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92_HB2555
LRB9201219JSpcA
1 AN ACT concerning disclosure of certain information
2 relating to insurance companies.
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 Sections 35A-50, 131.22, 132.5, 136, 141.4, 186.1,
7 188.1, 191, 223, 401.5, 404, 502.2, and 511.109 as follows:
8 (215 ILCS 5/35A-50)
9 Sec. 35A-50. Confidentiality and prohibition on
10 announcements.
11 (a)(1) All RBC Reports, to the extent the information
12 therein is not required to be set forth in a publicly
13 available annual statement schedule, and RBC Plans, including
14 the results or report of any examination or analysis of an
15 insurer performed under this Article and any Corrective Order
16 issued by the Director pursuant to the examination or
17 analysis, with respect to any domestic insurer or foreign
18 insurer that are in the possession or control of the Director
19 shall be confidential by law and privileged, shall not be
20 subject to the Freedom of Information Act, shall not be
21 subject to subpoena, and shall not be subject to discovery or
22 admission into evidence in any private civil action. However,
23 the Director is authorized to use the documents, materials,
24 or other information in the furtherance of any regulatory or
25 legal action brought as a part of the Director's official
26 duties filed with the Director constitute information that
27 might be damaging to the insurer if made available to its
28 competitors and shall be kept confidential by the Director.
29 This information shall not be made public or be subject to
30 subpoena, other than by the Director and then only for the
31 purpose of enforcement actions taken by the Director under
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1 this Code or other provisions of the insurance laws of this
2 State.
3 (2) Neither the Director nor any person who
4 received documents, materials, or other information while
5 acting under the authority of the Director shall be
6 permitted or required to testify in any private civil
7 action concerning any confidential documents, materials,
8 or information subject to paragraph (1).
9 (3) In order to assist in the performance of the
10 Director's duties, the Director:
11 (A) may share documents, materials, or other
12 information, including the confidential and
13 privileged documents, materials, or information
14 subject to paragraph (1), with other state, federal,
15 and international regulatory agencies, with the
16 National Association of Insurance Commissioners and
17 its affiliates or subsidiaries, and with state,
18 federal, and international law enforcement
19 authorities, provided that the recipient agrees to
20 maintain the confidentiality and privileged status
21 of the document, material, or other information;
22 (B) may receive documents, materials, or
23 information, including otherwise confidential and
24 privileged documents, materials, or information,
25 from the National Association of Insurance
26 Commissioners and its affiliates or subsidiaries and
27 from regulatory and law enforcement officials of
28 other foreign or domestic jurisdictions, and shall
29 maintain as confidential or privileged any document,
30 material, or information received with notice or the
31 understanding that it is confidential or privileged
32 under the laws of the jurisdiction that is the
33 source of the document, material, or information;
34 and
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1 (C) may enter into agreements governing the
2 sharing and use of information consistent with this
3 subsection.
4 (4) No waiver of any applicable privilege or claim
5 of confidentiality in the documents, materials, or
6 information shall occur as a result of disclosure to the
7 Director under this Section or as a result of sharing
8 authorized in paragraph (3).
9 (b) It is the judgment of the legislature that the
10 comparison of an insurer's total adjusted capital to any of
11 its RBC levels is a regulatory tool that may indicate the
12 need for possible corrective action with respect to the
13 insurer and not a means to rank insurers generally.
14 Therefore, except as otherwise required under the provisions
15 of this Code, the disclosure, in any manner or form, directly
16 or indirectly, of information containing an assertion,
17 representation, or statement regarding the RBC levels of any
18 insurer or any component derived in the calculation of RBC
19 levels by any insurer, insurance producer, limited insurance
20 producer, broker, or other person engaged in any manner in
21 the insurance business would be misleading and is prohibited.
22 In the event that a materially false statement with respect
23 to the comparison regarding an insurer's total adjusted
24 capital to any of its RBC levels or an inappropriate
25 comparison of any other amount to the insurer's RBC levels is
26 published in any written publication and the insurer is able
27 to demonstrate to the Director with substantial proof the
28 falsity of the statement or the inappropriateness thereof,
29 the insurer may publish an announcement in a written
30 publication if the sole purpose of the announcement is to
31 rebut the materially false statement.
32 (c) It is the further judgment of the legislature that
33 the RBC Instructions, RBC Reports, Adjusted RBC Reports, RBC
34 Plans, and Revised RBC Plans are intended solely for use by
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1 the Director in monitoring the solvency of insurers and the
2 need for possible corrective action with respect to insurers
3 and shall not be used by the Director for ratemaking or
4 considered or introduced as evidence in any rate proceeding
5 or used by the Director to calculate or derive any elements
6 of an appropriate premium level or rate of return for any
7 line of insurance that an insurer or an affiliate is
8 authorized to write.
9 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
10 (215 ILCS 5/131.22) (from Ch. 73, par. 743.22)
11 Sec. 131.22. Confidential treatment. All information,
12 documents, and copies thereof obtained by or disclosed to the
13 Director or any other person in the course of an examination
14 or investigation made under Section 131.21 and all
15 information submitted under Sections 131.13 or 131.20a and
16 all personal financial statement information submitted under
17 Section 131.5 must be given confidential treatment and is not
18 subject to subpoena and may not be made public by the
19 Director or any other person, without the prior written
20 consent of the company to which it pertains unless the
21 Director, after giving the company and its affiliates who
22 would be affected thereby notice and opportunity to be heard,
23 determines that the interests of policyholders, shareholders
24 or the public will be served by the publication thereof in
25 which event he may publish all or any part thereof in such
26 manner as he may deem appropriate.
27 Nothing contained in this Section shall prevent or be
28 construed as prohibiting the Director from disclosing such
29 information to the insurance department of any other state or
30 county or to law enforcement officials of this or any other
31 state or agency of the federal government at any time upon
32 the written agreement of the entity receiving the information
33 to hold that information confidential and in a manner
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1 consistent with this Code.
2 (1) Documents, materials, or other information in
3 the possession or control of the Director that are
4 obtained by or disclosed to the Director or any other
5 person in the course of an examination or investigation
6 made pursuant to Section 131.21 and all information
7 reported pursuant to Section 131.21 shall be confidential
8 by law and privileged, shall not be subject to the
9 Freedom of Information Act, shall not be subject to
10 subpoena, and shall not be subject to discovery or
11 admission into evidence in any private civil action.
12 However, the Director is authorized to use the documents,
13 materials, or other information in the furtherance of any
14 regulatory or legal action brought as a part of the
15 Director's official duties.
16 (2) Neither the Director nor any person who
17 received documents, materials, or other information while
18 acting under the authority of the Director shall be
19 permitted or required to testify in any private civil
20 action concerning any confidential documents, materials,
21 or information subject to paragraph (1).
22 (3) In order to assist in the performance of the
23 Director's duties, the Director:
24 (A) may share documents, materials, or other
25 information, including the confidential and
26 privileged documents, materials, or information
27 subject to paragraph (1), with other state, federal,
28 and international regulatory agencies, with the
29 National Association of Insurance Commissioners and
30 its affiliates or subsidiaries, and with state,
31 federal, and international law enforcement
32 authorities, provided that the recipient agrees to
33 maintain the confidentiality and privileged status
34 of the document, material, or other information;
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1 (B) may receive documents, materials, or
2 information, including otherwise confidential and
3 privileged documents, materials, or information,
4 from the National Association of Insurance
5 Commissioners and its affiliates or subsidiaries and
6 from regulatory and law enforcement officials of
7 other foreign or domestic jurisdictions, and shall
8 maintain as confidential or privileged any document,
9 material, or information received with notice or the
10 understanding that it is confidential or privileged
11 under the laws of the jurisdiction that is the
12 source of the document, material, or information;
13 and
14 (C) may enter into agreements governing the
15 sharing and use of information consistent with this
16 subsection.
17 (4) No waiver of any applicable privilege or claim
18 of confidentiality in the documents, materials, or
19 information shall occur as a result of disclosure to the
20 Director under this Section or as a result of sharing
21 authorized in paragraph (3).
22 (Source: P.A. 88-364.)
23 (215 ILCS 5/132.5) (from Ch. 73, par. 744.5)
24 Sec. 132.5. Examination reports.
25 (a) General description. All examination reports shall
26 be comprised of only facts appearing upon the books, records,
27 or other documents of the company, its agents, or other
28 persons examined or as ascertained from the testimony of its
29 officers, agents, or other persons examined concerning its
30 affairs and the conclusions and recommendations as the
31 examiners find reasonably warranted from those facts.
32 (b) Filing of examination report. No later than 60 days
33 following completion of the examination, the examiner in
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1 charge shall file with the Department a verified written
2 report of examination under oath. Upon receipt of the
3 verified report, the Department shall transmit the report to
4 the company examined, together with a notice that affords the
5 company examined a reasonable opportunity of not more than 30
6 days to make a written submission or rebuttal with respect to
7 any matters contained in the examination report.
8 (c) Adoption of the report on examination. Within 30
9 days of the end of the period allowed for the receipt of
10 written submissions or rebuttals, the Director shall fully
11 consider and review the report, together with any written
12 submissions or rebuttals and any relevant portions of the
13 examiners work papers and enter an order:
14 (1) Adopting the examination report as filed or
15 with modification or corrections. If the examination
16 report reveals that the company is operating in violation
17 of any law, regulation, or prior order of the Director,
18 the Director may order the company to take any action the
19 Director considers necessary and appropriate to cure the
20 violation.
21 (2) Rejecting the examination report with
22 directions to the examiners to reopen the examination for
23 purposes of obtaining additional data, documentation, or
24 information and refiling under subsection (b).
25 (3) Calling for an investigatory hearing with no
26 less than 20 days notice to the company for purposes of
27 obtaining additional documentation, data, information,
28 and testimony.
29 (d) Order and procedures. All orders entered under
30 paragraph (1) of subsection (c) shall be accompanied by
31 findings and conclusions resulting from the Director's
32 consideration and review of the examination report, relevant
33 examiner work papers, and any written submissions or
34 rebuttals. The order shall be considered a final
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1 administrative decision and may be appealed in accordance
2 with the Administrative Review Law. The order shall be served
3 upon the company by certified mail, together with a copy of
4 the adopted examination report. Within 30 days of the
5 issuance of the adopted report, the company shall file
6 affidavits executed by each of its directors stating under
7 oath that they have received a copy of the adopted report and
8 related orders.
9 Any hearing conducted under paragraph (3) of subsection
10 (c) by the Director or an authorized representative shall be
11 conducted as a nonadversarial confidential investigatory
12 proceeding as necessary for the resolution of any
13 inconsistencies, discrepancies, or disputed issues apparent
14 upon the face of the filed examination report or raised by or
15 as a result of the Director's review of relevant work papers
16 or by the written submission or rebuttal of the company.
17 Within 20 days of the conclusion of any hearing, the Director
18 shall enter an order under paragraph (1) of subsection (c).
19 The Director shall not appoint an examiner as an
20 authorized representative to conduct the hearing. The hearing
21 shall proceed expeditiously with discovery by the company
22 limited to the examiner's work papers that tend to
23 substantiate any assertions set forth in any written
24 submission or rebuttal. The Director or his representative
25 may issue subpoenas for the attendance of any witnesses or
26 the production of any documents deemed relevant to the
27 investigation, whether under the control of the Department,
28 the company, or other persons. The documents produced shall
29 be included in the record, and testimony taken by the
30 Director or his representative shall be under oath and
31 preserved for the record. Nothing contained in this Section
32 shall require the Department to disclose any information or
33 records that would indicate or show the existence or content
34 of any investigation or activity of a criminal justice
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1 agency.
2 The hearing shall proceed with the Director or his
3 representative posing questions to the persons subpoenaed.
4 Thereafter the company and the Department may present
5 testimony relevant to the investigation. Cross-examination
6 shall be conducted only by the Director or his
7 representative. The company and the Department shall be
8 permitted to make closing statements and may be represented
9 by counsel of their choice.
10 (e) Publication and use. Upon the adoption of the
11 examination report under paragraph (1) of subsection (c), the
12 Director shall continue to hold the content of the
13 examination report as private and confidential information
14 for a period of 35 days, except to the extent provided in
15 subsection (b). Thereafter, the Director may open the report
16 for public inspection so long as no court of competent
17 jurisdiction has stayed its publication.
18 Nothing contained in this Code shall prevent or be
19 construed as prohibiting the Director from disclosing the
20 content of an examination report, preliminary examination
21 report or results, or any matter relating thereto, to the
22 insurance department of any other state or country or to law
23 enforcement officials of this or any other state or agency of
24 the federal government at any time, so long as the agency or
25 office receiving the report or matters relating thereto
26 agrees in writing to hold it confidential and in a manner
27 consistent with this Code.
28 In the event the Director determines that regulatory
29 action is appropriate as a result of any examination, he may
30 initiate any proceedings or actions as provided by law.
