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Public Act 92-0386
HB2994 Enrolled LRB9205492JSpcA
AN ACT concerning insurance producers.
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 Section 445 and adding Sections 500-5, 500-10,
500-15, 500-20, 500-25, 500-30, 500-35, 500-40, 500-45,
500-50, 500-55, 500-60, 500-65, 500-70, 500-75, 500-80,
500-85, 500-90, 500-95, 500-100, 500-105, 500-110, 500-115,
500-120, 500-125, 500-130, 500-135, 500-140, 500-145, and
500-150 as follows:
(215 ILCS 5/445) (from Ch. 73, par. 1057)
Sec. 445. Surplus line.
(1) Surplus line defined; surplus line insurer
requirements. Surplus line insurance is insurance on an
Illinois risk of the kinds specified in Classes 2 and 3 of
Section 4 of this Code procured from an unauthorized insurer
company or a domestic surplus line insurer as defined in
Section 445a after the insurance producer representing the
insured or the surplus line producer is unable, after
diligent effort, to procure said insurance from insurers
companies which are authorized to transact business in this
State other than domestic surplus line insurers as defined in
Section 445a.
Insurance producers may procure surplus line insurance
only if licensed as a surplus line producer under this
Section and may procure that insurance only from an
unauthorized insurer company or from a domestic surplus line
insurer as defined in Section 445a:
(a) that based upon information available to the
surplus line producer has a policyholders surplus of not
less than $15,000,000 determined in accordance with
accounting rules that are applicable to authorized
insurers companies; and
(b) that has standards of solvency and management
that are adequate for the protection of policyholders;
and
(c) where an unauthorized insurer company does not
meet the standards set forth in (a) and (b) above, a
surplus line producer may, if necessary, procure
insurance from that insurer company only if prior written
warning of such fact or condition is given to the insured
by the insurance producer or surplus line producer.
(2) Surplus line producer; license. Any licensed
producer who is a resident of this State, or any nonresident
who qualifies under Section 500-40, may be licensed as a
surplus line producer upon:
(a) completing a prelicensing course of study
passing a written examination. The examination shall
reasonably test the knowledge of the applicant concerning
the surplus line law and the responsibilities assumed by
a surplus line producer thereunder. The course
examination provided for by this Section shall be
conducted under rules and regulations prescribed by the
Director. The Director may administer the course
examination or may make arrangements, including
contracting with an outside educational testing service,
for administering the course and collecting the
non-refundable application fee provided for in this
subsection such examinations. Any charges assessed by
the Director or the educational testing service for
administering the course such examinations shall be paid
directly by the individual applicants. Each applicant
required to take the course an examination shall, at the
time of request for examination, enclose with the
application a non-refundable $10 application fee payable
to the Director plus a separate course an examination
administration fee. If the Director administers the
examination, the application fee and examination
administration fee shall be combined and made payable to
the Director. If the Director designates an outside
testing service to administer the examination, the
applicant shall make a separate examination
administration fee remittance payable to the designated
testing service for the total fees the testing service
charges for each of the various services being requested
by the applicant. An applicant who fails to appear for
the course examination as scheduled, or appears but fails
to complete the course pass, shall not be entitled to any
refund, and shall be required to submit a new request to
attend the course for examination together with all the
requisite fees before being rescheduled for another
course examination at a later date; and
(b) payment of an annual license fee of $200; and
(c) procurement of the surety bond required in
subsection (4) of this Section.
A Each surplus line producer so licensed shall keep a
separate account of the business transacted thereunder which
shall be open at all times to the inspection of the Director
or his representative.
The prelicensing course of study examination requirement
in (a) above shall not apply to insurance producers who were
licensed under the Illinois surplus line law or individuals
designated to act for a partnership, association or
corporation licensed under the Illinois surplus line law on
or before the effective date of this amendatory Act of the
92nd General Assembly February 27, 1985.
(3) Taxes and reports.
(a) Surplus line tax and penalty for late payment.
A Each surplus line producer shall file with the
Director on or before February 1 and August 1 of each
year a report in the form prescribed by the Director on
all surplus line insurance procured from unauthorized
insurers during the preceding 6 month period ending
December 31 or June 30 respectively, and on the filing of
such report shall pay to the Director for the use and
benefit of the State a sum equal to 3% of the gross
premiums less returned premiums upon all surplus line
insurance procured or cancelled during the preceding 6
months.
Any surplus line producer who fails to pay the full
amount due under this subsection is liable, in addition
to the amount due, for such penalty and interest charges
as are provided for under Section 412 of this Code. The
Director, through the Attorney General, may institute an
action in the name of the People of the State of
Illinois, in any court of competent jurisdiction, for the
recovery of the amount of such taxes and penalties due,
and prosecute the same to final judgment, and take such
steps as are necessary to collect the same.
(b) Fire Marshal Tax.
Each surplus line producer shall file with the
Director on or before March 31 of each year a report in
the form prescribed by the Director on all fire insurance
procured from unauthorized insurers subject to tax under
Section 12 of the Fire Investigation Act and shall pay to
the Director the fire marshal tax required thereunder.
(c) Taxes and fees charged to insured. The taxes
imposed under this subsection and the countersigning fees
charged by the Surplus Line Association of Illinois may
be charged to and collected from surplus line insureds.
(4) Bond. Each surplus line producer, as a condition to
receiving a surplus line producer's license, shall execute
and deliver to the Director a surety bond to the People of
the State in the penal sum of $20,000, with a surety which is
authorized to transact business in this State, conditioned
that the surplus line producer will pay to the Director the
tax, interest and penalties levied under subsection (3) of
this Section.
(5) Submission of documents to Surplus Line Association
of Illinois. A Each surplus line producer shall submit every
insurance contract issued under his or her license to the
Surplus Line Association of Illinois for recording and
countersignature. The submission and countersignature may be
effected through electronic means. The submission insurance
contracts submitted shall set forth:
(a) the name of the insured;
(b) the description and location of the insured
property or risk;
(c) the amount insured;
(d) the gross premiums charged or returned;
(e) the name of the unauthorized insurer or
domestic surplus line insurer as defined in Section 445a
from whom coverage has been procured;
(f) the kind or kinds of insurance procured; and
(g) amount of premium subject to tax required by
Section 12 of the Fire Investigation Act.
Proposals, endorsements, and other documents which
are incidental to the insurance but which do does not
affect the premium charged are exempted from filing and
countersignature.
The submission of insuring contracts to the Surplus
Line Association of Illinois constitutes a certification
by the surplus line producer or by the insurance producer
who presented the risk to the surplus line producer for
placement as a surplus line risk that after diligent
effort the required insurance could not be procured from
insurers companies which are authorized to transact
business in this State other than domestic surplus line
insurers as defined in Section 445a and that such
procurement was otherwise in accordance with the surplus
line law.
(6) Countersignature required. It shall be unlawful for
an insurance producer to deliver any unauthorized company
insurer insurance contract or domestic surplus line insurer
contract unless such insurance contract is countersigned by
the Surplus Line Association of Illinois.
(7) Inspection of records. A Each surplus line producer
shall maintain separate records of the business transacted
under his or her license, including complete copies of
surplus line insurance contracts maintained on paper or by
electronic means, which records shall be open at all times
for inspection by the Director and by the Surplus Line
Association of Illinois.
(8) Violations and penalties. The Director may suspend
or revoke or refuse to renew a surplus line producer license
for any violation of this Code. In addition to or in lieu of
suspension or revocation, the Director may subject a surplus
line producer to a civil penalty of up to $1,000 for each
cause for suspension or revocation. Such penalty is
enforceable under subsection (5) of Section 403A of this
Code.
(9) Director may declare insurer ineligible. If the
Director determines that the further assumption of risks
might be hazardous to the policyholders of an unauthorized
insurer, the Director may order the Surplus Line Association
of Illinois not to countersign insurance contracts evidencing
insurance in such insurer and order surplus line producers to
cease procuring insurance from such insurer.
