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91_HB1348sam001
LRB9102806JSpcam
1 AMENDMENT TO HOUSE BILL 1348
2 AMENDMENT NO. . Amend House Bill 1348 by replacing
3 the title with the following:
4 "AN ACT concerning insurers, amending named Acts."; and
5 by replacing everything after the enacting clause with the
6 following:
7 "Section 5. The Illinois Insurance Code is amended by
8 changing Sections 3.1, 35A-5, 35A-10, 35A-15, 35A-20, 35A-30,
9 35A-55, 35A-60, 245, 356h, 356v, 364, 367, and 367i as
10 follows:
11 (215 ILCS 5/3.1) (from Ch. 73, par. 615.1)
12 Sec. 3.1. Definitions of admitted assets. "Admitted
13 Assets" includes the investments authorized or permitted by
14 this Code, the credit for reinsurance allowed by this Code,
15 and in addition thereto, only the following:
16 (a) Petty cash and other cash funds in the company's
17 principal or any official branch office and under the control
18 of the company.
19 (b) Immediately withdrawable funds on deposit in demand
20 accounts, in a bank or trust company as defined in Section
21 126.2MMM(1) or like funds actually in the principal or any
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1 official branch office at statement date, and, in transit to
2 such bank or trust company with authentic deposit credit
3 given prior to the close of business on the fifth bank
4 working day following the statement date.
5 (c) The amount fairly estimated as recoverable on cash
6 deposited in a closed bank or trust company, if qualifying
7 under the provisions of this Section prior to the suspension
8 of such bank or trust company.
9 (d) Bills and accounts receivable collateralized by
10 securities of the kind in which the company is authorized to
11 invest.
12 (e) Bills receivable not past due covering uncollected
13 premiums taken by a company in the transaction of business
14 described in Class 3 of Section 4, in an amount not to exceed
15 the unearned premium reserve liability calculated on each
16 respective policy.
17 (f) For in force insurance coverages written by fire,
18 casualty, and reciprocal companies, excluding group accident
19 and health business, premium deposits, gross premiums, and
20 agents' balances (net of related commissions) not more than
21 90 days past due; installments booked but deferred and not
22 yet due (net of related commissions), provided that all
23 amounts having become due from the insured are not more than
24 90 days past due; and audit and retrospective premium to the
25 extent permitted to be admitted pursuant to the Annual
26 Statement Instructions and the Accounting Practices and
27 Procedures Manual for Property and Casualty Insurers
28 published by the National Association of Insurance
29 Commissioners, unless the Director prescribes otherwise.
30 However, audit and retrospective premiums that represent
31 anticipated additional premiums on policies for which the
32 policy period has not yet expired may not be admitted.
33 (g) Net amount of uncollected premiums on group life and
34 group accident and health policies, not more than 90 days
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1 past due.
2 (h) Due and uncollected accident and health premiums on
3 in force individual policies, on insurance written by Class
4 1, Section 4 companies, less commissions due thereon to
5 agents; not exceeding in the aggregate the premium reserve
6 liability computed on such business.
7 (i) Premium notes, policy loans and liens, and the net
8 amount of uncollected and deferred premiums on individual
9 life insurance policies, not in excess of the liability for
10 the legal reserves specified in Section 223 or 281 of this
11 Code on such individual life insurance policies.
12 (j) Premium and assessment notes, certificate loans and
13 liens, and the gross amount less loading, of premiums or
14 assessments actually collected by subordinate lodges not yet
15 turned over to the Supreme Lodge on individual life insurance
16 certificates not in excess of the liability for the legal
17 reserves specified in Section 297.1 or 305.1 on such
18 individual life insurance certificates.
19 (k) Mortuary assessments due and unpaid on last call
20 made within 60 days, on insurance in force and for which
21 notices have been issued, not in excess of the liability for
22 the unpaid claims which are to be paid by the proceeds.
23 (l) Amounts fairly estimated as recoverable from
24 advances made on contracts under surety bonds.
25 (m) Amounts receivable from insurance companies
26 authorized to do business in this State and from associations
27 or bureaus owned or controlled by 5 or more separate and
28 nonaffiliated, by ownership or management, insurance
29 companies of which a majority thereof are authorized to
30 transact business in this State. The amount of those
31 receivables allowed as admitted assets may not exceed the
32 lesser of 5% of the company's total admitted assets or 10% of
33 the company's surplus as regards policyholders. Amounts
34 receivable from insurance companies or associations or
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1 bureaus not meeting the preceding standards of this Section
2 if collateralized in the manner prescribed by Section 173.1.
3 (n) Tax refunds due from the United States or any state,
4 the Government of Canada or any province, or the Commonwealth
5 of Puerto Rico or amounts due to a subsidiary from a parent
6 under a tax allocation agreement that conforms with rules
7 adopted by the Director.
8 (o) The interest accrued on mortgage loans conforming to
9 this Code, not exceeding an aggregate amount on an individual
10 loan of one year's total due and accrued interest.
11 (p) The rents accrued and owing to the company on real
12 and personal property, directly or beneficially owned, not
13 exceeding on each individual property the amount of one
14 year's total due and accrued rent.
15 (q) Interest or rents accrued on conditional sales
16 agreements, security interests, chattel mortgages and real or
17 personal property under lease to other corporations, all
18 conforming to this Code, and not exceeding on any individual
19 investment, the amount of one year's total due and accrued
20 interest or rent.
21 (r) The fixed and required interest due and accrued on
22 bonds and other like evidences of indebtedness, conforming to
23 this Code, and not in default.
24 (s) Dividends receivable on shares of stock conforming
25 to this Code; provided that the market price taken for
26 valuation purposes does not include the value of the
27 dividend.
28 (t) The interest or dividends due and payable, but not
29 credited, on deposits in banks and trust companies or on
30 accounts with savings and loan associations.
31 (u) Interest accrued on secured loans conforming to this
32 Code, not exceeding the amount of one year's interest on any
33 loan.
34 (v) Interest accrued on tax anticipation warrants.
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1 (w) The value of electronic computer or data processing
2 machines or systems purchased for use in connection with the
3 business of the company, if such machines or systems whenever
4 purchased have an aggregate original cost to the company of
5 at least $75,000. The amortized value of such machines or
6 systems at the end of any calendar year shall not be greater
7 than the original purchase price less 10% for each completed
8 year, or pro rata portion for any fraction thereof, after
9 such purchase, with the total admissible value at any
10 statement date to be limited to an amount not exceeding 2% of
11 the company's admitted assets at such statement date.
12 (1) (x) Amounts, other than premium, receivable from
13 affiliates, not outstanding for more than 3 months, and
14 arising under, management contracts or service agreements
15 which meet the requirements of Section 141.1 of the Illinois
16 Insurance Code to the extent that the affiliate has liquid
17 assets sufficient to pay the balance. The amount of those
18 receivables included in admitted assets may not exceed the
19 lesser of 5% of the company's admitted assets or 10% of the
20 company's surplus as regards policyholders. For purposes of
21 this subsection, "affiliate" has the meaning given that term
22 in Article VIII 1/2 of the Illinois Insurance Code.
23 (2) Amounts permitted under Section 136.
24 (y) Property and liability guaranty fund or guaranty
25 association assessments paid in any state, but only to the
26 extent it is probable the company will be able to offset
27 those assessments against present or future premium taxes or
28 income taxes payable in the state in which the assessments
29 were paid. The amount of those assessments allowed as
30 admitted assets may not exceed the lesser of 5% of the
31 company's total admitted assets or 10% of the company's
32 surplus as regards policyholders. The Director may disallow
33 any such assessment as an admitted asset to the extent he
34 determines a company is unlikely to realize a present or
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1 future premium tax or income tax offset as a result of the
2 assessment.
3 (Source: P.A. 89-97, eff. 7-7-95; 89-669, eff. 1-1-97;
4 90-418, eff. 8-15-97.)
5 (215 ILCS 5/35A-5)
6 Sec. 35A-5. Definitions. As used in this Article, the
7 terms listed in this Section have the meaning given herein.
8 "Adjusted RBC Report" means an RBC Report that has been
9 adjusted by the Director in accordance with subsection (f)
10 (e) of Section 35A-10.
11 "Authorized control level RBC" means the number
12 determined under the risk-based capital formula in accordance
13 with the RBC Instructions.
14 "Company action level RBC" means the product of 2.0 and
15 the insurer's authorized control level RBC.
16 "Corrective Order" means an order issued by the Director
17 in accordance with Article XII 1/2 specifying corrective
18 actions that the Director determines are required.
