not apply to Industrial policies issued on or after the operative date of subsection (4c). In the case of Industrial policies issued on or after the operative date of this subsection (4b) as defined herein, all adjusted premiums and present values referred to in this Section shall be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table and the rate of interest specified in the policy for calculating cash surrender values and paid-up nonforfeiture benefits, provided that such rate of interest shall not exceed 3 1/2% per annum except that a rate of interest not exceeding 5 1/2% per annum may be used for policies issued on or after September 8, 1977, except that for any single premium whole life or endowment insurance policy a rate of interest not exceeding 6 1/2% per annum may be used. Provided, however, that in calculating the present value of any paid-up term insurance with accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1961 Industrial Extended Term Insurance Table. Provided, further, that for insurance issued on a substandard basis, the calculations of any such adjusted premiums and present values may be based on such other table of mortality as may be specified by the company and approved by the Director. After the effective date of this subsection (4b), 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, 1968. After the filing of such notice, then upon such specified date (which shall be the operative date of this subsection for such company), this subsection shall become operative with respect to the Industrial policies thereafter issued by such company. If a company makes no such election, the operative date of this subsection for such company shall be January 1, 1968.
    (4c)(a) This subsection shall apply to all policies issued on or after its operative date. Except as provided in paragraph (g), the adjusted premiums for any policy shall be calculated on an annual basis and shall be such uniform percentage of the respective premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments or special hazards and any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender value and paid-up nonforfeiture benefits of the policy, that the present value, at the date of issue of the policy, of all adjusted premiums shall be equal to the sum of (i) the then present value of the future guaranteed benefits provided for by the policy; (ii) 1% of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years; and (iii) 125% of the nonforfeiture net level premium as hereinafter defined. In applying the percentage specified in (iii), however, no nonforfeiture net level premium shall exceed 4% of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years. The date of issue of a policy for the purpose of this subsection is the date as of which the rated age of the insured is determined.
    (b) The nonforfeiture net level premium equals the present value, at the date of issue of the policy, of the guaranteed benefits provided for by the policy divided by the present value, at the date of issue of the policy, of an annuity of one per annum payable on the date of issue of the policy and on each anniversary of such policy on which a premium falls due.
    (c) In the case of a policy which causes, on a basis guaranteed in such policy, unscheduled changes in benefits or premiums, or which provides an option for changes in benefits or premiums other than a change to a new policy, adjusted premiums and present values shall initially be calculated on the assumption that future benefits and premiums do not change from those stipulated at the date of issue of such policy. At the time of any such change in the benefits or premiums, the future adjusted premiums, nonforfeiture net level premiums and present values shall be recalculated on the assumption that future benefits and premiums do not change from those stipulated by such policy immediately after the change.
    (d) Except as otherwise provided in paragraph (g), the recalculated future adjusted premiums for any policy shall be such uniform percentage of the respective future premiums specified in the policy for each policy year, excluding amounts payable as extra premiums to cover impairments and special hazards and any uniform annual contract charge or policy fee specified in the policy in a statement of the method to be used in calculating the cash surrender values and paid-up nonforfeiture benefits, that the present value, at the time of change to the newly defined benefits or premiums, of all such future adjusted premiums shall be equal to the excess of (A) the sum of (i) the then present value of the then future guaranteed benefits provided for by the policy and (ii) the additional expense allowance, if any, over (B) the then cash surrender value, if any, or present value of any paid-up nonforfeiture benefit under the policy.
    (e) The additional expense allowance at the time of the change to the newly defined benefits or premiums shall be the sum of (i) 1% of the excess, if positive, of the average amount of insurance at the beginning of each of the first 10 policy years subsequent to the change over the average amount of insurance prior to the change at the beginning of each of the first 10 policy years subsequent to the time of the most recent previous change, or, if there has been no previous change, the date of issue of the policy; and (ii) 125% of the increase, if positive, in the nonforfeiture net level premium.
    (f) The recalculated nonforfeiture net level premium equals the result obtained by dividing X by Y, where
    (i) X equals the sum of
    (A) the nonforfeiture net level premium applicable prior to the change times the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of the change on which a premium would have fallen due had the change not occurred, and
    (B) the present value of the increase in future guaranteed benefits provided for by the policy; and
    (ii) Y equals the present value of an annuity of one per annum payable on each anniversary of the policy on or subsequent to the date of change on which a premium falls due.
    (g) Notwithstanding any other provisions of this subsection to the contrary, in the case of a policy issued on a substandard basis which provides reduced graded amounts of insurance so that, in each policy year, such policy has the same tabular mortality cost as an otherwise similar policy issued on the standard basis which provides higher uniform amounts of insurance, adjusted premiums and present values for such substandard policy may be calculated as if it were issued to provide such higher uniform amounts of insurance on the standard basis.
    (h) All adjusted premiums and present values referred to in this Section shall for all policies of ordinary insurance be calculated on the basis of the Commissioners 1980 Standard Ordinary Mortality Table or, 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. All adjusted premiums and present values referred to in this Section shall for all policies of Industrial insurance be calculated on the basis of the Commissioners 1961 Standard Industrial Mortality Table. All adjusted premiums and present values referred to in this Section for all policies issued in a particular calendar year shall be calculated on the basis of a rate of interest not exceeding the nonforfeiture interest rate as defined in this subsection for policies issued in that calendar year. The provisions of this paragraph are subject to the provisions set forth in subparagraphs (i) through (vii).
    (i) At the option of the company, calculations for all policies issued in a particular calendar year may be made on the basis of a rate of interest not exceeding the nonforfeiture interest rate, as defined in this subsection, for policies issued in the immediately preceding calendar year.
    (ii) Under any paid-up nonforfeiture benefit, including any paid-up dividend additions, any cash surrender value available, whether or not required by subsection (1), shall be calculated on the basis of the mortality table and rate of interest used in determining the amount of such paid-up nonforfeiture benefit and paid-up dividend additions, if any.
    (iii) A company may calculate the amount of any guaranteed paid-up nonforfeiture benefit, including any paid-up additions under the policy, on the basis of an interest rate no lower than that specified in the policy for calculating cash surrender values.
    (iv) In calculating the present value of any paid-up term insurance with an accompanying pure endowment, if any, offered as a nonforfeiture benefit, the rates of mortality assumed may be not more than those shown in the Commissioners 1980 Extended Term Insurance Table for policies of ordinary insurance and not more than the Commissioner 1961 Industrial Extended Term Insurance Table for policies of industrial insurance.
    (v) For insurance issued on a substandard basis, the calculation of any such adjusted premiums and present values may be based on appropriated modifications of the aforementioned tables.
    (vi) For policies issued prior to the operative date of the Valuation Manual, any Commissioners Standard Mortality Table adopted after 1980 by the National Association of Insurance Commissioners and approved by regulations promulgated by the Director for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table.
    For policies issued on or after the operative date of the Valuation Manual, the Valuation Manual shall provide the Commissioners Standard Ordinary Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1980 Standard Ordinary Mortality Table with or without Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended Term Insurance Table. If the Director approves by regulation any Commissioners Standard Ordinary Mortality Table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the Valuation Manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the Valuation Manual.
    (vii) For policies issued prior to the operative date of the Valuation Manual, any Commissioners Standard Industrial Mortality Table adopted after 1980 by the National Association of Insurance Commissioners and approved by regulations promulgated by the Director for use in determining the minimum nonforfeiture standard may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table.
    For policies issued on or after the operative date of the Valuation Manual, the Valuation Manual shall provide the Commissioners Standard Industrial Mortality Table for use in determining the minimum nonforfeiture standard that may be substituted for the Commissioners 1961 Standard Industrial Mortality Table or the Commissioners 1961 Industrial Extended Term Insurance Table. If the Director approves by regulation any Commissioners Standard Industrial Mortality Table adopted by the National Association of Insurance Commissioners for use in determining the minimum nonforfeiture standard for policies issued on or after the operative date of the Valuation Manual, then that minimum nonforfeiture standard supersedes the minimum nonforfeiture standard provided by the Valuation Manual.
    (i) The nonforfeiture interest rate is defined as follows:
        (i) For policies issued prior to the operative date
    
of the Valuation Manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be equal to 125% of the calendar year statutory valuation interest rate for such policy, as defined in the Standard Valuation Law, rounded to the nearest .25%, provided, however, that the nonforfeiture interest rate shall not be less than 4.00%.
        (ii) For policies issued on and after the operative
    
date of the Valuation Manual, the nonforfeiture interest rate per annum for any policy issued in a particular calendar year shall be provided by the Valuation Manual.
    (j) Notwithstanding any other provision in this Code to the contrary, any refiling of nonforfeiture values or their methods of computation for any previously approved policy form which involves only a change in the interest rate or mortality table used to compute nonforfeiture values shall not require refiling of any other provisions of that policy form.
    (k) After the effective date of this subsection, any company may, with respect to any category of insurance, 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, 1989. That date shall be the operative date of this subsection for that category of insurance for such company. If a company makes no such election, the operative date of this subsection for that category of insurance issued by such company shall be January 1, 1989.
    (5) 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 which is of such a nature that minimum values cannot be determined by the methods described in subsections (1), (2), (3), (4), (4a), (4b) or (4c), then
    (a) the Director shall satisfy himself that the benefits provided under such plan are substantially as favorable to policyholders and insured parties as the minimum benefits otherwise required by subsections (1), (2), (3), (4), (4a), (4b) or (4c);
    (b) the Director shall satisfy himself that the benefits and the pattern of premiums of that plan are not such as to mislead prospective policyholders or insured parties; and
    (c) the cash surrender values and paid-up nonforfeiture benefits provided by such plan shall not be less than the minimum values and benefits computed by a method consistent with the principles of this Standard Nonforfeiture Law for Life Insurance, as determined by regulations promulgated by the Director.
    (6) Any cash surrender value and any paid-up nonforfeiture benefit, available under the policy in the event of default in a premium payment due at any time other than on the policy anniversary, shall be calculated with allowance for the lapse of time and the payment of fractional premiums beyond the last preceding policy anniversary. All values referred to in subsections (2), (3), (4), (4a), (4b) and (4c) may be calculated upon the assumption that any death benefit is payable at the end of the policy year of death. The net value of any paid-up additions, other than paid-up term additions, shall be not less than the amounts used to provide such additions. Notwithstanding the provisions of subsection (2), additional benefits payable (i) in the event of death or dismemberment by accident or accidental means, (ii) in the event of total and permanent disability, (iii) as reversionary annuity or deferred reversionary annuity benefits, (iv) as term insurance benefits provided by a rider or supplemental policy provision to which, if issued as a separate policy, this section would not apply, (v) as term insurance on the life of a child or on the lives of children provided in a policy on the life of a parent of the child, if such term insurance expires before the child's age is 26, is uniform in amount after the child's age is one, and has not become paid-up by reason of the death of a parent of the child, and (vi) as other policy benefits additional to life insurance and endowment benefits, and premiums for all such additional benefits, shall be disregarded in ascertaining cash surrender values and nonforfeiture benefits required by this section, and no such additional benefits shall be required to be included in any paid-up nonforfeiture benefits.
    (7) This subsection shall apply to all policies issued on or after January 1, 1987. Any cash surrender value available under the policy in the event of default in a premium payment due on any policy anniversary shall be in an amount which does not differ by more than .2% of either the amount of insurance if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years, from the sum of (a) the greater of zero and the basic cash value hereinafter specified and (b) the present value of any existing paid-up additions less the amount of any indebtedness to the company under the policy.
    The basic cash value equals the present value, on such anniversary, of the future guaranteed benefits which would have been provided for by the policy, excluding any existing paid-up additions and before deduction of any indebtedness to the company, if there had been no default, less the then present value of the nonforfeiture factors, as hereinafter defined, corresponding to premiums which would have fallen due on and after such anniversary. The effects on the basic cash value of supplemental life insurance or annuity benefits or of family coverage, as described in subsection (2) or (4), whichever is applicable, shall, however, be the same as are the effects specified in subsection (2) or (4), whichever is applicable, on the cash surrender values defined in that subsection.
    The nonforfeiture factor for each policy year equals a percentage of the adjusted premium for the policy year, as defined in subsection (4) or (4c), whichever is applicable. Except as is required by the next succeeding sentence of this paragraph, such percentage
    (a) shall be the same percentage for each policy year between the second policy anniversary and the later of (i) the fifth policy anniversary and (ii) the first policy anniversary at which there is available under the policy a cash surrender value in an amount, before including any paid-up additions and before deducting any indebtedness, of at least .2% of either the amount of insurance, if the insurance is uniform in amount, or the average amount of insurance at the beginning of each of the first 10 policy years; and
    (b) shall be such that no percentage after the later of the 2 policy anniversaries specified in the preceding item (a) may apply to fewer than 5 consecutive policy years.
    No basic cash value may be less than the value which would be obtained if the adjusted premiums for the policy, as defined in subsection (4) or (4c), whichever is applicable, were substituted for the nonforfeiture factors in the calculation of the basic cash value.
    All adjusted premiums and present values referred to in this subsection shall for a particular policy be calculated on the same mortality and interest bases as those used in accordance with the other subsections of this law. The cash surrender values referred to in this subsection shall include any endowment benefits provided for by the policy.
    Any cash surrender value available other than in the event of default in a premium payment due on a policy anniversary, and the amount of any paid-up nonforfeiture benefit available under the policy in the event of default in a premium payment shall be determined in manners consistent with the manners specified for determining the analogous minimum amounts in subsections 1, 2, 3, 4c, and 6. The amounts of any cash surrender values and of any paid-up nonforfeiture benefits granted in connection with additional benefits such as those listed as items (i) through (vi) in subsection (6) shall conform with the principles of this subsection (7).
    (8) This Section shall not apply to any of the following:
    (a) reinsurance,
    (b) group insurance,
    (c) a pure endowment,
    (d) an annuity or reversionary annuity contract,
    (e) a term policy of uniform amount, which provides no guaranteed nonforfeiture or endowment benefits, or renewal thereof, of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy,
    (f) a term policy of decreasing amount, which provides no guaranteed nonforfeiture or endowment benefits, on which each adjusted premium, calculated as specified in subsections (4), (4a), (4b) and (4c), is less than the adjusted premium so calculated, on a term policy of uniform amount, or renewal thereof, which provides no guaranteed nonforfeiture or endowment benefits, issued at the same age and for the same initial amount of insurance and for a term of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term of the policy,
    (g) a policy, which provides no guaranteed nonforfeiture or endowment benefits, for which no cash surrender value, if any, or present value of any paid-up nonforfeiture benefit, at the beginning of any policy year, calculated as specified in subsections (2), (3), (4), (4a), (4b) and (4c), exceeds 2.5% of the amount of insurance at the beginning of the same policy year,
    (h) any policy which shall be delivered outside this State through an agent or other representative of the company issuing the policy.
    For purposes of determining the applicability of this Section, the age of expiry for a joint term life insurance policy shall be the age of expiry of the oldest life.
    (9) For the purposes of this Section:
    "Operative date of the Valuation Manual" means the January 1 of the first calendar year that the Valuation Manual is effective.
    "Valuation Manual" has the same meaning as set forth in Section 223 of this Code.
(Source: P.A. 99-162, eff. 1-1-16.)

    (215 ILCS 5/229.3) (from Ch. 73, par. 841.3)
    Sec. 229.3. Loan provisions in policies. In the case of those policies issued prior to the operative date of Section 229.2 (the Standard Non-forfeiture Law) the loan value referred to in clause (f) of section 224 shall be the reserve at the end of the current policy year on the policy and on the dividend additions thereto, if any, exclusive of the reserve on account of total and permanent disability and additional accidental death benefits, less a specified maximum percentage (not more than two and one-half) of the amount insured by the policy and of any dividend additions thereto (the policy to specify the mortality table, rate of interest and method of valuation adopted for computing such reserve), the exact percentage to be specified for each year for which required values are not included in the policy. The policy may also provide that such loan may be deferred for not exceeding six months after the application therefor is made.
    (2) In the case of policies issued on or after the operative date of Section 229.2 (the Standard Non-forfeiture Law) the loan value referred to in clause (f) of section 224 shall be the cash surrender value at the end of the current policy year as required by section 229.2. The company shall reserve the right to defer such loan, except when made to pay premiums, for six months after application therefor is made.
(Source: Laws 1943, vol. 1, p. 824.)

    (215 ILCS 5/229.4) (from Ch. 73, par. 841.4)
    Sec. 229.4. (Repealed).
(Source: P.A. 93-873, eff. 8-6-04. Repealed internally, eff. 7-1-06.)

    (215 ILCS 5/229.4a)
    Sec. 229.4a. Standard Nonforfeiture Law for Individual Deferred Annuities.
    (1) Title. This Section shall be known as the Standard Nonforfeiture Law for Individual Deferred Annuities.
    (2) Applicability. This Section shall not apply to any reinsurance, group annuity 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, premium deposit fund, variable annuity, investment annuity, immediate annuity, any deferred annuity contract after annuity payments have commenced, or reversionary annuity, nor to any contract which shall be delivered outside this State through an agent or other representative of the company issuing the contract.
    (3) Nonforfeiture Requirements.
        (A) In the case of contracts issued on or after the
    
operative date of this Section as defined in subsection (13), no contract of annuity, except as stated in subsection (2), shall be delivered or issued for delivery in this State unless it contains in substance the following provisions, or corresponding provisions which in the opinion of the Director of Insurance are at least as favorable to the contract holder, upon cessation of payment of considerations under the contract:
            (i) That upon cessation of payment of
        
considerations under a contract, or upon the written request of the contract owner, the company shall grant a paid-up annuity benefit on a plan stipulated in the contract of such value as is specified in subsections (5), (6), (7), (8), and (10);
            (ii) If a contract provides for a lump sum
        
settlement at maturity, or at any other time, that upon surrender of the contract at or prior to the commencement of any annuity payments, the company shall pay in lieu of a paid-up annuity benefit a cash surrender benefit of such amount as is specified in subsections (5), (6), (8), and (10). The company may reserve the right to defer the payment of the cash surrender benefit for a period not to exceed 6 months after demand therefor with surrender of the contract after making written request and receiving written approval of the Director. The request shall address the necessity and equitability to all policyholders of the deferral;
            (iii) A statement of the mortality table, if any,
        
and interest rates used calculating any minimum paid-up annuity, cash surrender, or death benefits that are guaranteed under the contract, together with sufficient information to determine the amounts of the benefits; and
            (iv) A statement that any paid-up annuity, cash
        
surrender, or death benefits that may be available under the contract are not less than the minimum benefits required by any statute of the state in which the contract is delivered and an explanation of the manner in which the benefits are altered by the existence of any additional amounts credited by the company to the contract, any indebtedness to the company on the contract, or any prior withdrawals from or partial surrenders of the contract.
        (B) Notwithstanding the requirements of this Section,
    
a deferred annuity contract may provide that if no considerations have been received under a contract for a period of 2 full years and the portion of the paid-up annuity benefit at maturity on the plan stipulated in the contract arising from prior considerations paid would be less than $20 monthly, the company may at its option terminate the contract by payment in cash of the then present value of the portion of the paid-up annuity benefit, calculated on the basis on the mortality table, if any, and interest rate specified in the contract for determining the paid-up annuity benefit, and by this payment shall be relieved of any further obligation under the contract.
    (4) Minimum values. The minimum values as specified in subsections (5), (6), (7), (8), and (10) of any paid-up annuity, cash surrender, or death benefits available under an annuity contract shall be based upon minimum nonforfeiture amounts as defined in this subsection.
        (A)(i) The minimum nonforfeiture amount at any time
    
at or prior to the commencement of any annuity payments shall be equal to an accumulation up to such time at rates of interest as indicated in subdivision (4)(B) of the net considerations (as hereinafter defined) paid prior to such time, decreased by the sum of paragraphs (a) through (d) below:
            (a) Any prior withdrawals from or partial
        
surrenders of the contract accumulated at rates of interest as indicated in subdivision (4)(B);
            (b) An annual contract charge of $50, accumulated
        
at rates of interest as indicated in subdivision (4)(B);
            (c) Any premium tax paid by the company for the
        
contract, accumulated at rates of interest as indicated in subdivision (4)(B); and
            (d) The amount of any indebtedness to the company
        
on the contract, including interest due and accrued.
        (ii) The net considerations for a given contract year
    
used to define the minimum nonforfeiture amount shall be an amount equal to 87.5% of the gross considerations, credited to the contract during that contract year.
        (B) The interest rate used in determining minimum
    
nonforfeiture amounts shall be an annual rate of interest determined as the lesser of 3% per annum and the following, which shall be specified in the contract if the interest rate will be reset:
            (i) The 5-year Constant Maturity Treasury Rate
        
reported by the Federal Reserve as of a date, or average over a period, rounded to the nearest 1/20th of one percent, specified in the contract no longer than 15 months prior to the contract issue date or redetermination date under subdivision (4)(B)(iv);
            (ii) Reduced by 125 basis points;
            (iii) Where the resulting interest rate is not
        
less than 0.15%; and
            (iv) The interest rate shall apply for an initial
        
period and may be redetermined for additional periods. The redetermination date, basis, and period, if any, shall be stated in the contract. The basis is the date or average over a specified period that produces the value of the 5-year Constant Maturity Treasury Rate to be used at each redetermination date.
        (C) During the period or term that a contract
    
provides substantive participation in an equity indexed benefit, it may increase the reduction described in subdivision (4)(B)(ii) above by up to an additional 100 basis points to reflect the value of the equity index benefit. The present value at the contract issue date, and at each redetermination date thereafter, of the additional reduction shall not exceed market value of the benefit. The Director may require a demonstration that the present value of the additional reduction does not exceed the market value of the benefit. Lacking such a demonstration that is acceptable to the Director, the Director may disallow or limit the additional reduction.
        (D) The Director may adopt rules to implement the
    
provisions of subdivision (4)(C) and to provide for further adjustments to the calculation of minimum nonforfeiture amounts for contracts that provide substantive participation in an equity index benefit and for other contracts that the Director determines adjustments are justified.
    (5) Computation of Present Value. Any paid-up annuity benefit available under a contract shall be such that its present value on the date annuity payments are to commence is at least equal to the minimum nonforfeiture amount on that date. Present value shall be computed using the mortality table, if any, and the interest rates specified in the contract for determining the minimum paid-up annuity benefits guaranteed in the contract.
    (6) Calculation of Cash Surrender Value. For contracts that provide cash surrender benefits, the cash surrender benefits available prior to maturity shall not be less than the present value as of the date of surrender of that portion of the maturity value of the paid-up annuity benefit that would be provided under the contract at maturity arising from considerations paid prior to the time of cash surrender reduced by the amount appropriate to reflect any prior withdrawals from or partial surrenders of the contract, such present value being calculated on the basis of an interest rate not more than 1% higher than the interest rate specified in the contract for accumulating the net considerations to determine maturity value, decreased by the amount of any indebtedness to the company on the contract, including interest due and accrued, and increased by any existing additional amounts credited by the company to the contract. In no event shall any cash surrender benefit be less than the minimum nonforfeiture amount at that time. The death benefit under such contracts shall be at least equal to the cash surrender benefit.
    (7) Calculation of Paid-up Annuity Benefits. For contracts that do not provide cash surrender benefits, the present value of any paid-up annuity benefit available as a nonforfeiture option at any time prior to maturity shall not be less than the present value of that portion of the maturity value of the paid-up annuity benefit provided under the contract arising from considerations paid prior to the time the contract is surrendered in exchange for, or changed to, a deferred paid-up annuity, such present value being calculated for the period prior to the maturity date on the basis of the interest rate specified in the contract for accumulating the net considerations to determine maturity value, and increased by any additional amounts credited by the company to the contract. For contracts that do not provide any death benefits prior to the commencement of any annuity payments, present values shall be calculated on the basis of such interest rate and the mortality table specified in the contract for determining the maturity value of the paid-up annuity benefit. However, in no event shall the present value of a paid-up annuity benefit be less than the minimum nonforfeiture amount at that time.
    (8) Maturity Date. For the purpose of determining the benefits calculated under subsections (6) and (7), in the case of annuity contracts under which an election may be made to have annuity payments commence at optional maturity dates, the maturity date shall be deemed to be the latest date for which election shall be permitted by the contract, but shall not be deemed to be later than the anniversary of the contract next following the annuitant's seventieth birthday or the tenth anniversary of the contract, whichever is later.
    (9) Disclosure of Limited Death Benefits. A contract that does not provide cash surrender benefits or does not provide death benefits at least equal to the minimum nonforfeiture amount prior to the commencement of any annuity payments shall include a statement in a prominent place in the contract that such benefits are not provided.
    (10) Inclusion of Lapse of Time Considerations. Any paid-up annuity, cash surrender, or death benefits available at any time, other than on the contract anniversary under any contract with fixed scheduled considerations, shall be calculated with allowance for the lapse of time and the payment of any scheduled considerations beyond the beginning of the contract year in which cessation of payment of considerations under the contract occurs.
    (11) Proration of Values; Additional Benefits. For a contract which provides, within the same contract by rider or supplemental contract provision, both annuity benefits and life insurance benefits that are in excess of the greater of cash surrender benefits or a return of the gross considerations with interest, the minimum nonforfeiture benefits shall be equal to the sum of the minimum nonforfeiture benefits for the annuity portion and the minimum nonforfeiture benefits, if any, for the life insurance portion computed as if each portion were a separate contract. Notwithstanding the provisions of subsections (5), (6), (7), (8), and (10), additional benefits payable in the event of total and permanent disability, as reversionary annuity or deferred reversionary annuity benefits, or as other policy benefits additional to life insurance, endowment, and annuity benefits, and considerations for all such additional benefits, shall be disregarded in ascertaining the minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits that may be required under this Section. The inclusion of such benefits shall not be required in any paid-up benefits, unless the additional benefits separately would require minimum nonforfeiture amounts, paid-up annuity, cash surrender, and death benefits.
    (12) Rules. The Director may adopt rules to implement the provisions of this Section.
    (13) Effective Date. After August 6, 2004 (the effective date of Public Act 93-873), a company may elect to apply its provisions to annuity contracts on a contract form-by-contract form basis before July 1, 2006. In all other instances, this Section shall become operative with respect to annuity contracts issued by the company on or after July 1, 2006.
    (14) (Blank).
(Source: P.A. 102-775, eff. 5-13-22; 103-154, eff. 6-30-23.)

    (215 ILCS 5/229.5) (from Ch. 73, par. 841.5)
    Sec. 229.5. Policy loan interest rates. (a) As used in this Section, unless the context requires otherwise:
    (1) "Policy" includes certificates issued by a fraternal benefit society and annuity contracts which provide for policy loans.
    (2) "Policy loan" includes any premium loan made under a policy to pay one or more premiums that were not paid to the life insurer as they became due.
    (3) "Policyholder" includes the owner of the policy or the person designated to pay premiums as shown on the records of the life insurer.
    (4) "Published Monthly Average" means:
    (i) Moody's Corporate Bond Yield Average - Monthly Average Corporates as published by Moody's Investors Service, Inc., or any successor thereto; or
    (ii) In the event that Moody's Corporate Bond Yield Average - Monthly Average Corporates is no longer published, a substantially similar average, established by regulation issued by the Director.
    (b) Maximum rate of interest on policy loans.
    (1) Policies issued on or after the effective date of this amendatory Act of 1981 shall provide for policy loan interest rates as follows:
    (i) A provision permitting a maximum interest rate of not more than 8% per annum; or
    (ii) A provision permitting an adjustable maximum interest rate established from time to time by the life insurer as permitted by law.
    (2) The rate of interest charged on a policy loan made under subsection (1)(ii) shall not exceed the higher of the following:
    (i) The Published Monthly Average for the calendar month ending 2 months before the date on which the rate is determined; or
    (ii) The rate used to compute the cash surrender values under the policy during the applicable period plus 1% per annum.
    (3) If the maximum rate of interest is determined pursuant to clause (ii) of paragraph (1) of this subsection (b), the policy shall contain a provision setting forth the frequency at which the rate is to be determined for that policy.
    (4) The maximum rate for each policy must be determined at regular intervals at least once every 12 months, but not more frequently than once in any 3 month period. At the intervals specified in the policy:
    (i) The rate being charged may be increased whenever such change as determined under paragraph (2) of this subsection (b) would increase that rate by 1/2% or more per annum.
    (ii) The rate being charged must be reduced whenever such reduction as determined under paragraph (2) of this subsection (b) would decrease that rate by 1/2% or more per annum.
    (5) The life insurer shall:
    (i) notify the policyholder at the time a cash loan is made of the initial rate of interest on the loan;
    (ii) notify the policyholder with respect to premium loans of the initial rate of interest on the loan as soon as it is reasonably practical to do so after making the initial loan. Notice need not be given to the policyholder when a further premium loan is added, except as provided in (iii) below;
    (iii) send to policyholders with loans a reasonable advance notice of any increase in the rate; and
    (iv) include in the notices required above the substance of the pertinent provisions of paragraph (1) and (3) of this subsection (b).
    (6) The loan value of the policy shall be determined in accordance with Section 229.3, but no policy shall terminate in a policy year as the sole result of change in the interest rate during that policy year, and the life insurer shall maintain coverage during that policy year until such time as it would otherwise have terminated if there had been no change in the interest rate during that policy year.
    (7) The substance of the pertinent provisions of paragraphs (1) and (3) of this subsection (b) shall be set forth in the policies to which they apply.
    (8) For purposes of this Section, the rate of interest on policy loans permitted under this Section includes the interest rate charged on reinstatement of policy loans for the period during and after any lapse of a policy.
    (9) No other provisions of law shall apply to policy loan interest rates unless made specifically applicable to such rates.
    (c) The provisions of this Section shall not apply to any insurance contract issued before the effective date of this amendatory Act of 1981, unless the policyholder agrees in writing to the applicability of such provisions.
(Source: P.A. 83-1362.)

    (215 ILCS 5/230.1) (from Ch. 73, par. 842.1)
    Sec. 230.1. Group Insurance Definition. Except as provided in Section 230.2, no policy of group life insurance shall be delivered in this State unless it conforms to one of the following descriptions:
    (A) A policy issued to an employer, or to the trustees of a fund established by an employer, which employer or trustees shall be deemed the policyholder, to insure employees of the employer for the benefit of persons other than the employer, subject to the following requirements:
    (1) The employees eligible for insurance under the policy shall be all of the employees of the employer, or all of any class or classes thereof. The policy may provide that the term "employees" shall include the employees of one or more subsidiary corporations, and the employees, individual proprietors, and partners of one or more affiliated corporations, proprietorships or partnerships if the business of the employer and of such affiliated corporations, proprietorships, or partnerships is under common control. The policy may provide that the term "employees" shall include the individual proprietor or partners if the employer is an individual proprietorship or partnership. The policy may provide that the term "employees" shall include retired employees and directors of a corporate employer. A policy issued to insure the employees of a public body may provide that the term "employees" shall include elected or appointed officials.
    (2) The premium for the policy shall be paid either from the employer's funds or from funds contributed by the insured employees, or from both. Except as provided in paragraph (3) of this subsection (A), a policy on which no part of the premium is to be derived from funds contributed by the insured employees must insure all eligible employees, except those who reject such coverage in writing.
    (3) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.
    (B) A policy issued to a creditor or its parent holding company or to a trustee or trustees or agent designated by two or more creditors, which creditor, holding company, affiliate, trustee, trustees, or agent shall be deemed the policyholder, to insure debtors of the creditor, or creditors, subject to the following requirements:
    (1) The debtors eligible for insurance under the policy shall be all of the debtors of the creditor or creditors, or all of any class or classes thereof. The policy may provide that the term "debtors" shall include (i) borrowers of money or purchasers or lessees of goods, services, or property for which payment is arranged through a credit transaction; (ii) the debtors of one or more subsidiary corporations; and (iii) the debtors of one or more affiliated corporations, proprietorships, or partnerships if the business of the policyholder and of such affiliated corporations, proprietorships, or partnerships is under common control.
    (2) The premium for the policy shall be paid either from the creditor's funds, or from charges collected from the insured debtors, or from both. Except as provided in paragraph (3) of this subsection (B), a policy on which no part of the premium is to be derived from the funds contributed by insured debtors specifically for their insurance must insure all eligible debtors.
    (3) An insurer may exclude any debtors as to whom evidence of individual insurability is not satisfactory to the insurer.
    (4) The amount of the insurance on the life of any debtor shall at no time exceed the greater of the scheduled or actual amount of unpaid indebtedness to the creditor.
    (5) The insurance may be payable to the creditor or any successor to the right, title, and interest of the creditor. Such payment shall reduce or extinguish the unpaid indebtedness of the debtor to the extent of such payment. Whenever the amount of insurance payable exceeds the amount of outstanding indebtedness the excess benefit shall be payable to the person otherwise contractually or legally entitled thereto; if there be no person determined to be so entitled, such excess shall be paid to the estate of the insured person.
    (6) Notwithstanding the provisions of the above paragraphs, insurance on agricultural credit transaction commitments may be written up to the amount of the loan commitment on a non-decreasing or level term plan. Insurance on educational credit transaction commitments may be written up to the amount of the loan commitment less the amount of any repayments made on the loan.
    (C) A policy issued to a labor union, or similar employee organization, which shall be deemed to be the policyholder, to insure members of such union or organization for the benefit of persons other than the union or organization or any of its officials, representatives, or agents, subject to the following requirements:
    (1) The members eligible for insurance under the policy shall be all of the members of the union or organization, or all of any class or classes thereof.
    (2) The premium for the policy shall be paid either from funds of the union or organization, or from the funds contributed by the insured members specifically for their insurance, or from both. Except as provided in paragraph (3) of this subsection (C), a policy on which no part of the premium is to be derived from funds contributed by the insured members specifically for their insurance must insure all eligible members, except those who reject such coverage in writing.
    (3) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.
    (D) A policy issued to a trust or to the trustees of a fund established by two or more employers, or by one or more labor unions or similar employee organizations, or by one or more employers and one or more labor unions or similar employee organizations, which trust or trustees shall be deemed the policyholder, to insure employees of the employers or members of the unions or organizations for the benefit of persons other than the employers or the unions or organizations, subject to the following requirements:
    (1) The persons eligible for insurance shall be all employees of the employers or all of the members of the unions or organizations, or all of any class or classes thereof. The policy may provide that the term "employees" shall include retired employees, the individual proprietor or partners if an employer is an individual proprietorship or a partnership, and directors of a corporate employer. The policy may provide that the term "employees" shall include the trustees or their employees, or both, if their duties are principally connected with such trusteeship.
    (2) The premium for the policy shall be paid from funds contributed by the employer or employers of the insured persons, or by the union or unions or similar employee organizations, or by both, or from funds contributed by the insured persons or from both the insured persons and the employer or union or similar employee organizations. Except as provided in paragraph (3) of this subsection (D), a policy on which no part of the premium is to be derived from funds contributed by the insured persons specifically for their insurance must insure all eligible persons, except those who reject such coverage in writing.
    (3) An insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.
    (E) A policy issued to an association or to a trust or to the trustees of a fund established, created, or maintained for the benefit of members of one or more associations. The association or associations shall have at the outset a minimum of 100 persons; shall have been organized and maintained in good faith for purposes other than that of obtaining insurance; shall have been in active existence for at least two years; and shall have a constitution and by-laws which provides that (i) the association or associations hold regular meetings not less than annually to further purposes of the members, (ii) except for credit unions, the association or associations collect dues or solicit contributions from members, and (iii) the members have voting privileges and representation on the governing board and committees. The policy shall be subject to the following requirements:
    (1) The policy may insure members of such association or associations, employees thereof or employees of members, or one or more of the preceding or all of any class or classes thereof for the benefit of persons other than the employee's employer.
    (2) The premium for the policy shall be paid from funds contributed by the association or associations, or by employer members, or by both, or from funds contributed by the covered persons or from both the covered persons and the association, associations, or employer members.
    (3) Except as provided in paragraph (4) of this subsection (E), a policy on which no part of the premium is to be derived from funds contributed by the covered persons specifically for the insurance must insure all eligible persons, except those who reject such coverage in writing.
    (4) An insurer may exclude or limit the coverage of any person as to whom evidence of individual insurability is not satisfactory to the insurer.
(Source: P.A. 83-1465.)

