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90_SB1728
215 ILCS 5/86 from Ch. 73, par. 698
215 ILCS 5/98 from Ch. 73, par. 710
215 ILCS 5/102 from Ch. 73, par. 714
215 ILCS 5/103 from Ch. 73, par. 715
215 ILCS 5/144 from Ch. 73, par. 756
Amends the Illinois Insurance Code. Removes the limit on
the amount of insurance a Lloyds may underwrite with respect
to any single risk. Effective immediately.
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LRB9011450JSmg
1 AN ACT to amend the Illinois Insurance Code by changing
2 Sections 86, 98, 102, 103, and 144.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Insurance Code is amended by
6 changing Sections 86, 98, 102, 103, and 144 as follows:
7 (215 ILCS 5/86) (from Ch. 73, par. 698)
8 Sec. 86. Scope of Article.
9 (1) This Article applies to all groups including
10 incorporated and individual unincorporated underwriters
11 transacting an insurance business in this State through an
12 attorney-in-fact under the name Lloyds or under a Lloyds plan
13 of operation. Groups that meet the requirements of
14 subsection (3) are referred to in this Code as "Lloyds", and
15 incorporated and individual unincorporated underwriters are
16 referred to as "underwriters".
17 (2) As used in this Code "Domestic Lloyds" means a
18 Lloyds having its home office in this State; "Foreign Lloyds"
19 means a Lloyds having its home office in any state of the
20 United States other than this State; and "Alien Lloyds" means
21 a Lloyds having its home office or principal place of
22 business in any country other than the United States.
23 (3) A domestic Lloyds must: (i) be established pursuant
24 to a statute or written charter; (ii) provide for governance
25 by a board of directors or similar body; and (iii) establish
26 and monitor standards of solvency of its underwriters. A
27 foreign or alien Lloyds must be subject to requirements of
28 its state or country of domicile. Those requirements must be
29 substantially similar to those required of domestic Lloyds.
30 Domestic, foreign, and alien Lloyd's shall not be subject to
31 Section 144 of this Code.
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1 (Source: P.A. 88-535.)
2 (215 ILCS 5/98) (from Ch. 73, par. 710)
3 Sec. 98. Verified statement Maximum single risk.
4 (1) The net maximum amount of insurance to be assumed by
5 an underwriter of a domestic Lloyds upon any single risk for
6 each kind of insurance shall not exceed ten per centum of the
7 value of the cash and securities deposited in trust by such
8 underwriter plus the share of admitted assets other than
9 underwriters' deposits of such Lloyds belonging to such
10 underwriter less the share of liabilities and reserves of
11 such Lloyds allocable to such underwriter, but in no event
12 shall it exceed ten per centum of the value of the cash or
13 securities deposited in trust by such underwriter.
14 (2) Whenever the Director shall so require, the
15 attorney-in-fact of a domestic Lloyds shall file with the
16 Director a verified statement setting forth
17 (a) the names and addresses of all underwriters;
18 and
19 (b) a description of the cash and securities
20 deposited in trust by each underwriter.;
21 (c) the maximum amount of insurance assumed by each
22 underwriter upon any single risk for each kind of
23 insurance; and
24 (d) That the maximum amount of insurance assumed or
25 made upon any single risk for each kind of insurance by
26 any underwriter does not exceed the limitation set forth
27 in subsection (1) of this section.
28 (Source: P.A. 88-535.)
29 (215 ILCS 5/102) (from Ch. 73, par. 714)
30 Sec. 102. Restrictions upon foreign Lloyds.
31 (1) Each foreign Lloyds authorized to transact business
32 in this State shall
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1 (a) maintain cash and securities, including the deposits
2 of its underwriters, of a character conformable to the
3 requirements of Article VIII of this Code for domestic
4 companies, at least equal at all times to the minimum
5 admitted assets required by this Article for a domestic
6 Lloyds doing the same kind or kinds of business.
7 (b) file with the Director an authenticated copy of its
8 power of attorney and an authenticated copy of the trust
9 agreement or other agreement under which deposits made by
10 underwriters are held;
11 (c) notify the Director forthwith of any amendment to
12 its power of attorney, deposit agreement or other documents
13 underlying its organization, by filing with the Director an
14 authenticated copy of such document as amended;
15 (d) notify the Director forthwith of any change in its
16 name or change of attorney-in-fact or change of address of
17 its attorney-in-fact.