19 "Domestic insurer" means any insurance company domiciled
20 in this State under Article II, Article III, Article III 1/2,
21 or Article IV or a health organization as defined by this
22 Article, except this shall include only those health
23 maintenance organizations that are "domestic companies" in
24 accordance with Section 5-3 of the Health Maintenance
25 Organization Act and only those limited health service
26 organizations that are "domestic companies" in accordance
27 with Section 4003 of the Limited Health Service Organization
28 Act.
29 "Foreign insurer" means any foreign or alien insurance
30 company licensed under Article VI that is not domiciled in
31 this State and any health maintenance organization that is
32 not a "domestic company" in accordance with Section 5-3 of
33 the Health Maintenance Organization Act and any limited
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1 health service organization that is not a "domestic company"
2 in accordance with Section 4003 of the Limited Health Service
3 Organization Act.
4 "Health organization" means an entity operating under a
5 certificate of authority issued pursuant to the Health
6 Maintenance Organization Act, the Dental Service Plan Act,
7 the Limited Health Service Organization Act, or the Voluntary
8 Health Services Plans Act, unless the entity is otherwise
9 defined as a "life, health, or life and health insurer"
10 pursuant to this Act.
11 "Life, health, or life and health insurer" means an
12 insurance company that has authority to transact the kinds of
13 insurance described in either or both clause (a) or clause
14 (b) of Class 1 of Section 4 or a licensed property and
15 casualty insurer writing only accident and health insurance.
16 "Mandatory control level RBC" means the product of 0.70
17 and the insurer's authorized control level RBC.
18 "NAIC" means the National Association of Insurance
19 Commissioners.
20 "Negative trend" means, with respect to a life, health,
21 or life and health insurer, a negative trend over a period of
22 time, as determined in accordance with the trend test
23 calculation included in the RBC Instructions.
24 "Property and casualty insurer" means an insurance
25 company that has authority to transact the kinds of insurance
26 in either or both Class 2 or Class 3 of Section 4 or a
27 licensed insurer writing only insurance authorized under
28 clause (c) of Class 1, but does not include monoline mortgage
29 guaranty insurers, financial guaranty insurers, and title
30 insurers.
31 "RBC" means risk-based capital.
32 "RBC Instructions" means the RBC Report including
33 risk-based capital instructions adopted by the NAIC as those
34 instructions may be amended by the NAIC from time to time in
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1 accordance with the procedures adopted by the NAIC.
2 "RBC level" means an insurer's company action level RBC,
3 regulatory action level RBC, authorized control level RBC, or
4 mandatory control level RBC.
5 "RBC Plan" means a comprehensive financial plan
6 containing the elements specified in subsection (b) of
7 Section 35A-15.
8 "RBC Report" means the risk-based capital report required
9 under Section 35A-10.
10 "Receivership" means conservation, rehabilitation, or
11 liquidation under Article XIII.
12 "Regulatory action level RBC" means the product of 1.5
13 and the insurer's authorized control level RBC.
14 "Revised RBC Plan" means an RBC Plan rejected by the
15 Director and revised by the insurer with or without the
16 Director's recommendations.
17 "Total adjusted capital" means the sum of (1) an
18 insurer's statutory capital and surplus and (2) any other
19 items that the RBC Instructions may provide.
20 (Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)
21 (215 ILCS 5/35A-10)
22 Sec. 35A-10. RBC Reports.
23 (a) On or before each March 1 (the "filing date"), every
24 domestic insurer shall prepare and submit to the Director a
25 report of its RBC levels as of the end of the previous
26 calendar year in the form and containing the information
27 required by the RBC Instructions. Every domestic insurer
28 shall also file its RBC Report with the NAIC in accordance
29 with the RBC Instructions. In addition, if requested in
30 writing by the chief insurance regulatory official of any
31 state in which it is authorized to do business, every
32 domestic insurer shall file its RBC Report with that official
33 no later than the later of 15 days after the insurer receives
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1 the written request or the filing date.
2 (b) A life, health, or life and health insurer's RBC
3 shall be determined under the formula set forth in the RBC
4 Instructions. The formula shall take into account (and may
5 adjust for the covariance between):
6 (1) the risk with respect to the insurer's assets;
7 (2) the risk of adverse insurance experience with
8 respect to the insurer's liabilities and obligations;
9 (3) the interest rate risk with respect to the
10 insurer's business; and
11 (4) all other business risks and other relevant
12 risks set forth in the RBC Instructions.
13 These risks shall be determined in each case by applying the
14 factors in the manner set forth in the RBC Instructions.
15 (c) A property and casualty insurer's RBC shall be
16 determined in accordance with the formula set forth in the
17 RBC Instructions. The formula shall take into account (and
18 may adjust for the covariance between):
19 (1) asset risk;
20 (2) credit risk;
21 (3) underwriting risk; and
22 (4) all other business risks and other relevant
23 risks set forth in the RBC Instructions.
24 These risks shall be determined in each case by applying the
25 factors in the manner set forth in the RBC Instructions.
26 (d) A health organization's RBC shall be determined in
27 accordance with the formula set forth in the RBC
28 Instructions. The formula shall take the following into
29 account (and may adjust for the covariance between):
30 (1) asset risk;
31 (2) credit risk;
32 (3) underwriting risk; and
33 (4) all other business risks and other relevant
34 risks set forth in the RBC Instructions.
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1 These risks shall be determined in each case by applying the
2 factors in the manner set forth in the RBC Instructions.
3 (e) (d) An excess of capital over the amount produced by
4 the risk-based capital requirements contained in this Code
5 and the formulas, schedules, and instructions referenced in
6 this Code is desirable in the business of insurance.
7 Accordingly, insurers should seek to maintain capital above
8 the RBC levels required by this Code. Additional capital is
9 used and useful in the insurance business and helps to secure
10 an insurer against various risks inherent in, or affecting,
11 the business of insurance and not accounted for or only
12 partially measured by the risk-based capital requirements
13 contained in this Code.
14 (f) (e) If a domestic insurer files an RBC Report that,
15 in the judgment of the Director, is inaccurate, the Director
16 shall adjust the RBC Report to correct the inaccuracy and
17 shall notify the insurer of the adjustment. The notice shall
18 contain a statement of the reason for the adjustment.
19 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
20 (215 ILCS 5/35A-15)
21 Sec. 35A-15. Company action level event.
22 (a) A company action level event means any of the
23 following events:
24 (1) The filing of an RBC Report by an insurer that
25 indicates that:
26 (A) the insurer's total adjusted capital is
27 greater than or equal to its regulatory action level
28 RBC, but less than its company action level RBC; or
29 (B) The insurer, if a life, health, or life
30 and health insurer, has total adjusted capital that
31 is greater than or equal to its company action level
32 RBC, but less than the product of its authorized
33 control level RBC and 2.5 and has a negative trend.
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1 (2) The notification by the Director to the insurer
2 of an Adjusted RBC Report that indicates an event
3 described in paragraph (1), provided the insurer does not
4 challenge the Adjusted RBC Report under Section 35A-35.
5 (3) The notification by the Director to the insurer
6 that the Director has, after a hearing, rejected the
7 insurer's challenge under Section 35A-35 to an Adjusted
8 RBC Report that indicates the event described in
9 paragraph (1).
10 (b) In the event of a company action level event, the
11 insurer shall prepare and submit to the Director an RBC Plan
12 that does all of the following:
13 (1) Identifies the conditions that contribute to
14 the company action level event.
15 (2) Contains proposed corrective actions that the
16 insurer intends to take and that are expected to result
17 in the elimination of the company action level event. A
18 health organization is not prohibited from proposing
19 recognition of a parental guarantee or a letter of credit
20 to eliminate the company action level event; however the
21 Director shall, at his discretion, determine whether or
22 the extent to which the proposed parental guarantee or
23 letter of credit is an acceptable part of a satisfactory
24 RBC Plan or Revised RBC Plan.
25 (3) Provides projections of the insurer's financial
26 results in the current year and at least the 4 succeeding
27 years, both in the absence of proposed corrective actions
28 and giving effect to the proposed corrective actions,
29 including projections of statutory operating income, net
30 income, capital, and surplus. The projections for both
31 new and renewal business may include separate projections
32 for each major line of business and separately identify
33 each significant income, expense, and benefit component.
34 (4) Identifies the key assumptions affecting the
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1 insurer's projections and the sensitivity of the
2 projections to the assumptions.
3 (5) Identifies the quality of, and problems
4 associated with, the insurer's business including, but
5 not limited to, its assets, anticipated business growth
6 and associated surplus strain, extraordinary exposure to
7 risk, mix of business, and use of reinsurance, if any, in
8 each case.
9 (c) The insurer shall submit the RBC Plan to the
10 Director within 45 days after the company action level event
11 occurs or within 45 days after the Director notifies the
12 insurer that the Director has, after a hearing, rejected its
13 challenge under Section 35A-35 to an Adjusted RBC Report.
