State of Illinois
91st General Assembly
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Public Act 91-0796

SB1701 Enrolled                                LRB9112329JSpc

    AN ACT concerning insurance exchanges.

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

    Section  5.   The  Illinois  Insurance Code is amended by
changing Sections 107.02, 107.15a, 107.15b,  107.17,  107.21,
107.26, and 107.29 as follows:

    (215 ILCS 5/107.02) (from Ch. 73, par. 719.02)
    Sec. 107.02. Incorporation.
    (a)  There  is  hereby authorized created an exchange for
the reinsurance and insurance of risks.  An  exchange  formed
pursuant   to   this  Article  shall  be  a  privately  owned
organization separate and distinct from the State.  Within 60
days after this Act becomes law, the  Director  of  Insurance
shall   appoint  an  interim  Board  of  Directors  to  adopt
temporary by-laws, hire employees, and take such other  steps
as  are  authorized  or  necessary to establish the Exchange.
When subscriptions totalling $4,000,000  have  been  received
pursuant  to  Section  107.07,  the  Board of Directors shall
apply to the Director for a  Certificate  of  Authority.  The
Director shall approve such Certificate within 30 days unless
he  determines that the requirements of this Article have not
been met and specifies his objections in writing.  Within  30
days  after  receiving  proof  from  the  Exchange  that  the
objections  have  been  met,  the  Director shall approve the
application of the Exchange.
    (b)  After the effective date of this amendatory  Act  of
1997,   the   Director   may  organize,  in  accordance  with
subsection (a), an additional exchange  for  the  reinsurance
and insurance of risks.  The additional exchange shall comply
with the provisions of this Article.
(Source: P.A. 90-499, eff. 8-19-97.)
    (215 ILCS 5/107.15a) (from Ch. 73, par. 719.15a)
    Sec.  107.15a.  Duties and powers of trustees.  The Board
of Trustees shall have such power as may be necessary for the
management  and  operations   of   the   Exchange   and   the
Association.   Such  powers  shall include but not be limited
         (a)  establishment    of     the     qualifications,
    requirements, limitations and obligations for syndicates,
    limited syndicates, subscribers, and Exchange brokers;
         (b)  denying  access  to  the Exchange to applicants
    which do not meet such qualifications, requirements,  and
         (c)  imposing   penalties   on  syndicates,  limited
    syndicates,  subscribers   and   Exchange   brokers   for
    violations  of  the regulations of the Exchange or orders
    of the Board;
         (d)  assessing fees annually on syndicates,  limited
    syndicates,  subscribers and Exchange brokers, and making
    assessments  on  syndicates,   limited   syndicates   and
    subscribers for the expenses of the Exchange;
         (e)  suspending,  in whole or in part, access to the
    Exchange or  expelling  syndicates,  limited  syndicates,
    subscribers  or  Exchange  brokers who do not continue to
    meet the qualifications,  requirements,  and  obligations
    established  by  the  Board,  who  fail  or refuse to pay
    penalties,  fees,  or  assessments  when  due,  or  whose
    continued  operation  the  Board  determines   would   be
    injurious   to   the  best  interests  of  the  Exchange,
    policyholders, claimants, or creditors;
         (f)  obtaining immediate access for the  benefit  of
    the   Immediate   Access   Security  Association  to  the
    following assets of the impaired or insolvent syndicate:
              (i)  the full amount held in its security trust
         or custodial account; and
              (ii)  the assets of its subscribers under their
         certificates of guaranty;.
         (g)  organizing a guaranty mechanism or fund for the
    protection of policyholders.
(Source: P.A. 91-77, eff. 7-9-99.)

