215 ILCS 5/ Illinois Insurance Code.

(215 ILCS 5/445) (from Ch. 73, par. 1057)

Sec. 445. Surplus line.

(1) Definitions. For the purposes of this Section:

"Affiliate" means, with respect to an insured, any entity that controls, is controlled by, or is under common control with the insured. For the purpose of this definition, an entity has control over another entity if:

(A) the entity directly or indirectly or acting through one or more other persons owns, controls, or has the power to vote 25% or more of any class of voting securities of the other entity; or

(B) the entity controls in any manner the election of a majority of the directors or trustees of the other entity.

"Affiliated group" means any group of entities that are all affiliated.

"Authorized insurer" means an insurer that holds a certificate of authority issued by the Director but, for the purposes of this Section, does not include a domestic surplus line insurer as defined in Section 445a or any residual market mechanism.

"Exempt commercial purchaser" means any person purchasing commercial insurance that, at the time of placement, meets the following requirements:

(A) The person employs or retains a qualified risk manager to negotiate insurance coverage.

(B) The person has paid aggregate nationwide commercial property and casualty insurance premiums in excess of $100,000 in the immediately preceding 12 months.

(C) The person meets at least one of the following criteria:

(I) The person possesses a net worth in excess of $20,000,000, as such amount is adjusted pursuant to the provision in this definition concerning percentage change.

(II) The person generates annual revenues in excess of $50,000,000, as such amount is adjusted pursuant to the provision in this definition concerning percentage change.

(III) The person employs more than 500 full-time or full-time equivalent employees per individual insured or is a member of an affiliated group employing more than 1,000 employees in the aggregate.

(IV) The person is a not-for-profit organization or public entity generating annual budgeted expenditures of at least $30,000,000, as such amount is adjusted pursuant to the provision in this definition concerning percentage change.

(V) The person is a municipality with a population in excess of 50,000 persons.

Effective on January 1, 2015 and each fifth January 1 occurring thereafter, the amounts in subitems (I), (II), and (IV) of item (C) of this definition shall be adjusted to reflect the percentage change for such 5-year period in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics of the Department of Labor.

"Home state" means the following:

(A) With respect to an insured, except as provided in item (B) of this definition:

(I) the state in which an insured maintains its principal place of business or, in the case of an individual, the individual's principal residence; or

(II) if 100% of the insured risk is located out of the state referred to in subitem (I), the state to which the greatest percentage of the insured's taxable premium for that insurance contract is allocated.

(B) If more than one insured from an affiliated group are named insureds on a single surplus line insurance contract, then "home state" means the home state, as determined pursuant to item (A) of this definition, of the member of the affiliated group that has the largest percentage of premium attributed to it under such insurance contract.

If more than one insured from a group that is not affiliated are named insureds on a single surplus line insurance contract, then:

(I) if individual group members pay 100% of the premium for the insurance from their own funds, "home state" means the home state, as determined pursuant to item (A) of this definition, of each individual group member; each individual group member's coverage under the surplus line insurance contract shall be treated as a separate surplus line contract for the purposes of this Section;

(II) otherwise, "home state" means the home state, as determined pursuant to item (A) of this definition, of the group.

Nothing in this definition shall be construed to alter the terms of the surplus line insurance contract.

"Master policy" means a surplus line insurance contract with a single set of general contractual terms that are designed to apply on a group basis to multiple insureds who may or may not be affiliated and who may be added to or removed from the contract throughout the course of the contract period. A master policy may include certain provisions that vary for each insured depending on the insured's characteristics and the coverage sought.

"Multi-State risk" means a risk with insured exposures in more than one State.

"NAIC" means the National Association of Insurance Commissioners or any successor entity.

"Personal lines insurance" means insurance as defined in subsection (a), (b), or (c) of Section 143.13 of this Code.

"Premium" means any amount designated as premium on the declarations page or elsewhere in a policy and on any endorsement, but does not include taxes, the Surplus Line Association of Illinois recording fee, or any other fee.

"Program business" means a clearly defined group of insurance contracts procured by a licensed surplus line producer from an unauthorized insurer, under a single agreement between the producer and insurer, for insureds with the same or similar characteristics and containing the same or similar contract terms.

"Qualified risk manager" means, with respect to a policyholder of commercial insurance, a person who meets all of the following requirements:

(A) The person is an employee of, or third-party consultant retained by, the commercial policyholder.

(B) The person provides skilled services in loss prevention, loss reduction, or risk and insurance coverage analysis, and purchase of insurance.