14 (d) Within 60 days after an insurer submits an RBC Plan
15 to the Director, the Director shall notify the insurer
16 whether the RBC Plan shall be implemented or is, in the
17 judgment of the Director, unsatisfactory. If the Director
18 determines the RBC Plan is unsatisfactory, the notification
19 to the insurer shall set forth the reasons for the
20 determination and may set forth proposed revisions that will
21 render the RBC Plan satisfactory in the judgment of the
22 Director. Upon notification from the Director, the insurer
23 shall prepare a Revised RBC Plan, which may incorporate by
24 reference any revisions proposed by the Director. The
25 insurer shall submit the Revised RBC Plan to the Director
26 within 45 days after the Director notifies the insurer that
27 the RBC Plan is unsatisfactory or within 45 days after the
28 Director notifies the insurer that the Director has, after a
29 hearing, rejected its challenge under Section 35A-35 to the
30 determination that the RBC Plan is unsatisfactory.
31 (e) In the event the Director notifies an insurer that
32 its RBC Plan or Revised RBC Plan is unsatisfactory, the
33 Director may, at the Director's discretion and subject to the
34 insurer's right to a hearing under Section 35A-35, specify in
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1 the notification that the notification constitutes a
2 regulatory action level event.
3 (f) Every domestic insurer that files an RBC Plan or
4 Revised RBC Plan with the Director shall file a copy of the
5 RBC Plan or Revised RBC Plan with the chief insurance
6 regulatory official in any state in which the insurer is
7 authorized to do business if that state has a law
8 substantially similar to the confidentiality provisions in
9 subsection (a) of Section 35A-50 and if that official
10 requests in writing a copy of the plan. The insurer shall
11 file a copy of the RBC Plan or Revised RBC Plan in that state
12 no later than the later of 15 days after receiving the
13 written request for the copy or the date on which the RBC
14 Plan or Revised RBC Plan is filed under subsection (c) or (d)
15 of this Section.
16 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
17 (215 ILCS 5/35A-20)
18 Sec. 35A-20. Regulatory action level event.
19 (a) A regulatory action level event means any of the
20 following events:
21 (1) The filing of an RBC Report by the insurer that
22 indicates that the insurer's total adjusted capital is
23 greater than or equal to its authorized control level
24 RBC, but less than its regulatory action level RBC.
25 (2) The notification by the Director to an insurer
26 of an Adjusted RBC Report that indicates the event
27 described in paragraph (1), provided the insurer does not
28 challenge the Adjusted RBC Report under Section 35A-35.
29 (3) The notification by the Director to the insurer
30 that the Director has, after a hearing, rejected the
31 insurer's challenge under Section 35A-35 to an Adjusted
32 RBC Report that indicates the event described in
33 paragraph (1).
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1 (4) The failure of the insurer to file an RBC
2 Report by the filing date, unless the insurer has
3 provided an explanation for the failure that is
4 satisfactory to the Director and has cured the failure
5 within 10 days after the filing date.
6 (5) The failure of the insurer to submit an RBC
7 Plan to the Director within the time period set forth in
8 subsection (c) of Section 35A-15.
9 (6) The notification by the Director to the insurer
10 that the insurer's RBC Plan or revised RBC Plan is, in
11 the judgment of the Director, unsatisfactory and that the
12 notification constitutes a regulatory action level event
13 with respect to the insurer, provided the insurer does
14 not challenge the determination under Section 35A-35.
15 (7) The notification by the Director to the insurer
16 that the Director has, after a hearing, rejected the
17 insurer's challenge under Section 35A-35 to the
18 determination made by the Director under paragraph (6).
19 (8) The notification by the Director to the insurer
20 that the insurer has failed to adhere to its RBC Plan or
21 Revised RBC Plan, but only if that failure has a
22 substantial adverse effect on the ability of the insurer
23 to eliminate the company action level event in accordance
24 with its RBC Plan or Revised RBC Plan and the Director
25 has so stated in the notification, provided the insurer
26 does not challenge the determination under Section
27 35A-35.
28 (9) The notification by the Director to the insurer
29 that the Director has, after a hearing, rejected the
30 insurer's challenge under Section 35A-35 to the
31 determination made by the Director under paragraph (8).
32 (b) In the event of a regulatory action level event, the
33 Director shall do all of the following:
34 (1) Require the insurer to prepare and submit an
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1 RBC Plan or, if applicable, a Revised RBC Plan to the
2 Director within 45 days after the regulatory action level
3 event occurs or within 45 days after the Director
4 notifies the insurer that the Director has, after a
5 hearing, rejected its challenge under Section 35A-35 to
6 either an Adjusted RBC Report or a Revised RBC Plan.
7 However, if the insurer previously prepared and submitted
8 an RBC Plan or a Revised RBC Plan in accordance with any
9 provision of this Article, the Director may determine
10 that the previously prepared RBC Plan or Revised RBC Plan
11 satisfies the requirement of this subsection (b)(1).
12 (2) Perform any examination or analysis of the
13 assets, liabilities, and operations of the insurer,
14 including a review of its RBC Plan or Revised RBC Plan,
15 that the Director deems necessary.
16 (3) After the examination or analysis, issue a
17 Corrective Order specifying the corrective actions the
18 Director determines are required.
19 (c) In determining corrective actions, the Director may
20 take into account any factors the Director deems relevant
21 based upon the examination or analysis of the assets,
22 liabilities, and operations of the insurer including, but not
23 limited to, the results of any sensitivity tests undertaken
24 under the RBC Instructions. The regulatory action level event
25 shall be deemed sufficient grounds for the Director to issue
26 a Corrective Order in accordance with Article XII 1/2. The
27 Director shall have rights, powers, and duties with respect
28 to the insurer that are set forth in Article XII 1/2 and the
29 insurer shall be entitled to the protections afforded
30 insurers under Article XII 1/2.
31 (d) The Director may retain actuaries, investment
32 experts, and other consultants necessary to review an
33 insurer's RBC Plan or Revised RBC Plan, examine or analyze
34 the assets, liabilities, and operations of the insurer, and
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1 formulate the Corrective Order with respect to the insurer.
2 The fees, costs, and expenses related to the actuaries,
3 investment experts, and other consultants shall be reasonable
4 and customary for the nature of the services provided and
5 shall be borne by the affected insurer or the party
6 designated by the Director.
7 (Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)
8 (215 ILCS 5/35A-30)
9 Sec. 35A-30. Mandatory control level event.
10 (a) A mandatory control level event means any of the
11 following events:
12 (1) The filing of an RBC Report that indicates that
13 the insurer's total adjusted capital is less than its
14 mandatory control level RBC.
15 (2) The notification by the Director to the insurer
16 of an Adjusted RBC Report that indicates the event
17 described in paragraph (1), provided the insurer does not
18 challenge the Adjusted RBC Report under Section 35A-35.
19 (3) The notification by the Director to the insurer
20 that the Director has, after a hearing, rejected the
21 insurer's challenge under Section 35A-35 to the Adjusted
22 RBC Report that indicates the event described in
23 paragraph (1).
24 (b) In the event of a mandatory control level event with
25 respect to a life, health, or life and health insurer, the
26 Director shall take actions necessary to place the insurer in
27 receivership under Article XIII. In that event, the
28 mandatory control level event shall be deemed sufficient
29 grounds for the Director to take action under Article XIII,
30 and the Director shall have the rights, powers, and duties
31 with respect to the insurer that are set forth in Article
32 XIII. If the Director takes action under this subsection
33 regarding an Adjusted RBC Report, the insurer shall be
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1 entitled to the protections of Article XIII. If the Director
2 finds that there is a reasonable expectation that the
3 mandatory control level event may be eliminated within 90
4 days after it occurs, the Director may delay action for not
5 more than 90 days after the mandatory control level event.
6 (c) In the case of a mandatory control level event with
7 respect to a property and casualty insurer, the Director
8 shall take the actions necessary to place the insurer in
9 receivership under Article XIII or, in the case of an insurer
10 that is writing no business and that is running-off its
11 existing business, may allow the insurer to continue its
12 run-off under the supervision of the Director. In either
13 case, the mandatory control level event is deemed sufficient
14 grounds for the Director to take action under Article XIII,
15 and the Director has the rights, powers, and duties with
16 respect to the insurer that are set forth in Article XIII.
17 If the Director takes action regarding an Adjusted RBC
18 Report, the insurer shall be entitled to the protections of
19 Article XIII. If the Director finds that there is a
20 reasonable expectation that the mandatory control level event
21 may be eliminated within 90 days after it occurs, the
22 Director may delay action for not more than 90 days after the
23 mandatory control level event.
24 (d) In the case of a mandatory control level event with
25 respect to a health organization, the Director shall take the
26 actions necessary to place the insurer in receivership under
27 Article XIII or, in the case of an insurer that is writing no
28 business and that is running-off its existing business, may
29 allow the insurer to continue its run-off under the
30 supervision of the Director. In either case, the mandatory
31 control level event is deemed sufficient grounds for the
32 Director to take action under Article XIII, and the Director
33 has the rights, powers, and duties with respect to the
34 insurer that are set forth in Article XIII. If the Director
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1 takes action regarding an Adjusted RBC Report, the insurer
2 shall be entitled to the protections of Article XIII. If the
3 Director finds that there is a reasonable expectation that
4 the mandatory control level event may be eliminated within 90
5 days after it occurs, the Director may delay action for not
6 more than 90 days after the mandatory control level event.
