215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/1206) (from Ch. 73, par. 1065.906)

Sec. 1206. Expenses. The companies required to file reports under this Article shall pay a reasonable fee established by the Director sufficient to cover the total cost of the Department incident to or associated with the administration and enforcement of this Article, including the collection, analysis and distribution of the insurance cost data, the conversion of hard copy reports to tape, and the compilation and analysis of basic reports. The Director may establish a schedule of fees for this purpose. Expenses for additional reports shall be billed to those requesting the reports. Any such fees collected under this Section shall be paid to the Director of Insurance and deposited into the Technology Management Revolving Fund and credited to the account of the Department of Insurance.

(Source: P.A. 100-23, eff. 7-6-17.)

(215 ILCS 5/Art. XLIII heading) ARTICLE XLIII. Mortgage Insurance Consolidation

(215 ILCS 5/1300) (from Ch. 73, par. 1065.1000)

Sec. 1300. Title. This Article may be cited as the Mortgage Insurance Consolidation Law.

(Source: P.A. 86-378.)

(215 ILCS 5/1301) (from Ch. 73, par. 1065.1001)

Sec. 1301. Purpose. The purpose of this Article is to protect the interests of Illinois insureds by:

(1) establishing minimum standards and procedures for the effectuation of mortgage insurance consolidations;

(2) establishing disclosure requirements specific to mortgage insurance consolidations and requiring insurers to make such disclosures on a timely basis;

(3) clarifying the applicability of the unfair rate discrimination provisions of this Code to consolidations involved in loan transfers so as to prevent premium increases for consumers resulting from mandatory premium recalculation;

(4) requiring that group mortgage life insurance certificates contain minimum standard provisions including conversion rights; and

(5) preventing the arbitrary termination of mortgage insurance coverage in connection with consolidations.

(Source: P.A. 86-378.)

(215 ILCS 5/1302) (from Ch. 73, par. 1065.1002)

Sec. 1302. Scope. (a) This Article applies:

(1) To all insurance companies authorized to transact the business of insurance in this State of the kind or kinds of business described in Class 1(a) and (b) and Class 2(a) of Section 4 of this Code except for the kind or kinds of business described in Article IX 1/2 of this Code.

(2) To all mortgage insurance coverage offered, issued, or issued for delivery in this State, by mail or otherwise, in connection with consolidations regardless of whether the financial institution involved is located in or outside Illinois.

(3) To all consolidations whether the old coverage is provided under an individual or group policy.

(b) Except as otherwise specifically provided, it is not intended that this Article conflict with or supersede any other provisions of this Code, or any rules promulgated by the Department of Insurance implementing any such provisions.

(Source: P.A. 86-378.)

(215 ILCS 5/1303) (from Ch. 73, par. 1065.1003)

Sec. 1303. Definitions. The following definitions shall apply to this Article:

"Consolidation" means any transaction in which a financial institution makes its premium collection services available to its mortgage debtors in connection with a particular insurer's ("new insurer") offer of mortgage insurance, which offer is made to debtors who, immediately prior to the offer, had mortgage insurance with another insurer ("old insurer") and were paying premiums for that insurance with their monthly mortgage payments.

"Financial institution" or "servicer" means any entity or organization that services mortgage loans by collecting and accounting for monthly mortgage insurance premiums as part of the debtor's monthly mortgage payment for one or more insurers.

"Insured" means the individual loan customer or certificate holder.

"Loan transfer" means a transaction in which the servicing of a block of mortgage loans is transferred from one servicer to another servicer. This shall include, but not be limited to, mergers or acquisitions.

"Loan transfer consolidation" means a consolidation in which coverage is limited to insureds whose mortgage loans have been sold or transferred in the secondary market from one servicer to another.

"Group-to-group consolidation" means a consolidation in which coverages under both the old plan and the new plan is provided under group policies.

"Mortgage insurance" means mortgage life insurance (term or ordinary), mortgage disability insurance, mortgage accidental death insurance, or any combination thereof, including both individual and group policies, and any certificates issued thereunder, on credit transactions of more than 10 years duration and written in connection with a credit transaction that is secured by a first mortgage or deed of trust and made to finance the purchase of real property or the construction of a dwelling thereon or to refinance a prior credit transaction made for such a purpose.

"New coverage" or "new plan" means the mortgage insurance coverage or plan for which a financial institution collects premium beginning on the effective date of a consolidation.

"New insurer" means any insurer who offers mortgage insurance coverage to borrowers of the financial institution who can no longer remit monthly premiums for the old insurer along with their monthly mortgage payment.

