[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
| [ Engrossed ] | [ House Amendment 001 ] |
91_HB2777
LRB9101905JSpc
1 AN ACT concerning financial reports of certain insurers,
2 amending named Acts.
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 3.1 as follows:
7 (215 ILCS 5/3.1) (from Ch. 73, par. 615.1)
8 Sec. 3.1. Definitions of admitted assets. "Admitted
9 Assets" includes the investments authorized or permitted by
10 this Code, the credit for reinsurance allowed by this Code,
11 and in addition thereto, only the following:
12 (a) Petty cash and other cash funds in the company's
13 principal or any official branch office and under the control
14 of the company.
15 (b) Immediately withdrawable funds on deposit in demand
16 accounts, in a bank or trust company as defined in Section
17 126.2MMM(1) or like funds actually in the principal or any
18 official branch office at statement date, and, in transit to
19 such bank or trust company with authentic deposit credit
20 given prior to the close of business on the fifth bank
21 working day following the statement date.
22 (c) The amount fairly estimated as recoverable on cash
23 deposited in a closed bank or trust company, if qualifying
24 under the provisions of this Section prior to the suspension
25 of such bank or trust company.
26 (d) Bills and accounts receivable collateralized by
27 securities of the kind in which the company is authorized to
28 invest.
29 (e) Bills receivable not past due covering uncollected
30 premiums taken by a company in the transaction of business
31 described in Class 3 of Section 4, in an amount not to exceed
-2- LRB9101905JSpc
1 the unearned premium reserve liability calculated on each
2 respective policy.
3 (f) For in force insurance coverages written by fire,
4 casualty, and reciprocal companies, excluding group accident
5 and health business, premium deposits, gross premiums, and
6 agents' balances (net of related commissions) not more than
7 90 days past due; installments booked but deferred and not
8 yet due (net of related commissions), provided that all
9 amounts having become due from the insured are not more than
10 90 days past due; and audit and retrospective premium to the
11 extent permitted to be admitted pursuant to the Annual
12 Statement Instructions and the Accounting Practices and
13 Procedures Manual for Property and Casualty Insurers
14 published by the National Association of Insurance
15 Commissioners, unless the Director prescribes otherwise.
16 However, audit and retrospective premiums that represent
17 anticipated additional premiums on policies for which the
18 policy period has not yet expired may not be admitted.
19 (g) Net amount of uncollected premiums on group life and
20 group accident and health policies, not more than 90 days
21 past due.
22 (h) Due and uncollected accident and health premiums on
23 in force individual policies, on insurance written by Class
24 1, Section 4 companies, less commissions due thereon to
25 agents; not exceeding in the aggregate the premium reserve
26 liability computed on such business.
27 (i) Premium notes, policy loans and liens, and the net
28 amount of uncollected and deferred premiums on individual
29 life insurance policies, not in excess of the liability for
30 the legal reserves specified in Section 223 or 281 of this
31 Code on such individual life insurance policies.
32 (j) Premium and assessment notes, certificate loans and
33 liens, and the gross amount less loading, of premiums or
34 assessments actually collected by subordinate lodges not yet
-3- LRB9101905JSpc
1 turned over to the Supreme Lodge on individual life insurance
2 certificates not in excess of the liability for the legal
3 reserves specified in Section 297.1 or 305.1 on such
4 individual life insurance certificates.
5 (k) Mortuary assessments due and unpaid on last call
6 made within 60 days, on insurance in force and for which
7 notices have been issued, not in excess of the liability for
8 the unpaid claims which are to be paid by the proceeds.
9 (l) Amounts fairly estimated as recoverable from
10 advances made on contracts under surety bonds.
11 (m) Amounts receivable from insurance companies
12 authorized to do business in this State and from associations
13 or bureaus owned or controlled by 5 or more separate and
14 nonaffiliated, by ownership or management, insurance
15 companies of which a majority thereof are authorized to
16 transact business in this State. The amount of those
17 receivables allowed as admitted assets may not exceed the
18 lesser of 5% of the company's total admitted assets or 10% of
19 the company's surplus as regards policyholders. Amounts
20 receivable from insurance companies or associations or
21 bureaus not meeting the preceding standards of this Section
22 if collateralized in the manner prescribed by Section 173.1.
23 (n) Tax refunds due from the United States or any state,
24 the Government of Canada or any province, or the Commonwealth
25 of Puerto Rico or amounts due to a subsidiary from a parent
26 under a tax allocation agreement that conforms with rules
27 adopted by the Director.