7 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
8 (215 ILCS 5/35A-55)
9 Sec. 35A-55. Provisions of Article supplemental;
10 exemptions.
11 (a) The provisions of this Article are supplemental to
12 the provisions of any other laws of this State and do not
13 preclude or limit other powers or duties of the Director
14 under any other laws.
15 (b) The Director may exempt from the application of this
16 Article any domestic property and casualty insurer that:
17 (1) writes direct business only in this State;
18 (2) writes direct annual premiums of $2,000,000 or
19 less; and
20 (3) assumes no reinsurance in excess of 5% of
21 direct premium written.
22 (c) The Director may exempt from the application of this
23 Article any company that is organized under Article IV of
24 this Code, that writes direct business only in this State,
25 and that assumes no reinsurance in excess of 5% of direct
26 written premiums.
27 (d) The Director may exempt from the application of this
28 Article any domestic health organization upon a showing by
29 the health organization of the reasons for requesting the
30 exemption and a determination by the Director of good cause
31 for an exemption.
32 (e) (d) The Director may by rule impose upon any insurer
33 exempted from the application of this Article under
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1 subsection (b), or (c), or (d) of this Section conditions to
2 the exemption that require maintenance of adequate capital.
3 These conditions shall not exceed the requirements of this
4 Article.
5 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
6 (215 ILCS 5/35A-60)
7 Sec. 35A-60. Phase-in of Article.
8 (a) For RBC Reports filed with respect to the December
9 31, 1993 annual statement, instead of the provisions of
10 Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following
11 provisions apply:
12 (1) In the event of a company action level event,
13 the Director shall take no action under this Article.
14 (2) In the event of a regulatory action level event
15 under paragraph (1), (2), or (3) of subsection (a) of
16 Section 35A-20, the Director shall take the actions
17 required under Section 35A-15.
18 (3) In the event of a regulatory action level event
19 under paragraph (4), (5), (6), (7), (8), or (9) of
20 subsection (a) of Section 35A-20 or an authorized control
21 level event, the Director shall take the actions required
22 under Section 35A-20.
23 (4) In the event of a mandatory control level
24 event, the Director shall take the actions required under
25 Section 35A-25.
26 (b) For RBC Reports required to be filed by property and
27 casualty insurers with respect to the December 31, 1995
28 annual statement, instead of the provisions of Section
29 35A-15, 35A-20, 35A-25, and 35A-30, the following provisions
30 apply:
31 (1) In the event of a company action level event
32 with respect to a domestic insurer, the Director shall
33 take no regulatory action under this Article.
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1 (2) In the event of a an regulatory action level
2 event under paragraph (1), (2) or (3) of subsection (a)
3 of Section 35A-20, the Director shall take the actions
4 required under Section 35A-15.
5 (3) In the event of a an regulatory action level
6 event under paragraph (4), (5), (6), (7), (8), or (9) of
7 subsection (a) of Section 35A-20 or an authorized control
8 level event, the Director shall take the actions required
9 under Section 35A-20.
10 (4) In the event of a mandatory control level
11 event, the Director shall take the actions required under
12 Section 35A-25.
13 (c) For RBC Reports required to be filed by health
14 organizations with respect to the December 31, 1999 annual
15 statement and the December 31, 2000 annual statement, instead
16 of the provisions of Sections 35A-15, 35A-20, 35A-25, and
17 35A-30, the following provisions apply:
18 (1) In the event of a company action level event
19 with respect to a domestic insurer, the Director shall
20 take no regulatory action under this Article.
21 (2) In the event of a regulatory action level event
22 under paragraph (1), (2), or (3) of subsection (a) of
23 Section 35A-20, the Director shall take the actions
24 required under Section 35A-15.
25 (3) In the event of a regulatory action level event
26 under paragraph (4), (5), (6), (7), (8), or (9) of
27 subsection (a) of Section 35A-20 or an authorized control
28 level event, the Director shall take the actions required
29 under Section 35A-20.
30 (4) In the event of a mandatory control level
31 event, the Director shall take the actions required under
32 Section 35A-25.
33 This subsection does not apply to a health organization
34 that provides or arranges for a health care plan under which
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1 enrollees may access health care services from contracted
2 providers without a referral from their primary care
3 physician.
4 Nothing in this subsection shall preclude or limit other
5 powers or duties of the Director under any other laws.
6 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
7 (215 ILCS 5/245) (from Ch. 73, par. 857)
8 Sec. 245. Salaries; pensions.
9 (1) No domestic life company shall directly or
10 indirectly pay any salary, compensation or emolument to any
11 officer, trustee or director thereof, or any salary,
12 compensation or emolument amounting in any year to more than
13 $200,000 $100,000 to any person, firm or corporation, unless
14 such payment be first authorized by a vote of the board of
15 directors of such company, which vote shall be duly recorded
16 in the records of the company. No such domestic life company
17 shall make any agreement with any of its officers, trustees
18 or salaried employees whereby it agrees that for any services
19 rendered or to be rendered he shall receive any salary,
20 compensation or emolument, directly or indirectly, that will
21 extend beyond a period of three years from the date of such
22 agreement except that payment of an amount not in excess of
23 20% of the salary of any of its officers, trustees, or
24 salaried employees may by written agreement be deferred
25 beyond such period of three years, which agreement may
26 include conditions to be met by such officer, trustee, or
27 salaried employee before payment will be made. The limitation
28 as to time contained herein shall not apply to a contract for
29 renewal commissions with any such officer, trustee or
30 salaried employee who is also an agent of the company nor
31 shall such limitation be construed as preventing a domestic
32 company from entering into contracts with its agents for the
33 payment of renewal commissions.
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1 (2) No such life company shall grant any pension to any
2 officer, director or trustee thereof or to any member of his
3 family after his death except that it may provide a pension
4 pursuant to the terms of the uniform retirement plan adopted
5 by the board of directors and for any person who is or has
6 been a salaried officer or employee of such company and who
7 may retire by reason of age or disability.
8 (3) No such company shall hereafter create or establish
9 any account or fund for the purpose of promoting the health
10 or welfare of its employees except from annual accretions to
11 earned surplus computed in the manner provided by this Code.
12 Contributions to such fund by any company in any calendar
13 year shall not exceed 15% of the accretion to earned surplus
14 in such calendar year. Before such account or fund shall be
15 established, maintained or operated, the plan for such
16 account or fund and its method of operation shall be approved
17 by the board of directors of the company, and submitted to
18 the shareholders in the case of a stock company, or members
19 in the case of a mutual company, at a special meeting called
20 for the purpose of considering such plan. Contributions to
21 the fund from sources other than the company may be provided
22 for in the operation of the plan. No amount held in such fund
23 or account whether contributed by the company or from any
24 other source shall be considered an admitted asset as defined
25 in this Code, nor considered in determining the solvency of
26 such company, nor be subject to the provisions of this Code.
27 (Source: P.A. 86-384.)
28 (215 ILCS 5/356h) (from Ch. 73, par. 968h)
29 Sec. 356h. No individual or group policy of accident and
30 health insurance which covers the insured's immediate family
31 or children, as well as covering the insured, shall exclude a
32 child from coverage or limit coverage for a child solely
33 because the child is an adopted child, or solely because the
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1 child does not reside with the insured. For purposes of this
2 Section, a child who is in the custody of the insured,
3 pursuant to an interim court order of adoption or, in the
4 case of group insurance, placement of adoption, whichever
5 comes first, vesting temporary care of the child in the
6 insured, is an adopted child, regardless of whether a final
7 order granting adoption is ultimately issued.
8 (Source: P.A. 86-649.)
9 (215 ILCS 5/356v)
10 Sec. 356v. Use of information derived from genetic
11 testing. After the effective date of this amendatory Act of
12 1997, an insurer must comply with the provisions of the
13 Genetic Information Privacy Act in connection with the
14 amendment, delivery, issuance, or renewal of, or claims for
15 or denial of coverage under, an individual or group policy of
16 accident and health insurance. Additionally, genetic
17 information shall not be treated as a condition described in
18 item (1) of subsection (A) of Section 20 of the Illinois
19 Health Insurance Portability and Accountability Act in the
20 absence of a diagnosis of the condition related to that
21 genetic information.
22 (Source: P.A. 90-25, eff. 1-1-98; 90-655, eff. 7-30-98.)
23 (215 ILCS 5/364) (from Ch. 73, par. 976)
24 Sec. 364. Discrimination prohibited. Discrimination
25 between individuals of the same class of risk in the issuance
26 of its policies or in the amount of premiums or rates charged
27 for any insurance covered by this article, or in the benefits
28 payable thereon, or in any of the terms or conditions of such
29 policy, or in any other manner whatsoever is prohibited.