(C) With regard to the person:

(I) the person has:

(a) a bachelor's degree or higher from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the Director or his designee to demonstrate minimum competence in risk management; and

(b) the following:

(i) three years of experience in risk financing, claims administration, loss prevention, risk and insurance analysis, or purchasing commercial lines of insurance; or

(ii) alternatively has:

(AA) a designation as a Chartered Property and Casualty Underwriter (in this subparagraph (ii) referred to as "CPCU") issued by the American Institute for CPCU/Insurance Institute of America;

(BB) a designation as an Associate in Risk Management (ARM) issued by the American Institute for CPCU/Insurance Institute of America;

(CC) a designation as Certified Risk Manager (CRM) issued by the National Alliance for Insurance Education & Research;

(DD) a designation as a RIMS Fellow (RF) issued by the Global Risk Management Institute; or

(EE) any other designation, certification, or license determined by the Director or his designee to demonstrate minimum competency in risk management;

(II) the person has:

(a) at least 7 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; and

(b) has any one of the designations specified in subparagraph (ii) of paragraph (b);

(III) the person has at least 10 years of experience in risk financing, claims administration, loss prevention, risk and insurance coverage analysis, or purchasing commercial lines of insurance; or

(IV) the person has a graduate degree from an accredited college or university in risk management, business administration, finance, economics, or any other field determined by the Director or his or her designee to demonstrate minimum competence in risk management.

"Residual market mechanism" means an association, organization, or other entity described in Article XXXIII of this Code or Section 7-501 of the Illinois Vehicle Code or any similar association, organization, or other entity.

"State" means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and American Samoa.

"Surplus line insurance" means insurance on a risk:

(A) of the kinds specified in Classes 2 and 3 of Section 4 of this Code; and

(B) that is procured from an unauthorized insurer after the insurance producer representing the insured or the surplus line producer is unable, after diligent effort, to procure the insurance from authorized insurers; and

(C) where Illinois is the home state of the insured, for policies effective, renewed or extended on July 21, 2011 or later and for multiyear policies upon the policy anniversary that falls on or after July 21, 2011; and

(D) that is located in Illinois, for policies effective prior to July 21, 2011.

"Taxable premium" means a premium for any risk that is located in or attributed to any state.

"Unauthorized insurer" means an insurer that does not hold a valid certificate of authority issued by the Director but, for the purposes of this Section, shall also include a domestic surplus line insurer as defined in Section 445a.

(1.5) Procuring surplus line insurance; surplus line insurer requirements.

(a) License required. Insurance producers may procure surplus line insurance only if licensed as a surplus line producer under this Section.

(b) Domestic and foreign insurer eligibility. Licensed surplus line producers may procure surplus line insurance from an unauthorized insurer domiciled in any state only if the insurer:

(i) is permitted in its domiciliary jurisdiction to write the type of insurance involved; and

(ii) has, based upon information available to the surplus line producer, a policyholders surplus of not less than $15,000,000 determined in accordance with the laws of its domiciliary jurisdiction; and

(iii) has standards of solvency and management that are adequate for the protection of policyholders.

Where an unauthorized insurer does not meet the standards set forth in (ii) and (iii) above, a surplus line producer may, if necessary, procure insurance from that insurer only if prior written warning of such fact or condition is given to the insured by the insurance producer or surplus line producer.

(c) Alien insurer eligibility. Licensed surplus line producers may procure surplus line insurance from an unauthorized insurer not domiciled in any state only if the insurer meets the standards for unauthorized insurers domiciled in any state in paragraph (b) of this subsection (1.5) or is listed on the Quarterly Listing of Alien Insurers maintained by the International Insurers Department of the NAIC at the time of procurement. The Director shall make the Quarterly Listing of Alien Insurers available to surplus line producers without charge.

(d) Prohibited transactions. Insurance producers shall not procure from an unauthorized insurer an insurance policy:

(i) that is designed to satisfy the proof of financial responsibility and insurance requirements in any Illinois law where the law requires that the proof of insurance is issued by an authorized insurer or residual market mechanism;

(ii) that covers the risk of accidental injury to employees arising out of and in the course of employment according to the provisions of the Workers' Compensation Act; or

(iii) that insures any Illinois personal lines risk that is eligible for residual market mechanism coverage, unless the insured or prospective insured requests limits of liability greater than the limits provided by the residual market mechanism. In the course of making a diligent effort to procure insurance from authorized insurers, an insurance producer shall not be required to submit a risk to a residual market mechanism when the risk is not eligible for coverage or exceeds the limits available in the residual market mechanism.

Where there is an insurance policy issued by an authorized insurer or residual market mechanism insuring a risk described in item (i), (ii), or (iii) above, nothing in this paragraph shall be construed to prohibit a surplus line producer from procuring from an unauthorized insurer a policy insuring the risk on an excess or umbrella basis where the excess or umbrella policy is written over one or more underlying policies.

(e) Exempt commercial purchaser diligent effort. Licensed surplus line producers may procure surplus line insurance from an unauthorized insurer for an exempt commercial purchaser without making the required diligent effort to procure the insurance from authorized insurers if:

(i) the producer has disclosed to the exempt commercial purchaser that such insurance may or may not be available from authorized insurers that may provide greater protection with more regulatory oversight; and

(ii) the exempt commercial purchaser has subsequently in writing requested the producer to procure such insurance from an unauthorized insurer.