28 (o) The interest accrued on mortgage loans conforming to
29 this Code, not exceeding an aggregate amount on an individual
30 loan of one year's total due and accrued interest.
31 (p) The rents accrued and owing to the company on real
32 and personal property, directly or beneficially owned, not
33 exceeding on each individual property the amount of one
34 year's total due and accrued rent.
-4- LRB9101905JSpc
1 (q) Interest or rents accrued on conditional sales
2 agreements, security interests, chattel mortgages and real or
3 personal property under lease to other corporations, all
4 conforming to this Code, and not exceeding on any individual
5 investment, the amount of one year's total due and accrued
6 interest or rent.
7 (r) The fixed and required interest due and accrued on
8 bonds and other like evidences of indebtedness, conforming to
9 this Code, and not in default.
10 (s) Dividends receivable on shares of stock conforming
11 to this Code; provided that the market price taken for
12 valuation purposes does not include the value of the
13 dividend.
14 (t) The interest or dividends due and payable, but not
15 credited, on deposits in banks and trust companies or on
16 accounts with savings and loan associations.
17 (u) Interest accrued on secured loans conforming to this
18 Code, not exceeding the amount of one year's interest on any
19 loan.
20 (v) Interest accrued on tax anticipation warrants.
21 (w) The value of electronic computer or data processing
22 machines or systems purchased for use in connection with the
23 business of the company, if such machines or systems whenever
24 purchased have an aggregate original cost to the company of
25 at least $75,000. The amortized value of such machines or
26 systems at the end of any calendar year shall not be greater
27 than the original purchase price less 10% for each completed
28 year, or pro rata portion for any fraction thereof, after
29 such purchase, with the total admissible value at any
30 statement date to be limited to an amount not exceeding 2% of
31 the company's admitted assets at such statement date.
32 (1)(x) Amounts, other than premium, receivable from
33 affiliates, not outstanding for more than 3 months, and
34 arising under, management contracts or service agreements
-5- LRB9101905JSpc
1 which meet the requirements of Section 141.1 of the Illinois
2 Insurance Code to the extent that the affiliate has liquid
3 assets sufficient to pay the balance. The amount of those
4 receivables included in admitted assets may not exceed the
5 lesser of 5% of the company's admitted assets or 10% of the
6 company's surplus as regards policyholders. For purposes of
7 this subsection, "affiliate" has the meaning given that term
8 in Article VIII 1/2 of the Illinois Insurance Code.
9 (2) Amounts permitted under Section 136.
10 (y) Property and liability guaranty fund or guaranty
11 association assessments paid in any state, but only to the
12 extent it is probable the company will be able to offset
13 those assessments against present or future premium taxes or
14 income taxes payable in the state in which the assessments
15 were paid. The amount of those assessments allowed as
16 admitted assets may not exceed the lesser of 5% of the
17 company's total admitted assets or 10% of the company's
18 surplus as regards policyholders. The Director may disallow
19 any such assessment as an admitted asset to the extent he
20 determines a company is unlikely to realize a present or
21 future premium tax or income tax offset as a result of the
22 assessment.
23 (Source: P.A. 89-97, eff. 7-7-95; 89-669, eff. 1-1-97;
24 90-418, eff. 8-15-97.)
25 Section 10. The Health Maintenance Organization Act is
26 amended by changing Sections 1-3 and 2-7 as follows:
27 (215 ILCS 125/1-3) (from Ch. 111 1/2, par. 1402.1)
28 Sec. 1-3. Definitions of admitted assets. "Admitted
29 Assets" includes the investments authorized or permitted by
30 Section 3-1 of this Act and, in addition thereto, only the
31 following:
32 (a) Petty cash and other cash funds in the
-6- LRB9101905JSpc
1 organization's principal or any official branch office and
2 under the control of the organization.
3 (b) Immediately withdrawable funds on deposit in demand
4 accounts, in a bank or trust company as defined in paragraph
5 (3) of subsection (g) of Section 3-1 or like funds actually
6 in the principal or any official branch office at statement
7 date, and, in transit to such bank or trust company with
8 authentic deposit credit given prior to the close of business
9 on the fifth bank working day following the statement date.
10 (c) The amount fairly estimated as recoverable on cash
11 deposited in a closed bank or trust company, if qualifying
12 under the provisions of this Sec. prior to the suspension of
13 such bank or trust company.
14 (d) Bills and accounts receivable collateralized by
15 securities of the kind in which the organization is
16 authorized to invest.
