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91_HB0812
LRB9101344JSpc
1 AN ACT to amend the Illinois Insurance Code by changing
2 Section 123B-4.
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 Section 123B-4 as follows:
7 (215 ILCS 5/123B-4) (from Ch. 73, par. 735B-4)
8 Sec. 123B-4. Risk retention groups not organized in this
9 State. Any risk retention group organized and licensed in a
10 state other than this State and seeking to do business as a
11 risk retention group in this State shall comply with the laws
12 of this State as follows:
13 A. Notice of operations and designation of the Director
14 as agent.
15 Before offering insurance in this State, a risk retention
16 group shall submit to the Director on a form approved by the
17 Director:
18 (1) a statement identifying the state or states in
19 which the risk retention group is organized and licensed
20 as a liability insurance company, its date of
21 organization, its principal place of business, and such
22 other information, including information on its
23 membership, as the Director may require to verify that
24 the risk retention group is qualified under subsection
25 (11) of Section 123B-2 of this Article;
26 (2) a copy of its plan of operations or a
27 feasibility study and revisions of such plan or study
28 submitted to its state of domicile; provided, however,
29 that the provision relating to the submission of a plan
30 of operation or a feasibility study shall not apply with
31 respect to any line or classification of liability
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1 insurance which (a) was defined in the Product Liability
2 Risk Retention Act of 1981 before October 27, 1986, and
3 (b) was offered before such date by any risk retention
4 group which had been organized and operating for not less
5 than 3 years before such date; and
6 (3) a statement of registration which designates
7 the Director as its agent for the purpose of receiving
8 service of legal documents or process, together with a
9 filing fee of $100 payable to the Director.
10 B. Financial condition. Any risk retention group doing
11 business in this State shall submit to the Director:
12 (1) a copy of the group's financial statement
13 submitted to the state in which the risk retention group
14 is organized and licensed, which shall be certified by an
15 independent public accountant and contain a statement of
16 opinion on loss and loss adjustment expense reserves made
17 by a member of the American Academy of Actuaries or a
18 qualified loss reserve specialist (under criteria
19 established by the National Association of Insurance
20 Commissioners);
21 (2) a copy of each examination of the risk
22 retention group as certified by the public official
23 conducting the examination;
24 (3) upon request by the Director, a copy of any
25 audit performed with respect to the risk retention group;
26 and
27 (4) such information as may be required to verify
28 its continuing qualification as a risk retention group
29 under subsection (11) of Section 123B-2.
30 C. Taxation.
31 (1) Each risk retention group shall be liable for
32 the payment of premium taxes and taxes on premiums of
33 direct business for risks resident or located within this
34 State, and shall report to the Director the net premiums
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1 written for risks resident or located within this State.
2 Such risk retention group shall be subject to taxation,
3 and any applicable fines and penalties related thereto,
4 on the same basis as a foreign admitted insurer.
5 (2) To the extent licensed insurance producers are
6 utilized pursuant to Section 123B-11, they shall report
7 to the Director the premiums for direct business for
8 risks resident or located within this State which such
9 licensees have placed with or on behalf of a risk
10 retention group not organized in this State.
11 (3) To the extent that licensed insurance producers
12 are utilized pursuant to Section 123B-11, each such
13 producer shall keep a complete and separate record of all
14 policies procured from each such risk retention group,
15 which record shall be open to examination by the
16 Director, as provided in Section 506.1 of this Code.
17 These records shall, for each policy and each kind of
18 insurance provided thereunder, include the following:
19 (a) the limit of the liability;
20 (b) the time period covered;
21 (c) the effective date;
22 (d) the name of the risk retention group which
23 issued the policy;
24 (e) the gross premium charged; and
25 (f) the amount of return premiums, if any.
26 D. Compliance With unfair claims practices provisions.
27 Any risk retention group, its agents and representatives
28 shall be subject to the unfair claims practices provisions of
29 Sections 154.5 through 154.8 of this Code.
30 E. Deceptive, false, or fraudulent practices. Any risk
31 retention group shall comply with the laws of this State
32 regarding deceptive, false, or fraudulent acts or practices.
33 However, if the Director seeks an injunction regarding such
34 conduct, the injunction must be obtained from a court of
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1 competent jurisdiction.
2 F. Examination regarding financial condition. Any risk
3 retention group must submit to an examination by the Director
4 to determine its financial condition if the commissioner of
5 insurance of the jurisdiction in which the group is organized
6 and licensed has not initiated an examination or does not
7 initiate an examination within 60 days after a request by the
8 Director. Any such examination shall be coordinated to avoid
9 unjustified repetition and conducted in an expeditious manner
10 and in accordance with the National Association of Insurance
11 Commissioners' Examiner Handbook.
12 G. Notice to purchasers. Every application form for
13 insurance from a risk retention group and the front page and
14 declaration page of every policy issued by a risk retention
15 group shall contain in 10 point type the following notice:
16 "NOTICE
17 This policy is issued by your risk retention group. Your
18 risk retention group is not subject to all of the insurance
19 laws and regulations of your state. State insurance
20 insolvency guaranty fund protection is not available for your
21 risk retention group".
22 H. Prohibited acts regarding solicitation or sale. The
23 following acts by a risk retention group are hereby
24 prohibited:
25 (1) the solicitation or sale of insurance by a risk
26 retention group to any person who is not eligible for
27 membership in such group; and
28 (2) the solicitation or sale of insurance by, or
29 operation of, a risk retention group that is in a
30 hazardous financial condition or is financially impaired.
31 I. Prohibition on ownership by an insurance company. No
32 risk retention group shall be allowed to do business in this
33 State if an insurance company is directly or indirectly a
34 member or owner of such risk retention group, other than in
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1 the case of a risk retention group all of whose members are
2 insurance companies.
3 J. Prohibited coverage. No risk retention group may
4 offer insurance policy coverage prohibited by Articles IX or
5 XI of this Code or declared unlawful by the Illinois Supreme
6 Court; provided however, a risk retention group organized and
7 licensed in a state other than this State that selects the
8 law of this State to govern the validity, construction, or
9 enforceability of policies issued by it is permitted to
10 provide coverage under policies issued by it for penalties in
11 the nature of compensatory damages including, without
12 limitation, punitive damages and the multiplied portion of
13 multiple damages, so long as coverage of those penalties is
14 not prohibited by the law of the state under which the risk
15 retention group is organized.
16 K. Delinquency proceedings. A risk retention group not
17 organized in this State and doing business in this State
18 shall comply with a lawful order issued in a voluntary
19 dissolution proceeding or in a conservation, rehabilitation,
20 liquidation, or other delinquency proceeding commenced by the
21 Director or by another state insurance commissioner if there
22 has been a finding of financial impairment after an
23 examination under subsection F of Section 123B-4 of this
24 Article.
25 L. Compliance with injunctive relief. A risk retention
26 group shall comply with an injunctive order issued in another
27 state by a court of competent jurisdiction or by a United
28 States District Court based on a finding of financial
29 impairment or hazardous financial condition.
30 M. Penalties. A risk retention group that violates any
31 provision of this Article will be subject to fines and
32 penalties applicable to licensed insurers generally,
33 including revocation of its license or the right to do
34 business in this State, or both.
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1 N. Operations prior to August 3, 1987. In addition to
2 complying with the requirements of this Section, any risk
3 retention group operating in this State prior to August 3,
4 1987, shall within 30 days after such effective date comply
5 with the provisions of subsection A of this Section.
6 (Source: P.A. 87-1090.)
7 Section 99. Effective date. This Act takes effect upon
8 becoming law.