31 (f) Privilege for and confidentiality of ancillary
32 information. (1)(A) Except as provided in subsection (e) and
33 in this subsection, documents, materials, or other
34 information including, but not limited to, all working
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1 papers, recorded information, documents, and copies thereof,
2 created, produced, or by, obtained by, or disclosed to the
3 Director or any other person in the course of any examination
4 or in the course of analysis by the Director of the financial
5 condition or market conduct of a company shall be
6 confidential by law and privileged, shall not be subject to
7 the Freedom of Information Act, shall not be subject to
8 subpoena, and shall not be subject to discovery or admission
9 into evidence in any private civil action. must be given
10 confidential treatment, are not subject to subpoena, and may
11 not be made public by the Director or any other persons,
12 except to the extent provided in subsection (e). Access may
13 also be granted to the National Association of Insurance
14 Commissioners. Those parties must agree in writing before
15 receiving the information to provide to it the same
16 confidential treatment as required by this Section, unless
17 the prior written consent of the company to which it pertains
18 has been obtained. The Director is authorized to use the
19 documents, materials, or other information in the furtherance
20 of any regulatory or legal action brought as part of the
21 Director's official duties.
22 (B) Documents, materials, or other information,
23 including, but not limited to, all working papers, and copies
24 thereof, in the possession or control of the National
25 Association of Insurance Commissioners and its affiliates and
26 subsidiaries shall be confidential by law and privileged,
27 shall not be subject to subpoena, and shall not be subject to
28 discovery or admission into evidence in any private civil
29 action, if they are:
30 (i) created, produced, or obtained by or disclosed
31 to the National Association of Insurance Commissioners
32 and its affiliates and subsidiaries in the course of the
33 National Association of Insurance Commissioners and its
34 affiliates and subsidiaries assisting an examination made
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1 under this Code, or assisting a commissioner in the
2 analysis of the financial condition or market conduct of
3 a company; or
4 (ii) disclosed to the National Association of
5 Insurance Commissioners and its affiliates and
6 subsidiaries under paragraph (3) of this subsection by a
7 commissioner.
8 (C) For the purposes of paragraph (1)(B), "Code"
9 includes the law of another state or jurisdiction that is
10 substantially similar to this Code.
11 (2) Neither the Director nor any person who received the
12 documents, material, or other information while acting under
13 the authority of the Director, including the National
14 Association of Insurance Commissioners and its affiliates and
15 subsidiaries, shall be permitted to testify in any private
16 civil action concerning any confidential documents,
17 materials, or information subject to paragraph (1).
18 (3) In order to assist in the performance of the
19 Director's duties, the Director:
20 (A) may share documents, materials, or other
21 information, including the confidential and privileged
22 documents, materials, or information subject to paragraph
23 (1), with other state, federal, and international regulatory
24 agencies, with the National Association of Insurance
25 Commissioners and its affiliates and subsidiaries, and with
26 state, federal, and international law enforcement
27 authorities, provided that the recipient agrees to maintain
28 the confidentiality and privileged status of the document,
29 material, or other information;
30 (B) may receive documents, materials, or information,
31 including otherwise confidential and privileged documents,
32 materials, or information, from the National Association of
33 Insurance Commissioners and its affiliates and subsidiaries
34 and from regulatory and law enforcement officials of other
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1 foreign or domestic jurisdictions, and shall maintain as
2 confidential or privileged any document, material, or
3 information received with notice or the understanding that it
4 is confidential or privileged under the laws of the
5 jurisdiction that is the source of the document, material, or
6 information; and
7 (C) may enter into agreements governing sharing and use
8 of information consistent with this subsection.
9 (4) No waiver of any applicable privilege or claim of
10 confidentiality in the documents, materials, or information
11 shall occur as a result of disclosure to the Director under
12 this Section or as result of sharing as authorized in
13 paragraph (3).
14 (5) A privilege established under the law of any state
15 or jurisdiction that is substantially similar to the
16 privilege established under this subsection shall be
17 available and enforced in any proceeding in, and in any court
18 of, this State.
19 (6) In this subsection "department," "insurance
20 department," "law enforcement agency," "regulatory agency,"
21 and the "National Association of Insurance Commissioners"
22 include, but are not limited to, their employees, agents,
23 consultants, and contractors.
24 (Source: P.A. 87-108.)
25 (215 ILCS 5/136) (from Ch. 73, par. 748)
26 Sec. 136. Annual statement.
27 (1) Every company authorized to do business in this
28 State or accredited by this State shall file with the
29 Director by March 1st in each year 2 copies of its financial
30 statement for the year ending December 31st immediately
31 preceding on forms prescribed by the Director, which shall
32 conform substantially to the form of statement adopted by the
33 National Association of Insurance Commissioners. Unless the
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1 Director provides otherwise, the annual statement is to be
2 prepared in accordance with the annual statement instructions
3 and the Accounting Practices and Procedures Manual adopted by
4 the National Association of Insurance Commissioners. The
5 Director shall have power to make such modifications and
6 additions in this form as he may deem desirable or necessary
7 to ascertain the condition and affairs of the company. The
8 Director shall have authority to extend the time for filing
9 any statement by any company for reasons which he considers
10 good and sufficient. In every statement the admitted assets
11 shall be shown at the actual values as of the last day of the
12 preceding year, in accordance with Section 126.7. The
13 statement shall be verified by oaths of the president and
14 secretary of the company or, in their absence, by 2 other
15 principal officers. In addition, any company may be required
16 by the Director, when he considers that action to be
17 necessary and appropriate for the protection of
18 policyholders, creditors, shareholders, or claimants, to
19 file, within 60 days after mailing to the company a notice
20 that such is required, a supplemental summary statement as of
21 the last day of any calendar month occurring during the 100
22 days next preceding the mailing of such notice designated by
23 him on forms prescribed and furnished by the Director. The
24 Director may require supplemental summary statements to be
25 certified by an independent actuary deemed competent by the
26 Director or by an independent certified public accountant.
27 (2) The statement of an alien company shall embrace only
28 its condition and transactions in the United States and shall
29 be verified by the oaths of its resident manager or principal
30 representative in the United States, except that in the case
31 of any life company organized under the laws of Canada or any
32 province thereof, the statement may be verified by the oaths
33 of any of its principal officers designated for that purpose
34 by its board of directors.
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1 (3) For the information of the public generally the
2 Director shall cause an abstract of the information contained
3 in the annual statement to be made available to the public as
4 soon as practicable after filing with the Department, by
5 printing those abstracts in pamphlet tabular form for free
6 general distribution by the Department, or by such other
7 publication in the city of Springfield or in the city of
8 Chicago as may be reasonably necessary more fully to inform
9 the public of the financial condition of companies
10 transacting business in this State.
11 (4) Each domestic, foreign, and alien insurer authorized
12 to do business in this State or accredited by this State
13 shall participate in the National Association of Insurance
14 Commissioners' Insurance Regulatory Information System,
15 including the payment of all fees and charges of the system.
16 Each company shall, on or before March 1 of each year, file
17 with the National Association of Insurance Commissioners a
18 copy of its annual financial statement along with any
19 additional filings prescribed by the Director for the
20 preceding year. The statement filed with the National
21 Association of Insurance Commissioners shall be in the same
22 format and scope as that required by this Code and shall
23 include a signed jurat page and actuarial certification. Any
24 amendments and addendums to the annual statement shall also
25 be filed with the National Association of Insurance
26 Commissioners. Each company shall also file with the National
27 Association of Insurance Commissioners annual and quarterly
28 financial statement information in computer readable format
29 as required by the Insurance Regulatory Information System.
30 Failure of a company to file financial statement information
31 in computer readable format shall subject the company to the
32 provisions of Section 139.
33 (5)(a) All financial analysis ratios and examination
34 synopsis concerning insurance companies that are submitted to
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1 the Director by the National Association of Insurance
2 Commissioners' Insurance Regulatory Information System and in
3 the possession or control of the Director shall be
4 confidential by law and privileged, shall not be subject to
5 the Freedom of Information Act, shall not be subject to
6 subpoena, and shall not be subject to discovery or admission
7 into evidence in any private civil action. However, the
8 Director is authorized to use the documents, materials, or
9 other information in the furtherance of any regulatory or
10 legal action brought as a part of the Director's official
11 duties are confidential and may not be disclosed by the
12 Director.
13 (b) Neither the Director nor any person who received
14 documents, materials, or other information while acting under
15 the authority of the Director shall be permitted or required
16 to testify in any private civil action concerning any
17 confidential documents, materials, or information subject to
18 paragraph (a).
19 (c) In order to assist in the performance of the
20 Director's duties, the Director:
21 (i) may share documents, materials, or other
22 information, including the confidential and privileged
23 documents, materials, or information subject to paragraph
24 (a), with other state, federal, and international
25 regulatory agencies, with the National Association of
26 Insurance Commissioner and its affiliates or
27 subsidiaries, and with state, federal, and international
28 law enforcement authorities, provided that the recipient
29 agrees to maintain the confidentiality and privileged
30 status of the document, material, or other information;
31 (ii) may receive documents, materials, or
32 information, including otherwise confidential and
33 privileged documents, materials, or information, from the
34 National Association of Insurance Commissioners and its
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1 affiliates or subsidiaries and from regulatory and law
2 enforcement officials of other foreign or domestic
3 jurisdictions, and shall maintain as confidential or
4 privileged any document, material, or information
5 received with notice or the understanding that it is
6 confidential or privileged under the laws of the
7 jurisdiction that is the source of the document,
8 material, or information; and
9 (iii) may enter into agreements governing the
10 sharing and use of information consistent with this
11 subsection.
12 (d) No waiver of any applicable privilege or claim of
13 confidentiality in the documents, materials, or information
14 shall occur as a result of disclosure to the Director under
15 this Section or as a result of sharing authorized in
16 paragraph (c).
17 (Source: P.A. 90-418, eff. 8-15-97.)
18 (215 ILCS 5/141.4)
19 Sec. 141.4. Disclosure of material transactions.
20 (a) An insurer domiciled in this State shall file a
21 report with the Director disclosing material acquisitions and
22 dispositions of assets or material nonrenewals,
23 cancellations, or revisions of ceded reinsurance agreements
24 unless the acquisitions and dispositions of assets or the
25 material nonrenewals, cancellations, or revisions of ceded
26 reinsurance agreements have been otherwise submitted to the
27 Director for review, approval, or information purposes. The
28 report must be filed no later than 15 days after the end of
29 the calendar month in which a reportable transaction occurs.
30 A copy of the report, including any exhibits or other
31 attachments filed as a part of the report, shall be filed
32 with the National Association of Insurance Commissioners.
33 All reports obtained by or disclosed to the Director under
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1 this Section shall be given confidential treatment and shall
2 not be subject to subpoena and shall not be made public by
3 the Director, the National Association of Insurance
4 Commissioners, or any other person, except to insurance
5 departments of other states, without the prior written
6 consent of the insurer to which it pertains unless the
7 Director, after giving the insurer who would be affected
8 notice and an opportunity to be heard, determines that the
9 interests of policyholders, shareholders, or the public will
10 be served by publication, in which event the Director may
11 publish all or any part in the manner the Director may deem
12 appropriate.
13 (b) Asset acquisitions or dispositions that are not
14 material do not have to be reported under this Section. For
15 purposes of this Section, a material acquisition (or the
16 aggregate of any series of related acquisitions during any 30
17 day period) or disposition (or the aggregate of any series of
18 related dispositions during any 30 day period) is one that is
19 nonrecurring and not in the ordinary course of business and
20 involves more than 5% of the reporting insurer's total
21 admitted assets as reported in its most recent statutory
22 financial statement filed with the Director. Asset
23 acquisitions subject to this Section include, but are not
24 limited to, every purchase, lease, exchange, merger,
25 consolidation, succession, or other acquisition other than
26 the construction or development of real property by or for
27 the reporting insurer or the acquisition of materials for
28 that purpose. Asset dispositions subject to this Section
29 include, but are not limited to, every sale, lease, exchange,
30 merger, consolidation, mortgage, hypothecation, assignment
31 (whether for the benefit of creditors or otherwise),
32 abandonment, destruction, or other disposition. All of the
33 following information shall be disclosed in the report of a
34 material acquisition or disposition of assets:
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1 (1) Date of the transaction.
2 (2) Manner of acquisition or disposition.
3 (3) Description of the assets involved.
4 (4) Nature and amount of the consideration received
5 or given.
6 (5) Purpose of, or reason for, the transaction.
7 (6) Manner by which the amount of consideration was
8 determined.
9 (7) Gain or loss recognized or realized as a result
10 of the transaction.
11 (8) Name of the person from whom the assets were
12 acquired or to whom they were disposed.