30 Nothing in this provision shall prohibit an insurer from
31 providing incentives for insureds to utilize the services of
32 a particular hospital or person. It is hereby expressly
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1 provided that whenever the terms "physician" or "doctor"
2 appear or are used in any way in any policy of accident or
3 health insurance issued in this state, said terms shall
4 include within their meaning persons licensed to practice
5 dentistry under the Illinois Dental Practice Act with regard
6 to benefits payable for services performed by a person so
7 licensed, which such services are within the coverage
8 provided by the particular policy or contract of insurance
9 and are within the professional services authorized to be
10 performed by such person under and in accordance with the
11 said Act.
12 No company, in any policy of accident or health insurance
13 issued in this State, shall make or permit any distinction or
14 discrimination against individuals solely because of
15 handicaps or disabilities in the amount of payment of
16 premiums or rates charged for policies of insurance, in the
17 amount of any dividends or other benefits payable thereon, or
18 in any other terms and conditions of the contract it makes,
19 except where the distinction or discrimination is based on
20 sound actuarial principles or is related to actual or
21 reasonably anticipated experience.
22 No company shall refuse to insure, or refuse to continue
23 to insure, or limit the amount or extent or kind of coverage
24 available to an individual, or charge an individual a
25 different rate for the same coverage solely because of
26 blindness or partial blindness. With respect to all other
27 conditions, including the underlying cause of the blindness
28 or partial blindness, persons who are blind or partially
29 blind shall be subject to the same standards of sound
30 actuarial principles or actual or reasonably anticipated
31 experience as are sighted persons. Refusal to insure includes
32 denial by an insurer of disability insurance coverage on the
33 grounds that the policy defines "disability" as being
34 presumed in the event that the insured loses his or her
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1 eyesight. However, an insurer may exclude from coverage
2 disabilities consisting solely of blindness or partial
3 blindness when such condition existed at the time the policy
4 was issued.
5 (Source: P.A. 85-1209.)
6 (215 ILCS 5/367) (from Ch. 73, par. 979)
7 Sec. 367. Group accident and health insurance.
8 (1) Group accident and health insurance is hereby
9 declared to be that form of accident and health insurance
10 covering not less than 2 10 employees, members, or employees
11 of members, (except in case of volunteer fire departments the
12 number shall not be less than 5 members) written under a
13 master policy issued to any governmental corporation, unit,
14 agency or department thereof, or to any corporation,
15 copartnership, individual employer, or to any association
16 upon application of an executive officer or trustee of such
17 association having a constitution or bylaws and formed in
18 good faith for purposes other than that of obtaining
19 insurance, where officers, members, employees, employees of
20 members or classes or department thereof, may be insured for
21 their individual benefit. In addition a group accident and
22 health policy may be written to insure any group which may be
23 insured under a group life insurance policy. The term
24 "employees" shall include the officers, managers and
25 employees of subsidiary or affiliated corporations, and the
26 individual proprietors, partners and employees of affiliated
27 individuals and firms, when the business of such subsidiary
28 or affiliated corporations, firms or individuals, is
29 controlled by a common employer through stock ownership,
30 contract or otherwise.
31 (2) Any insurance company authorized to write accident
32 and health insurance in this State shall have power to issue
33 group accident and health policies. No policy of group
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1 accident and health insurance may be issued or delivered in
2 this State unless a copy of the form thereof shall have been
3 filed with the department and approved by it in accordance
4 with Section 355, and it contains in substance those
5 provisions contained in Sections 357.1 through 357.30 as may
6 be applicable to group accident and health insurance and the
7 following provisions:
8 (a) A provision that the policy, the application of
9 the employer, or executive officer or trustee of any
10 association, and the individual applications, if any, of
11 the employees, members or employees of members insured
12 shall constitute the entire contract between the parties,
13 and that all statements made by the employer, or the
14 executive officer or trustee, or by the individual
15 employees, members or employees of members shall (in the
16 absence of fraud) be deemed representations and not
17 warranties, and that no such statement shall be used in
18 defense to a claim under the policy, unless it is
19 contained in a written application.
20 (b) A provision that the insurer will issue to the
21 employer, or to the executive officer or trustee of the
22 association, for delivery to the employee, member or
23 employee of a member, who is insured under such policy,
24 an individual certificate setting forth a statement as to
25 the insurance protection to which he is entitled and to
26 whom payable.
27 (c) A provision that to the group or class thereof
28 originally insured shall be added from time to time all
29 new employees of the employer, members of the association
30 or employees of members eligible to and applying for
31 insurance in such group or class.
32 (3) Anything in this code to the contrary
33 notwithstanding, any group accident and health policy may
34 provide that all or any portion of any indemnities provided
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1 by any such policy on account of hospital, nursing, medical
2 or surgical services, may, at the insurer's option, be paid
3 directly to the hospital or person rendering such services;
4 but the policy may not require that the service be rendered
5 by a particular hospital or person. Payment so made shall
6 discharge the insurer's obligation with respect to the amount
7 of insurance so paid. Nothing in this subsection (3) shall
8 prohibit an insurer from providing incentives for insureds to
9 utilize the services of a particular hospital or person.
10 (4) Special group policies may be issued to school
11 districts providing medical or hospital service, or both, for
12 pupils of the district injured while participating in any
13 athletic activity under the jurisdiction of or sponsored or
14 controlled by the district or the authorities of any school
15 thereof. The provisions of this Section governing the
16 issuance of group accident and health insurance shall,
17 insofar as applicable, control the issuance of such policies
18 issued to schools.
19 (5) No policy of group accident and health insurance may
20 be issued or delivered in this State unless it provides that
21 upon the death of the insured employee or group member the
22 dependents' coverage, if any, continues for a period of at
23 least 90 days subject to any other policy provisions relating
24 to termination of dependents' coverage.
25 (6) No group hospital policy covering miscellaneous
26 hospital expenses issued or delivered in this State shall
27 contain any exception or exclusion from coverage which would
28 preclude the payment of expenses incurred for the processing
29 and administration of blood and its components.
30 (7) No policy of group accident and health insurance,
31 delivered in this State more than 120 days after the
32 effective day of the Section, which provides inpatient
33 hospital coverage for sicknesses shall exclude from such
34 coverage the treatment of alcoholism. This subsection shall
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1 not apply to a policy which covers only specified sicknesses.
2 (8) No policy of group accident and health insurance,
3 which provides benefits for hospital or medical expenses
4 based upon the actual expenses incurred, issued or delivered
5 in this State shall contain any specific exception to
6 coverage which would preclude the payment of actual expenses
7 incurred in the examination and testing of a victim of an
8 offense defined in Sections 12-13 through 12-16 of the
9 Criminal Code of 1961, or an attempt to commit such offense,
10 to establish that sexual contact did occur or did not occur,
11 and to establish the presence or absence of sexually
12 transmitted disease or infection, and examination and
13 treatment of injuries and trauma sustained by the victim of
14 such offense, arising out of the offense. Every group policy
15 of accident and health insurance which specifically provides
16 benefits for routine physical examinations shall provide full
17 coverage for expenses incurred in the examination and testing
18 of a victim of an offense defined in Sections 12-13 through
19 12-16 of the Criminal Code of 1961, or an attempt to commit
20 such offense, as set forth in this Section. This subsection
21 shall not apply to a policy which covers hospital and medical
22 expenses for specified illnesses and injuries only.
23 (9) For purposes of enabling the recovery of State
24 funds, any insurance carrier subject to this Section shall
25 upon reasonable demand by the Department of Public Health
26 disclose the names and identities of its insureds entitled to
27 benefits under this provision to the Department of Public
28 Health whenever the Department of Public Health has
29 determined that it has paid, or is about to pay, hospital or
30 medical expenses for which an insurance carrier is liable
31 under this Section. All information received by the
32 Department of Public Health under this provision shall be
33 held on a confidential basis and shall not be subject to
34 subpoena and shall not be made public by the Department of
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1 Public Health or used for any purpose other than that
2 authorized by this Section.
3 (10) Whenever the Department of Public Health finds that
4 it has paid all or part of any hospital or medical expenses
5 which an insurance carrier is obligated to pay under this
6 Section, the Department of Public Health shall be entitled to
7 receive reimbursement for its payments from such insurance
8 carrier provided that the Department of Public Health has
9 notified the insurance carrier of its claim before the
10 carrier has paid the benefits to its insureds or the
11 insureds' assignees.
12 (11) (a) No group hospital, medical or surgical expense
13 policy shall contain any provision whereby benefits
14 otherwise payable thereunder are subject to reduction
15 solely on account of the existence of similar benefits
16 provided under other group or group-type accident and
17 sickness insurance policies where such reduction would
18 operate to reduce total benefits payable under these
19 policies below an amount equal to 100% of total allowable
20 expenses provided under these policies.
21 (b) When dependents of insureds are covered under 2
22 policies, both of which contain coordination of benefits
23 provisions, benefits of the policy of the insured whose
24 birthday falls earlier in the year are determined before
25 those of the policy of the insured whose birthday falls
26 later in the year. Birthday, as used herein, refers only
27 to the month and day in a calendar year, not the year in
28 which the person was born. The Department of Insurance
29 shall promulgate rules defining the order of benefit
30 determination pursuant to this paragraph (b).