(10) Service of process upon Director. All Insurance
contracts delivered under this Section from unauthorized
insurers shall contain a provision designating the Director
and his successors in office the true and lawful attorney of
the insurer upon whom may be served all lawful process in any
action, suit or proceeding arising out of such insurance and
further designate the surplus line producer or other resident
of this State an agent of the unauthorized insurer to which a
copy of such process shall be forwarded by the Director for
delivery to the insurer. Service of process made upon the
Director to be valid hereunder must state the name of the
insured, the name of the unauthorized insurer and identify
the contract of insurance. The Director at his option is
authorized to forward a copy of the process to the Surplus
Line Association of Illinois for delivery to the unauthorized
insurer surplus line producer or other designated resident of
this State or the Director may deliver the process to the
unauthorized insurer by other means which he considers to be
reasonably prompt and certain.
(11) The Illinois Surplus Line law does not apply to
insurance of property and operations of railroads or aircraft
engaged in interstate or foreign commerce, insurance of
vessels, crafts or hulls, cargoes, marine builder's risks,
marine protection and indemnity, or other risks including
strikes and war risks insured under ocean or wet marine forms
of policies.
(12) Surplus line insurance procured under this Section,
including insurance procured from a domestic surplus line
insurer, is not subject to the provisions of the Illinois
Insurance Code other than Sections 123, 123.1, 401, 401.1,
402, 403, 403A, 408, 412, 445, 445.1, 445.2, 445.3, 445.4,
and all of the provisions of Article XXXI to the extent that
the provisions of Article XXXI are not inconsistent with the
terms of this Act.
(Source: P.A. 90-794, eff. 8-14-98.)
(215 ILCS 5/500-5 new)
Sec. 500-5. Scope of Article. This Article applies to
all persons and insurance companies as defined in this Code.
This Article does not apply to surplus lines producers
licensed pursuant to Section 445 except as provided in
Section 500-40 and subsection (b) of Section 500-90 of this
Article.
(215 ILCS 5/500-10 new)
Sec. 500-10. Definitions. In addition to the
definitions in Section 2 of the Code, the following
definitions apply to this Article:
"Business entity" means a corporation, association,
partnership, limited liability company, limited liability
partnership, or other legal entity.
"Car rental limited line licensee" means a person
authorized under the provisions of Section 500-105 to sell
certain coverages relating to the rental of vehicles.
"Home state" means the District of Columbia and any state
or territory of the United States in which an insurance
producer maintains his or her principal place of residence or
principal place of business and is licensed to act as an
insurance producer.
"Insurance" means any of the lines of authority in
Section 500-35, any health care plan under the Health
Maintenance Organization Act, or any limited health care plan
under the Limited Health Service Organization Act.
"Insurance producer" means a person required to be
licensed under the laws of this State to sell, solicit, or
negotiate insurance.
"Insurer" means a company as defined in subsection (e) of
Section 2 of this Code, a health maintenance organization as
defined in the Health Maintenance Organization Act, or a
limited health service organization as defined in the Limited
Health Service Organization Act.
"License" means a document issued by the Director
authorizing an individual to act as an insurance producer for
the lines of authority specified in the document or
authorizing a business entity to act as an insurance
producer. The license itself does not create any authority,
actual, apparent, or inherent, in the holder to represent or
commit an insurance carrier.
"Limited lines insurance" means those lines of insurance
defined in Section 500-100 or any other line of insurance
that the Director may deem it necessary to recognize for the
purposes of complying with subsection (e) of Section 500-40.
"Limited lines producer" means a person authorized by the
Director to sell, solicit, or negotiate limited lines
insurance.
"Negotiate" means the act of conferring directly with or
offering advice directly to a purchaser or prospective
purchaser of a particular contract of insurance concerning
any of the substantive benefits, terms, or conditions of the
contract, provided that the person engaged in that act either
sells insurance or obtains insurance from insurers for
purchasers.
"Person" means an individual or a business entity.
"Rental agreement" means a written agreement setting
forth the terms and conditions governing the use of a
vehicle provided by a rental company for rental or lease.
"Rental company" means a person, or a franchisee of the
person, in the business of providing primarily private
passenger vehicles to the public under a rental agreement for
a period not to exceed 30 days.
"Rental period" means the term of the rental agreement.
"Renter" means a person obtaining the use of a vehicle
from a rental company under the terms of a rental agreement
for a period not to exceed 30 days.
"Sell" means to exchange a contract of insurance by any
means, for money or its equivalent, on behalf of an insurance
company.
"Solicit" means attempting to sell insurance or asking or
urging a person to apply for a particular kind of insurance
from a particular company.
"Terminate" means the cancellation of the relationship
between an insurance producer and the insurer or the
termination of a producer's authority to transact insurance.
"Uniform Business Entity Application" means the current
version of the National Association of Insurance
Commissioners' Uniform Business Entity Application for
nonresident business entities.
"Uniform Application" means the current version of the
National Association of Insurance Commissioners' Uniform
Application for nonresident producer licensing.
"Vehicle" or "rental vehicle" means a motor vehicle
of (1) the private passenger type, including passenger
vans, mini vans, and sport utility vehicles or (2) the cargo
type, including cargo vans, pickup trucks, and trucks
with a gross vehicle weight of less than 26,000 pounds the
operation of which does not require the operator to possess a
commercial driver's license.
(215 ILCS 5/500-15 new)
Sec. 500-15. License required.
(a) A person may not sell, solicit, or negotiate
insurance in this State for any class or classes of insurance
unless the person is licensed for that line of authority in
accordance with this Article.
(b) A person may not, for a fee, engage in the business
of offering any advice, counsel, opinion, or service with
respect to the benefits, advantages, or disadvantages under
any policy of insurance that could be issued in Illinois,
unless that person is:
(1) engaged or employed as an attorney licensed to
practice law and performing duties incidental to that
position;
(2) a licensed insurance producer, limited
insurance representative, or temporary insurance producer
offering advice concerning a class of insurance as to
which he or she is licensed to transact business;
(3) a trust officer of a bank performing duties
incidental to his or her position;
(4) an actuary or a certified public accountant
engaged or employed in a consulting capacity, performing
duties incidental to that position; or
(5) a licensed public adjuster acting within the
scope of his or her license.
(c) In addition to any other penalty set forth in this
Article, an individual who knowingly violates subsection (a)
is guilty of a Class A misdemeanor.
(d) In addition to any other penalty set forth in this
Article, any individual violating subsection (a) or (b) and
misappropriating or converting any moneys collected in
conjunction with the violation is guilty of a Class 4 felony.
(215 ILCS 5/500-20 new)
Sec. 500-20. Exceptions to licensing.
(a) Nothing in this Article shall be construed to
require an insurer to obtain an insurance producer license.
In this Section, the term "insurer" does not include an
insurer's officers, directors, employees, subsidiaries, or
affiliates.
(b) A license as an insurance producer shall not be
required of the following:
(1) an officer, director, or employee of an insurer
or of an insurance producer, provided that the officer,
director, or employee does not receive any commission on
policies written or sold to insure risks residing,
located, or to be performed in this State and:
(A) the officer's, director's, or employee's
activities are executive, administrative,
managerial, clerical, or a combination of these, and
are only indirectly related to the sale,
solicitation, or negotiation of insurance;
(B) the officer's , director's, or employee's
function relates to underwriting, loss control,
inspection, or the processing, adjusting,
investigating, or settling of a claim on a contract
of insurance; or
(C) the officer, director, or employee is
acting in the capacity of a special agent or agency
supervisor assisting insurance producers if the
person's activities are limited to providing
technical advice and assistance to licensed
insurance producers and do not include the sale,
solicitation, or negotiation of insurance;
(2) a person who secures and furnishes information
for the purpose of group life insurance, group property
and casualty insurance, group annuities, or group or
blanket accident and health insurance or for the purpose
of enrolling individuals under plans, issuing
certificates under plans or otherwise assisting in
administering plans or who performs administrative
services related to mass marketed property and casualty
insurance, if no commission is paid to the person for the
service;
(3) an employer or association or its officers,
directors, employees, or the trustees of an employee
trust plan, to the extent that the employers, officers,
employees, directors, or trustees are engaged in the
administration or operation of a program of employee
benefits for the employer's or association's own
employees or the employees of its subsidiaries or
affiliates, which program involves the use of insurance
issued by an insurer, as long as the employers,
associations, officers, directors, employees, or trustees
are not in any manner compensated, directly or
indirectly, by the company issuing the contracts;
(4) employees of insurers or organizations employed
by insurers who are engaging in the inspection, rating,
or classification of risks or in the supervision of the
training of insurance producers and who are not
individually engaged in the sale, solicitation, or
negotiation of insurance;
(5) a person whose activities in this State are
limited to advertising without the intent to solicit
insurance in this State through communications in printed
publications or forms of electronic mass media whose
distribution is not limited to residents of this State,
provided that the person does not sell, solicit, or
negotiate insurance that would insure risks residing,
located, or to be performed in this State;
(6) a person who is not a resident of this State
who sells, solicits, or negotiates a contract of
insurance for commercial property and casualty risks to
an insured with risks located in more than one state
insured under that contract, provided that the person is
otherwise licensed as an insurance producer to sell,
solicit, or negotiate that insurance in the state where
the insured maintains its principal place of business and
the contract of insurance insures risks located in that
state; or
(7) a salaried, full-time employee who counsels or
advises his or her employer relative to the insurance
interests of the employer or of the subsidiaries or
business affiliates of the employer provided that the
employee does not sell or solicit insurance or receive a
commission.
