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| [ Introduced ] | [ Engrossed ] | [ House Amendment 001 ] |
92_SB1976enr SB1976 Enrolled LRB9214934JSpcA 1 AN ACT concerning insurance. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Insurance Code is amended by 5 changing Sections 205 and 226.1 as follows: 6 (215 ILCS 5/205) (from Ch. 73, par. 817) 7 Sec. 205. Priority of distribution of general assets. 8 (1) The priorities of distribution of general assets 9 from the company's estate is to be as follows: 10 (a) The costs and expenses of administration, 11 including the expenses of the Illinois Insurance Guaranty 12 Fund, the Illinois Life and Health Insurance Guaranty 13 Association, the Illinois Health Maintenance Organization 14 Guaranty Association and of any similar organization in 15 any other state as prescribed in subsection (c) of 16 Section 545. 17 (b) Secured claims, including claims for taxes and 18 debts due the federal or any state or local government, 19 that are secured by liens perfected prior to the filing 20 of the complaint. 21 (c) Claims for wages actually owing to employees 22 for services rendered within 3 months prior to the date 23 of the filing of the complaint, not exceeding $1,000 to 24 each employee unless there are claims due the federal 25 government under paragraph (f), then the claims for wages 26 shall have a priority of distribution immediately 27 following that of federal claims under paragraph (f) and 28 immediately preceding claims of general creditors under 29 paragraph (g). 30 (d) Claims by policyholders, beneficiaries, and 31 insureds, under insurance policies, annuity contracts, SB1976 Enrolled -2- LRB9214934JSpcA 1 and funding agreements,andliability claims against 2 insureds covered under insurance policies and insurance 3 contracts issued by the company, and claims of the 4 Illinois Insurance Guaranty Fund, the Illinois Life and 5 Health Insurance Guaranty Association, the Illinois 6 Health Maintenance Organization Guaranty Association and 7 any similar organization in another state as prescribed 8 in Section 545. For purposes of this Section, "funding 9 agreement" means an agreement whereby an insurer 10 authorized to write business under Class 1 of Section 4 11 of this Code may accept and accumulate funds and make one 12 or more payments at future dates in amounts that are not 13 based upon mortality or morbidity contingencies. 14 (e) Claims by policyholders, beneficiaries, and 15 insureds, the allowed values of which were determined by 16 estimation under paragraph (b) of subsection (4) of 17 Section 209. 18 (f) Any other claims due the federal government. 19 (g) All other claims of general creditors not 20 falling within any other priority under this Section 21 including claims for taxes and debts due any state or 22 local government which are not secured claims and claims 23 for attorneys' fees incurred by the company in contesting 24 its conservation, rehabilitation, or liquidation. 25 (h) Claims of guaranty fund certificate holders, 26 guaranty capital shareholders, capital note holders, and 27 surplus note holders. 28 (i) Proprietary claims of shareholders, members, or 29 other owners. 30 Every claim under a written agreement, statute, or rule 31 providing that the assets in a separate account are not 32 chargeable with the liabilities arising out of any other 33 business of the insurer shall be satisfied out of the funded 34 assets in the separate account equal to, but not to exceed, SB1976 Enrolled -3- LRB9214934JSpcA 1 the reserves maintained in the separate account under the 2 separate account agreement, and to the extent, if any, the 3 claim is not fully discharged thereby, the remainder of the 4 claim shall be treated as a priority level (d) claim under 5 paragraph (d) of this subsection to the extent that reserves 6 have been established in the insurer's general account 7 pursuant to statute, rule, or the separate account agreement. 8 For purposes of this provision, "separate account 9 policies, contracts, or agreements" means any policies, 10 contracts, or agreements that provide for separate accounts 11 as contemplated by Section 245.21. 