(f) Commercial wholesale transaction diligent effort. A licensed surplus line producer may procure a surplus line insurance contract, other than a personal lines insurance contract, from an unauthorized insurer without making the required diligent effort to procure the insurance from authorized insurers if the risk was referred to the surplus line producer by an Illinois-licensed insurance producer who is not affiliated with the surplus line producer.

(g) Master policy diligent effort. For a master policy insurance contract, a licensed surplus line producer may make the required diligent effort to procure the insurance from authorized insurers annually for the master policy rather than individually for each insured that is added during the policy period. The diligent effort shall include all variable provisions of the master policy.

(h) Program business diligent effort. For program business, a licensed surplus line producer may make the required diligent effort to procure the insurance from authorized insurers annually for the program rather than individually for each contract. The diligent effort shall include all variable provisions of the master policy.

(2) Surplus line producer; license. Any licensed producer who is a resident of this State, or any nonresident who qualifies under Section 500-40, may be licensed as a surplus line producer upon payment of an annual license fee of $400.

A surplus line producer so licensed shall keep a separate account of the business transacted thereunder for 7 years from the policy effective date which shall be open at all times to the inspection of the Director or his representative.

No later than July 21, 2012, the State of Illinois shall participate in the national insurance producer database of the NAIC, or any other equivalent uniform national database, for the licensure of surplus line producers and the renewal of such licenses.

(3) Taxes and reports.

(a) Surplus line tax and penalty for late payment. The surplus line tax rate for a surplus line insurance policy or contract is determined as follows:

(i) 3% for policies or contracts with an effective date prior to July 1, 2003;

(ii) 3.5% for policies or contracts with an effective date of July 1, 2003 or later.

A surplus line producer shall file with the Director on or before February 1 and August 1 of each year a report in the form prescribed by the Director on all surplus line insurance procured from unauthorized insurers and submitted to the Surplus Line Association of Illinois during the preceding 6 month period ending December 31 or June 30 respectively, and on the filing of such report shall pay to the Director for the use and benefit of the State a sum equal to the surplus line tax rate multiplied by the gross taxable premiums less returned taxable premiums upon all surplus line insurance submitted to the Surplus Line Association of Illinois during the preceding 6 months.

Any surplus line producer who fails to pay the full amount due under this subsection is liable, in addition to the amount due, for such late fee, penalty, and interest charges as are provided for under Section 412 of this Code. The Director, through the Attorney General, may institute an action in the name of the People of the State of Illinois, in any court of competent jurisdiction, for the recovery of the amount of such taxes, late fees, interest, and penalties due, and prosecute the same to final judgment, and take such steps as are necessary to collect the same.

(b) Fire Marshal Tax. Each surplus line producer shall file with the Director on or before February 1 of each year a report in the form prescribed by the Director on all fire insurance procured from unauthorized insurers and submitted to the Surplus Line Association of Illinois during the previous year that is subject to tax under Section 12 of the Fire Investigation Act and shall pay to the Director the fire marshal tax required thereunder.

(c) Taxes and fees charged to insured. The taxes imposed under this subsection and the recording fees charged by the Surplus Line Association of Illinois may be charged to and collected from surplus line insureds.

(4) (Blank).

(5) Submission of documents to Surplus Line Association of Illinois. A surplus line producer shall submit every insurance contract and premium-bearing endorsement issued under his or her license to the Surplus Line Association of Illinois for recording. The submission and recording may be effected through electronic means. The submission shall set forth:

(a) the name of the insured;

(b) the description and location of the insured property or risk;

(c) (blank);

(d) the gross premiums charged or returned;

(e) the name of the unauthorized insurer from whom coverage has been procured;

(f) the kind or kinds of insurance procured; and

(g) amount of premium subject to tax required by Section 12 of the Fire Investigation Act.

Proposals, endorsements, and other documents which are incidental to the insurance but which do not affect the premium charged are exempted from the submission and recording requirements.

The submission of insuring contracts to the Surplus Line Association of Illinois constitutes a certification by the surplus line producer or by the insurance producer who presented the risk to the surplus line producer for placement as a surplus line risk that after diligent effort, where required, the required insurance could not be procured from authorized insurers and that such procurement was otherwise in accordance with the surplus line law.

(6) Evidence of recording required. It shall be unlawful for an insurance producer to deliver any unauthorized insurer contract or premium-bearing endorsement unless it contains evidence of recording by the Surplus Line Association of Illinois.

(7) Inspection of records. A surplus line producer shall maintain separate records of the business transacted under his or her license for 7 years from the policy effective date, including complete copies of surplus line insurance contracts maintained on paper or by electronic means, which records shall be open at all times for inspection by the Director and by the Surplus Line Association of Illinois.