(215 ILCS 5/500-25 new)
Sec. 500-25. Application for examination.
(a) A resident individual applying for an insurance
producer license must pass a written examination unless
exempt pursuant to Section 500-45. Both part one and part 2
of the examination must be passed within 90 days of each
other. The examination shall test the knowledge of the
individual concerning the lines of authority for which
application is made, the duties and responsibilities of an
insurance producer, and the insurance laws and rules of this
State. Examinations required by this Section must be
developed and conducted under rules prescribed by the
Director.
(b) The Director may make arrangements, including
contracting with an outside testing service, for
administering examinations and collecting the nonrefundable
fee set forth in Section 500-135.
(c) An individual applying for an examination must remit
a nonrefundable fee as prescribed by the Director as set
forth in Section 500-135, plus a separate remittance payable
to the designated testing service for the total fees the
testing service charges for each of the various services
being requested by the applicant.
(d) An individual who fails to appear for the
examination as scheduled or fails to pass the examination,
must reapply for an examination and remit all required fees
and forms before being rescheduled for another examination.
(215 ILCS 5/500-30 new)
Sec. 500-30. Application for license.
(a) An individual applying for a resident insurance
producer license must make application on a form specified by
the Director and declare under penalty of refusal,
suspension, or revocation of the license that the statements
made in the application are true, correct, and complete to
the best of the individual's knowledge and belief. Before
approving the application, the Director must find that the
individual:
(1) is at least 18 years of age;
(2) has not committed any act that is a ground for
denial, suspension, or revocation set forth in Section
500-70;
(3) has completed, if required by the Director, a
pre-licensing course of study for the lines of authority
for which the individual has applied (an individual who
successfully completes the Fire and Casualty
pre-licensing courses also meets the requirements for
Personal Lines-Property and Casualty);
(4) has paid the fees set forth in Section 500-135;
and
(5) has successfully passed the examinations for
the lines of authority for which the person has applied.
(b) A pre-licensing course of study for each class of
insurance for which an insurance producer license is
requested must be established in accordance with rules
prescribed by the Director and must consist of the following
minimum hours:
Class of Insurance Number of
Hours
Life (Class 1 (a)) 15.0
Accident and Health (Class 1(b) or 2(a)) 15.0
Fire (Class 3) 15.0
Casualty (Class 2) 15.0
Personal Lines-Property Casualty 15.0
Motor Vehicle (Class 2(b) or 3(e)) 7.5
(c) A business entity acting as an insurance producer
must obtain an insurance producer license. Application must
be made using the Uniform Business Entity Application. Before
approving the application, the Director must find that:
(1) the business entity has paid the fees set forth
in Section 500-135; and
(2) the business entity has designated a licensed
producer responsible for the business entity's compliance
with the insurance laws and rules of this State.
(d) The Director may require any documents reasonably
necessary to verify the information contained in an
application.
(215 ILCS 5/500-35 new)
Sec. 500-35. License.
(a) Unless denied a license pursuant to Section 500-70,
persons who have met the requirements of Sections 500-25 and
500-30 shall be issued a 2-year insurance producer license.
An insurance producer may receive qualification for a license
in one or more of the following lines of authority:
(1) Life: insurance coverage on human lives
including benefits of endowment and annuities, and may
include benefits in the event of death or dismemberment
by accident and benefits for disability income.
(2) Variable life and variable annuity products:
insurance coverage provided under variable life insurance
contracts and variable annuities.
(3) Accident and health or sickness: insurance
coverage for sickness, bodily injury, or accidental death
and may include benefits for disability income.
(4) Property: insurance coverage for the direct or
consequential loss or damage to property of every kind.
(5) Casualty: insurance coverage against legal
liability, including that for death, injury, or
disability or damage to real or personal property.
(6) Personal lines: property and casualty insurance
coverage sold to individuals and families for primarily
noncommercial purposes.
(7) Any other line of insurance permitted under
State laws or rules.
(b) An insurance producer license shall remain in effect
unless revoked or suspended as long as the fee set forth in
Section 500-135 is paid and education requirements for
resident individual producers are met by the due date.
(1) Before each license renewal, an insurance
producer must satisfactorily complete at least 30 hours
of course study in accordance with rules prescribed by
the Director. The Director may not approve a course of
study unless the course provides for classroom, seminar,
or self-study instruction methods. A course given in a
combination instruction method of classroom or seminar
and self-study shall be deemed to be a self-study course
unless the classroom or seminar certified hours meets or
exceeds two-thirds of total hours certified for the
course. The self-study material used in the combination
course must be directly related to and complement the
classroom portion of the course in order to be considered
for credit. An instruction method other than classroom
or seminar shall be considered as self-study
methodology. Self-study credit hours require the
successful completion of an examination covering the
self-study material. The examination may not be
self-evaluated. However, if the self-study material is
completed through the use of an approved computerized
interactive format whereby the computer validates the
successful completion of the self-study material, no
additional examination is required. The self-study
credit hours contained in a certified course shall be
considered classroom hours when at least two-thirds of
the hours are given as classroom or seminar instruction.
(2) An insurance producer license automatically
terminates when an insurance producer fails to
successfully meet the requirements of item (1) of
subsection (b) of this Section. The producer must
complete the course in advance of the renewal date to
allow the education provider time to report the credit to
the Department.
(c) A provider of a pre-licensing or continuing
education course required by Section 500-30 and this Section
must pay a registration fee and a course certification fee
for each course being certified as provided by Section
500-135.
(d) An individual insurance producer who allows his or
her license to lapse may, within 12 months after the due date
of the renewal fee, be issued a license without the necessity
of passing a written examination. However, a penalty in the
amount of double the unpaid renewal fee shall be required
after the due date.
(e) A licensed insurance producer who is unable to
comply with license renewal procedures due to military
service may request a waiver of those procedures.
(f) The license must contain the licensee's name,
address, and personal identification number, the date of
issuance, the lines of authority, the expiration date, and
any other information the Director deems necessary.
(g) Licensees must inform the Director by any means
acceptable to the Director of a change of address within 30
days after the change.
(h) In order to assist in the performance of the
Director's duties, the Director may contract with a
non-governmental entity including the National Association of
Insurance Commissioners (NAIC), or any affiliates or
subsidiaries that the NAIC oversees, to perform any
ministerial functions, including collection of fees, related
to producer licensing that the Director and the
non-governmental entity may deem appropriate.
(215 ILCS 5/500-40 new)
Sec. 500-40. Nonresident licensing.
(a) Unless denied a license pursuant to Section 500-70,
a nonresident person shall receive a nonresident producer
license if:
(1) the person is currently licensed as a resident
and in good standing in his or her home state;
(2) the person has submitted the proper request for
a license and has paid the fees required by Section
500-135;
(3) the person has submitted or transmitted to the
Director the application for a license that the person
submitted to his or her home state or, instead of that
application, a completed Uniform Application; and
(4) the person's home state awards nonresident
producer licenses to residents of this State on the same
basis.
