HB1164 93rd General Assembly

093_HB1164

 
                                     LRB093 02144 JLS 02151 b

 1        AN ACT concerning insurance.

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

 4        Section  5.  The  Illinois  Insurance  Code is amended by
 5    changing Sections 143.14, 143.15,  143.16,  143.17,  143.17a,
 6    and 513a11 as follows:

 7        (215 ILCS 5/143.14) (from Ch. 73, par. 755.14)
 8        Sec. 143.14.  Notice of cancellation.
 9        (a)  No   notice   of   cancellation  of  any  policy  of
10    insurance,  to  which  Section  143.11  applies,   shall   be
11    effective  unless  mailed by the company to the named insured
12    and the mortgage or lien  holder  identified  on  the  policy
13    declarations  or  endorsement,  at  the  last mailing address
14    known by the company.  The company shall  maintain  proof  of
15    mailing  of such notice on a recognized U.S. Post Office form
16    or a form acceptable to  the  U.  S.  Post  Office  or  other
17    commercial mail delivery service.  A copy of all such notices
18    shall  be sent to the insured's broker if known, or the agent
19    of record, and to the mortgagee or lienholder  identified  on
20    the policy declarations or endorsement, if known, at the last
21    mailing address known to the company.
22        (b)  Whenever a financed insurance contract is cancelled,
23    the insurer shall return whatever gross unearned premiums are
24    due  under  the insurance contract or contracts not to exceed
25    the unpaid balance due the premium finance  company  directly
26    to the premium finance company effecting the cancellation for
27    the  account of the named insured. The return premium must be
28    mailed to the premium finance company  within  60  days.  The
29    request  for  the  unearned  premium  by  the premium finance
30    company shall be in the manner of a monthly account,  current
31    accounting  by  producer,  policy  number, unpaid balance and
 
                            -2-      LRB093 02144 JLS 02151 b
 1    name of insured for each cancelled amount. In the  event  the
 2    insurance  contract  or  contracts  are subject to audit, the
 3    insurer shall retain the right to withhold the return of  the
 4    portion  of premium that can be identified to the contract or
 5    contracts until the audit is completed.  Within  30  days  of
 6    the  completion  of  the  audit, if a premium retained by the
 7    insurer after crediting the earned premium would result in  a
 8    surplus, the insurer shall return the surplus directly to the
 9    premium  finance  company.   If the audit should result in an
10    additional premium due the insurer, the  obligation  for  the
11    collection  of  this  premium shall fall upon the insurer and
12    not affect any other contract or  contracts  currently  being
13    financed  by  the  premium  finance  company  for  the  named
14    insured.
15        (c)  Whenever  a  premium  finance  agreement  contains a
16    power of attorney enabling the  premium  finance  company  to
17    cancel  any insurance contract or contracts in the agreement,
18    the insurer shall honor the date of cancellation as set forth
19    in the request  from  the  premium  finance  company  without
20    requiring  the return of the insurance contract or contracts.
21    The insurer may mail to the named insured  an  acknowledgment
22    of  the  notice  of  cancellation  from  the  premium finance
23    company but the named insured shall not incur any  additional
24    premium  charge  for  any extension of coverage.  The insurer
25    need not maintain proof of mailing of this notice.
26        (d)  All    statutory    regulatory    and    contractual
27    restrictions providing that the insurance contract may not be
28    cancelled  unless  the  required  notice  is  mailed   to   a
29    governmental  agency,  mortgagee,  lienholder, or other third
30    party shall apply where  cancellation  is  effected  under  a
31    power  of  attorney  under  a premium finance agreement.  The
32    insurer shall have the right for a premium  charge  for  this
33    extension of coverage.
34    (Source: P.A. 86-370; 86-437; 86-1028; 87-811; 87-1123.)
 
                            -3-      LRB093 02144 JLS 02151 b
 1        (215 ILCS 5/143.15) (from Ch. 73, par. 755.15)
 2        Sec.   143.15.   Mailing  of  cancellation  notice.   All
 3    notices  of  cancellation  of   insurance   as   defined   in
 4    subsections (a), (b) and (c) of Section 143.13 must be mailed
 5    at  least 30 days prior to the effective date of cancellation
 6    to the named insured and mortgagee or lien holder  identified
 7    on  the policy declarations or endorsement , if known, at the
 8    last mailing address known to the company.   All  notices  of
 9    cancellation  shall  include  a  specific  explanation of the
10    reason  or  reasons   for   cancellation.    However,   where
11    cancellation  is  for  nonpayment  of  premium, the notice of
12    cancellation must  be mailed at  least  10  days  before  the
13    effective date of the cancellation.
14    (Source: P.A. 89-669, eff. 1-1-97.)