(8) Violations and penalties. The Director may suspend or revoke or refuse to renew a surplus line producer license for any violation of this Code. In addition to or in lieu of suspension or revocation, the Director may subject a surplus line producer to a civil penalty of up to $2,000 for each cause for suspension or revocation. Such penalty is enforceable under subsection (5) of Section 403A of this Code.

Whenever it appears to the satisfaction of the Director that a surplus line producer has made a documented good faith determination of the home state for a surplus line insurance contract and has paid the surplus line taxes to a state other than Illinois, and the Director determines that the producer's good faith determination was incorrect and the home state is Illinois, the surplus line producer may, at the discretion of the Director, be required to submit the contract to the Surplus Line Association of Illinois and pay applicable taxes and recording fees, but there shall be no penalty, interest, or late fee assessed.

(9) Director may declare insurer ineligible. If the Director determines that the further assumption of risks might be hazardous to the policyholders of an unauthorized insurer, the Director may order the Surplus Line Association of Illinois not to accept and record insurance contracts evidencing insurance in such insurer and order surplus line producers to cease procuring insurance from such insurer.

(10) Service of process upon Director. Insurance contracts delivered under this Section from unauthorized insurers, other than domestic surplus line insurers as defined in Section 445a, shall contain a provision designating the Director and his successors in office the true and lawful attorney of the insurer upon whom may be served all lawful process in any action, suit or proceeding arising out of such insurance. Service of process made upon the Director to be valid hereunder must state the name of the insured, the name of the unauthorized insurer and identify the contract of insurance. The Director at his option is authorized to forward a copy of the process to the Surplus Line Association of Illinois for delivery to the unauthorized insurer or the Director may deliver the process to the unauthorized insurer by other means which he considers to be reasonably prompt and certain.

(10.5) Required notice to policyholder. Insurance contracts delivered under this Section from unauthorized insurers, other than domestic surplus line insurers as defined in Section 445a, shall have stamped or imprinted on the first page thereof in not less than 12-pt. bold face type the following legend: "Notice to Policyholder: This contract is issued, pursuant to Section 445 of the Illinois Insurance Code, by a company not authorized and licensed to transact business in Illinois and as such is not covered by the Illinois Insurance Guaranty Fund." Insurance contracts delivered under this Section from domestic surplus line insurers as defined in Section 445a shall have stamped or imprinted on the first page thereof in not less than 12-pt. bold face type the following legend: "Notice to Policyholder: This contract is issued by a domestic surplus line insurer, as defined in Section 445a of the Illinois Insurance Code, pursuant to Section 445, and as such is not covered by the Illinois Insurance Guaranty Fund."

(11) Marine, aviation, and transportation. The Illinois Surplus Line law does not apply to insurance of property and operations of railroads or aircraft engaged in interstate or foreign commerce, insurance of vessels, crafts or hulls, cargoes, marine builder's risks, marine protection and indemnity, or other risks including strikes and war risks insured under ocean or wet marine forms of policies.

(12) Applicability of Illinois Insurance Code. Surplus line insurance procured under this Section, including insurance procured from a domestic surplus line insurer, is not subject to the provisions of the Illinois Insurance Code other than Sections 123, 123.1, 401, 401.1, 402, 403, 403A, 408, 412, 445, 445a, 445.1, 445.2, 445.3, 445.4, and all of the provisions of Article XXXI to the extent that the provisions of Article XXXI are not inconsistent with the terms of this Act.

(Source: P.A. 102-224, eff. 1-1-22.)

(215 ILCS 5/445a)

Sec. 445a. Domestic surplus line insurer.

(a) A domestic insurer possessing policyholder surplus of at least $15,000,000 may pursuant to a resolution by its board of directors, and with the written approval of the Director, be designated as a "domestic surplus line insurer".

(b) A domestic surplus line insurer may insure in this State an Illinois risk only if procured from a surplus line producer pursuant to Section 445 of this Code.

(c) A domestic surplus line insurer must agree not to issue a policy designed to satisfy the financial responsibility requirements of the Illinois Vehicle Code, the Workers' Compensation Act, or the Workers' Occupational Diseases Act. A domestic surplus line insurer is not subject to the provisions of Articles XXXIII, XXXIII 1/2, XXXIV, XXXVIIIA, Section 468, or Section 478.1 of this Code.

(d) For the purposes of the federal Nonadmitted and Reinsurance Reform Act of 2010 (15 USC 8201 et seq.), a domestic surplus line insurer shall be considered a nonadmitted insurer, as the term is defined in the Act, with respect to risks insured in this State.

(Source: P.A. 97-955, eff. 8-14-12.)