(b) The Director may verify the producer's licensing
status through the Producer Database maintained by the
National Association of Insurance Commissioners or its
affiliates or subsidiaries or by obtaining certification from
the public official having supervision of insurance in the
applicant's state of residence that the applicant has passed
the written examination for the class of insurance applied
for.
(c) A nonresident producer who moves from one state to
another state or a resident producer who moves from this
State to another state must file a change of address and
provide certification from the new resident state within 30
days after the change of legal residence. No fee or license
application is required.
(d) Notwithstanding any other provision of this Article,
a person licensed as a surplus lines producer in his or her
home state shall receive a nonresident surplus lines producer
license pursuant to subsection (a) of this Section. Except
as provided in subsection (a), nothing in this Section
supersedes any provision of Section 445 of this Code.
(e) Notwithstanding any other provision of this Article,
a person licensed as a limited lines producer in his or her
home state shall receive a nonresident limited lines producer
license, pursuant to subsection (a) of this Section, granting
the same scope of authority as granted under the license
issued by the producer's home state. For the purposes of
this subsection, limited line insurance is any authority
granted by the home state that restricts the authority of the
license to less than the total authority prescribed in the
associated major lines pursuant to items (1) through (5) of
subsection (a) of Section 500-35.
(215 ILCS 5/500-45 new)
Sec. 500-45. Exemption from examination.
(a) An individual who applies for an insurance producer
license in this State who was previously licensed for the
same lines of authority in another state shall not be
required to complete any pre-licensing education or
examination. This exemption is only available if the person
is currently licensed in that state or if the application is
received within 90 days after the cancellation of the
applicant's previous license and if the prior state issues a
certification that, at the time of cancellation, the
applicant was in good standing in that state or the state's
Producer Database records, maintained by the National
Association of Insurance Commissioners, its affiliates, or
subsidiaries indicate that the producer is or was licensed in
good standing for the line of authority requested.
(b) A person licensed as an insurance producer in
another state who moves to this State must make application
within 90 days after establishing legal residence to become a
resident licensee pursuant to Section 500-30. A pre-licensing
education or examination is not required of that person to
obtain any line of authority previously held in the prior
state except when the Director determines otherwise by rule.
(215 ILCS 5/500-50 new)
Sec. 500-50. Insurance producers; examination
statistics.
(a) The use of examinations for the purpose of
determining qualifications of persons to be licensed as
insurance producers has a direct and far-reaching effect on
persons seeking those licenses, on insurance companies, and
on the public. It is in the public interest and it will
further the public welfare to insure that examinations for
licensing do not have the effect of unlawfully discriminating
against applicants for licensing as insurance producers on
the basis of race, color, national origin, or sex.
(b) As used in this Section, the following words have
the meanings given in this subsection.
Examination. "Examination" means the examination in each
line of insurance administered pursuant to Section 500-30.
Examinee. "Examinee" means a person who takes an
examination.
Part. "Part" means a portion of an examination for which
a score is calculated.
Operational item. "Operational item" means a test
question considered in determining an examinee's score.
Test form. "Test form" means the test booklet or
instrument used for a part of an examination.
Pretest item. "Pretest item" means a prospective test
question that is included in a test form in order to assess
its performance, but is not considered in determining an
examinee's score.
Minority group or examinees. "Minority group" or
"minority examinees" means African American, American Indian,
Asian, and Hispanic examinees.
Correct-answer rate. "Correct-answer rate" for an item
means the number of examinees who provided the correct answer
on an item divided by the number of examinees who answered
the item.
Correlation. "Correlation" means a statistical measure of
the relationship between performance on an item and
performance on a part of the examination.
(c) The Director shall ask each examinee to self-report
on a voluntary basis on the answer sheet, application form,
or by other appropriate means, the following information:
(1) race or ethnicity (African American; white;
American Indian; Asian; Hispanic; or other);
(2) education (8th grade or less; less than 12th
grade; high school diploma or G.E.D.; some college, but
no 4-year degree; or 4-year degree or more); and
(3) gender (male or female).
The Director must advise all examinees that they are not
required to provide this information, that they will not be
penalized for not doing so, and that the Director will use
the information provided exclusively for research and
statistical purposes and to improve the quality and fairness
of the examinations.
(d) No later than May 1 of each year, the Director must
prepare, publicly announce, and publish an Examination Report
of summary statistical information relating to each
examination administered during the preceding calendar year.
Each Examination Report shall show with respect to each
examination:
(1) For all examinees combined and separately by
race or ethnicity, by educational level, by gender, by
educational level within race or ethnicity, by education
level within gender, and by race or ethnicity within
gender:
(A) number of examinees;
(B) percentage and number of examinees who
passed each part;
(C) percentage and number of examinees who
passed all parts;
(D) mean scaled scores on each part; and
(E) standard deviation of scaled scores on
each part.
(2) For male examinees, female examinees, African
American examinees, white examinees, American Indian
examinees, Asian examinees, and Hispanic examinees,
respectively, with a high school diploma or G.E.D., the
distribution of scaled scores on each part.
No later than May 1 of each year, the Director must
prepare and make available on request an Item Report of
summary statistical information relating to each operational
item on each test form administered during the preceding
calendar year. The Item Report shall show, for each
operational item, for all examinees combined and separately
for African American examinees, white examinees, American
Indian examinees, Asian examinees, Hispanic examinees, and
other examinees, the correct-answer rates and correlations.
The Director is not required to report separate
statistical information for any group or subgroup comprising
fewer than 50 examinees.
(e) The Director must obtain a regular analysis of the
data collected under this Section, and any other relevant
information, for purposes of the development of new test
forms. The analysis shall continue the implementation of the
item selection methodology as recommended in the Final Report
of the Illinois Insurance Producer's Licensing Examination
Advisory Committee dated November 19, 1991, and filed with
the Department unless some other methodology is determined by
the Director to be as effective in minimizing differences
between white and minority examinee pass-fail rates.
(f) The Director has the discretion to set cutoff scores
for the examinations, provided that scaled scores on test
forms administered after July 1, 1993, shall be made
comparable to scaled scores on test forms administered in
1991 by use of professionally acceptable methods so as to
minimize changes in passing rates related to the presence or
absence of or changes in equating or scaling equations or
methods or content outlines. Each calendar year, the scaled
cutoff score for each part of each examination shall
fluctuate by no more than the standard error of measurement
from the scaled cutoff score employed during the preceding
year.
(g) No later than May 1, 2003 and no later than May 1 of
every fourth year thereafter, the Director must release to
the public and make generally available one representative
test form and set of answer keys for each part of each
examination.
(h) The Director must maintain, for a period of 3 years
after they are prepared or used, all registration forms, test
forms, answer sheets, operational items and pretest items,
item analyses, and other statistical analyses relating to the
examinations. All personal identifying information regarding
examinees and the content of test items must be maintained
confidentially as necessary for purposes of protecting the
personal privacy of examinees and the maintenance of test
security.
(i) In administering the examinations, the Director must
make such accommodations for disabled examinees as are
reasonably warranted by the particular disability involved,
including the provision of additional time if necessary to
complete an examination or special assistance in taking an
examination.
(215 ILCS 5/500-55 new)
Sec. 500-55. Assumed names. An insurance producer doing
business under any name other than the producer's legal name
must notify the Director before using the assumed name.
(215 ILCS 5/500-60 new)
Sec. 500-60. Temporary licensing.
(a) The Director may issue a temporary insurance
producer license for a period not to exceed 180 days and, at
the discretion of the Director, may renew the temporary
producer license for an additional 180 days without requiring
an examination if the Director deems that the temporary
license is necessary for the servicing of an insurance
business in the following cases:
(1) to the surviving spouse or court-appointed
personal representative of a licensed insurance producer
who dies or becomes mentally or physically disabled to
allow adequate time for the sale of the insurance
business owned by the producer or for the recovery or
return of the producer to the business or to provide for
the training and licensing of new personnel to operate
the producer's business;
(2) to a member or employee of a business entity
licensed as an insurance producer, upon the death or
disability of an individual designated in the business
entity application or the license; or
(3) to the designee of a licensed insurance
producer entering active service in the armed forces of
the United States of America.