13 Insurers shall report acquisitions and dispositions on a
14 nonconsolidated basis unless the insurer is part of a
15 consolidated group of insurers that utilizes a pooling
16 arrangement or a 100% reinsurance agreement that affects the
17 solvency and integrity of the insurer's reserves and the
18 insurer ceded substantially all of its direct and assumed
19 business to the pool. An insurer is deemed to have ceded
20 substantially all of its direct and assumed business to a
21 pool if the insurer has less than $1,000,000 total direct
22 plus assumed written premiums during a calendar year that are
23 not subject to a pooling arrangement and the net income of
24 the business not subject to the pooling arrangement
25 represents less than 5% of the insurer's capital and surplus.
26 (c) Ceded reinsurance agreement nonrenewals,
27 cancellations, or revisions that are not material do not have
28 to be reported under this Section. For purposes of this
29 Section, a material nonrenewal, cancellation, or revision is
30 one that affects:
31 (1) For property and casualty business, including
32 accident and health business written by a property and
33 casualty insurer:
34 (A) more than 50% of the insurer's total ceded
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1 written premium; or
2 (B) more than 50% of the insurer's total ceded
3 indemnity and loss adjustment reserves.
4 (2) For life, annuity, and accident and health
5 business: more than 50% of the total reserve credit taken
6 for business ceded, on an annual basis, as indicated in
7 the insurer's most recent annual statement.
8 (3) Property and casualty or life, annuity, and
9 accident and health business:
10 (A) an authorized reinsurer representing more
11 than 10% of total cession is replaced by one or more
12 unauthorized reinsurers; or
13 (B) previously established collateral
14 requirements have been reduced or waived as respects
15 one or more unauthorized reinsurer representing
16 collectively more than 10% of a total cession.
17 With respect to property and casualty business, including
18 accident and health business written by a property and
19 casualty insurer, no filing shall be required if the
20 insurer's total ceded written premium represents, on an
21 annualized basis, less than 10% of its total written premium
22 for direct and assumed business. With respect to life,
23 annuity, and accident and health business, no filing shall be
24 required if the total reserve credit taken for business ceded
25 represents, on an annualized basis, less than 10% of the
26 statutory reserve requirement prior to any cession.
27 All of the following information shall be disclosed in
28 the report of a material nonrenewal, cancellation, or
29 revision of ceded reinsurance agreements:
30 (1) Effective date of the nonrenewal, cancellation
31 or revision.
32 (2) The description of the transaction with an
33 identification of the initiator thereof.
34 (3) Purpose of, or reason for, the transaction.
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1 (4) The identity of the replacement insurers, if
2 applicable.
3 Insurers shall report all material nonrenewals,
4 cancellations, or revisions of ceded reinsurance agreements
5 on a nonconsolidated basis unless the insurer is part of a
6 consolidated group of insurers that utilizes a pooling
7 arrangement or 100% reinsurance agreement that affects the
8 solvency and integrity of the insurer's reserves and the
9 insurer ceded substantially all of its direct and assumed
10 business to the pool. An insurer is deemed to have ceded
11 substantially all of its direct and assumed business to a
12 pool if the insurer has less than $1,000,000 of total direct
13 plus assumed written premiums during a calendar year that are
14 not subject to the pooling arrangement and the net income of
15 the business not subject to the pooling arrangement
16 represents less than 5% of the insurer's capital and surplus.
17 (d)(1) All reports obtained by or disclosed to the
18 Director pursuant to this Section in the possession or
19 control of the Director, shall be confidential by law and
20 privileged, shall not be subject to the Freedom of
21 Information Act, shall not be subject to subpoena, and
22 shall not be subject to discovery or admission into
23 evidence in any private civil action without the prior
24 written consent of the insurer to which it pertains.
25 However, the Director is authorized to use the documents,
26 material, or other information in the furtherance of any
27 regulatory or legal action brought as a part of the
28 Director's official duties.
29 (2) After giving the insurer who would be affected
30 notice and an opportunity to be heard, the Director may
31 determine that the interest of policyholders,
32 shareholders, or the public will be served by publication
33 of the information subject to subdivision (d)(1), in
34 which event the Director may publish all or any part in
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1 the manner the Director may deem appropriate.
2 (3) Neither the Director nor any person who
3 received documents, materials, or other information while
4 acting under the authority of the Director shall be
5 permitted or required to testify in any private civil
6 action concerning any confidential documents, materials,
7 or information subject to subdivision (d)(1).
8 (4) In order to assist in the performance of the
9 Director's duties, the Director:
10 (A) may share documents, materials, or other
11 information, including the confidential and
12 privileged documents, materials, or information
13 subject to subdivision (d)(1), with other state,
14 federal, and international regulatory agencies, with
15 the National Association of Insurance Commissioners
16 and its affiliates and subsidiaries, and with state,
17 federal, and international law enforcement
18 authorities, provided that the recipient agrees to
19 maintain the confidentiality and privileged status
20 of the document, material, or other information.
21 (B) may receive documents, materials, or
22 information, including otherwise confidential and
23 privileged documents, materials, or information,
24 from the National Association of Insurance
25 Commissioners and its affiliates and subsidiaries
26 and from regulatory and law enforcement officials or
27 other foreign or domestic jurisdictions, and shall
28 maintain as confidential or privileged any document,
29 material, or information received with notice or the
30 understanding that it is confidential or privileged
31 under the laws of the jurisdiction that is the
32 source of the document, material, or information;
33 and
34 (C) may enter into agreements governing
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1 sharing and use of information consistent with this
2 subsection.
3 (5) No waiver of any applicable privilege or claim
4 of confidentiality in the documents, materials, or
5 information shall occur as a result of disclosure to the
6 Director under this Section or as a result of sharing as
7 authorized in subdivision (d)(4).
8 (Source: P.A. 89-97, eff. 7-7-95.)
9 (215 ILCS 5/186.1) (from Ch. 73, par. 798.1)
10 Sec. 186.1. Supervision by the Director.
11 (1) If the Director determines that any domestic
12 insurance company is operating in a manner, that could lead
13 to, or is in, a financial condition, which if continued would
14 make it hazardous to the public, and its policyholders, the
15 Director may issue an order:
16 (a) notifying the company and its Board of Directors of
17 his determination and setting forth the specific deficiencies
18 leading to the determination;
19 (b) setting forth the specific action required or
20 prohibited to correct the cited deficiencies; and
21 (c) ordering the company to comply with the Director's
22 order within such reasonable time as the Director shall
23 prescribe.
24 (2) Operation or financial condition deficiencies
25 supporting the Director's determination under subsection (1)
26 may include, but are not limited to, the following:
27 (a) The company has failed to maintain a relationship of
28 policyholder surplus to premium writings or policyholder
29 surplus to claim and unearned premium reserves which provides
30 a reasonable margin of safety for the policyholders
31 considering the classes of insurance the company is writing.
32 (b) The company's asset liquidity is not adequate to
33 provide orderly payment of its obligations.
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1 (c) The company's current or projected net income is
2 inadequate to meet its present or projected obligations.
3 (d) The company has a history of claim reserve
4 inadequacy which affects the reliability of its financial
5 statements.
6 (e) The company has failed to maintain adequate books
7 and records or has otherwise conducted its insurance
8 operation in a manner which impairs the Director's ability to
9 determine its true financial condition.
10 (3) If a company fails to comply with the Director's
11 order issued pursuant to subsection (1) within the time
12 prescribed for such compliance the Director may institute
13 proceedings for the conservation, rehabilitation or
14 liquidation of the company under Article XIII of this Code.
15 (4)(a) The Director may require that the company prepare
16 and file a plan to correct the deficiencies cited by the
17 Director in his order within such time as the Director may
18 prescribe. A corrective order may require, prohibit or
19 permit certain acts subject to conditions including the
20 Director's prior approval. The scope of a corrective order
21 may relate to but shall not be limited to:
22 (i) the disposition, recovery or mix of assets;
23 (ii) the assumption or cession of reinsurance, including
24 reinsurance of outstanding risks;
25 (iii) lending and borrowing;
26 (iv) investments;
27 (v) restricting underwriting and marketing activities.
28 (b) The Director may require that any company under such
29 corrective order direct any certified public accountants,
30 consulting actuary or financial consultant retained by the
31 company to prepare for the Director such reports, accounting
32 data and such other reports as the Director may reasonably
33 require to assist in carrying out the responsibilities of the
34 Director under this Section.
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1 (5)(a) Any company subject to an order under subsections
2 (1) or (4) may request a hearing before the Director to
3 review that order. Such request shall be made in writing
4 within 10 days of the receipt of such order, shall state the
5 company's objections to the order, and shall be addressed to
6 the Director. Such hearing shall be convened not less than
7 10 days nor more than 20 days after receipt of the written
8 request for hearing unless otherwise agreed to by the
9 company. The Director shall make a final determination
10 within 10 days after the conclusion of the hearing. The
11 Director shall hold all hearings under this subsection
12 privately in accordance with subsection (6) of this Section.
13 The pendency of a hearing or pendency of the Director's final
14 determination shall not stay the effect of the Director's
15 order.
16 (b) After the Director's final determination pursuant to
17 any hearing under this subsection, any party to the
18 proceedings whose interests are affected by the Director's
19 final determination shall be entitled to judicial review of
20 such final determination pursuant to the provisions of the
21 "Administrative Review Law".
22 Notwithstanding the availability of administrative
23 remedies or judicial review under the "Administrative Review
24 Law", a company which is subject to an order of the Director
25 under this Section shall be entitled to immediate judicial
26 review and injunctive relief in the Circuit Court of Cook
27 County or the Circuit Court of Sangamon County upon
28 satisfying the court:
29 (i) that accepting the facts set forth in the order as
30 true, the order is arbitrary or capricious;
31 (ii) that the company's interests are substantially
32 impaired by the order; and
33 (iii) that the company will suffer permanent injury in
34 the absence of immediate injunctive relief.
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1 (6)(a) All administrative and judicial proceedings
2 arising under this Article shall be held privately unless a
3 public hearing is requested by the company, and all records
4 of the company, and all records of the Department concerning
5 the company, so far as they pertain to or are a part of the
6 record of the proceedings, shall be and remain confidential,
7 unless the company requests otherwise. Such records shall
8 not be subject to public disclosure under "The Illinois
9 Freedom of Information Act", certified December 27, 1983, as
10 amended, or otherwise, nor shall such records be subject to
11 subpoena by third parties, unless the company and Director
12 consent to such disclosure or release under subpoena.
13 (b) The Director may share the notices, correspondence,
14 reports, records, or information with other state, federal,
15 and international regulatory agencies, with the National
16 Association of Insurance Commissioners and its affiliates and
17 subsidiaries, and with state, federal, and international law
18 enforcement authorities, if the Director determines that the
19 disclosure is necessary or proper for the enforcement of the
20 laws of this or another state of the United States, and
21 provided that the recipient agrees to maintain the
22 confidentiality of the documents, materials, or other
23 information. No waiver of any applicable privilege or claim
24 of confidentiality shall occur as a result of the sharing of
25 documents, materials, or other information pursuant to this
26 subsection.
27 (c) The Director may open the proceedings or hearings or
28 make public the notices, correspondence, reports, records, or
29 other information if the Director deems that it is in the
30 best interest of the public or in the best interest of the
31 company, its insureds, creditors, or the general public.
32 (7) The powers vested in the Director by this Section
33 are additional to any and all other powers and remedies
34 vested in the Director by law, and nothing herein contained
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1 shall prohibit the Director from proceeding under any other
2 applicable law or under this Section in conjunction with any
3 other law.
4 (Source: P.A. 84-715.)
5 (215 ILCS 5/188.1) (from Ch. 73, par. 800.1)
6 Sec. 188.1. Provisions for conservation of assets of a
7 domestic, foreign, or alien company.
8 (1) Upon the filing by the Director of a verified
9 complaint alleging (a) that with respect to a domestic,
10 foreign, or alien company, whether authorized or
11 unauthorized, a condition exists that would justify a court
12 order for proceedings under Section 188, and (b) that the
13 interests of creditors, policyholders or the public will
14 probably be endangered by delay, then the circuit court of
15 Sangamon or Cook County or the circuit court of the county in
16 which such company has or last had its principal office shall
17 enter forthwith without a hearing or prior notice an order
18 directing the director to take possession and control of the
19 property, business, books, records, and accounts of the
20 company, and of the premises occupied by it for the
21 transaction of its business, or such part of each as the
22 complaint shall specify, and enjoining the company and its
23 officers, directors, agents, servants, and employees from
24 disposition of its property and from transaction of its
25 business except with the concurrence of the Director until
26 the further order of the court. Copies of the verified
27 complaint and the seizure order shall be served upon the
28 company.
29 (2) The order shall continue in force and effect for
30 such time as the court deems necessary for the Director to
31 ascertain the condition and situation of the company. On
32 motion of either party or on its own motion, the court may
33 from time to time hold such hearings as it deems desirable,
-27- LRB9201219JSpcA
1 and may extend, shorten, or modify the terms of, the seizure
2 order. So far as the court deems it possible, the parties
3 shall be given adequate notice of such hearings. As soon as
4 practicable, the court shall vacate the seizure order or
5 terminate the conservation proceedings of the company, either
6 when the Director has failed to institute proceedings under
7 Section 188 having a reasonable opportunity to do so, or upon
8 an order of the court pursuant to such proceedings.