31 (12) Every group policy under this Section shall be
32 subject to the provisions of Sections 356g and 356n of this
33 Code.
34 (13) No accident and health insurer providing coverage
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1 for hospital or medical expenses on an expense incurred basis
2 shall deny reimbursement for an otherwise covered expense
3 incurred for any organ transplantation procedure solely on
4 the basis that such procedure is deemed experimental or
5 investigational unless supported by the determination of the
6 Office of Health Care Technology Assessment within the Agency
7 for Health Care Policy and Research within the federal
8 Department of Health and Human Services that such procedure
9 is either experimental or investigational or that there is
10 insufficient data or experience to determine whether an organ
11 transplantation procedure is clinically acceptable. If an
12 accident and health insurer has made written request, or had
13 one made on its behalf by a national organization, for
14 determination by the Office of Health Care Technology
15 Assessment within the Agency for Health Care Policy and
16 Research within the federal Department of Health and Human
17 Services as to whether a specific organ transplantation
18 procedure is clinically acceptable and said organization
19 fails to respond to such a request within a period of 90
20 days, the failure to act may be deemed a determination that
21 the procedure is deemed to be experimental or
22 investigational.
23 (14) Whenever a claim for benefits by an insured under a
24 dental prepayment program is denied or reduced, based on the
25 review of x-ray films, such review must be performed by a
26 dentist.
27 (Source: P.A. 89-187, eff. 7-19-95.)
28 (215 ILCS 5/367i) (from Ch. 73, par. 979i)
29 Sec. 367i. Discontinuance and replacement of coverage.
30 Group health insurance policies issued, amended, delivered or
31 renewed on and after the effective date of this amendatory
32 Act of 1989, shall provide a reasonable extension of benefits
33 in the event of total disability on the date the policy is
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1 discontinued for any reason.
2 Any applicable extension of benefits or accrued liability
3 shall be described in the policy and group certificate.
4 Benefits payable during any extension of benefits may be
5 subject to the policy's regular benefit limits.
6 Any insurer discontinuing a group health insurance policy
7 shall provide to the policyholder for delivery to covered
8 employees or members a notice as to the date such
9 discontinuation is to be effective and urging them to refer
10 to their group certificates to determine what contract
11 rights, if any, are available to them.
12 In the event a discontinued policy is replaced by another
13 group policy, the prior insurer or plan shall be liable only
14 to the extent of its accrued liabilities and extension of
15 benefits. Persons eligible for coverage under the succeeding
16 insurer's plan or policy shall include all employees and
17 dependents covered under the prior insurer's plan, including
18 disabled individuals covered under the prior plan but absent
19 from work on the effective date and thereafter. The prior
20 insurer shall provide extension of benefits for an insured's
21 disabling condition when no coverage is available under the
22 succeeding insurer's plan whether due to the absence of
23 coverage in the contract or lack of required creditable
24 coverage for a preexisting condition. be covered by that
25 policy. Persons not eligible for coverage under the
26 succeeding insurer's policy shall, until such time as such
27 person becomes eligible, be covered by the succeeding
28 insurer's policy in such a way as to ensure that such persons
29 shall be treated no less favorably than had the change in
30 insurers not occurred.
31 The Director shall promulgate reasonable rules as
32 necessary to carry out this Section.
33 (Source: P.A. 86-537.)
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1 Section 10. The Dental Service Plan Act is amended by
2 changing Section 25 as follows:
3 (215 ILCS 110/25) (from Ch. 32, par. 690.25)
4 Sec. 25. Application of Insurance Code provisions.
5 Dental service plan corporations and all persons interested
6 therein or dealing therewith shall be subject to the
7 provisions of Articles IIA and Article XII 1/2 and Sections
8 3.1, 133, 140, 143, 143c, 149, 355.2, 367.2, 401, 401.1, 402,
9 403, 403A, 408, 408.2, and 412, and subsection (15) of
10 Section 367 of the Illinois Insurance Code.
11 (Source: P.A. 86-600; 87-587; 87-1090.)
12 Section 15. The Health Maintenance Organization Act is
13 amended by changing Sections 1-3, 2-7, 4-9, and 5-3 as
14 follows:
15 (215 ILCS 125/1-3) (from Ch. 111 1/2, par. 1402.1)
16 Sec. 1-3. Definitions of admitted assets. "Admitted
17 Assets" includes the investments authorized or permitted by
18 Section 3-1 of this Act and, in addition thereto, only the
19 following:
20 (a) Petty cash and other cash funds in the
21 organization's principal or any official branch office and
22 under the control of the organization.
23 (b) Immediately withdrawable funds on deposit in demand
24 accounts, in a bank or trust company as defined in paragraph
25 (3) of subsection (g) of Section 3-1 or like funds actually
26 in the principal or any official branch office at statement
27 date, and, in transit to such bank or trust company with
28 authentic deposit credit given prior to the close of business
29 on the fifth bank working day following the statement date.
30 (c) The amount fairly estimated as recoverable on cash
31 deposited in a closed bank or trust company, if qualifying
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1 under the provisions of this Sec. prior to the suspension of
2 such bank or trust company.
3 (d) Bills and accounts receivable collateralized by
4 securities of the kind in which the organization is
5 authorized to invest.
6 (e) Premiums receivable from groups or individuals which
7 are not more than 60 days past due. Premiums receivable from
8 the United States, any state thereof or any political
9 subdivision of either which is not more than 90 days past
10 due.
11 (f) Amounts due under insurance policies or reinsurance
12 arrangements from insurance companies authorized to do
13 business in this State.
14 (g) Tax refunds due from the United States, any state or
15 any political subdivision thereof.
16 (h) The interest accrued on mortgage loans conforming to
17 Section 3-1 of this Act, not exceeding in aggregate amount on
18 an individual loan of one year's total due and accrued
19 interest.
20 (i) The rents accrued and owing to the organization on
21 real and personal property, directly or beneficially owned,
22 not exceeding on each individual property the amount of one
23 year's total due and accrued rent.
24 (j) Interest or rents accrued on conditional sales
25 agreements, security interests, chattel mortgages and real or
26 personal property under lease to other corporations, all
27 conforming to Section 3-1 of this Act, and not exceeding on
28 any individual investment, the amount of one year's total due
29 and accrued interest or rent.
30 (k) The fixed and required interest due and accrued on
31 bonds and other like evidences of indebtedness, conforming to
32 Section 3-1 of this Act, and not in default.
33 (l) Dividends receivable on shares of stock conforming
34 to Section 3-1 of this Act; provided that the market price
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1 taken for valuation purposes does not include the value of
2 the dividend.
3 (m) The interest or dividends due and payable, but not
4 credited, on deposits in banks and trust companies or on
5 accounts with savings and loan associations.
6 (n) Interest accrued on secured loans conforming to this
7 Act, not exceeding the amount of one year's interest on any
8 loan.
9 (o) Interest accrued on tax anticipation warrants.
10 (p) The amortized value of electronic computer or data
11 processing machines or systems purchased for use in
12 connection with the business of the organization, including
13 software purchased and developed specifically for the
14 organization's use and purposes.
15 (q) The cost of furniture, equipment and medical
16 equipment, less accumulated depreciation thereon, and
17 medical and pharmaceutical supplies that are used in the
18 delivery of health care and under the control of the
19 organization, provided such assets do not exceed 30% of
20 admitted assets.
21 (1) (r) Amounts due from affiliates pursuant to
22 management contracts or service agreements which meet the
23 requirements of Section 141.1 of the Illinois Insurance Code
24 to the extent that the affiliate has liquid assets with which
25 to pay the balance and maintain its accounts on a current
26 basis; provided that the aggregate amount due from affiliates
27 may not exceed the lesser of 10% of the organization's
28 admitted assets or 25% of the organization's net worth as
29 defined in Section 3-1. Any amount outstanding more than 3
30 months shall be deemed not current. For purpose of this
31 subsection "affiliates" are as defined in Article VIII 1/2 of
32 the Illinois Insurance Code.
33 (s) Intangible assets, including, but not limited to,
34 organization goodwill and purchased goodwill, to the extent
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1 reported in the most recent annual or quarterly financial
2 statement filed with the Director preceding the effective
3 date of this Amendatory Act of 1987. However, such assets
4 shall be amortized, by the straight-line method, to a value
5 of zero no later than December 31, 1990; provided, however,
6 that no organization shall be required pursuant to the
7 foregoing provision to amortize such assets in an amount
8 greater than $300,000 in any one year, and in cases where
9 amortization of such assets by December 31, 1990 would
10 otherwise require amortization of an annual amount in excess
11 of $300,000, the organization shall be required only to
12 amortize such assets at a rate of $300,000 per year until all
13 such assets have been amortized to a value of zero, unless
14 the continuation of the current amortization schedule would
15 result in an earlier zero value, in which case the current
16 amortization schedule shall be applied.