    (215 ILCS 5/230.2) (from Ch. 73, par. 842.2)
    Sec. 230.2. Limits of Group Life Insurance. Group life insurance offered to a resident of this State under a group life insurance policy issued to a group other than one described in Section 230.1 shall be subject to the following requirements:
    (A) No such group life insurance policy shall be delivered in this State unless the Director finds that:
    (1) The issuance of such group policy is not contrary to the best interest of the public;
    (2) The issuance of the group policy would be actuarially sound;
    (3) The issuance of the group policy would result in economies of acquisition or administration; and
    (4) The benefits are reasonable in relation to the premiums charged.
    (B) No such group life insurance coverage may be offered in this State by an insurer under a policy issued in another State unless this State or another State having requirements substantially similar to those contained in subsection (A) of this Section has made a determination that such requirements have been met.
    (C) The premium for the policy shall be paid either from the policyholder's funds or from funds contributed by the covered persons, or from both.
    (D) An insurer may exclude or limit coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer.
(Source: P.A. 83-598.)

    (215 ILCS 5/230.3) (from Ch. 73, par. 842.3)
    Sec. 230.3. Dependent Group Life Insurance. Except for a policy issued under subsection (B) of Section 230.1, a group life insurance policy may be extended to insure the employees or members against loss due to the death of their spouses and dependent children, or any class or classes thereof, subject to the following:
    (A) The premium for the insurance shall be paid either from funds contributed by the employer, union, association, or other person to whom the policy has been issued, or from funds contributed by the covered persons, or from both. Except as provided in subsection (B) of this Section, a policy on which no part of the premium for the spouse's and dependent child's coverage is to be derived from funds contributed by the covered persons must insure all eligible employees or members with respect to their spouses and dependent children, or any class or classes thereof.
    (B) An insurer may exclude or limit the coverage on any spouse or dependent child as to whom evidence of individual insurability is not satisfactory to the insurer.
    (C) The amount of insurance for any covered spouse or dependent child under the policy may not exceed 100% of the amount of insurance for which the employee or member is insured.
(Source: P.A. 88-400.)

    (215 ILCS 5/231.1) (from Ch. 73, par. 843.1)
    Sec. 231.1. Group Life Insurance Standard Provision. No policy of group life insurance shall be delivered in this State unless it contains in substance the following provisions, or provisions which in the opinion of the Director are more favorable to the persons insured, or at least as favorable to the persons insured and more favorable to the policyholder, provided, however, (a) that provisions (F) to (K) inclusive shall not apply to policies insuring the lives of debtors; (b) that the standard provisions required for individual life insurance policies shall not apply to group life insurance policies; and (c) that if the group life insurance policy is on a plan of insurance other than the term plan, it shall contain a nonforfeiture provision which in the opinion of the Director is equitable to the insured persons and to the policyholder, but nothing herein shall be construed to require that group life insurance policies contain the same nonforfeiture provisions as are required for individual life insurance policies:
    (A) A provision that the policyholder is entitled to a grace period of 31 days for the payment of any premium due except the first, during which grace period the death benefit coverage shall continue in force, unless the policyholder shall have given the insurer written notice of discontinuance in advance of the date of discontinuance and in accordance with the terms of the policy. The policy may provide that the policyholder shall be liable to the insurer for the payment of a pro rata premium for the time the policy was in force during such grace period.
    (B) A provision that validity of the policy shall not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue; and that no statement made by any person insured under the policy relating to his insurability shall be used in contesting the validity of the insurance with respect to which such statement was made after such insurance has been in force prior to the contest for a period of two years during such person's lifetime nor unless it is contained in a written instrument signed by him; provided, however, that no such provision shall preclude the assertion at any time of defenses based upon provisions in the policy which relate to eligibility for coverage.
    (C) A provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued, and that all statements made by the policyholder shall be deemed representations and not warranties, and that no statement made by any person insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such person or, in the event of death or incapacity of the insured person, to his beneficiary or personal representative.
    (D) A provision setting forth the conditions, if any, under which the insurer reserves the right to require a person eligible for insurance to furnish evidence of individual insurability satisfactory to the insurer as a condition to part or all of his coverage.
    (E) A provision specifying an equitable adjustment of premiums or of benefits or of both to be made in the event the age of a person insured has been misstated, such provision to contain a clear statement of the method of adjustment to be made.
    (F) A provision that any sum becoming due by reason of the death of the person insured shall be payable to the beneficiary designated by the person insured, except that where the policy contains conditions pertaining to family status the beneficiary may be the family member specified by the policy terms, subject to the provisions of the policy in the event there is no designated beneficiary, as to all or any part of such sum, living at the death of the person insured, and subject to any right reserved by the insurer in the policy and set forth in the certificate to pay at its option a part of such sum not exceeding $2,000 to any person appearing to the insurer to be equitably entitled thereto by reason of having incurred funeral or other expenses incident to the last illness or death of the person insured.
    (G) A provision that the insurer will issue to the policyholder for delivery to each person insured a certificate setting forth a statement as to the insurance protection to which he is entitled, to whom the insurance benefits are payable, a statement as to any dependent's coverage included in such certificate, and the rights and conditions set forth in provisions (H), (I), (J) and (K) following.
    (H) A provision that if the insurance, or any portion of it, on a person covered under the policy or on the dependent of a person covered, ceases because of termination of employment or of membership in the class or classes eligible for coverage under the policy, such person shall be entitled to have issued to him by the insurer, without evidence of insurability, an individual policy of life insurance without disability or other supplementary benefits, unless such right to convert such coverage was provided for in the group policy and is applied for in the application for conversion, provided that an application for the individual policy shall be made, and the first premium paid to the insurer, within 31 days after such termination, and provided further that:
        (1) the individual policy may, at the option of such
    
person, be on any one of the forms then customarily issued by the insurer at the age and for the amount applied for, except that the group policy may exclude the option to elect term insurance;
        (2) the individual policy shall be in an amount equal
    
to, unless such person chooses to elect a lesser amount, the amount of life insurance which ceases because of such termination, less the amount of any life insurance for which such person becomes eligible under the same or any other group policy within 31 days after such termination, provided that any amount of insurance which shall have matured on or before the date of such termination as an endowment payable to the person insured, whether in one sum or in installments or in the form of an annuity, shall not, for the purposes of this provision, be included in the amount which is considered to cease because of such termination; and
        (3) the premium on the individual policy shall be at
    
the insurer's then customary rate applicable to the form and amount of the individual policy, to the class of risk to which such person then belongs, and to such person's age attained on the effective date of the individual policy.
        (4) If any individual insured under a group life
    
insurance policy becomes entitled under the terms of such policy to have an individual policy of life insurance issued and if such individual is not given notice of the existence of such right at least 15 days prior to the expiration date of such period, then in such event the individual shall have an additional period within which to exercise such right, but nothing herein contained shall be construed to continue any insurance beyond the period provided in such policy. This additional period shall expire 15 days next after the individual is given such notice but in no event shall such additional period extend beyond 60 days next after the expiration date of the period provided in such policy. Written notice presented to the individual or mailed by the policyholder to the last known address of the individual or mailed by the insurer to the last known address of the individual as furnished by the policyholder shall constitute notice for the purpose of this Section.
    Subject to the same conditions set forth above the conversion privilege shall be available (i) to a surviving dependent, if any, at the death of the employee or member, with respect to the coverage under the group policy which terminates by reason of such death and (ii) to the dependent of the employee or member upon termination of coverage of the dependent, while the employee or member remains under the group policy, by reason of the dependent ceasing to be a qualified family member under the group policy.
    (I) A provision, except in the case of a policy described in paragraph (B) of Section 230.1, that the termination of the employment of an employee or the membership of a member shall not terminate the insurance of such employee or member under the group policy until the expiration of such period for which the premium for such employee or member has been paid, not exceeding 31 days.
    (J) A provision that from time to time all new employees or members eligible for insurance and desiring the same shall be added to the group or class thereof originally insured.
    (K) A provision that if the group policy terminates or is amended so as to terminate the insurance of any class of insured persons, every person insured thereunder at the date of such termination whose insurance terminates, including the insured dependent of a covered person, and who has been so insured for at least five years prior to such termination date shall be entitled to have issued by the insurer an individual policy of life insurance, subject to the same conditions and limitations as are provided by provision (H) above, except that the group policy may provide that the amount of such individual policy shall not exceed the smaller of (a) the amount of the person's life insurance protection ceasing because of the termination or amendment of the group policy, less the amount of any life insurance for which he is or becomes eligible under a group policy issued or reinstated by the same or another insurer within 31 days after such termination, or (b) $10,000.
    (L) A provision that if a person insured under the group policy, or the insured dependent of a covered person, dies during the period within which the individual would have been entitled to have an individual policy issued in accordance with provisions (H) or (I) above and before such an individual policy shall have become effective, the amount of life insurance which he would have been entitled to have issued under such individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium therefor has been made.
    (M) If active employment is a condition of insurance, a provision that an insured may continue coverage during the insured's total disability by timely payment to the policyholder of that portion, if any, of the premium that would have been required from the insured had total disability not occurred. The continuation shall be on a premium paying basis for a period of six months from the date on which the total disability started, but not beyond the earlier of (a) approval by the insurer of continuation of the coverage under any disability provision which the group insurance policy may contain or (b) the discontinuance of the group insurance policy.
    (N) If active employment is a condition of insurance, in the case of a policy of group life insurance replacing another policy of group life insurance in force with another insurance carrier immediately prior to the effective date of the new policy, a provision preventing loss of coverage, subject to premium payments, for those active employees who are not actively at work on the effective date of the new policy if the following conditions are met:
        (1) the active employee was insured under the prior
    
carrier's group life insurance policy immediately prior to the effective date of the policy;
        (2) the active employee is not actively at work on
    
the effective date of the new policy;
        (3) the active employee is a member of an eligible
    
class under the policy; and
        (4) the active employee is not receiving or
    
eligible to receive benefits under the prior carrier's group life insurance policy.
    (O) If active employment is a condition of insurance, a provision that for active employees receiving or eligible to receive benefits under provision (N) the continued coverage will remain in effect until the earliest of the following:
        (1) the date the employee returns to active work;
        (2) the date that coverage under the prior
    
carrier's group life insurance policy would have ended for any reason other than the termination of the policy;
        (3) the date that coverage would otherwise end
    
under the replacing carrier's policy;
        (4) a date no less than 6 months after the
    
replacement coverage begins; or
        (5) the date the employee is covered or is eligible
    
for coverage under the prior carrier's group policy.
    (P) If active employment is a condition of insurance, a provision that the replacing carrier's obligations under provisions (N) and (O) may be limited to the amount for which the employee was covered under the prior carrier's group life insurance policy and may be reduced by any amounts payable under the prior carrier's group life insurance policy.
    (Q) In the case of a policy insuring the lives of debtors, a provision that the insurer will furnish to the policyholder for delivery to each debtor insured under the policy a certificate of insurance describing the coverage and specifying that the death benefit shall first be applied to reduce or extinguish the indebtedness. Whenever the amount of insurance payable exceeds the amount of outstanding indebtedness the excess benefit shall be payable to the person otherwise contractually or legally entitled thereto; if there be no person determined to be so entitled, such excess shall be paid to the estate of the insured person.
(Source: P.A. 102-367, eff. 1-1-22; 102-743, eff. 5-6-22.)

    (215 ILCS 5/232) (from Ch. 73, par. 844)
    Sec. 232. Extension of time and modification of standard provisions.
    (1) Any company authorized to transact business in this State on the effective date of this Code may continue to issue policies and contracts of the kind or kinds it was permitted to issue immediately prior to such effective date, until December 31, 1937.
    (2) Policies and contracts may be issued and delivered in this State which contain provisions more favorable to the holders of such policies or contracts than the standard provisions required by this article. No domestic company and holder of a policy or contract shall after the effective date of this Code enter into any agreement to waive or modify in whole or in part a standard provision required by this Code or any prior law of this State, for the benefit of such holder, unless the agreement be approved by a court in a proceeding under Article XIII.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/233) (from Ch. 73, par. 845)
    Sec. 233. Participating and non-participating policies.
    After the calendar year during which this Code becomes effective, no life company authorized to do business in this State shall issue both participating and non-participating policies unless at least ninety per centum of the profits on its participating policies shall inure to the benefit of the participating policyholders. Any company having in force both participating and non-participating policies shall keep a separate accounting for each class of business and shall make and include in the annual statement to be filed with the Director each year a separate statement showing the gains, losses and expenses properly attributable to each of such classes and also showing the manner in which any general outlay of expense of the company has been apportioned to each except that this provision shall not apply to any company in which ninety per centum or more of the business in force is either participating or non-participating. This section shall not apply to business done by such life company outside this state, nor to paid-up, or temporary insurance or pure endowment benefits issued or granted pursuant to the non-forfeiture provision prescribed in clause (g) of sub-section (1) of Section 224 nor to annuities or policies of reinsurance.
(Source: Laws 1957, p. 607.)

    (215 ILCS 5/234) (from Ch. 73, par. 846)
    Sec. 234. Notice of premium required.
    (1) No life company doing business in this State shall declare any policy forfeited or lapsed within six months after default in payment of any premium installment or interest or any portion thereof, nor shall any such policy be forfeited or lapsed by reason of nonpayment when due of any premium, installment or interest, or any portion thereof, required by the terms of the policy to be paid, within six months from the default in payment of such premium, installment or interest, unless a written or printed notice stating the amount of such premium, installment, interest or portion thereof due on such policy, the place where it shall be paid and the person to whom the same is payable, shall have been duly addressed and mailed with the required postage affixed, to the person whose life is insured, or the assignee of the policy, (if notice of the assignment has been given to the company) at his last known post office address, at least fifteen days and not more than forty-five days prior to the day when the same is due and payable, before the beginning of the period of grace, except that in any case in which a parent insures the life of his minor child, the company may send notice of premium due to the parent. Such notice shall also state that unless such premium or other sums due shall be paid to the company or its agents the policy and all payments thereon will become forfeited and void, except as to the right to a surrender value or paid-up policy as provided for by the policy. The affidavit of any officer, clerk or agent of the company or of any one authorized to mail such notice that the notice required by this section bearing the required postage has been duly addressed and mailed shall be presumptive evidence that such notice has been duly given.
    (2) This section shall not apply to cancellable accident and health policies which are renewable at the option of the company nor shall it apply to group policies, industrial life policies, or to any policies upon which premiums are payable monthly or at shorter intervals.
(Source: Laws 1961, p. 3852.)

    (215 ILCS 5/234.1) (from Ch. 73, par. 846.1)
    Sec. 234.1. (Notice of the Enactment of a Non-Forfeiture Option.) No life company doing business in this State may enact a non-forfeiture option, unless a notice is given to the policyowner which explains this action and refers the policyowner to the other available options, if any, under the provisions of the policy. Evidence of this notice shall be maintained by the insurer.
(Source: P.A. 80-566.)

    (215 ILCS 5/235) (from Ch. 73, par. 847)
    Sec. 235. Extension of time for payment of life premium.
    A life company may enter into subsequent agreements in writing with the insured, which need not be attached to the policy, to extend the time for the payment of any premium or part thereof, upon condition that failure to comply with the terms of such agreement shall cause the policy to lapse as provided in said agreement or in the policy. Subject to such lien as may be created to secure any indebtedness contracted by the insured in consideration of the extension, such agreement shall not impair any right existing under the policy.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/235.1)
    Sec. 235.1. Notice of cancellation; secondary addressee.
    (a) A life company issuing an individual life insurance contract on or after January 1, 2022 shall notify an applicant, in writing on a form prescribed by the company at the time of application for the policy, of the applicant's right to designate a secondary addressee to receive notice of cancellation of the policy based on nonpayment of premium. The applicant may make such designation at the time of application for such policy or at any time such policy is in force by submitting a written notice to the insurer containing the name and address of the secondary addressee.
    (b) The insurer's transmission to a secondary addressee of a copy of a notice of cancellation based on nonpayment of premium shall be in addition to the transmission of the original document to the policyholder. The copy of the notice of cancellation transmitted to the secondary addressee shall be made in the same manner and form required for the transmission of the notice to the policyholder.
    (c) The designation of a secondary addressee shall not constitute acceptance of any liability on the part of the secondary addressee or insurer for services provided to the policyholder.
    (d) This Section does not apply to any individual life insurance contract under which premiums are payable monthly or more frequently and are regularly collected by a licensed agent or are paid by credit card or any preauthorized check processing or automatic debit service of a financial institution.
    (e) Nothing in this Section shall prohibit an applicant or policyholder from designating a life insurance agent of record as his or her secondary addressee.
(Source: P.A. 102-542, eff. 1-1-22.)

    (215 ILCS 5/236) (from Ch. 73, par. 848)
    Sec. 236. Discrimination prohibited.
    (a) No life company doing business in this State shall make or permit any distinction or discrimination in favor of individuals among insured persons of the same class and equal expectation of life in the issuance of its policies, in the amount of payment of premiums or rates charged for policies of insurance, in the amount of any dividends or other benefits payable thereon, or in any other of the terms and conditions of the contracts it makes.
    (b) No life company shall make or permit any distinction or discrimination against individuals with disabilities in the amount of payment of premiums or rates charged for policies of life insurance, in the amount of any dividends or death benefits payable thereon, or in any other terms and conditions of the contract it makes unless the rate differential is based on sound actuarial principles and a reasonable system of classification and is related to actual or reasonably anticipated experience directly associated with the disability.
    (c) No life company shall refuse to insure, or refuse to continue to insure, or limit the amount or extent or kind of coverage available to an individual, or charge an individual a different rate for the same coverage solely because of blindness or partial blindness. With respect to all other conditions, including the underlying cause of the blindness or partial blindness, persons who are blind or partially blind shall be subject to the same standards of sound actuarial principles or actual or reasonably anticipated experience as are sighted persons. Refusal to insure includes denial by an insurer of disability insurance coverage on the grounds that the policy defines "disability" as being presumed in the event that the insured loses his or her eyesight. However, an insurer may exclude from coverage disabilities consisting solely of blindness or partial blindness when such condition existed at the time the policy was issued.
    (d) No life company shall refuse to insure or to continue to insure an individual solely because of the individual's status as a member of the United States Air Force, Army, Coast Guard, Marines, or Navy or solely because of the individual's status as a member of the National Guard or Armed Forces Reserve.
    (e) An insurer or producer authorized to issue policies of insurance in this State may not make a distinction or otherwise discriminate between persons, reject an applicant, cancel a policy, or demand or require a higher rate of premium for reasons based solely upon an applicant's or insured's past lawful travel experiences or future lawful travel plans. This subsection (e) does not prohibit an insurer or producer from excluding or limiting coverage under a policy or refusing to offer the policy based upon past lawful travel or future lawful travel plans or from charging a different rate for that coverage when that action is based upon sound actuarial principles or is related to actual or reasonably expected experience and is not based solely on the destination's inclusion on the United States Department of State's travel warning list.
    (f) With respect to life insurance final expense policies, no life company authorized to issue these policies in this State shall refuse to insure an individual; refuse to continue to insure an indiviudal; limit the amount, extent, or kind of coverage available to an individual; or charge an individual a different rate for the same coverage solely on the basis that an insured or applicant has been convicted of a felony. Nothing in this subsection shall be construed to require a life company to issue or otherwise provide coverage for a life insurance policy to a person who is actively incarcerated pursuant to a felony conviction. As used in this subsection, "final expense policy" means a policy marketed and sold exclusively to cover costs associated with funeral and burial expenses.
(Source: P.A. 104-224, eff. 1-1-26.)

    (215 ILCS 5/237) (from Ch. 73, par. 849)
    Sec. 237. Illegal inducements - Penalty. No life company authorized to do business in this State shall issue or deliver in this State or permit its agents, officers or employees to issue or deliver in this State as an inducement to insurance or in connection therewith, any agency company shares or other capital shares, benefit certificates or shares in any common law corporation, securities of any special or advisory board, or other contracts of any kind promising returns and profits as an inducement to insurance; and no life company shall be authorized to do business in this State which issues or permits its agents, officers or employees to issue in this State or in any other state, agency company shares or other capital shares or benefit certificates or shares in any common law corporation or securities of any special advisory board or other contracts of any kind promising returns and profits as an inducement to insurance; and no corporation acting as an agent of a life company, or any of its agents, officers or employees shall be permitted to sell, agree or offer to sell, or give or offer to give directly or indirectly, in any manner whatsoever, as an inducement to insurance or in connection therewith, any shares, securities, bonds or agreements of any form or nature promising returns and profits as an inducement to insurance or in connection therewith. It shall be the duty of the Director upon due proof after notice and hearing to revoke the certificate of authority of any company or the license of any agent so offending, or suspend such license or certificate of authority 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 five hundred dollars, 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 or certificate of authority of such insurance company or agent for any period of time up to, but not exceeding a period of, two years if he finds that any such company or agent thereof has violated any of the provisions of this section.
(Source: Laws 1957, p. 1530.)

    (215 ILCS 5/238) (from Ch. 73, par. 850)
    Sec. 238. Exemption.
    (a) All proceeds payable because of the death of the insured and the aggregate net cash value of any or all life and endowment policies and annuity contracts payable to a wife or husband of the insured, or to a child, parent or other person dependent upon the insured, whether the power to change the beneficiary is reserved to the insured or not, and whether the insured or his estate is a contingent beneficiary or not, shall be exempt from execution, attachment, garnishment or other process, for the debts or liabilities of the insured incurred subsequent to the effective date of this Code, except as to premiums paid in fraud of creditors within the period limited by law for the recovery thereof.
    (b) Any insurance company doing business in this State and governed by this Code shall encumber or surrender accounts as defined in Section 10-24 of the Illinois Public Aid Code held by the insurance company owned by any responsible relative who is subject to a child support lien, upon notice of the lien or levy by the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) or its successor agency pursuant to Section 10-25.5 of the Illinois Public Aid Code, or upon notice of interstate lien from any other state's agency responsible for implementing the child support enforcement program set forth in Title IV, Part D of the Social Security Act.
    This Section does not prohibit the furnishing of information in accordance with the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Any insurance company governed by this Code shall enter into an agreement for data exchanges with the Department of Healthcare and Family Services provided the Department of Healthcare and Family Services pays to the insurance company a reasonable fee not to exceed its actual cost incurred. An insurance company providing information in accordance with this item shall not be liable to any owner of an account as defined in Section 10-24 of the Illinois Public Aid Code or other person for any disclosure of information to the Department of Healthcare and Family Services (formerly Department of Public Aid), for encumbering or surrendering any accounts as defined in Section 10-24 of the Illinois Public Aid Code held by the insurance company in response to a lien or order to withhold and deliver issued by a State agency, or for any other action taken pursuant to this item, including individual or mechanical errors, provided the action does not constitute gross negligence or willful misconduct. An insurance company shall have no obligation to hold, encumber, or surrender any accounts as defined in Section 10-24 of the Illinois Public Aid Code until it has been served with a subpoena, summons, warrant, court or administrative order, lien, or levy requiring that action.
(Source: P.A. 95-331, eff. 8-21-07.)

    (215 ILCS 5/238.1)
    Sec. 238.1. Data exchanges; administrative liens.
    (a) Any insurance company doing business in the State and governed by this Code shall enter into an agreement for data exchanges with the Department of Healthcare and Family Services for the purpose of locating accounts as defined in Section 10-24 of the Illinois Public Aid Code of responsible relatives to satisfy past-due child support owed by responsible relatives under an order for support entered by a court or administrative body of this or any other State on behalf of resident or non-resident persons.
    (b) Notwithstanding any provisions in this Code to the contrary, an insurance company shall not be liable to any person:
        (1) for any disclosure of information to the
    
Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) under subsection (a);
        (2) for encumbering or surrendering any accounts as
    
defined in Section 10-24 of the Illinois Public Aid Code held by such insurance company in response to a notice of lien or levy issued by the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid), or by any other state's child support enforcement agency, as provided for in Section 238 of this Code; or
        (3) for any other action taken in good faith to
    
comply with the requirements of subsection (a).
(Source: P.A. 95-331, eff. 8-21-07.)

    (215 ILCS 5/239) (from Ch. 73, par. 851)
    Sec. 239. Misrepresentations-Penalty.
    No agent, examining physician, or other person shall knowingly or wilfully make any false or fraudulent statement or representation in, or with reference, to any application for life insurance, or shall make any such statement or representation for the purpose of obtaining any fees, commission, money or benefit from or in any life company. Any person who violates any of the provisions of this section shall be guilty of a Class A misdemeanor.
(Source: P.A. 77-2699.)

    (215 ILCS 5/240) (from Ch. 73, par. 852)
    Sec. 240. Premium deposit reserve.
    A life company may contract for or accept premium deposits, other than premiums stated in the policy. The unused accumulation from such shall be held and accounted for as a premium deposit reserve, and in such case the policy or an endorsement thereon shall provide for the manner of application of the premium deposit reserve to the payment of premiums in default and for the disposition of such reserve if it is not sufficient to pay the next premium. Such premium deposit reserve shall be available as an addition to the loan and cash surrender values, shall be paid with other benefits upon death or maturity of the policy, and shall be paid to the insured whenever the cash surrender value with the premium deposit reserve shall equal or exceed the original amount of insurance, but no part of the premium deposit reserve may be paid to the insured during the continuance of the policy except at such times or in such amounts as specified in the policy or in endorsements thereon.
(Source: Laws 1937, p. 696.)

    (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 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 5/242) (from Ch. 73, par. 854)
    Sec. 242. Rights of minors.
    Any minor of the age of fifteen years or more may, notwithstanding such minority, contract for life, health and accident insurance on his own life for his own benefit or for the benefit of his father, mother, husband, wife, child, brother or sister, and may exercise all such contractual rights and powers with respect to any such contract of insurance as might be exercised by a person of full legal age, and may exercise with like effect all rights and privileges under such contract, including the surrender of his interest therein and the giving of a valid discharge for any benefit accruing or money payable thereunder. Such minor shall not, by reason of his minority, be entitled to rescind, avoid, or repudiate such contract, or any exercise of a right or privilege thereunder.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/243) (from Ch. 73, par. 855)
    Sec. 243. Contingency reserves.
    (1) Any domestic life company may accumulate and maintain in addition to an amount equal to the net value of its participating policies computed according to the standard adopted by it under section 223, a contingency reserve not exceeding the following respective percentages of said net values, to-wit:
    (a) When said net values are less than one hundred thousand dollars, twenty per centum thereof or the sum of ten thousand dollars, whichever is the greater.
    (b) When said net values are greater than one hundred thousand dollars the percentage thereof measuring the contingency reserve shall decrease one-half of one per centum for each one hundred thousand dollars of said net values up to one million dollars; one-half of one per centum for each additional one million dollars up to ten million dollars; one-half of one per centum for each additional two million, five hundred thousand dollars up to fifteen million dollars; and, if said net values equal or exceed the last mentioned amount, the contingency reserve shall not exceed ten per centum thereof.
    (2) As the net values of said policies increase and the maximum percentage measuring the contingency reserve decreases the company may maintain any contingency reserve accumulated under this section, although it may exceed the maximum percentage herein prescribed, but may not add to the contingency reserve when the addition will bring it beyond the maximum percentage.
    (3) Nothing herein contained shall be construed to affect any existing surplus or contingency reserves held by any such company except that whenever the existing surplus and contingency reserves, exclusive of said net values and of all accumulations held on account of existing deferred dividend policies or groups of such policies, shall exceed the limit above mentioned it shall not be entitled to maintain any additional contingency reserve. However, for cause shown the Director may at any time and from time to time permit any company to accumulate and maintain a contingency reserve in excess of the limit above mentioned for a prescribed period not exceeding one year under any one permission, by filing in his office a decision stating his reasons therefor and causing the same to be published in his next annual report.
    (4) This section shall not be construed as preventing the accumulation from the non-participating business of a contingency reserve for the benefit of non-participating policies.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/244) (from Ch. 73, par. 856)
    Sec. 244. Limitation of expenses for life companies.
    (1) No life company authorized to do business in this State shall make or incur acquisition expenses in any calendar year after the calendar year during which this Code becomes effective amounting to more than the first year's gross premiums nor shall such company make or incur renewal expenses on policies issued after such year in any of the nine succeeding renewal years following each year's new business in excess of 10% of the gross renewal premiums, unless the company collects renewal premiums in person in which case such renewal expense applicable to such policies for as long as such premiums are collected in person shall not exceed 20%, except that renewal expenses in excess of such 10% limitation relative to the 9 succeeding renewal years may be made or incurred if such excess in any year be included with acquisition expenses made or incurred during that calendar year. After the tenth policy year the annual maximum renewal expenses shall not exceed 3% of such gross annual renewal premiums, unless the company collects renewal premiums in person in which case such renewal expense applicable to such policies for as long as such premiums are collected in person shall not exceed 13%, but a company may pay renewal expenses after the tenth policy year in excess of 3% if such excess is charged to the renewal expense of that calendar year within the limitation provided herein.
    (2) In computing such acquisition expenses there shall be included all commissions and other valuable considerations paid or payable to or for agents, and other expenses made or incurred in acquiring new business, except medical examination and inspection fees and the normal overhead expenses of operation at the home office. In computing such renewal expenses there shall be included commissions and other valuable considerations paid or payable to or for agents, and all other expenses made or incurred for the collection of such renewal premiums, except the normal overhead expenses of operation at the home office.
    (3) This Section shall not apply to accident and health or industrial business written by any companies.
(Source: Laws 1967, p. 3359.)

    (215 ILCS 5/244.1) (from Ch. 73, par. 856.1)
    Sec. 244.1. Whenever the financial condition of any company transacting the kinds of business authorized in Class 1 of Section 4, when reviewed in conjunction with the kinds and nature of risks insured, the loss experience and ownership of the company and the ratio of annual premium volume to the incurred acquisition expenses, indicates a condition such that the continued operation of the company might be hazardous to its policyholders, creditors or the general public, then the Director may, after notice and hearing, order the company to take such action as may be reasonably necessary to rectify the existing condition, including but not necessarily limited to 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 reduce general or acquisition expenses by
    
specified methods;
        (d) to suspend the writing of new business for a
    
period not to exceed 3 months; or
        (e) to increase the company's surplus by a
    
contribution to surplus.
(Source: P.A. 77-1514.)

    (215 ILCS 5/245) (from Ch. 73, par. 857)
    Sec. 245. Salaries; pensions.
    (1) No domestic life company shall directly or indirectly pay any salary, compensation or emolument to any officer, trustee or director thereof, or any salary, compensation or emolument amounting in any year to more than $200,000 to any person, firm or corporation, unless such payment be first authorized by a vote of the board of directors of such company, which vote shall be duly recorded in the records of the company. No such domestic life company shall make any agreement with any of its officers, trustees or salaried employees whereby it agrees that for any services rendered or to be rendered he shall receive any salary, compensation or emolument, directly or indirectly, that will extend beyond a period of three years from the date of such agreement except that payment of an amount not in excess of 20% of the salary of any of its officers, trustees, or salaried employees may by written agreement be deferred beyond such period of three years, which agreement may include conditions to be met by such officer, trustee, or salaried employee before payment will be made. The limitation as to time contained herein shall not apply to a contract for renewal commissions with any such officer, trustee or salaried employee who is also an agent of the company nor shall such limitation be construed as preventing a domestic company from entering into contracts with its agents for the payment of renewal commissions.
    (2) No such life company shall grant any pension to any officer, director or trustee thereof or to any member of his family after his death except that it may provide a pension pursuant to the terms of the uniform retirement plan adopted by the board of directors and for any person who is or has been a salaried officer or employee of such company and who may retire by reason of age or disability.
    (3) No such company shall hereafter create or establish any account or fund for the purpose of promoting the health or welfare of its employees except from annual accretions to earned surplus computed in the manner provided by this Code. Contributions to such fund by any company in any calendar year shall not exceed 15% of the accretion to earned surplus in such calendar year. Before such account or fund shall be established, maintained or operated, the plan for such account or fund and its method of operation shall be approved by the board of directors of the company, and submitted to the shareholders in the case of a stock company, or members in the case of a mutual company, at a special meeting called for the purpose of considering such plan. Contributions to the fund from sources other than the company may be provided for in the operation of the plan. No amount held in such fund or account whether contributed by the company or from any other source shall be considered an admitted asset as defined in this Code, nor considered in determining the solvency of such company, nor be subject to the provisions of this Code.
(Source: P.A. 91-549, eff. 8-14-99.)

    (215 ILCS 5/245.1) (from Ch. 73, par. 857.1)
    Sec. 245.1. Assignability of life insurance. No provision of the Illinois Insurance Code, or any other law prohibits an insured under any policy of life insurance, or any other person who may be the owner of any rights under such policy, from making an assignment of all or any part of his rights and privileges under the policy including but not limited to the right to designate a beneficiary thereunder and to have an individual policy issued in accordance with paragraphs (G), (H), and (K) of Section 231.1 of the Illinois Insurance Code. Subject to the terms of the policy or any contract relating thereto, an assignment by an insured or by any other owner of rights under the policy, made before or after the effective date of this amendatory Act of 1969 is valid for the purpose of vesting in the assignee, in accordance with any provisions included therein as to the time at which it is effective, all rights and privileges so assigned. However, such assignment is without prejudice to the company on account of any payment it makes or individual policy it issues in accordance with paragraphs (d) and (g) of Section 231 before receipt of notice of the assignment. This amendatory Act of 1969 acknowledges, declares and codifies the existing right of assignment of interests under life insurance policies.
(Source: P.A. 98-969, eff. 1-1-15.)

    (215 ILCS 5/245.2) (from Ch. 73, par. 857.2)
    Sec. 245.2. Not-for-profit organizations; beneficiary of insurance on member's life. Members of not-for-profit organizations that are exempt from taxation as described in paragraph (3), (4), (5), (9), or (10) of subsection (c) of Section 501 of the Internal Revenue Code or either past or present individual or family donors to a not-for-profit organization may obtain life insurance policies naming the not-for-profit organization as the irrevocable sole beneficiary of the policy. The not-for-profit organization, as the sole beneficiary of the policy, may continue to pay the premiums to the issuing insurance company where the donor discontinues the premium payments and continuance of the policy is a prudent investment.
(Source: P.A. 87-770.)