17 (e) Premiums receivable from groups or individuals which
18 are not more than 60 days past due. Premiums receivable from
19 the United States, any state thereof or any political
20 subdivision of either which is not more than 90 days past
21 due.
22 (f) Amounts due under insurance policies or reinsurance
23 arrangements from insurance companies authorized to do
24 business in this State.
25 (g) Tax refunds due from the United States, any state or
26 any political subdivision thereof.
27 (h) The interest accrued on mortgage loans conforming to
28 Section 3-1 of this Act, not exceeding in aggregate amount on
29 an individual loan of one year's total due and accrued
30 interest.
31 (i) The rents accrued and owing to the organization on
32 real and personal property, directly or beneficially owned,
33 not exceeding on each individual property the amount of one
34 year's total due and accrued rent.
-7- LRB9101905JSpc
1 (j) Interest or rents accrued on conditional sales
2 agreements, security interests, chattel mortgages and real or
3 personal property under lease to other corporations, all
4 conforming to Section 3-1 of this Act, and not exceeding on
5 any individual investment, the amount of one year's total due
6 and accrued interest or rent.
7 (k) The fixed and required interest due and accrued on
8 bonds and other like evidences of indebtedness, conforming to
9 Section 3-1 of this Act, and not in default.
10 (l) Dividends receivable on shares of stock conforming
11 to Section 3-1 of this Act; provided that the market price
12 taken for valuation purposes does not include the value of
13 the dividend.
14 (m) The interest or dividends due and payable, but not
15 credited, on deposits in banks and trust companies or on
16 accounts with savings and loan associations.
17 (n) Interest accrued on secured loans conforming to this
18 Act, not exceeding the amount of one year's interest on any
19 loan.
20 (o) Interest accrued on tax anticipation warrants.
21 (p) The amortized value of electronic computer or data
22 processing machines or systems purchased for use in
23 connection with the business of the organization, including
24 software purchased and developed specifically for the
25 organization's use and purposes.
26 (q) The cost of furniture, equipment and medical
27 equipment, less accumulated depreciation thereon, and
28 medical and pharmaceutical supplies that are used in the
29 delivery of health care and under the control of the
30 organization, provided such assets do not exceed 30% of
31 admitted assets.
32 (1)(r) Amounts due from affiliates pursuant to
33 management contracts or service agreements which meet the
34 requirements of Section 141.1 of the Illinois Insurance Code
-8- LRB9101905JSpc
1 to the extent that the affiliate has liquid assets with which
2 to pay the balance and maintain its accounts on a current
3 basis; provided that the aggregate amount due from affiliates
4 may not exceed the lesser of 10% of the organization's
5 admitted assets or 25% of the organization's net worth as
6 defined in Section 3-1. Any amount outstanding more than 3
7 months shall be deemed not current. For purpose of this
8 subsection "affiliates" are as defined in Article VIII 1/2 of
9 the Illinois Insurance Code.
10 (s) Intangible assets, including, but not limited to,
11 organization goodwill and purchased goodwill, to the extent
12 reported in the most recent annual or quarterly financial
13 statement filed with the Director preceding the effective
14 date of this Amendatory Act of 1987. However, such assets
15 shall be amortized, by the straight-line method, to a value
16 of zero no later than December 31, 1990; provided, however,
17 that no organization shall be required pursuant to the
18 foregoing provision to amortize such assets in an amount
19 greater than $300,000 in any one year, and in cases where
20 amortization of such assets by December 31, 1990 would
21 otherwise require amortization of an annual amount in excess
22 of $300,000, the organization shall be required only to
23 amortize such assets at a rate of $300,000 per year until all
24 such assets have been amortized to a value of zero, unless
25 the continuation of the current amortization schedule would
26 result in an earlier zero value, in which case the current
27 amortization schedule shall be applied.
28 (t) Amounts due from patients or enrollees for health
29 care services rendered which are not more than 60 days past
30 due.
31 (2)(u) Amounts advanced to providers under contract to
32 the organization for services to be rendered to enrollees
33 pursuant to the contract. Amounts advanced must be for
34 period of not more than 3 months and must be based on
-9- LRB9101905JSpc
1 historical or estimated utilization patterns with the
2 provider and must be reconciled against actual incurred
3 claims at least semi-annually. Amounts due in the aggregate
4 may not exceed 50% of the organization's net worth as defined
5 in Section 3-1. Amounts due from a single provider may not
6 exceed the lesser of 5% of the organization's admitted assets
7 or 10% of the organization's net worth.
8 (3) Amounts permitted under Section 2-7.