(b) The Director may by order limit the authority of any
temporary licensee in any way deemed necessary to protect
insureds and the public. The Director may require the
temporary licensee to have a suitable sponsor who is a
licensed producer or insurer and who assumes responsibility
for all acts of the temporary licensee and may impose other
similar requirements designed to protect insureds and the
public. The Director may by order revoke a temporary license
if the interest of insureds or the public are endangered. A
temporary license may not continue after the owner or the
personal representative disposes of the business.
(c) Before any temporary insurance producer license is
issued, there must be filed with the Director a written
application by the person desiring the license in the form,
with the supplements, and containing the information that
the Director requires. License fees, as provided for in
Section 500-135, must be paid upon the issuance of the
original temporary insurance producer license, but not for
any renewal thereof.
(215 ILCS 5/500-65 new)
Sec. 500-65. Temporary insurance producer license for an
applicant.
(a) The Director may grant a temporary insurance
producer license to an applicant for an insurance producer
license, without requiring an examination, for a period of 90
days, when the applicant otherwise meets the requirements of
this Article. During that 90-day period, the applicant must
be enrolled in a training course or training program
conducted by or on behalf of the appointing insurance company
and be in the process of fulfilling the pre-licensing
requirements of Sections 500-25 and 500-30.
(b) An individual applicant may not hold more than one
temporary insurance producer license during his or her
lifetime.
(c) The Director may refuse to grant temporary insurance
producer licenses to applicants from an insurance company
when during a 6-month period more than 50% of that company's
temporary insurance producer license holders have failed to
obtain insurance producer licenses prior to the expiration of
their temporary insurance producer licenses.
(d) Before the Director approves any temporary insurance
producer license, the insurance company requesting the
license must file with the Director an application and the
fee required by Section 500-135. The application must be made
on the form and in the manner the Director requires.
(215 ILCS 5/500-70 new)
Sec. 500-70. License denial, nonrenewal, or revocation.
(a) The Director may place on probation, suspend,
revoke, or refuse to issue or renew an insurance producer's
license or may levy a civil penalty in accordance with this
Section or take any combination of actions, for any one or
more of the following causes:
(1) providing incorrect, misleading, incomplete, or
materially untrue information in the license application;
(2) violating any insurance laws, or violating any
rule, subpoena, or order of the Director or of another
state's insurance commissioner;
(3) obtaining or attempting to obtain a license
through misrepresentation or fraud;
(4) improperly withholding, misappropriating or
converting any moneys or properties received in the
course of doing insurance business;
(5) intentionally misrepresenting the terms of an
actual or proposed insurance contract or application for
insurance;
(6) having been convicted of a felony;
(7) having admitted or been found to have committed
any insurance unfair trade practice or fraud;
(8) using fraudulent, coercive, or dishonest
practices, or demonstrating incompetence,
untrustworthiness or financial irresponsibility in the
conduct of business in this State or elsewhere;
(9) having an insurance producer license, or its
equivalent, denied, suspended, or revoked in any other
state, province, district or territory;
(10) forging a name to an application for insurance
or to a document related to an insurance transaction;
(11) improperly using notes or any other reference
material to complete an examination for an insurance
license;
(12) knowingly accepting insurance business from an
individual who is not licensed;
(13) failing to comply with an administrative or
court order imposing a child support obligation;
(14) failing to pay state income tax or penalty or
interest or comply with any administrative or court order
directing payment of state income tax or failed to file a
return or to pay any final assessment of any tax due to
the Department of Revenue; or
(15) failing to make satisfactory repayment to the
Illinois Student Assistance Commission for a delinquent
or defaulted student loan.
(b) If the action by the Director is to nonrenew,
suspend, or revoke a license or to deny an application for a
license, the Director shall notify the applicant or licensee
and advise, in writing, the applicant or licensee of the
reason for the suspension, revocation, denial or nonrenewal
of the applicant's or licensee's license. The applicant or
licensee may make written demand upon the Director within 30
days after the date of mailing for a hearing before the
Director to determine the reasonableness of the Director's
action. The hearing must be held within not fewer than 20
days nor more than 30 days after the mailing of the notice of
hearing and shall be held pursuant to 50 Ill. Adm. Code 2402.
(c) The license of a business entity may be suspended,
revoked, or refused if the Director finds, after hearing,
that an individual licensee's violation was known or should
have been known by one or more of the partners, officers, or
managers acting on behalf of the partnership, corporation,
limited liability company, or limited liability partnership
and the violation was neither reported to the Director nor
corrective action taken.
(d) In addition to or instead of any applicable denial,
suspension, or revocation of a license, a person may, after
hearing, be subject to a civil penalty of up to $5,000 for
each cause for denial, suspension, or revocation, however,
the civil penalty may total no more than $20,000.
(e) The Director has the authority to enforce the
provisions of and impose any penalty or remedy authorized by
this Article against any person who is under investigation
for or charged with a violation of this Code or rules even if
the person's license or registration has been surrendered or
has lapsed by operation of law.
(f) Upon the suspension, denial, or revocation of a
license, the licensee or other person having possession or
custody of the license shall promptly deliver it to the
Director in person or by mail. The Director shall publish
all suspensions, denials, or revocations after the
suspensions, denials, or revocations become final in a
manner designed to notify interested insurance companies and
other persons.
(g) A person whose license is revoked or whose
application is denied pursuant to this Section is ineligible
to apply for any license for 3 years after the revocation or
denial. A person whose license as an insurance producer has
been revoked, suspended, or denied may not be employed,
contracted, or engaged in any insurance related capacity
during the time the revocation, suspension, or denial is in
effect.
(215 ILCS 5/500-75 new)
Sec. 500-75. Disclosure. A policy the solicitation of
which involves an insurance producer, limited insurance
representative, or temporary insurance producer must identify
the name of the producer, representative, or firm. An
individual life or accident and health application and a
master policy application for life or accident and health
group coverages must bear the name and signature of the
licensee who solicited and wrote the application.
(215 ILCS 5/500-80 new)
Sec. 500-80. Commissions.
(a) An insurer or insurance producer may not pay a
commission, service fee, brokerage, or other valuable
consideration to a person for selling, soliciting, or
negotiating insurance in this State if that person is
required to be licensed under this Article and is not so
licensed at the time of selling, soliciting, or negotiating
the insurance.
(b) A person may not accept a commission, service fee,
brokerage, or other valuable consideration for selling,
soliciting, or negotiating insurance in this State if that
person is required to be licensed under this Article and is
not so licensed.
(c) Renewal or other deferred commissions may be paid to
a person for selling, soliciting, or negotiating insurance in
this State if the person was required to be licensed under
this Article at the time of the sale, solicitation, or
negotiation and was so licensed at that time.
(d) An insurer or insurance producer may pay or assign
commissions, service fees, brokerages, or other valuable
consideration to an insurance agency or to persons who do not
sell, solicit, or negotiate insurance in this State, unless
the payment would violate Section 151 of this Code.
(e) Except as to commissions deductible from premiums on
insurance policies or contracts for insurance, an insurance
producer or business entity does not have any right to
compensation from an insured or prospective insured for or on
account of the transaction of insurance business unless the
right to compensation is stated on a separate written
memorandum that clearly specifies the amount or extent of the
service fee and that is provided to the applicant or insured
before the performance of the service or the issuance of the
policy, whichever is first. A copy of the memorandum must be
maintained by any producer who collects or receives the
service fee or any portion of the service fee. If the
compensation or service fee exceeds 10% of the premium amount
or potential premium amount of the contract or policy, the
memorandum shall include the signature of the insured or
prospective insured acknowledging the compensation or service
fee.
(f) Any compensation or service fee received on a
contract or policy that is later canceled, within the first
half of the contract or policy period, for any reason must be
returned to the insured by the insurance producer or business
entity at a prorated amount. The prorated amount shall be
based on the length of the term of the policy or contract
compared to the time that contract or policy was in force
such that the amount returned reflects the portion of the
term of the contract or policy during which the contract was
not in force. There shall be no compensation or service fee
assessed or received on a contract or policy by the insurance
producer or business entity for processing such cancellation.
(215 ILCS 5/500-85 new)
Sec. 500-85. Notification of termination; immunity;
confidentiality.
