State of Illinois
92^nd General Assembly
Legislation

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92_HB2994eng

 
HB2994 Engrossed                              LRB9205492JSpcA

 1        AN ACT concerning insurance producers.

 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  445  and  adding  Sections  500-5, 500-10,
 6    500-15,  500-20,  500-25,  500-30,  500-35,  500-40,  500-45,
 7    500-50,  500-55,  500-60,  500-65,  500-70,  500-75,  500-80,
 8    500-85, 500-90, 500-95, 500-100, 500-105,  500-110,  500-115,
 9    500-120,  500-125,  500-130,  500-135,  500-140, 500-145, and
10    500-150 as follows:

11        (215 ILCS 5/445) (from Ch. 73, par. 1057)
12        Sec. 445.  Surplus line.
13        (1)  Surplus   line   defined;   surplus   line   insurer
14    requirements.  Surplus line  insurance  is  insurance  on  an
15    Illinois  risk  of  the kinds specified in Classes 2 and 3 of
16    Section 4 of this Code procured from an unauthorized  insurer
17    company  or  a  domestic  surplus  line insurer as defined in
18    Section 445a after the insurance  producer  representing  the
19    insured  or  the  surplus  line  producer  is  unable,  after
20    diligent  effort,  to  procure  said  insurance from insurers
21    companies which are authorized to transact business  in  this
22    State other than domestic surplus line insurers as defined in
23    Section 445a.
24        Insurance  producers  may  procure surplus line insurance
25    only if licensed  as  a  surplus  line  producer  under  this
26    Section   and   may  procure  that  insurance  only  from  an
27    unauthorized insurer company or from a domestic surplus  line
28    insurer as defined in Section 445a:
29             (a)  that  based  upon  information available to the
30        surplus line producer has a policyholders surplus of  not
31        less  than  $15,000,000  determined  in  accordance  with
 
HB2994 Engrossed            -2-               LRB9205492JSpcA
 1        accounting   rules  that  are  applicable  to  authorized
 2        insurers companies; and
 3             (b)  that has standards of solvency  and  management
 4        that  are  adequate  for the protection of policyholders;
 5        and
 6             (c)  where an unauthorized insurer company does  not
 7        meet  the  standards  set  forth  in (a) and (b) above, a
 8        surplus  line  producer  may,   if   necessary,   procure
 9        insurance from that insurer company only if prior written
10        warning of such fact or condition is given to the insured
11        by the insurance producer or surplus line producer.
12        (2)  Surplus   line   producer;  license.   Any  licensed
13    producer who is a resident of this State, or any  nonresident
14    who  qualifies  under  Section  500-40,  may be licensed as a
15    surplus line producer upon:
16             (a)  completing  a  prelicensing  course  of   study
17        passing  a  written  examination.   The examination shall
18        reasonably test the knowledge of the applicant concerning
19        the surplus line law and the responsibilities assumed  by
20        a   surplus   line   producer   thereunder.   The  course
21        examination  provided  for  by  this  Section  shall   be
22        conducted  under  rules and regulations prescribed by the
23        Director.   The  Director  may  administer   the   course
24        examination   or   may   make   arrangements,   including
25        contracting  with an outside educational testing service,
26        for  administering  the   course   and   collecting   the
27        non-refundable  application  fee  provided  for  in  this
28        subsection  such  examinations.   Any charges assessed by
29        the Director  or  the  educational  testing  service  for
30        administering  the course such examinations shall be paid
31        directly by the individual  applicants.   Each  applicant
32        required  to take the course an examination shall, at the
33        time  of  request  for  examination,  enclose  with   the
34        application  a non-refundable $10 application fee payable
 