    (215 ILCS 5/245.3)
    Sec. 245.3. Irrevocable assignment of life insurance to a funeral home. An insured or any other person who may be the owner of rights under a policy of life insurance may make an irrevocable assignment of all or a part of his or her rights under the policy to a funeral home in accordance with Section 2b of the Illinois Funeral or Burial Funds Act. Subject to the terms of the policy or a contract relating to the policy, including, but not limited to, a prepaid funeral or burial contract, an irrevocable assignment by an insured or other owner of rights under a policy made before or after the effective date of this amendatory Act of the 102nd General Assembly is valid for the purpose of vesting in the assignee, in accordance with the policy or contract as to the time at which it is effective, all rights assigned. That irrevocable assignment is, however, without prejudice to the company on account of any payment it makes. The insurance company shall within 15 business days notify the funeral home and owner of the policy of its receipt of the form. A policy owner who executes a designation of beneficiary form pursuant to Section 2b of the Illinois Funeral or Burial Funds Act also irrevocably waives and cannot exercise the following rights:
        (1) The right to collect from the insurance company
    
the net proceeds of the policy when it becomes a claim by death.
        (2) The right to surrender the policy and receive the
    
cash surrender value of the policy.
        (3) The right to obtain a policy loan.
        (4) The right to designate as primary beneficiary of
    
the policy anyone other than as provided in that Act.
        (5) The right to collect or receive income,
    
distributions, or shares of surplus, dividend deposits, refunds of premium, or additions to the policy.
    This amendatory Act of the 102nd General Assembly acknowledges, declares, and codifies the existing right of assignment of interests under life insurance policies.
(Source: P.A. 102-959, eff. 5-27-22.)


 
    (215 ILCS 5/Art. XIV.5 heading)
ARTICLE XIV 1/2. SEPARATE ACCOUNTS

    (215 ILCS 5/245.21) (from Ch. 73, par. 857.21)
    Sec. 245.21. Establishment of separate accounts by domestic companies organized to do a life, annuity, or accident and health insurance business. A domestic company, including for the purposes of this Article all domestic fraternal benefit societies, may, for authorized classes of insurance, establish one or more separate accounts, and may allocate thereto amounts (including without limitation proceeds applied under optional modes of settlement or under dividend options) to provide for life, annuity, or accident and health insurance (and benefits incidental thereto), payable in fixed or variable amounts or both, subject to the following:
        (1) The income, gains and losses, realized or
    
unrealized, from assets allocated to a separate account must be credited to or charged against the account, without regard to other income, gains or losses of the company.
        (2) Except as may be provided with respect to
    
reserves for guaranteed benefits and funds referred to in paragraph (3) of this Section (i) amounts allocated to any separate account and accumulations thereon may be invested and reinvested without regard to any requirements or limitations of Part 2 or Part 3 of Article VIII of this Code and (ii) the investments in any separate account or accounts may not be taken into account in applying the investment limitations otherwise applicable to the investments of the company.
        (3) Except with the approval of the Director and
    
under the conditions as to investments and other matters as the Director may prescribe, that must recognize the guaranteed nature of the benefits provided, reserves for (i) benefits guaranteed as to dollar amount and duration and (ii) funds guaranteed as to principal amount or stated rate of interest may not be maintained in a separate account.
        (4) Unless otherwise approved by the Director, assets
    
allocated to a separate account must be valued at their market value on the date of valuation, or if there is no readily available market, then as provided in the contract or the rules or other written agreement applicable to the separate account. Unless otherwise approved by the Director, the portion, if any, of the assets of the separate account equal to the company's reserve liability with regard to the guaranteed benefits and funds referred to in paragraph (3) of this Section must be valued in accordance with the rules otherwise applicable to the company's assets.
        (5) Amounts allocated to a separate account under
    
this Article are owned by the company, and the company may not be, nor hold itself out to be, a trustee with respect to those amounts. The assets of any separate account equal to the reserves and other contract liabilities with respect to the account may not be charged with liabilities arising out of any other business the company may conduct, unless the separate account is subject to guarantees, in which case the assets shall be charged with liabilities arising out of other business of the company, unless the contract specifies that the assets are insulated.
        (6) No sale, exchange or other transfer of assets may
    
be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, the transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless the transfer, whether into or from a separate account, is made (i) by a transfer of cash, or (ii) by a transfer of securities having a readily determinable market value, if the transfer of securities is approved by the Director. The Director may approve other transfers among those accounts if, in his or her opinion, the transfers would not be inequitable.
        (7) To the extent a company considers it necessary to
    
comply with any applicable federal or state laws, the company, with respect to any separate account, including without limitation any separate account which is a management investment company or a unit investment trust, may provide for persons having an interest therein appropriate voting and other rights and special procedures for the conduct of the business of the account, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of independent public accountants, and the selection of a committee, the members of which need not be otherwise affiliated with the company, to manage the business of the account.
(Source: P.A. 98-39, eff. 6-28-13.)

    (215 ILCS 5/245.22) (from Ch. 73, par. 857.22)
    Sec. 245.22. Any contract providing benefits payable in variable amounts delivered or issued for delivery in this State must contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of the variable benefits. Any such contract under which the benefits vary to reflect investment experience, including a group contract and any certificate in evidence of variable benefits issued thereunder, must state that such dollar amount will so vary and must contain on its first page a statement to the effect that the benefits thereunder are on a variable basis.
(Source: P.A. 77-1572.)

    (215 ILCS 5/245.23) (from Ch. 73, par. 857.23)
    Sec. 245.23. No company may deliver or issue for delivery within this State variable contracts unless it is authorized or organized to do a life, annuity, or accident and health insurance business in this State, and the Director is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this State. In this connection, the Director may consider among other things:
    (a) The history and financial condition of the company;
    (b) The character, responsibility and fitness of the officers and directors of the company; and
    (c) The law and regulation under which the company is authorized in its state of domicile to issue variable contracts. If the company is a subsidiary of an authorized insurance company, or affiliated with such a company through common management or ownership, it may be deemed by the Director to have met the requirements of this Section if either it or the parent or the affiliated company meets the requirements of this Section.
(Source: P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/245.24) (from Ch. 73, par. 857.24)
    Sec. 245.24. Notwithstanding any other provision of law, the Director has sole authority to regulate the issuance and sale of variable contracts, and to promulgate such reasonable rules and regulations as may be appropriate to carry out the purposes and provisions of this Article.
(Source: P.A. 77-1572.)

    (215 ILCS 5/245.25) (from Ch. 73, par. 857.25)
    Sec. 245.25. Except for subparagraphs (1)(a), (1)(f), (1)(g) and (3) of Section 226 of the Illinois Insurance Code, in the case of a variable annuity contract and subparagraphs (1)(b), (1)(f), (1)(g), (1)(h), (1)(i), and (1)(k) of Section 224, subparagraph (1)(c) of Section 225, and subparagraph (h) of Section 231 in the case of a variable life insurance policy, except for Sections 357.4, 357.5, 367e, and 367e.1 in the case of a variable health insurance policy, and except as otherwise provided in this Article, all pertinent provisions of the Illinois Insurance Code which are appropriate to those contracts apply to separate accounts and contracts relating thereto. Any individual variable life insurance contract, delivered or issued for delivery in this State, must contain grace, reinstatement and non-forfeiture provisions appropriate to such a contract. Any individual variable annuity contract, delivered or issued for delivery in this State, must contain grace and reinstatement provisions appropriate to such a contract. Any group variable life insurance contract, delivered or issued for delivery in this State, must contain a grace provision appropriate to such a contract. A group variable health insurance contract delivered or issued for delivery in this State must contain a continuation of group coverage provision appropriate to the contract. The reserve liability for variable contracts must be established in accordance with actuarial procedures that recognize the variable nature of the benefits provided and any mortality guarantees.
(Source: P.A. 93-477, eff. 1-1-04.)

    (215 ILCS 5/245.60) (from Ch. 73, par. 857.60)
    Sec. 245.60. Whenever the Director finds that there has been a violation of this Article or of any rules or regulations issued pertaining thereto, and after written notice thereof and hearing given to the company or other person authorized or licensed by the Director, he shall set forth his findings, together with an order for compliance by a specific date. Such order shall be binding on the company and other persons authorized or licensed by the Director on the date specified unless sooner withdrawn by the Director or a stay thereof has been ordered by a court of competent jurisdiction.
(Source: Laws 1963, p. 1137.)

    (215 ILCS 5/245.61) (from Ch. 73, par. 857.61)
    Sec. 245.61. (Repealed).
(Source: Laws 1963, p. 1137. Repealed by P.A. 90-381, eff. 8-14-97.)

    (215 ILCS 5/245.62) (from Ch. 73, par. 857.62)
    Sec. 245.62. (Repealed).
(Source: P.A. 77-1572. Repealed by P.A. 90-381, eff. 8-14-97.)


 
    (215 ILCS 5/Art. XV heading)
ARTICLE XV. REGISTRATION OF POLICIES
AND DEPOSIT OF RESERVES

    (215 ILCS 5/246) (from Ch. 73, par. 858)
    Sec. 246. Scope of article.
    This article shall apply to companies that issued the policies or annuity bonds, and to the policies or annuity bonds, referred to in an Act entitled: "An Act to provide for the deposit of reserve and the registration of policies and annuity bonds by life insurance companies of this State," approved April 18, 1899. Such policies or annuity bonds are referred to in this article as "policies."
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/247) (from Ch. 73, par. 859)
    Sec. 247. Deposit of reserves on registered policies.
    Any company heretofore making deposits and registering policies pursuant to the act mentioned in section 246 shall keep and maintain such deposit with the Director in securities which are authorized for investment by life insurance companies under this Code. Certificates of purchase acquired by any company through foreclosure proceedings instituted by it upon mortgages in which its funds have been lawfully invested, and duly recorded conveyances of unencumbered improved real estate lawfully acquired by any company, accompanied by satisfactory evidence of ownership thereof shall likewise be eligible for deposit. The Director shall hold the title to such real estate so conveyed to him in trust until other satisfactory securities in lieu thereof have been deposited with him whereupon he shall reconvey the same to such company. The Director may cause such real estate to be valued and the company shall pay the reasonable expenses incurred in such valuation.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/248) (from Ch. 73, par. 860)
    Sec. 248. Registration of new policies prohibited.
    After the effective date of this Code the Director shall not register any new policies that are issued by any company, nor accept any deposits covering reserves on business thereafter written.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/249) (from Ch. 73, par. 861)
    Sec. 249. Valuation of registered policies.
    The Director shall keep such a record of the policies that have been issued pursuant to the act mentioned in section 246 as to enable him to compute their value at any time. Upon written proof attested by the president or vice-president and secretary of the company which shall have issued such policies that any of them have been commuted or terminated, the Director shall indicate such commutation or cancellation upon such record. The reserve value of all policies, according to the standard prescribed in this Code for the valuation of policies of life insurance companies, when the first premium shall have been paid thereon, less the amount of any liens, (as set forth in a statement showing kind, nature and amount, attested by the president or vice-president and secretary of the company issuing the policies against which such liens exist) not exceeding such value as the company may have against such policies shall be entered in the record aforesaid at the time such record is made. On the first day of January of each year, or within sixty days thereafter, the Director shall cause the registered policies of each company to be carefully revalued, and the reserve value thereof at the time fixed for such valuation, less any liens, (as set forth in a statement showing kind, nature and amount, attested by the president or vice-president and secretary of the company issuing the policies against which such liens exist) not exceeding such reserve value as the company may have against such policies shall be entered upon the record. It shall be the duty of the Director to cancel mutilated policies issued by said companies prior to the effective date of this Code, and register in lieu thereof other policies of like tenor and date.
(Source: P.A. 87-757.)

    (215 ILCS 5/250) (from Ch. 73, par. 862)
    Sec. 250. Additional deposits.
    Each company which shall have made the deposit provided for by the act mentioned in section 246, shall make additional deposits from time to time in amounts of not less than five thousand dollars of securities which are authorized investments for life insurance companies under this Code, so that the market value of the securities deposited shall always be equal to the reserve value of the policies heretofore registered by said company, less such liens (not exceeding such net value) as the company may have against them.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/251) (from Ch. 73, par. 863)
    Sec. 251. Record of securities-Deficit-When insolvent.
    The Director shall keep a record of the securities deposited by each company and when furnishing the annual certificate of valuation mentioned in section 249, he shall enter thereon the amount and market value of such securities deposited by such company. If at any time it shall appear from such certificate or otherwise that the value of the securities held on deposit is less than the reserve value of the registered policies theretofore issued by such company, less such liens (not exceeding such reserve value) as the company may have against them, and the company shall fail or neglect to make good such deposit within sixty days, after written notice by the Director, it shall be deemed to be insolvent and shall be proceeded against in the manner provided in Article XIII.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/252) (from Ch. 73, par. 864)
    Sec. 252. May increase deposit-Withdrawal of securities-Right to income.
    Any such company may increase its deposits at any time by making additional deposits of not less than five thousand dollars of securities which are authorized investments for life companies under this Code. Any company whose deposits exceed the reserve of all registered policies it has in force, less such liens (not exceeding such reserve value) as the company may hold against them, may withdraw such excess, or it may withdraw any of said securities at any time by depositing in their stead securities of equal value and authorized under this Code. So long as said company shall remain solvent and maintain its deposits, as herein provided, it may collect the interest, coupons, rents, and other income on the securities deposited as the same may accrue.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/253) (from Ch. 73, par. 865)
    Sec. 253. Deposits kept separate.
    The securities deposited with the Director pursuant to the act mentioned in section 246, shall be kept in the same manner but separate from other deposits of the company.
(Source: Laws 1937, p. 696.)


 
    (215 ILCS 5/Art. XVI heading)
ARTICLE XVI. ASSESSMENT LEGAL RESERVE LIFE COMPANIES
(Repealed by P.A. 98-692, eff. 7-1-14; 98-969, eff. 1-1-15)


 
    (215 ILCS 5/Art. XVII heading)
ARTICLE XVII. FRATERNAL BENEFIT SOCIETIES
(Article scheduled to be repealed on January 1, 2027)

    (215 ILCS 5/282.1) (from Ch. 73, par. 894.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 282.1. Fraternal benefit societies. Any incorporated society, order or supreme lodge without capital stock, including one exempted under the provisions of Section 315.5(a) of this amendatory Act whether incorporated or not, organized solely for the benefit of its members and their beneficiaries and not for profit, operated on a lodge system with ritualistic form of work, having a representative form of government and providing benefits in accordance with this amendatory Act is hereby declared to be a fraternal benefit society.
(Source: P.A. 84-303.)

    (215 ILCS 5/283.1) (from Ch. 73, par. 895.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 283.1. Lodge system.
    (a) A society is operating on the lodge system if it has a supreme governing body and subordinate lodges into which members are elected, initiated or admitted in accordance with its laws, rules and ritual. Subordinate lodges shall be required by the laws of the society to hold regular meetings at least once in each month in furtherance of the purposes of the society.
    (b) A society may, at its option, organize and operate lodges for children under the minimum age for adult membership. Membership and initiation in local lodges shall not be required of such children nor shall they have a voice or vote in the management of the society.
(Source: P.A. 84-303.)

    (215 ILCS 5/284.1) (from Ch. 73, par. 896.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 284.1. Representative form of government. A society has a representative form of government when:
        (a) It has a supreme governing body constituted in
    
one of the following ways:
            (1) Assembly. The supreme governing body is an
        
assembly composed of delegates elected directly by the members or at intermediate assemblies of members or their representatives, together with other delegates as may be prescribed in the society's laws. A society may provide for election of delegates by mail. The elected delegates shall constitute a majority in number and shall not have less than 2/3 of the votes and not less than the number of votes required to amend the society's laws. The assembly shall be elected and shall meet at least once every 4 years and shall elect a board of directors to conduct the business of the society between meetings of the assembly. Vacancies on the board of directors between elections may be filled in the manner prescribed by the society's laws; or
            (2) Direct Election. The supreme governing body
        
is a board composed of persons elected by the members, either directly or by their representatives in intermediate assemblies, and any other persons prescribed in the society's laws. A society may provide for election of the board by mail. Each term of a board member may be filled in the manner prescribed by the society's laws. However, those persons elected to the board shall constitute a majority in number and not less than the number of votes required to amend the society's laws. A person filling the unexpired term of an elected board member shall be considered to be an elected member. The board shall meet at least quarterly to conduct the business of the society;
        (b) The officers of the society are elected either by
    
the supreme governing body or by the board of directors;
        (c) Only benefit members are eligible for election to
    
the supreme governing body, the board of directors or any intermediate assembly; and
        (d) Each voting member has one vote; no vote may be
    
cast by proxy.
(Source: P.A. 84-303.)

    (215 ILCS 5/285.1) (from Ch. 73, par. 897.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 285.1. Definitions. Whenever used in this amendatory Act:
    (a) "Benefit contract" shall mean the agreement for provision of benefits authorized by Section 297.1 of this amendatory Act as that agreement is described in Section 300.1 of this amendatory Act;
    (b) "Benefit member" shall mean an adult member who is designated by the laws or rules of the society to be a benefit member under a benefit contract;
    (c) "Certificate" shall mean the document issued as written evidence of the benefit contract;
    (d) "Premiums" shall mean premiums, rates, dues or other required contributions, by whatever name known, which are payable under the certificate;
    (e) "Laws" shall mean the society's articles of incorporation, constitution and bylaws, however designated;
    (f) "Life insurer" shall mean an insurance company authorized to transact in this State the insurance business classified as Class 1, Clause (a) or (b) in Section 4 of this Code;
    (g) "Rules" shall mean all rules, regulations or resolutions adopted by the supreme governing body or board of directors which are intended to have general application to the members of the society;
    (h) "Society" shall mean fraternal benefit society, unless otherwise indicated; and
    (i) "Lodge" shall mean subordinate member units of the society, known as camps, courts, councils, branches or by any other designation.
(Source: P.A. 84-303.)

    (215 ILCS 5/286.1) (from Ch. 73, par. 898.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 286.1. Purposes and powers.
    (a) A society shall operate for the benefit of members and their beneficiaries by:
        (1) Providing benefits as specified in Section 297.1
    
of this amendatory Act; and
        (2) Operating for one or more social, intellectual,
    
educational, charitable, benevolent, moral, fraternal, patriotic or religious purposes for the benefit of its members, which may also be extended to others. Such purposes may be carried out directly by the society or indirectly through subsidiary corporations or affiliated organizations.
    (b) Every society shall have the power to adopt laws and rules for the government of the society, the admission of its members and the management of its affairs. It shall have the power to change, alter, add to or amend such laws and rules and shall have such other powers as are necessary and incidental to carrying into effect the objects and purposes of the society.
    (c) A domestic society that provides any of the benefits specified in Section 297.1 of this Code must be governed by a board of directors and managed by qualified officers subject to the following requirements:
        (1) The laws of a society must provide that:
            (i) the board of directors shall have the powers
        
and perform the duties ordinarily possessed and exercised by a board of directors under this Code, including, but not limited to, the authority and responsibility for the hiring and the discharge of a president, chief executive officer, or an equivalent position, except that a society that elects its president, chief executive officer, or equivalent position pursuant to its by-laws, as of the effective date of this amendatory Act of the 98th General Assembly, may continue to do so if it elects a president, chief executive officer, or equivalent position that meets qualifications set forth in a rule adopted by the Director; and
            (ii) the board of directors may remove a director
        
for cause and replace the director with another qualified director.
        After the effective date of this amendatory Act of
    
the 98th General Assembly, a domestic society shall amend its laws, as necessary, to comply with this paragraph (1) as soon as reasonably practicable, but in no event later than January 1, 2019.
        (2) A person convicted of a felony may not be a
    
director or an officer of a domestic society.
        (3) A society shall provide information regarding
    
qualifications of board candidates to voting members prior to the time of election.
        (4) Each newly elected director of a domestic society
    
shall participate in a board training or orientation program within 6 months after their election to the board that includes information regarding board duties and responsibilities.
        (5) At least annually, the board of directors shall
    
conduct a self-assessment.
        (6) Each domestic society shall establish an audit
    
committee. The composition and responsibilities of the audit committee shall comply with the Illinois Administrative Code provisions relating to annual financial reporting.
(Source: P.A. 98-814, eff. 1-1-15.)

    (215 ILCS 5/287.1) (from Ch. 73, par. 899.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 287.1. Qualifications for membership.
    (a) A society shall specify in its laws or rules:
        (1) eligibility standards for each and every class of
    
membership, provided that if benefits are provided on the lives of children, the minimum age for adult membership shall be set at not less than age 15 and not greater than age 21;
        (2) the process for admission to membership for each
    
membership class; and
        (3) the rights and privileges of each membership
    
class, provided that only benefit members shall have the right to vote on the management of the insurance affairs of the society.
    (b) A society may also admit social members who shall have no voice or vote in the management of the insurance affairs of the society.
    (c) Membership rights in the society are personal to the member and are not assignable.
(Source: P.A. 84-303.)

    (215 ILCS 5/288.1) (from Ch. 73, par. 900.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 288.1. Location of office, meetings, communications to members, grievance procedures.
    (a) The principal office and place of business of any domestic society shall be located in this State. The meetings of its supreme governing body may be held in any state, district, province or territory wherein such society has at least one subordinate lodge, or in such other location as determined by the supreme governing body, and all business transacted at such meeting shall be as valid in all respects as if such meetings were held in this State. The minutes of the proceedings of the supreme governing body and of the board of directors shall be in the English language.
    (b)(1) A society may provide in its laws for an official publication in which any notice, report or statement required by law to be given to members, including notice of election, may be published. Such required reports, notices and statements shall be printed conspicuously in the publication. If the records of a society show that 2 or more members have the same mailing address, an official publication mailed to one member is deemed to be mailed to all members at the same address unless a member requests a separate copy.
    (2) Not later than June 1 of each year, a synopsis of the society's annual statement providing an explanation of the facts concerning the condition of the society thereby disclosed shall be printed and mailed to each benefit member of the society or, in lieu thereof, such synopsis may be published in the society's official publication.
    (c) A society may provide in its laws or rules for grievance or complaint procedures for members.
(Source: P.A. 84-303.)

    (215 ILCS 5/289.1) (from Ch. 73, par. 901.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 289.1. Personal liability.
    (a) The officers and members of the supreme governing body or any subordinate body of a society shall not be personally liable for any benefits provided by a society.
    (b) Any person may be indemnified and reimbursed by any society for expenses reasonably incurred by, and liabilities imposed upon, such person in connection with or arising out of any action, suit or proceeding, whether civil, criminal, administrative or investigative, or threat thereof, in which the person may be involved by reason of the fact that he or she is or was a director, officer, employee or agent of the society or of any firm, corporation or organization which he or she served in any capacity at the request of the society. A person shall not be so indemnified or reimbursed (1) in relation to any matter in such action, suit or proceedings as to which he or she shall finally be adjudged to be or have been guilty of breach of a duty as a director, officer, employee or agent of the society; or (2) in relation to any matter in such action, suit or proceeding, or threat thereof, which has been made the subject of a compromise settlement; unless in either such case the person acted in good faith for a purpose the person reasonably believed to be in or not opposed to the best interests of the society and, in a criminal action or proceeding, in addition, had no reasonable cause to believe that his or her conduct was unlawful. The determination whether the conduct of such person met the standard required in order to justify indemnification and reimbursement in relation to any matter described in subpoints (1) or (2) of the preceding sentence may only be made by the supreme governing body or board of directors by a majority vote of a quorum consisting of persons who were not parties to such action, suit or proceeding or by a court of competent jurisdiction. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of no contest as to such person shall not in itself create a conclusive presumption that the person did not meet the standard of conduct required in order to justify indemnification and reimbursement. The foregoing right of indemnification and reimbursement shall not be exclusive of other rights to which such person may be entitled as a matter of law and shall inure to the benefit of his or her heirs, executors and administrators.
    (c) A society shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the society, or who is or was serving at the request of the society as a director, officer, employee or agent of any other firm, corporation or organization against any liability asserted against such person and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not the society would have the power to indemnify the person against such liability under this Section.
(Source: P.A. 84-303.)

    (215 ILCS 5/290.1) (from Ch. 73, par. 902.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 290.1. Waiver. The laws of the society may provide that no subordinate body, nor any of its subordinate officers or members, shall have the power or authority to waive any of the provisions of the laws of the society. Such provisions shall be binding on the society and every member and beneficiary of a member.
(Source: P.A. 84-303.)

    (215 ILCS 5/291.1) (from Ch. 73, par. 903.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 291.1. Organization. A domestic society organized on or after January 1, 1986 (the effective date of Public Act 84-303) shall be formed as follows:
        (a) Seven or more citizens of the United States, a
    
majority of whom are citizens of this State, who desire to form a fraternal benefit society may make, sign and acknowledge, before some officer competent to take acknowledgement of deeds, articles of incorporation, in which shall be stated:
            (1) The proposed corporate name of the society,
        
which shall not so closely resemble the name of any society or insurance company already authorized to transact business in this State as to be misleading or confusing;
            (2) The place where its principal office shall be
        
located within this State;
            (3) The purposes for which it is being formed and
        
the mode in which its corporate powers are to be exercised. Such purposes shall not include more liberal powers than are granted by this amendatory Act; and
            (4) The names and residences of the incorporators
        
and the names, residences and official titles of all the officers, trustees, directors or other persons who are to have and exercise the general control of the management of the affairs and funds of the society for the first year or until the ensuing election, at which all such officers shall be elected by the supreme governing body, which election shall be held not later than one year from the date of issuance of the permanent certificate of authority;
        (b) Duplicate originals of the articles of
    
incorporation, certified copies of the society's bylaws and rules, copies of all proposed forms of certificates, applicants and rates therefor, and circulars to be issued by the society and a bond conditioned upon the return to applicants of the advanced payments if the organization is not completed within one year shall be filed with the Director, who may require such further information as the Director deems necessary. The bond with sureties approved by the Director shall be in such amount, not less than $300,000 nor more than $1,500,000, as required by the Director. All documents filed are to be in the English language. If the Director finds that the purposes of the society conform to the requirements of this amendatory Act and all provisions of the law have been complied with, the Director shall approve the articles of incorporation and issue the incorporators a preliminary certificate of authority authorizing the society to solicit members as hereinafter provided;
        (c) No preliminary certificate of authority issued
    
under the provisions of this Section shall be valid after one year from its date of issue or after such further period, not exceeding one year, as may be authorized by the Director, upon cause shown, unless the 500 applicants hereinafter required have been secured and the organization has been completed as herein provided. The articles of incorporation and all other proceedings thereunder shall become null and void in one year from the date of the preliminary certificate of authority or at the expiration of the extended period, unless the society shall have completed its organization and received a certificate of authority to do business as hereinafter provided;
        (d) Upon receipt of a preliminary certificate of
    
authority from the Director, the society may solicit members for the purpose of completing its organization, shall collect from each applicant the amount of not less than one regular monthly premium in accordance with its table of rates and shall issue to each such applicant a receipt for the amount so collected. No society shall incur any liability other than for the return of such advance premium nor issue any certificate nor pay, allow or offer or promise to pay or allow any benefit to any person until:
            (1) Actual bona fide applications for benefits
        
have been secured on not less than 500 applicants and any necessary evidence of insurability has been furnished to and approved by the society;
            (2) At least 10 subordinate lodges have been
        
established into which the 500 applicants have been admitted;
            (3) There has been submitted to the Director,
        
under oath of the president or secretary, or corresponding officer of the society, a list of such applicants, giving their names, addresses, date each was admitted, name and number of the subordinate lodge of which each applicant is a member, amount of benefits to be granted and premiums therefor;
            (4) It shall have been shown to the Director, by
        
sworn statement of the treasurer or corresponding officer of such society, that at least 500 applicants have each paid in cash at least one regular monthly premium as herein provided, which premiums in the aggregate shall amount to at least $150,000. Said advance premiums shall be held in trust during the period of organization, and, if the society has not qualified for a certificate of authority within one year unless extended by the Director, as herein provided, such premiums shall be returned to said applicants; and
            (5) In the case of a domestic society that is
        
organized after January 1, 2015 (the effective date of Public Act 98-814), the society meets the following requirements:
                (i) maintains a minimum surplus of
            
$2,000,000, or such higher amount as the Director may deem necessary; and
                (ii) meets any other requirements as
            
determined by the Director.
        (e) The Director may make such examination and
    
require such further information as the Director deems necessary. Upon presentation of satisfactory evidence that the society has complied with all the provisions of law, the Director shall issue to the society a certificate of authority to that effect and that the society is authorized to transact business pursuant to the provisions of this amendatory Act; and
        (f) Any incorporated society authorized to transact
    
business in this State at the time Public Act 84-303 becomes effective (January 1, 1986) shall not be required to reincorporate.
(Source: P.A. 102-558, eff. 8-20-21.)

    (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 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 5/293.1) (from Ch. 73, par. 905.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 293.1. Institutions. A society may create, maintain and operate, or may establish organizations to operate, not for profit institutions to further the purposes permitted by Section 286.1 of this amendatory Act. Such institutions may furnish services free or at a reasonable charge. Any real or personal property owned, held or leased by the society for this purpose shall be reported in every annual statement. Admitted asset status of such real or personal property shall be in accordance with Section 302.1 of this amendatory Act.
(Source: P.A. 84-303.)

    (215 ILCS 5/294.1) (from Ch. 73, par. 906.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 294.1. Reinsurance.
    (a) A domestic society may enter into reinsurance transactions only in accordance with Article XI of this Code.
    (b) A domestic society may reinsure the risks of another society in connection with a merger transaction with approval by the Director.
(Source: P.A. 98-814, eff. 1-1-15.)

    (215 ILCS 5/295.1) (from Ch. 73, par. 907.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 295.1. Consolidations and mergers. A domestic society may enter into agreements of consolidation or merger only in accordance with Article X of this Code.
(Source: P.A. 84-303.)

    (215 ILCS 5/295.2)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 295.2. Maintenance of solvency.
    (a) In the event a domestic society has an authorized control level event described in Section 35A-25 of this Code under circumstances the Director determines will not be promptly remedied, the Director may, in addition to all other actions required or permitted by subsection (b) of Section 35A-25 of this Code, issue an order declaring the domestic society to be in hazardous condition and ordering that all steps be taken to remedy such condition pursuant to this Section.
    (b) A domestic society may negotiate an agreement to transfer members, certificates, and other assets and liabilities of the society, in whole or in part, to another organization through merger, consolidation, assumption, or other means. Such transfer shall be concluded within the timeframe established by the Director and subject to approval by the Director. Such transfer agreement shall be deemed fully approved by the domestic society upon majority vote of its board of directors. Such transfer shall be effective notwithstanding the provisions of Section 295.1 of this Code or any other law or regulation or laws of the domestic society requiring another form of notice to or approval by members, which shall be superseded by this Section.
    (c) In the event of an agreement to transfer under this Section to an organization without a certificate of authority in this State, the Director may grant a limited certificate of authority to such organization, upon request, if the organization does not apply for and obtain a certificate of authority to transact business in this State. Such limited certificate of authority shall grant the organization authority to service the certificates following the transfer and fulfill all obligations owed to certificate holders but not to otherwise transact insurance business in this State.
    (d) The board of directors of a domestic society may suspend or modify its qualifications for membership as necessary or appropriate to facilitate an agreement to transfer under this Section, notwithstanding the laws of the society, or any other law or regulation to the contrary.
(Source: P.A. 98-814, eff. 1-1-15.)

    (215 ILCS 5/296.1) (from Ch. 73, par. 908.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 296.1. Conversion of fraternal benefit society to mutual life insurance company.
    (a) Any society subject to the provisions of this amendatory Act possessed of admitted assets in excess of all liabilities at least equal to the minimum surplus required of a new mutual legal reserve life company under Section 43 of this Code transacting the same kind or kinds of business may, at its option, without reincorporation, adopt and become subject to the provisions of Article III of this Code, in lieu of this amendatory Act.
    (b) The board of directors of the society shall approve such proposed amendments to the articles of incorporation, the constitution and bylaws of the society as may be necessary or desirable to make the same conform to the articles of incorporation and bylaws of a mutual legal reserve life company, in accordance with the requirements of Article III of this Code.
    (c) The board of directors of the society shall then submit such proposed amendments to the Director together with: (1) a copy of the notice to be given to members and lodges as herein provided; (2) a current financial statement of the society showing assets, liabilities and surplus valued in accordance with the requirements of Article III; and (3) the proposed plan for transition from a fraternal society to a mutual legal reserve company, including, if pertinent, the following: dissolution of the lodge system; disposition of property held for the benefit of lodges; changes in the amount, calculation and collection of future premiums on policies; the method of selection of officers and board of directors or trustees to manage and control the mutual company until the regular annual meeting of its members; and such other changes as may be necessary to an orderly transition. If the Director finds that: (a) the amendments, notice and plan are in accordance with the provisions of this amendatory Act and not inconsistent with the laws and the Constitutions of this State and the United States; (b) the society has a surplus which, when calculated in accordance with the requirements of Article III of this Code, is at least equal to the original surplus required under Article III of a mutual legal reserve life company transacting the same kind or kinds of business; and (c) no reasonable objection exists to such conversion, the Director shall, within a reasonable time, authorize the sending of notices and further proceedings hereunder.
    (d) After the Director has given such authority, the board of directors of the society shall then submit the proposed amendments and plan of transition, as so approved, to the supreme governing body of such society at any regular or special meeting thereof, provided a copy of such amendments and plan have been included in or enclosed with the notice of such meeting, which notice shall be given as provided in the laws of the society for the convening of such supreme governing body in regular or special session as the case may be. At least 90 days prior to the date of such regular or special meeting, as the case may be, a notice describing the purpose of the proposed amendments, and including therein or enclosing therewith a copy of such amendments and plan of transition, all as approved by the Director, shall be mailed to each lodge or local body of the society qualified to choose a delegate or delegates to said meeting and also to each member of the society; for the purpose of this notice the lodges or local bodies and the members and the addresses of same shall be taken as those shown by the records of the society as of a date not earlier than 120 days prior to the date set for such meeting. The affidavit of any officer, clerk or agent of the company, or of anyone authorized to mail such notices, that the notices required by this Section bearing the required postage have been duly addressed and mailed shall, upon final approval by the Director of the proceedings hereunder, constitute conclusive evidence that such notice has been duly given in accordance herewith.
    (e) The affirmative votes of 2/3 of the members of such supreme governing body present at such meeting shall be necessary for the adoption of amendments and the plan of transition under this Section, provided, however, that 2/3 of the elective members present shall vote in favor thereof; the amendments and plan adopted shall be submitted to the Director for his final approval. If the Director shall find that the amendments and plan and the adoption thereof are in accordance with this Section he shall approve the same, and, not less than 30 days nor more than 60 days after such approval, he shall issue a certificate of authority authorizing the company to do business subject to and entitled to the benefits of Article III of this Code. Upon issuance of such certificate, any right in the society to assess its members shall expire and any provision for an assessment contained in the policies issued by the society shall become thenceforth unenforceable, null and void.
(Source: P.A. 84-303.)