9 (3) Entry of a seizure order under this Section shall
10 not constitute an anticipatory breach of any contract of the
11 company.
12 (4) The court may hold all hearings in conservation
13 proceedings privately in chambers, and shall do so on request
14 of any officer of the company proceeded against.
15 (5) In conservation proceedings and judicial reviews
16 thereof, all records of the company, other documents, and all
17 insurance department files and court records and papers, so
18 far as they pertain to and are a part of the record of the
19 conservation proceedings, shall be and remain confidential
20 except as is necessary to obtain compliance therewith, unless
21 and until the court, after hearing arguments in chambers from
22 the Director and the company, shall decide otherwise, or
23 unless the company requests that the matter be made public,
24 or unless the Director applies for a rehabilitation or
25 liquidation order. However, the Director may share documents,
26 materials, or other information in his or her possession or
27 control pertaining to an insurer that is the subject of a
28 proceeding under this Code with other state, federal, and
29 international regulatory agencies, with the National
30 Association of Insurance Commissioners and its affiliates and
31 subsidiaries, and with state, federal, and international law
32 enforcement authorities, provided that the recipient agrees
33 to maintain the confidentiality of the documents, materials,
34 or other information. No waiver of any applicable privilege
-28- LRB9201219JSpcA
1 or claim of confidentiality shall occur as a result of
2 disclosure by the Director under this Section or as a result
3 of sharing documents, materials, or other information
4 pursuant to this subsection.
5 (6) Any person having possession of and refusing to
6 deliver any of the property, business, books, records or
7 accounts of a company against which a seizure order has been
8 issued shall be guilty of a Class A misdemeanor.
9 (Source: P.A. 89-206, eff. 7-21-95.)
10 (215 ILCS 5/191) (from Ch. 73, par. 803)
11 Sec. 191. Title to property of company.
12 (a) The Director and his successor and successors in
13 office shall be vested by operation of law with the title to
14 all property, contracts, and rights of action of the company
15 as of the date of the order directing rehabilitation or
16 liquidation. The Director is entitled to immediate possession
17 and control of all property, contracts, and rights of action
18 of the company, and is further authorized and directed to
19 remove any and all records and property of the company to the
20 Director's possession and control or to such other place as
21 may be convenient for the purposes of efficient and orderly
22 administration of the rehabilitation or liquidation. All
23 persons, companies, and entities shall immediately release
24 their possession and control of any and all property,
25 contracts, and rights of action of the company to the
26 Director including, but not limited to, bank accounts and
27 bank records, premium and related records, and claim,
28 underwriting, accounting, and litigation files. The entry of
29 an order of rehabilitation or liquidation creates an estate
30 that comprises all of the liabilities and assets of the
31 company. The filing or recording of such order in the office
32 of the recorder or the Registrar of Titles in any county of
33 this State shall impart the same notice that a deed, bill of
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1 sale or other evidence of title duly filed for record by such
2 company would have imparted.
3 (b) The Director may provide information to other state
4 insurance regulators and guaranty associations, including
5 reports and analyses of financial condition and the status of
6 development of a plan of rehabilitation. The Director may
7 also permit a state insurance regulator or guaranty
8 association to obtain a listing of policyholders and
9 certificate holders residing in the requestor's state,
10 including current addresses and summary policy information,
11 provided that the regulator or guaranty association agrees to
12 maintain the confidentiality of the records, and that the
13 records will be used only for regulatory or guaranty
14 association purposes. No waiver of any applicable privilege
15 shall occur as a result of disclosure to the Director under
16 this Section or as a result of sharing documents, materials,
17 or other information pursuant to this Section.
18 (Source: P.A. 89-206, eff. 7-21-95.)
19 (215 ILCS 5/223) (from Ch. 73, par. 835)
20 Sec. 223. Director to value policies; legal standard of
21 valuation.
22 (1) The Director shall annually value, or cause to be
23 valued, the reserve liabilities (hereinafter called reserves)
24 for all outstanding life insurance policies and annuity and
25 pure endowment contracts of every life insurance company
26 doing business in this State, except that in the case of an
27 alien company, such valuation shall be limited to its United
28 States business, and may certify the amount of any such
29 reserves, specifying the mortality table or tables, rate or
30 rates of interest, and methods (net level premium method or
31 other) used in the calculation of such reserves. In
32 calculating such reserves, he may use group methods and
33 approximate averages for fractions of a year or otherwise. In
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1 lieu of the valuation of the reserves herein required of any
2 foreign or alien company, he may accept any valuation made,
3 or caused to be made, by the insurance supervisory official
4 of any state or other jurisdiction when such valuation
5 complies with the minimum standard herein provided and if the
6 official of such state or jurisdiction accepts as sufficient
7 and valid for all legal purposes the certificate of valuation
8 of the Director when such certificate states the valuation to
9 have been made in a specified manner according to which the
10 aggregate reserves would be at least as large as if they had
11 been computed in the manner prescribed by the law of that
12 state or jurisdiction.
13 Any such company which at any time has adopted any
14 standard of valuation producing greater aggregate reserves
15 than those calculated according to the minimum standard
16 herein provided may, with the approval of the Director, adopt
17 any lower standard of valuation, but not lower than the
18 minimum herein provided, however, that, for the purposes of
19 this subsection, the holding of additional reserves
20 previously determined by a qualified actuary to be necessary
21 to render the opinion required by subsection (1a) shall not
22 be deemed to be the adoption of a higher standard of
23 valuation. In the valuation of policies the Director shall
24 give no consideration to, nor make any deduction because of,
25 the existence or the possession by the company of
26 (a) policy liens created by any agreement given or
27 assented to by any assured subsequent to July 1, 1937,
28 for which liens such assured has not received cash or
29 other consideration equal in value to the amount of such
30 liens, or
31 (b) policy liens created by any agreement entered
32 into in violation of Section 232 unless the agreement
33 imposing or creating such liens has been approved by a
34 Court in a proceeding under Article XIII, or in the case
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1 of a foreign or alien company has been approved by a
2 court in a rehabilitation or liquidation proceeding or by
3 the insurance official of its domiciliary state or
4 country, in accordance with the laws thereof.
5 (1a) This subsection shall become operative at the end
6 of the first full calendar year following the effective date
7 of this amendatory Act of 1991.
8 (A) General.
9 (1) Every life insurance company doing
10 business in this State shall annually submit the
11 opinion of a qualified actuary as to whether the
12 reserves and related actuarial items held in support
13 of the policies and contracts specified by the
14 Director by regulation are computed appropriately,
15 are based on assumptions that satisfy contractual
16 provisions, are consistent with prior reported
17 amounts and comply with applicable laws of this
18 State. The Director by regulation shall define the
19 specifics of this opinion and add any other items
20 deemed to be necessary to its scope.
21 (2) The opinion shall be submitted with the
22 annual statement reflecting the valuation of reserve
23 liabilities for each year ending on or after
24 December 31, 1992.
25 (3) The opinion shall apply to all business in
26 force including individual and group health
27 insurance plans, in form and substance acceptable to
28 the Director as specified by regulation.
29 (4) The opinion shall be based on standards
30 adopted from time to time by the Actuarial Standards
31 Board and on additional standards as the Director
32 may by regulation prescribe.
33 (5) In the case of an opinion required to be
34 submitted by a foreign or alien company, the
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1 Director may accept the opinion filed by that
2 company with the insurance supervisory official of
3 another state if the Director determines that the
4 opinion reasonably meets the requirements applicable
5 to a company domiciled in this State.
6 (6) For the purpose of this Section,
7 "qualified actuary" means a member in good standing
8 of the American Academy of Actuaries who meets the
9 requirements set forth in its regulations.
10 (7) Except in cases of fraud or willful
11 misconduct, the qualified actuary shall not be
12 liable for damages to any person (other than the
13 insurance company and the Director) for any act,
14 error, omission, decision or conduct with respect to
15 the actuary's opinion.
16 (8) Disciplinary action by the Director
17 against the company or the qualified actuary shall
18 be defined in regulations by the Director.
19 (9) A memorandum, in form and substance
20 acceptable to the Director as specified by
21 regulation, shall be prepared to support each
22 actuarial opinion.
23 (10) If the insurance company fails to provide
24 a supporting memorandum at the request of the
25 Director within a period specified by regulation or
26 the Director determines that the supporting
27 memorandum provided by the insurance company fails
28 to meet the standards prescribed by the regulations
29 or is otherwise unacceptable to the Director, the
30 Director may engage a qualified actuary at the
31 expense of the company to review the opinion and the
32 basis for the opinion and prepare the supporting
33 memorandum as is required by the Director.
34 (11) Except as provided in paragraph 15,
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1 documents, materials, or other information in the
2 possession or control of the Director that are a
3 memorandum in support of the opinion, and any other
4 material provided by the company to the Director in
5 connection with the memorandum, shall be
6 confidential by law and privileged, shall not be
7 subject to the Freedom of Information Act, shall not
8 be subject to subpoena, and shall not be subject to
9 discovery or admission into evidence in any private
10 civil action. However, the Director is authorized to
11 use the documents, materials, or other information
12 in the furtherance of any regulatory or legal action
13 brought as a part of the Director's official duties.
14 (12) Neither the Director nor any person who
15 received documents, materials, or other information
16 while acting under the authority of the Director
17 shall be permitted or required to testify in any
18 private civil action concerning any confidential
19 documents, materials, or information subject to
20 paragraph (11).
21 (13) In order to assist in the performance of
22 the Director's duties, the Director:
23 (i) may share documents, materials, or
24 other information, including the confidential
25 and privileged documents, materials, or
26 information subject to paragraph (11) with
27 other state, federal, and international
28 regulatory agencies, with the National
29 Association of Insurance Commissioners and its
30 affiliates and subsidiaries, and with state,
31 federal, and international law enforcement
32 authorities, provided that the recipient agrees
33 to maintain the confidentiality and privileged
34 status of the document, material, or other
-34- LRB9201219JSpcA
1 information;
2 (ii) may receive documents, materials, or
3 information, including otherwise confidential
4 and privileged documents, materials, or
5 information, from the National Association of
6 Insurance Commissioners and its affiliates and
7 subsidiaries and from regulatory and law
8 enforcement officials of other foreign or
9 domestic jurisdictions, and shall maintain as
10 confidential or privileged any document,
11 material, or information received with notice
12 or the understanding that it is confidential or
13 privileged under the laws of the jurisdiction
14 that is the source of the document, material,
15 or information; and
16 (iii) may enter into agreements governing
17 sharing and use of information consistent with
18 paragraphs (11) and (13).
19 (14) No waiver of any applicable privilege or
20 claim of confidentiality in the documents,
21 materials, or information shall occur as a result of
22 disclosure to the Director under this Section or as
23 a result of the sharing as authorized in paragraph
24 (13).
25 (15)(11) Any memorandum in support of the
26 opinion, and any other material provided by the
27 company to the Director in connection therewith, may
28 be shall be kept confidential by the Director and
29 shall not be made public and shall not be subject to
30 subpoena, other than for the purpose of defending an
31 action seeking damages from the actuary submitting
32 the memorandum any person by reason of any action
33 required by this Section or by regulations
34 promulgated hereunder.; provided, however, that The
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1 memorandum or other material may otherwise be
2 released by the Director (a) with the written
3 consent of the company or (b) to the American
4 Academy of Actuaries upon request stating that the
5 memorandum or other material is required for the
6 purpose of professional disciplinary proceedings and
7 setting forth procedures satisfactory to the
8 Director for preserving the confidentiality of the
9 memorandum or other material. Once any portion of
10 the confidential memorandum is cited by the company
11 in its marketing or is cited before any governmental
12 agency other than a state insurance department or is
13 released by the company to the news media, all
14 portions of the confidential memorandum shall be no
15 longer confidential.
16 (B) Actuarial analysis of reserves and assets
17 supporting those reserves.
18 (1) Every life insurance company, except as
19 exempted by or under regulation, shall also annually
20 include in the opinion required by paragraph (A)(1)
21 of this subsection (1a), an opinion of the same
22 qualified actuary as to whether the reserves and
23 related actuarial items held in support of the
24 policies and contracts specified by the Director by
25 regulation, when considered in light of the assets
26 held by the company with respect to the reserves and
27 related actuarial items including, but not limited
28 to, the investment earnings on the assets and the
29 considerations anticipated to be received and
30 retained under the policies and contracts, make
31 adequate provision for the company's obligations
32 under the policies and contracts including, but not
33 limited to, the benefits under and expenses
34 associated with the policies and contracts.
-36- LRB9201219JSpcA
1 (2) The Director may provide by regulation for
2 a transition period for establishing any higher
3 reserves which the qualified actuary may deem
4 necessary in order to render the opinion required by
5 this Section.
6 (2) This subsection shall apply to only those policies
7 and contracts issued prior to the operative date of Section
8 229.2 (the Standard Non-forfeiture Law).