"Old coverage" or "old plan" means the mortgage insurance coverage or plan for which a financial institution collects premiums immediately prior to a consolidation.

"Old insurer" means any insurer for whom a financial institution will no longer make its premium collection facilities available for all or some of the insurer's policyholders or certificate holders.

(Source: P.A. 100-201, eff. 8-18-17.)

(215 ILCS 5/1304) (from Ch. 73, par. 1065.1004)

Sec. 1304. General requirements. Except as provided in Section 1305, no insurer shall participate in any consolidation unless, in addition to all other requirements provided by law, it complies with the following:

(1) The new insurer must calculate premiums for the new coverage on the basis of its own rates, the prospective insured's then attained age, if applicable, and the amount of insurance offered.

(2) Notice of the new premium shall be mailed, together with the offer of new coverage, to the prospective insured at least 30 days prior to the effective date of the new coverage.

(3) The new coverage shall be put into effect only after the new insurer receives an application which has been signed by the prospective insured.

(4) Whenever the existing coverage is provided under individual policies, the new insurer shall comply with the requirements of Part 917 of Title 50 of the Illinois Administrative Code, promulgated by the Department of Insurance.

(5) All riders which are a part of the existing insurance shall be offered without proof of insurability to all policyholders (or certificate holders) obtained by consolidation, including, but not limited to, waiver of premium and accidental death insurance.

(6) Prospective insureds shall be given the option to name the beneficiary of their choice by the new insurer, if the previous beneficiary is other than a financial institution.

(7) Regulations including, but not limited to, those promulgated by the Department of Insurance implementing Sections 143, 149, 151, 236, 237, 421, 424 and 507.1 of this Code concerning misrepresentations to any policyholder for the purpose of inducing or tending to induce such policyholder to lapse, forfeit or surrender his insurance, unfair or deceptive practices, complaints, solicitation and replacement of life insurance, compensation, and rebating shall be complied with.

(Source: P.A. 86-378.)

(215 ILCS 5/1305) (from Ch. 73, par. 1065.1005)

Sec. 1305. Loan transfer consolidations. In a consolidation conducted as a result of a loan transfer, the offer of new coverage may be based on the same premium the insured was paying for his old coverage only if, in addition to all other requirements provided by law, the following conditions are met:

(1) Both the old and the new coverage must be provided under a group policy.

(2) An offer of new coverage must be made as soon as reasonably possible after the loan transfer. If an offer of new coverage is not made within 30 days after the loan transfer, or at least 30 days prior to the proposed effective date of the new coverage, the insurer shall notify the debtor, in writing, that he has the right to an unconditional refund of all premiums paid for the new coverage as long as he exercises that right, in writing, within 30 days from the date of the notification.

(3) The new coverage offered to the prospective insured must be the same as the old coverage, including all supplemental benefits provided under the old plan. If the coverage offered is not the same, then all the requirements of Section 1304 shall apply.

(4) In addition to the requirements of Section 1307, the certificate shall contain the following notice, printed in bold type on page one of the certificate: IMPORTANT NOTICE This certificate is issued to you in connection with a mortgage insurance consolidation. It is the intention of the Company to provide you group coverage which is equal to or better than the group coverage you had before. To the extent the benefits provided or the provisions of your prior certificate of insurance are more liberal than those under this certificate, the provisions of your prior certificate will control. Therefore, you should keep your old certificate along with this certificate for comparison purposes.

(5) The information contained in the notice prescribed by paragraph (4) shall also be disclosed in writing (separate from the certificate of insurance) to each prospective insured at the time the offer of new coverage is made.

(6) Only the group coverage written in connection with the loans which are the subject of the loan transfer may be consolidated pursuant to this Section.

(7) Payment of the required premium shall constitute acceptance of the new coverage if:

(A) such acceptance mechanism is clearly explained to the debtor; and

(B) All other disclosure requirements of this Article are met.

(8) Regulations including, but not limited to, those promulgated by the Department of Insurance implementing Sections 143, 149, 151, 236, 237, 421, 424 and 507.1 of this Code concerning misrepresentations to any policyholder for the purpose of inducing or tending to induce such policyholder to lapse, forfeit or surrender his insurance, unfair or deceptive practices, complaints, solicitation and replacement of life insurance, compensation and rebating shall be complied with.