    (215 ILCS 5/297.1) (from Ch. 73, par. 909.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 297.1. Benefits.
    (a) A society may provide the following contractual benefits in any form:
        (1) Death benefits;
        (2) Endowment benefits;
        (3) Annuity benefits;
        (4) Temporary or permanent disability benefits;
        (5) Hospital, medical or nursing benefits;
        (6) Monument or tombstone benefits to the memory of
    
deceased members; and
        (7) Such other benefits as authorized for life
    
insurers and which are not inconsistent with this amendatory Act.
    (b) A society shall specify in its rules those persons who may be issued, or covered by, the contractual benefits in subsection (a), consistent with providing benefits to members and their dependents. A society may provide benefits on the lives of children under the minimum age for adult membership upon application of an adult person.
    (c) After the effective date of this amendatory Act of the 98th General Assembly, a society shall provide an applicant for contractual benefits a disclosure statement that reads substantially as follows:
    ". . . . . . .(name of the society) is licensed to do
    
business in the State of Illinois as a fraternal benefit society. As such, it is not included in the Illinois Life and Health Guaranty Association (otherwise known as the Guaranty Association). This means that fraternal benefit societies cannot be assessed for the insolvency of other life insurers or other fraternal benefit societies. By law, a fraternal benefit society is responsible for its own solvency. If there is an impairment of reserves, a certificate holder may be assessed a proportionate share of the impairment. This process is described in the certificate issued by the society.".
    The statement must appear immediately above the applicant's signature on the society's membership application or certificate or policy application, in uppercase and bold type or boxed.
(Source: P.A. 98-814, eff. 1-1-15.)

    (215 ILCS 5/298.1) (from Ch. 73, par. 910.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 298.1. Beneficiaries.
    (a) The owner of a benefit contract shall have the right at all times to change the beneficiary or beneficiaries in accordance with the laws or rules of the society unless the owner waives this right by specifically requesting in writing that the beneficiary designation be irrevocable. A society may, through its laws or rules, limit the scope of beneficiary designations and shall provide that no revocable beneficiary shall have or obtain any vested interest in the proceeds of any certificate until the certificate has become due and payable in conformity with the provisions of the benefit contract.
    (b) A society may make provision for the payment of funeral benefits to the extent of such portion of any payment under a certificate as might reasonably appear to be due to any person equitably entitled thereto by reason of having incurred expense occasioned by the burial of the member, provided the portion so paid shall not exceed the sum of $2000.
    (c) If, at the death of any person insured under a benefit contract, there is no lawful beneficiary to whom the proceeds shall be payable, the amount of such benefit, except to the extent that funeral benefits may be paid as hereinbefore provided, shall be payable to the personal representative of the deceased insured, provided that if the owner of the certificate is other than the insured, such proceeds shall be payable to such owner.
(Source: P.A. 84-303.)

    (215 ILCS 5/299.1a) (from Ch. 73, par. 911.1a)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 299.1a. Benefits not attachable.
    (a) No money or other charity, relief or aid to be paid, provided or rendered by any society shall be liable to attachment, garnishment or other process or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.
    (b) Any benefit association doing business in this State and governed by this Article XVII shall encumber or surrender accounts as defined in Section 10-24 of the Illinois Public Aid Code held by the benefit association owned by any responsible relative who is subject to a child support lien, upon notice of the lien or levy by the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) or its successor agency pursuant to Section 10-25.5 of the Illinois Public Aid Code, or upon notice of interstate lien from any other state's agency responsible for implementing the child support enforcement program set forth in Title IV, Part D of the Social Security Act.
    This Section shall not prohibit the furnishing of information in accordance with the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Any benefit association governed by this Article XVII shall enter into an agreement for data exchanges with the Department of Healthcare and Family Services provided the Department of Healthcare and Family Services pays to the benefit association a reasonable fee not to exceed its actual cost incurred. A benefit association providing information in accordance with this item shall not be liable to any account holder or other person for any disclosure of information to a State agency, for encumbering or surrendering any accounts as defined in Section 10-24 of the Illinois Public Aid Code held by the benefit association in response to a lien or order to withhold and deliver issued by a State agency, or for any other action taken pursuant to this item, including individual or mechanical errors, provided the action does not constitute gross negligence or willful misconduct. A benefit association shall have no obligation to hold, encumber, or surrender accounts until it has been served with a subpoena, summons, warrant, court or administrative order, lien, or levy requiring that action.
(Source: P.A. 95-331, eff. 8-21-07.)

    (215 ILCS 5/299.1b)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 299.1b. Data exchanges; administrative liens.
    (a) Any benefit association doing business in the State and governed by this Code shall enter into an agreement for data exchanges with the Department of Healthcare and Family Services for the purpose of locating accounts as defined in Section 10-24 of the Illinois Public Aid Code of responsible relatives to satisfy past-due child support owed by responsible relatives under an order for support entered by a court or administrative body of this or any other State on behalf of resident or non-resident persons.
    (b) Notwithstanding any provisions in this Code to the contrary, a benefit association shall not be liable to any person:
        (1) for any disclosure of information to the
    
Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) under subsection (a);
        (2) for encumbering or surrendering any accounts as
    
defined in Section 10-24 of the Illinois Public Aid Code held by such benefit association in response to a notice of lien or levy issued by the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid), or by any other state's child support enforcement agency, as provided for in Section 299.1a of this Code; or
        (3) for any other action taken in good faith to
    
comply with the requirements of subsection (a).
(Source: P.A. 95-331, eff. 8-21-07.)

    (215 ILCS 5/300.1) (from Ch. 73, par. 912.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 300.1. The benefit contract.
    (a) Every society authorized to do business in this State shall issue to each owner of a benefit contract a certificate specifying the amount of benefits provided thereby. The certificate, together with any riders or endorsements attached thereto, the laws of the society, the application for membership, the application for insurance and declaration of insurability, if any, signed by the applicant and all amendments to each thereof shall constitute the benefit contract, as of the date of issuance, between the society and the owner, and the certificate shall so state. A copy of the application for insurance and declaration of insurability, if any, shall be endorsed upon or attached to the certificate. All statements on the application shall be representations and not warranties. Any waiver of this provision shall be void.
    (b) Any changes, additions or amendments to the laws of the society duly made or enacted subsequent to the issuance of the certificate shall bind the owner and the beneficiaries and shall govern and control the benefit contract in all respects the same as though such changes, additions or amendments had been made prior to and were in force at the time of the application for insurance, except that no change, addition or amendment shall destroy or diminish benefits which the society contracted to give the owner as of the date of issuance.
    (c) Any person upon whose life a benefit contract is issued prior to attaining the age of majority shall be bound by the terms of the application and certificate and by all the laws and rules of the society to the same extent as though the age of majority had been attained at the time of application.
    (d) A society shall provide in its laws and its certificates that, if its reserves as to all or any class of certificates become impaired, its board of directors or corresponding body may require that there shall be paid by the owner to the society an assessment in the amount of the owner's equitable proportion of such deficiency as ascertained by its board, and that, if the payment is not made, either (1) it shall stand as an indebtedness against the certificate and draw interest not to exceed the rate specified for certificate loans under the certificates; or (2) in lieu of or in combination with (1), the owner may accept a proportionate reduction in benefits under the certificate. However, in no event may an assessment obligation be forgiven, credited, or repaid by whatever means or however labeled by the society in lieu of collection or reduction in benefits, unless provided to all society members and approved in writing by the Director, except that the forgiveness or repayment of any assessments issued by a society that remain outstanding as of January 1, 2015 (the effective date of Public Act 98-814) may be forgiven or repaid by any manner or plan certified by an independent actuary and filed with the Director to make reasonable and adequate provision for the forgiveness or repayment of the assessment to all society members. Notwithstanding the foregoing, a society may fully repay, credit, or forgive an assessment from the date of death of any life insured under a certificate so long as the plan to forgive or repay the assessment is certified by an independent actuary and filed with the Director to make reasonable and adequate provision for the forgiveness or repayment of the assessment to all assessed society members as a result of the death. The society may specify the manner of the election and which alternative is to be presumed if no election is made. No such assessment shall take effect unless a 30-day notification has been provided to the Director, who shall have the ability to disapprove the assessment only if the Director finds that such assessment is not in the best interests of the benefit members of the domestic society. Disapproval by the Director shall be made within 30 days after receipt of notice and shall be in writing and mailed to the domestic society. If the Director disapproves the assessment, the reasons therefor shall be stated in the written notice.
    (e) Copies of any of the documents mentioned in this Section, certified by the secretary or corresponding officer of the society, shall be received in evidence of the terms and conditions thereof.
    (f) No certificate shall be delivered or issued for delivery in this State unless a copy of the form has been filed with the Director in the manner provided for like policies issued by life insurers in this State. Every life, accident, health or disability insurance certificate and every annuity certificate issued on or after one year from January 1, 1986 (the effective date of Public Act 84-303) shall meet the standard contract provision requirements not inconsistent with Public Act 84-303 for like policies issued by life insurers in this State except that a society may provide for a grace period for payment of premiums of one full month in its certificates. The certificate shall also contain a provision stating the amount of premiums which are payable under the certificate and a provision reciting or setting forth the substance of any sections of the society's laws or rules in force at the time of issuance of the certificate which, if violated, will result in the termination or reduction of benefits payable under the certificate. If the laws of the society provide for expulsion or suspension of a member, the certificate shall also contain a provision that any member so expelled or suspended, except for nonpayment of a premium or within the contestable period for material misrepresentation in the application for membership or insurance, shall have the privilege of maintaining the certificate in force by continuing payment of the required premium.
    (g) Benefit contracts issued on the lives of persons below the society's minimum age for adult membership may provide for transfer of control or ownership to the insured at an age specified in the certificate. A society may require approval of an application for membership in order to effect this transfer and may provide in all other respect for the regulation, government and control of such certificates and all rights, obligations and liabilities incident thereto and connected therewith. Ownership rights prior to such transfer shall be specified in the certificate.
    (h) A society may specify the terms and conditions on which benefit contracts may be assigned.
(Source: P.A. 101-81, eff. 7-12-19.)

    (215 ILCS 5/301.1) (from Ch. 73, par. 913.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 301.1. Nonforfeiture benefits, cash surrender values, certificate loans and other options.
    (a) For certificates issued prior to one year after the effective date of this amendatory Act, the value of every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall comply with the provisions of law applicable immediately prior to the effective date of this amendatory Act.
    (b) For certificates issued on or after one year from the effective date of this amendatory Act for which reserves are computed on the Commissioner's 1941 Standard Ordinary Mortality Table, the Commissioner's 1941 Standard Industrial Table, the Commissioner's 1958 Standard Ordinary Mortality Table, the Commissioner's 1980 Standard Mortality Table or any more recent table made applicable to life insurers, every paid-up nonforfeiture benefit and the amount of any cash surrender value, loan or other option granted shall not be less than the corresponding amount ascertained in accordance with the laws of this State applicable to life insurers issuing policies containing like benefits based upon such tables.
(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 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 5/303.1) (from Ch. 73, par. 915.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 303.1. Funds.
    (a) All assets shall be held, invested and disbursed for the use and benefit of the society, and no member or beneficiary shall have or acquire individual rights therein or become entitled to any apportionment on the surrender of any part thereof except as provided in the benefit contract.
    (b) A society may create, maintain, invest, disburse and apply any special fund or funds necessary to carry out any purpose permitted by the laws of such society.
    (c) A society may, pursuant to resolution of its supreme governing body, establish and operate one or more separate accounts and issue contracts on a variable basis, subject to the provisions of Article XIV 1/2 of this Code. To the extent the society deems it necessary in order to comply with any applicable federal or State law, or any rules issued thereunder, the society may adopt special procedures for the conduct of the business and affairs of a separate account; may, for persons having beneficial interests therein, provide special voting and other rights, including without limitation special rights and procedures relating to investment policy, investment advisory services, selection of certified public accountants and selection of a committee to manage the business and affairs of the account; and may issue contracts on a variable basis to which subsection 300.1(b) and 300.1(d) of this amendatory Act shall not apply.
(Source: P.A. 84-303.)

    (215 ILCS 5/304.2) (from Ch. 73, par. 916.2)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 304.2. Taxation. Every society organized or licensed under this amendatory Act is hereby declared to be a charitable and benevolent institution, and all of its funds shall be exempt from all and every State, county, district, municipal and school tax other than taxes on real estate and office equipment.
(Source: P.A. 84-303.)

    (215 ILCS 5/305.1) (from Ch. 73, par. 917.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 305.1. Valuation.
    (a) Standards of valuation for certificates issued prior to one year after the effective date of this amendatory Act shall be those provided by the laws applicable immediately prior to the effective date of this amendatory Act.
    (b) The minimum standards of valuation for certificates issued on or after one year from the effective date of this amendatory Act shall be based on the following tables:
        (1) For certificates of life insurance - the
    
Commissioner's 1941 Standard Ordinary Mortality Table, the Commissioner's 1941 Standard Industrial Mortality Table, the Commissioner's 1958 Standard Ordinary Mortality Table, the Commissioner's 1980 Standard Ordinary Mortality Table or any more recent table made applicable to life insurers; and
        (2) For annuity and pure endowment certificates, for
    
total and permanent disability benefits, for accidental death benefits and for non-cancellable accident and health benefits - such tables as are authorized for use by life insurers in this State.
    All of the above shall be under valuation methods and standards including, but not limited to, interest assumptions in accordance with the laws of this State applicable to life insurers issuing policies containing like benefits.
    (c) The Director may, in his or her discretion, accept other standards for valuation if the Director finds that the reserves produced thereby will not be less in the aggregate than reserves computed in accordance with the minimum valuation standard herein prescribed. The Director may, in his or her discretion, vary the standards of mortality applicable to all benefit contracts on substandard lives or other extra-hazardous lives by any society authorized to do business in this State.
    (d) Any society, with the consent of the Commissioner of Insurance of the state of domicile of the society and under such conditions, if any, which the Commissioner may impose, may establish and maintain reserves on its certificates in excess of the reserves required thereunder, but the contractual rights of any benefit member shall not be affected thereby.
(Source: P.A. 84-303.)

    (215 ILCS 5/306.1) (from Ch. 73, par. 918.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 306.1. Reports. Every society transacting business in this State shall annually, on or before the first day of March, unless for cause shown such time has been extended by the Director, file with the Director a true statement of its financial condition, transactions and affairs for the preceding calendar year in accordance with Section 136 of this Code. The statement shall be in general form and context as approved by the National Association of Insurance Commissioners for fraternal benefit societies and as supplemented by additional information required by the Director.
(Source: P.A. 84-303.)

    (215 ILCS 5/307.1) (from Ch. 73, par. 919.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 307.1. Annual license. Societies which were authorized to transact business in this State prior to the effective date of this amendatory Act may continue such business until the first day of July next succeeding the effective date of this amendatory Act. The authority of such societies and all societies hereafter issued certificates of authority may thereafter be renewed annually, but in all cases to terminate on the first day of the succeeding July. A certified copy or duplicate of such certificate of authority shall be prima facie evidence that the licensee is a fraternal benefit society within the meaning of this amendatory Act.
(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 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 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 alien society - admission. No foreign or 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 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 5/311.1) (from Ch. 73, par. 923.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 311.1. Injunction proceedings.
    (a) Upon the refusal or neglect of any society to make the annual report, as provided in this amendatory Act, or in case any such society shall exceed its powers or shall conduct its business fraudulently or is not carrying out its contracts in good faith or shall be 30 days in arrears in the payment of death or disability claims, endowments or annuities after the same have been allowed by the board of directors or other person or persons whose duty it is to pass upon such claims and after establishment of the interest and competency of the payee to receive, receipt and acquit for payment, provided that such claim shall be approved or disapproved within 60 days after receipt of due proof of loss or death or, after one year's existence, shall have a membership of less than 500 or shall determine to discontinue business or shall fail to comply with any of the provisions of this amendatory Act, the Director shall immediately commence, or cause to be commenced, an action against such society under Article XIII of this Code and to enjoin the same from carrying on any business, and an injunction may be granted, upon proper showing by the Director, in any circuit court in this State; provided, however, that no injunction against any society within this State or application for or appointment of a receiver or action to prevent any society from carrying on business in this State shall be made or granted by any court except on the application of the Director and after written notice duly made and served upon the chief executive officer of such society within this State, or, if incorporated under the laws of another state, then such notice may be served by sending the same to the president or secretary of the society by registered mail at the home office of the society, and a full hearing before such court, whether the party seeking such relief be the State, member of such society or any other person whatsoever.
    (b) If the court shall find that such society so enjoined was in default as charged and the violation complained of shall have been corrected and the injunction dissolved, the society may continue in business provided it shall have satisfied the Director that it has paid the costs of the action. Any officer, agent or person acting for any society or subordinate body thereof within this State and who shall transact any business for such society contrary to the provisions of such injunction or prohibition while such society shall be so enjoined or prohibited from doing business pursuant to this amendatory Act shall be deemed guilty of a Class A misdemeanor.
(Source: P.A. 84-303.)

    (215 ILCS 5/312.1) (from Ch. 73, par. 924.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 312.1. Salaries. No domestic society shall pay any salary, compensation or emolument to any officer, trustee or director thereof, nor any salary, compensation or emolument amounting in any year to more than $40,000 to any person, firm or corporation, unless such payment be first authorized by the supreme governing body or the board of directors or corresponding body. No such society shall make any agreement with any of its officers, trustees or directors or salaried employees whereby it agrees that for any service rendered or to be rendered he shall receive any salary, compensation or emolument that will extend beyond a period of 4 years from the date of such agreement, provided that payment of an amount not in excess of 20% of the salary of any of its officers, directors or salaried employees may by written agreement be deferred beyond such period of 4 years, which agreement may include conditions to be met by such officers, directors or salaried employees before payment will be made, and provided further that a domestic society may enter into contracts with its producer for the payment of renewal commissions. No such society shall enter into a special contract which will compensate any officer, trustee or director based on a percentage of premiums collected by the society or on a percentage of the entire insurance business of the society. No such society shall grant any pension to any officer, trustee or director thereof or to any member of his family after his death except that it may provide a pension pursuant to the terms of a uniform retirement plan adopted by the board of directors.
(Source: P.A. 84-303.)

    (215 ILCS 5/313.1) (from Ch. 73, par. 925.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 313.1. Licensing of producers.
    (a) Except as otherwise provided in this Section, producers of societies shall be subject to the provisions of Article XXXI of this Code.
    (b) No examination or license shall be required of any regular salaried officer, employee or member of a licensed society who devotes substantially all of his or her services to activities other than the solicitation of fraternal benefit contracts from the public and who receives for the solicitation of such contracts no commission or other compensation directly dependent upon the amount of business obtained.
    (c) Any producer, representative or member of a society who devotes or intends to devote less than 50% of such person's time to the solicitation and procurement of benefit contracts for such society shall be exempt from the requirements of subsection (a). Any person who in the preceding calendar year has solicited and procured life insurance contracts on behalf of any society in an amount of insurance in excess of $100,000 or, in the case of any other kind or kinds of insurance which the society might write, on the persons of more than 25 individuals and who has received or will receive a commission or other compensation therefor shall be presumed to be devoting, or intending to devote, 50% of time to the solicitation or procurement of benefit contracts for such society.
(Source: P.A. 84- 303.)

    (215 ILCS 5/314.1) (from Ch. 73, par. 926.1)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 314.1. Unfair methods of competition and unfair and deceptive acts and practices. Every society authorized to do business in this State shall be subject to the provisions of Article XXVI of this Code, provided, however, that nothing in such provisions shall be construed as applying to or affecting the right of any society to determine its eligibility requirements for membership or be construed as applying to or affecting the offering of benefits exclusively to members or persons eligible for membership in the society by a subsidiary corporation or affiliated organization of the society.
(Source: P.A. 84-303.)

    (215 ILCS 5/315.2) (from Ch. 73, par. 927.2)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 315.2. Service of process.
    (a) Every society authorized to do business in this State shall appoint in writing the Director and each successor in office to be its true and lawful attorney upon whom all lawful process in any action or proceeding against it shall be served and shall agree in such writing that any lawful process against it which is served on said attorney shall be of the same legal force and validity as if served upon the society and that the authority shall continue in force so long as any liability remains outstanding in this State. Copies of such appointment, certified by said Director, shall be deemed sufficient evidence thereof and shall be admitted in evidence with the same force and effect as the original thereof might be admitted.
    (b) Service shall be made 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 shall constitute sufficient service upon the society. When legal process against a society is served upon the Director, the Director shall forthwith forward one of the duplicate copies, by certified or registered mail prepaid, to the society. No such service shall require a society to file its answer, pleading or defense in less than 30 days from the date of mailing the copy of the service to a society unless otherwise ordered by the court. Legal process shall not be served upon a society except in the manner herein provided.
(Source: P.A. 84-303.)

    (215 ILCS 5/315.3) (from Ch. 73, par. 927.3)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 315.3. Review. The provisions of the Administrative Review Law, and all amendments and modifications thereof, and the rules adopted pursuant thereto shall apply to and govern all proceedings for the judicial review of final administrative decisions of the Department.
(Source: P.A. 84-303.)

    (215 ILCS 5/315.4) (from Ch. 73, par. 927.4)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 315.4. Penalties.
    (a) Any person who willfully makes a false or fraudulent statement in or relating to an application for membership or for the purpose of obtaining money from, or a benefit in, any society shall upon conviction be fined not less than $200 nor more than $10,000 or be subject to imprisonment in the county jail not less than 30 days nor more than one year, or both.
    (b) Any person who willfully makes a false or fraudulent statement in any verified report or declaration under oath required or authorized by this amendatory Act, or of any material fact or thing contained in a sworn statement concerning the death or disability of an insured for the purpose of procuring payment of a benefit named in the certificate, shall be guilty of perjury and shall be subject to the penalties therefor prescribed by law.
    (c) Any person who solicits membership for, or in any manner assists in procuring membership in, any society not licensed to do business in this State shall upon conviction be fined not less than $100 nor more than $400.
    (d) Any person guilty of a willful violation of, or neglect or refusal to comply with, the provisions of this amendatory Act for which a penalty is not otherwise prescribed shall upon conviction be subject to a fine not exceeding $10,000.
(Source: P.A. 93-32, eff. 7-1-03.)

    (215 ILCS 5/315.5) (from Ch. 73, par. 927.5)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 315.5. Exemption of certain societies.
    (a) Nothing contained in this amendatory Act shall be so construed as to affect or apply to:
        (1) grand or subordinate lodges of societies, orders
    
or associations now doing business in this State which provide benefits exclusively through local or subordinate lodges;
        (2) orders, societies or associations which admit to
    
membership only persons engaged in one or more crafts or hazardous occupations, in the same or similar lines of business, insuring only their own members and their families, and the ladies' societies or ladies' auxiliaries to such orders, societies or associations;
        (3) domestic societies which limit their membership
    
to employees of a particular city or town, designated firm, business house or corporation which provide for a death benefit of not more than $700 or disability benefits of not more than $650 to any person in any one year, or both; or
        (4) domestic societies or associations of a purely
    
religious, charitable or benevolent description which provide for a death benefit of not more than $400 or for disability benefits of not more than $350 to any one person in any one year, or both.
    (b) Any such society or association described in subsections (a)(3) or (a)(4) supra which provides for death or disability benefits for which benefit certificates are issued and any such society or association included in subsection (a)(4) which has more than 1000 members shall not be exempted from the provisions of this amendatory Act but shall comply with all requirements thereof.
    (c) No society which, by the provisions of this Section, is exempt from the requirements of this amendatory Act, except any society described in subsection (a)(2) supra, shall give or allow, or promise to give or allow, to any person any compensation for procuring new members.
    (d) Every society which provides for benefits in case of death or disability resulting solely from accident and which does not obligate itself to pay natural death or sick benefits shall have all of the privileges and be subject to all the applicable provisions and regulations of this amendatory Act except that the provisions thereof relating to medical examination, valuations of benefit certificates and incontestability shall not apply to such society.
    (e) The Director may require from any society or association, by examination or otherwise, such information as will enable the Director to determine whether such society or association is exempt from the provisions of this amendatory Act.
    (f) Societies exempted under the provisions of this Section shall also be exempt from all other provisions of the insurance laws of this State.
(Source: P.A. 86-187.)

    (215 ILCS 5/315.6) (from Ch. 73, par. 927.6)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 315.6. Application of other Code provisions. Unless otherwise provided in this amendatory Act, every fraternal benefit society shall be governed by this amendatory Act and shall be exempt from all other provisions of the insurance laws of this State not only in governmental relations with the State but for every other purpose, except for those provisions specified in this amendatory Act and except as follows:
        (a) Sections 1, 2, 2.1, 3.1, 117, 118, 132, 132.1,
    
132.2, 132.3, 132.4, 132.5, 132.6, 132.7, 133, 134, 136, 138, 139, 140, 141, 141.01, 141.1, 141.2, 141.3, 143, 143.31, 143c, 144.1, 147, 148, 149, 150, 151, 152, 153, 154.5, 154.6, 154.7, 154.8, 155, 155.04, 155.05, 155.06, 155.07, 155.08 and 408 of this Code; and
        (b) Articles VIII 1/2, XII, XII 1/2, XIII, XXIV, and
    
XXVIII of this Code.
(Source: P.A. 103-656, eff. 1-1-25.)

    (215 ILCS 5/315.7) (from Ch. 73, par. 927.7)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 315.7. Severability. If any provision of this amendatory Act or the application of such provision to any circumstance is held invalid, the remainder of the amendatory Act or the application of the provision to other circumstances shall not be affected thereby.
(Source: P.A. 84-303.)

    (215 ILCS 5/315.9)
    (Section scheduled to be repealed on January 1, 2027)
    Sec. 315.9. Voluntary dissolution. Upon application to the Director, a domestic society may request that it be dissolved and that its existence be terminated. The application shall demonstrate that the applicant has satisfied its members' certificate obligations or that it has transferred such obligations to another organization, domestic or foreign, by means of assumption or bulk reinsurance or otherwise, and that the domestic society's supreme governing body has approved the termination and dissolution. The application shall contain any other information required by the Director. Any limitation related to reinsurance by a domestic society shall not apply to reinsurance entered into in conjunction with the transfer of members' certificate obligations as a part of a voluntary dissolution. Upon approval of the application by the Director, the domestic society shall be deemed dissolved and its existence terminated as of the date set forth in the application.
(Source: P.A. 98-814, eff. 1-1-15.)


 
    (215 ILCS 5/Art. XVIII heading)
ARTICLE XVIII. MUTUAL BENEFIT ASSOCIATIONS
(Repealed by P.A. 98-969, eff. 1-1-15)


 
    (215 ILCS 5/Art. XIX heading)
ARTICLE XIX. BURIAL SOCIETIES

    (215 ILCS 5/338) (from Ch. 73, par. 950)
    Sec. 338. Scope of Article.
    (1) This Article shall apply to:
        (a) all societies organized or operating, prior to
    
the effective date of this Code, under an Act entitled "An Act relating to burial insurance societies", approved June 10, 1911;
        (b) any person, firm, corporation, society, or
    
association of individuals engaged in the business of providing a burial benefit or award for the payment, in whole or in part, of funeral, burial or other expenses relating to deceased members, certificate holders or subscribers, by the levying of assessments, or by the charging of a fee or premium.
    (2) Each person, firm, corporation, society or association mentioned in subsection (1) is referred to in this Article as a "burial society" and subscribers to and certificate holders of such a society are referred to in this Article as "members."
(Source: P.A. 91-357, eff. 7-29-99.)

    (215 ILCS 5/339) (from Ch. 73, par. 951)
    Sec. 339. Present authorized burial societies may transact business.
    Every society organized prior to the effective date of this amendatory Act of 1959 and which society on that date was transacting business under a certificate of authority issued by the Director may continue to transact such business subject to the provisions of this article, but except as provided in Section 336a no person, firm, corporation, society or association shall enter business as a burial society after the effective date of this amendatory Act of 1959.
(Source: Laws 1959, p. 1150.)

    (215 ILCS 5/340) (from Ch. 73, par. 952)
    Sec. 340. Article of Incorporation. The articles of incorporation of a burial society shall state:
    (a) The corporate name which shall not resemble the name of any existing society or corporation organized under the laws of this State or authorized to transact business therein as to mislead the public or cause confusion, the purpose for which it is formed and the place in this State where its principal office is located;
    (b) The mode and manner in which the corporate powers of the society shall be exercised; the manner of electing directors; the number of directors which shall not be less than 3 nor more than 7; terms of office of directors which shall be not more than 4 years; the manner of electing officers and filling vacancies and such other particulars as may be necessary to explain and manifest the object and purpose of the society and the manner in which it is to be conducted.
    A copy of the by-laws and forms of applications for members and a copy of all forms of policies or certificates, literature and advertisements shall be filed with the Director.
    The Director shall examine the articles of incorporation and other papers so filed with him and if he finds no objection thereto he shall submit the articles of incorporation to the Attorney General for examination and if found by the Attorney General to be in accordance with the provisions of this Code and not inconsistent with the laws and constitution of this State and of the United States, he shall certify to the same and deliver it back to the Director who shall cause the articles to be recorded in his records and issue to the incorporators a certified copy thereof, and thereupon such incorporators and their associates shall become and be a body corporate with the power to sue and be sued, contract and be contracted with, adopt by-laws not in conflict with the provisions of this Code, adopt a seal and do such other acts, subject to the provisions and restrictions of this Code, as shall be needful to accomplish the purposes of its organization. The management of the affairs of the society shall at all times be vested in the board of directors.
(Source: P.A. 82-498.)

    (215 ILCS 5/341) (from Ch. 73, par. 953)
    Sec. 341. Deposit required.
    (1) A burial society shall maintain with the Director a deposit of cash or securities in an amount of at least $1,000. A society having a membership of more than 2,500 members and less than 5,000 members shall maintain a deposit with the Director of $5,000. A society having a membership of more than 5,000 members and less than 10,000 members shall maintain a deposit with the Director of $10,000. A society having more than 10,000 members shall maintain a deposit with the Director of $10,000 and an additional $1,000 for each 1,000 members in excess of 10,000.
    (2) All deposits as required herein shall be in cash or in securities permitted by section 346.
    (3) The Director may release the required deposit of cash or securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the burial society that it has no outstanding creditors, policyholders, certificate holders, or member obligations in effect and no plans to engage in the business of insurance; (ii) receipt of a lawful resolution of the burial society's board of directors effecting the surrender of its articles of incorporation for administrative dissolution by the Director; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the burial society, together with a plan of dissolution approved by the Director.
(Source: P.A. 92-75, eff. 7-12-01.)

    (215 ILCS 5/342) (from Ch. 73, par. 954)
    Sec. 342. Officers bond.
    The officer or officers of the society entrusted with the custody of its funds shall give bond to the association in double the amount of the minimum deposit required by this article, but in no event less than Two Thousand ($2,000) Dollars or more than Five Thousand ($5,000) Dollars, conditioned upon the faithful performance of his or their duties and accounting for the funds entrusted to his or their custody.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/343) (from Ch. 73, par. 955)
    Sec. 343. Certificate form.
    (1) Every burial society shall issue a certificate of membership to each member, agreeing to pay upon death a specified sum of money not to exceed $1,000, which specified amount shall not be diminished during the existence of the contract. The form of certificate shall be submitted to the Director for his or her approval before the same shall be issued. Each certificate issued after the effective date of this Code, shall contain the following provisions, and shall be printed in clear readable type of uniform size except that the words in capital letters in the following form may be in larger type:
............, Illinois.
Certificate Number
..................
..............................
(A Burial Insurance Society)
    Incorporated under the Illinois Insurance Code.
    HEREBY INSURES the life of ...., hereinafter called the Member.
    The society hereby agrees to pay to .... Beneficiary, the sum of $...., upon receipt of due proof of the death of the member, such payment to be paid only in lawful money of the United States.
    This certificate is issued in consideration of the application and the payment in advance of a first .... premium of .... which maintains this certificate in force for a period ending .... following its date of issue, and the payment of a like sum on the .... day of each .... thereafter during the lifetime of the member.
    CHANGE OF BENEFICIARY. The member may change the beneficiary at any time by giving notice at the principal office of the society.
    INCONTESTABLE CLAUSE. This certificate shall be incontestable after it has been in force during the life-time of the member for 2 years except for non-payment of premiums provided herein.
    GRACE PERIOD. A grace period of 30 days shall be allowed for the payment of any premium after the first, during which time this certificate shall be continued in full force. Should the member die during such grace period, the unpaid premium may be deducted from the amount otherwise payable. This certificate shall be regarded and accepted by the society and the member as cancelled and terminated upon failure to pay any premium before the expiration of the grace period.
    REINSTATEMENT. This certificate, after default in payment of any premium, may be reinstated at the discretion of the Board of Directors upon the member furnishing to the society satisfactory evidence of good health and paying the delinquent premiums.
    CONTRACT. This certificate and the application therefor, a copy of which is attached hereto, shall constitute the entire contract with the member.
    MISSTATEMENT OF AGE. If the age of the member has been misstated, the amount payable under the certificate shall be such as the member would have been entitled to at the true age.
    IN WITNESS WHEREOF, the society has caused this certificate to be signed by its duly authorized officers, on (insert date), which shall be the effective date of this certificate.
.................
(Secretary)
.................
(President)
    (2) If the society is operating on an assessment plan, it may substitute in lieu of the word premium the word assessment in each case and may substitute in lieu of the consideration clause contained in the form the following:
    This certificate is issued in consideration of the application and the payment in advance of the first .... assessment and the further payment of such assessments as may be levied from time to time during the lifetime of the member.
(Source: P.A. 91-357, eff. 7-29-99.)

    (215 ILCS 5/344) (from Ch. 73, par. 956)
    Sec. 344. Burial benefit payable in lawful money.
    No society operating under or by virtue of this article shall pay a burial benefit or award other than in lawful money of the United States and any provision in any contract to the contrary shall be of no effect, nor shall any member of any society or representative or beneficiary of such member be required as a condition of his becoming a member, or otherwise, to purchase funeral supplies or burial services from any specified or designated person, firm or corporation so as to deprive the representative, beneficiary or family of any such member from procuring or purchasing said supplies and services in the open market.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/345) (from Ch. 73, par. 957)
    Sec. 345. Society and directors or officers may not advertise funeral supplies.
    No burial society nor any officer, director or agent of any burial society shall offer or make any oral or written agreement to furnish, or shall distribute or cause to be distributed any literature or advertising of any kind whatsoever which offers or purports to offer, funeral supplies of any kind in lieu of the cash payment upon the death of a member. Upon any violation of this section by any society, or officer, director or agent thereof, the Director shall proceed to liquidate such society in accordance with the provisions of Article XIII.
(Source: Laws 1937, p. 689.)

    (215 ILCS 5/346) (from Ch. 73, par. 958)
    Sec. 346. Benefit account and expense account. (1) All burial societies shall charge a premium or levy an assessment to be paid by the members. Unless the society maintains reserves meeting the standards of Article XIV on its benefit certificates, the society shall not use more than sixty-five per centum of such premium or assessment for the purpose of paying commissions, salaries and other expenses of operation, and the surplus and legal reserves shall constitute the benefit account of the society and shall be retained in cash or be invested in accordance with Article VIII.
    (2) No society shall invest in or loan upon any bond or note secured by mortgage or trust deed on real estate if an officer or director of such society has any financial interest in the real estate upon which the loan is made.
(Source: P.A. 86-753.)

    (215 ILCS 5/347) (from Ch. 73, par. 959)
    Sec. 347. Failure to maintain deposit-Payment of claims.
    All claims filed with a society shall be approved or disapproved within sixty days after receipt of due proof of death and, if approved, shall be paid within thirty days after such approval. The Director shall proceed under Article XIII to liquidate any society which shall fail to maintain the deposit required by this article, or shall conduct its business fraudulently, or is not carrying out its contracts in good faith, or shall be thirty days or more in arrears in payment of death claims after the same have been allowed by the board of directors, or has violated any of the provisions of this article.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/348) (from Ch. 73, par. 960)
    Sec. 348. Amendment of articles.
    The articles of incorporation of any society, subject to the provisions of this article, may be amended by proper resolutions adopted by the Board of Directors.
(Source: Laws 1937, p. 696.)

