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91_HB0812eng HB0812 Engrossed 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 HB0812 Engrossed -2- LRB9101344JSpc 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 HB0812 Engrossed -3- LRB9101344JSpc 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 HB0812 Engrossed -4- LRB9101344JSpc 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 HB0812 Engrossed -5- LRB9101344JSpc 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. HB0812 Engrossed -6- LRB9101344JSpc 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.