(215 ILCS 5/445.1) (from Ch. 73, par. 1057.1)

Sec. 445.1. Surplus Line Association of Illinois. There is hereby created a non-profit association to be known as the Surplus Line Association of Illinois. All surplus line producers shall be and must remain individual members of the Association as a condition of their holding a license as a surplus line producer in this State. The Association must perform its functions under the plan of operation established and approved under Section 445.3 and must exercise its powers through a board of directors established under Section 445.2 of this Code. The Association shall be supervised by the Director and is subject to the applicable provisions of the Illinois Insurance Code. The Association shall be authorized and have the duty to:

(1) receive and record all surplus line insurance contracts that surplus line producers are required to file with the Association under subsection (5) of Section 445;

(2) prepare monthly reports for the Director on surplus line insurance procured by its members during the preceding month in such form and providing such information as the Director may prescribe;

(3) prepare and deliver to the Director and, at the discretion of the Director, to each licensee the reports of surplus line business prescribed in subsection (3) of Section 445;

(4) assess its members for costs of operations in accordance with a schedule adopted by the Board of Directors of the Association and approved by the Director;

(5) employ and retain such persons as are necessary to carry out the duties of the Association;

(6) borrow money as necessary to effect the purposes of the Association;

(7) enter contracts as necessary to effect the purposes of the Association;

(8) perform such other acts as will facilitate and encourage compliance by its members with the surplus line law of this State and rules promulgated thereunder; and

(9) provide such other services to its members as are incidental or related to the purposes of the Association.

Nothing in this Act shall be construed as giving the Association any discretionary authority to enforce this Act or to withhold or decline acceptance and recording of insurance contracts that meet the requirements of subsection (5) of Section 445.

(Source: P.A. 102-224, eff. 1-1-22.)

(215 ILCS 5/445.2) (from Ch. 73, par. 1057.2)

Sec. 445.2. Board of Directors. The Association shall function through a Board of Directors elected by the Association members, and officers who shall be elected by the Board of Directors.

The Board of Directors of the Association shall consist of not less than 5 nor more than 9 persons serving terms as established in the plan of operation. The plan of operation shall provide for the election of a Board of Directors by the members of the Association from its membership. The plan of operation shall fix the manner of voting and may weigh each member's vote to reflect the annual surplus line insurance premium written by the member. Members employed by the same or affiliated employers may consolidate their premiums written and delegate an individual officer or partner to represent the member in the exercise of Association affairs, including service on the Association Board of Directors. The Director shall appoint an interim Board of Directors for the sole purpose of conducting an election of Directors. If no Board of Directors is elected within 90 days after the effective date of this amendatory Act of 1984, the Director shall appoint the initial members of the Board of Directors.

The Board of Directors shall elect such officers as may be provided in the plan of operation.

(Source: P.A. 83-1300.)

(215 ILCS 5/445.3) (from Ch. 73, par. 1057.3)

Sec. 445.3. Plan of Operation. (1) The Association shall submit to the Director a plan of operation and any amendments thereto to provide operating procedures for the administration of the Association. The plan of operation and any amendments thereto shall become effective upon approval in writing by the Director.

(2) If the Association fails to submit a suitable plan of operation within 180 days following the effective date of this amendatory Act of 1984, or if at any time thereafter the Association fails to submit required amendments to the plan of operation, the Director shall, after notice and hearing pursuant to Sections 401, 402 and 403 of this Code, adopt and promulgate such rules as are necessary or advisable to effectuate the provisions of this Act. Such rules shall continue in force until modified by the Director or superseded by a plan of operation submitted by the Association and approved by the Director.

(3) All Association members must comply with the plan of operation.

(Source: P.A. 83-1300.)

(215 ILCS 5/445.4) (from Ch. 73, par. 1057.4)

Sec. 445.4. Examination. The Director shall, at such times as he deems necessary, make or cause to be made an examination of the Association. The reasonable cost of any such examination shall be paid by the Association upon presentation to it by the Director of a detailed account of such cost. During the course of such examination, the directors, officers, members, agents and employees of the Association may be examined under oath regarding the operation of the Association and shall make available all books, records, accounts, documents and agreements pertaining thereto. The Director shall furnish a copy of the examination report to the Association. Within 20 days after receipt of the report, the Association may request a hearing on the report or any facts or recommendations therein. If the Director finds the Association or any of its members to be in violation of this Act, he may issue an order requiring discontinuance of such violation. The Association shall annually provide for an independent financial audit of the books and records of the Association by a certified public accountant and shall provide a copy of the audit report to the Director.

(Source: P.A. 98-978, eff. 1-1-15.)

(215 ILCS 5/445.5) (from Ch. 73, par. 1057.5)

Sec. 445.5. Immunity. There shall be no liability on the part of and no causes of action of any nature shall arise against the Association, its directors, officers, agents or employees, or the Director of Insurance or his representatives for any action taken or omitted by them in the performance of their powers and duties under this Act.

(Source: P.A. 83-1300.)

(215 ILCS 5/446) (from Ch. 73, par. 1058)

Sec. 446. Penalties.

Any person who violates any of the provisions of this Code, or fails to comply with any duty imposed upon him or it by any provision of this law, for which violation or failure no penalty is elsewhere provided by the laws of this State, shall be guilty of a petty offense.

(Source: P.A. 77-2699.)

