State of Illinois
91st General Assembly
Legislation

   [ Search ]   [ Legislation ]
[ Home ]   [ Back ]   [ Bottom ]


[ Introduced ][ Enrolled ]

91_HB0812eng

 
HB0812 Engrossed                               LRB9101344JSpc

 1        AN ACT to amend the Illinois Insurance Code  by  changing
 2    Section 123B-4.

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

 5        Section 5.  The Illinois Insurance  Code  is  amended  by
 6    changing Section 123B-4 as follows:

 7        (215 ILCS 5/123B-4) (from Ch. 73, par. 735B-4)
 8        Sec. 123B-4.  Risk retention groups not organized in this
 9    State.  Any  risk retention group organized and licensed in a
10    state other than this State and seeking to do business  as  a
11    risk retention group in this State shall comply with the laws
12    of this State as follows:
13        A.  Notice  of operations and designation of the Director
14    as agent.
15        Before offering insurance in this State, a risk retention
16    group shall submit to the Director on a form approved by  the
17    Director:
18             (1)  a  statement identifying the state or states in
19        which the risk retention group is organized and  licensed
20        as   a   liability   insurance   company,   its  date  of
21        organization, its principal place of business,  and  such
22        other   information,   including   information   on   its
23        membership,  as  the  Director may require to verify that
24        the risk retention group is  qualified  under  subsection
25        (11) of Section 123B-2 of this Article;
26             (2)  a   copy   of  its  plan  of  operations  or  a
27        feasibility study and revisions of  such  plan  or  study
28        submitted  to  its  state of domicile; provided, however,
29        that the provision relating to the submission of  a  plan
30        of  operation or a feasibility study shall not apply with
31        respect  to  any  line  or  classification  of  liability
 
HB0812 Engrossed            -2-                LRB9101344JSpc
 1        insurance which (a) was defined in the Product  Liability
 2        Risk  Retention  Act of 1981 before October 27, 1986, and
 3        (b) was offered before such date by  any  risk  retention
 4        group which had been organized and operating for not less
 5        than 3 years before such date; and
 6             (3)  a  statement  of  registration which designates
 7        the Director as its agent for the  purpose  of  receiving
 8        service  of  legal  documents or process, together with a
 9        filing fee of $100 payable to the Director.
10        B.  Financial condition.  Any risk retention group  doing
11    business in this State shall submit to the Director:
12             (1)  a  copy  of  the  group's  financial  statement
13        submitted  to the state in which the risk retention group
14        is organized and licensed, which shall be certified by an
15        independent public accountant and contain a statement  of
16        opinion on loss and loss adjustment expense reserves made
17        by  a  member  of  the American Academy of Actuaries or a
18        qualified  loss  reserve   specialist   (under   criteria
19        established  by  the  National  Association  of Insurance
20        Commissioners);
21             (2)  a  copy  of  each  examination  of   the   risk
22        retention  group  as  certified  by  the  public official
23        conducting the examination;
24             (3)  upon request by the Director,  a  copy  of  any
25        audit performed with respect to the risk retention group;
26        and
27             (4)  such  information  as may be required to verify
28        its continuing qualification as a  risk  retention  group
29        under subsection (11) of Section 123B-2.
30        C.  Taxation.
31             (1)  Each  risk  retention group shall be liable for
32        the payment of premium taxes and  taxes  on  premiums  of
33        direct business for risks resident or located within this
34        State,  and shall report to the Director the net premiums
 
HB0812 Engrossed            -3-                LRB9101344JSpc
 1        written for risks resident or located within this  State.
 2        Such  risk  retention group shall be subject to taxation,
 3        and any applicable fines and penalties  related  thereto,
 4        on the same basis as a foreign admitted insurer.
 5             (2)  To  the extent licensed insurance producers are
 6        utilized pursuant to Section 123B-11, they  shall  report
 7        to  the  Director  the  premiums  for direct business for
 8        risks resident or located within this  State  which  such
 9        licensees  have  placed  with  or  on  behalf  of  a risk
10        retention group not organized in this State.
11             (3)  To the extent that licensed insurance producers
12        are utilized  pursuant  to  Section  123B-11,  each  such
13        producer shall keep a complete and separate record of all
14        policies  procured  from  each such risk retention group,
15        which  record  shall  be  open  to  examination  by   the
16        Director,  as  provided  in  Section  506.1 of this Code.
17        These records shall, for each policy  and  each  kind  of
18        insurance provided thereunder, include the following:
19                  (a)  the limit of the liability;
20                  (b)  the time period covered;
21                  (c)  the effective date;
22                  (d)  the name of the risk retention group which
23             issued the policy;
24                  (e)  the gross premium charged; and
25                  (f)  the amount of return premiums, if any.
26        D.  Compliance  With  unfair claims practices provisions.
27    Any risk retention  group,  its  agents  and  representatives
28    shall be subject to the unfair claims practices provisions of
29    Sections 154.5 through 154.8 of this Code.
30        E.  Deceptive,  false, or fraudulent practices.  Any risk
31    retention group shall comply with  the  laws  of  this  State
32    regarding  deceptive, false, or fraudulent acts or practices.
33    However, if the Director seeks an injunction  regarding  such
34    conduct,  the  injunction  must  be  obtained from a court of
 