15        (215 ILCS 5/143.16) (from Ch. 73, par. 755.16)
16        Sec.   143.16.   Mailing  of  cancellation  notice.   All
17    notices of cancellation of insurance to which Section  143.11
18    applies, except for those defined in subsections (a), (b) and
19    (c)  of  Section 143.13 must be mailed at least 30 days prior
20    to the effective date of cancellation  during  the  first  60
21    days  of coverage.  After the coverage has been effective for
22    61 days or more, all notices must be mailed at least 60  days
23    prior to the effective date of cancellation. All such notices
24    shall  include  a  specific  explanation  of   the  reason or
25    reasons for cancellation and shall be  mailed  to  the  named
26    insured and mortgagee or lien holder identified on the policy
27    declarations  or  endorsement , if known, at the last mailing
28    address known to the company. However, where cancellation  is
29    for nonpayment of premium, the notice of cancellation must be
30    mailed  at  least  10  days  before the effective date of the
31    cancellation.
32    (Source: P.A. 89-669, eff. 1-1-97.)
 
                            -4-      LRB093 02144 JLS 02151 b
 1        (215 ILCS 5/143.17) (from Ch. 73, par. 755.17)
 2        Sec. 143.17.  Notice of intention not to renew.
 3        a.  No  company  shall  fail  to  renew  any  policy   of
 4    insurance,  as  defined in subsections (a), (b), (c), and (h)
 5    of Section 143.13, to which Section 143.11 applies, unless it
 6    shall send by mail to the named  insured  at  least  30  days
 7    advance  notice  of  its intention not to renew.  The company
 8    shall  maintain  proof  of  mailing  of  such  notice  on   a
 9    recognized  U.S. Post Office form or a form acceptable to the
10    U. S. Post Office or other commercial mail delivery  service.
11    An exact and unaltered copy of such notice shall also be sent
12    to the insured's broker, if known, or the agent of record and
13    to  the  mortgagee  or  lien  holder identified on the policy
14    declarations or endorsement at the last mailing address known
15    by the company. However, where cancellation is for nonpayment
16    of premium, the notice of  cancellation  must  be  mailed  at
17    least 10 days before the effective date of the cancellation.
18        b.  This  Section  does  not  apply  if  the  company has
19    manifested its willingness to renew  directly  to  the  named
20    insured. Such written notice shall specify the premium amount
21    payable,  including  any  premium payment plan available, and
22    the name of any person or  persons,  if  any,  authorized  to
23    receive payment on behalf of the company.  If no person is so
24    authorized, the premium notice shall so state.  The notice of
25    nonrenewal  and the proof of mailing shall be effected on the
26    same date.
27        b-5.  This  Section  does  not  apply  if   the   company
28    manifested  its  willingness  to  renew directly to the named
29    insured.   However,  no  company  may   impose   changes   in
30    deductibles or coverage for any policy forms applicable to an
31    entire  line  of business enumerated in subsections (a), (b),
32    (c), and (h)  of  Section  143.13  to  which  Section  143.11
33    applies unless the company mails to the named insured written
34    notice  of  the  change in deductible or coverage at least 60
 
                            -5-      LRB093 02144 JLS 02151 b
 1    days prior to the renewal or anniversary date.  An exact  and
 2    unaltered  copy  of  the  notice  shall  also  be sent to the
 3    insured's broker, if known, or the agent of record.
 4        c.  Should a company fail to comply with (a)  or  (b)  of
 5    this   Section,  the  policy  shall  terminate  only  on  the
 6    effective date of  any  similar  insurance  procured  by  the
 7    insured   with  respect  to  the  same  subject  or  location
 8    designated in both policies.
 9        d.  Renewal of a policy does not constitute a  waiver  or
10    estoppel  with  respect  to  grounds  for  cancellation which
11    existed before the effective date of such renewal.
12        e.  In all notices of intention not to renew  any  policy
13    of  insurance, as defined in Section 143.11 the company shall
14    provide a specific explanation of the reasons for nonrenewal.
15    (Source: P.A. 91-597, eff. 1-1-00.)

16        (215 ILCS 5/143.17a) (from Ch. 73, par. 755.17a)
17        Sec. 143.17a.  Notice of intention not to renew.
18        a.  No  company  shall  fail  to  renew  any  policy   of
19    insurance,  to which Section 143.11 applies, except for those
20    defined in subsections (a), (b),  (c),  and  (h)  of  Section
21    143.13,  unless it shall send by mail to the named insured at
22    least 60 days advance notice of its intention not  to  renew.
23    The company shall maintain proof of mailing of such notice on
24    one  of  the  following forms:  a recognized U.S. Post Office
25    form or a form acceptable to the U.S. Post  Office  or  other
26    commercial  mail  delivery  service.   An exact and unaltered
27    copy of such notice shall  also  be  sent  to  the  insured's
28    broker, if known, or the agent of record and to the mortgagee
29    or  lien  holder  identified  on  the  policy declarations or
30    endorsement at the last mailing address known by the company.
31    However, where cancellation is for nonpayment of premium, the
32    notice of cancellation must be mailed at least 10 days before
33    the effective date of the cancellation.
 