9 (a) Except as otherwise in this Article provided,
10 the legal minimum standard for valuation of contracts
11 issued before January 1, 1908, shall be the Actuaries or
12 Combined Experience Table of Mortality with interest at
13 4% per annum and for valuation of contracts issued on or
14 after that date shall be the American Experience Table of
15 Mortality with either Craig's or Buttolph's Extension for
16 ages under 10 and with interest at 3 1/2% per annum. The
17 legal minimum standard for the valuation of group
18 insurance policies under which premium rates are not
19 guaranteed for a period in excess of 5 years shall be the
20 American Men Ultimate Table of Mortality with interest at
21 3 1/2% per annum. Any life company may, at its option,
22 value its insurance contracts issued on or after January
23 1, 1938, in accordance with their terms on the basis of
24 the American Men Ultimate Table of Mortality with
25 interest not higher than 3 1/2% per annum.
26 (b) Policies issued prior to January 1, 1908, may
27 continue to be valued according to a method producing
28 reserves not less than those produced by the full
29 preliminary term method. Policies issued on and after
30 January 1, 1908, may be valued according to a method
31 producing reserves not less than those produced by the
32 modified preliminary term method hereinafter described in
33 paragraph (c). Policies issued on and after January 1,
34 1938, may be valued either according to a method
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1 producing reserves not less than those produced by such
2 modified preliminary term method or by the select and
3 ultimate method on the basis that the rate of mortality
4 during the first 5 years after the issuance of such
5 contracts respectively shall be calculated according to
6 the following percentages of rates shown by the American
7 Experience Table of Mortality:
8 (i) first insurance year 50% thereof;
9 (ii) second insurance year 65% thereof;
10 (iii) third insurance year 75% thereof;
11 (iv) fourth insurance year 85% thereof;
12 (v) fifth insurance year 95% thereof;
13 (c) If the premium charged for the first policy
14 year under a limited payment life preliminary term policy
15 providing for the payment of all premiums thereon in less
16 than 20 years from the date of the policy or under an
17 endowment preliminary term policy, exceeds that charged
18 for the first policy year under 20 payment life
19 preliminary term policies of the same company, the
20 reserve thereon at the end of any year, including the
21 first, shall not be less than the reserve on a 20 payment
22 life preliminary term policy issued in the same year at
23 the same age, together with an amount which shall be
24 equivalent to the accumulation of a net level premium
25 sufficient to provide for a pure endowment at the end of
26 the premium payment period, equal to the difference
27 between the value at the end of such period of such a 20
28 payment life preliminary term policy and the full net
29 level premium reserve at such time of such a limited
30 payment life or endowment policy. The premium payment
31 period is the period during which premiums are
32 concurrently payable under such 20 payment life
33 preliminary term policy and such limited payment life or
34 endowment policy.
-38- LRB9201219JSpcA
1 (d) The legal minimum standard for the valuations
2 of annuities issued on and after January 1, 1938, shall
3 be the American Annuitant's Table with interest not
4 higher than 3 3/4% per annum, and all annuities issued
5 before that date shall be valued on a basis not lower
6 than that used for the annual statement of the year 1937;
7 but annuities deferred 10 or more years and written in
8 connection with life insurance shall be valued on the
9 same basis as that used in computing the consideration or
10 premiums therefor, or upon any higher standard at the
11 option of the company.
12 (e) The Director may vary the standards of interest
13 and mortality as to contracts issued in countries other
14 than the United States and may vary standards of
15 mortality in particular cases of invalid lives and other
16 extra hazards.
17 (f) The legal minimum standard for valuation of
18 waiver of premium disability benefits or waiver of
19 premium and income disability benefits issued on and
20 after January 1, 1938, shall be the Class (3) Disability
21 Table (1926) modified to conform to the contractual
22 waiting period, with interest at not more than 3 1/2% per
23 annum; but in no event shall the values be less than
24 those produced by the basis used in computing premiums
25 for such benefits. The legal minimum standard for the
26 valuation of such benefits issued prior to January 1,
27 1938, shall be such as to place an adequate value, as
28 determined by sound insurance practices, on the
29 liabilities thereunder and shall be such that the value
30 of the benefits under each and every policy shall in no
31 case be less than the value placed upon the future
32 premiums.
33 (g) The legal minimum standard for the valuation of
34 industrial policies issued on or after January 1, 1938,
-39- LRB9201219JSpcA
1 shall be the American Experience Table of Mortality or
2 the Standard Industrial Mortality Table or the
3 Substandard Industrial Mortality Table with interest at 3
4 1/2% per annum by the net level premium method, or in
5 accordance with their terms by the modified preliminary
6 term method hereinabove described.
7 (h) Reserves for all such policies and contracts
8 may be calculated, at the option of the company,
9 according to any standards which produce greater
10 aggregate reserves for all such policies and contracts
11 than the minimum reserves required by this subsection.
12 (3) This subsection shall apply to only those policies
13 and contracts issued on or after January 1, 1948 or such
14 earlier operative date of Section 229.2 (the Standard
15 Non-forfeiture Law) as shall have been elected by the
16 insurance company issuing such policies or contracts.
17 (a) Except as otherwise provided in subsections
18 (4), (6), and (7), the minimum standard for the valuation
19 of all such policies and contracts shall be the
20 Commissioners Reserve valuation method defined in
21 paragraphs (b) and (f) of this subsection and in
22 subsection 5, 3 1/2% interest for such policies issued
23 prior to September 8, 1977, 5 1/2% interest for single
24 premium life insurance policies and 4 1/2% interest for
25 all other such policies issued on or after September 8,
26 1977, and the following tables:
27 (i) The Commissioners 1941 Standard Ordinary
28 Mortality Table for all Ordinary policies of life
29 insurance issued on the standard basis, excluding
30 any disability and accidental death benefits in such
31 policies, for such policies issued prior to the
32 operative date of subsection (4a) of Section 229.2
33 (Standard Non-forfeiture Law); and the Commissioners
34 1958 Standard Ordinary Mortality Table for such
-40- LRB9201219JSpcA
1 policies issued on or after such operative date but
2 prior to the operative date of subsection (4c) of
3 Section 229.2 provided that for any category of such
4 policies issued on female risks all modified net
5 premiums and present values referred to in this Act
6 may, prior to September 8, 1977, be calculated
7 according to an age not more than 3 years younger
8 than the actual age of the insured and, after
9 September 8, 1977, calculated according to an age
10 not more than 6 years younger than the actual age of
11 the insured; and for such policies issued on or
12 after the operative date of subsection (4c) of
13 Section 229.2, (i) the Commissioners 1980 Standard
14 Ordinary Mortality Table, or (ii) at the election of
15 the company for any one or more specified plans of
16 life insurance, the Commissioners 1980 Standard
17 Ordinary Mortality Table with Ten-Year Select
18 Mortality Factors, or (iii) any ordinary mortality
19 table adopted after 1980 by the National Association
20 of Insurance Commissioners and approved by
21 regulations promulgated by the Director for use in
22 determining the minimum standard of valuation for
23 such policies.
24 (ii) For all Industrial Life Insurance
25 policies issued on the standard basis, excluding any
26 disability and accidental death benefits in such
27 policies--the 1941 Standard Industrial Mortality
28 Table for such policies issued prior to the
29 operative date of subsection 4 (b) of Section 229.2
30 (Standard Non-forfeiture Law); and for such policies
31 issued on or after such operative date the
32 Commissioners 1961 Standard Industrial Mortality
33 Table or any industrial mortality table adopted
34 after 1980 by the National Association of Insurance
-41- LRB9201219JSpcA
1 Commissioners and approved by regulations
2 promulgated by the Director for use in determining
3 the minimum standard of valuation for such policies.
4 (iii) For Individual Annuity and Pure
5 Endowment contracts, excluding any disability and
6 accidental death benefits in such policies--the 1937
7 Standard Annuity Mortality Table--or, at the option
8 of the company, the Annuity Mortality Table for
9 1949, Ultimate, or any modification of either of
10 these tables approved by the Director.
11 (iv) For Group Annuity and Pure Endowment
12 contracts, excluding any disability and accidental
13 death benefits in such policies--the Group Annuity
14 Mortality Table for 1951, any modification of such
15 table approved by the Director, or, at the option of
16 the company, any of the tables or modifications of
17 tables specified for Individual Annuity and Pure
18 Endowment contracts.
19 (v) For Total and Permanent Disability
20 Benefits in or supplementary to Ordinary policies or
21 contracts for policies or contracts issued on or
22 after January 1, 1966, the tables of Period 2
23 disablement rates and the 1930 to 1950 termination
24 rates of the 1952 Disability Study of the Society of
25 Actuaries, with due regard to the type of benefit,
26 or any tables of disablement rates and termination
27 rates adopted after 1980 by the National Association
28 of Insurance Commissioners and approved by
29 regulations promulgated by the Director for use in
30 determining the minimum standard of valuation for
31 such policies; for policies or contracts issued on
32 or after January 1, 1961, and prior to January 1,
33 1966, either such tables or, at the option of the
34 company, the Class (3) Disability Table (1926); and
-42- LRB9201219JSpcA
1 for policies issued prior to January 1, 1961, the
2 Class (3) Disability Table (1926). Any such table
3 shall, for active lives, be combined with a
4 mortality table permitted for calculating the
5 reserves for life insurance policies.
6 (vi) For Accidental Death benefits in or
7 supplementary to policies--for policies issued on or
8 after January 1, 1966, the 1959 Accidental Death
9 Benefits Table or any accidental death benefits
10 table adopted after 1980 by the National Association
11 of Insurance Commissioners and approved by
12 regulations promulgated by the Director for use in
13 determining the minimum standard of valuation for
14 such policies; for policies issued on or after
15 January 1, 1961, and prior to January 1, 1966, any
16 of such tables or, at the option of the company, the
17 Inter-Company Double Indemnity Mortality Table; and
18 for policies issued prior to January 1, 1961, the
19 Inter-Company Double Indemnity Mortality Table.
20 Either table shall be combined with a mortality
21 table permitted for calculating the reserves for
22 life insurance policies.
23 (vii) For Group Life Insurance, life insurance
24 issued on the substandard basis and other special
25 benefits--such tables as may be approved by the
26 Director.
27 (b) Except as otherwise provided in paragraph (f)
28 of subsection (3), subsection (5), and subsection (7)
29 reserves according to the Commissioners reserve valuation
30 method, for the life insurance and endowment benefits of
31 policies providing for a uniform amount of insurance and
32 requiring the payment of uniform premiums shall be the
33 excess, if any, of the present value, at the date of
34 valuation, of such future guaranteed benefits provided
-43- LRB9201219JSpcA
1 for by such policies, over the then present value of any
2 future modified net premiums therefor. The modified net
3 premiums for any such policy shall be such uniform
4 percentage of the respective contract premiums for such
5 benefits that the present value, at the date of issue of
6 the policy, of all such modified net premiums shall be
7 equal to the sum of the then present value of such
8 benefits provided for by the policy and the excess of (A)
9 over (B), as follows:
10 (A) A net level annual premium equal to the
11 present value, at the date of issue, of such
12 benefits provided for after the first policy year,
13 divided by the present value, at the date of issue,
14 of an annuity of one per annum payable on the first
15 and each subsequent anniversary of such policy on
16 which a premium falls due; provided, however, that
17 such net level annual premium shall not exceed the
18 net level annual premium on the 19 year premium
19 whole life plan for insurance of the same amount at
20 an age one year higher than the age at issue of such
21 policy.
22 (B) A net one year term premium for such
23 benefits provided for in the first policy year.
24 For any life insurance policy issued on or after
25 January 1, 1987, for which the contract premium in the
26 first policy year exceeds that of the second year with no
27 comparable additional benefit being provided in that
28 first year, which policy provides an endowment benefit or
29 a cash surrender value or a combination thereof in an
30 amount greater than such excess premium, the reserve
31 according to the Commissioners reserve valuation method
32 as of any policy anniversary occurring on or before the
33 assumed ending date, defined herein as the first policy
34 anniversary on which the sum of any endowment benefit and
-44- LRB9201219JSpcA
1 any cash surrender value then available is greater than
2 such excess premium, shall, except as otherwise provided
3 in paragraph (f) of subsection (3), be the greater of the
4 reserve as of such policy anniversary calculated as
5 described in the preceding part of this paragraph (b) and
6 the reserve as of such policy anniversary calculated as
7 described in the preceding part of this paragraph (b)
8 with (i) the value defined in subpart A of the preceding
9 part of this paragraph (b) being reduced by 15% of the
10 amount of such excess first year premium, (ii) all
11 present values of benefits and premiums being determined
12 without reference to premiums or benefits provided for by
13 the policy after the assumed ending date, (iii) the
14 policy being assumed to mature on such date as an
15 endowment, and (iv) the cash surrender value provided on
16 such date being considered as an endowment benefit. In
17 making the above comparison, the mortality and interest
18 bases stated in paragraph (a) of subsection (3) and in
19 subsection 6 shall be used.