HB0812 Engrossed            -4-                LRB9101344JSpc
 1    competent jurisdiction.
 2        F.  Examination regarding financial condition.  Any  risk
 3    retention group must submit to an examination by the Director
 4    to  determine  its financial condition if the commissioner of
 5    insurance of the jurisdiction in which the group is organized
 6    and licensed has not initiated an  examination  or  does  not
 7    initiate an examination within 60 days after a request by the
 8    Director.  Any such examination shall be coordinated to avoid
 9    unjustified repetition and conducted in an expeditious manner
10    and  in accordance with the National Association of Insurance
11    Commissioners' Examiner Handbook.
12        G.  Notice to purchasers.   Every  application  form  for
13    insurance  from a risk retention group and the front page and
14    declaration page of every policy issued by a  risk  retention
15    group shall contain in 10 point type the following notice:
16                               "NOTICE
17        This  policy is issued by your risk retention group. Your
18    risk retention group is not subject to all of  the  insurance
19    laws   and   regulations   of  your  state.  State  insurance
20    insolvency guaranty fund protection is not available for your
21    risk retention group".
22        H.  Prohibited acts regarding solicitation or sale.   The
23    following   acts   by  a  risk  retention  group  are  hereby
24    prohibited:
25             (1)  the solicitation or sale of insurance by a risk
26        retention group to any person who  is  not  eligible  for
27        membership in such group; and
28             (2)  the  solicitation  or  sale of insurance by, or
29        operation of,  a  risk  retention  group  that  is  in  a
30        hazardous financial condition or is financially impaired.
31        I.  Prohibition on ownership by an insurance company.  No
32    risk  retention group shall be allowed to do business in this
33    State if an insurance company is  directly  or  indirectly  a
34    member  or  owner of such risk retention group, other than in
 
HB0812 Engrossed            -5-                LRB9101344JSpc
 1    the case of a risk retention group all of whose  members  are
 2    insurance companies.
 3        J.  Prohibited  coverage.   No  risk  retention group may
 4    offer insurance policy coverage prohibited by Articles IX  or
 5    XI  of this Code or declared unlawful by the Illinois Supreme
 6    Court; provided however, a risk retention group organized and
 7    licensed in a state other than this State  that  selects  the
 8    law  of  this  State to govern the validity, construction, or
 9    enforceability of policies  issued  by  it  is  permitted  to
10    provide coverage under policies issued by it for penalties in
11    the   nature   of  compensatory  damages  including,  without
12    limitation, punitive damages and the  multiplied  portion  of
13    multiple  damages,  so long as coverage of those penalties is
14    not prohibited by the law of the state under which  the  risk
15    retention group is organized.
16        K.  Delinquency  proceedings.  A risk retention group not
17    organized in this State and  doing  business  in  this  State
18    shall  comply  with  a  lawful  order  issued  in a voluntary
19    dissolution proceeding or in a conservation,  rehabilitation,
20    liquidation, or other delinquency proceeding commenced by the
21    Director  or by another state insurance commissioner if there
22    has  been  a  finding  of  financial  impairment   after   an
23    examination  under  subsection  F  of  Section 123B-4 of this
24    Article.
25        L.  Compliance with injunctive relief.  A risk  retention
26    group shall comply with an injunctive order issued in another
27    state  by  a  court  of competent jurisdiction or by a United
28    States  District  Court  based  on  a  finding  of  financial
29    impairment or hazardous financial condition.
30        M.  Penalties.  A risk retention group that violates  any
31    provision  of  this  Article  will  be  subject  to fines and
32    penalties  applicable   to   licensed   insurers   generally,
33    including  revocation  of  its  license  or  the  right to do
34    business in this State, or both.
 
HB0812 Engrossed            -6-                LRB9101344JSpc
 1        N.  Operations prior to August 3, 1987.  In  addition  to
 2    complying  with  the  requirements  of this Section, any risk
 3    retention group operating in this State prior  to  August  3,
 4    1987,  shall  within 30 days after such effective date comply
 5    with the provisions of subsection A of this Section.
 6    (Source: P.A. 87-1090.)

 7        Section 99.  Effective date.  This Act takes effect  upon
 8    becoming law.

[ Top ]