(9) If an insurer charges debtor insureds the same premium for the new coverage that they were paying for the old coverage, and, as a result, debtor insureds of a financial institution are charged different premium rates for the same coverage, such rate differences shall not constitute unfair discrimination under Sections 236 and 364 of this Code provided all the other applicable requirements of this Code are met.

(Source: P.A. 86-378.)

(215 ILCS 5/1306) (from Ch. 73, par. 1065.1006)

Sec. 1306. Out-of-state consolidations. If Illinois residents whose loans are serviced outside Illinois are involved in a group-to-group consolidation by an out-of-state servicer, Section 1305 may be employed if the Illinois residents are an incidental part of the consolidation. Otherwise the provisions of this Article shall apply to any consolidation insofar as it involves Illinois residents. For purposes of this provision "incidental" shall mean that the Illinois residents comprise less than 25% or 100 lives of the total lives involved in the consolidation, whichever is less.

(Source: P.A. 86-378.)

(215 ILCS 5/1307) (from Ch. 73, par. 1065.1007)

Sec. 1307. Group certificates. No insurer may participate in a group-to-group consolidation or a loan transfer consolidation unless in addition to all other requirements provided by law, it complies with the following:

(1) A group certificate must be delivered to each debtor insured under the new plan, which certificate shall include the following information:

(A) the name or names of the single or joint insureds;

(B) identification of the insured mortgage;

(C) the amount of insurance under the new plan;

(D) the premium for the new coverage;

(E) the effective date of the new coverage;

(F) the beneficiary for the new coverage.

(2) The new coverage offered to the prospective insured must be the same coverage as the old coverage, including all supplemental benefits, or the same type of coverage as the old coverage, whichever is otherwise required by this Article.

(3) A group certificate evidencing the new coverage may not include a contestability clause or, in the case of mortgage life insurance, a provision excluding suicide.

(Source: P.A. 86-378.)

(215 ILCS 5/1308) (from Ch. 73, par. 1065.1008)

Sec. 1308. Conversion privilege. Notwithstanding the provisions of Section 231.1(H) of this Code, all group mortgage life insurance policies and any certificates issued thereunder shall include a conversion privilege permitting a debtor insured to convert, without evidence of insurability, to an individual policy of decreasing term insurance within 30 days of the date the debtor insured's group coverage is terminated for any reason other than the nonpayment of premiums. The initial amount of coverage under the individual policy shall be an amount equal to the amount of coverage terminated under the group policy and shall decrease over a term that corresponds with the scheduled term of the insured debtor's mortgage loan. The premium for the individual policy shall be the same premium the debtor insured was paying under the group policy.

(Source: P.A. 86-378.)

(215 ILCS 5/1309) (from Ch. 73, par. 1065.1009)

Sec. 1309. Required disclosures. (a) In conjunction with the offer of new coverage involving any consolidation, the new insurer shall disclose in writing to each insured under the old plan or plans at least 30 days prior to the effective date of the new coverage the following:

(1) Identification of the insured mortgage.

(2) The name of the insured or insureds.

(3) Name of the owner of the individual policy or master policy (if group insurance) under both the new and old plans, if known.

(4) The premium for the new and old coverage.

(5) Amount of coverage for both the new and old plans. If the amount of coverage for the old plan is not known, a statement that the amount may be scheduled and it may be less than or greater than the amount of the loan and the insured should check the policy schedule for an exact amount of coverage.

(6) Effective dates of the old coverage if the contestable or suicide period have not expired as of the effective date of the new coverage. If the new insurer waives the contestable and suicide period, then the effective date of the old coverage does not need to be disclosed.

(7) Name of the beneficiary under the old plan, if known.

(8) A statement as to whether the old plan was an individual or group plan and a statement as to whether the new plan is an individual or a group plan.

(9) A statement that neither the old plan or new plan is required.

(10) A statement that the prospective insured may have the right to continue or convert his old coverage by paying premiums directly to the old insurer, and what the prospective insured must do to keep the old coverage in effect including, but not limited to, the name and address of the company involved, the policy number or other information which reasonably identifies the insured's plan of coverage, the amount of the premium and where it is to be sent.

(11) A statement that the mortgage payment will be reduced by the amount of the old plan premium if the new plan is not accepted.

(12) Name and home office address of the new and old insurer, as well as the address and phone number for the customer services office for Illinois insureds.

(13) The effective date of the new coverage.

(14) Whether premium rates under the new plan are guaranteed.

(15) Material differences, if any between the new plan and the old plan.

(b) Any insurer which fails to provide the written notice required by subsection (a) at least 30 days prior to the effective date of the new coverage shall notify the debtor, in writing, that he has the right to an unconditional refund of all premiums paid for the new coverage as long as he exercises that right, in writing, within 30 days from that notification.