                            -6-      LRB093 02144 JLS 02151 b
 1        b.  This Section  does  not  apply  if  the  company  has
 2    manifested  its  willingness  to  renew directly to the named
 3    insured. Provided, however, that no company may increase  the
 4    renewal  premium  on any policy of insurance to which Section
 5    143.11 applies, except for those defined in subsections  (a),
 6    (b),  (c),  and  (h)  of  Section 143.13, by 30% or more, nor
 7    impose changes in deductibles  or  coverage  that  materially
 8    alter  the  policy,   unless the company shall have mailed or
 9    delivered  to  the  named  insured  written  notice  of  such
10    increase or change in deductible or coverage at least 60 days
11    prior to the renewal or anniversary  date.  The  increase  in
12    premium  shall  be  the  renewal  premium  based on the known
13    exposure as of the date of  the  quotation  compared  to  the
14    premium as of the last day of coverage for the current year's
15    policy, annualized.  The premium on the renewal policy may be
16    subsequently  amended  to  reflect any change in exposure not
17    considered in the quotation.  An exact and unaltered copy  of
18    such  notice  shall  also be sent to the insured's broker, if
19    known, or the agent of record.  The  company  shall  maintain
20    proof of mailing or proof of receipt whichever is required.
21        c.  Should  a  company  fail  to  comply  with the notice
22    requirements of this Section, the policy shall terminate only
23    as provided in  this  subsection.  In  the  event  notice  is
24    provided  at  least  31  days, but less than 60 days prior to
25    expiration of the policy, the policy shall be extended for  a
26    period  of 60 days or until the effective date of any similar
27    insurance procured by the insured, whichever is less, on  the
28    same  terms  and  conditions  as  the  policy  sought  to  be
29    terminated.   In  the  event  notice is provided less than 31
30    days prior to the expiration of the policy, the policy  shall
31    be  extended  for a period of one year or until the effective
32    date of  any  similar  insurance  procured  by  the  insured,
33    whichever  is  less,  on the same terms and conditions as the
34    policy  sought  to  be  terminated  unless  the  insurer  has
 
                            -7-      LRB093 02144 JLS 02151 b
 1    manifested its  willingness  to  renew  at  a  premium  which
 2    represents  an  increase  not  exceeding 30%. The premium for
 3    coverage shall be prorated in accordance with the  amount  of
 4    the last year's premium, and the company shall be entitled to
 5    this premium for the extension of coverage and such extension
 6    may be contingent upon the payment of such premium.
 7        d.  Renewal  of  a policy does not constitute a waiver or
 8    estoppel with  respect  to  grounds  for  cancellation  which
 9    existed before the effective date of such renewal.
10        e.  In  all  notices of intention not to renew any policy
11    of insurance, as defined in Section 143.11 the company  shall
12    provide a specific explanation of the reasons for nonrenewal.
13    (Source: P.A. 89-669, eff. 1-1-97.)

14        (215 ILCS 5/513a11) (from Ch. 73, par. 1065.60a11)
15        Sec. 513a11.  Cancellation requirements upon default.
16        (a)  When a premium finance agreement contains a power of
17    attorney  enabling  the premium finance company to cancel any
18    insurance contract or contracts listed in the premium finance
19    agreement, the insurance contract or contracts shall  not  be
20    cancelled  by  the premium finance company unless the request
21    for cancellation is effectuated under this Section.
22        (b)  Not less than 10 days written notice shall be mailed
23    to the named insured of the intent  of  the  premium  finance
24    company  to  cancel the insurance contract unless the default
25    is cured within the 10 day period.
26        (c)  After expiration of the 10 day period,  the  premium
27    finance  company  may  request,  in  the  name  of  the named
28    insured, cancellation of the insurance contract or  contracts
29    by  mailing  or  hand delivering to the insurer a request for
30    cancellation, and the insurance contract shall  be  cancelled
31    as  if the request for cancellation had been submitted by the
32    named insured,  but  without  requiring  the  return  of  the
33    insurance  contract or contracts. The premium finance company
 
                            -8-      LRB093 02144 JLS 02151 b
 1    shall also mail a copy of the request for cancellation to the
 2    named insured at his last known address.
 3        (d)  All   statutory,   regulatory,    and    contractual
 4    restrictions providing that the insurance contract may not be
 5    cancelled  unless  notice  is given to a governmental agency,
 6    mortgagee  identified   on   the   policy   declarations   or
 7    endorsement,  or  other  third party identified on the policy
 8    declarations or endorsement shall apply where cancellation is
 9    effected under provisions of this Section. The insurer  shall
10    give   the  notice  to  any  governmental  agency,  mortgagee
11    identified on the  policy  declarations  or  endorsement,  or
12    other  third  party  identified on the policy declarations or
13    endorsement on or before the  fifth  business  day  after  it
14    receives  the notice of cancellation from the premium finance
15    company.
16        (e)  In the event that the collection of return  premiums
17    for  the  account  of  the named insured results in a surplus
18    over the amount due  from  the  named  insured,  the  premium
19    finance company shall refund the excess to the named insured;
20    however, no refund is required if it amounts to less than $5.
21        (f)  All  cancellation provisions required of the premium
22    finance company and insurer are applicable to any  policy  to
23    which Section 143.11 applies.
24    (Source: P.A. 87-811.)

25        Section  99.  Effective date.  This Act takes effect upon
26    becoming law.