9 (v) Cost reimbursement due from the Health Care
10 Financing Administration for furnishing covered medicare
11 services to medicare enrollees which are not more than twelve
12 months past due.
13 (w) Prepaid rent or lease payments no greater than 3
14 months in advance, on real property used for the
15 administration of the organizations business or for the
16 delivery of medical care.
17 (Source: P.A. 88-364; revised 10-31-98.)
18 (215 ILCS 125/2-7) (from Ch. 111 1/2, par. 1407)
19 Sec. 2-7. Annual statement; audited financial reports
20 enrollment projections and budget filings.
21 (a) A health maintenance organization shall file with
22 the Director by March 1st in each year 2 copies of its
23 financial statement for the year ending December 31st
24 immediately preceding on forms prescribed by the Director,
25 which shall conform substantially to the form of statement
26 adopted by the National Association of Insurance
27 Commissioners. Unless the Director provides otherwise, the
28 annual statement is to be prepared in accordance with the
29 annual statement instructions and the Accounting Practices
30 and Procedures Manual adopted by the National Association of
31 Insurance Commissioners. The Director shall have power to
32 make such modifications and additions in this form as he may
33 deem desirable or necessary to ascertain the condition and
-10- LRB9101905JSpc
1 affairs of the organization. The Director shall have
2 authority to extend the time for filing any statement by any
3 organization for reasons which he considers good and
4 sufficient. The statement shall be verified by oaths of the
5 president and secretary of the organization or, in their
6 absence, by 2 other principal officers. In addition, any
7 organization may be required by the Director, when he
8 considers that action to be necessary and appropriate for the
9 protection of enrollees, creditors, shareholders,
10 subscribers, or claimants, to file, within 60 days after
11 mailing to the organization a notice that such is required, a
12 supplemental summary statement as of the last day of any
13 calendar month occurring during the 100 days next preceding
14 the mailing of such notice designated by him on forms
15 prescribed and furnished by the Director. The Director may
16 require supplemental summary statements to be certified by an
17 independent actuary deemed competent by the Director or by an
18 independent certified public accountant. Every Health
19 Maintenance Organization shall annually, on or before the
20 first day of March, file 2 original copies of its annual
21 statement with the Director verified by at least two
22 principal officers, covering the two preceding calendar
23 years. Such annual statement shall be on forms prescribed by
24 the Director and shall include: (1) financial statements of
25 the organization; (2) the number of persons enrolled during
26 the year, the number of enrollees at the end of the year and
27 the number of enrollments terminated during the year; and (3)
28 such other information relating to the performance of the
29 Health Maintenance Organization as is necessary to enable the
30 Director to carry out his duties under this Act.
31 Any organization failing, without just cause, to file its
32 annual statement as required in this Act shall be required,
33 after notice and hearing, to pay a penalty of $100 for each
34 day's delay, to be recovered by the Director of Insurance of
-11- LRB9101905JSpc
1 the State of Illinois and the penalty so recovered shall be
2 paid into the General Revenue Fund of the State of Illinois.
3 The Director may reduce the penalty if the company
4 demonstrates to the Director that the imposition of the
5 penalty would constitute a financial hardship to the
6 organization.
7 An annual statement which is not materially complete when
8 filed shall not be considered to have been properly filed
9 until those deficiencies which make the filing incomplete
10 have been corrected and file.
11 (b) Audited financial reports shall be filed on or
12 before June 1 of each year for the two calendar years
13 immediately preceding and shall provide an opinion expressed
14 by an independent certified public accountant on the
15 accompanying financial statement of the Health Maintenance
16 Organization and a detailed reconciliation for any
17 differences between the accompanying financial statements and
18 each of the related financial statements filed in accordance
19 with subsection (a) of this Section. Any organization
20 failing, without just cause, to file the annual audited
21 financial statement as required in this Act shall be
22 required, after the notice and hearing, to pay a penalty of
23 $100 for each day's delay, to be recovered by the Director of
24 Insurance of the State of Illinois and the penalty so
25 recovered shall be paid into the General Revenue Fund of the
26 State of Illinois. The Director may reduce the penalty if
27 the organization demonstrates to the Director that the
28 imposition of the penalty would constitute a financial
29 hardship to the organization.
30 (c) (Blank). The Director may require that additional
31 summary financial information be filed no more often than 3
32 times per year on reporting forms provided by him. However,
33 he may request certain key information on a more frequent
34 basis if necessary for a determination of the financial
-12- LRB9101905JSpc
1 viability of the organization.
2 (d) The Director shall have the authority to extend the
3 time for filing any statement by any organization for reasons
4 which the Director considers good and sufficient.