(215 ILCS 5/447) (from Ch. 73, par. 1059)

Sec. 447. Domestic company's adoption of code.

Any company, other than a stock company, heretofore organized or incorporated under the laws of this State may, without reincorporation, avail itself of all the provisions of this Code by filing with the Director, a certified copy of a resolution adopted by its board of directors, trustees, or other governing body, and in the case of a stock company such certified copy and a certified copy of a resolution adopted by at least two-thirds of its shareholders, accepting the provisions of this Code.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/448) (from Ch. 73, par. 1060)

Sec. 448. Certain powers reserved to General Assembly.

The General Assembly shall at all times have power to prescribe such regulations, provisions, and limitations as it may deem advisable, which regulations, provisions, and limitations shall be binding upon any and all companies, domestic, foreign or alien, subject to the provisions of this Code, and the General Assembly shall have power to amend, repeal, or modify this Code at pleasure.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/449) (from Ch. 73, par. 1061)

Sec. 449. Effect of repeal of prior law.

The repeal of a law by this Code shall not affect any right accrued or established, or any liability or penalty incurred, under the provisions of such law, prior to the repeal thereof.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/450) (from Ch. 73, par. 1062)

Sec. 450. Effect of invalidity of part of code.

If any provision of this Code, or the application of such provision to any person or circumstances, shall be held invalid, the remainder of the Code, and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

(Source: Laws 1937, p. 696.)

(215 ILCS 5/451) (from Ch. 73, par. 1063)

Sec. 451. Companies not subject to Code. This Code shall not apply to companies now or hereafter organized or transacting business under the Title Insurance Act, or Act amendatory thereof, supplementary thereto, or in replacement thereof; nor to corporations now or hereafter organized and transacting business under "An Act to provide for the incorporation and regulation of nonprofit hospital service corporations" approved July 6, 1935, or Act amendatory thereof or supplementary thereto; nor shall any part of this Code other than Articles X, XI, XIII, and XXIV apply to companies now or hereafter organized or transacting business under an Act entitled, "An Act relating to local mutual district, county and township insurance companies," approved March 13, 1936, or Act amendatory thereof or supplementary thereto. No domestic company shall be organized under this Code, nor shall any foreign or alien company receive a certificate of authority under this Code, to transact the business of title insurance. The changes made to this Section by Public Act 96-334 are a statement and clarification of existing law.

(Source: P.A. 96-334, eff. 1-1-10; 96-1000, eff. 7-2-10.)

(215 ILCS 5/452) (from Ch. 73, par. 1064)

Sec. 452. Civil Administrative Code of Illinois. Nothing in this Code contained shall be held or construed to alter, modify, or repeal any of the provisions of the Civil Administrative Code of Illinois.

(Source: P.A. 101-81, eff. 7-12-19.)

(215 ILCS 5/Art. XXIX heading) ARTICLE XXIX. WORKERS' COMPENSATION AND EMPLOYER'S LIABILITY RATES.

(215 ILCS 5/454) (from Ch. 73, par. 1065.1)

Sec. 454. Purpose of Article. The purpose of this Article is to promote the public welfare by regulating workers' compensation and employer's liability insurance rates to the end that they shall not be excessive, inadequate or unfairly discriminatory, or erroneously applied and to authorize and regulate co-operative action among companies in rate making and in other matters within the scope of this Article. Nothing in this Article is intended (1) to prohibit or discourage reasonable competition, or (2) to prohibit, or encourage except to the extent necessary to accomplish the aforementioned purpose, uniformity in insurance rates, rating systems, rating plans or practices. This Article shall be liberally interpreted to carry into effect the provisions of this Section. Section 462b of this Article is a codification of existing law and practice.

(Source: P.A. 83-1002.)

(215 ILCS 5/455) (from Ch. 73, par. 1065.2)

Sec. 455. Scope of article. This Article applies to workers' compensation and employers' liability insurance incidental thereto and written in connection therewith but shall not apply to reinsurance thereon.

(Source: P.A. 81-992.)

(215 ILCS 5/456) (from Ch. 73, par. 1065.3)

Sec. 456. Making of rates.

(1) All rates shall be made in accordance with the following provisions:

(a) Due consideration shall be given to past and prospective loss experience within and outside this state, to catastrophe hazards, if any, to a reasonable margin for profit and contingencies, to dividends, savings or unabsorbed premium deposits allowed or returned by companies to their policyholders, members or subscribers, to past and prospective expenses both countrywide and those specially applicable to this state, to underwriting practice and judgment and to all other relevant factors within and outside this state;

(b) 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 requirements of 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 for which subdivision or combination separate expense provisions are applicable;

(c) 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 measure variation in hazards or expense provisions, or both. Such rating plans may measure any differences among risks that have a probable effect upon losses or expenses;

(d) Rates shall not be excessive, inadequate or unfairly discriminatory.

A rate is excessive if it is likely to produce a profit that is unreasonably high for the insurance provided or if expenses are unreasonably high in relation to the services rendered.