(a) An insurer or authorized representative of an
insurer that terminates the appointment, employment,
contract, or other insurance business relationship with a
producer must notify the Director within 30 days following
the effective date of the termination, using a format
prescribed by the Director, if the reason for termination is
one of the reasons set forth in Section 500-70 or the insurer
has knowledge the producer was found by a court, government
body, or self-regulatory organization authorized by law to
have engaged in any of the activities in Section 500-70. Upon
written request by the Director, the insurer must provide
additional information, documents, records, or other data
pertaining to the termination or activity of the producer.
(b) The insurer or the authorized representative of the
insurer must promptly notify the Director in a format
acceptable to the Director if, upon further review or
investigation, the insurer discovers additional information
that would have been reportable to the Director in accordance
with subsection (a) had the insurer then known of its
existence.
(c) Within 15 days after making the notification
required by subsections (a) and (b), the insurer must mail a
copy of the notification to the producer at his or her last
known address. If the producer is terminated for cause for
any of the reasons listed in Section 500-70, the insurer must
provide a copy of the notification to the producer at his or
her last known address by certified mail, return receipt
requested, postage prepaid or by overnight delivery using a
nationally recognized carrier.
Within 30 days after the producer has received the
original or additional notification, the producer may file
written comments concerning the substance of the notification
with the Director. The producer must, by the same means,
simultaneously send a copy of the comments to the reporting
insurer, and the comments shall become a part of the
Director's file and accompany every copy of a report
distributed or disclosed for any reason about the producer as
permitted under this Code.
(d) There shall be no liability on the part of, nor
shall a cause of action of any nature arise against, an
insurer, the authorized representative of the insurer, a
producer, the Director, or an organization of which the
Director is a member for any information, documents, records,
or statements provided pursuant to this Section.
(e) An insurer, the authorized representative of the
insurer, or a producer that fails to report as required under
the provisions of this Section or that is found to have
reported with malicious intent by a court of competent
jurisdiction may, after notice and hearing, have its license
or certificate of authority suspended or revoked and may be
subjected to a civil penalty.
(215 ILCS 5/500-90 new)
Sec. 500-90. Reciprocity.
(a) The Director shall waive any requirements for a
nonresident license applicant with a valid license from his
or her home state, except the requirements imposed by Section
500-40 of this Article, if the applicant's home state awards
nonresident licenses to residents of this State on the same
basis.
(b) A nonresident producer's satisfaction of his or her
home state's continuing education requirements for licensed
insurance producers shall constitute satisfaction of this
State's continuing education requirements if the non-resident
producer's home state recognizes the satisfaction of its
continuing education requirements imposed upon producers from
this State on the same basis.
(215 ILCS 5/500-95 new)
Sec. 500-95. Reporting of actions. An individual who,
while licensed as an insurance producer, is convicted of a
felony, must report the conviction to the Director within 30
days after the entry date of the judgment. Within that
30-day period, the individual must also provide the Director
with a copy of the judgment, the probation or commitment
order, and any other relevant documents.
(215 ILCS 5/500-100 new)
Sec. 500-100. Limited lines producer license.
(a) An individual who is at least 18 years of age and
whom the Director considers to be competent, trustworthy, and
of good business reputation may obtain a limited lines
producer license for one or more of the following classes:
(1) insurance on baggage or limited travel health,
accident, or trip cancellation insurance sold in
connection with transportation provided by a common
carrier;
(2) industrial life insurance, as defined in
Section 228 of this Code;
(3) industrial accident and health insurance, as
defined in Section 368 of this Code;
(4) insurance issued by a company organized under
the Farm Mutual Insurance Company Act of 1986;
(5) legal expense insurance;
(6) enrollment of recipients of public aid or
medicare in a health maintenance organization;
(7) a limited health care plan issued by an
organization having a certificate of authority under the
Limited Health Service Organization Act.
(b) The application for a limited lines producer license
must be submitted on a form prescribed by the Director by a
designee of the insurance company, health maintenance
organization, or limited health service organization
appointing the limited insurance representative. The
insurance company, health maintenance organization, or
limited health service organization must pay the fee required
by Section 500-135.
(c) A limited lines producer may represent more than one
insurance company, health maintenance organization, or
limited health service organization.
(d) An applicant who has met the requirements of this
Section shall be issued a perpetual limited lines producer
license.
(e) A limited lines producer license shall remain in
effect as long as the appointing insurance company pays the
respective fee required by Section 500-135 prior to January 1
of each year, unless the license is revoked or suspended
pursuant to Section 500-70. Failure of the insurance company
to pay the license fee or to submit the required documents
shall cause immediate termination of the limited line
insurance producer license with respect to which the failure
occurs.
(f) A limited lines producer license may be terminated
by the insurance company or the licensee.
(g) A person whom the Director considers to be
competent, trustworthy, and of good business reputation may
be issued a car rental limited line license. A car rental
limited line license for a rental company shall remain in
effect as long as the car rental limited line licensee pays
the respective fee required by Section 500-135 prior to the
next fee date unless the car rental license is revoked or
suspended pursuant to Section 500-70. Failure of the car
rental limited line licensee to pay the license fee or to
submit the required documents shall cause immediate
suspension of the car rental limited line license. A car
rental limited line license for rental companies may be
voluntarily terminated by the car rental limited line
licensee. The license fee shall not be refunded upon
termination of the car rental limited line license by the car
rental limited line licensee.
(h) A limited lines producer issued a license pursuant
to this Section is not subject to the requirements of Section
500-30.
(i) A limited lines producer license must contain the
name, address and personal identification number of the
licensee, the date the license was issued, general
conditions relative to the license's expiration or
termination, and any other information the Director considers
proper. A limited line producer license, if applicable, must
also contain the name and address of the appointing insurance
company.
(215 ILCS 5/500-105 new)
Sec. 500-105. Car rental limited line license for rental
companies.
(a) A rental company must obtain a producer license or
obtain a car rental limited line license before offering or
selling insurance in connection with and incidental to the
rental of vehicles. The sale of the insurance may occur at
the rental office or by preselection of coverage in a master,
corporate, group rental, or individual agreement. The
following general categories of coverage may be offered or
sold:
(1) personal accident insurance covering the risks
of travel including, but not limited to, accident and
health insurance that provides coverage, as applicable,
to renters and other rental vehicle occupants for
accidental death or dismemberment and reimbursement for
medical expenses resulting from an accident that occurs
during the rental period;
(2) liability insurance, including uninsured and
underinsured motorist coverage, that provides coverage,
as applicable, to renters and other authorized drivers
of rental vehicles for liability arising from the
operation of the rental vehicle;
(3) personal effects insurance that provides
coverage, as applicable, to renters and other vehicle
occupants for the loss of, or damage to, personal effects
that occurs during the rental period;
(4) roadside assistance and emergency sickness
protection programs; and
(5) any other travel or auto-related coverage that
a rental company offers in connection with and incidental
to the rental of vehicles.
(b) Insurance may not be offered by a car rental limited
line producer pursuant to this Section unless:
(1) the rental company has applied for and obtained
a car rental limited line license;
(2) the rental period of the rental agreement does
not exceed 30 consecutive days;
(3) at every rental location where rental
agreements are executed, brochures or other written
materials are readily available to the prospective renter
that:
(A) summarize clearly and correctly, the
material terms of coverage offered to renters,
including the identity of the insurer;
(B) disclose that the coverage offered by the
rental company may provide a duplication of coverage
already provided by a renter's personal automobile
insurance policy, homeowner's insurance policy,
personal liability insurance policy, or other source
of coverage;
(C) state that the purchase by the renter of
the kinds of coverage specified in this Section is
not required in order to rent a vehicle; and
(D) describe the process for filing a claim in
the event the renter elects to purchase coverage and
in the event of a claim; and
(4) evidence of coverage in the rental agreement is
disclosed to every renter who elects to purchase such
coverage.
(c) Car rental company franchisees must apply for a car
rental limited line license independent of the franchisor if
insurance provided pursuant to this Section is offered by the
franchisee.
(d) A car rental limited line license issued under this
Section shall also authorize any employee of the car rental
limited line licensee to act individually on behalf and under
the supervision of the car rental limited line licensee with
respect to the kinds of coverage specified in this Section.