    (215 ILCS 5/349) (from Ch. 73, par. 961)
    Sec. 349. Penalties.
    Any society or any officer or agent of any society who violates any of the provisions of this article shall be guilty of a petty offense.
(Source: P.A. 77-2699.)

    (215 ILCS 5/351) (from Ch. 73, par. 963)
    Sec. 351. Application of article and other code provisions. (1) This article shall not apply to fraternal or fraternal benefit societies, assessment life and accident associations existing or operating under or by virtue of any statute of this State, societies that pay sick or disability benefits and limit their membership to a particular class of persons or to the employees of a designated person, firm or corporation nor shall this article apply to any burial insurance society composed exclusively of the employees of any department of any municipal, county, state or national government.
    (2) Unless otherwise provided in this article every burial society shall be subject to other applicable provisions of this Code. Unless specifically exempted by the Director of Insurance every society not operating on the true assessment plan shall adopt a standard of valuation approved by the Director.
(Source: P.A. 80-624.)


 
    (215 ILCS 5/Art. XIXA heading)
ARTICLE XIXA.
LONG-TERM CARE INSURANCE

    (215 ILCS 5/351A-1) (from Ch. 73, par. 963A-1)
    Sec. 351A-1. Definitions. Unless the context requires otherwise, in this Article:
    (a) "Long-term care insurance" means any accident and health insurance policy or rider advertised, marketed, offered or designed to provide coverage for not less than 12 consecutive months for each covered person on an expense incurred, indemnity, prepaid or other basis, for one or more necessary or medically necessary diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services, provided in a setting other than an acute care unit of a hospital. Such term includes group and individual annuities and life insurance policies or riders which provide directly or which supplement long-term care insurance. The term also includes a policy or rider that provides for payment of benefits based upon cognitive impairment or the loss of functional capacity. The term shall also include qualified long-term care insurance contracts. Long-term care insurance may be issued by insurers, fraternal benefit societies, nonprofit health, hospital, and medical service corporations, prepaid health plans, health maintenance organizations or any similar organization to the extent they are otherwise authorized to issue life or health insurance. Long-term care insurance shall not include any insurance policy which is offered primarily to provide basic Medicare supplement coverage, basic hospital expense coverage, basic medical-surgical expense coverage, hospital confinement indemnity coverage, major medical expense coverage, disability income protection coverage, accident only coverage, specified disease or specified accident coverage, or limited benefit health coverage. Long-term care insurance may include benefits for care and treatment in accordance with the tenets and practices of any established church or religious denomination which teaches reliance on spiritual treatment through prayer for healing.
    (b) "Applicant" means:
        (1) In the case of an individual long-term care
    
insurance policy, the person who seeks to contract for benefits.
        (2) In the case of a group long-term care insurance
    
policy, the proposed certificate holder.
    (c) "Certificate" means, for the purposes of this Article, any certificate issued under a group long-term care insurance policy, which policy has been delivered or issued for delivery in this State.
    (d) "Director" means the Director of Insurance of this State.
    (e) "Group long-term care insurance" means a long-term care insurance policy which is delivered or issued for delivery in this State and issued to one of the following:
        (1) One or more employers or labor organizations, or
    
to a trust or to the trustee or trustees of a fund established by one or more employers or labor organizations, or a combination thereof, for employees or former employees, or a combination thereof, or for members or former members, or a combination thereof, of the labor organizations.
        (2) Any professional, trade or occupational
    
association for its members or former or retired members, or combination thereof, if such association:
            (A) is composed of individuals all of whom are or
        
were actively engaged in the same profession, trade or occupation; and
            (B) has been maintained in good faith for
        
purposes other than obtaining insurance.
        (3) An association or a trust or the trustee or
    
trustees of a fund established, created or maintained for the benefit of members of one or more associations. Prior to advertising, marketing or offering such policy within this State, the association or associations, or the insurer of the association or associations, shall file evidence with the Director that the association or associations have at the outset a minimum of 100 members and have been organized and maintained in good faith for purposes other than that of obtaining insurance, have been in active existence for at least one year, and have a constitution and by-laws which provide that:
            (A) the association or associations hold regular
        
meetings not less than annually to further the purposes of the members;
            (B) except for credit unions, the association or
        
associations collect dues or solicit contributions from members; and
            (C) the members have voting privileges and
        
representation on the governing board and committees.
        Thirty days after such filing the association or
    
associations will be deemed to satisfy such organizational requirements, unless the Director makes a finding that the association or associations do not satisfy those organizational requirements.
        (4) A group other than as described in paragraph (1),
    
(2) or (3) of this subsection (e), subject to a finding by the Director that:
            (A) the issuance of the group policy is not
        
contrary to the best interest of the public;
            (B) the issuance of the group policy would result
        
in economies of acquisition or administration; and
            (C) the benefits are reasonable in relation to
        
the premiums charged.
    (f) "Policy" means, for the purposes of this Article, any policy, contract, subscriber agreement, rider or endorsement delivered or issued for delivery in this State by an insurer, fraternal benefit society, nonprofit health, hospital, or medical service corporation, prepaid health plan, health maintenance organization or any similar organization.
    (g) "Qualified long-term care insurance contract" or "federally tax-qualified long-term care insurance contract" means an individual or group insurance contract that meets the requirements of Section 7702B(b) of the Internal Revenue Code of 1986, as amended, as follows:
        (1) The only insurance protection provided under the
    
contract is coverage of qualified long-term care services. A contract shall not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.
        (2) The contract does not pay or reimburse expenses
    
incurred for services or items to the extent that the expenses are reimbursable under Title XVIII of the Social Security Act, as amended, or would be so reimbursable but for the application of a deductible or coinsurance amount. The requirements of this subparagraph do not apply to expenses that are reimbursable under Title XVIII of the Social Security Act only as a secondary payor. A contract shall not fail to satisfy the requirements of this subparagraph by reason of payments being made on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate.
        (3) The contract is guaranteed renewable within the
    
meaning of Section 7702(B)(b)(1)(C) of the Internal Revenue Code of 1986, as amended.
        (4) The contract does not provide for a cash
    
surrender value or other money that can be paid, assigned, pledged as collateral for a loan, or borrowed except as provided in subparagraph (5).
        (5) All refunds of premiums and all policyholder
    
dividends or similar amounts under the contract are to be applied as a reduction in future premiums or to increase future benefits, except that a refund on the event of death of the insured or a complete surrender or cancellation of the contract cannot exceed the aggregate premiums paid under the contract.
        (6) The contract meets the consumer protection
    
provisions set forth in Section 7702B(g) of the Internal Revenue Code of 1986, as amended.
    "Qualified long-term care insurance contract" or "federally tax-qualified long-term care insurance contract" also means the portion of a life insurance contract that provides long-term care insurance coverage by rider or as part of the contract and that satisfies the requirements of Sections 7702B(b) and 7702B(e) of the Internal Revenue Code of 1986, as amended.
(Source: P.A. 92-148, eff. 7-24-01.)

    (215 ILCS 5/351A-2) (from Ch. 73, par. 963A-2)
    Sec. 351A-2. Group policy issued in another state. No group long-term care insurance coverage may be offered to a resident of this State under a group policy issued in another state to a group described in paragraph (4) of subsection (e) of Section 351A-1, unless the Director determines that this State or another state having statutory and regulatory long-term care insurance requirements substantially similar to those adopted in this State has made a determination that such requirements have been met.
(Source: P.A. 85-1172; 85-1174; 85-1440.)

    (215 ILCS 5/351A-3) (from Ch. 73, par. 963A-3)
    Sec. 351A-3. Disclosures. The Director may adopt rules that include standards for full and fair disclosure setting forth the manner, content, and required disclosures for the sale of long-term care insurance policies, terms of renewability, initial and subsequent conditions of eligibility, nonduplication of coverage provisions, coverage of dependents, preexisting conditions, termination of insurance, continuation or conversion, probationary periods, limitations, exceptions, reductions, elimination periods, requirements for replacement, recurrent conditions, and definitions of terms.
(Source: P.A. 85-1172; 85-1174; 85-1440.)

    (215 ILCS 5/351A-4) (from Ch. 73, par. 963A-4)
    Sec. 351A-4. Limitation. No long-term care insurance policy may:
        (1) Be cancelled, nonrenewed or otherwise terminated
    
on grounds of the age or the deterioration of the mental or physical health of the insured individual or certificate holder.
        (2) Contain a provision establishing a new waiting
    
period in the event existing coverage is converted to or replaced by a new or other form, except with respect to an increase in benefits voluntarily selected by the insured individual or group policyholder.
        (3) Provide coverage for skilled nursing care only or
    
provide significantly more coverage for skilled care in a facility than coverage for lower levels of care.
(Source: P.A. 92-148, eff. 7-24-01.)

    (215 ILCS 5/351A-4.5)
    Sec. 351A-4.5. Long-term care; coverages. Nothing in this Code prohibits an insurance company from offering a long-term care insurance policy that provides for (1) reimbursement of paid premiums in the event of cancellation or (2) reduced benefits in the event the policyholder discontinues premium payments.
(Source: P.A. 88-290.)

    (215 ILCS 5/351A-5) (from Ch. 73, par. 963A-5)
    Sec. 351A-5. Preexisting condition. (a) No long-term care insurance policy or certificate other than a policy or certificate thereunder issued to a group as defined in paragraph (1) of subsection (e) of Section 351A-1 shall use a definition of "preexisting condition" which is more restrictive than the following: Preexisting condition means the existence of symptoms which would cause an ordinarily prudent person to seek diagnosis, care or treatment, or a condition for which medical advice or treatment was recommended by, or received from a provider of health care services, within 6 months preceding the effective date of coverage for an insured person.
    (b) No long-term care insurance policy or certificate other than a policy or certificate thereunder issued to a group as defined in paragraph (1) subsection (e) of Section 351A-1 may exclude coverage for a loss or confinement which is the result of a preexisting condition unless such loss or confinement begins within 6 months following the effective date of coverage of an insured person.
    (c) The Director may extend the limitation periods set forth in subsections (a) and (b) of this Section as to specific age group categories in specific policy forms upon finding that the extension is in the best interest of the public.
    (d) The definition of "preexisting condition" does not prohibit an insurer from using an application form designed to elicit the complete health history of an applicant, and, on the basis of the answers on that application, from underwriting in accordance with that insurer's established underwriting standards. Unless otherwise provided in the policy or certificate, a preexisting condition, regardless of whether it is disclosed on the application, need not be covered until the waiting period described in subsection (b) of this Section expires. No long-term care insurance policy or certificate may exclude or use waivers or riders of any kind to exclude, limit or reduce coverage or benefits for specifically named or described preexisting diseases or physical conditions beyond the waiting period described in subsection (b) of this Section.
(Source: P.A. 85-1172; 85-1174; 85-1440.)

    (215 ILCS 5/351A-6) (from Ch. 73, par. 963A-6)
    Sec. 351A-6. Prior hospitalization; institutionalizations.
    (a) On and after the effective date of this amendatory Act of 1989, no long-term care insurance policy may be delivered or issued for delivery in this State if such policy:
        (1) conditions eligibility for any benefits on a
    
prior hospitalization requirement; or
        (2) conditions eligibility for benefits provided in
    
an institutional care setting on the receipt of a higher level of institutional care.
    (b) Beginning one year after the effective date of this amendatory Act of 1989, a long-term care insurance policy containing any limitations or conditions for eligibility other than those prohibited above in subsection (a) shall clearly label in a separate paragraph of the policy or certificate entitled "Limitations or Conditions on Eligibility for Benefits" such limitations or conditions, including any required number of days of confinement.
        (1) A long-term care insurance policy containing a
    
benefit advertised, marketed or offered as a home health care or home care benefit may not condition receipt of benefits on a prior institutionalization requirement.
        (2) A long-term care insurance policy which
    
conditions eligibility of non-institutional benefits on the prior receipt of institutional care shall not require a prior institutional stay of more than 30 days for which benefits are paid.
(Source: P.A. 85-1440; 86-384.)

    (215 ILCS 5/351A-7) (from Ch. 73, par. 963A-7)
    Sec. 351A-7. Right to return.
    (a) An individual long-term care insurance policyholder shall have the right to return the policy within 30 days of its delivery and to have the premium refunded directly to him or her if, after examination of the policy, the policyholder is not satisfied for any reason. Long-term care insurance policies shall have a notice prominently printed on the first page of the policy or attached thereto stating in substance that the policyholder shall have the right to return the policy within 30 days of its delivery and to have the premium refunded if, after examination of the policy, the policyholder is not satisfied for any reason.
    (b) A person insured under a long-term care insurance policy or certificate issued pursuant to a direct response solicitation shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded directly to him or her if, after examination, the insured person is not satisfied for any reason. Long-term care insurance policies or certificates issued pursuant to a direct response solicitation shall have a notice prominently printed on the first page of the policy or certificate attached thereto stating in substance that the insured person shall have the right to return the policy or certificate within 30 days of its delivery and to have the premium refunded if, after examination of the policy or certificate, the insured person is not satisfied for any reason. This subsection also applies to denials of applications, and any refund must be made within 30 days of the return or denial.
(Source: P.A. 92-148, eff. 7-24-01.)

    (215 ILCS 5/351A-8) (from Ch. 73, par. 963A-8)
    Sec. 351A-8. Outline of coverage.
    (a) An outline of coverage shall be delivered to a prospective applicant for long-term care insurance at the time of initial solicitation through means which prominently direct the attention of the recipient to the document and its purpose.
        (1) The Director shall prescribe a standard format
    
including style, arrangement and overall appearance and the content of an outline of coverage.
        (2) In the case of agent solicitations, an agent must
    
deliver the outline of coverage prior to the presentation of an application or enrollment form.
        (3) In the case of direct response solicitations, the
    
outline of coverage must be presented in conjunction with any application or enrollment form.
    (b) The outline of coverage shall include:
        (1) A description of the principal benefits and
    
coverage provided in the policy.
        (2) A statement of the principal exclusions,
    
reductions and limitations contained in the policy.
        (3) A statement of the terms under which the policy
    
or certificate, or both, may be continued in force or discontinued, including any reservation in the policy of a right to change premium. Continuation or conversion provisions of group coverage shall be specifically described.
        (4) A statement that the outline of coverage is a
    
summary only, not a contract of insurance, and that the policy or group master policy contain governing contractual provisions.
        (5) A description of the terms under which the policy
    
or certificate may be returned and premium refunded.
        (6) A brief description of the relationship of cost
    
of care and benefits.
        (7) A statement that discloses to the policyholder or
    
certificate holder whether the policy is intended to be a federally tax-qualified long-term care insurance contract under 7702B(b) of the Internal Revenue Code of 1986, as amended.
(Source: P.A. 92-148, eff. 7-24-01.)

    (215 ILCS 5/351A-9) (from Ch. 73, par. 963A-9)
    Sec. 351A-9. Disclosure in certificate. A certificate issued pursuant to a group long-term care insurance policy, which policy is delivered or issued for delivery in this State, shall include each of the following:
    (1) A description of the principal benefits and coverage provided in the policy.
    (2) A statement of the principal exclusions, reductions and limitations contained in the policy.
    (3) A statement that the group master policy determines governing contractual provisions.
(Source: P.A. 85-1172; 85-1174; 85-1440.)

    (215 ILCS 5/351A-9.1) (from Ch. 73, par. 963A-9.1)
    Sec. 351A-9.1. Policy summary and benefit reports.
    (a) At the time of policy delivery, a policy summary shall be delivered for an individual life insurance policy which provides long-term care benefits within the policy or by rider. In the case of direct response solicitations, the insurer shall deliver the policy summary upon the applicant's request, but regardless of request shall make such delivery no later than at the time of policy delivery. In addition to complying with all applicable requirements, the summary shall also include:
        (1) an explanation of how the long-term care benefit
    
interacts with other components of the policy, including deductions from death benefits;
        (2) an illustration of the amount of benefits, the
    
length of benefit, and the guaranteed lifetime benefits if any, for each covered person;
        (3) any exclusions, reductions and limitations on
    
benefits of long-term care; and
        (4) if applicable to the policy type, the summary
    
shall also include:
            (A) disclosure of the effects of exercising other
        
rights under the policy;
            (B) disclosure of guarantees related to long-term
        
care costs of insurance charges; and
            (C) current and projected maximum lifetime
        
benefits.
    (b) Any time a long-term care benefit, funded through a life insurance vehicle by the acceleration of the death benefit, is in benefit payment status, a monthly report shall be provided to the policyholder. Such report shall include:
        (1) any long-term care benefits paid during the month;
        (2) an explanation of any changes in the policy,
    
including changes in death benefits or cash values, due to long-term care benefits being paid out; and
        (3) the amount of long-term care benefits existing or
    
remaining.
(Source: P.A. 86-384.)

    (215 ILCS 5/351A-9.2)
    Sec. 351A-9.2. Delivery of policy. If an applicant for a long-term care insurance contract or certificate is approved, the issuer shall deliver the contract or certificate of insurance to the applicant no later than 30 days after the date of approval.
(Source: P.A. 92-148, eff. 7-24-01.)

    (215 ILCS 5/351A-9.3)
    Sec. 351A-9.3. Claim denial; explanation. If a claim under a long-term care insurance contract is denied, the issuer, within 60 days after receipt of a written request by a policyholder or certificate holder or a policyholder's or certificate holder's representative shall:
        (1) provide a written explanation of the reasons for
    
the denial; and
        (2) make available all information directly related
    
to the denial.
(Source: P.A. 92-148, eff. 7-24-01.)

    (215 ILCS 5/351A-10) (from Ch. 73, par. 963A-10)
    Sec. 351A-10. Any policy or rider advertised, marketed or offered as long-term care or nursing home insurance shall comply with the provisions of this Article.
(Source: P.A. 85-1440; 86-384.)

    (215 ILCS 5/351A-11) (from Ch. 73, par. 963A-11)
    Sec. 351A-11. Rules and regulations. The Director may adopt rules and regulations establishing minimum standards for marketing practices and reporting practices, penalties for violating those standards, and loss ratio standards for long-term care insurance policies, provided that a specific reference to long-term care insurance policies is contained in the regulation. Rules adopted pursuant to this Article shall be in accordance with the provisions of the Illinois Administrative Procedure Act.
(Source: P.A. 87-601.)


 
    (215 ILCS 5/Art. XIXB heading)
ARTICLE XIXB. SMALL EMPLOYER GROUP HEALTH INSURANCE LAW
(Repealed by P.A. 98-692, eff. 7-1-14; 98-969, eff. 1-1-15)


 
    (215 ILCS 5/Art. XX heading)
ARTICLE XX. ACCIDENT AND HEALTH INSURANCE

    (215 ILCS 5/352) (from Ch. 73, par. 964)
    Sec. 352. Scope of Article.
    (a) Except as provided in subsections (b), (c), (d), (e), and (g), this Article shall apply to all companies transacting in this State the kinds of business enumerated in clause (b) of Class 1 and clause (a) of Class 2 of Section 4 and to all policies, contracts, and certificates of insurance issued in connection therewith that are not otherwise excluded under Article VII of this Code. Nothing in this Article shall apply to, or in any way affect policies or contracts described in clause (a) of Class 1 of Section 4; however, this Article shall apply to policies and contracts which contain benefits providing reimbursement for the expenses of long term health care which are certified or ordered by a physician including but not limited to professional nursing care, custodial nursing care, and non-nursing custodial care provided in a nursing home or at a residence of the insured.
    (b) (Blank).
    (c) A policy issued and delivered in this State that provides coverage under that policy for certificate holders who are neither residents of nor employed in this State does not need to provide to those nonresident certificate holders who are not employed in this State the coverages or services mandated by this Article.
    (d) Stop-loss insurance, as defined in clause (b) of Class 1 or clause (a) of Class 2 of Section 4, is exempt from all Sections of this Article, except this Section and Sections 353a, 354, 357.30, and 370.
    (e) A policy issued or delivered in this State to the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) and providing coverage, under clause (b) of Class 1 or clause (a) of Class 2 as described in Section 4, to persons who are enrolled under Article V of the Illinois Public Aid Code or under the Children's Health Insurance Program Act is exempt from all restrictions, limitations, standards, rules, or regulations respecting benefits imposed by or under authority of this Code, except those specified by subsection (1) of Section 143, Section 370c, and Section 370c.1. Nothing in this subsection, however, affects the total medical services available to persons eligible for medical assistance under the Illinois Public Aid Code.
    (f) An in-office membership care agreement provided under the In-Office Membership Care Act is not insurance for the purposes of this Code.
    (g) The provisions of Sections 356a through 359a, both inclusive, shall not apply to or affect:
        (1) any policy or contract of reinsurance; or
        (2) life insurance, endowment or annuity contracts,
    
or contracts supplemental thereto that contain only such provisions relating to accident and sickness insurance that (A) provide additional benefits in case of death or dismemberment or loss of sight by accident, or (B) operate to safeguard such contracts against lapse, or to give a special surrender value or special benefit or an annuity if the insured or annuitant becomes a person with a total and permanent disability, as defined by the contract or supplemental contract.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/352a) (from Ch. 73, par. 964a)
    Sec. 352a. Mandated Coverages. No legislation enacted after the effective date of this Amendatory Act of 1990 which mandates or requires the offering of health care coverages or services shall apply to any insurer unless the legislation applies equally to employee welfare benefit plans described in 29 U.S.C. 1001 et seq.
(Source: P.A. 86-1365.)

    (215 ILCS 5/352b)
    Sec. 352b. Excepted benefits exempted.
    (a) Unless specified otherwise and when used in context of accident and health insurance policy benefits, coverage, terms, or conditions required to be provided under this Article, references to any policy of individual or group accident and health insurance, or both, as used in this Article, do not include any coverage or policy that provides an excepted benefit, as that term is defined in Section 2791(c) of the federal Public Health Service Act (42 U.S.C. 300gg-91). Nothing in this subsection applies to a policy of limited scope dental or vision benefits insurance issued under this Code. Nothing in this subsection shall be construed to subject excepted benefits outside the scope of Section 352 to any requirements of this Article.
    (b) Nothing in this Article shall require a policy of excepted benefits to provide benefits, coverage, terms, or conditions in such a manner as to disqualify it from being classified under federal law as the type of excepted benefit for which its policy forms are filed under Sections 143 and 355 of this Code.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/352c)
    Sec. 352c. Short-term, limited-duration insurance prohibited.
    (a) In this Section:
    "Excepted benefits" has the meaning given to that term in 42 U.S.C. 300gg-91 and implementing regulations. "Excepted benefits" includes individual, group, or blanket coverage.
    "Short-term, limited-duration insurance" means any type of accident and health insurance offered or provided within this State pursuant to a group or individual policy or individual certificate by a company, regardless of the situs state of the delivery of the policy, that has an expiration date specified in the contract that is fewer than 365 days after the original effective date. Regardless of the duration of coverage, "short-term, limited-duration insurance" does not include excepted benefits or any student health insurance coverage.
    (b) On and after January 1, 2025, no company shall issue, deliver, amend, or renew short-term, limited-duration insurance to any natural or legal person that is a resident or domiciled in this State.
(Source: P.A. 103-649, eff. 1-1-25.)

    (215 ILCS 5/353) (from Ch. 73, par. 965)
    Sec. 353. Non-cancellable accident and health insurance reserves.
    (1) The legal minimum standard for computing the active life reserve, including the unearned premium reserve, of non-cancellable accident and health policies issued on and after January 1 of the year following that during which this Code becomes effective shall be based on Class III Disability Experience with interest at not to exceed three and one-half per centum per annum on the full preliminary term basis; and the minimum standard for computing the active life reserve of such policies issued prior to January 1 of the year following that during which this Code becomes effective shall be such as to place an adequate value, as determined by sound insurance practices, on the liabilities thereunder.
    (2) For policies with a waiting period of less than three (3) months, or providing benefits at ages beyond the limits of Class III Disability Experience, such tables shall be extended to cover the provisions of such policies on such basis as may be approved by the Director.
    (3) The reserve for losses under non-cancellable accident and health policies issued on and after January 1 of the year following that during which this Code becomes effective shall be based on Class III Disability Experience, except that for claims of less than twenty-seven months duration the reserve may be taken as equivalent to the prospective claim payments for three and one-half times the elapsed period of disability, provided, that in no case shall the reserve be less than the equivalent of seven weeks' claim payments; and the minimum standard for computing the reserve for losses under such policies issued prior to January 1 of the year following that during which the Code becomes effective shall be such as to place an adequate value, as determined by sound insurance practices, on such losses.
    (4) The Director shall modify the application of the tables and requirements prescribed in this section to policies or to claims arising under policies in accordance with the waiting period contained in such policies and in accordance with any limitation as to the time for which indemnity is payable. The company shall give the notice required in section 234 on all non-cancellable accident and health policies.
    This section shall apply only to accident and health policies issued prior to the operative date under section 353a as defined therein.
(Source: Laws 1965, p. 740.)

    (215 ILCS 5/353a) (from Ch. 73, par. 965a)
    Sec. 353a. Accident and health reserves. The reserves for all accident and health policies issued after the operative date of this section shall be computed and maintained on a basis which shall place an actuarially sound value on the liabilities under such policies. To provide a basis for the determination of such actuarially sound value, the Director from time to time shall adopt rules requiring the use of appropriate tables of morbidity, mortality, interest rates and valuation methods for such reserves for policies issued before January 1, 2017. For policies issued on or after January 1, 2017, Section 223 shall govern the basis for determining such actuarially sound value. In no event shall such reserves be less than the pro rata gross unearned premium reserve for such policies.
    The company shall give the notice required in section 234 on all non-cancellable accident and health policies.
    After this section becomes effective, any company may file with the Director written notice of its election to comply with the provisions of this section after a specified date before January 1, 1967. After the filing of such notice, then upon such specified date (which shall be the operative date of this section for such company), this section shall become operative with respect to the accident and health policies thereafter issued by such company. If a company makes no such election, the operative date of this section for such company shall be January 1, 1967.
    After this section becomes effective, any company may file with the Director written notice of its election to establish and maintain reserves upon its accident and health policies issued prior to the operative date of this section in accordance with the standards for reserves established by this section, and thereafter the reserve standards prescribed pursuant to this section shall be effective with respect to said accident and health policies issued prior to the operative date of this section.
(Source: P.A. 102-775, eff. 5-13-22.)

    (215 ILCS 5/354) (from Ch. 73, par. 966)
    Sec. 354. Accident and health loss reserves.
    The loss reserves of all accident and health policies other than non-cancellable accident and health policies shall be computed and maintained in accordance with the applicable provisions of Article XXII. The unearned premium reserve of all accident and health policies other than non-cancellable accident and health policies shall be computed and maintained on the monthly pro rata basis.
    This Section shall apply only to accident and health policies issued prior to the operative date under section 353a as defined therein.
(Source: P.A. 83-584.)

    (215 ILCS 5/355)
    Sec. 355. Accident and health policies; provisions.
    (a) As used in this Section:
    "Inadequate rate" means a rate:
        (1) that is insufficient to sustain projected losses
    
and expenses to which the rate applies; and
        (2) the continued use of which endangers the solvency
    
of an insurer using that rate.
    "Large employer" has the meaning provided in the Illinois Health Insurance Portability and Accountability Act.
    "Plain language" has the meaning provided in the federal Plain Writing Act of 2010 and subsequent guidance documents, including the Federal Plain Language Guidelines.
    "Unreasonable rate increase" means a rate increase that the Director determines to be excessive, unjustified, or unfairly discriminatory in accordance with 45 CFR 154.205.
    (b) No policy of insurance against loss or damage from the sickness, or from the bodily injury or death of the insured by accident shall be issued or delivered to any person in this State until a copy of the form thereof and of the classification of risks and the premium rates pertaining thereto have been filed with the Director; nor shall it be so issued or delivered until the Director shall have approved such policy pursuant to the provisions of Section 143. If the Director disapproves the policy form, he or she shall make a written decision stating the respects in which such form does not comply with the requirements of law and shall deliver a copy thereof to the company and it shall be unlawful thereafter for any such company to issue any policy in such form. On and after January 1, 2025, any form filing submitted for large employer group accident and health insurance shall be automatically deemed approved within 90 days of the submission date unless the Director extends by not more than an additional 30 days the period within which the form shall be approved or disapproved by giving written notice to the insurer of such extension before the expiration of the 90 days. Any form in receipt of such an extension shall be automatically deemed approved within 120 days of the submission date. The Director may toll the filing due to a conflict in legal interpretation of federal or State law as long as the tolling is applied uniformly to all applicable forms, written notification is provided to the insurer prior to the tolling, the duration of the tolling is provided within the notice to the insurer, and justification for the tolling is posted to the Department's website. The Director may disapprove the filing if the insurer fails to respond to an objection or request for additional information within the timeframe identified for response. As used in this subsection, "large employer" has the meaning given in Section 5 of the federal Health Insurance Portability and Accountability Act.
    (c) For plan year 2026 and thereafter, premium rates for all individual and small group accident and health insurance policies must be filed with the Department for approval. Unreasonable rate increases or inadequate rates shall be modified or disapproved. For any plan year during which the Illinois Health Benefits Exchange operates as a full State-based exchange, the Department shall provide insurers at least 30 days' notice of the deadline to submit rate filings.
    (c-5) Unless prohibited under federal law, for plan year 2026 and thereafter, each insurer proposing to offer a qualified health plan issued in the individual market through the Illinois Health Benefits Exchange must incorporate the following approach in its rate filing under this Section:
        (1) The rate filing must apply a cost-sharing
    
reduction defunding adjustment factor within a range that:
            (A) is uniform across all insurers;
            (B) is consistent with the total adjustment
        
expected to be needed to cover actual cost-sharing reduction costs across all silver plans on the Illinois Health Benefits Exchange statewide, provided that such costs are calculated assuming utilization by the State's full individual-market risk pool; and
            (C) assumes that the only on-Exchange silver
        
plans that will be purchased are the 87% and 94% cost-sharing reduction variations.
        (2) The rate filing must apply an induced demand
    
factor based on the following formula: (Plan Actuarial Value)2 - (Plan Actuarial Value) + 1.24.
    In the annual notice to insurers described in subsection (c), the Department must include the specific numerical range calculated for the applicable plan year under paragraph (1) of this subsection (c-5) and the formula in paragraph (2) of this subsection (c-5).
    (d) For plan year 2025 and thereafter, the Department shall post all insurers' rate filings and summaries on the Department's website 5 business days after the rate filing deadline set by the Department in annual guidance. The rate filings and summaries posted to the Department's website shall exclude information that is proprietary or trade secret information protected under paragraph (g) of subsection (1) of Section 7 of the Freedom of Information Act or confidential or privileged under any applicable insurance law or rule. All summaries shall include a brief justification of any rate increase or decrease requested, including the number of individual members, the medical loss ratio, medical trend, administrative costs, and any other information required by rule. The plain writing summary shall include notification of the public comment period established in subsection (e).
    (e) The Department shall open a 30-day public comment period on the rate filings beginning on the date that all of the rate filings are posted on the Department's website. The Department shall post all of the comments received to the Department's website within 5 business days after the comment period ends.
    (f) After the close of the public comment period described in subsection (e), the Department, beginning for plan year 2026, shall issue a decision to approve, disapprove, or modify a rate filing within 60 days. Any rate filing or any rates within a filing on which the Director does not issue a decision within 60 days shall automatically be deemed approved. The Director's decision shall take into account the actuarial justifications and public comments. The Department shall notify the insurer of the decision, make the decision available to the public by posting it on the Department's website, and include an explanation of the findings, actuarial justifications, and rationale that are the basis for the decision. Any company whose rate has been modified or disapproved shall be allowed to request a hearing within 10 days after the action taken. The action of the Director in disapproving a rate shall be subject to judicial review under the Administrative Review Law.
    (g) If, following the issuance of a decision but before the effective date of the premium rates approved by the decision, an event occurs that materially affects the Director's decision to approve, deny, or modify the rates, the Director may consider supplemental facts or data reasonably related to the event.
    (h) The Department shall adopt rules implementing the procedures described in subsections (d) through (g) by March 31, 2024.
    (i) Subsection (a), subsections (c) through (h), and subsection (j) of this Section do not apply to grandfathered health plans as defined in 45 CFR 147.140; excepted benefits as defined in 42 U.S.C. 300gg-91; or student health insurance coverage as defined in 45 CFR 147.145. For a filing of premium rates or classifications of risk for any of these types of coverage, the Director's initial review period shall not exceed 60 days to issue informal objections to the company that request additional clarification, explanation, substantiating documentation, or correction of concerns identified in the filing before the company implements the premium rates, classifications, or related rate-setting methodologies described in the filing, except that the Director may extend by not more than an additional 30 days the period of initial review by giving written notice to the company of such extension before the expiration of the initial 60-day period. Nothing in this subsection shall confer authority upon the Director to approve, modify, or disapprove rates where that authority is not provided by other law. Nothing in this subsection shall prohibit the Director from conducting any investigation, examination, hearing, or other formal administrative or enforcement proceeding with respect to a company's rate filing or implementation thereof under applicable law at any time, including after the period of initial review.
    (j) Subsection (a) and subsections (c) through (h) do not apply to group policies issued in the large group market as defined in Section 5 of the Illinois Health Insurance Portability and Accountability Act. For large group policies issued, delivered, amended, or renewed on or after January 1, 2026 that are not described in subsection (i), the premium rates and risk classifications, including any rate manuals and rules used to arrive at the rates, must be filed with the Department annually for approval at least 120 days before the rates are intended to take effect.
        (1) A rate filing shall be modified or disapproved if
    
the premiums are unreasonable in relation to the benefits because the rates were not calculated in accordance with sound actuarial principles.
        (2) Within 60 days of receipt of the rate filing, the
    
Director shall issue a decision to approve, disapprove, or modify the filing along with the reasons and actuarial justification for the decision. Any rate filing or rates within a filing on which the Director does not issue a decision within 60 days shall be automatically deemed approved.
        (3) Any company whose rate or rate filing has been
    
modified or disapproved shall be allowed to request a hearing within 10 days after the action taken. The action of the Director in disapproving a rate or rate filing shall be subject to judicial review under the Administrative Review Law.
        (4) Nothing in this subsection requires a company to
    
file a large group policy's final premium rates for prior approval if the company negotiates the final rates or rate adjustments with the plan sponsor or its administrator in accordance with the rate manual and rules of the currently approved rate filing for the policy.
    In this subsection, "administrator" and "plan sponsor" have the meanings given to those terms in 29 U.S.C. 1002(16).
(Source: P.A. 103-106, eff. 1-1-24; 103-650, Article 3, Section 3-5, eff. 1-1-25; 103-650, Article 4, Section 4-5, eff. 1-1-25; 104-417, eff. 8-15-25.)

    (215 ILCS 5/355.1) (from Ch. 73, par. 967.1)
    Sec. 355.1. No claim for benefits for loss of time from the insured person's occupation, under a group or individual accident and health insurance policy delivered in this State more than 120 days after the effective date of this Section, shall be reduced by reason of any cost-of-living increase, designated as such under the Federal Social Security Act, if such cost-of-living increase occurs while the policy's benefits are payable for that claim.
(Source: P.A. 78-603.)

