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| [ Engrossed ] | [ Senate Amendment 001 ] |
92_HB1989
LRB9205486JSpc
1 AN ACT concerning insurance.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Insurance Code is amended by
5 changing Section 205 as follows:
6 (215 ILCS 5/205) (from Ch. 73, par. 817)
7 Sec. 205. Priority of distribution of general assets.
8 (1) The priorities of distribution of general assets
9 from the company's estate is to be as follows:
10 (a) The costs and expenses of administration,
11 including the expenses of the Illinois Insurance Guaranty
12 Fund, the Illinois Life and Health Insurance Guaranty
13 Association, the Illinois Health Maintenance Organization
14 Guaranty Association and of any similar organization in
15 any other state as prescribed in subsection (c) of
16 Section 545.
17 (b) Secured claims, including claims for taxes and
18 debts due the federal or any state or local government,
19 that are secured by liens perfected prior to the filing
20 of the complaint.
21 (c) Claims for wages actually owing to employees
22 for services rendered within 3 months prior to the date
23 of the filing of the complaint, not exceeding $1,000 to
24 each employee unless there are claims due the federal
25 government under paragraph (f), then the claims for wages
26 shall have a priority of distribution immediately
27 following that of federal claims under paragraph (f) and
28 immediately preceding claims of general creditors under
29 paragraph (g).
30 (d) Claims by policyholders, beneficiaries,
31 insureds and liability claims against insureds covered
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1 under insurance policies and insurance contracts issued
2 by the company, and claims of the Illinois Insurance
3 Guaranty Fund, the Illinois Life and Health Insurance
4 Guaranty Association, the Illinois Health Maintenance
5 Organization Guaranty Association and any similar
6 organization in another state as prescribed in Section
7 545.
8 (e) Claims by policyholders, beneficiaries, and
9 insureds, the allowed values of which were determined by
10 estimation under paragraph (b) of subsection (4) of
11 Section 209.
12 (f) Any other claims due the federal government.
13 (g) All other claims of general creditors not
14 falling within any other priority under this Section
15 including claims for taxes and debts due any state or
16 local government which are not secured claims and claims
17 for attorneys' fees incurred by the company in contesting
18 its conservation, rehabilitation, or liquidation.
19 (h) Claims of guaranty fund certificate holders,
20 guaranty capital shareholders, capital note holders, and
21 surplus note holders.
22 (i) Proprietary claims of shareholders, members, or
23 other owners.
24 Every claim under a written agreement, statute, or rule
25 providing that the assets in a separate account are not
26 chargeable with the liabilities arising out of any other
27 business of the insurer shall be satisfied out of the funded
28 assets in the separate account equal to, but not to exceed,
29 the reserves maintained in the separate account under the
30 separate account agreement, and to the extent, if any, the
31 claim is not fully discharged thereby, the remainder of the
32 claim shall be treated as a priority level (d) claim under
33 paragraph (d) of this subsection to the extent that reserves
34 have been established in the insurer's general account
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1 pursuant to statute, rule, or the separate account agreement.
2 For purposes of this provision, "separate account
3 policies, contracts, or agreements" means any policies,
4 contracts, or agreements that provide for separate accounts
5 as contemplated by Section 245.21.
6 To the extent that any assets of an insurer, other than
7 those assets properly allocated to and maintained in a
8 separate account, have been used to fund or pay any expenses,
9 taxes, or policyholder benefits that are attributable to a
10 separate account policy, contract, or agreement that should
11 have been paid by a separate account prior to the
12 commencement of receivership proceedings, then upon the
13 commencement of receivership proceedings, the separate
14 accounts that benefited from this payment or funding shall
15 first be used to repay or reimburse the company's general
16 assets or account for any unreimbursed net sums due at the
17 commencement of receivership proceedings prior to the
18 application of the separate account assets to the
19 satisfaction of liabilities or the corresponding separate
20 account policies, contracts, and agreements.
21 To the extent, if any, reserves or assets maintained in
22 the separate account are in excess of the amounts needed to
23 satisfy claims under the separate account contracts, the
24 excess shall be treated as part of the general assets of the
25 insurer's estate.
26 (2) Within 120 days after the issuance of an Order of
27 Liquidation with a finding of insolvency against a domestic
28 company, the Director shall make application to the court
29 requesting authority to disburse funds to the Illinois
30 Insurance Guaranty Fund, the Illinois Life and Health
31 Insurance Guaranty Association, the Illinois Health
32 Maintenance Organization Guaranty Association and similar
33 organizations in other states from time to time out of the
34 company's marshaled assets as funds become available in
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1 amounts equal to disbursements made by the Illinois Insurance
2 Guaranty Fund, the Illinois Life and Health Insurance
3 Guaranty Association, the Illinois Health Maintenance
4 Organization Guaranty Association and similar organizations
5 in other states for covered claims obligations on the
6 presentation of evidence that such disbursements have been
7 made by the Illinois Insurance Guaranty Fund, the Illinois
8 Life and Health Insurance Guaranty Association, the Illinois
9 Health Maintenance Organization Guaranty Association and
10 similar organizations in other states.
11 The Director shall establish procedures for the ratable
12 allocation and distribution of disbursements to the Illinois
13 Insurance Guaranty Fund, the Illinois Life and Health
14 Insurance Guaranty Association, the Illinois Health
15 Maintenance Organization Guaranty Association and similar
16 organizations in other states. In determining the amounts
17 available for disbursement, the Director shall reserve
18 sufficient assets for the payment of the expenses of
19 administration described in paragraph (1) (a) of this
20 Section. All funds available for disbursement after the
21 establishment of the prescribed reserve shall be promptly
22 distributed. As a condition to receipt of funds in
23 reimbursement of covered claims obligations, the Director
24 shall secure from the Illinois Insurance Guaranty Fund, the
25 Illinois Life and Health Insurance Guaranty Association, the
26 Illinois Health Maintenance Organization Guaranty Association
27 and each similar organization in other states, an agreement
28 to return to the Director on demand funds previously received
29 as may be required to pay claims of secured creditors and
30 claims falling within the priorities established in
31 paragraphs (a), (b), (c), and (d) of subsection (1) of this
32 Section in accordance with such priorities.
33 (3) The provisions of this Section are severable under
34 Section 1.31 of the Statute on Statutes.
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1 (Source: P.A. 89-206, eff. 7-21-95; 90-381, eff. 8-14-97.)
2 Section 99. Effective date. This Act takes effect upon
3 becoming law.