5 (Source: P.A. 85-20; revised 10-31-98.)
6 Section 15. The Limited Health Service Organization Act
7 is amended by changing Section 2007 as follows:
8 (215 ILCS 130/2007) (from Ch. 73, par. 1502-7)
9 Sec. 2007. Annual statement; audited financial reports;
10 enrollment projections and budget; filings.
11 (a) A limited health service organization shall file
12 with the Director by March 1st in each year 2 copies of its
13 financial statement for the year ending December 31st
14 immediately preceding on forms prescribed by the Director,
15 which shall conform substantially to the form of statement
16 adopted by the National Association of Insurance
17 Commissioners. Unless the Director provides otherwise, the
18 annual statement is to be prepared in accordance with the
19 annual statement instructions and the Accounting Practices
20 and Procedures Manual adopted by the National Association of
21 Insurance Commissioners. The Director shall have power to
22 make such modifications and additions in this form as he may
23 deem desirable or necessary to ascertain the condition and
24 affairs of the organization. The Director shall have
25 authority to extend the time for filing any statement by any
26 organization for reasons which he considers good and
27 sufficient. The statement shall be verified by oaths of the
28 president and secretary of the organization or, in their
29 absence, by 2 other principal officers. In addition, any
30 organization may be required by the Director, when he
31 considers that action to be necessary and appropriate for the
32 protection of enrollees, creditors, shareholders,
-13- LRB9101905JSpc
1 subscribers, or claimants, to file, within 60 days after
2 mailing to the organization a notice that such is required, a
3 supplemental summary statement as of the last day of any
4 calendar month occurring during the 100 days next preceding
5 the mailing of such notice designated by him on forms
6 prescribed and furnished by the Director. The Director may
7 require supplemental summary statements to be certified by an
8 independent actuary deemed competent by the Director or by an
9 independent certified public accountant. Every limited health
10 service organization shall annually, on or before the first
11 day of March, file 2 original copies of its annual statement
12 with the Director verified by at least 2 principal officers,
13 covering the 2 preceding calendar years. Such annual
14 statement shall be on forms prescribed by the Director and
15 shall include:
16 (1) the financial statements of the organization;
17 (2) the number of persons enrolled during the year,
18 the number of enrollees at the end of the year and the
19 number of enrollments terminated during the year; and
20 (3) such other information relating to the
21 performance of the limited health service organization as
22 the Director deems necessary to enable the Director to
23 carry out his duties under this Act.
24 Any organization failing, without just cause, to file its
25 annual statement as required in this Act shall be required,
26 after notice and opportunity for hearing, to pay a penalty of
27 $100 for each day's delay, to be recovered by the Director of
28 Insurance. The penalty so recovered shall be paid into the
29 General Revenue Fund of the State of Illinois. The Director
30 may reduce the penalty if the organization demonstrates to
31 the Director that the imposition of the penalty would
32 constitute a financial hardship to the organization.
33 An annual statement which is not materially complete when
34 filed shall not be considered to have been properly filed
-14- LRB9101905JSpc
1 until those deficiencies which make the filing incomplete
2 have been corrected and filed.
3 (b) Audited financial reports shall be filed on or
4 before June 1 of each year for the 2 calendar years
5 immediately preceding and shall provide an opinion expressed
6 by an independent certified public accountant on the
7 accompanying financial statement of the limited health
8 service organization and detailed reconciliation for any
9 differences between the accompanying financial statements and
10 each of the related financial statements filed in accordance
11 with subsection (a) of this Section. Any organization
12 failing, without just cause, to file the annual audited
13 financial statement as required in this Act shall be
14 required, after the notice and opportunity for hearing, to
15 pay a penalty of $100 for each day's delay, to be recovered
16 by the Director of Insurance. The penalty so recovered shall
17 be paid into the General Revenue Fund of the State of
18 Illinois. The Director may reduce the penalty if the
19 organization demonstrates to the Director that the imposition
20 of the penalty would constitute a financial hardship to the
21 organization.
22 (c) (Blank).The Director may require that additional
23 summary financial information be filed no more often than 3
24 times per year on reporting forms provided by him. However,
25 he may request certain key information on a more frequent
26 basis if necessary for a determination of the financial
27 viability of the organization.
28 (d) The Director shall have the authority to extend the
29 time for filing any statements by an organization for reasons
30 which the Director considers good and sufficient.
31 (Source: P.A. 86-600.)
32 Section 99. Effective date. This Act takes effect on
33 January 1, 2001.