    (215 ILCS 5/355.2) (from Ch. 73, par. 967.2)
    Sec. 355.2. Dental coverage reimbursement rates.
    (a) Every company that issues, delivers, amends, or renews any individual or group policy of accident and health insurance on or after the effective date of this amendatory Act of 1991 that provides dental insurance and bases payment for those benefits upon a usual and customary fee charged by licensed dentists must disclose all of the following:
        (1) The frequency of the determination of the usual
    
and customary fee.
        (2) A general description of the methodology used to
    
determine usual and customary fees.
        (3) The percentile that determines the maximum
    
benefit that the company will pay for any dental procedure, if the usual and customary fee is determined by taking a sample of fees submitted on actual claims from licensed dentists and then determining the benefit by selecting a percentile of those fees.
    (b) The disclosure must be provided upon request to all group and individual policy holders and group certificate holders. All proposals for dental insurance must notify the prospective policy holder that information regarding usual and customary fee determinations is available from the insurer. All employee benefit descriptions or supplemental documents must notify the employee that information regarding reimbursement rates is available from the employer.
(Source: P.A. 87-587.)

    (215 ILCS 5/355.3)
    Sec. 355.3. Noncovered dental services.
    (a) In this Section:
    "Covered services" means dental care services for which a reimbursement is available under an enrollee's plan contract, or for which a reimbursement would be available but for the application of contractual limitations such as deductibles, copayments, coinsurance, waiting periods, annual or lifetime maximums, frequency limitations, alternative benefit payments, or any other limitation.
    "Dental insurance" means any policy of insurance that is issued by a company that provides coverage for dental services not covered by a medical plan.
    (b) No company that issues, delivers, amends, or renews an individual or group policy of accident and health insurance on or after the effective date of this amendatory Act of the 97th General Assembly that provides dental insurance shall issue a service provider contract that requires a dentist to provide services to the insurer's policyholders at a fee set by the insurer unless the services are covered services under the applicable policyholder agreement.
(Source: P.A. 97-805, eff. 1-1-13.)

    (215 ILCS 5/355.4)
    Sec. 355.4. Provider notification of network plan changes.
    (a) As used in this Section:
    "Contracting entity" means any person or company that enters into direct contracts with providers for the delivery of dental services in the ordinary course of business, including a third-party administrator and a dental carrier.
    "Dental carrier" means a dental insurance company, dental service corporation, dental plan organization authorized to provide dental benefits, or a health insurance plan that includes coverage for dental services.
    (b) No dental carrier may automatically enroll a provider in a leased network without allowing any provider that is part of the dental carrier's provider network to choose to not participate by opting out.
    (c) Any contract entered into or renewed on or after the effective date of this amendatory Act of the 103rd General Assembly that allows the rights and obligations of the contract to be assigned or leased to another insurer shall provide for notice that informs each provider in writing via mail 60 days before any scheduled assignment or lease of the network to which the provider is a contracted provider. To be in compliance with this Section, the notification must provide the specific URL address where the following are located: all contract terms, a policy manual, a fee schedule, and a statement that the provider has the right to choose not to participate in third-party access. The notification must also provide instructions for how the provider may obtain a copy of those materials.
    (d) A dental carrier that leases or assigns its network shall not cancel a network participating dentist's contractual relationship or otherwise penalize a network participating dentist in any way based on whether or not the dentist accepts the terms of the assignment or lease. Before accepting the terms of an assignment or lease agreement as described in this Section, any provider who receives notification of an impending assignment or lease must be given the option to contract directly with the entities proposing to gain access to the provider's network.
    (e) The provisions of this Section do not apply:
        (1) if access to a provider network contract is
    
granted to a dental carrier or an entity operating in accordance with the same brand licensee program as the contracting entity; or
        (2) to a provider network contract for dental
    
services provided to beneficiaries of the State employee group health insurance program or the medical assistance program under the Illinois Public Aid Code.
(Source: P.A. 103-24, eff. 1-1-24; 103-832, eff. 1-1-25.)

    (215 ILCS 5/355.5)
    Sec. 355.5. Dental coverage reimbursement; prohibitions. No insurer, dental service plan corporation, professional service corporation, insurance network leasing company, or any company that amends, delivers, issues, or renews an individual or group policy of accident and health insurance on or after the effective date of this amendatory Act of the 103rd General Assembly shall require a dental care provider to incur a fee to access and obtain payment or reimbursement for services provided. A dental plan carrier shall provide a dental care provider with 100% of the contracted amount of the payment or reimbursement. Fees incurred directly by a dental care provider from third parties related to transmitting an automated clearing house network claim, transaction management, data management, or portal services and other fees charged by third parties that are not in the control of the dental plan carrier shall not be prohibited by this Section.
(Source: P.A. 103-24, eff. 1-1-24.)

    (215 ILCS 5/355.6)
    Sec. 355.6. Health care provider reimbursement.
    (a) In this Section, "health care provider" has the meaning given to the term "provider" in Section 370g.
    (b) Any group or individual policy of accident and health insurance or managed care plan amended, delivered, issued, or renewed on or after January 1, 2026 shall offer all reasonably available methods of payment from the insurer or managed care plan, or its contracted vendor, to the contracted health care provider, which shall include, but not be limited to, payment by check and electronic funds transfer. An insurer or managed care plan shall not mandate payment by credit card. For purposes of this subsection, "credit card" means a single-use or virtual credit card provided in an electronic, digital, facsimile, physical, or paper format.
    (c) If one of the available payment methods has a fee associated with it, the insurer or managed care plan, or its contracted vendor, shall, prior to initiating the first payment to an in-network health care provider or upon changing the payment methods available to a health care provider:
        (1) notify the health care provider that there may be
    
fees associated with a particular payment method and that the insurer or managed care plan, or its contracted vendor, shall disclose any fees beyond what the health care provider would normally pay to process a payment using that payment method; and
        (2) provide the health care provider with clear
    
instructions on the insurer's or managed care plan's, or its contracted vendor's, website or through means other than the contract offered to the health care provider as to how to select each method.
    (d) If a health care provider requests a change in the available payment method, the insurer or managed care plan, or its contracted vendor, shall implement the change to the payment method selected by the health care provider within 30 business days, subject to federal and State verification measures to prevent fraud and abuse.
    (e) An insurer or managed care plan shall not use a health care provider's preferred method of payment as a factor when deciding whether to provide credentials to a health care provider.
(Source: P.A. 103-618, eff. 1-1-25.)

    (215 ILCS 5/355.7)
    Sec. 355.7. Medical loss ratio report and premium rebate.
    (a) A health insurance issuer offering group or individual health insurance coverage, including a grandfathered health plan, shall, with respect to each plan year, submit to the Director a report concerning the ratio of the incurred loss or incurred claims plus the loss adjustment expense or change in contract reserves to earned premiums. The report shall include the percentage of total premium revenue, after accounting for collections or receipts for risk adjustment and risk corridors and payments of reinsurance, that such coverage expends:
        (1) on reimbursement for clinical services provided
    
to enrollees under such coverage;
        (2) for activities that improve health care quality;
    
and
        (3) on all other non-claims costs, including an
    
explanation of the nature of such costs, and excluding federal and State taxes and licensing or regulatory fees.
    (b) A health insurance issuer shall comply with subsection (a) by filing with the Director a copy of the report submitted to the United States Department of Health and Human Services under 42 U.S.C. 300gg-18, which must comply with federal regulations promulgated thereunder. The Department shall make the reports received under this Section available to the public on its website.
    (c) If 42 U.S.C. 300gg-18 or the federal regulations promulgated thereunder are amended after January 15, 2025 to repeal the reporting or rebate requirements, reduce the amount or types of information required to be reported, or adopt a calculation method that reduces the amount of rebates in this State, a health insurance issuer shall file a supplemental report with the Director or make supplemental rebate payments, as applicable, for group or individual health insurance coverage regulated by this State to ensure that the same total information is filed with the Director and the same total rebates are remitted to enrollees as before the federal repeal, reduction, or recalculation took effect.
    (d) Notwithstanding any other provision of this Section, under no circumstances may the costs described in paragraphs (1) and (2) of subsection (a) include:
        (1) executive compensation beyond base salary;
        (2) entity surplus or accumulated profit; or
        (3) costs attendant with an application for lifestyle
    
management, weight loss, or wellness when the application falls outside the scope of 45 CFR 158.140 through 158.160.
    (e) This Section does not apply with respect to any policy of excepted benefits as defined under 42 U.S.C. 300gg-91.
    (f) Notwithstanding anything in this Section to the contrary, this Section does not apply to policies issued or delivered in this State that provide medical assistance under the Illinois Public Aid Code or the Children's Health Insurance Program Act.
(Source: P.A. 104-28, eff. 1-1-26.)

    (215 ILCS 5/355a) (from Ch. 73, par. 967a)
    Sec. 355a. Standardization of terms and coverage.
    (1) The purposes of this Section shall be (a) to provide reasonable standardization and simplification of terms and coverages of individual accident and health insurance policies to facilitate public understanding and comparisons; (b) to eliminate provisions contained in individual accident and health insurance policies which may be misleading or unreasonably confusing in connection either with the purchase of such coverages or with the settlement of claims; and (c) to provide for reasonable disclosure in the sale of accident and health coverages.
    (2) Definitions applicable to this Section are as follows:
        (a) "Policy" means all or any part of the forms
    
constituting the contract between the insurer and the insured, including the policy, certificate, subscriber contract, riders, endorsements, and the application if attached, which are subject to filing with and approval by the Director.
        (b) "Service corporations" means voluntary health and
    
dental corporations organized and operating respectively under the Voluntary Health Services Plans Act and the Dental Service Plan Act.
        (c) "Accident and health insurance" means insurance
    
written under Article XX of this Code, other than credit accident and health insurance, and coverages provided in subscriber contracts issued by service corporations. For purposes of this Section such service corporations shall be deemed to be insurers engaged in the business of insurance.
    (3) The Director shall issue such rules as he shall deem necessary or desirable to establish specific standards, including standards of full and fair disclosure that set forth the form and content and required disclosure for sale, of individual policies of accident and health insurance, which rules and regulations shall be in addition to and in accordance with the applicable laws of this State, and which may cover but shall not be limited to: (a) terms of renewability; (b) initial and subsequent conditions of eligibility; (c) non-duplication of coverage provisions; (d) coverage of dependents; (e) pre-existing conditions; (f) termination of insurance; (g) probationary periods; (h) limitation, exceptions, and reductions; (i) elimination periods; (j) requirements regarding replacements; (k) recurrent conditions; and (l) the definition of terms, including, but not limited to, the following: hospital, accident, sickness, injury, physician, accidental means, total disability, partial disability, nervous disorder, guaranteed renewable, and non-cancellable.
    The Director may issue rules that specify prohibited policy provisions not otherwise specifically authorized by statute which in the opinion of the Director are unjust, unfair or unfairly discriminatory to the policyholder, any person insured under the policy, or beneficiary.
    (4) The Director shall issue such rules as he shall deem necessary or desirable to establish minimum standards for benefits under each category of coverage in individual accident and health policies, other than conversion policies issued pursuant to a contractual conversion privilege under a group policy, including but not limited to the following categories: (a) basic hospital expense coverage; (b) basic medical-surgical expense coverage; (c) hospital confinement indemnity coverage; (d) major medical expense coverage; (e) disability income protection coverage; (f) accident only coverage; and (g) specified disease or specified accident coverage.
    Nothing in this subsection (4) shall preclude the issuance of any policy which combines two or more of the categories of coverage enumerated in subparagraphs (a) through (f) of this subsection.
    No policy shall be delivered or issued for delivery in this State which does not meet the prescribed minimum standards for the categories of coverage listed in this subsection unless the Director finds that such policy is necessary to meet specific needs of individuals or groups and such individuals or groups will be adequately informed that such policy does not meet the prescribed minimum standards, and such policy meets the requirement that the benefits provided therein are reasonable in relation to the premium charged. The standards and criteria to be used by the Director in approving such policies shall be included in the rules required under this Section with as much specificity as practicable.
    The Director shall prescribe by rule the method of identification of policies based upon coverages provided.
    (5) (a) In order to provide for full and fair disclosure in the sale of individual accident and health insurance policies, no such policy shall be delivered or issued for delivery in this State unless the outline of coverage described in paragraph (b) of this subsection either accompanies the policy, or is delivered to the applicant at the time the application is made, and an acknowledgment signed by the insured, of receipt of delivery of such outline, is provided to the insurer. In the event the policy is issued on a basis other than that applied for, the outline of coverage properly describing the policy must accompany the policy when it is delivered and such outline shall clearly state that the policy differs, and to what extent, from that for which application was originally made. All policies, except single premium nonrenewal policies, shall have a notice prominently printed on the first page of the policy or attached thereto stating in substance, that the policyholder shall have the right to return the policy within 10 days of its delivery and to have the premium refunded if after examination of the policy the policyholder is not satisfied for any reason.
    (b) The Director shall issue such rules as he shall deem necessary or desirable to prescribe the format and content of the outline of coverage required by paragraph (a) of this subsection. "Format" means style, arrangement, and overall appearance, including such items as the size, color, and prominence of type and the arrangement of text and captions. "Content" shall include without limitation thereto, statements relating to the particular policy as to the applicable category of coverage prescribed under subsection (4); principal benefits; exceptions, reductions and limitations; and renewal provisions, including any reservation by the insurer of a right to change premiums. Such outline of coverage shall clearly state that it constitutes a summary of the policy issued or applied for and that the policy should be consulted to determine governing contractual provisions.
    (c) (Blank).
    (d) (Blank).
    (e) (Blank).
    (f) (Blank).
    (6) Prior to the issuance of rules pursuant to this Section, the Director shall afford the public, including the companies affected thereby, reasonable opportunity for comment. Such rulemaking is subject to the provisions of the Illinois Administrative Procedure Act.
    (7) When a rule has been adopted, pursuant to this Section, all policies of insurance or subscriber contracts which are not in compliance with such rule shall, when so provided in such rule, be deemed to be disapproved as of a date specified in such rule not less than 120 days following its effective date, without any further or additional notice other than the adoption of the rule.
    (8) When a rule adopted pursuant to this Section so provides, a policy of insurance or subscriber contract which does not comply with the rule shall, not less than 120 days from the effective date of such rule, be construed, and the insurer or service corporation shall be liable, as if the policy or contract did comply with the rule.
    (9) Violation of any rule adopted pursuant to this Section shall be a violation of the insurance law for purposes of Sections 370 and 446 of this Code.
(Source: P.A. 102-775, eff. 5-13-22.)

    (215 ILCS 5/355b)
    Sec. 355b. Claim-related information; alternative means of communication.
    (a) For the purposes of this Section, "claim-related information" means all claim or billing information relating specifically to an insured, subscriber, or person covered by an individual or group policy of accident and health insurance issued, delivered, amended, or renewed by a company doing business in this State.
    (b) A company that issues, delivers, amends, or renews an individual or group policy of accident and health insurance on or after the effective date of this amendatory Act of the 98th General Assembly shall accommodate a reasonable request by a person covered by a policy issued by the company to receive communications of claim-related information from the company by alternative means or at alternative locations if the person clearly states that disclosure of all or part of the information could endanger the person.
    (c) If a child is covered by a policy issued by a company, then the child's parent or guardian may make a request to the company pursuant to subsection (b) of this Section.
    (d) A company may require (1) a person making a request pursuant to subsection (b) of this Section to do so in writing, (2) the request to contain a statement that disclosure of all or part of the claim-related information to which the request pertains could endanger the person or child, and (3) the specification of an alternative address, telephone number, or other method of contact.
    (e) Except with the express consent of the person making a request pursuant to subsection (b) of this Section, a company may not disclose to the policyholder (1) the address, telephone number, or any other personally identifying information of the person who made the request or child for whose benefit a request was made, (2) the nature of the health care services provided, or (3) the name or address of the provider of the health care services.
    (f) A company that makes reasonable and good faith efforts to comply with this Section shall not be subject to civil or criminal liability on the grounds of noncompliance with this Section.
    (g) The Director shall adopt rules to guide companies in guarding against the disclosure of the information protected pursuant to this Section.
    (h) Nothing in this Section shall prevent, hinder, or otherwise affect the entry of an appropriate order made in the best interests of a child by a court of competent jurisdiction adjudicating disputed issues of child welfare or custody.
(Source: P.A. 98-189, eff. 1-1-14.)

    (215 ILCS 5/355c)
    Sec. 355c. Availability of information on qualified health plans.
    (a) Without limiting the generality of paragraph (b) of subsection (5) of Section 355a, no qualified health plans shall be offered for sale directly to consumers through the health insurance marketplace operating in this State in accordance with Sections 1311 and 1321 of the federal Patient Protection and Affordable Care Act of 2010 (Public Law 111-148), as amended by the federal Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), and any amendments thereto, or regulations or guidance issued thereunder (collectively, "the Federal Act"), unless the following information is made available to the consumer at the time he or she is comparing policies and their premiums:
        (1) With respect to prescription drug benefits,
    
the most recently published formulary where a consumer can view in one location covered prescription drugs; information on tiering and the cost-sharing structure for each tier; and information about how a consumer can obtain specific copayment amounts or coinsurance percentages for a specific qualified health plan before enrolling in that plan. This information shall clearly identify the qualified health plan to which it applies.
        (2) The most recently published provider directory
    
where a consumer can view the provider network that applies to each qualified health plan and information about each provider, including location, contact information, specialty, medical group, if any, any institutional affiliation, and whether the provider is accepting new patients at each of the specific locations listing the provider. Dental providers shall notify qualified health plans electronically or in writing of any changes to their information as listed in the provider directory. Qualified health plans shall update their directories in a manner consistent with the information provided by the provider or dental management service organization within 10 business days after being notified of the change by the provider. Nothing in this paragraph (2) shall void any contractual relationship between the provider and the plan. The information shall clearly identify the qualified health plan to which it applies.
    (b) Each company that offers qualified health plans for sale directly to consumers through the health insurance marketplace operating in this State shall make the information in subsection (a), for each qualified health plan that it offers, available and accessible to the general public on the company's website and through other means for individuals without access to the Internet.
    (c) The Department shall ensure that State-operated websites, in addition to the website for the health insurance marketplace established in this State in accordance with the Federal Act, prominently provide links to Internet-based materials and tools to help consumers be informed purchasers of health insurance.
    (d) Nothing in this Section shall be interpreted or implemented in a manner not consistent with the Federal Act. This Section shall apply to all qualified health plans offered for sale directly to consumers through the health insurance marketplace operating in this State for any coverage year beginning on or after January 1, 2015.
(Source: P.A. 102-775, eff. 5-13-22.)

    (215 ILCS 5/355d)
    Sec. 355d. Denials of claims submitted after prior authorization.
    (a) In this Section:
    "Dental carrier" means an insurer, dental service corporation, insurance network leasing company, or any company that offers individual or group policies of accident and health insurance that provide coverage for dental services.
    "Prior authorization" means any written communication that is verifiable, whether through issuance or letter, facsimile, email, or similar means, indicating that a specific procedure is, or multiple procedures are, covered under the patient's dental plan and reimbursable at a specific amount, subject to applicable coinsurance and deductibles, and issued in response to a request submitted by a dentist using a format prescribed by the dental carrier.
    (b) Beginning on the effective date of this amendatory Act of the 103rd General Assembly, a dental carrier shall not deny any claim subsequently submitted for procedures specifically included in a prior authorization unless at least one of the following circumstances applies for each procedure denied:
        (1) benefit limitations, such as annual maximums and
    
frequency limitations, that were not applicable at the time of the prior authorization are reached due to utilization after issuance of the prior authorization;
        (2) the documentation for the claim provided by the
    
person submitting the claim clearly fails to support the claim as originally authorized;
        (3) if, after the issuance of the prior
    
authorization, new procedures are provided to the patient or a change in the condition of the patient occurs such that the prior authorized procedure would no longer be considered medically necessary based on the prevailing standard of care;
        (4) if, after the issuance of the prior
    
authorization, new procedures are provided to the patient or a change in the condition of the patient occurs such that the prior authorized procedure would, at that time, require disapproval pursuant to the terms and conditions for coverage under the plan for the patient in effect at the time the prior authorization was used; or
        (5) the claim was denied by a dental carrier due to
    
one of the following reasons:
            (A) another payor is responsible for the payment;
            (B) the dentist has already been paid for the
        
procedures identified on the claim;
            (C) the claim was submitted fraudulently or the
        
prior authorization was based in whole or material part on erroneous information provided to the dental carrier; or
            (D) the person receiving the procedure was not
        
eligible for the procedure on the date of service and the dental carrier did not know, and with the exercise of reasonable care could not have known, that person's eligibility status.
    A dental carrier shall not recoup a claim solely due to a loss of coverage of a patient or ineligibility if, at the time of treatment, the dental carrier erroneously confirmed coverage and eligibility, but had sufficient information available to the dental carrier indicating that the patient was no longer covered or was ineligible for coverage.
    (c) The provisions of this Section may not be waived by contract. Any contractual agreement entered into or amended, delivered, issued, or renewed on or after the effective date of this amendatory Act of the 103rd General Assembly that is in conflict with this Section or that purports to waive any requirement of this Section is null and void.
(Source: P.A. 103-832, eff. 1-1-25.)

    (215 ILCS 5/356a) (from Ch. 73, par. 968a)
    Sec. 356a. Form of policy.
    (1) No individual policy of accident and health insurance shall be delivered or issued for delivery to any person in this State unless:
        (a) the entire money and other considerations
    
therefor are expressed therein; and
        (b) the time at which the insurance takes effect and
    
terminates is expressed therein; and
        (c) it purports to insure only one person, except
    
that a policy may insure, originally or by subsequent amendment, upon the application of an adult member of a family who shall be deemed the policyholder, any 2 or more eligible members of that family, including husband, wife, dependent children or any children under a specified age which shall not exceed 19 years and any other person dependent upon the policyholder; and
        (d) the style, arrangement and over-all appearance of
    
the policy give no undue prominence to any portion of the text, and unless every printed portion of the text of the policy and of any endorsements or attached papers is plainly printed in light-faced type of a style in general use, the size of which shall be uniform and not less than ten-point with a lower-case unspaced alphabet length not less than one hundred and twenty-point (the "text" shall include all printed matter except the name and address of the insurer, name or title of the policy, the brief description if any, and captions and subcaptions); and
        (e) the exceptions and reductions of indemnity are
    
set forth in the policy and, except those which are set forth in Sections 357.1 through 357.30 of this Act, are printed, at the insurer's option, either included with the benefit provision to which they apply, or under an appropriate caption such as "EXCEPTIONS", or "EXCEPTIONS AND REDUCTIONS", provided that if an exception or reduction specifically applies only to a particular benefit of the policy, a statement of such exception or reduction shall be included with the benefit provision to which it applies; and
        (f) each such form, including riders and
    
endorsements, shall be identified by a form number in the lower left-hand corner of the first page thereof; and
        (g) it contains no provision purporting to make any
    
portion of the charter, rules, constitution, or by-laws of the insurer a part of the policy unless such portion is set forth in full in the policy, except in the case of the incorporation of, or reference to, a statement of rates or classification of risks, or short-rate table filed with the Director.
    (2) If any policy is issued by an insurer domiciled in this State for delivery to a person residing in another state, and if the official having responsibility for the administration of the insurance laws of such other state shall have advised the Director that any such policy is not subject to approval or disapproval by such official, the Director may by ruling require that such policy meet the standards set forth in subsection (1) of this Section and in Sections 357.1 through 357.30.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/356b) (from Ch. 73, par. 968b)
    Sec. 356b. (a) This Section applies to the hospital and medical expense provisions of an individual accident or health insurance policy.
    (b) If a policy provides that coverage of a dependent person terminates upon attainment of the limiting age for dependent persons specified in the policy, the attainment of such limiting age does not operate to terminate the hospital and medical coverage of a person who, because of a disabling condition that occurred before attainment of the limiting age, is incapable of self-sustaining employment and is dependent on his or her parents or other care providers for lifetime care and supervision.
    (c) For purposes of subsection (b), "dependent on other care providers" is defined as requiring a Community Integrated Living Arrangement, group home, supervised apartment, or other residential services licensed or certified by the Department of Human Services (as successor to the Department of Mental Health and Developmental Disabilities), the Department of Public Health, or the Department of Healthcare and Family Services (formerly Department of Public Aid).
    (d) The insurer may inquire of the policyholder 2 months prior to attainment by a dependent of the limiting age set forth in the policy, or at any reasonable time thereafter, whether such dependent is in fact a person who has a disability and is dependent and, in the absence of proof submitted within 60 days of such inquiry that such dependent is a person who has a disability and is dependent may terminate coverage of such person at or after attainment of the limiting age. In the absence of such inquiry, coverage of any person who has a disability and is dependent shall continue through the term of such policy or any extension or renewal thereof.
    (e) This amendatory Act of 1969 is applicable to policies issued or renewed more than 60 days after the effective date of this amendatory Act of 1969.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/356c) (from Ch. 73, par. 968c)
    Sec. 356c. (1) No policy of accident and health insurance providing coverage of hospital expenses or medical expenses or both on an expense incurred basis which in addition to covering the insured, also covers members of the insured's immediate family, shall contain any disclaimer, waiver or other limitation of coverage relative to the hospital or medical coverage or insurability of newborn infants from and after the moment of birth.
    (2) Each such policy of accident and health insurance shall contain a provision stating that the accident and health insurance benefits applicable for children shall be granted immediately with respect to a newly born child from the moment of birth. The coverage for newly born children shall include coverage of illness, injury, congenital defects (including the treatment of cleft lip and cleft palate), birth abnormalities and premature birth.
    (3) If payment of a specific premium is required to provide coverage for a child, the policy may require that notification of birth of a newly born child must be furnished to the insurer within 31 days after the date of birth in order to have the coverage continue beyond such 31 day period and may require payment of the appropriate premium.
    (4) In the event that no other members of the insured's immediate family are covered, immediate coverage for the first newborn infant shall be provided if the insured applies for dependent's coverage within 31 days of the newborn's birth. Such coverage shall be contingent upon payment of the additional premium.
    (5) The requirements of this Section shall apply, on or after the sixtieth day following the effective date of this Section, (a) to all such non-group policies delivered or issued for delivery, and (b) to all such group policies delivered, issued for delivery, renewed or amended. The insurers of such non-group policies in effect on the sixtieth day following the effective date of this Section shall extend to owners of said policies, on or before the first policy anniversary following such date, the opportunity to apply for the addition to their policies of a provision as set forth in paragraph (2) above, with, at the option of the insurer, payment of a premium appropriate thereto.
(Source: P.A. 102-768, eff. 1-1-24.)

    (215 ILCS 5/356d) (from Ch. 73, par. 968d)
    Sec. 356d. Conversion privileges for insured former spouses. (1) No individual policy of accident and health insurance providing coverage of hospital and/or medical expense on either an expense incurred basis or other than an expense incurred basis, which in addition to covering the insured also provides coverage to the spouse of the insured shall contain a provision for termination of coverage for a spouse covered under the policy solely as a result of a break in the marital relationship except by reason of an entry of a valid judgment of dissolution of marriage between the parties.
    (2) Every policy which contains a provision for termination of coverage of the spouse upon dissolution of marriage shall contain a provision to the effect that upon the entry of a valid judgment of dissolution of marriage between the insured parties the spouse whose marriage was dissolved shall be entitled to have issued to him or her, without evidence of insurability, upon application made to the company within 60 days following the entry of such judgment, and upon the payment of the appropriate premium, an individual policy of accident and health insurance. Such policy shall provide the coverage then being issued by the insurer which is most nearly similar to, but not greater than, such terminated coverages. Any and all probationary and/or waiting periods set forth in such policy shall be considered as being met to the extent coverage was in force under the prior policy.
    (3) The requirements of this Section shall apply to all policies delivered or issued for delivery on or after the 60th day following the effective date of this Section.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/356e) (from Ch. 73, par. 968e)
    Sec. 356e. Victims of certain offenses.
    (1) No individual policy of accident and health insurance, which provides benefits for hospital or medical expenses based upon the actual expenses incurred, delivered or issued for delivery to any person in this State shall contain any specific exception to coverage which would preclude the payment under that policy of actual expenses incurred in the examination and testing of a victim of an offense defined in Sections 11-1.20 through 11-1.60 or 12-13 through 12-16 of the Criminal Code of 1961 or the Criminal Code of 2012, or an attempt to commit such offense to establish that sexual contact did occur or did not occur, and to establish the presence or absence of sexually transmitted disease or infection, and examination and treatment of injuries and trauma sustained by a victim of such offense arising out of the offense. Every policy of accident and health insurance which specifically provides benefits for routine physical examinations shall provide full coverage for expenses incurred in the examination and testing of a victim of an offense defined in Sections 11-1.20 through 11-1.60 or 12-13 through 12-16 of the Criminal Code of 1961 or the Criminal Code of 2012, or an attempt to commit such offense as set forth in this Section. This Section shall not apply to a policy which covers hospital and medical expenses for specified illnesses or injuries only.
    (2) For purposes of enabling the recovery of State funds, any insurance carrier subject to this Section shall upon reasonable demand by the Department of Public Health disclose the names and identities of its insureds entitled to benefits under this provision to the Department of Public Health whenever the Department of Public Health has determined that it has paid, or is about to pay, hospital or medical expenses for which an insurance carrier is liable under this Section. All information received by the Department of Public Health under this provision shall be held on a confidential basis and shall not be subject to subpoena and shall not be made public by the Department of Public Health or used for any purpose other than that authorized by this Section.
    (3) Whenever the Department of Public Health finds that it has paid all or part of any hospital or medical expenses which an insurance carrier is obligated to pay under this Section, the Department of Public Health shall be entitled to receive reimbursement for its payments from such insurance carrier provided that the Department of Public Health has notified the insurance carrier of its claims before the carrier has paid such benefits to its insureds or in behalf of its insureds.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/356f) (from Ch. 73, par. 968f)
    Sec. 356f. No individual policy of accident or health insurance or any renewal thereof shall be denied or cancelled by the insurer, nor shall any such policy contain any exception or exclusion of benefits, solely because the mother of the insured has taken diethylstilbestrol, commonly referred to as DES.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/356g) (from Ch. 73, par. 968g)
    Sec. 356g. Mammograms; mastectomies.
    (a) Every insurer shall provide in each group or individual policy, contract, or certificate of insurance issued or renewed for persons who are residents of this State, coverage for screening by low-dose mammography for all patients 35 years of age or older for the presence of occult breast cancer within the provisions of the policy, contract, or certificate. The coverage shall be as follows:
        (1) A baseline mammogram for patients 35 to 39 years
    
of age.
        (2) An annual mammogram for patients 40 years of age
    
or older.
        (3) A mammogram at the age and intervals considered
    
medically necessary by the patient's health care provider for patients under 40 years of age and having a family history of breast cancer, prior personal history of breast cancer, positive genetic testing, or other risk factors.
        (4) For an individual or group policy of accident and
    
health insurance or a managed care plan that is amended, delivered, issued, or renewed on or after January 1, 2020 (the effective date of Public Act 101-580) and before the effective date of this amendatory Act of the 103rd General Assembly, a comprehensive ultrasound screening and MRI of an entire breast or breasts if a mammogram demonstrates heterogeneous or dense breast tissue or when medically necessary as determined by a physician licensed to practice medicine in all of its branches.
        (4.3) For an individual or group policy of accident
    
and health insurance or a managed care plan that is amended, delivered, issued, or renewed on or after the effective date of this amendatory Act of the 103rd General Assembly, a comprehensive ultrasound screening and MRI of an entire breast or breasts if a mammogram demonstrates heterogeneous or dense breast tissue or when medically necessary as determined by a physician licensed to practice medicine in all of its branches, advanced practice registered nurse, or physician assistant.
        (4.5) For a group policy of accident and health
    
insurance that is amended, delivered, issued, or renewed on or after the effective date of this amendatory Act of the 103rd General Assembly, molecular breast imaging (MBI) of an entire breast or breasts if a mammogram demonstrates heterogeneous or dense breast tissue or when medically necessary as determined by a physician licensed to practice medicine in all of its branches, advanced practice registered nurse, or physician assistant.
        (5) A screening MRI when medically necessary, as
    
determined by a physician licensed to practice medicine in all of its branches.
        (6) For an individual or group policy of accident and
    
health insurance or a managed care plan that is amended, delivered, issued, or renewed on or after January 1, 2020 (the effective date of Public Act 101-580), a diagnostic mammogram when medically necessary, as determined by a physician licensed to practice medicine in all its branches, advanced practice registered nurse, or physician assistant.
    A policy subject to this subsection shall not impose a deductible, coinsurance, copayment, or any other cost-sharing requirement on the coverage provided; except that this sentence does not apply to coverage of diagnostic mammograms to the extent such coverage would disqualify a high-deductible health plan from eligibility for a health savings account pursuant to Section 223 of the Internal Revenue Code (26 U.S.C. 223).
    For purposes of this Section:
    "Diagnostic mammogram" means a mammogram obtained using diagnostic mammography.
    "Diagnostic mammography" means a method of screening that is designed to evaluate an abnormality in a breast, including an abnormality seen or suspected on a screening mammogram or a subjective or objective abnormality otherwise detected in the breast.
    "Low-dose mammography" means the x-ray examination of the breast using equipment dedicated specifically for mammography, including the x-ray tube, filter, compression device, and image receptor, with radiation exposure delivery of less than 1 rad per breast for 2 views of an average size breast. The term also includes digital mammography and includes breast tomosynthesis. As used in this Section, the term "breast tomosynthesis" means a radiologic procedure that involves the acquisition of projection images over the stationary breast to produce cross-sectional digital three-dimensional images of the breast.
    If, at any time, the Secretary of the United States Department of Health and Human Services, or its successor agency, promulgates rules or regulations to be published in the Federal Register or publishes a comment in the Federal Register or issues an opinion, guidance, or other action that would require the State, pursuant to any provision of the Patient Protection and Affordable Care Act (Public Law 111-148), including, but not limited to, 42 U.S.C. 18031(d)(3)(B) or any successor provision, to defray the cost of any coverage for breast tomosynthesis outlined in this subsection, then the requirement that an insurer cover breast tomosynthesis is inoperative other than any such coverage authorized under Section 1902 of the Social Security Act, 42 U.S.C. 1396a, and the State shall not assume any obligation for the cost of coverage for breast tomosynthesis set forth in this subsection.
    (a-5) Coverage as described by subsection (a) shall be provided at no cost to the insured and shall not be applied to an annual or lifetime maximum benefit.
    (a-10) When health care services are available through contracted providers and a person does not comply with plan provisions specific to the use of contracted providers, the requirements of subsection (a-5) are not applicable. When a person does not comply with plan provisions specific to the use of contracted providers, plan provisions specific to the use of non-contracted providers must be applied without distinction for coverage required by this Section and shall be at least as favorable as for other radiological examinations covered by the policy or contract.
    (b) No policy of accident or health insurance that provides for the surgical procedure known as a mastectomy shall be issued, amended, delivered, or renewed in this State unless that coverage also provides for prosthetic devices or reconstructive surgery incident to the mastectomy. Coverage for breast reconstruction in connection with a mastectomy shall include:
        (1) reconstruction of the breast upon which the
    
mastectomy has been performed;
        (2) surgery and reconstruction of the other breast to
    
produce a symmetrical appearance; and
        (3) prostheses and treatment for physical
    
complications at all stages of mastectomy, including lymphedemas.
Care shall be determined in consultation with the attending physician and the patient. The offered coverage for prosthetic devices and reconstructive surgery shall be subject to the deductible and coinsurance conditions applied to the mastectomy, and all other terms and conditions applicable to other benefits. When a mastectomy is performed and there is no evidence of malignancy then the offered coverage may be limited to the provision of prosthetic devices and reconstructive surgery to within 2 years after the date of the mastectomy. As used in this Section, "mastectomy" means the removal of all or part of the breast for medically necessary reasons, as determined by a licensed physician.
    Written notice of the availability of coverage under this Section shall be delivered to the insured upon enrollment and annually thereafter. An insurer may not deny to an insured eligibility, or continued eligibility, to enroll or to renew coverage under the terms of the plan solely for the purpose of avoiding the requirements of this Section. An insurer may not penalize or reduce or limit the reimbursement of an attending provider or provide incentives (monetary or otherwise) to an attending provider to induce the provider to provide care to an insured in a manner inconsistent with this Section.
    (c) Rulemaking authority to implement Public Act 95-1045, 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. 103-808, eff. 1-1-26.)