18 (2) A foreign Lloyds shall not establish branches under
19 other or different names or titles.
20 (3) Each such foreign Lloyds shall be subject to all
21 limitation of risk provisions imposed by this Article upon
22 domestic Lloyds.
23 (3)(4) There shall be filed with the Director by the
24 attorney-in-fact of such foreign Lloyds at the time of filing
25 the annual statement, or more often if required by the
26 Director, a statement verified by the appropriate official of
27 such Lloyds, setting forth
28 (a) the names and addresses of all underwriters of such
29 Lloyds; and
30 (b) a description of the cash and securities deposited
31 in trust by each underwriter.;
32 (c) the maximum amount of insurance assumed by each
33 underwriter upon any single risk for each kind of insurance;
34 and
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1 (d) that the maximum amount of insurance assumed upon
2 any single risk for each kind of insurance by any underwriter
3 does not exceed the limitation provided in this article for
4 individual underwriters of a domestic Lloyds.
5 (Source: Laws 1959, p. 1431.)
6 (215 ILCS 5/103) (from Ch. 73, par. 715)
7 Sec. 103. Alien Lloyds.
8 (1) Each alien Lloyds authorized to transact business in
9 this State shall
10 (a) maintain in this State or any other state of the
11 United States in which they are authorized to transact
12 business, cash or securities of a character conformable to
13 the requirements of Article VIII of this Code for domestic
14 companies at least equal at all times to the minimum of
15 admitted assets required by this Article for a domestic
16 Lloyds doing the same kind or kinds of business;
17 (b) make deposits of underwriters in this State in
18 accordance with the requirements imposed upon domestic
19 Lloyds;
20 (c) file with the Director an authenticated copy of its
21 power of attorney and an authenticated copy of the trust
22 agreement or other agreement under which deposits made by
23 underwriters in this State are held;
24 (d) notify the Director forthwith of any amendment to
25 its power of attorney, deposit agreement or other documents
26 by filing with the Director an authenticated copy of such
27 document as amended; and
28 (e) notify the Director forthwith of any change in its
29 name or change of attorney-in-fact or change of address of
30 its attorney-in-fact.
31 (2) An alien Lloyds shall not establish branches under
32 other or different names or titles.
33 (3) Each such alien Lloyds shall be subject to all
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1 limitation of risk provisions imposed by this Article upon
2 domestic Lloyds.
3 (3)(4) There shall be filed with the Director by the
4 attorney-in-fact for such Lloyds, who or which shall be a
5 resident person or corporation of this State, at the time of
6 filing the annual statement, or more often if required by the
7 Director, a verified statement setting forth
8 (a) the names and addresses of all underwriters of such
9 Lloyds; and
10 (b) a description of the cash and securities deposited
11 in trust by each underwriter.;
12 (c) the maximum amount of insurance assumed by each
13 underwriter upon any single risk for each kind of insurance;
14 and
15 (d) that the maximum amount of insurance assumed upon
16 any single risk for each kind of insurance by any
17 underwriters does not exceed 10% of such underwriter's
18 deposit.
19 (4)(5) Additional underwriters may join and be included
20 in any such Lloyds subject to such conditions and
21 requirements as may from time to time be imposed by such
22 Lloyds and upon meeting the requirements of this section,
23 such additional underwriters who may so join such Lloyds
24 shall be bound by the documents on file with the Director in
25 the same manner as though they had personally executed the
26 same and shall have the same rights, powers and duties as all
27 other underwriters of such Lloyds. The attorney-in-fact
28 authorized by the underwriters to act for them shall
29 thereafter be the attorney-in-fact for such additional
30 underwriters to the extent of the power of attorney or other
31 document or authorization by such underwriters to the
32 attorney-in-fact.