A rate is not inadequate unless such rate is clearly insufficient to sustain projected losses and expenses in the class of business to which it applies and the use of such rate has or, if continued, will have the effect of substantially lessening competition or the tendency to create monopoly in any market.

Unfair discrimination exists if, after allowing for practical limitations, price differentials fail to reflect equitably the differences in expected losses and expenses. A rate is not unfairly discriminatory because different premiums result for policyholders with like exposures but different expenses, or like expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.

(e) The rating plan shall contain a mandatory offer of a deductible applicable only to the medical benefit under the Workers' Compensation Act. Such deductible offer shall be in a minimum amount of at least $1,000 per accident.

(f) Any rating plan or program shall include a rule permitting 2 or more employers with similar risk characteristics, who participate in a loss prevention program or safety group, to pool their premium and loss experience in determining their rate or premium for such participation in the program.

(2) Except to the extent necessary to meet the provisions of subdivision (d) of subsection (1) of this Section, uniformity among companies in any matters within the scope of this Section is neither required nor prohibited.

(Source: P.A. 100-1118, eff. 2-1-19.)

(215 ILCS 5/457) (from Ch. 73, par. 1065.4)

Sec. 457. Rate filings.

(1) Every company shall prefile with the Director every manual of classifications, every manual of rules and rates, every rating plan and every modification of the foregoing which it intends to use. Such filings shall be made at least 30 days before they become effective. A company may satisfy its obligation to make such filings by adopting the filing of a licensed rating organization of which it is a member or subscriber, filed pursuant to subsection (2) of this Section, in total or, with the approval of the Director, deviate from such filing. If a company intends to deviate from the filing of a licensed rating organization of which it is a member, the company shall provide the Director with supporting information that specifies the basis for the requested deviation and provides justification for the deviation. Any company adopting a pure premium filed by a rating organization pursuant to subsection (2) must file with the Director the modification factor it is using for expenses and profit so that the final rates in use by such company can be determined.

(2) Each licensed rating organization must prefile with the Director every manual of classification, every manual of rules and advisory rates, every pure premium which has been fully adjusted and fully developed, every rating plan and every modification of any of the foregoing which it intends to recommend for use to its members and subscribers, at least 30 days before such manual, premium, plan or modification thereof takes effect. Every licensed rating organization shall also file with the Director the rate classification system, all rating rules, rating plans, policy forms, underwriting rules or similar materials, and each modification of any of the foregoing which it requires its members and subscribers to adhere to not later than 30 days before such filings or modifications thereof are to take effect. Every such filing shall state the proposed effective date thereof and shall indicate the character and extent of the coverage contemplated.

(3) A filing and any supporting information made pursuant to this Section shall be open to public inspection as soon as filed.

(4) A filing shall not be effective nor used until approved by the Director. A filing shall be deemed approved and legally effective if the Director fails to disapprove within 30 days after the filing.

(Source: P.A. 100-1118, eff. 2-1-19.)

(215 ILCS 5/458) (from Ch. 73, par. 1065.5)

Sec. 458. Disapproval of filings.

(1) If within 30 days of any filing the Director finds that such filing does not meet the requirements of this Article, he shall send to the company or rating organization which made such filing a written notice of disapproval of such filing, specifying therein in what respects he finds that such filing fails to meet the requirements of this Article. A company or rating organization whose filing has been disapproved shall be given a hearing upon a written request made within 30 days after the disapproval order.

(2) If at any time subsequent to the applicable review period provided for in subsection (1) of this Section, the Director finds that a filing does not meet the requirements of this Article, he shall, after a hearing held upon not less than ten days written notice, specifying the matters to be considered at such hearing, to every company and rating organization which made such filing, issue an order specifying in what respects he finds that such filing fails to meet the requirements of this Article, and stating when, within a reasonable period thereafter, such filings shall be deemed no longer effective. Copies of said order shall be sent to every such company and rating organization. Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in said order.

(3) Any person or organization aggrieved with respect to any filing which is in effect may make written application to the Director for a hearing thereon, provided, however, that the company or rating organization that made the filing shall not be authorized to proceed under this subsection. Such application shall specify the grounds to be relied upon by the applicant. If the Director shall find that the application is made in good faith, that the applicant would be so aggrieved if his grounds are established, and that such grounds otherwise justify holding such a hearing, he shall, within thirty days after receipt of such application, hold a hearing upon not less than ten days written notice to the applicant and to every company and rating organization which made such filing.

If, after such hearing, the Director finds that the filing does not meet the requirements of this Article, he shall issue an order specifying in what respects he finds that such filing fails to meet the requirements of this Article, and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. Copies of said order shall be sent to the applicant and to every such company and rating organization. Said order shall not affect any contract or policy made or issued prior to the expiration of the period set forth in said order.