    (215 ILCS 5/107.15b)
    Sec. 107.15b.  Board rulemaking authority.
    (a)  The Board has the authority to adopt such  rules  as
it deems necessary to carry out its duties under this Article
and  to  maintain a well-regulated marketplace.  A syndicate,
limited syndicate,  subscriber,  or  exchange  broker,  as  a
condition  of  its authority to transact business through the
Exchange, shall comply with this Article, all existing  rules
of  the  Exchange, and all rules or modifications of existing
rules adopted  by  the  Board  and  not  disapproved  by  the
Director,  including,  but  not  limited  to, rules extending
requirements  and   obligations   with   effect   after   the
suspension,   expulsion,   or  voluntary  withdrawal  of  the
syndicate, limited syndicate, subscriber, or exchange  broker
from access to the Exchange.
    (b)  A  rule  or modification to an existing rule adopted
by the Board after the effective date of this amendatory  Act
of  1997  shall  be  filed with the Director not less than 30
days before the  proposed  effective  date  of  the  rule  or
modification.    The   Director,   upon  written  order,  may
disapprove the rule or modification, in  whole  or  in  part,
upon  a finding that the rule or modification would cause the
exchange to be operated in a manner that would  be  hazardous
to the public or its policyholders.
    (c)  An  order  by  the  Director  disapproving a rule or
modification shall be deemed to  be  a  final  administrative
decision  and shall be subject to judicial review pursuant to
the provisions of the Administrative Review Law.
    (d)  Neither the Board nor the Exchange is an  agency  of
the   State  for  purposes  of  the  Illinois  Administrative
Procedure Act or otherwise.
(Source: P.A. 90-499, eff. 1-1-98.)

    (215 ILCS 5/107.17) (from Ch. 73, par. 719.17)
    Sec. 107.17.  Governance.  The business  and  affairs  of
the  Exchange shall be managed by an Executive Committee with
the advice and consent of the Board of Trustees.
    There  shall  be  2  classes  of  trustees:    Subscriber
trustees  and  public  trustees.     Both public trustees and
subscriber trustees shall be elected by a  majority  vote  of
the  subscribers.   In addition, the public trustees shall be
approved by the Director.
    The trustees shall be 13 in number.  There  shall  be  at
least  5  public trustees who shall be individual persons who
are not insurers, subscribers, exchange brokers, or employees
of insurers, subscribers, exchange  brokers,  syndicates,  or
affiliates thereof.
    The  Executive  Committee  shall  be composed of 3 public
trustees elected by the  Board.   Members  of  the  Executive
Committee  shall  serve for a term of 3 years, except that of
the initial members of the Executive  Committee,  one  member
shall  serve  for  a term of one year, one member shall serve
for a term of 2 years, and one member shall serve for a  term
of  3  years.   The  terms  of  the  initial  members  of the
Executive Committee shall be determined by lot.
    All decisions of the Executive Committee, except those of
a ministerial nature that may  be  delegated  by  the  Board,
shall be subject to the approval of the Board.  All action of
the  Executive Committee shall be approved unless disapproved
on a recorded vote by 9 members of the Board.
(Source: P.A. 89-206,  eff.  7-21-95;  89-669,  eff.  1-1-97;
90-499, eff. 1-1-98.)
    (215 ILCS 5/107.21) (from Ch. 73, par. 719.21)
    Sec. 107.21.  Central Processing Facility. Establishment:
The  Exchange  shall  establish  a  facility  for centralized
record keeping, data collection, and statistical  compilation
of  all  insurance  and  reinsurance transactions involving a
    Scope:  Except  with  respect  to  reinsurance  contracts
where the risks are transferred from a syndicate to a limited
syndicate  and  security  for the exposure is held in a fully
funded  trust  account,  all  monies  due  on  contracts   of
insurance  and  reinsurance  issued  by  syndicates  shall be
payable  to  the  Exchange  and  disbursed  directly  to  the
Facility  for  recording   and   distribution.    All   other
transactions  of  business  on the Exchange shall be reported
concurrently to the Facility unless exempted by the Board.
    Management:  The management and operation of the Facility
shall be conducted pursuant to rules adopted  by  the  Board.
The  facility  shall  keep  full  and  accurate  accounts and
records of receipts and  disbursements  of  the  funds  being
processed  by the Facility and maintain accounting records of
all transactions of each subscriber, syndicate,  and  limited
syndicate.    Monthly   reports   stating  the  receipts  and
disbursements of the Facility shall be  made  to  the  Board.
The  Board  may  also  require any other report that it deems
(Source: P.A. 81-1047.)