33 (Source: Laws 1959, p. 1431.)
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1 (215 ILCS 5/144) (from Ch. 73, par. 756)
2 Sec. 144. Limitation of risk.
3 (1) No company authorized to transact any of the kind of
4 business enumerated in Classes 2 and 3 of Section 4 in this
5 State may expose itself to any loss on any one risk or hazard
6 to an amount exceeding 10% of its admitted assets in excess
7 of its liabilities excluding, in the case of a stock company,
8 its capital stock liability. No portion of any such risk or
9 hazard which has been reinsured in a domestic or an approved
10 foreign or alien company, in accordance with this Code, shall
11 be included in determining the limitation of risk prescribed
12 herein.
13 (2) Any company transacting the kind of business
14 enumerated in clause (g) of Class 2 of Section 4 may expose
15 itself to a risk or hazard in excess of the amount prescribed
16 in subsection (1) if it is protected in excess of that amount
17 by the following:
18 (a) The co-suretyship of such a company similarly
19 authorized; or
20 (b) By deposit with it in pledge or conveyance to
21 it in trust for its protection of property; or
22 (c) By conveyance or mortgage for its protection;
23 or
24 (d) In case a suretyship obligation was made on
25 behalf or on account of a fiduciary holding property in a
26 trust capacity, by deposit or other disposition of a
27 portion of the property so held in trust that no future
28 sale, mortgage, pledge or other disposition can be made
29 thereof without the consent of such company except by a
30 judgment or order of a court of competent jurisdiction.
31 (3) A company designated in subsection (2) may also
32 execute transportation or warehouse bonds for United States
33 Internal Revenue taxes to an amount equal to 50% of its
34 capital and surplus. When the penalty of the suretyship
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1 obligation exceeds the amount of a judgment described therein
2 as appealed from and thereby secured, or exceeds the amount
3 of the subject matter in controversy or of the estate in the
4 custody of the fiduciary for the performance of whose duties
5 it is conditioned, the bond may be executed if the actual
6 amount of the judgment or the subject matter in controversy
7 or estate not subject to supervision or control of the surety
8 is not in excess of such limitation. When the penalty of the
9 suretyship obligation executed for the performance of a
10 contract exceeds the contract price, the latter shall be
11 taken as the basis for estimating the limit of risk within
12 the meaning of this Section.
13 (4) Whenever the ratio of the annual premium volume in
14 proportion to the policyholder surplus of any company
15 transacting the kinds of business authorized in Class 2 and
16 Class 3 of Section 4 when reviewed in conjunction with the
17 kinds and nature of risks insured, the financial condition of
18 the company and its ownership including but not limited to
19 the liquidity of assets, relationship of surplus to
20 liabilities and adequacy of outstanding loss reserves,
21 creates a condition such that the further assumption of risks
22 might be hazardous to policyholders, creditors or the general
23 public, then the Director may order such company to take one
24 or more of the following steps:
25 (a) to reduce the loss exposure by reinsurance;
26 (b) to reduce the volume of new business being
27 accepted;
28 (c) to suspend the writing of new business for a
29 period not to exceed 3 months;
30 (d) to increase and maintain the company's surplus
31 by a contribution to surplus which will raise the surplus
32 for such a period of time and by such an amount as the
33 Director may deem necessary and essential; or
34 (e) to reduce general or acquisition expenses by
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1 specified methods.
2 (f) (Blank).
3 (5) The provisions of this Section do not apply to
4 domestic, foreign, and alien Lloyds.
5 The company may, within 10 days after receipt of an Order
6 of the Director under this Section, request that the Director
7 hold a hearing to determine whether the Order of the Director
8 should be modified in any way. A request for a hearing by a
9 company under this Section stays any Order of the Director
10 entered under this Section until such time as the Director
11 has entered an Order pursuant to the hearing.
12 (Source: P.A. 89-97, eff. 7-7-95.)
13 Section 99. Effective date. This Act takes effect upon
14 becoming law.