(4) Whenever an insurer has no legally effective rates as a result of the Director's disapproval of rates or other act, the Director shall on request of the insurer specify interim rates for the insurer that are high enough to protect the interests of all parties and may order that a specified portion of the premiums be placed in an escrow account approved by him or her. When new rates become legally effective, the Director shall order the escrowed funds or any overcharge in the interim rates to be distributed appropriately, except that refunds to policyholders that are de minimis shall not be required.

(Source: P.A. 100-1118, eff. 2-1-19.)

(215 ILCS 5/459) (from Ch. 73, par. 1065.6)

Sec. 459. Rating organizations. (1) A corporation, an unincorporated association, a partnership or an individual, whether located within or outside this state, may make application to the Director for license as a rating organization for such kinds of insurance or subdivisions thereof as are specified in its application and shall file therewith (a) a copy of its constitution, its articles of agreement or association or its certificate of incorporation, and of its bylaws, rules and regulations governing the conduct of its business, (b) a list of its members and subscribers, (c) the name and address of a resident of this state upon whom notices or orders of the Director or process affecting such rating organization may be served and (d) a statement of its qualifications as a rating organization. If the Director finds that the applicant is competent, trustworthy and otherwise qualified to act as a rating organization and that its constitution, articles of agreement or association or certificate of incorporation, and its bylaws, rules and regulations governing the conduct of its business conform to the requirements of law, he shall issue a license specifying the kinds of insurance or subdivisions thereof for which the applicant is authorized to act as a rating organization. Every such application shall be granted or denied in whole or in part by the Director within sixty days of the date of its filing with him. Licenses issued pursuant to this Section shall remain in effect for three years unless sooner suspended or revoked by the Director. The fee for said license shall be twenty-five dollars. Licenses issued pursuant to this Section may be suspended or revoked by the Director, after hearing upon notice, in the event the rating organization ceases to meet the requirements of this subsection. Every rating organization shall notify the Director promptly of every change in (a) its constitution, its articles of agreement or association or its certificate of incorporation, and its bylaws, rules and regulations governing the conduct of its business, (b) its list of members and subscribers and (c) 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 rating organization may be served.

(2) Subject to rules and regulations which have been approved by the Director as reasonable, each rating organization shall permit any company, not a member, to be a subscriber to its rating services for any kind of insurance or subdivision thereof for which it is authorized to act as a rating organization. Notice of proposed changes in such rules and regulations shall be given to subscribers. Each rating organization shall furnish its rating services without discrimination to its members and subscribers. The reasonableness of any rule or regulation in its application to subscribers, or the refusal of any rating organization to admit a company as a subscriber, shall, at the request of any subscriber or any such company, be reviewed by the Director at a hearing held upon at least ten days' written notice to such rating organization and to such subscriber or company. If the Director finds that such rule or regulation is unreasonable in its application to subscribers, he shall order that such rule or regulation shall not be applicable to subscribers. If the rating organization fails to grant or reject a company's application for subscribership within thirty days after it was made, the company may request a review by the Director as if the application had been rejected. If the Director finds that the company has been refused admittance to the rating organization as a subscriber without justification, he shall order the rating organization to admit the company as a subscriber. If he finds that the action of the rating organization was justified, he shall make an order affirming its action.

(3) No rating organization shall adopt any rule the effect of which would be to prohibit or regulate the payment of dividends, savings or unabsorbed premium deposits allowed or returned by companies to their policyholders, members or subscribers.

(4) Cooperation among rating organizations or among rating organizations and companies in matters within the scope of this Article is hereby authorized, provided the filings resulting from such cooperation are subject to all the provisions of this Article which are applicable to filings generally. The Director may review such cooperative activities and practices and if, after a hearing, he finds that any such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this Article, he may issue a written order specifying in what respects such activity or practice is unfair or unreasonable or otherwise inconsistent with the provisions of this Article, and requiring the discontinuance of such activity or practice.

(5) A rating organization may require members and subscribers to adhere to a rate classification system, rating rules, rating plans, policy forms, and underwriting rules or similar materials; however, no insurer may agree with any other insurer or with a rating organization to adhere to or use any rate or schedule rating plan. For the purposes of this Article, "rate" means the charge for insurance per unit of exposure, prior to any application of individual risk variations based on loss or expense considerations, or a consideration of both, and does not include minimum premiums.

(6) Two or more insurers having a common ownership or operating in this State under common management or control may act in concert between or among themselves with respect to those activities authorized in this Article as if they were a single insurer.

(7) The fact that 2 or more insurers consistently or intermittently use the same rates is not sufficient in itself to support a finding that an illegal agreement exists, and may be used only for the purpose of supplementing or explaining other direct evidence of the existence of any such agreement.

(Source: P.A. 82-939.)

(215 ILCS 5/460) (from Ch. 73, par. 1065.7)

Sec. 460. (Repealed).

(Source: P.A. 99-642, eff. 7-28-16. Repealed by P.A. 100-1118, eff. 2-1-19.)