(e) A rental company licensed pursuant to this Section
must conduct a training program in which employees being
trained shall receive basic instruction about the kinds of
coverage specified in this Section and offered for purchase
by prospective renters of rental vehicles.
(f) Notwithstanding any other provision of this Section
or any rule adopted by the Director, a car rental limited
line producer pursuant to this Section is not required to
treat moneys collected from renters purchasing insurance when
renting vehicles as funds received in a fiduciary capacity,
provided that the charges for coverage shall be itemized and
be ancillary to a rental transaction.
(g) The sale of insurance not in conjunction with a
rental transaction shall not be permitted.
(h) A car rental limited line producer under this
Section may not advertise, represent, or otherwise hold
itself or any of its employees out as licensed insurers,
insurance producers, insurance agents, or insurance brokers.
(i) Direct commissions may not be paid to rental car
company employees by the insurer or the customer purchasing
insurance products. The rental car company may include
insurance products in an overall employee performance
compensation incentive program.
(j) An application for a car rental limited line license
must be made on a form specified by the Director.
(215 ILCS 5/500-110 new)
Sec. 500-110. Regulatory examinations.
(a) The Director may examine any applicant for or holder
of an insurance producer license, limited line producer
license or temporary insurance producer license or any
business entity.
(b) All persons being examined, as well as their
officers, directors, insurance producers, limited lines
producers, and temporary insurance producers must provide to
the Director convenient and free access, at all reasonable
hours at their offices, to all books, records, documents, and
other papers relating to the persons' insurance business
affairs. The officers, directors, insurance producers,
limited lines producers, temporary insurance producers, and
employees must facilitate and aid the Director in the
examinations as much as it is in their power to do so.
(c) The Director may designate an examiner or examiners
to conduct any examination under this Section. The Director
or his or her designee may administer oaths and examine
under oath any individual relative to the business of the
person being examined.
(d) The examiners designated by the Director under this
Section may make reports to the Director. A report alleging
substantive violations of this Article or any rules
prescribed by the Director must be in writing and be based
upon facts ascertained from the books, records, documents,
papers, and other evidence obtained by the examiners or from
sworn or affirmed testimony of or written affidavits from
the person's officers, directors, insurance producers,
limited lines producer, temporary insurance producers, or
employees or other individuals, as given to the examiners.
The report of an examination must be verified by the
examiners.
(e) If a report is made, the Director must either
deliver a duplicate of the report to the person being
examined or send the duplicate by certified or registered
mail to the person's address of record. The Director shall
afford the person an opportunity to demand a hearing with
reference to the facts and other evidence contained in the
report. The person may request a hearing within 14 calendar
days after he or she receives the duplicate of the
examination report by giving the Director written notice of
that request, together with a written statement of the
person's objections to the report. The Director must, if
requested to do so, conduct a hearing in accordance with
Sections 402 and 403 of this Code. The Director must issue
a written order based upon the examination report and upon
the hearing, if a hearing is held, within 90 days after the
report is filed, or within 90 days after the hearing if a
hearing is held. If the report is refused or otherwise
undeliverable, or a hearing is not requested in a timely
fashion, the right to a hearing is waived. After the hearing
or the expiration of the time period in which a person may
request a hearing, if the examination reveals that the person
is operating in violation of any law, rule, or prior order,
the Director in the written order may require the person to
take any action the Director considers necessary or
appropriate in accordance with the report or examination
hearing. The order is subject to review under the
Administrative Review Law.
(f) The Director may adopt reasonable rules to further
the purposes of this Section.
(g) A person who violates or aids and abets any
violation of a written order issued under this Section shall
be guilty of a business offense and his or her license may be
revoked or suspended pursuant to Section 500-70 of this
Article and he or she may be subjected to a civil penalty of
not more than $10,000.
(215 ILCS 5/500-115 new)
Sec. 500-115. Financial responsibilities.
(a) Any money that an insurance producer, limited line
producer, temporary insurance producer, business entity, or
surplus line producer receives for soliciting, negotiating,
effecting, procuring, renewing, continuing, or binding
policies of insurance shall be held in a fiduciary capacity
and shall not be misappropriated, converted, or improperly
withheld. An insurance company that delivers to any
insurance producer in this State a policy or contract for
insurance pursuant to the application or request of an
insurance producer, authorizes the producer to collect or
receive on its behalf payment of any premium that is due on
the policy or contract for insurance at the time of its
issuance or delivery and any premium that becomes due on the
policy or contract not more than 90 days thereafter.
(b) An insurer that issues a policy of insurance shall
be deemed to have received payment of the premium if the
insured paid any insurance producer requesting the coverage.
The insurer shall be responsible to the insured for any
return premium.
(c) In the case of open accounts receivable with the
balance payable to an insurance producer within a specified
period of 90 days or less, where the balance is not fully
paid within that period, a late charge not exceeding 1.5% per
month may be added by the insurance producer to the unpaid
balance to induce payment of the premium.
(d) If an insurance producer or surplus line producer
knowingly misappropriates or converts to his or her own use
or illegally withholds fiduciary moneys in the amount of $150
or less, he or she is guilty of a Class A misdemeanor for a
first offense and a Class 4 felony for subsequent
conversions, misappropriations, and withholdings of that
nature. If an insurance producer or surplus line producer
knowingly misappropriates or converts to his or her own use
or illegally withholds premiums in excess of $150, he or she
is guilty of a Class 3 felony.
(215 ILCS 5/500-120 new)
Sec. 500-120. Conflicts of interest; inactive status.
(a) A person, partnership, association, or corporation
licensed by the Department who, due to employment with any
unit of government that would cause a conflict of interest
with the holding of that license, notifies the Director in
writing on forms prescribed by the Department and, subject to
rules of the Department, makes payment of applicable
licensing renewal fees, may elect to place the license on an
inactive status.
(b) A licensee whose license is on inactive status may
have the license restored by making application to the
Department on such form as may be prescribed by the
Department. The application must be accompanied with a fee of
$50 plus the current applicable license fee.
(c) A license may be placed on inactive status for a
2-year period, and upon request, the inactive status may be
extended for a successive 2-year period not to exceed a
cumulative 4-year inactive period. After a license has been
on inactive status for 4 years or more, the licensee must
meet all of the standards required of a new applicant before
the license may be restored to active status.
(d) If requests for inactive status are not renewed as
set forth in subsection (c), the license will be taken off
the inactive status and the license will lapse immediately.
(215 ILCS 5/500-125 new)
Sec. 500-125. Controlled business.
(a) An insurance producer license may not be granted or
extended to any person if the Director has reasonable cause
to believe:
(1) that during either of the 2 calendar years
immediately preceding the extension date of the license
the aggregate amount of premiums on insurance represented
by controlled business exceeded the aggregate amount of
premiums on all other insurance business of the licensee;
or
(2) that during the 12-month period immediately
following the issuance or extension of the license, if so
issued or extended, the aggregate amount of premiums on
controlled business would exceed the aggregate amount of
premiums on all other insurance business of the applicant
or licensee.
(b) Controlled business means insurance procured or to
be procured by or through the person upon:
(1) his own life, person, property or risks, or
those of his spouse; or
(2) the life, person, property, or risks of his
employer or his own business.
(215 ILCS 5/500-130 new)
Sec. 500-130. Bond required of insurance producers.
(a) An insurance producer who places insurance either
directly or indirectly with an insurer with which the
insurance producer does not have an agent contact must
maintain in force while licensed a bond in favor of the
people of the State of Illinois executed by an authorized
surety company and payable to any party injured under the
terms of the bond. The bond shall be continuous in form and
in the amount of $2,500 or 5% of the premiums brokered in the
previous calendar year, whichever is greater, but not to
exceed $50,000 total aggregate liability. The bond shall be
conditioned upon full accounting and due payment to the
person or company entitled thereto, of funds coming into the
insurance producer's possession as an incident to insurance
transactions under the license or surplus line insurance
transactions under the license as a surplus line producer.
(b) Authorized insurance producers of a business entity
may meet the requirements of this Section with a bond in the
name of the business entity, continuous in form, and in the
amounts set forth in subsection (a) of this Section.