    (215 ILCS 5/356g.5)
    Sec. 356g.5. Clinical breast exam.
    (a) The General Assembly finds that clinical breast examinations are a critical tool in the early detection of breast cancer, while the disease is in its earlier and potentially more treatable stages. Insurer reimbursement of clinical breast examinations is essential to the effort to reduce breast cancer deaths in Illinois.
    (b) Every insurer shall provide, in each group or individual policy, contract, or certificate of accident or health insurance issued or renewed for persons who are residents of Illinois, coverage for complete and thorough clinical breast examinations as indicated by guidelines of practice, performed by a physician licensed to practice medicine in all its branches, a licensed advanced practice registered nurse, or a licensed physician assistant, to check for lumps and other changes for the purpose of early detection and prevention of breast cancer as follows:
        (1) at least every 3 years for women at least 20
    
years of age but less than 40 years of age; and
        (2) annually for women 40 years of age or older.
    (c) Upon approval of a nationally recognized separate and distinct clinical breast exam code that is compliant with all State and federal laws, rules, and regulations, public and private insurance plans shall take action to cover clinical breast exams on a separate and distinct basis.
(Source: P.A. 99-173, eff. 7-29-15; 100-513, eff. 1-1-18.)

    (215 ILCS 5/356g.5-1)
    Sec. 356g.5-1. Breast cancer pain medication and therapy. A group or individual policy of accident and health insurance or managed care plan that is amended, delivered, issued, or renewed after the effective date of this amendatory Act of the 95th General Assembly must provide coverage for all medically necessary pain medication and pain therapy related to the treatment of breast cancer on the same terms and conditions that are generally applicable to coverage for other conditions. For purposes of this Section, "pain therapy" means pain therapy that is medically based and includes reasonably defined goals, including, but not limited to, stabilizing or reducing pain, with periodic evaluations of the efficacy of the pain therapy against these goals. The provisions of this Section do not apply to short-term travel, accident-only, limited, or specified-disease policies, or to policies or contracts designed for issuance to persons eligible for coverage under Title XVIII of the Social Security Act, known as Medicare, or any other similar coverage under State or federal governmental plans.
    Rulemaking authority to implement this amendatory Act of the 95th 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. 95-1045, eff. 3-27-09.)

    (215 ILCS 5/356h) (from Ch. 73, par. 968h)
    Sec. 356h. No individual or group policy of accident and health insurance which covers the insured's immediate family or children, as well as covering the insured, shall exclude a child from coverage or limit coverage for a child solely because the child is an adopted child, or solely because the child does not reside with the insured. For purposes of this Section, a child who is in the custody of the insured, pursuant to an interim court order of adoption or, in the case of group insurance, placement of adoption, whichever comes first, vesting temporary care of the child in the insured, is an adopted child, regardless of whether a final order granting adoption is ultimately issued.
(Source: P.A. 91-549, eff. 8-14-99.)

    (215 ILCS 5/356i) (from Ch. 73, par. 968i)
    Sec. 356i. Medical assistance; coverage of child.
    (a) In this Section, "Medicaid" means medical assistance authorized under Section 1902 of the Social Security Act.
    (b) An individual or group policy of accident and health insurance that is delivered or issued for delivery to any person in this State or renewed or amended may not contain any provision which limits or excludes payments of hospital or medical benefits coverage to or on behalf of the insured because the insured or any covered dependent is eligible for or receiving Medicaid benefits in this or any other state.
    (c) To the extent that payment for covered expenses has been made under Article V, VI, or VII of the Illinois Public Aid Code for health care services provided to an individual, if a third party has a legal liability to make payments for those health care services, the State is considered to have acquired the rights of the individual to payment.
    (d) If a child is covered under an accident and health insurance policy issued to the child's noncustodial parent, the issuer of the policy shall do all of the following:
        (1) Provide necessary information to the child's
    
custodial parent to enable the child to obtain benefits under that coverage.
        (2) Permit the child's custodial parent (or the
    
provider, with the custodial parent's approval) to submit claims for payment for covered services without the approval of the noncustodial parent.
        (3) Make payments on claims submitted in accordance
    
with paragraph (2) directly to the custodial parent, the provider of health care services, or the state Medicaid agency.
    (e) An insurer may not deny enrollment of a child under the accident and health insurance coverage of the child's parent on any of the following grounds:
        (1) The child was born out of wedlock.
        (2) The child is not claimed as a dependent on the
    
parent's federal income tax return.
        (3) The child does not reside with the parent or in
    
the insurer's service area.
    (f) If a parent is required by a court or administrative order to provide accident and health insurance coverage for a child and the parent is insured under a plan that offers coverage for eligible dependents, the insurer, upon receiving a copy of the order, shall:
        (1) Upon application, permit the parent to add to the
    
parent's coverage such a child who is otherwise eligible for that coverage, without regard to any enrollment season restrictions.
        (2) Add the child to the parent's coverage upon
    
application of the child's other parent, the state agency administering the Medicaid program, or the state agency administering a program for enforcing child support and establishing paternity under 42 U.S.C. 651 through 669 (or another child support enforcement program), if the parent is covered but fails to apply for coverage for the child.
    (g) An insurer may not impose, on a state agency that has been assigned the rights of a covered individual who receives Medicaid benefits, requirements that are different from requirements applicable to an assignee of any other individual covered under the same insurance policy.
    (h) Nothing in subsections (e) and (f) prevents an insurer from denying any such application if the child is not eligible for coverage according to the insurer's medical underwriting standards.
    (i) The insurer may not eliminate coverage of such a child unless the insurer is provided satisfactory written evidence of either of the following:
        (1) The court or administrative order is no longer in
    
effect.
        (2) The child is or will be covered under a
    
comparable health care plan obtained by the parent under such order and that coverage is currently in effect or will take effect not later than the date the prior coverage is terminated.
(Source: P.A. 89-183, eff. 1-1-96.)

    (215 ILCS 5/356j) (from Ch. 73, par. 968j)
    Sec. 356j. (Repealed).
(Source: Repealed by P.A. 89-183, eff. 1-1-96.)

    (215 ILCS 5/356K) (from Ch. 73, par. 968K)
    Sec. 356K. Coverage for Organ Transplantation Procedures. No insurer providing individual accident and health insurance coverage under this Act for hospital or medical expenses shall deny reimbursement for an otherwise covered expense incurred for any organ transplantation procedure solely on the basis that such procedure is deemed experimental or investigational unless supported by the determination of the Office of Health Care Technology Assessment within the Agency for Health Care Policy and Research within the federal Department of Health and Human Services that such procedure is either experimental or investigational or that there is insufficient data or experience to determine whether an organ transplantation procedure is clinically acceptable. If an accident and health insurer has made written request, or had one made on its behalf by a national organization, for determination by the Office of Health Care Technology Assessment within the Agency for Health Care Policy and Research within the federal Department of Health and Human Services as to whether a specific organ transplantation procedure is clinically acceptable and said organization fails to respond to such a request within a period of 90 days, the failure to act may be deemed a determination that the procedure is deemed to be experimental or investigational.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/356L) (from Ch. 73, par. 968L)
    Sec. 356L. No individual policy of accident or health insurance shall include any provision which shall have the effect of denying coverage to or on behalf of an insured under such policy on the basis of a failure by the insured to file a notice of claim within the time period required by the policy, provided such failure is caused solely by the physical inability or mental incapacity of the insured to file such notice of claim because of a period of emergency hospitalization.
(Source: P.A. 103-718, eff. 7-19-24.)

    (215 ILCS 5/356m) (from Ch. 73, par. 968m)
    Sec. 356m. Infertility coverage.
    (a) No group policy of accident and health insurance providing coverage for more than 25 employees that provides pregnancy-related benefits may be issued, amended, delivered, or renewed in this State after January 1, 2016 and through December 31, 2025 unless the policy contains coverage for the diagnosis and treatment of infertility including, but not limited to, in vitro fertilization, uterine embryo lavage, embryo transfer, artificial insemination, gamete intrafallopian tube transfer, zygote intrafallopian tube transfer, and low tubal ovum transfer.
    (a-5) No group policy of accident and health insurance that provides pregnancy-related benefits may be issued, amended, delivered, or renewed in this State on or after January 1, 2026 unless the policy contains coverage for the diagnosis and treatment of infertility, including, but not limited to, in vitro fertilization, uterine embryo lavage, embryo transfer, artificial insemination, gamete intrafallopian tube transfer, zygote intrafallopian tube transfer, surgical sperm extraction procedures, and low tubal ovum transfer. The coverage required shall include procedures necessary to screen or diagnose a fertilized egg before implantation, including, but not limited to, preimplantation genetic testing for aneuploidy, preimplantation genetic testing for chromosome structural rearrangements, and preimplantation genetic testing for monogenic or single gene disorders. Coverage under this subsection for the diagnosis and treatment of infertility shall be required only if the procedures:
        (1) are considered medically appropriate by the
    
patient's medical provider based on clinical guidelines or standards developed by the American Society for Reproductive Medicine, the American College of Obstetricians and Gynecologists, or the Society for Assisted Reproductive Technology; and
        (2) are performed at medical facilities or clinics
    
that are members in good standing of the Society for Assisted Reproductive Technology.
    (b) The coverage required under subsection (a) for procedures for in vitro fertilization, gamete intrafallopian tube transfer, or zygote intrafallopian tube transfer shall be required only if:
        (1) the covered individual has been unable to attain
    
a viable pregnancy, maintain a viable pregnancy, or sustain a successful pregnancy through reasonable, less costly medically appropriate infertility treatments for which coverage is available under the policy, plan, or contract;
        (2) the covered individual has not undergone 4
    
completed oocyte retrievals, except that if a live birth follows a completed oocyte retrieval, then 2 more completed oocyte retrievals shall be covered; and
        (3) the procedures are performed at medical
    
facilities that conform to the American College of Obstetric and Gynecology guidelines for in vitro fertilization clinics or to the American Fertility Society minimal standards for programs of in vitro fertilization.
    (c) As used in this Section, "infertility" means a disease, condition, or status characterized by:
        (1) a failure to establish a pregnancy or to carry a
    
pregnancy to live birth after 12 months of regular, unprotected sexual intercourse if the woman is 35 years of age or younger, or after 6 months of regular, unprotected sexual intercourse if the woman is over 35 years of age; conceiving but having a miscarriage does not restart the 12-month or 6-month term for determining infertility;
        (2) a person's inability to reproduce either as a
    
single individual or with a partner without medical intervention; or
        (3) a licensed physician's findings based on a
    
patient's medical, sexual, and reproductive history, age, physical findings, or diagnostic testing.
    (d) A policy, contract, or certificate may not impose any exclusions, limitations, or other restrictions on coverage of fertility medications that are different from those imposed on any other prescription medications, nor may it impose any exclusions, limitations, or other restrictions on coverage of any fertility services based on a covered individual's participation in fertility services provided by or to a third party, nor may it impose deductibles, copayments, coinsurance, benefit maximums, waiting periods, or any other limitations on coverage for the diagnosis of infertility, treatment for infertility, and standard fertility preservation services, except as provided in this Section, that are different from those imposed upon benefits for services not related to infertility.
    (e) The procedures required to be covered under this Section are not required to be contained in any policy or plan issued to or by a religious institution or organization or to or by an entity sponsored by a religious institution or organization that finds the procedures required to be covered under this Section to violate its religious and moral teachings and beliefs.
(Source: P.A. 102-170, eff. 1-1-22; 103-751, eff. 8-2-24.)

    (215 ILCS 5/356n) (from Ch. 73, par. 968n)
    Sec. 356n. Fibrocystic condition; denial of coverage. No group or individual policy of accident or health insurance or any renewal thereof shall be denied by the insurer, nor shall any policy contain any exception or exclusion of benefits, solely because the insured has been diagnosed as having a fibrocystic breast condition, unless the condition is diagnosed by a breast biopsy that demonstrates an increased disposition to the development of breast cancer or unless the insured's medical history confirms a chronic, relapsing, symptomatic breast condition.
(Source: P.A. 87-519; 87-895; 87-1066.)

    (215 ILCS 5/356p) (from Ch. 73, par. 968p)
    Sec. 356p. Breast implant removal. No individual or group policy of accident and health insurance shall deny coverage for the removal of breast implants when the removal of the implants is medically necessary treatment for a sickness or injury. This Section does not apply to surgery performed for removal of breast implants that were implanted solely for cosmetic reasons. For the purpose of this Section, cosmetic reasons does not include cosmetic surgery performed as reconstruction resulting from sickness or injury.
(Source: P.A. 87-938.)

    (215 ILCS 5/356q)
    Sec. 356q. On or after the effective date of this Section, every insurer which delivers or issues for delivery in this State a group accident and health policy providing coverage for hospital, medical, or surgical treatment on an expense-incurred basis shall offer, for an additional premium and subject to the insurer's standard of insurability, optional coverage for the reasonable and necessary medical treatment of temporomandibular joint disorder and craniomandibular disorder. The group policyholder shall accept or reject the coverage in writing on the application or an amendment thereto for the master group policy. Benefits may be subject to the same pre-existing conditions, limitations, deductibles, co-payments and co-insurance that generally apply to any other sickness. The maximum lifetime benefits for temporomandibular joint disorder and craniomandibular treatment shall be no less than $2,500. Nothing herein shall prevent an insurer from including such coverage for temporomandibular joint disorder and craniomandibular disorder as part of a policy's basic coverage, in lieu of offering optional coverage.
(Source: P.A. 88-592, eff. 1-1-95.)

    (215 ILCS 5/356r)
    Sec. 356r. Access to obstetrical and gynecological care.
    (a) An individual or group policy of accident and health insurance or a managed care plan amended, delivered, issued, or renewed in this State must not require authorization or referral by the plan, issuer, or any person, including a primary care provider, for any covered individual who seeks coverage for obstetrical or gynecological care provided by any licensed or certified participating health care professional who specializes in obstetrics or gynecology.
    (a-5) If a policy, contract, or certificate requires or allows a covered individual to designate a primary care provider and provides coverage for any obstetrical or gynecological care, the insurer shall provide the notice required under 45 CFR 147.138(a)(4) and 149.310(a)(4) in all circumstances required under that provision.
    (a-6) The requirements of this Section shall be construed in a manner consistent with the requirements for access to and notice of obstetrical and gynecological care in 45 CFR 147.138 and 45 CFR 149.310.
    (b) Nothing in this Section prevents a health insurance issuer from requiring a participating obstetrical or gynecological health care professional to agree, with respect to individuals covered under a policy of accident and health insurance, to otherwise adhere to the health insurance issuer's policies and procedures, including procedures regarding referrals and obtaining prior authorization and providing services pursuant to a treatment plan, if any, approved by the issuer.
    (c) (Blank).
    (d) Nothing in this Section shall be construed to preclude a health insurance issuer from requiring that a participating obstetrical or gynecological health care professional notify the covered individual's primary care physician or the issuer of treatment decisions or update centralized medical records.
(Source: P.A. 103-718, eff. 1-1-25.)

    (215 ILCS 5/356s)
    Sec. 356s. Post-parturition care. An individual or group policy of accident and health insurance that provides maternity coverage and is amended, delivered, issued, or renewed after the effective date of this amendatory Act of 1996 shall provide coverage for the following:
        (1) a minimum of 48 hours of inpatient care following
    
a vaginal delivery for the mother and the newborn, except as otherwise provided in this Section; or
        (2) a minimum of 96 hours of inpatient care following
    
a delivery by caesarian section for the mother and newborn, except as otherwise provided in this Section.
    Coverage may be limited to a shorter length of inpatient care for services related to maternity and newborn care if the attending physician licensed to practice medicine in all of its branches determines, in accordance with the protocols and guidelines developed by the American College of Obstetricians and Gynecologists or the American Academy of Pediatrics, that the mother and the newborn meet the appropriate guidelines for that length of stay based upon evaluation of the mother and newborn and the coverage and availability of a post-discharge physician office visit or in-home nurse visit to verify the condition of the infant in the first 48 hours after discharge.
(Source: P.A. 103-718, eff. 1-1-25.)

    (215 ILCS 5/356t)
    Sec. 356t. Post-mastectomy care. An individual or group policy of accident and health insurance or managed care plan that provides surgical coverage and is amended, delivered, issued, or renewed after the effective date of this amendatory Act of 1997 shall provide inpatient coverage following a mastectomy for a length of time determined by the attending physician to be medically necessary and in accordance with protocols and guidelines based on sound scientific evidence and upon evaluation of the patient and the coverage for and availability of a post-discharge physician office visit or in-home nurse visit to verify the condition of the patient in the first 48 hours after discharge.
(Source: P.A. 90-7, eff. 6-10-97; 90-655, eff. 7-30-98.)

    (215 ILCS 5/356u)
    Sec. 356u. Pap tests and prostate cancer screenings.
    (a) A group policy of accident and health insurance that provides coverage for hospital or medical treatment or services for illness on an expense-incurred basis and is amended, delivered, issued, or renewed after January 1, 2024 shall provide coverage, without imposing a deductible, coinsurance, copayment, or any other cost-sharing requirement, for all of the following:
        (1) An annual cervical smear or Pap smear test for
    
all insureds.
        (2) An annual prostate cancer screening for insureds
    
upon the recommendation of a physician licensed to practice medicine in all its branches for:
            (A) asymptomatic individuals age 50 and over;
            (B) African-American individuals age 40 and over;
        
and
            (C) individuals age 40 and over with a family
        
history of or genetic predisposition to prostate cancer.
        (3) Surveillance tests for ovarian cancer for
    
insureds who are at risk for ovarian cancer.
    (b) This Section shall not apply to agreements, contracts, or policies that provide coverage for a specified disease or other limited benefit coverage.
    (c) This Section does not apply to coverage of prostate cancer screenings to the extent such coverage would disqualify a high-deductible health plan from eligibility for a health savings account pursuant to Section 223 of the Internal Revenue Code.
    (d) For the purposes of this Section:
    "At risk for ovarian cancer" means:
        (1) having a family history (i) with one or more
    
first-degree relatives with ovarian cancer, (ii) of clusters of relatives with breast cancer, or (iii) of nonpolyposis colorectal cancer; or
        (2) testing positive for BRCA1 or BRCA2 mutations.
    "Prostate cancer screening" means medically viable methods for the detection and diagnosis of prostate cancer, including a digital rectal exam and the prostate-specific antigen test and associated laboratory work. "Prostate cancer screening" includes medically necessary subsequent follow-up testing as directed by a health care provider, including, but not limited to:
        (1) urinary analysis;
        (2) serum biomarkers; and
        (3) medical imaging, including, but not limited to,
    
magnetic resonance imaging.
    "Surveillance tests for ovarian cancer" means annual screening using (i) CA-125 serum tumor marker testing, (ii) transvaginal ultrasound, (iii) pelvic examination.
(Source: P.A. 102-1073, eff. 1-1-23; 103-30, eff. 1-1-25.)

    (215 ILCS 5/356u.5)
    Sec. 356u.5. Coverage for genetic testing for breast and ovarian cancer susceptibility. A group or individual policy of accident and health insurance that is amended, delivered, issued, or renewed on or after January 1, 2024 shall provide coverage for the cost of the genetic testing of the BRCA1 and BRCA2 genes to detect an increased risk for breast and ovarian cancer if recommended by a health care provider in accordance with the United States Preventive Services Task Force's recommendations for testing.
(Source: P.A. 102-979, eff. 1-1-23.)

    (215 ILCS 5/356u.10)
    Sec. 356u.10. Genetic testing and evidence-based screenings for an inherited gene mutation.
    (a) In this Section, "genetic testing for an inherited mutation" means germline multi-gene testing for an inherited mutation associated with an increased risk of cancer in accordance with evidence-based, clinical practice guidelines.
    (b) A group policy of accident and health insurance or managed care plan that is amended, delivered, issued, or renewed after January 1, 2026 shall provide coverage for clinical genetic testing for an inherited gene mutation for individuals with a personal or family history of cancer, as recommended by a health care professional in accordance with current evidence-based clinical practice guidelines, including, but not limited to, the current version of the National Comprehensive Cancer Network clinical practice guidelines. The coverage shall limit the total amount that a covered person is required to pay for a clinical genetic test under this subsection to an amount not to exceed $50, except for services for which cost sharing is prohibited under 42 U.S.C. 300gg-13. This subsection (b) shall not apply to coverage of genetic testing to the extent such coverage would disqualify a high-deductible health plan from eligibility for a health savings account pursuant to Section 223 of the Internal Revenue Code.
    (c) For individuals with a genetic test that is positive for an inherited mutation associated with an increased risk of cancer, coverage required under this Section shall include any evidence-based screenings, as recommended by a health care professional in accordance with current evidence-based clinical practice guidelines, to the extent that the management recommendation is not already covered by the policy, except that coverage for evidence-based screenings under this subsection (c) may be subject to a deductible, coinsurance, or other cost-sharing limitation so long as the limitation is not greater than that required for other related cancer risk management benefits covered under the policy. In this subsection, "evidence-based cancer screenings" means medically recommended evidence-based screening modalities in accordance with current clinical practice guidelines.
(Source: P.A. 103-914, eff. 1-1-25.)

    (215 ILCS 5/356v)
    Sec. 356v. Use of information derived from genetic testing. After the effective date of this amendatory Act of 1997, an insurer must comply with the provisions of the Genetic Information Privacy Act in connection with the amendment, delivery, issuance, or renewal of, or claims for or denial of coverage under, an individual or group policy of accident and health insurance. Additionally, genetic information shall not be treated as a condition described in item (1) of subsection (A) of Section 20 of the Illinois Health Insurance Portability and Accountability Act in the absence of a diagnosis of the condition related to that genetic information.
(Source: P.A. 90-25, eff. 1-1-98; 90-655, eff. 7-30-98; 91-549, eff. 8-14-99.)

    (215 ILCS 5/356w)
    Sec. 356w. Diabetes self-management training and education.
    (a) A group policy of accident and health insurance that is amended, delivered, issued, or renewed after the effective date of this amendatory Act of 1998 shall provide coverage for outpatient self-management training and education, equipment, and supplies, as set forth in this Section, for the treatment of type 1 diabetes, type 2 diabetes, and gestational diabetes mellitus.
    (b) As used in this Section:
    "Diabetes self-management training" means instruction in an outpatient setting which enables a diabetic patient to understand the diabetic management process and daily management of diabetic therapy as a means of avoiding frequent hospitalization and complications. Diabetes self-management training shall include the content areas listed in the National Standards for Diabetes Self-Management Education Programs as published by the American Diabetes Association, including medical nutrition therapy and education programs, as defined by the contract of insurance, that allow the patient to maintain an A1c level within the range identified in nationally recognized standards of care.
    "Medical nutrition therapy" shall have the meaning ascribed to that term in the Dietitian Nutritionist Practice Act.
    "Physician" means a physician licensed to practice medicine in all of its branches providing care to the individual.
    "Qualified provider" for an individual that is enrolled in:
        (1) a health maintenance organization that uses a
    
primary care physician to control access to specialty care means (A) the individual's primary care physician licensed to practice medicine in all of its branches, (B) a physician licensed to practice medicine in all of its branches to whom the individual has been referred by the primary care physician, or (C) a certified, registered, or licensed network health care professional with expertise in diabetes management to whom the individual has been referred by the primary care physician.
        (2) an insurance plan means (A) a physician licensed
    
to practice medicine in all of its branches or (B) a certified, registered, or licensed health care professional with expertise in diabetes management to whom the individual has been referred by a physician.
    (c) Coverage under this Section for diabetes self-management training, including medical nutrition education, shall be limited to the following:
        (1) Up to 3 medically necessary visits to a qualified
    
provider upon initial diagnosis of diabetes by the patient's physician or, if diagnosis of diabetes was made within one year prior to the effective date of this amendatory Act of 1998 where the insured was a covered individual, up to 3 medically necessary visits to a qualified provider within one year after that effective date.
        (2) Up to 2 medically necessary visits to a qualified
    
provider upon a determination by a patient's physician that a significant change in the patient's symptoms or medical condition has occurred. A "significant change" in condition means symptomatic hyperglycemia (greater than 250 mg/dl on repeated occasions), severe hypoglycemia (requiring the assistance of another person), onset or progression of diabetes, or a significant change in medical condition that would require a significantly different treatment regimen.
    Payment by the insurer or health maintenance organization for the coverage required for diabetes self-management training pursuant to the provisions of this Section is only required to be made for services provided. No coverage is required for additional visits beyond those specified in items (1) and (2) of this subsection.
    Coverage under this subsection (c) for diabetes self-management training shall be subject to the same deductible, co-payment, and co-insurance provisions that apply to coverage under the policy for other services provided by the same type of provider.
    (d) Coverage shall be provided for the following equipment when medically necessary and prescribed by a physician licensed to practice medicine in all of its branches. Coverage for the following items shall be subject to deductible, co-payment and co-insurance provisions provided for under the policy or a durable medical equipment rider to the policy:
        (1) blood glucose monitors;
        (2) blood glucose monitors for the legally blind;
        (3) cartridges for the legally blind; and
        (4) lancets and lancing devices.
    This subsection does not apply to a group policy of accident and health insurance that does not provide a durable medical equipment benefit.
    (e) Coverage shall be provided for the following pharmaceuticals and supplies when medically necessary and prescribed by a physician licensed to practice medicine in all of its branches. Coverage for the following items shall be subject to the same coverage, deductible, co-payment, and co-insurance provisions under the policy or a drug rider to the policy, except as otherwise provided for under Section 356z.41:
        (1) insulin;
        (2) syringes and needles;
        (3) test strips for glucose monitors;
        (4) FDA approved oral agents used to control blood
    
sugar; and
        (5) glucagon emergency kits.
    This subsection does not apply to a group policy of accident and health insurance that does not provide a drug benefit.
    (f) Coverage shall be provided for regular foot care exams by a physician or by a physician to whom a physician has referred the patient. Coverage for regular foot care exams shall be subject to the same deductible, co-payment, and co-insurance provisions that apply under the policy for other services provided by the same type of provider.
    (g) If authorized by a physician, diabetes self-management training may be provided as a part of an office visit, group setting, or home visit.
    (h) This Section shall not apply to agreements, contracts, or policies that provide coverage for a specified diagnosis or other limited benefit coverage.
(Source: P.A. 101-625, eff. 1-1-21.)

    (215 ILCS 5/356x)
    Sec. 356x. Coverage for colorectal cancer examination and screening.
    (a) An individual or group policy of accident and health insurance or a managed care plan that is amended, delivered, issued, or renewed on or after the effective date of this amendatory Act of the 93rd General Assembly that provides coverage to a resident of this State must provide benefits or coverage for all colorectal cancer examinations and laboratory tests for colorectal cancer as prescribed by a physician, in accordance with the published American Cancer Society guidelines on colorectal cancer screening or other existing colorectal cancer screening guidelines issued by nationally recognized professional medical societies or federal government agencies, including the National Cancer Institute, the Centers for Disease Control and Prevention, and the American College of Gastroenterology.
    (b) Coverage required under this Section may not impose any deductible, coinsurance, waiting period, or other cost-sharing limitation that is greater than that required for other coverage under the policy.
(Source: P.A. 93-568, eff. 1-1-04.)

    (215 ILCS 5/356y)
    Sec. 356y. (Repealed).
(Source: P.A. 91-406, eff. 1-1-00. Repealed internally, eff. 1-1-03.)

    (215 ILCS 5/356z.1)
    Sec. 356z.1. Prenatal HIV testing. An individual or group policy of accident and health insurance that provides maternity coverage and is amended, delivered, issued, or renewed after the effective date of this amendatory Act of the 92nd General Assembly must provide coverage for prenatal HIV testing ordered by an attending physician licensed to practice medicine in all its branches, or by a physician assistant or advanced practice registered nurse, including but not limited to orders consistent with the recommendations of the American College of Obstetricians and Gynecologists or the American Academy of Pediatrics.
(Source: P.A. 99-173, eff. 7-29-15.)

    (215 ILCS 5/356z.2)
    Sec. 356z.2. Coverage for adjunctive services in dental care.
    (a) An individual or group policy of accident and health insurance amended, delivered, issued, or renewed after January 1, 2003 (the effective date of Public Act 92-764) shall cover charges incurred, and anesthetics provided, in conjunction with dental care that is provided to a covered individual in a hospital or an ambulatory surgical treatment center if any of the following applies:
        (1) the individual is a child age 6 or under;
        (2) the individual has a medical condition that
    
requires hospitalization or general anesthesia for dental care; or
        (3) the individual is a person with a disability.
    (a-5) An individual or group policy of accident and health insurance amended, delivered, issued, or renewed after January 1, 2016 (the effective date of Public Act 99-141) shall cover charges incurred, and anesthetics provided by a dentist with a permit provided under Section 8.1 of the Illinois Dental Practice Act, in conjunction with dental care that is provided to a covered individual in a dental office, oral surgeon's office, hospital, or ambulatory surgical treatment center if the individual is under age 26 and has been diagnosed with an autism spectrum disorder as defined in Section 10 of the Autism Spectrum Disorders Reporting Act or a developmental disability. A covered individual shall be required to make 2 visits to the dental care provider prior to accessing other coverage under this subsection.
    For purposes of this subsection, "developmental disability" means "developmental disability" as defined in Section 1-106 of the Mental Health and Developmental Disabilities Code.
    (b) For purposes of this Section, "ambulatory surgical treatment center" has the meaning given to that term in Section 3 of the Ambulatory Surgical Treatment Center Act.
    For purposes of this Section, "person with a disability" means a person, regardless of age, with a chronic disability if the chronic disability meets all of the following conditions:
        (1) It is attributable to a mental or physical
    
impairment or combination of mental and physical impairments.
        (2) It is likely to continue.
        (3) It results in substantial functional limitations
    
in one or more of the following areas of major life activity:
            (A) self-care;
            (B) receptive and expressive language;
            (C) learning;
            (D) mobility;
            (E) capacity for independent living; or
            (F) economic self-sufficiency.
    (c) The coverage required under this Section may be subject to any limitations, exclusions, or cost-sharing provisions that apply generally under the insurance policy.
    (d) This Section does not apply to a policy that covers only dental care.
    (e) Nothing in this Section requires that the dental services be covered.
    (f) The provisions of this Section do not apply to short-term travel, accident-only, limited, or specified disease policies, nor to policies or contracts designed for issuance to persons eligible for coverage under Title XVIII of the Social Security Act, known as Medicare, or any other similar coverage under State or federal governmental plans.
(Source: P.A. 101-525, eff. 1-1-20; 102-972, eff. 1-1-23.)

    (215 ILCS 5/356z.3)
    Sec. 356z.3. Disclosure of limited benefit. An insurer that issues, delivers, amends, or renews an individual or group policy of accident and health insurance in this State after the effective date of this amendatory Act of the 92nd General Assembly and arranges, contracts with, or administers contracts with a provider whereby beneficiaries are provided an incentive to use the services of such provider must include the following disclosure on its contracts and evidences of coverage: "WARNING, LIMITED BENEFITS WILL BE PAID WHEN NON-PARTICIPATING PROVIDERS ARE USED. YOU CAN EXPECT TO PAY MORE THAN THE COST-SHARING AMOUNT DEFINED IN THE POLICY IN NON-EMERGENCY SITUATIONS. Except in limited situations governed by the federal No Surprises Act or Section 356z.3a of the Illinois Insurance Code (215 ILCS 5/356z.3a), non-participating providers furnishing non-emergency services may bill members for any amount up to the billed charge after the plan has paid its portion of the bill. If you elect to use a non-participating provider, plan benefit payments will be determined according to your policy's fee schedule, usual and customary charge (which is determined by comparing charges for similar services adjusted to the geographical area where the services are performed), or other method as defined by the policy. Participating providers have agreed to ONLY bill members the cost-sharing amounts. You may obtain further information about the participating status of professional providers and information on out-of-pocket expenses by calling the toll-free telephone number on your identification card.".
(Source: P.A. 102-901, eff. 1-1-23; 103-718, eff. 1-1-25.)

