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Public Act 103-0566


 

Public Act 0566 103RD GENERAL ASSEMBLY

 


 
Public Act 103-0566
 
SB0765 EnrolledLRB103 03220 BMS 48226 b

    AN ACT concerning regulation.
 
    Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
 
    Section 5. The Farm Mutual Insurance Company Act of 1986
is amended by changing Section 10 as follows:
 
    (215 ILCS 120/10)  (from Ch. 73, par. 1260)
    Sec. 10. Property insurable; limitations of risk.
    (a) Until the date that is 5 years after the effective date
of this amendatory Act of the 103rd General Assembly this
subsection (a) applies:
        (1) Farm mutual insurance companies are permitted to
    insure the following classes of property:
            (A) (a) Farm property, including residences and
        other farm buildings and all classes of personal
        property in connection therewith, other than motor
        vehicles required to be licensed for road use,
        including such property temporarily located elsewhere;
            (B) (b) Growing crops;
            (C) (c) Buildings and personal property used in
        the processing of agricultural products in conjunction
        with a farming operation;
            (D) (d) Residences, including household and
        personal effects, and including such property
        temporarily located elsewhere;
            (E) (e) Churches, schools and community buildings
        and such property as may be properly contained
        therein.
        No farm mutual insurance company may insure any
    property within the limits of any city containing over
    50,000 inhabitants at the time of the organization of the
    company.
        (2) No farm mutual insurance company authorized to
    write the kinds of insurance enumerated in Section 5 of
    this Act may expose itself to any loss on any one risk in
    an amount in excess of $20,000 plus 10% of its
    policyholders' surplus in excess of $20,000.
            A farm mutual insurance company insuring against
    the perils of wind or hail must have and maintain adequate
    catastrophic reinsurance which limits the company's
    exposure on any one loss occurrence to 20% of its
    policyholders' surplus.
        A farm mutual insurance company converting from
    unlimited catastrophic reinsurance to adequate
    catastrophic reinsurance under this Section shall provide
    notice of the change to policyholders in a form approved
    by the Director of Insurance.
        A farm mutual insurance company must additionally have
    and maintain aggregate reinsurance coverage in an amount
    no less than that required for a 250-year event, based on
    an actuarially sound catastrophe model.
        The reinsurance permitted or required by this Section
    must be provided by (i) a farm mutual insurance company,
    (ii) an insurance company authorized to write the kinds of
    insurance described in Class 2 or Class 3 of Section 4 of
    the Illinois Insurance Code, or (iii) a reinsurer and
    reinsurance program meeting the standards set forth in
    Article XI of the Illinois Insurance Code that permit a
    domestic company to take credit for reinsurance.
        Nothing in this Section shall be construed to prohibit
    a farm mutual insurance company from purchasing
    reinsurance coverage greater than the minimum requirement
    set forth under this Section, including purchasing
    unlimited catastrophic coverage.
        No portion of any such risk which has been reinsured
    with a farm mutual insurance company or an insurance
    company authorized to write the kinds of insurance
    described in Class 2 or Class 3 of Section 4 of the
    Illinois Insurance Code shall be included in determining
    the limitation of risk described herein.
        For purposes of this Section:
        A single risk shall be all real and personal property
    in one fixed location and not separated by 50 feet.
        "Adequate catastrophic reinsurance" means reinsurance
    in an amount no less than that required for a 500-year
    event, based on an actuarially sound catastrophe model
    that limits the company's exposure on any one loss
    occurrence to (i) 20% of its policyholders' surplus or
    (ii) an amount authorized by the Director of Insurance.
        As regards the peril of wind or hail, the term "loss
    occurrence" shall mean all losses occasioned by tornadoes,
    cyclones, windstorms, hurricanes, or hail stones arising
    from the same atmospheric disturbance and occurring during
    any continuous period of not less than 48 hours.
        (3) Whenever the company's financial condition is such
    that the further assumption of risks might be hazardous to
    policyholders, the Director of Insurance may order the
    company to take one or more of the following steps:
            (A) (a) To reduce the loss exposure by
        reinsurance;
            (B) (b) To reduce the volume of business being
        written or renewed;
            (C) (c) To suspend the writing of new business;
            (D) (d) To suspend the writing of both new and
        renewal business;
            (E) (e) To levy a special assessment of
        policyholders;
            (F) (f) To reduce general or acquisition expenses
        by specified methods.
        (4) Whenever the Director determines that a farm
    mutual insurance company is insolvent he shall order the
    farm mutual insurance company to levy a special assessment
    within 30 days of receipt of such order. If the insolvency
    is not corrected within 90 days of the mailing of such
    assessment, the company shall be subject to liquidation
    pursuant to Article XIII of the Illinois Insurance Code.
    (b) On and after the date that is 5 years after the
effective date of this amendatory Act of the 103rd General
Assembly this subsection (b) applies:
        (1) Farm mutual insurance companies are permitted to
    insure the following classes of property:
            (A) Farm property, including residences and other
        farm buildings and all classes of personal property in
        connection therewith, other than motor vehicles
        required to be licensed for road use, including such
        property temporarily located elsewhere;
            (B) Growing crops;
            (C) Buildings and personal property used in the
        processing of agricultural products in conjunction
        with a farming operation;
            (D) Residences, including household and personal
        effects, and including such property temporarily
        located elsewhere;
            (E) Churches, schools and community buildings and
        such property as may be properly contained therein.
        No farm mutual insurance company may insure any
    property within the limits of any city containing over
    50,000 inhabitants at the time of the organization of the
    company.
        (2) No farm mutual insurance company authorized to
    write the kinds of insurance enumerated in Section 5 of
    this Act may expose itself to any loss on any one risk in
    an amount in excess of $20,000 plus 10% of its
    policyholders' surplus in excess of $20,000.
        A farm mutual insurance company insuring against the
    perils of wind or hail must have and maintain catastrophic
    reinsurance which limits the company's exposure on any one
    loss occurrence to 20% of its policyholders' surplus.
        No portion of any such risk which has been reinsured
    with a farm mutual insurance company or an insurance
    company authorized to write the kinds of insurance
    described in Class 2 or Class 3 of Section 4 of the
    Illinois Insurance Code shall be included in determining
    the limitation of risk described herein.
        For purposes of this Section:
        A single risk shall be all real and personal property
    in one fixed location and not separated by 50 feet.
        As regards the peril of wind or hail, the term "loss
    occurrence" shall mean all losses occasioned by tornadoes,
    cyclones, windstorms, hurricanes, or hail stones arising
    from the same atmospheric disturbance and occurring during
    any continuous period of not less than 48 hours.
        (3) Whenever the company's financial condition is such
    that the further assumption of risks might be hazardous to
    policyholders, the Director of Insurance may order the
    company to take one or more of the following steps:
            (A) To reduce the loss exposure by reinsurance;
            (B) To reduce the volume of business being written
        or renewed;
            (C) To suspend the writing of new business;
            (D) To suspend the writing of both new and renewal
        business;
            (E) To levy a special assessment of policyholders;
            (F) To reduce general or acquisition expenses by
        specified methods.
        (4) Whenever the Director determines that a farm
    mutual insurance company is insolvent he shall order the
    farm mutual insurance company to levy a special assessment
    within 30 days of receipt of such order. If the insolvency
    is not corrected within 90 days of the mailing of such
    assessment, the company shall be subject to liquidation
    pursuant to Article XIII of the Illinois Insurance Code.
(Source: P.A. 88-364.)
 
    Section 99. Effective date. This Act takes effect upon
becoming law.

Effective Date: 11/17/2023