Insurance producers may meet the requirements of this Section
with a bond in the name of an association. An individual
producer remains responsible for assuring that a producer
bond is in effect and is for the correct amount. The
association must have been in existence for 5 years, have
common membership, and been formed for a purpose other than
obtaining a bond.
(c) The surety may cancel the bond and be released from
further liability thereunder upon 30 days' written notice in
advance to the principal. The cancellation does not affect
any liability incurred or accrued under the bond before the
termination of the 30-day period.
(d) The producer's license may be revoked if the
producer acts without a bond that is required under this
Section.
(e) If a party injured under the terms of the bond
requests the producer to provide the name of the surety and
the bond number, the producer must provide the information
within 3 working days after receiving the request.
(f) An association may meet the requirements of this
Section for all of its members with a bond in the name of the
association that is continuous in form and in the amounts set
forth in subsection (a) of this Section.
(215 ILCS 5/500-135 new)
Sec. 500-135. Fees.
(a) The fees required by this Article are as follows:
(1) a fee of $150 payable once every 2 years for an
insurance producer license;
(2) a fee of $25 for the issuance of a temporary
insurance producer license;
(3) a fee of $50 payable once every 2 years for a
business entity;
(4) an annual $25 fee for a limited line producer
license issued under items (1) through (7) of subsection
(a) of Section 500-100;
(5) a $25 application fee for the processing of a
request to take the written examination for an insurance
producer license;
(6) an annual registration fee of $500 for
registration of an education provider;
(7) a certification fee of $25 for each certified
pre-licensing or continuing education course and an
annual fee of $10 for renewing the certification of each
such course;
(8) a fee of $50 payable once every 2 years for a
car rental limited line license;
(9) a fee of $150 payable once every 2 years for a
limited lines license other than the licenses issued
under items (1) through (7) of subsection (a) of Section
500-100 or a car rental limited line license.
(b) Except as otherwise provided, all fees paid to and
collected by the Director under this Section shall be paid
promptly after receipt thereof, together with a detailed
statement of such fees, into a special fund in the State
Treasury to be known as the Insurance Producer Administration
Fund. The moneys deposited into the Insurance Producer
Administration Fund may be used only for payment of the
expenses of the Department in the execution, administration,
and enforcement of the insurance laws of this State, and
shall be appropriated as otherwise provided by law for the
payment of those expenses with first priority being any
expenses incident to or associated with the administration
and enforcement of this Article.
(215 ILCS 5/500-140 new)
Sec. 500-140. Injunctive relief. A person required to be
licensed under this Article but failing to obtain a valid and
current license under this Article constitutes a public
nuisance. The Director may report the failure to obtain a
license to the Attorney General, whose duty it is to apply
forthwith by complaint on relation of the Director in the
name of the people of the State of Illinois, for injunctive
relief in the circuit court of the county where the failure
to obtain a license occurred to enjoin that person from
failing to obtain a license. Upon the filing of a verified
petition in the court, the court, if satisfied by affidavit
or otherwise that the person is required to have a license
and does not have a valid and current license, may enter a
temporary restraining order without notice or bond, enjoining
the defendant from acting in any capacity that requires such
license. A copy of the verified complaint shall be served
upon the defendant, and the proceedings shall thereafter be
conducted as in other civil cases. If it is established that
the defendant has been, or is engaged in any unlawful
practice, the court may enter an order or judgment
perpetually enjoining the defendant from further engaging in
such practice. In all proceedings brought under this
Section, the court, in its discretion, may apportion the
costs among the parties, including the cost of filing the
complaint, service of process, witness fees and expenses,
court reporter charges, and reasonable attorney fees. In
case of the violation of any injunctive order entered under
the provisions of this Section, the court may summarily try
and punish the offender for contempt of court. The
injunctive relief available under this Section is in addition
to and not in lieu of all other penalties and remedies
provided in this Code.
(215 ILCS 5/500-145 new)
Sec. 500-145. Rules. The Director may, in accordance
with Section 401 of this Code, promulgate reasonable rules as
are necessary or proper to carry out the purposes of this
Article.
(215 ILCS 5/500-150 new)
Sec. 500-150. Severability. The provisions of this
Article are severable under Section 1.31 of the Statute on
Statutes.
(215 ILCS 5/490.1 rep.)
(215 ILCS 5/491.1 rep.)
(215 ILCS 5/492.2 rep.)
(215 ILCS 5/493.2 rep.)
(215 ILCS 5/494.1 rep.)
(215 ILCS 5/494.2 rep.)
(215 ILCS 5/495.1 rep.)
(215 ILCS 5/495.2 rep.)
(215 ILCS 5/496.2 rep.)
(215 ILCS 5/497.1 rep.)
(215 ILCS 5/498.1 rep.)
(215 ILCS 5/499.1 rep.)
(215 ILCS 5/500.1 rep.)
(215 ILCS 5/501.2 rep.)
(215 ILCS 5/502.2 rep.)
(215 ILCS 5/503.1 rep.)
(215 ILCS 5/504 rep.)
(215 ILCS 5/504.1 rep.)
(215 ILCS 5/505.1 rep.)
(215 ILCS 5/505.2 rep.)
(215 ILCS 5/506.1 rep.)
(215 ILCS 5/507.1 rep.)
(215 ILCS 5/508.1 rep.)
(215 ILCS 5/508.2 rep.)
(215 ILCS 5/509.1 rep.)
(215 ILCS 5/510.2 rep.)
(215 ILCS 5/511.1 rep.)
Section 10. The Illinois Insurance Code is amended by
repealing Sections 490.1, 491.1, 492.2, 493.2, 494.1, 494.2,
495.1, 495.2, 496.2, 497.1, 498.1, 499.1, 500.1, 501.2,
502.2, 503.1, 504, 504.1, 505.1, 505.2, 506.1, 507.1, 508.1,
508.2, 509.1, 510.2, and 511.1.
Section 99. Effective date. This Act takes effect
January 1, 2002.
INDEX
Statutes amended in order of appearance
215 ILCS 5/500-5 new
215 ILCS 5/500-10 new
215 ILCS 5/500-15 new
215 ILCS 5/500-20 new
215 ILCS 5/500-25 new
215 ILCS 5/500-30 new
215 ILCS 5/500-35 new
215 ILCS 5/500-40 new
215 ILCS 5/500-45 new
215 ILCS 5/500-50 new
215 ILCS 5/500-55 new
215 ILCS 5/500-60 new
215 ILCS 5/500-65 new
215 ILCS 5/500-70 new
215 ILCS 5/500-75 new
215 ILCS 5/500-80 new
215 ILCS 5/500-85 new
215 ILCS 5/500-90 new
215 ILCS 5/500-95 new
215 ILCS 5/500-100 new
215 ILCS 5/500-105 new
215 ILCS 5/500-110 new
215 ILCS 5/500-115 new
215 ILCS 5/500-120 new
215 ILCS 5/500-125 new
215 ILCS 5/500-130 new
215 ILCS 5/500-135 new
215 ILCS 5/500-140 new
215 ILCS 5/500-145 new
215 ILCS 5/500-150 new
215 ILCS 5/490.1 rep.
215 ILCS 5/491.1 rep.
215 ILCS 5/492.2 rep.
215 ILCS 5/493.2 rep.
215 ILCS 5/494.1 rep.
215 ILCS 5/494.2 rep.
215 ILCS 5/495.1 rep.
215 ILCS 5/495.2 rep.
215 ILCS 5/496.2 rep.
215 ILCS 5/497.1 rep.
215 ILCS 5/498.1 rep.
215 ILCS 5/499.1 rep.
215 ILCS 5/500.1 rep.
215 ILCS 5/501.2 rep.
215 ILCS 5/502.2 rep.
215 ILCS 5/503.1 rep.
215 ILCS 5/504 rep.
215 ILCS 5/504.1 rep.
215 ILCS 5/505.1 rep.
215 ILCS 5/505.2 rep.
215 ILCS 5/506.1 rep.
215 ILCS 5/507.1 rep.
215 ILCS 5/508.1 rep.
215 ILCS 5/508.2 rep.
215 ILCS 5/509.1 rep.
215 ILCS 5/510.2 rep.
215 ILCS 5/511.1 rep.
Passed in the General Assembly May 22, 2001.
Approved August 16, 2001.
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