17 (t) Amounts due from patients or enrollees for health
18 care services rendered which are not more than 60 days past
19 due.
20 (2) (u) Amounts advanced to providers under contract to
21 the organization for services to be rendered to enrollees
22 pursuant to the contract. Amounts advanced must be for
23 period of not more than 3 months and must be based on
24 historical or estimated utilization patterns with the
25 provider and must be reconciled against actual incurred
26 claims at least semi-annually. Amounts due in the aggregate
27 may not exceed 50% of the organization's net worth as defined
28 in Section 3-1. Amounts due from a single provider may not
29 exceed the lesser of 5% of the organization's admitted assets
30 or 10% of the organization's net worth.
31 (3) Amounts permitted under Section 2-7.
32 (v) Cost reimbursement due from the Health Care
33 Financing Administration for furnishing covered medicare
34 services to medicare enrollees which are not more than twelve
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1 months past due.
2 (w) Prepaid rent or lease payments no greater than 3
3 months in advance, on real property used for the
4 administration of the organizations business or for the
5 delivery of medical care.
6 (Source: P.A. 88-364; revised 10-31-98.)
7 (215 ILCS 125/2-7) (from Ch. 111 1/2, par. 1407)
8 Sec. 2-7. Annual statement; audited financial reports
9 enrollment projections and budget filings.
10 (a) A health maintenance organization shall file with
11 the Director by March 1st in each year 2 copies of its
12 financial statement for the year ending December 31st
13 immediately preceding on forms prescribed by the Director,
14 which shall conform substantially to the form of statement
15 adopted by the National Association of Insurance
16 Commissioners. Unless the Director provides otherwise, the
17 annual statement is to be prepared in accordance with the
18 annual statement instructions and the Accounting Practices
19 and Procedures Manual adopted by the National Association of
20 Insurance Commissioners. The Director shall have power to
21 make such modifications and additions in this form as he may
22 deem desirable or necessary to ascertain the condition and
23 affairs of the organization. The Director shall have
24 authority to extend the time for filing any statement by any
25 organization for reasons which he considers good and
26 sufficient. The statement shall be verified by oaths of the
27 president and secretary of the organization or, in their
28 absence, by 2 other principal officers. In addition, any
29 organization may be required by the Director, when he
30 considers that action to be necessary and appropriate for the
31 protection of enrollees, creditors, shareholders,
32 subscribers, or claimants, to file, within 60 days after
33 mailing to the organization a notice that such is required, a
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1 supplemental summary statement as of the last day of any
2 calendar month occurring during the 100 days next preceding
3 the mailing of such notice designated by him on forms
4 prescribed and furnished by the Director. The Director may
5 require supplemental summary statements to be certified by an
6 independent actuary deemed competent by the Director or by an
7 independent certified public accountant. Every Health
8 Maintenance Organization shall annually, on or before the
9 first day of March, file 2 original copies of its annual
10 statement with the Director verified by at least two
11 principal officers, covering the two preceding calendar
12 years. Such annual statement shall be on forms prescribed by
13 the Director and shall include: (1) financial statements of
14 the organization; (2) the number of persons enrolled during
15 the year, the number of enrollees at the end of the year and
16 the number of enrollments terminated during the year; and (3)
17 such other information relating to the performance of the
18 Health Maintenance Organization as is necessary to enable the
19 Director to carry out his duties under this Act.
20 Any organization failing, without just cause, to file its
21 annual statement as required in this Act shall be required,
22 after notice and hearing, to pay a penalty of $100 for each
23 day's delay, to be recovered by the Director of Insurance of
24 the State of Illinois and the penalty so recovered shall be
25 paid into the General Revenue Fund of the State of Illinois.
26 The Director may reduce the penalty if the company
27 demonstrates to the Director that the imposition of the
28 penalty would constitute a financial hardship to the
29 organization.
30 An annual statement which is not materially complete when
31 filed shall not be considered to have been properly filed
32 until those deficiencies which make the filing incomplete
33 have been corrected and file.
34 (b) Audited financial reports shall be filed on or
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1 before June 1 of each year for the two calendar years
2 immediately preceding and shall provide an opinion expressed
3 by an independent certified public accountant on the
4 accompanying financial statement of the Health Maintenance
5 Organization and a detailed reconciliation for any
6 differences between the accompanying financial statements and
7 each of the related financial statements filed in accordance
8 with subsection (a) of this Section. Any organization
9 failing, without just cause, to file the annual audited
10 financial statement as required in this Act shall be
11 required, after the notice and hearing, to pay a penalty of
12 $100 for each day's delay, to be recovered by the Director of
13 Insurance of the State of Illinois and the penalty so
14 recovered shall be paid into the General Revenue Fund of the
15 State of Illinois. The Director may reduce the penalty if
16 the organization demonstrates to the Director that the
17 imposition of the penalty would constitute a financial
18 hardship to the organization.
19 (c) The Director may require that additional summary
20 financial information be filed no more often than 3 times per
21 year on reporting forms provided by him. However, he may
22 request certain key information on a more frequent basis if
23 necessary for a determination of the financial viability of
24 the organization.
25 (d) The Director shall have the authority to extend the
26 time for filing any statement by any organization for reasons
27 which the Director considers good and sufficient.
28 (Source: P.A. 85-20; revised 10-31-98.)
29 (215 ILCS 125/4-9) (from Ch. 111 1/2, par. 1409.2)
30 Sec. 4-9. Adopted children. No contract or evidence of
31 coverage issued by a Health Maintenance Organization which
32 provides for coverage of dependents of the principal
33 enrollees shall exclude a child from coverage or eligibility
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1 for coverage or limit coverage for a child solely on the
2 basis that he or she is an adopted child. For purposes of
3 this Section, a child who is in the custody of a principal
4 enrollee, pursuant to an interim court order of adoption or,
5 in the case of group insurance, placement of adoption,
6 whichever comes first, vesting temporary care of the child in
7 the enrollee, is an adopted child, regardless of whether a
8 final order granting adoption is ultimately issued.
9 (Source: P.A. 86-620.)
10 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
11 Sec. 5-3. Insurance Code provisions.
12 (a) Health Maintenance Organizations shall be subject to
13 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
14 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
15 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x,
16 367i, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444,
17 and 444.1, paragraph (c) of subsection (2) of Section 367,
18 and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2,
19 XXV, and XXVI of the Illinois Insurance Code.
20 (b) For purposes of the Illinois Insurance Code, except
21 for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
22 Health Maintenance Organizations in the following categories
23 are deemed to be "domestic companies":
24 (1) a corporation authorized under the Dental
25 Service Plan Act or the Voluntary Health Services Plans
26 Act;
27 (2) a corporation organized under the laws of this
28 State; or
29 (3) a corporation organized under the laws of
30 another state, 30% or more of the enrollees of which are
31 residents of this State, except a corporation subject to
32 substantially the same requirements in its state of
33 organization as is a "domestic company" under Article
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1 VIII 1/2 of the Illinois Insurance Code.
2 (c) In considering the merger, consolidation, or other
3 acquisition of control of a Health Maintenance Organization
4 pursuant to Article VIII 1/2 of the Illinois Insurance Code,
5 (1) the Director shall give primary consideration
6 to the continuation of benefits to enrollees and the
7 financial conditions of the acquired Health Maintenance
8 Organization after the merger, consolidation, or other
9 acquisition of control takes effect;
10 (2)(i) the criteria specified in subsection (1)(b)
11 of Section 131.8 of the Illinois Insurance Code shall not
12 apply and (ii) the Director, in making his determination
13 with respect to the merger, consolidation, or other
14 acquisition of control, need not take into account the
15 effect on competition of the merger, consolidation, or
16 other acquisition of control;
17 (3) the Director shall have the power to require
18 the following information:
19 (A) certification by an independent actuary of
20 the adequacy of the reserves of the Health
21 Maintenance Organization sought to be acquired;
22 (B) pro forma financial statements reflecting
23 the combined balance sheets of the acquiring company
24 and the Health Maintenance Organization sought to be
25 acquired as of the end of the preceding year and as
26 of a date 90 days prior to the acquisition, as well
27 as pro forma financial statements reflecting
28 projected combined operation for a period of 2
29 years;
30 (C) a pro forma business plan detailing an
31 acquiring party's plans with respect to the
32 operation of the Health Maintenance Organization
33 sought to be acquired for a period of not less than
34 3 years; and
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1 (D) such other information as the Director
2 shall require.
3 (d) The provisions of Article VIII 1/2 of the Illinois
4 Insurance Code and this Section 5-3 shall apply to the sale
5 by any health maintenance organization of greater than 10% of
6 its enrollee population (including without limitation the
7 health maintenance organization's right, title, and interest
8 in and to its health care certificates).