12 To the extent that any assets of an insurer, other than 13 those assets properly allocated to and maintained in a 14 separate account, have been used to fund or pay any expenses, 15 taxes, or policyholder benefits that are attributable to a 16 separate account policy, contract, or agreement that should 17 have been paid by a separate account prior to the 18 commencement of receivership proceedings, then upon the 19 commencement of receivership proceedings, the separate 20 accounts that benefited from this payment or funding shall 21 first be used to repay or reimburse the company's general 22 assets or account for any unreimbursed net sums due at the 23 commencement of receivership proceedings prior to the 24 application of the separate account assets to the 25 satisfaction of liabilities or the corresponding separate 26 account policies, contracts, and agreements. 27 To the extent, if any, reserves or assets maintained in 28 the separate account are in excess of the amounts needed to 29 satisfy claims under the separate account contracts, the 30 excess shall be treated as part of the general assets of the 31 insurer's estate. 32 (2) Within 120 days after the issuance of an Order of 33 Liquidation with a finding of insolvency against a domestic 34 company, the Director shall make application to the court SB1976 Enrolled -4- LRB9214934JSpcA 1 requesting authority to disburse funds to the Illinois 2 Insurance Guaranty Fund, the Illinois Life and Health 3 Insurance Guaranty Association, the Illinois Health 4 Maintenance Organization Guaranty Association and similar 5 organizations in other states from time to time out of the 6 company's marshaled assets as funds become available in 7 amounts equal to disbursements made by the Illinois Insurance 8 Guaranty Fund, the Illinois Life and Health Insurance 9 Guaranty Association, the Illinois Health Maintenance 10 Organization Guaranty Association and similar organizations 11 in other states for covered claims obligations on the 12 presentation of evidence that such disbursements have been 13 made by the Illinois Insurance Guaranty Fund, the Illinois 14 Life and Health Insurance Guaranty Association, the Illinois 15 Health Maintenance Organization Guaranty Association and 16 similar organizations in other states. 17 The Director shall establish procedures for the ratable 18 allocation and distribution of disbursements to the Illinois 19 Insurance Guaranty Fund, the Illinois Life and Health 20 Insurance Guaranty Association, the Illinois Health 21 Maintenance Organization Guaranty Association and similar 22 organizations in other states. In determining the amounts 23 available for disbursement, the Director shall reserve 24 sufficient assets for the payment of the expenses of 25 administration described in paragraph (1) (a) of this 26 Section. All funds available for disbursement after the 27 establishment of the prescribed reserve shall be promptly 28 distributed. As a condition to receipt of funds in 29 reimbursement of covered claims obligations, the Director 30 shall secure from the Illinois Insurance Guaranty Fund, the 31 Illinois Life and Health Insurance Guaranty Association, the 32 Illinois Health Maintenance Organization Guaranty Association 33 and each similar organization in other states, an agreement 34 to return to the Director on demand funds previously received SB1976 Enrolled -5- LRB9214934JSpcA 1 as may be required to pay claims of secured creditors and 2 claims falling within the priorities established in 3 paragraphs (a), (b), (c), and (d) of subsection (1) of this 4 Section in accordance with such priorities. 5 (3) The provisions of this Section are severable under 6 Section 1.31 of the Statute on Statutes. 7 (Source: P.A. 92-65, eff. 7-12-01.) 8 (215 ILCS 5/226.1) (from Ch. 73, par. 838.1) 9 Sec. 226.1. Entitled annuity payment options. Annuity 10 contracts and funding agreements may be issued without a life 11 contingency annuity payment option in the following 12 circumstances: (1) to fund benefits under an employee benefit 13 plan as defined in the Employee Retirement Income Security 14 Act of 1974, as now or hereafter amended; (2) to fund the 15 activities of an organization exempt from taxation under 16 Internal Revenue Code Section 501(c), as now or hereafter 17 amended; (3) to fund a program of a governmental entity or of 18 an agency or instrumentality thereof; (4) to fund an 19 agreement providing for periodic payments entered into in 20 satisfaction of a claim; or (5) to fund a program of an 21 institution having assets in excess of $25,000,000. 22 (Source: P.A. 86-753.) 23 Section 99. Effective date. This Act takes effect upon 24 becoming law.