(Source: P.A. 86-378.)

(215 ILCS 5/1310) (from Ch. 73, par. 1065.1010)

Sec. 1310. Compensation. No sponsorship fees, or other special fees designed to induce their participation, shall be paid to a financial institution in connection with any mortgage consolidation, and any compensation paid to either the financial institution or any of its representatives shall be only in accordance with Section 151 and all other applicable provisions of this Code.

(Source: P.A. 86-378.)

(215 ILCS 5/1311) (from Ch. 73, par. 1065.1011)

Sec. 1311. No group policy or group certificate of mortgage insurance used in connection with a consolidation, nor any application, endorsement or rider which becomes a part of any such group policy or certificate, may be issued or delivered in this State until a copy of the form has been filed with and approved by the Director.

(Source: P.A. 86-378.)

(215 ILCS 5/1312) (from Ch. 73, par. 1065.1012)

Sec. 1312. The Director is authorized to adopt such rules governing mortgage insurance consolidations as he deems necessary to implement or enforce this Article.

(Source: P.A. 86-378.)

(215 ILCS 5/Art. XLIV heading) Article XLIV. FINANCIAL INSTITUTIONS INSURANCE SALES LAW

(215 ILCS 5/1400)

Sec. 1400. Title. This Article may be cited as the Financial Institutions Insurance Sales Law.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1401)

Sec. 1401. Purpose. The purpose of this Article is to increase the availability of insurance products to the citizens of this State by expanding those businesses authorized to sell insurance products to include financial institutions, and to protect the interests of the citizens of this State by regulating their authority to do so. This Article does not apply to activities or services conducted in this State by or for a financial institution that do not require licensure as an insurance producer, temporary insurance producer, limited insurance representative, or registered firm.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1402)

Sec. 1402. Definitions. For the purposes of this Article:

"Financial institution" means:

(1) a State bank, a national bank, or an out-of-state bank, as those terms are defined in the Illinois Banking Act, or any subsidiary of a State bank, a national bank, or an out-of-state bank;

(2) a foreign banking corporation, as that term is defined in the Foreign Banking Office Act, or any subsidiary of a foreign banking corporation;

(3) a corporate fiduciary, as that term is defined in the Corporate Fiduciary Act;

(4) a savings bank organized under the Savings Bank Act, an out-of-state savings bank chartered under the laws of a state other than Illinois, a territory of the United States, or the District of Columbia, or a federal savings bank organized under federal law, or any subsidiary of a savings bank, an out-of-state savings bank or a federal savings bank;

(5) an association or federal association, as those terms are defined in the Illinois Savings and Loan Act of 1985, or any subsidiary of an association or federal association;

(6) an out-of-state savings and loan association chartered under the laws of a state other than Illinois, a territory of the United States or the District of Columbia, or a federal savings and loan association organized under federal law whose principal business office is located outside of Illinois, or any subsidiary of an out-of-state savings and loan association or federal savings and loan association whose principal business office is located outside of Illinois; or

(7) a credit union as defined in the Illinois Credit Union Act, or any subsidiary of a credit union.

To the extent that any entity other than a financial institution conducts insurance activities in this State on behalf of or on the premises of the financial institution, such entity shall be subject to this Article for the purposes of those activities.

"Insurance" means all lines of insurance defined and regulated as insurance under this Code, but for the purposes of this Article, "insurance" shall not include the following lines of insurance, provided that this paragraph shall not be deemed to preclude or otherwise limit regulation of the following lines of insurance pursuant to and to the extent otherwise provided by any other insurance law of this State:

(1) credit life, credit accident and health, credit involuntary unemployment, credit casualty and credit property insurance;

(2) extended service contracts and warranty agreements;

(3) insurance obtained by the debtor to provide payment for the difference between the remaining balance on a loan or other extension of credit and the amount of insurance coverage on the collateral securing the loan or other extension of credit;

(4) insurance placed by a financial institution on collateral used in connection with a loan or other extension of credit when a debtor breaches the contractual obligation to provide that insurance;

(5) title insurance regulated by the Title Insurance Act; and

(6) private mortgage insurance and financial guarantee insurance.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1403)

Sec. 1403. Licensure requirements for financial institutions.

(a) A financial institution transacting insurance business in this State shall register with the Director pursuant to the Illinois Insurance Code and shall be subject to the laws, rules, and penalties of the Illinois Insurance Code.