    (215 ILCS 5/356z.3a)
    (Text of Section from P.A. 104-60)
    Sec. 356z.3a. Billing; emergency services; nonparticipating providers.
    (a) As used in this Section:
    "Ancillary services" means:
        (1) items and services related to emergency medicine,
    
anesthesiology, pathology, radiology, and neonatology that are provided by any health care provider;
        (2) items and services provided by assistant
    
surgeons, hospitalists, and intensivists;
        (3) diagnostic services, including radiology and
    
laboratory services, except for advanced diagnostic laboratory tests identified on the most current list published by the United States Secretary of Health and Human Services under 42 U.S.C. 300gg-132(b)(3);
        (4) items and services provided by other specialty
    
practitioners as the United States Secretary of Health and Human Services specifies through rulemaking under 42 U.S.C. 300gg-132(b)(3);
        (5) items and services provided by a nonparticipating
    
provider if there is no participating provider who can furnish the item or service at the facility; and
        (6) items and services provided by a nonparticipating
    
provider if there is no participating provider who will furnish the item or service because a participating provider has asserted the participating provider's rights under the Health Care Right of Conscience Act.
    "Cost sharing" means the amount an insured, beneficiary, or enrollee is responsible for paying for a covered item or service under the terms of the policy or certificate. "Cost sharing" includes copayments, coinsurance, and amounts paid toward deductibles, but does not include amounts paid towards premiums, balance billing by out-of-network providers, or the cost of items or services that are not covered under the policy or certificate.
    "Emergency department of a hospital" means any hospital department that provides emergency services, including a hospital outpatient department.
    "Emergency medical condition" has the meaning ascribed to that term in Section 10 of the Managed Care Reform and Patient Rights Act.
    "Emergency medical screening examination" has the meaning ascribed to that term in Section 10 of the Managed Care Reform and Patient Rights Act.
    "Emergency services" means, with respect to an emergency medical condition:
        (1) in general, an emergency medical screening
    
examination, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition, and such further medical examination and treatment as would be required to stabilize the patient regardless of the department of the hospital or other facility in which such further examination or treatment is furnished; or
        (2) additional items and services for which benefits
    
are provided or covered under the coverage and that are furnished by a nonparticipating provider or nonparticipating emergency facility regardless of the department of the hospital or other facility in which such items are furnished after the insured, beneficiary, or enrollee is stabilized and as part of outpatient observation or an inpatient or outpatient stay with respect to the visit in which the services described in paragraph (1) are furnished. Services after stabilization cease to be emergency services only when all the conditions of 42 U.S.C. 300gg-111(a)(3)(C)(ii)(II) and regulations thereunder are met.
    "Freestanding Emergency Center" means a facility licensed under Section 32.5 of the Emergency Medical Services (EMS) Systems Act.
    "Health care facility" means, in the context of non-emergency services, any of the following:
        (1) a hospital as defined in 42 U.S.C. 1395x(e);
        (2) a hospital outpatient department;
        (3) a critical access hospital certified under 42
    
U.S.C. 1395i-4(e);
        (4) an ambulatory surgical treatment center as
    
defined in the Ambulatory Surgical Treatment Center Act; or
        (5) any recipient of a license under the Hospital
    
Licensing Act that is not otherwise described in this definition.
    "Health care provider" means a provider as defined in subsection (d) of Section 370g. "Health care provider" does not include a provider of air ambulance or ground ambulance services.
    "Health care services" has the meaning ascribed to that term in subsection (a) of Section 370g.
    "Health insurance issuer" has the meaning ascribed to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act.
    "Nonparticipating emergency facility" means, with respect to the furnishing of an item or service under a policy of group or individual health insurance coverage, any of the following facilities that does not have a contractual relationship directly or indirectly with a health insurance issuer in relation to the coverage:
        (1) an emergency department of a hospital;
        (2) a Freestanding Emergency Center;
        (3) an ambulatory surgical treatment center as
    
defined in the Ambulatory Surgical Treatment Center Act; or
        (4) with respect to emergency services described in
    
paragraph (2) of the definition of "emergency services", a hospital.
    "Nonparticipating provider" means, with respect to the furnishing of an item or service under a policy of group or individual health insurance coverage, any health care provider who does not have a contractual relationship directly or indirectly with a health insurance issuer in relation to the coverage.
    "Participating emergency facility" means any of the following facilities that has a contractual relationship directly or indirectly with a health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant health care service is provided to an insured, beneficiary, or enrollee under the coverage:
        (1) an emergency department of a hospital;
        (2) a Freestanding Emergency Center;
        (3) an ambulatory surgical treatment center as
    
defined in the Ambulatory Surgical Treatment Center Act; or
        (4) with respect to emergency services described in
    
paragraph (2) of the definition of "emergency services", a hospital.
    For purposes of this definition, a single case agreement between an emergency facility and an issuer that is used to address unique situations in which an insured, beneficiary, or enrollee requires services that typically occur out-of-network constitutes a contractual relationship and is limited to the parties to the agreement.
    "Participating health care facility" means any health care facility that has a contractual relationship directly or indirectly with a health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant health care service is provided to an insured, beneficiary, or enrollee under the coverage. A single case agreement between an emergency facility and an issuer that is used to address unique situations in which an insured, beneficiary, or enrollee requires services that typically occur out-of-network constitutes a contractual relationship for purposes of this definition and is limited to the parties to the agreement.
    "Participating provider" means any health care provider that has a contractual relationship directly or indirectly with a health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant health care service is provided to an insured, beneficiary, or enrollee under the coverage.
    "Qualifying payment amount" has the meaning given to that term in 42 U.S.C. 300gg-111(a)(3)(E) and the regulations promulgated thereunder.
    "Recognized amount" means the lesser of the amount initially billed by the provider or the qualifying payment amount.
    "Stabilize" means "stabilization" as defined in Section 10 of the Managed Care Reform and Patient Rights Act.
    "Treating provider" means a health care provider who has evaluated the individual.
    "Visit" means, with respect to health care services furnished to an individual at a health care facility, health care services furnished by a provider at the facility, as well as equipment, devices, telehealth services, imaging services, laboratory services, and preoperative and postoperative services regardless of whether the provider furnishing such services is at the facility.
    (b) Emergency services. When a beneficiary, insured, or enrollee receives emergency services from a nonparticipating provider or a nonparticipating emergency facility, the health insurance issuer shall ensure that the beneficiary, insured, or enrollee shall incur no greater out-of-pocket costs than the beneficiary, insured, or enrollee would have incurred with a participating provider or a participating emergency facility. Any cost-sharing requirements shall be applied as though the emergency services had been received from a participating provider or a participating facility. Cost sharing shall be calculated based on the recognized amount for the emergency services. If the cost sharing for the same item or service furnished by a participating provider would have been a flat-dollar copayment, that amount shall be the cost-sharing amount unless the provider has billed a lesser total amount. In no event shall the beneficiary, insured, enrollee, or any group policyholder or plan sponsor be liable to or billed by the health insurance issuer, the nonparticipating provider, or the nonparticipating emergency facility for any amount beyond the cost sharing calculated in accordance with this subsection with respect to the emergency services delivered. Administrative requirements or limitations shall be no greater than those applicable to emergency services received from a participating provider or a participating emergency facility.
    (b-5) Non-emergency services at participating health care facilities.
        (1) When a beneficiary, insured, or enrollee utilizes
    
a participating health care facility and, due to any reason, covered ancillary services are provided by a nonparticipating provider during or resulting from the visit, the health insurance issuer shall ensure that the beneficiary, insured, or enrollee shall incur no greater out-of-pocket costs than the beneficiary, insured, or enrollee would have incurred with a participating provider for the ancillary services. Any cost-sharing requirements shall be applied as though the ancillary services had been received from a participating provider. Cost sharing shall be calculated based on the recognized amount for the ancillary services. If the cost sharing for the same item or service furnished by a participating provider would have been a flat-dollar copayment, that amount shall be the cost-sharing amount unless the provider has billed a lesser total amount. In no event shall the beneficiary, insured, enrollee, or any group policyholder or plan sponsor be liable to or billed by the health insurance issuer, the nonparticipating provider, or the participating health care facility for any amount beyond the cost sharing calculated in accordance with this subsection with respect to the ancillary services delivered. In addition to ancillary services, the requirements of this paragraph shall also apply with respect to covered items or services furnished as a result of unforeseen, urgent medical needs that arise at the time an item or service is furnished, regardless of whether the nonparticipating provider satisfied the notice and consent criteria under paragraph (2) of this subsection.
        (2) When a beneficiary, insured, or enrollee utilizes
    
a participating health care facility and receives non-emergency covered health care services other than those described in paragraph (1) of this subsection from a nonparticipating provider during or resulting from the visit, the health insurance issuer shall ensure that the beneficiary, insured, or enrollee incurs no greater out-of-pocket costs than the beneficiary, insured, or enrollee would have incurred with a participating provider unless the nonparticipating provider or the participating health care facility on behalf of the nonparticipating provider satisfies the notice and consent criteria provided in 42 U.S.C. 300gg-132 and regulations promulgated thereunder. If the notice and consent criteria are not satisfied, then:
            (A) any cost-sharing requirements shall be
        
applied as though the health care services had been received from a participating provider;
            (B) cost sharing shall be calculated based on the
        
recognized amount for the health care services; and
            (C) in no event shall the beneficiary, insured,
        
enrollee, or any group policyholder or plan sponsor be liable to or billed by the health insurance issuer, the nonparticipating provider, or the participating health care facility for any amount beyond the cost sharing calculated in accordance with this subsection with respect to the health care services delivered.
    (c) Notwithstanding any other provision of this Code, except when the notice and consent criteria are satisfied for the situation in paragraph (2) of subsection (b-5), any benefits a beneficiary, insured, or enrollee receives for services under the situations in subsection (b) or (b-5) are assigned to the nonparticipating providers or the facility acting on their behalf. Upon receipt of the provider's bill or facility's bill, the health insurance issuer shall provide the nonparticipating provider or the facility with a written explanation of benefits that specifies the proposed reimbursement and the applicable deductible, copayment, or coinsurance amounts owed by the insured, beneficiary, or enrollee. The health insurance issuer shall pay any reimbursement subject to this Section directly to the nonparticipating provider or the facility.
    (d) For bills assigned under subsection (c), the nonparticipating provider or the facility may bill the health insurance issuer for the services rendered, and the health insurance issuer may pay the billed amount or attempt to negotiate reimbursement with the nonparticipating provider or the facility. Within 30 calendar days after the provider or facility transmits the bill to the health insurance issuer, the issuer shall send an initial payment or notice of denial of payment with the written explanation of benefits to the provider or facility. If attempts to negotiate reimbursement for services provided by a nonparticipating provider do not result in a resolution of the payment dispute within 30 days after receipt of written explanation of benefits by the health insurance issuer, then the health insurance issuer or nonparticipating provider or the facility may initiate binding arbitration to determine payment for services provided on a per-bill or batched-bill basis, in accordance with Section 300gg-111 of the Public Health Service Act and the regulations promulgated thereunder. The party requesting arbitration shall notify the other party arbitration has been initiated and state its final offer before arbitration. In response to this notice, the nonrequesting party shall inform the requesting party of its final offer before the arbitration occurs. Arbitration shall be initiated by filing a request with the Department of Insurance.
    (e) The Department of Insurance shall publish a list of approved arbitrators or entities that shall provide binding arbitration. These arbitrators shall be American Arbitration Association or American Health Lawyers Association trained arbitrators. Both parties must agree on an arbitrator from the Department of Insurance's or its approved entity's list of arbitrators. If no agreement can be reached, then a list of 5 arbitrators shall be provided by the Department of Insurance or the approved entity. From the list of 5 arbitrators, the health insurance issuer can veto 2 arbitrators and the provider or facility can veto 2 arbitrators. The remaining arbitrator shall be the chosen arbitrator. This arbitration shall consist of a review of the written submissions by both parties. The arbitrator shall not establish a rebuttable presumption that the qualifying payment amount should be the total amount owed to the provider or facility by the combination of the issuer and the insured, beneficiary, or enrollee. Binding arbitration shall provide for a written decision within 45 days after the request is filed with the Department of Insurance. Both parties shall be bound by the arbitrator's decision. The arbitrator's expenses and fees, together with other expenses, not including attorney's fees, incurred in the conduct of the arbitration, shall be paid as provided in the decision.
    (f) (Blank).
    (g) Section 368a of this Act shall not apply during the pendency of a decision under subsection (d). Upon the issuance of the arbitrator's decision, Section 368a applies with respect to the amount, if any, by which the arbitrator's determination exceeds the issuer's initial payment under subsection (c), or the entire amount of the arbitrator's determination if initial payment was denied. Any interest required to be paid to a provider under Section 368a shall not accrue until after 30 days of an arbitrator's decision as provided in subsection (d), but in no circumstances longer than 150 days from the date the nonparticipating facility-based provider billed for services rendered.
    (h) Nothing in this Section shall be interpreted to change the prudent layperson provisions with respect to emergency services under the Managed Care Reform and Patient Rights Act.
    (i) Nothing in this Section shall preclude a health care provider from billing a beneficiary, insured, or enrollee for reasonable administrative fees, such as service fees for checks returned for nonsufficient funds and missed appointments.
    (j) Nothing in this Section shall preclude a beneficiary, insured, or enrollee from assigning benefits to a nonparticipating provider when the notice and consent criteria are satisfied under paragraph (2) of subsection (b-5) or in any other situation not described in subsection (b) or (b-5).
    (k) Except when the notice and consent criteria are satisfied under paragraph (2) of subsection (b-5), if an individual receives health care services under the situations described in subsection (b) or (b-5), no referral requirement or any other provision contained in the policy or certificate of coverage shall deny coverage, reduce benefits, or otherwise defeat the requirements of this Section for services that would have been covered with a participating provider. However, this subsection shall not be construed to preclude a provider contract with a health insurance issuer, or with an administrator or similar entity acting on the issuer's behalf, from imposing requirements on the participating provider, participating emergency facility, or participating health care facility relating to the referral of covered individuals to nonparticipating providers.
    (l) Except if the notice and consent criteria are satisfied under paragraph (2) of subsection (b-5), cost-sharing amounts calculated in conformity with this Section shall count toward any deductible or out-of-pocket maximum applicable to in-network coverage.
    (m) The Department has the authority to enforce the requirements of this Section in the situations described in subsections (b) and (b-5), and in any other situation for which 42 U.S.C. Chapter 6A, Subchapter XXV, Parts D or E and regulations promulgated thereunder would prohibit an individual from being billed or liable for emergency services furnished by a nonparticipating provider or nonparticipating emergency facility or for non-emergency health care services furnished by a nonparticipating provider at a participating health care facility.
    (n) This Section does not apply with respect to air ambulance or ground ambulance services. This Section does not apply to any policy of excepted benefits or to short-term, limited-duration health insurance coverage.
    (o) Notwithstanding any other provision of law to the contrary, if a beneficiary, insured, or enrollee receives neonatal intensive care from a nonparticipating provider or nonparticipating facility, a health insurance issuer shall ensure that the beneficiary, insured, or enrollee shall incur no greater out-of-pocket costs than he or she would have incurred with a participating provider or a participating facility, as long as the nonparticipating provider or nonparticipating facility bills the neonatal intensive care as emergency services.
(Source: P.A. 103-440, eff. 1-1-24; 104-60, eff. 1-1-26.)
 
    (Text of Section from P.A. 104-248)
    Sec. 356z.3a. Billing; emergency services; nonparticipating providers.
    (a) As used in this Section:
    "Ancillary services" means:
        (1) items and services related to emergency medicine,
    
anesthesiology, pathology, radiology, and neonatology that are provided by any health care provider;
        (2) items and services provided by assistant
    
surgeons, hospitalists, and intensivists;
        (3) diagnostic services, including radiology and
    
laboratory services, except for advanced diagnostic laboratory tests identified on the most current list published by the United States Secretary of Health and Human Services under 42 U.S.C. 300gg-132(b)(3);
        (4) items and services provided by other specialty
    
practitioners as the United States Secretary of Health and Human Services specifies through rulemaking under 42 U.S.C. 300gg-132(b)(3);
        (5) items and services provided by a nonparticipating
    
provider if there is no participating provider who can furnish the item or service at the facility; and
        (6) items and services provided by a nonparticipating
    
provider if there is no participating provider who will furnish the item or service because a participating provider has asserted the participating provider's rights under the Health Care Right of Conscience Act.
    "Average gross charge rate" means, with respect to nonparticipating ground ambulance service providers, the average of the provider's gross charge rates in place for each individual charge described in subsection (b-15) of this Section for dates of service that fall within the 12-month period ending on June 30 immediately preceding the date on which the reporting of average gross charge rates is required.
    "Cost sharing" means the amount an insured, beneficiary, or enrollee is responsible for paying for a covered item or service under the terms of the policy or certificate. "Cost sharing" includes copayments, coinsurance, and amounts paid toward deductibles, but does not include amounts paid towards premiums, balance billing by out-of-network providers, or the cost of items or services that are not covered under the policy or certificate.
    "Emergency department of a hospital" means any hospital department that provides emergency services, including a hospital outpatient department.
    "Emergency medical condition" has the meaning ascribed to that term in Section 10 of the Managed Care Reform and Patient Rights Act.
    "Emergency medical screening examination" has the meaning ascribed to that term in Section 10 of the Managed Care Reform and Patient Rights Act.
    "Emergency services" means, with respect to an emergency medical condition:
        (1) in general, an emergency medical screening
    
examination, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition, and such further medical examination and treatment as would be required to stabilize the patient regardless of the department of the hospital or other facility in which such further examination or treatment is furnished; or
        (2) additional items and services for which benefits
    
are provided or covered under the coverage and that are furnished by a nonparticipating provider or nonparticipating emergency facility regardless of the department of the hospital or other facility in which such items are furnished after the insured, beneficiary, or enrollee is stabilized and as part of outpatient observation or an inpatient or outpatient stay with respect to the visit in which the services described in paragraph (1) are furnished. Services after stabilization cease to be emergency services only when all the conditions of 42 U.S.C. 300gg-111(a)(3)(C)(ii)(II) and regulations thereunder are met.
    "Emergency ground ambulance service" means ground ambulance service provided by ground ambulance service providers, regardless of whether the patient was transported, if the service was provided pursuant to a request to 9-1-1 or an equivalent telephone number, texting system, or other method of summoning emergency service or if the service provided was provided when a patient's condition, at the time of service, was considered to be an emergency medical condition as determined by a physician licensed under the Medical Practice Act of 1987.
    "Evaluation" means, with respect to emergency ground ambulance service, the provision of a medical screening examination to determine whether an emergency medical condition exists.
    "Freestanding Emergency Center" means a facility licensed under Section 32.5 of the Emergency Medical Services (EMS) Systems Act.
    "Ground ambulance service" means both medical transportation service that is described as ground ambulance service by the Centers for Medicare and Medicaid Services and medical nontransportation service, such as evaluation without transport, treatment without transport, or paramedic intercept, and that is, in either case, provided in a vehicle that is licensed as an ambulance under the Emergency Medical Services (EMS) Systems Act or by EMS Personnel assigned to a vehicle that is licensed as an ambulance under the Emergency Medical Services (EMS) Systems Act. "Ground ambulance service" may include any combination of the following: emergency ground ambulance service in a ground ambulance, urgent ground ambulance service, evaluation without treatment, treatment without transport, and paramedic intercept.
    "Ground ambulance service provider" means a vehicle service provider under the Emergency Medical Services (EMS) Systems Act that operates licensed ground ambulances for the purpose of providing emergency ground ambulance services, urgent ground ambulances services, or both. "Ground ambulance service provider" includes both ambulance providers and ambulance suppliers as described by the Centers for Medicare and Medicaid Services.
    "Health care facility" means, in the context of non-emergency services, any of the following:
        (1) a hospital as defined in 42 U.S.C. 1395x(e);
        (2) a hospital outpatient department;
        (3) a critical access hospital certified under 42
    
U.S.C. 1395i-4(e);
        (4) an ambulatory surgical treatment center as
    
defined in the Ambulatory Surgical Treatment Center Act; or
        (5) any recipient of a license under the Hospital
    
Licensing Act that is not otherwise described in this definition.
    "Health care provider" means a provider as defined in subsection (d) of Section 370g. "Health care provider" does not include a provider of air ambulance or ground ambulance services.
    "Health care services" has the meaning ascribed to that term in subsection (a) of Section 370g.
    "Health insurance issuer" has the meaning ascribed to that term in Section 5 of the Illinois Health Insurance Portability and Accountability Act.
    "Nonparticipating emergency facility" means, with respect to the furnishing of an item or service under a policy of group or individual health insurance coverage, any of the following facilities that does not have a contractual relationship directly or indirectly with a health insurance issuer in relation to the coverage:
        (1) an emergency department of a hospital;
        (2) a Freestanding Emergency Center;
        (3) an ambulatory surgical treatment center as
    
defined in the Ambulatory Surgical Treatment Center Act; or
        (4) with respect to emergency services described in
    
paragraph (2) of the definition of "emergency services", a hospital.
    "Nonparticipating ground ambulance service provider" means, with respect to the furnishing of an item or services under a policy of group or individual health insurance coverage, any ground ambulance service provider that does not have a contractual relationship directly or indirectly with a health insurance issuer in relation to the coverage.
    "Nonparticipating provider" means, with respect to the furnishing of an item or service under a policy of group or individual health insurance coverage, any health care provider who does not have a contractual relationship directly or indirectly with a health insurance issuer in relation to the coverage.
    "Paramedic intercept" means a service in which a ground ambulance staffed by licensed paramedics rendezvouses with a ground ambulance staffed with nonparamedics to provide advanced life support care. As used in this definition, "advanced life support care" means life support care that is warranted when a patient's condition and need for treatment exceed the basic life support or intermediate life support level of care.
    "Participating emergency facility" means any of the following facilities that has a contractual relationship directly or indirectly with a health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant health care service is provided to an insured, beneficiary, or enrollee under the coverage:
        (1) an emergency department of a hospital;
        (2) a Freestanding Emergency Center;
        (3) an ambulatory surgical treatment center as
    
defined in the Ambulatory Surgical Treatment Center Act; or
        (4) with respect to emergency services described in
    
paragraph (2) of the definition of "emergency services", a hospital.
    For purposes of this definition, a single case agreement between an emergency facility and an issuer that is used to address unique situations in which an insured, beneficiary, or enrollee requires services that typically occur out-of-network constitutes a contractual relationship and is limited to the parties to the agreement.
    "Participating ground ambulance service provider" means any ground ambulance service provider that has a contractual relationship directly or indirectly with a health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant health care service is provided to an insured, beneficiary, or enrollee under the coverage. As used in this definition, a single case agreement between a ground ambulance service provider and a health insurance issuer that is used to address unique situations in which an insured, beneficiary, or enrollee requires services that typically occur out-of-network constitutes a contractual relationship and is limited to the parties of the agreement.
    "Participating health care facility" means any health care facility that has a contractual relationship directly or indirectly with a health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant health care service is provided to an insured, beneficiary, or enrollee under the coverage. A single case agreement between an emergency facility and an issuer that is used to address unique situations in which an insured, beneficiary, or enrollee requires services that typically occur out-of-network constitutes a contractual relationship for purposes of this definition and is limited to the parties to the agreement.
    "Participating provider" means any health care provider that has a contractual relationship directly or indirectly with a health insurance issuer offering group or individual health insurance coverage setting forth the terms and conditions on which a relevant health care service is provided to an insured, beneficiary, or enrollee under the coverage.
    "Qualifying payment amount" has the meaning given to that term in 42 U.S.C. 300gg-111(a)(3)(E) and the regulations promulgated thereunder.
    "Recognized amount" means, except as otherwise provided in this Section, the lesser of the amount initially billed by the provider or the qualifying payment amount.
    "Stabilize" means "stabilization" as defined in Section 10 of the Managed Care Reform and Patient Rights Act.
    "Treating provider" means a health care provider who has evaluated the individual.
    "Treatment" means, with respect to the provision of emergency ground ambulance service, the provision of an evaluation and either (i) a therapy or therapeutic agent used to treat an emergency medical condition or (ii) a procedure used to treat an emergency medical condition.
    "Urgent ground ambulance service" means ground ambulance service that is deemed medically necessary by a health care professional and is required within 12 hours after the certification of the need for the service.
    "Visit" means, with respect to health care services furnished to an individual at a health care facility, health care services furnished by a provider at the facility, as well as equipment, devices, telehealth services, imaging services, laboratory services, and preoperative and postoperative services regardless of whether the provider furnishing such services is at the facility.
    (b) Emergency services. When a beneficiary, insured, or enrollee receives emergency services from a nonparticipating provider or a nonparticipating emergency facility, the health insurance issuer shall ensure that the beneficiary, insured, or enrollee shall incur no greater out-of-pocket costs than the beneficiary, insured, or enrollee would have incurred with a participating provider or a participating emergency facility. Any cost-sharing requirements shall be applied as though the emergency services had been received from a participating provider or a participating facility. Cost sharing shall be calculated based on the recognized amount for the emergency services. If the cost sharing for the same item or service furnished by a participating provider would have been a flat-dollar copayment, that amount shall be the cost-sharing amount unless the provider has billed a lesser total amount. In no event shall the beneficiary, insured, enrollee, or any group policyholder or plan sponsor be liable to or billed by the health insurance issuer, the nonparticipating provider, or the nonparticipating emergency facility for any amount beyond the cost sharing calculated in accordance with this subsection with respect to the emergency services delivered. Administrative requirements or limitations shall be no greater than those applicable to emergency services received from a participating provider or a participating emergency facility.
    (b-5) Non-emergency services at participating health care facilities.
        (1) When a beneficiary, insured, or enrollee utilizes
    
a participating health care facility and, due to any reason, covered ancillary services are provided by a nonparticipating provider during or resulting from the visit, the health insurance issuer shall ensure that the beneficiary, insured, or enrollee shall incur no greater out-of-pocket costs than the beneficiary, insured, or enrollee would have incurred with a participating provider for the ancillary services. Any cost-sharing requirements shall be applied as though the ancillary services had been received from a participating provider. Cost sharing shall be calculated based on the recognized amount for the ancillary services. If the cost sharing for the same item or service furnished by a participating provider would have been a flat-dollar copayment, that amount shall be the cost-sharing amount unless the provider has billed a lesser total amount. In no event shall the beneficiary, insured, enrollee, or any group policyholder or plan sponsor be liable to or billed by the health insurance issuer, the nonparticipating provider, or the participating health care facility for any amount beyond the cost sharing calculated in accordance with this subsection with respect to the ancillary services delivered. In addition to ancillary services, the requirements of this paragraph shall also apply with respect to covered items or services furnished as a result of unforeseen, urgent medical needs that arise at the time an item or service is furnished, regardless of whether the nonparticipating provider satisfied the notice and consent criteria under paragraph (2) of this subsection.
        (2) When a beneficiary, insured, or enrollee utilizes
    
a participating health care facility and receives non-emergency covered health care services other than those described in paragraph (1) of this subsection from a nonparticipating provider during or resulting from the visit, the health insurance issuer shall ensure that the beneficiary, insured, or enrollee incurs no greater out-of-pocket costs than the beneficiary, insured, or enrollee would have incurred with a participating provider unless the nonparticipating provider or the participating health care facility on behalf of the nonparticipating provider satisfies the notice and consent criteria provided in 42 U.S.C. 300gg-132 and regulations promulgated thereunder. If the notice and consent criteria are not satisfied, then:
            (A) any cost-sharing requirements shall be
        
applied as though the health care services had been received from a participating provider;
            (B) cost sharing shall be calculated based on the
        
recognized amount for the health care services; and
            (C) in no event shall the beneficiary, insured,
        
enrollee, or any group policyholder or plan sponsor be liable to or billed by the health insurance issuer, the nonparticipating provider, or the participating health care facility for any amount beyond the cost sharing calculated in accordance with this subsection with respect to the health care services delivered.
    (b-10) Coverage for ground ambulance services provided by nonparticipating ground ambulance service providers.
        (1) Any group or individual policy of accident and
    
health insurance amended, delivered, issued, or renewed on or after January 1, 2027 shall provide coverage for both emergency ground ambulance service and urgent ground ambulance service.
        (2) Beginning on January 1, 2027, when a beneficiary,
    
insured, or enrollee receives emergency ground ambulance services or urgent ambulance services from a nonparticipating ground ambulance service provider, the health insurance issuer shall ensure that the beneficiary, insured, or enrollee shall incur no greater out-of-pocket costs than the beneficiary, insured, or enrollee would have incurred with a participating ground ambulance provider. Any cost-sharing requirements shall be applied as though the emergency ground ambulance services or urgent ground ambulance services had been received from a participating ground ambulance service provider. Except as otherwise provided in State or federal law, cost sharing shall be calculated based on the lesser of the policy's copayment or coinsurance for an emergency room visit or 10% of the recognized amount. For purposes of this subsection, the recognized amount shall be calculated as provided for in paragraph (3) of this subsection. Except as otherwise provided for in State or federal law, if the cost sharing for the same item or service furnished by a participating ground ambulance provider would have been a flat-dollar copayment, that amount shall be the cost-sharing amount unless the nonparticipating ground ambulance provider has billed a lesser total amount.
        (3) Upon reasonable demand by a nonparticipating
    
ground ambulance service provider and after subtracting the beneficiary's, insured's, or enrollee's cost sharing amount, a health insurance issuer shall pay the nonparticipating ground ambulance service provider as follows:
            (A) for nonparticipating ground ambulance service
        
providers subject to a unit of local government that has jurisdiction over where the service was provided, a rate that is equal to the rate established or approved by the governing body of the local government having jurisdiction for that area or subarea; or
            (B) for nonparticipating ground ambulance service
        
providers that are not subject to the jurisdiction of a unit of local government, a rate that is equal to the lesser of (i) the negotiated rate between the nonparticipating ground ambulance service provider and the health insurance issuer; (ii) 85% of the nonparticipating ground ambulance service provider's billed charges; or (iii) the average gross charge rate in effect for the date of service in question for a base charge and, if applicable, a loaded mileage charge, the nonparticipating ground ambulance service provider has filed with the Department of Public Health in accordance with subsection (b-15).
            By accepting the payment from the health
        
insurance issuer, the nonparticipating ground ambulance service provider shall not seek any payment from the beneficiary, insured, or enrollee for any amount that exceeds the deductible, coinsurance, or copay for services provided to the beneficiary, insured, or enrollee.
    (b-15) Beginning on October 1, 2026, and each October 1 thereafter, each nonparticipating ground ambulance service provider shall file annually with the Department of Public Health, in the form and manner prescribed by the Department of Public Health, its average gross charge rates and any other information required by the Department of Public Health, by rule, for each of the following ground ambulance charge descriptions, as applicable: (1) basic life support, urgent base; (2) basic life support, emergency base; (3) advanced life support, urgent, level 1 base; (4) advanced life support, emergency, level 1 base; (5) advanced life support, emergency, level 2 base; (6) specialty care transport base; (7) emergency response, evaluation without transport base; (8) emergency response, treatment without transport base; (9) emergency response, paramedic intercept base; and (10) loaded mileage, per loaded mile charge for each of the applicable base charge descriptions services. The Department of Public Health shall publish the submitted rate information by January 1, 2027 and every January 1 thereafter. The Department of Public Health may request information from ground ambulance service providers and health insurance issuers regarding factors contributing to the network status of the ground ambulance service providers. The Department of Public Health may, upon the submission of rate information, assess a fee to each ground ambulance service provider that shall not exceed the administrative costs to complete the Department of Public Health's obligations in this subsection. The Department of Public Health may also request information from nationally recognized organizations that provide data on health care costs. The Department of Insurance shall direct the health insurance issuer to the location in which the information reported to the Department of Public Health is stored.
    (c) Notwithstanding any other provision of this Code, except when the notice and consent criteria are satisfied for the situation in paragraph (2) of subsection (b-5), any benefits a beneficiary, insured, or enrollee receives for services under the situations in subsection (b), (b-5), (b-10), or (b-15) are assigned to the nonparticipating providers, nonparticipating ground ambulance service provider, or the facility acting on their behalf. Upon receipt of the provider's bill or facility's bill, the health insurance issuer shall provide the nonparticipating provider, nonparticipating ground ambulance service provider, or the facility with a written explanation of benefits that specifies the proposed reimbursement and the applicable deductible, copayment, or coinsurance amounts owed by the insured, beneficiary, or enrollee. The health insurance issuer shall pay any reimbursement subject to this Section directly to the nonparticipating provider, nonparticipating ground ambulance service provider, or the facility.
    (d) For bills assigned under subsection (c), the nonparticipating provider or the facility may bill the health insurance issuer for the services rendered, and the health insurance issuer may pay the billed amount or attempt to negotiate reimbursement with the nonparticipating provider or the facility. Within 30 calendar days after the provider or facility transmits the bill to the health insurance issuer, the issuer shall send an initial payment or notice of denial of payment with the written explanation of benefits to the provider or facility. If attempts to negotiate reimbursement for services provided by a nonparticipating provider do not result in a resolution of the payment dispute within 30 days after receipt of written explanation of benefits by the health insurance issuer, then the health insurance issuer or nonparticipating provider or the facility may initiate binding arbitration to determine payment for services provided on a per-bill or batched-bill basis, in accordance with Section 300gg-111 of the Public Health Service Act and the regulations promulgated thereunder. The party requesting arbitration shall notify the other party arbitration has been initiated and state its final offer before arbitration. In response to this notice, the nonrequesting party shall inform the requesting party of its final offer before the arbitration occurs. Arbitration shall be initiated by filing a request with the Department of Insurance.
    (e) The Department of Insurance shall publish a list of approved arbitrators or entities that shall provide binding arbitration. These arbitrators shall be American Arbitration Association or American Health Lawyers Association trained arbitrators. Both parties must agree on an arbitrator from the Department of Insurance's or its approved entity's list of arbitrators. If no agreement can be reached, then a list of 5 arbitrators shall be provided by the Department of Insurance or the approved entity. From the list of 5 arbitrators, the health insurance issuer can veto 2 arbitrators and the provider or facility can veto 2 arbitrators. The remaining arbitrator shall be the chosen arbitrator. This arbitration shall consist of a review of the written submissions by both parties. The arbitrator shall not establish a rebuttable presumption that the qualifying payment amount should be the total amount owed to the provider or facility by the combination of the issuer and the insured, beneficiary, or enrollee. Binding arbitration shall provide for a written decision within 45 days after the request is filed with the Department of Insurance. Both parties shall be bound by the arbitrator's decision. The arbitrator's expenses and fees, together with other expenses, not including attorney's fees, incurred in the conduct of the arbitration, shall be paid as provided in the decision.
    (f) (Blank).
    (g) Section 368a of this Act shall not apply during the pendency of a decision under subsection (d). Upon the issuance of the arbitrator's decision, Section 368a applies with respect to the amount, if any, by which the arbitrator's determination exceeds the issuer's initial payment under subsection (c), or the entire amount of the arbitrator's determination if initial payment was denied. Any interest required to be paid to a provider under Section 368a shall not accrue until after 30 days of an arbitrator's decision as provided in subsection (d), but in no circumstances longer than 150 days from the date the nonparticipating facility-based provider billed for services rendered.
    (h) Nothing in this Section shall be interpreted to change the prudent layperson provisions with respect to emergency services under the Managed Care Reform and Patient Rights Act.
    (i) Nothing in this Section shall preclude a health care provider from billing a beneficiary, insured, or enrollee for reasonable administrative fees, such as service fees for checks returned for nonsufficient funds and missed appointments.
    (j) Nothing in this Section shall preclude a beneficiary, insured, or enrollee from assigning benefits to a nonparticipating provider when the notice and consent criteria are satisfied under paragraph (2) of subsection (b-5) or in any other situation not described in subsection (b) or (b-5).
    (k) Except when the notice and consent criteria are satisfied under paragraph (2) of subsection (b-5), if an individual receives health care services under the situations described in subsection (b) or (b-5), no referral requirement or any other provision contained in the policy or certificate of coverage shall deny coverage, reduce benefits, or otherwise defeat the requirements of this Section for services that would have been covered with a participating provider. However, this subsection shall not be construed to preclude a provider contract with a health insurance issuer, or with an administrator or similar entity acting on the issuer's behalf, from imposing requirements on the participating provider, participating emergency facility, or participating health care facility relating to the referral of covered individuals to nonparticipating providers.
    (l) Except if the notice and consent criteria are satisfied under paragraph (2) of subsection (b-5), cost-sharing amounts calculated in conformity with this Section shall count toward any deductible or out-of-pocket maximum applicable to in-network coverage.
    (m) The Department has the authority to enforce the requirements of this Section in the situations described in subsections (b) and (b-5), and in any other situation for which 42 U.S.C. Chapter 6A, Subchapter XXV, Parts D or E and regulations promulgated thereunder would prohibit an individual from being billed or liable for emergency services furnished by a nonparticipating provider or nonparticipating emergency facility or for non-emergency health care services furnished by a nonparticipating provider at a participating health care facility.
    (n) This Section does not apply with respect to air ambulance services. This Section does not apply to any policy of excepted benefits or to short-term, limited-duration health insurance coverage.
    (o) A home rule unit may not regulate payments for ground ambulance service in a manner inconsistent with this Section. This subsection is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.
(Source: P.A. 103-440, eff. 1-1-24; 104-248, eff. 8-15-25.)

    (215 ILCS 5/356z.4)
    Sec. 356z.4. Coverage for contraceptives.
    (a)(1) The General Assembly hereby finds and declares all of the following:
        (A) Illinois has a long history of expanding
    
timely access to birth control to prevent unintended pregnancy.
        (B) The federal Patient Protection and Affordable
    
Care Act includes a contraceptive coverage guarantee as part of a broader requirement for health insurance to cover key preventive care services without out-of-pocket costs for patients.
        (C) The General Assembly intends to build on