Public Act 0566 103RD GENERAL ASSEMBLY
 

 
Public Act 103-0566
 
SB0765 EnrolledLRB103 03220 BMS 48226 b

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