(b) The solicitation and sale of insurance by a financial institution shall be conducted only by individuals who have been issued and maintain an insurance producer's license pursuant to the Illinois Insurance Code and shall be subject to the laws, rules, and penalties of the Illinois Insurance Code.

(c) For the purposes of this Section, a "financial institution" means the subsidiary of a financial institution when the financial institution is transacting insurance business in this State only through the subsidiary. For the purposes of Section 499.1 of the Illinois Insurance Code, a financial institution shall be deemed to be a corporation.

(d) Nothing in Section 500-100 of this Code shall be construed to require a limited lines producer license or any other form or class of producer's license for financial institutions, or their employees, if the financial institution has purchased or sponsored a group credit life, credit accident and health, credit casualty, credit property, or other group credit insurance policy or program under which the financial institution enrolls or performs other administrative services, or both, to enable individuals to purchase insurance coverage under the group credit insurance policy sold by a licensed producer in compliance with Section 155.56. A financial institution that performs enrollment or other administrative services, or both, with respect to its group credit insurance policies or programs shall be deemed to be in compliance with paragraph (2) of subsection (b) of Section 500-20 of this Code.

(Source: P.A. 100-349, eff. 8-25-17.)

(215 ILCS 5/1404)

Sec. 1404. Subsidiaries or divisions. A financial institution shall not qualify for registration as a registered firm under Section 499.1 of this Code unless: (1) it establishes a separate subsidiary that acts as the registered firm or (2) it is otherwise permitted by law to sell insurance directly through the financial institution, and it establishes a separate division within the financial institution to conduct the business of the registered firm. The subsidiary or division acting as a registered firm shall maintain records for insurance transactions that are separate and distinct from the records of the financial institution.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1405)

Sec. 1405. Extensions of credit. A financial institution shall not delay or impede the completion of a loan transaction or other transactions involving the extension of credit for the purpose of influencing a customer's selection of any insurance product.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1406)

Sec. 1406. Insurance and financial institution products.

(a) No financial institution may offer banking products or services, or fix or vary the consideration of the offer, on a condition or requirement that the customer obtain insurance from the financial institution or any affiliate of the financial institution.

(b) A financial institution that offers banking products or services in conformity with the provisions of Section 106 of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1972) shall be deemed to be in compliance with the provisions of subsection (a) of this Section.

(c) No financial institution shall require that a customer or prospective customer of the financial institution purchase an insurance product from any particular registered firm or insurance producer as a condition for the lending of money or extension of credit, the establishment or maintenance of a checking, savings, or other deposit account, or the establishment or maintenance of a trust account.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1407)

Sec. 1407. Rebating and discounting.

(a) No financial institution may offer a rebate on an insurance product in violation of Section 151 of this Code.

(b) No financial institution may offer a discount on a loan or extension of credit for the purpose of inducing the customer to purchase insurance required in connection with the loan or extension of credit.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1408)

Sec. 1408. Discrimination prohibited. No financial institution may:

(1) require as a condition of providing any product or service or renewal of any contract for providing a product or service to any customer, that the customer acquire, finance, or negotiate any policy or contract of insurance through a particular insurer, insurance producer, or registered firm;

(2) in connection with a loan or extension of credit that requires a borrower to obtain insurance, reject an insurance policy solely because the policy has been issued or underwritten by any person who is not associated with the financial institution;

(3) impose any discriminatory requirement on any insurance producer who is not associated with the financial institution that is not imposed on any insurance producer who is associated with the financial institution; or

(4) if the financial institution is a registered firm, require any debtor, insurer, or insurance producer to pay a separate charge in connection with the handling of insurance that is required under a contract, unless: (i) the financial institution is the registered firm providing the insurance, (ii) if the financial institution is not the registered firm providing the insurance, the charge would be uniformly applied if the financial institution was the registered firm providing the insurance, or (iii) the charge is otherwise permitted by this Code or other applicable State or federal law.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1409)

Sec. 1409. Disclosure. A financial institution shall clearly and conspicuously disclose in any written advertisement or promotional or informational material regarding an insurance product that the insurance offered, recommended, sponsored, or sold:

(1) is not a deposit;

(2) is not insured by the Federal Deposit Insurance Corporation, or in the case of a credit union, by the National Credit Union Share Insurance Fund;

(3) is not guaranteed by the financial institution or an affiliated insured depository institution; and

(4) where appropriate, involves investment risk, including potential loss of principal.

(Source: P.A. 90-41, eff. 10-1-97.)