20 Reserves according to the Commissioners reserve
21 valuation method for (i) life insurance policies
22 providing for a varying amount of insurance or requiring
23 the payment of varying premiums, (ii) group annuity and
24 pure endowment contracts purchased under a retirement
25 plan or plan of deferred compensation, established or
26 maintained by an employer (including a partnership or
27 sole proprietorship) or by an employee organization, or
28 by both, other than a plan providing individual
29 retirement accounts or individual retirement annuities
30 under Section 408 of the Internal Revenue Code, as now or
31 hereafter amended, (iii) disability and accidental death
32 benefits in all policies and contracts, and (iv) all
33 other benefits, except life insurance and endowment
34 benefits in life insurance policies and benefits provided
-45- LRB9201219JSpcA
1 by all other annuity and pure endowment contracts, shall
2 be calculated by a method consistent with the principles
3 of this paragraph (b), except that any extra premiums
4 charged because of impairments or special hazards shall
5 be disregarded in the determination of modified net
6 premiums.
7 (c) In no event shall a company's aggregate
8 reserves for all life insurance policies, excluding
9 disability and accidental death benefits be less than the
10 aggregate reserves calculated in accordance with the
11 methods set forth in paragraphs (b), (f), and (g) of
12 subsection (3) and in subsection (5) and the mortality
13 table or tables and rate or rates of interest used in
14 calculating non-forfeiture benefits for such policies.
15 (d) In no event shall the aggregate reserves for
16 all policies, contracts, and benefits be less than the
17 aggregate reserves determined by the qualified actuary to
18 be necessary to render the opinion required by subsection
19 (1a).
20 (e) Reserves for any category of policies,
21 contracts or benefits as established by the Director, may
22 be calculated, at the option of the company, according to
23 any standards which produce greater aggregate reserves
24 for such category than those calculated according to the
25 minimum standard herein provided, but the rate or rates
26 of interest used for policies and contracts, other than
27 annuity and pure endowment contracts, shall not be higher
28 than the corresponding rate or rates of interest used in
29 calculating any nonforfeiture benefits provided for
30 therein.
31 (f) If in any contract year the gross premium
32 charged by any life insurance company on any policy or
33 contract is less than the valuation net premium for the
34 policy or contract calculated by the method used in
-46- LRB9201219JSpcA
1 calculating the reserve thereon but using the minimum
2 valuation standards of mortality and rate of interest,
3 the minimum reserve required for such policy or contract
4 shall be the greater of either the reserve calculated
5 according to the mortality table, rate of interest, and
6 method actually used for such policy or contract, or the
7 reserve calculated by the method actually used for such
8 policy or contract but using the minimum standards of
9 mortality and rate of interest and replacing the
10 valuation net premium by the actual gross premium in each
11 contract year for which the valuation net premium exceeds
12 the actual gross premium. The minimum valuation
13 standards of mortality and rate of interest referred to
14 in this paragraph (f) are those standards stated in
15 subsection (6) and paragraph (a) of subsection (3).
16 For any life insurance policy issued on or after
17 January 1, 1987, for which the gross premium in the first
18 policy year exceeds that of the second year with no
19 comparable additional benefit provided in that first
20 year, which policy provides an endowment benefit or a
21 cash surrender value or a combination thereof in an
22 amount greater than such excess premium, the foregoing
23 provisions of this paragraph (f) shall be applied as if
24 the method actually used in calculating the reserve for
25 such policy were the method described in paragraph (b) of
26 subsection (3), ignoring the second paragraph of said
27 paragraph (b). The minimum reserve at each policy
28 anniversary of such a policy shall be the greater of the
29 minimum reserve calculated in accordance with paragraph
30 (b) of subsection (3), including the second paragraph of
31 said paragraph (b), and the minimum reserve calculated in
32 accordance with this paragraph (f).
33 (g) In the case of any plan of life insurance which
34 provides for future premium determination, the amounts of
-47- LRB9201219JSpcA
1 which are to be determined by the insurance company based
2 on then estimates of future experience, or in the case of
3 any plan of life insurance or annuity which is of such a
4 nature that the minimum reserves cannot be determined by
5 the methods described in paragraphs (b) and (f) of
6 subsection (3) and subsection (5), the reserves which are
7 held under any such plan shall:
8 (i) be appropriate in relation to the benefits
9 and the pattern of premiums for that plan, and
10 (ii) be computed by a method which is
11 consistent with the principles of this Standard
12 Valuation Law, as determined by regulations
13 promulgated by the Director.
14 (4) Except as provided in subsection (6), the minimum
15 standard for the valuation of all individual annuity and pure
16 endowment contracts issued on or after the operative date of
17 this subsection, as defined herein, and for all annuities and
18 pure endowments purchased on or after such operative date
19 under group annuity and pure endowment contracts shall be the
20 Commissioners Reserve valuation methods defined in paragraph
21 (b) of subsection (3) and subsection (5) and the following
22 tables and interest rates:
23 (a) For individual single premium immediate annuity
24 contracts, excluding any disability and accidental death
25 benefits in such contracts, the 1971 Individual Annuity
26 Mortality Table, any individual annuity mortality table
27 adopted after 1980 by the National Association of
28 Insurance Commissioners and approved by regulations
29 promulgated by the Director for use in determining the
30 minimum standard of valuation for such contracts, or any
31 modification of those tables approved by the Director,
32 and 7 1/2% interest.
33 (b) For individual and pure endowment contracts
34 other than single premium annuity contracts, excluding
-48- LRB9201219JSpcA
1 any disability and accidental death benefits in such
2 contracts, the 1971 Individual Annuity Mortality Table,
3 any individual annuity mortality table adopted after 1980
4 by the National Association of Insurance Commissioners
5 and approved by regulations promulgated by the Director
6 for use in determining the minimum standard of valuation
7 for such contracts, or any modification of those tables
8 approved by the Director, and 5 1/2% interest for single
9 premium deferred annuity and pure endowment contracts and
10 4 1/2% interest for all other such individual annuity and
11 pure endowment contracts.
12 (c) For all annuities and pure endowments purchased
13 under group annuity and pure endowment contracts,
14 excluding any disability and accidental death benefits
15 purchased under such contracts, the 1971 Group Annuity
16 Mortality Table, any group annuity mortality table
17 adopted after 1980 by the National Association of
18 Insurance Commissioners and approved by regulations
19 promulgated by the Director for use in determining the
20 minimum standard of valuation for such annuities and pure
21 endowments, or any modification of those tables approved
22 by the Director, and 7 1/2% interest.
23 After September 8, 1977, any company may file with the
24 Director a written notice of its election to comply with the
25 provisions of this subsection after a specified date before
26 January 1, 1979, which shall be the operative date of this
27 subsection for such company; provided, a company may elect a
28 different operative date for individual annuity and pure
29 endowment contracts from that elected for group annuity and
30 pure endowment contracts. If a company makes no election,
31 the operative date of this subsection for such company shall
32 be January 1, 1979.
33 (5) This subsection shall apply to all annuity and pure
34 endowment contracts other than group annuity and pure
-49- LRB9201219JSpcA
1 endowment contracts purchased under a retirement plan or plan
2 of deferred compensation, established or maintained by an
3 employer (including a partnership or sole proprietorship) or
4 by an employee organization, or by both, other than a plan
5 providing individual retirement accounts or individual
6 retirement annuities under Section 408 of the Internal
7 Revenue Code, as now or hereafter amended.
8 Reserves according to the Commissioners annuity reserve
9 method for benefits under annuity or pure endowment
10 contracts, excluding any disability and accidental death
11 benefits in such contracts, shall be the greatest of the
12 respective excesses of the present values, at the date of
13 valuation, of the future guaranteed benefits, including
14 guaranteed nonforfeiture benefits, provided for by such
15 contracts at the end of each respective contract year, over
16 the present value, at the date of valuation, of any future
17 valuation considerations derived from future gross
18 considerations, required by the terms of such contract, that
19 become payable prior to the end of such respective contract
20 year. The future guaranteed benefits shall be determined by
21 using the mortality table, if any, and the interest rate, or
22 rates, specified in such contracts for determining guaranteed
23 benefits. The valuation considerations are the portions of
24 the respective gross considerations applied under the terms
25 of such contracts to determine nonforfeiture values.
26 (6) (a) Applicability of this subsection. (i) The
27 interest rates used in determining the minimum standard
28 for the valuation of
29 (A) all life insurance policies issued in a
30 particular calendar year, on or after the operative
31 date of subsection (4c) of Section 229.2 (Standard
32 Nonforfeiture Law),
33 (B) all individual annuity and pure endowment
34 contracts issued in a particular calendar year
-50- LRB9201219JSpcA
1 ending on or after December 31, 1983,
2 (C) all annuities and pure endowments
3 purchased in a particular calendar year ending on or
4 after December 31, 1983, under group annuity and
5 pure endowment contracts, and
6 (D) the net increase in a particular calendar
7 year ending after December 31, 1983, in amounts held
8 under guaranteed interest contracts
9 shall be the calendar year statutory valuation interest
10 rates, as defined in this subsection.
11 (b) Calendar Year Statutory Valuation Interest
12 Rates.
13 (i) The calendar year statutory valuation
14 interest rates shall be determined according to the
15 following formulae, rounding "I" to the nearest
16 .25%.
17 (A) For life insurance,
18 I = .03 + W (R1 - .03) + W/2 (R2 - .09).
19 (B) For single premium immediate
20 annuities and annuity benefits involving life
21 contingencies arising from other annuities with
22 cash settlement options and from guaranteed
23 interest contracts with cash settlement
24 options,
25 I = .03 + W (R - .03) or with prior
26 approval of the Director I = .03 + W (Rq -
27 .03).
28 For the purposes of this subparagraph (i), "I"
29 equals the calendar year statutory valuation
30 interest rate, "R" is the reference interest rate
31 defined in this subsection, "R1" is the lesser of R
32 and .09, "R2" is the greater of R and .09, "Rq" is
33 the quarterly reference interest rate defined in
34 this subsection, and "W" is the weighting factor
-51- LRB9201219JSpcA
1 defined in this subsection.
2 (C) For other annuities with cash
3 settlement options and guaranteed interest
4 contracts with cash settlement options, valued
5 on an issue year basis, except as stated in
6 (B), the formula for life insurance stated in
7 (A) applies to annuities and guaranteed
8 interest contracts with guarantee durations in
9 excess of 10 years, and the formula for single
10 premium immediate annuities stated in (B) above
11 applies to annuities and guaranteed interest
12 contracts with guarantee durations of 10 years
13 or less.
14 (D) For other annuities with no cash
15 settlement options and for guaranteed interest
16 contracts with no cash settlement options, the
17 formula for single premium immediate annuities
18 stated in (B) applies.
19 (E) For other annuities with cash
20 settlement options and guaranteed interest
21 contracts with cash settlement options, valued
22 on a change in fund basis, the formula for
23 single premium immediate annuities stated in
24 (B) applies.
25 (ii) If the calendar year statutory valuation
26 interest rate for any life insurance policy issued
27 in any calendar year determined without reference to
28 this subparagraph differs from the corresponding
29 actual rate for similar policies issued in the
30 immediately preceding calendar year by less than
31 .5%, the calendar year statutory valuation interest
32 rate for such life insurance policy shall be the
33 corresponding actual rate for the immediately
34 preceding calendar year. For purposes of applying
-52- LRB9201219JSpcA
1 this subparagraph, the calendar year statutory
2 valuation interest rate for life insurance policies
3 issued in a calendar year shall be determined for
4 1980, using the reference interest rate defined for
5 1979, and shall be determined for each subsequent
6 calendar year regardless of when subsection (4c) of
7 Section 229.2 (Standard Nonforfeiture Law) becomes
8 operative.
9 (c) Weighting Factors.
10 (i) The weighting factors referred to in the
11 formulae stated in paragraph (b) are given in the
12 following tables.
13 (A) Weighting Factors for Life Insurance.
14 Guarantee Weighting
15 Duration Factors
16 (Years)
17 10 or less .50
18 More than 10, but not more than 20 .45
19 More than 20 .35
20 For life insurance, the guarantee duration
21 is the maximum number of years the life
22 insurance can remain in force on a basis
23 guaranteed in the policy or under options to
24 convert to plans of life insurance with premium
25 rates or nonforfeiture values or both which are
26 guaranteed in the original policy.
27 (B) The weighting factor for single
28 premium immediate annuities and for annuity
29 benefits involving life contingencies arising
30 from other annuities with cash settlement
31 options and guaranteed interest contracts with
32 cash settlement options is .80.
33 (C) The weighting factors for other
34 annuities and for guaranteed interest
-53- LRB9201219JSpcA
1 contracts, except as stated in (B) of this
2 subparagraph (i), shall be as specified in
3 tables (1), (2), and (3) of this subpart (C),
4 according to the rules and definitions in (4),
5 (5) and (6) of this subpart (C).