9 (e) In considering any management contract or service
10 agreement subject to Section 141.1 of the Illinois Insurance
11 Code, the Director (i) shall, in addition to the criteria
12 specified in Section 141.2 of the Illinois Insurance Code,
13 take into account the effect of the management contract or
14 service agreement on the continuation of benefits to
15 enrollees and the financial condition of the health
16 maintenance organization to be managed or serviced, and (ii)
17 need not take into account the effect of the management
18 contract or service agreement on competition.
19 (f) Except for small employer groups as defined in the
20 Small Employer Rating, Renewability and Portability Health
21 Insurance Act and except for medicare supplement policies as
22 defined in Section 363 of the Illinois Insurance Code, a
23 Health Maintenance Organization may by contract agree with a
24 group or other enrollment unit to effect refunds or charge
25 additional premiums under the following terms and conditions:
26 (i) the amount of, and other terms and conditions
27 with respect to, the refund or additional premium are set
28 forth in the group or enrollment unit contract agreed in
29 advance of the period for which a refund is to be paid or
30 additional premium is to be charged (which period shall
31 not be less than one year); and
32 (ii) the amount of the refund or additional premium
33 shall not exceed 20% of the Health Maintenance
34 Organization's profitable or unprofitable experience with
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1 respect to the group or other enrollment unit for the
2 period (and, for purposes of a refund or additional
3 premium, the profitable or unprofitable experience shall
4 be calculated taking into account a pro rata share of the
5 Health Maintenance Organization's administrative and
6 marketing expenses, but shall not include any refund to
7 be made or additional premium to be paid pursuant to this
8 subsection (f)). The Health Maintenance Organization and
9 the group or enrollment unit may agree that the
10 profitable or unprofitable experience may be calculated
11 taking into account the refund period and the immediately
12 preceding 2 plan years.
13 The Health Maintenance Organization shall include a
14 statement in the evidence of coverage issued to each enrollee
15 describing the possibility of a refund or additional premium,
16 and upon request of any group or enrollment unit, provide to
17 the group or enrollment unit a description of the method used
18 to calculate (1) the Health Maintenance Organization's
19 profitable experience with respect to the group or enrollment
20 unit and the resulting refund to the group or enrollment unit
21 or (2) the Health Maintenance Organization's unprofitable
22 experience with respect to the group or enrollment unit and
23 the resulting additional premium to be paid by the group or
24 enrollment unit.
25 In no event shall the Illinois Health Maintenance
26 Organization Guaranty Association be liable to pay any
27 contractual obligation of an insolvent organization to pay
28 any refund authorized under this Section.
29 (Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
30 90-177, eff. 7-23-97; 90-372, eff. 7-1-98; 90-583, eff.
31 5-29-98; 90-655, eff. 7-30-98; 90-741, eff. 1-1-99; revised
32 9-8-98.)
33 Section 20. The Limited Health Service Organization Act
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1 is amended by changing Sections 2007 and 4003 as follows:
2 (215 ILCS 130/2007) (from Ch. 73, par. 1502-7)
3 Sec. 2007. Annual statement; audited financial reports;
4 enrollment projections and budget; filings.
5 (a) A limited health service organization shall file
6 with the Director by March 1st in each year 2 copies of its
7 financial statement for the year ending December 31st
8 immediately preceding on forms prescribed by the Director,
9 which shall conform substantially to the form of statement
10 adopted by the National Association of Insurance
11 Commissioners. Unless the Director provides otherwise, the
12 annual statement is to be prepared in accordance with the
13 annual statement instructions and the Accounting Practices
14 and Procedures Manual adopted by the National Association of
15 Insurance Commissioners. The Director shall have power to
16 make such modifications and additions in this form as he may
17 deem desirable or necessary to ascertain the condition and
18 affairs of the organization. The Director shall have
19 authority to extend the time for filing any statement by any
20 organization for reasons which he considers good and
21 sufficient. The statement shall be verified by oaths of the
22 president and secretary of the organization or, in their
23 absence, by 2 other principal officers. In addition, any
24 organization may be required by the Director, when he
25 considers that action to be necessary and appropriate for the
26 protection of enrollees, creditors, shareholders,
27 subscribers, or claimants, to file, within 60 days after
28 mailing to the organization a notice that such is required, a
29 supplemental summary statement as of the last day of any
30 calendar month occurring during the 100 days next preceding
31 the mailing of such notice designated by him on forms
32 prescribed and furnished by the Director. The Director may
33 require supplemental summary statements to be certified by an
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1 independent actuary deemed competent by the Director or by an
2 independent certified public accountant. Every limited health
3 service organization shall annually, on or before the first
4 day of March, file 2 original copies of its annual statement
5 with the Director verified by at least 2 principal officers,
6 covering the 2 preceding calendar years. Such annual
7 statement shall be on forms prescribed by the Director and
8 shall include:
9 (1) the financial statements of the organization;
10 (2) the number of persons enrolled during the year,
11 the number of enrollees at the end of the year and the
12 number of enrollments terminated during the year; and
13 (3) such other information relating to the
14 performance of the limited health service organization as
15 the Director deems necessary to enable the Director to
16 carry out his duties under this Act.
17 Any organization failing, without just cause, to file its
18 annual statement as required in this Act shall be required,
19 after notice and opportunity for hearing, to pay a penalty of
20 $100 for each day's delay, to be recovered by the Director of
21 Insurance. The penalty so recovered shall be paid into the
22 General Revenue Fund of the State of Illinois. The Director
23 may reduce the penalty if the organization demonstrates to
24 the Director that the imposition of the penalty would
25 constitute a financial hardship to the organization.
26 An annual statement which is not materially complete when
27 filed shall not be considered to have been properly filed
28 until those deficiencies which make the filing incomplete
29 have been corrected and filed.
30 (b) Audited financial reports shall be filed on or
31 before June 1 of each year for the 2 calendar years
32 immediately preceding and shall provide an opinion expressed
33 by an independent certified public accountant on the
34 accompanying financial statement of the limited health
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1 service organization and detailed reconciliation for any
2 differences between the accompanying financial statements and
3 each of the related financial statements filed in accordance
4 with subsection (a) of this Section. Any organization
5 failing, without just cause, to file the annual audited
6 financial statement as required in this Act shall be
7 required, after the notice and opportunity for hearing, to
8 pay a penalty of $100 for each day's delay, to be recovered
9 by the Director of Insurance. The penalty so recovered shall
10 be paid into the General Revenue Fund of the State of
11 Illinois. The Director may reduce the penalty if the
12 organization demonstrates to the Director that the imposition
13 of the penalty would constitute a financial hardship to the
14 organization.
15 (c) The Director may require that additional summary
16 financial information be filed no more often than 3 times per
17 year on reporting forms provided by him. However, he may
18 request certain key information on a more frequent basis if
19 necessary for a determination of the financial viability of
20 the organization.
21 (d) The Director shall have the authority to extend the
22 time for filing any statements by an organization for reasons
23 which the Director considers good and sufficient.
24 (Source: P.A. 86-600.)
25 (215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
26 Sec. 4003. Illinois Insurance Code provisions. Limited
27 health service organizations shall be subject to the
28 provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
29 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
30 154.6, 154.7, 154.8, 155.04, 355.2, 356v, 401, 401.1, 402,
31 403, 403A, 408, 408.2, 409, 412, 444, and 444.1 and Articles
32 IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of
33 the Illinois Insurance Code. For purposes of the Illinois
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1 Insurance Code, except for Sections 444 and 444.1 and
2 Articles XIII and XIII 1/2, limited health service
3 organizations in the following categories are deemed to be
4 domestic companies:
5 (1) a corporation under the laws of this State; or
6 (2) a corporation organized under the laws of
7 another state, 30% of more of the enrollees of which are
8 residents of this State, except a corporation subject to
9 substantially the same requirements in its state of
10 organization as is a domestic company under Article VIII
11 1/2 of the Illinois Insurance Code.
12 (Source: P.A. 90-25, eff. 1-1-98; 90-583, eff. 5-29-98;
13 90-655, eff. 7-30-98.)
14 Section 25. The Voluntary Health Services Plans Act is
15 amended by changing Section 10 as follows:
16 (215 ILCS 165/10) (from Ch. 32, par. 604)
17 Sec. 10. Application of Insurance Code provisions.
18 Health services plan corporations and all persons interested
19 therein or dealing therewith shall be subject to the
20 provisions of Articles IIA and Article XII 1/2 and Sections
21 3.1, 133, 140, 143, 143c, 149, 354, 355.2, 356r, 356t, 356u,
22 356v, 356w, 356x, 367.2, 401, 401.1, 402, 403, 403A, 408,
23 408.2, and 412, and paragraphs (7) and (15) of Section 367 of
24 the Illinois Insurance Code.
25 (Source: P.A. 89-514, eff. 7-17-96; 90-7, eff. 6-10-97;
26 90-25, eff. 1-1-98; 90-655, eff. 7-30-98; 90-741, eff.
27 1-1-99.)
28 Section 99. Effective date. This Act takes effect upon
29 becoming law.".