    (215 ILCS 5/107.26) (from Ch. 73, par. 719.26)
    Sec. 107.26.  Immediate Access Security Association.
    (a)  There is authorized created a non-profit corporation
which  shall  be  known  as  the  Immediate  Access  Security
Association, and which shall be established  as  a  privately
owned  organization  incorporated  under  the General Not for
Profit Corporation Act separate and distinct from  the  State
and  not a part of the State government. All syndicates shall
be members  of  the  Association  as  a  condition  of  their
authority   to   transact   business  on  the  Exchange.  The
Association shall be exempt from payment of all fees and  all
taxes levied by this State or any of its subdivisions.
    (b)  In   the   event   of  the  entry  of  an  Order  of
Rehabilitation,  Conservation,  or  Liquidation   against   a
syndicate  pursuant  to Section 107.08, the Association shall
establish a claims date, which shall be not  later  than  one
year  after the date of such Order, by which time all persons
having claims arising out of  insurance  obligations  of  the
syndicate  must  file  their  claim with the Association. The
Association shall give notice to all policyholders and  other
persons  who  may have a claim against the syndicate as shown
by the syndicate's records. Such  notice  shall  include  the
date  of  the  Order,  the  claims  date  established  by the
Association and the procedure and form  for  filing  a  claim
with  the  Association.  The  Association shall determine the
syndicate's insurance obligations based on all  claims  filed
on or before the claims date.  The Association shall then pay
all  claims for which an insurance obligation exists from the
assets of the syndicate's  trust  or  custodial  account  and
certificates  of  guaranty.   In  the  event those assets are
insufficient to pay all claims in full, the Association shall
make payment  pursuant  to  a  plan  approved  by  the  court
entering   the  Order  of  Rehabilitation,  Conservation,  or
Liquidation. The Rehabilitator,  Conservator,  or  Liquidator
shall be bound by any settlement made by the Association. Any
person  not  receiving  full reimbursement for his claim from
the Association shall have a claim against the  assets  being
administered by the Rehabilitator, Conservator, or Liquidator
for  the remaining amounts. In settling claims and subject to
limitations in this Section, the Association shall  have  the
same  rights  and duties of the insolvent syndicate as if the
syndicate had not become insolvent.
    (c)  The Association may delegate to such other person or
entity as it deems appropriate the performance  of  any  duty
imposed on it by this Section.
(Source:  P.A.  89-97,  eff.  7-7-95;  89-206,  eff. 7-21-95;
89-626, eff. 8-9-96; 90-794, eff. 8-14-98.)

    (215 ILCS 5/107.29)
    Sec. 107.29.  Exchange operations runoff.
    (a)  The Board may adopt a  plan  of  operation  for  the
orderly  runoff  of the operations of the exchange.  The plan
of operation shall provide  that  all  funds,  legal  rights,
title  to  property,  and  causes  of  action of the Exchange
including, but not limited to, all assessments,  subscription
payments,  proceeds,  investments,  premium  fees,  surcharge
receipts,  and  funds  maintained  under  Sections 107.26 and
107.27  and  the  rules  or  regulations  of   the   Exchange
implementing  those  Sections  or any other provision of this
Article, shall be accounted for and paid over to the Director
as receiver of any delinquent syndicate in receivership after
settlement of all claims against the exchange.
         (1)  In the event that 2 or more syndicates are then
    in receivership, the amount  paid  over  to  each  estate
    shall be proportional to the relative size of the surplus
    deficiency of each.
         (2)  Any  excess  remaining after the payment of any
    and all claims against such receivership estates shall be
    transferred, in equal shares, to the  domestic  companies
    which   result   from   the  reorganization,  merger,  or
    consolidation  of  former  syndicates  of  the   Illinois
    Insurance Exchange.
    (b)  For  purposes  of  this Section, "syndicate" means a
syndicate or a limited syndicate.
(Source: P.A. 90-499, eff. 8-19-97; 91-77, eff. 7-9-99.)
    Section 99.  Effective date.  This Act takes effect  upon
becoming law.

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