6 (1) For annuities and guaranteed interest
7 contracts valued on an issue year basis.
8 Guarantee Weighting Factor
9 Duration for Plan Type
10 (Years) A B C
11 5 or less. .80 .60 .50
12 More than 5, but not
13 more than 10. .75 .60 .50
14 More than 10, but not
15 more than 20. .65 .50 .45
16 More than 20. .45 .35 .35
17 (2) For annuities and guaranteed interest
18 contracts valued on a change in fund basis, the
19 factors shown in (1) for Plan Types A, B and C
20 are increased by .15, .25 and .05,
21 respectively.
22 (3) For annuities and guaranteed interest
23 contracts valued on an issue year basis, other
24 than those with no cash settlement options,
25 which do not guarantee interest on
26 considerations received more than one year
27 after issue or purchase, and for annuities and
28 guaranteed interest contracts valued on a
29 change in fund basis which do not guarantee
30 interest rates on considerations received more
31 than 12 months beyond the valuation date, the
32 factors shown in (1), or derived in (2), for
33 Plan Types A, B and C are increased by .05.
34 (4) For other annuities with cash
-54- LRB9201219JSpcA
1 settlement options and guaranteed interest
2 contracts with cash settlement options, the
3 guarantee duration is the number of years for
4 which the contract guarantees interest rates in
5 excess of the calendar year statutory valuation
6 interest rate for life insurance policies with
7 guarantee durations in excess of 20 years. For
8 other annuities with no cash settlement
9 options, and for guaranteed interest contracts
10 with no cash settlement options, the guarantee
11 duration is the number of years from the date
12 of issue or date of purchase to the date
13 annuity benefits are scheduled to commence.
14 (5) The plan types used in the above
15 tables are defined as follows.
16 Plan Type A is a plan under which the
17 policyholder may not withdraw funds, or may
18 withdraw funds at any time but only (a) with an
19 adjustment to reflect changes in interest rates
20 or asset values since receipt of the funds by
21 the insurance company, (b) without such an
22 adjustment but in installments over 5 years or
23 more, or (c) as an immediate life annuity.
24 Plan Type B is a plan under which the
25 policyholder may not withdraw funds before
26 expiration of the interest rate guarantee, or
27 may withdraw funds before such expiration but
28 only (a) with an adjustment to reflect changes
29 in interest rates or asset values since receipt
30 of the funds by the insurance company, or (b)
31 without such adjustment but in installments
32 over 5 years or more. At the end of the
33 interest rate guarantee, funds may be withdrawn
34 without such adjustment in a single sum or
-55- LRB9201219JSpcA
1 installments over less than 5 years.
2 Plan Type C is a plan under which the
3 policyholder may withdraw funds before
4 expiration of the interest rate guarantee in a
5 single sum or installments over less than 5
6 years either (a) without adjustment to reflect
7 changes in interest rates or asset values since
8 receipt of the funds by the insurance company,
9 or (b) subject only to a fixed surrender charge
10 stipulated in the contract as a percentage of
11 the fund.
12 (6) A company may elect to value
13 guaranteed interest contracts with cash
14 settlement options and annuities with cash
15 settlement options on either an issue year
16 basis or on a change in fund basis. Guaranteed
17 interest contracts with no cash settlement
18 options and other annuities with no cash
19 settlement options shall be valued on an issue
20 year basis. As used in this Section, "issue
21 year basis of valuation" refers to a valuation
22 basis under which the interest rate used to
23 determine the minimum valuation standard for
24 the entire duration of the annuity or
25 guaranteed interest contract is the calendar
26 year valuation interest rate for the year of
27 issue or year of purchase of the annuity or
28 guaranteed interest contract. "Change in fund
29 basis of valuation", as used in this Section,
30 refers to a valuation basis under which the
31 interest rate used to determine the minimum
32 valuation standard applicable to each change in
33 the fund held under the annuity or guaranteed
34 interest contract is the calendar year
-56- LRB9201219JSpcA
1 valuation interest rate for the year of the
2 change in the fund.
3 (d) Reference Interest Rate. (i) The reference
4 interest rate referred to in paragraph (b) of this
5 subsection is defined as follows.
6 (A) For all life insurance, the reference
7 interest rate is the lesser of the average over a
8 period of 36 months, and the average over a period
9 of 12 months, with both periods ending on June 30,
10 or with prior approval of the Director ending on
11 December 31, of the calendar year next preceding the
12 year of issue, of Moody's Corporate Bond Yield
13 Average - Monthly Average Corporates, as published
14 by Moody's Investors Service, Inc.
15 (B) For single premium immediate annuities and
16 for annuity benefits involving life contingencies
17 arising from other annuities with cash settlement
18 options and guaranteed interest contracts with cash
19 settlement options, the reference interest rate is
20 the average over a period of 12 months, ending on
21 June 30, or with prior approval of the Director
22 ending on December 31, of the calendar year of issue
23 or year of purchase, of Moody's Corporate Bond Yield
24 Average - Monthly Average Corporates, as published
25 by Moody's Investors Service, Inc.
26 (C) For annuities with cash settlement options
27 and guaranteed interest contracts with cash
28 settlement options, valued on a year of issue basis,
29 except those described in (B), with guarantee
30 durations in excess of 10 years, the reference
31 interest rate is the lesser of the average over a
32 period of 36 months and the average over a period of
33 12 months, ending on June 30, or with prior approval
34 of the Director ending on December 31, of the
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1 calendar year of issue or purchase, of Moody's
2 Corporate Bond Yield Average-Monthly Average
3 Corporates, as published by Moody's Investors
4 Service, Inc.
5 (D) For other annuities with cash settlement
6 options and guaranteed interest contracts with cash
7 settlement options, valued on a year of issue basis,
8 except those described in (B), with guarantee
9 durations of 10 years or less, the reference
10 interest rate is the average over a period of 12
11 months, ending on June 30, or with prior approval of
12 the Director ending on December 31, of the calendar
13 year of issue or purchase, of Moody's Corporate Bond
14 Yield Average-Monthly Average Corporates, as
15 published by Moody's Investors Service, Inc.
16 (E) For annuities with no cash settlement
17 options and for guaranteed interest contracts with
18 no cash settlement options, the reference interest
19 rate is the average over a period of 12 months,
20 ending on June 30, or with prior approval of the
21 Director ending on December 31, of the calendar year
22 of issue or purchase, of Moody's Corporate Bond
23 Yield Average-Monthly Average Corporates, as
24 published by Moody's Investors Service, Inc.
25 (F) For annuities with cash settlement options
26 and guaranteed interest contracts with cash
27 settlement options, valued on a change in fund
28 basis, except those described in (B), the reference
29 interest rate is the average over a period of 12
30 months, ending on June 30, or with prior approval of
31 the Director ending on December 31, of the calendar
32 year of the change in the fund, of Moody's Corporate
33 Bond Yield Average-Monthly Average Corporates, as
34 published by Moody's Investors Service, Inc.
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1 (G) For annuities valued by a formula based on
2 Rq, the quarterly reference interest rate is, with
3 the prior approval of the Director, the average
4 within each of the 4 consecutive calendar year
5 quarters ending on March 31, June 30, September 30
6 and December 31 of the calendar year of issue or
7 year of purchase of Moody's Corporate Bond Yield
8 Average-Monthly Average Corporates, as published by
9 Moody's Investors Service, Inc.
10 (e) Alternative Method for Determining Reference
11 Interest Rates. In the event that the Moody's Corporate
12 Bond Yield Average-Monthly Average Corporates is no
13 longer published by Moody's Investors Services, Inc., or
14 in the event that the National Association of Insurance
15 Commissioners determines that Moody's Corporate Bond
16 Yield Average-Monthly Average Corporates as published by
17 Moody's Investors Service, Inc. is no longer appropriate
18 for the determination of the reference interest rate,
19 then an alternative method for determination of the
20 reference interest rate, which is adopted by the National
21 Association of Insurance Commissioners and approved by
22 regulations promulgated by the Director, may be
23 substituted.
24 (7) Minimum Standards for Health (Disability, Accident
25 and Sickness) Plans. The Director shall promulgate a
26 regulation containing the minimum standards applicable to the
27 valuation of health (disability, sickness and accident)
28 plans.
29 (Source: P.A. 91-357, eff. 7-29-99.)
30 (215 ILCS 5/401.5)
31 Sec. 401.5. Investigation of insurance law violations.
32 (a) If the Director of Insurance has cause to believe
33 that a person has engaged in, or is engaging in, an act,
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1 activity, or practice that constitutes a business offense,
2 misdemeanor, or felony violation of the Illinois Insurance
3 Code or related insurance laws, he or she shall designate
4 appropriate investigators or agents to investigate the
5 violations. For purposes of carrying out investigations
6 under this Section, the Department of Insurance is deemed a
7 criminal justice agency under all federal and State laws and
8 regulations, and as such shall have access to any information
9 that concerns or relates to a violation of the Illinois
10 Insurance Code or related insurance laws and that is
11 available to criminal justice agencies.
12 (b) The Director of Insurance may transmit or receive
13 written or oral information relating to possible violations
14 of the insurance laws of this State received by or from any
15 other criminal justice agencies, whether federal, State, or
16 local, if, in the opinion of the Director, the transmittal is
17 appropriate and may further the effective prevention of
18 criminal activities.
19 (c)(1) The Department of Insurance's papers, documents,
20 reports, or evidence relevant to the subject of an
21 investigation under this Section is not subject to public
22 inspection for so long as the Director Department deems
23 reasonably necessary to complete the investigation, to
24 protect the person investigated from unwarranted injury, or
25 to be in the public interest. Documents, materials, or other
26 information in the possession or control of the Director that
27 are provided pursuant to this Section or obtained by the
28 Director in an investigation of suspected fraudulent
29 insurance acts shall be confidential by law and privileged,
30 shall not be subject to the Freedom of Information Act, shall
31 not be subject to subpoena, and shall not be subject to
32 discovery or admission into evidence in any private civil
33 action. However, the Director is authorized to use the
34 documents, materials, or other information in the furtherance
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1 of any regulatory or legal action brought as a part of the
2 Director's official duties. Further, the papers, documents,
3 reports, or evidence relevant to the subject of an
4 investigation under this Section is not subject to subpoena
5 until opened for public inspection by the Department, unless
6 the Department consents, or until, after notice to the
7 Department and a hearing, the court determines the Department
8 would not be unnecessarily hindered by the subpoena. No
9 officer, agent, or employee of the Department is subject to
10 subpoena in civil actions by a court of this State to testify
11 concerning a matter of which they have knowledge under a
12 pending insurance fraud investigation by the Department.
13 (2) Neither the Director nor any person who
14 received documents, materials, or other information while
15 acting under the authority of the Director shall be
16 permitted or required to testify in any private civil
17 action concerning any confidential documents, materials,
18 or information subject to paragraph (1).
19 (3) In order to assist in the performance of the
20 Director's duties, the Director:
21 (A) may share documents, materials, or other
22 information, including the confidential and
23 privileged documents, materials, or information
24 subject to paragraph (1), with other state, federal,
25 and international regulatory agencies, with the
26 National Association of Insurance Commissioners and
27 its affiliates or subsidiaries, and with state,
28 federal, and international law enforcement
29 authorities, provided that the recipient agrees to
30 maintain the confidentiality and privileged status
31 of the document, material, or other information;
32 (B) may receive documents, materials, or
33 information, including otherwise confidential and
34 privileged documents, materials, or information,
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1 from the National Association of Insurance
2 Commissioners and its affiliates or subsidiaries and
3 from regulatory and law enforcement officials of
4 other foreign or domestic jurisdictions, and shall
5 maintain as confidential or privileged any document,
6 material, or information received with notice or the
7 understanding that it is confidential or privileged
8 under the laws of the jurisdiction that is the
9 source of the document, material, or information;
10 and
11 (C) may enter into agreements governing the
12 sharing and use of information consistent with this
13 subsection.
14 (4) No waiver of any applicable privilege or claim
15 of confidentiality in the documents, materials, or
16 information shall occur as a result of disclosure to the
17 Director under this Section or as a result of sharing
18 authorized in paragraph (3).
19 (d) No insurer, or employees or agents of an insurer,
20 are subject to civil liability for libel or otherwise by
21 virtue of furnishing information required by the insurance
22 laws of this State or required by the Department of Insurance
23 as a result of its investigation. No cause of action exists
24 and no liability may be imposed, either civil or criminal,
25 against the State, the Director, any officer, agent, or
26 employee of the Department of Insurance, or individuals
27 employed or retained by the Director, for an act or omission
28 by them in the performance of a power or duty authorized by
29 this Section, unless the act or omission was performed in bad
30 faith and with intent to injure a particular person.
31 (e) The powers vested in the Director by this Section
32 are additional to other powers and remedies vested in the
33 Director by law, and nothing in this Section shall be
34 construed as requiring that the Director shall employ the
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1 powers conferred in this Section instead of or as a condition
2 precedent to the exercise of any other power or remedy vested
3 in the Director. The Director may establish systems and
4 procedures for carrying out investigations under this Section
5 as are necessary to avoid the impairment or compromise of his
6 or her authority under this Section or any other law relating
7 to the regulation of insurance.
8 (Source: P.A. 89-234, eff. 1-1-96.)
9 (215 ILCS 5/404) (from Ch. 73, par. 1016)
10 Sec. 404. Office of Director; A public office;
11 destruction or disposal of records, papers, documents, and
12 memoranda.
13 (1) (a) The office of the Director shall be a public
14 office and the records, books, and papers thereof on file
15 therein, except those records or documents containing or
16 disclosing any analysis, opinion, calculation, ratio,
17 recommendation, advice, viewpoint, or estimation by any
18 Department staff regarding the financial or market condition
19 of an insurer not otherwise made part of the public record by
20 the Director, shall be accessible to the inspection of the
21 public, except as the Director, for good reason, may decide
22 otherwise, or except as may be otherwise provided in this
23 Code.
24 (b) Except where another provision of this Code
25 expressly prohibits a disclosure of confidential information
26 to the specific officials or organizations described in this
27 subsection, the Director may disclose or share any
28 confidential records or information in his custody and
29 control with any insurance regulatory officials of any state
30 or country, with the law enforcement officials of this State,
31 any other state, or the federal government, or with the
32 National Association of Insurance Commissioners, upon the
33 written agreement of the official or organization receiving
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1 the information to hold the information or records
2 confidential and in a manner consistent with this Code,
3 including a requirement that any recipient of the documents,
4 materials, or other information shall not be permitted or
5 required to testify in any private civil action concerning
6 those documents, materials, or other information received.
7 (c) The Director shall maintain as confidential any
8 records or information received from the National Association
9 of Insurance Commissioners or insurance regulatory officials
10 of other states which is confidential in that other
11 jurisdiction.
12 (2) Upon the filing of the examination to which
13 they relate, the Director is authorized to destroy or
14 otherwise dispose of all working papers relative to any
15 company which has been examined at any time prior to that
16 last examination by the Department, so that in such
17 circumstances only current working papers of that last
18 examination may be retained by the Department.
19 (3) Five years after the conclusion of the
20 transactions to which they relate, the Director is
21 authorized to destroy or otherwise dispose of all books,
22 records, papers, memoranda and correspondence directly
23 related to consumer complaints or inquiries.
24 (4) Two years after the conclusion of the
25 transactions to which they relate, the Director is
26 authorized to destroy or otherwise dispose of all books,
27 records, papers, memoranda, and correspondence directly
28 related to all void, obsolete, or superseded rate filings
29 and schedules required to be filed by statute; and all
30 individual company rating experience data and all
31 records, papers, documents and memoranda in the
32 possession of the Director relating thereto.
33 (5) Five years after the conclusion of the
34 transactions to which they relate, the Director is
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1 authorized to destroy or otherwise dispose of all
2 examination reports of companies made by the insurance
3 supervisory officials of states other than Illinois;
4 applications, requisitions, and requests for licenses;
5 all records of hearings; and all similar records, papers,
6 documents, and memoranda in the possession of the
7 Director.
8 (6) Ten years after the conclusion of the
9 transactions to which they relate, the Director is
10 authorized to destroy or otherwise dispose of all
11 official correspondence of foreign and alien companies,
12 all foreign companies' and alien companies' annual
13 statements, valuation reports, tax reports, and all
14 similar records, papers, documents and memoranda in the
15 possession of the Director.
16 (7) Whenever any records, papers, documents or
17 memoranda are destroyed or otherwise disposed of pursuant
18 to the provisions of this section, the Director shall
19 execute and file in a separate, permanent office file a
20 certificate listing and setting forth by summary
21 description the records, papers, documents or memoranda
22 so destroyed or otherwise disposed of, and the Director
23 may, in his discretion, preserve copies of any such
24 records, papers, documents or memoranda by means of
25 microfilming or photographing the same.
26 (8) This Section shall apply to records, papers,
27 documents, and memoranda presently in the possession of
28 the Director as well as to records, papers, documents,
29 and memoranda hereafter coming into his possession.
30 (Source: P.A. 89-97, eff. 7-7-95.)
31 (215 ILCS 5/502.2) (from Ch. 73, par. 1065.49-2)
32 Sec. 502.2. Termination reports.
33 (a) Insurance producer. Any insurance company which
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1 terminates an agency contract or agreement with an insurance
2 producer, shall, if the cause for such termination is any of
3 the causes for revocation or suspension of a license listed
4 in Section 505.1, notify the Director of such termination
5 within 30 days thereafter. The insurance company shall
6 provide the Director with information, documents, records or
7 statements pertaining to the termination which may be used by
8 the Director in any action taken pursuant to Section 505.1.
9 There shall be no liability on the part of, nor shall a cause
10 of action of any nature arise against, the Director, the
11 insurance company or an authorized representative of either
12 for any information, documents, records or statements
13 provided pursuant to this Section.
14 (b) Limited insurance representative. (1) If an
15 appointment of a limited insurance representative is
16 terminated, the terminating insurance company shall, within
17 30 days after the date of termination, give to the Director
18 written notice of such termination, including the date and
19 the reasons and circumstances behind the termination.
20 (2) If the termination is for any of the causes listed
21 in Section 505.1, the insurance company shall provide to the
22 Director any information, documents, records or statements
23 pertaining to the termination which may be used by the
24 Director in any action taken pursuant to Section 505.1.
25 There shall be no liability on the part of, nor shall a cause
26 of action of any nature arise against the Director, the
27 insurance company or an authorized representative of either
28 for any information, documents, records or statements
29 provided pursuant to this Section.
30 (3) The Director shall terminate forthwith the license
31 of a limited insurance representative whose terminated
32 appointment has been duly reported by the terminating
33 insurance company under this Section.
34 (c) Failure of any insurance company to comply with the
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1 requirements of subsection paragraph (a) or (b) results in a
2 civil penalty of $1,000 for each violation, in addition to
3 such other penalties as may be provided by this Code.
4 (d) Confidentiality. (1) Any documents, materials, or
5 other information in the possession or control of the
6 Director that are furnished by an insurer, producer, or an
7 employee or agent thereof acting on behalf of the insurer or
8 producer, or obtained by the Director in an investigation
9 pursuant to this Section shall be confidential by law and
10 privileged, shall not be subject to the Freedom of
11 Information Act, shall not be subject to subpoena, and shall
12 not be subject to discovery or admission into evidence in any
13 private civil action. However, the Director is authorized to
14 use the documents, materials, or other information in the
15 furtherance of any regulatory or legal action brought as a
16 part of the Director's official duties.
17 (2) Neither the Director nor any person who received
18 documents, materials, or other information while acting under
19 the authority of the Director shall be permitted or required
20 to testify in any private civil action concerning any
21 confidential documents, materials, or information subject to
22 paragraph (1).
23 (3) In order to assist in the performance of the
24 Director's duties, the Director:
25 (A) may share documents, materials, or other
26 information, including the confidential and
27 privileged documents, materials, or information
28 subject to paragraph (1), with other state, federal,
29 and international regulatory agencies, with the
30 National Association of insurance Commissioners, its
31 affiliates or subsidiaries, and with state, federal,
32 and international law enforcement authorities,
33 provided that the recipient agrees to maintain the
34 confidentiality and privileged status of the
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1 document, material, or other information;
2 (B) may receive documents, materials, or
3 information, including otherwise confidential and
4 privileged documents, materials, or information,
5 from the National Association of Insurance
6 Commissioners, its affiliates or subsidiaries and
7 from regulatory and law enforcement officials of
8 other foreign or domestic jurisdictions, and shall
9 maintain as confidential or privileged any document,
10 material, or information received with notice or the
11 understanding that it is confidential or privileged
12 under the laws of the jurisdiction that is the
13 source of the document, material, or information;
14 and
15 (C) may enter into agreements governing the
16 sharing and use of information consistent with this
17 subsection.
18 (4) No waiver of any applicable privilege or claim of
19 confidentiality in the documents, materials, or information
20 shall occur as a result of disclosure to the Director under
21 this Section or as a result of sharing authorized in
22 paragraph (3).
23 (5) Nothing in this Section shall prohibit the Director
24 from releasing final, adjudicated actions, including for
25 cause terminations that are open to public inspection, to a
26 database or other clearinghouse service maintained by the
27 National Association of Insurance Commissioners or affiliates
28 or subsidiaries of the National Association of Insurance
29 Commissioners.
30 (Source: P.A. 83-801.)
31 (215 ILCS 5/511.109) (from Ch. 73, par. 1065.58-109)
32 Sec. 511.109. Examination.
33 (a) The Director or his designee may examine any
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1 applicant for or holder of an administrator's license.
2 (b) Any administrator being examined shall provide to
3 the Director or his designee convenient and free access, at
4 all reasonable hours at their offices, to all books, records,
5 documents and other papers relating to such administrator's
6 business affairs.
7 (c) The Director or his designee may administer oaths
8 and thereafter examine any individual about the business of
9 the administrator.
10 (d) The examiners designated by the Director pursuant to
11 this Section may make reports to the Director. Any report
12 alleging substantive violations of this Article, any
13 applicable provisions of the Illinois Insurance Code, or any
14 applicable Part of Title 50 of the Illinois Administrative
15 Code shall be in writing and be based upon facts obtained by
16 the examiners. The report shall be verified by the
17 examiners.
18 (e) If a report is made, the Director shall either
19 deliver a duplicate thereof to the administrator being
20 examined or send such duplicate by certified or registered
21 mail to the administrator's address specified in the records
22 of the Department. The Director shall afford the
23 administrator an opportunity to request a hearing to object
24 to the report. The administrator may request a hearing
25 within 30 days after receipt of the duplicate of the
26 examination report by giving the Director written notice of
27 such request together with written objections to the report.
28 Any hearing shall be conducted in accordance with Sections
29 402 and 403 of this Code. The right to hearing is waived if
30 the delivery of the report is refused or the report is
31 otherwise undeliverable or the administrator does not timely
32 request a hearing. After the hearing or upon expiration of
33 the time period during which an administrator may request a
34 hearing, if the examination reveals that the administrator is
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1 operating in violation of any applicable provision of the
2 Illinois Insurance Code, any applicable Part of Title 50 of
3 the Illinois Administrative Code or prior order, the
4 Director, in the written order, may require the administrator
5 to take any action the Director considers necessary or
6 appropriate in accordance with the report or examination
7 hearing. If the Director issues an order, it shall be issued
8 within 90 days after the report is filed, or if there is a
9 hearing, within 90 days after the conclusion of the hearing.
10 The order is subject to review under the Administrative
11 Review Law.
12 (f)(1) Any documents, materials or other information in
13 the possession or control of the Director that are furnished
14 by a third party administrator, insurer, producer, or an
15 employee or agent thereof acting on behalf of the third party
16 administrator, insurer, producer, or obtained by the Director
17 in an examination shall be confidential by law and
18 privileged, shall not be subject to the Freedom of
19 Information Act, shall not be subject to subpoena, and shall
20 not be subject to discovery or admission into evidence in any
21 private civil action. However, the Director is authorized to
22 use the documents, materials, or other information in the
23 furtherance of any regulatory or legal action brought as a
24 part of the Director's official duties.
25 (2) Neither the Director nor any person who received
26 documents, materials, or other information while acting under
27 the authority of the Director shall be permitted or required
28 to testify in any private civil action concerning any
29 confidential documents, materials, or information subject to
30 paragraph (1).
31 (3) In order to assist in the performance of the
32 Director's duties, the Director:
33 (A) may share documents, materials, or other
34 information, including the confidential and
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1 privileged documents, materials, or information
2 subject to paragraph (1), with other state, federal,
3 and international regulatory agencies, with the
4 National Association of Insurance Commissioners and
5 its affiliates or subsidiaries, and with state,
6 federal, and international law enforcement
7 authorities, provided that the recipient agrees to
8 maintain the confidentiality and privileged status
9 of the document, material, or other information;
10 (B) may receive documents, materials, or
11 information, including otherwise confidential and
12 privileged documents, materials, or information,
13 from the National Association of Insurance
14 Commissioners and its affiliates or subsidiaries and
15 from regulatory and law enforcement officials of
16 other foreign or domestic jurisdictions, and shall
17 maintain as confidential or privileged any document,
18 material, or information received with notice or the
19 understanding that it is confidential or privileged
20 under the laws of the jurisdiction that is the
21 source of the document, material, or information;
22 and
23 (C) may enter into agreements governing the
24 sharing and use of information consistent with this
25 subsection.
26 (4) No waiver of any applicable privilege or claim
27 of confidentiality in the documents, materials, or
28 information shall occur as a result of disclosure to the
29 Director under this Section or as a result of sharing
30 authorized in paragraph (3).
31 (Source: P.A. 84-887.)
32 Section 99. Effective date. This Act takes effect upon
33 becoming law.