HB2994 Engrossed            -3-               LRB9205492JSpcA
 1        to the Director plus a  separate  course  an  examination
 2        administration  fee.   If  the  Director  administers the
 3        examination,  the   application   fee   and   examination
 4        administration  fee shall be combined and made payable to
 5        the Director.  If  the  Director  designates  an  outside
 6        testing   service  to  administer  the  examination,  the
 7        applicant   shall    make    a    separate    examination
 8        administration  fee  remittance payable to the designated
 9        testing service for the total fees  the  testing  service
10        charges  for each of the various services being requested
11        by the applicant.  An applicant who fails to  appear  for
12        the course examination as scheduled, or appears but fails
13        to complete the course pass, shall not be entitled to any
14        refund,  and shall be required to submit a new request to
15        attend the course for examination together with  all  the
16        requisite  fees  before  being  rescheduled  for  another
17        course examination at a later date; and
18             (b)  payment of an annual license fee of $200; and
19             (c)  procurement  of  the  surety  bond  required in
20        subsection (4) of this Section.
21        A Each surplus line producer so  licensed  shall  keep  a
22    separate  account of the business transacted thereunder which
23    shall be open at all times to the inspection of the  Director
24    or his representative.
25        The  prelicensing course of study examination requirement
26    in (a) above shall not apply to insurance producers who  were
27    licensed  under  the Illinois surplus line law or individuals
28    designated  to  act  for  a   partnership,   association   or
29    corporation  licensed  under the Illinois surplus line law on
30    or before the effective date of this amendatory  Act  of  the
31    92nd General Assembly February 27, 1985.
32        (3)  Taxes and reports.
33             (a)  Surplus line tax and penalty for late payment.
34             A  Each  surplus  line  producer shall file with the
 
HB2994 Engrossed            -4-               LRB9205492JSpcA
 1        Director on or before February 1 and  August  1  of  each
 2        year  a  report in the form prescribed by the Director on
 3        all surplus line  insurance  procured  from  unauthorized
 4        insurers  during  the  preceding  6  month  period ending
 5        December 31 or June 30 respectively, and on the filing of
 6        such report shall pay to the Director  for  the  use  and
 7        benefit  of  the  State  a  sum  equal to 3% of the gross
 8        premiums less returned premiums  upon  all  surplus  line
 9        insurance  procured  or  cancelled during the preceding 6
10        months.
11             Any surplus line producer who fails to pay the  full
12        amount  due  under this subsection is liable, in addition
13        to the amount due, for such penalty and interest  charges
14        as  are provided for under Section 412 of this Code.  The
15        Director, through the Attorney General, may institute  an
16        action  in  the  name  of  the  People  of  the  State of
17        Illinois, in any court of competent jurisdiction, for the
18        recovery of the amount of such taxes and  penalties  due,
19        and  prosecute  the same to final judgment, and take such
20        steps as are necessary to collect the same.
21             (b)  Fire Marshal Tax.
22             Each surplus  line  producer  shall  file  with  the
23        Director  on  or before March 31 of each year a report in
24        the form prescribed by the Director on all fire insurance
25        procured from unauthorized insurers subject to tax  under
26        Section 12 of the Fire Investigation Act and shall pay to
27        the Director the fire marshal tax required thereunder.
28             (c)  Taxes  and  fees charged to insured.  The taxes
29        imposed under this subsection and the countersigning fees
30        charged by the Surplus Line Association of  Illinois  may
31        be charged to and collected from surplus line insureds.
32        (4)  Bond.  Each surplus line producer, as a condition to
33    receiving  a  surplus  line producer's license, shall execute
34    and deliver to the Director a surety bond to  the  People  of
 
HB2994 Engrossed            -5-               LRB9205492JSpcA
 1    the State in the penal sum of $20,000, with a surety which is
 2    authorized  to  transact  business in this State, conditioned
 3    that the surplus line producer will pay to the  Director  the
 4    tax,  interest  and  penalties levied under subsection (3) of
 5    this Section.
 6        (5)  Submission of documents to Surplus Line  Association
 7    of Illinois.  A Each surplus line producer shall submit every
 8    insurance  contract  issued  under  his or her license to the
 9    Surplus  Line  Association  of  Illinois  for  recording  and
10    countersignature.  The submission and countersignature may be
11    effected through electronic means.  The submission  insurance
12    contracts submitted shall set forth:
13             (a)  the name of the insured;
14             (b)  the  description  and  location  of the insured
15        property or risk;
16             (c)  the amount insured;
17             (d)  the gross premiums charged or returned;
18             (e)  the  name  of  the  unauthorized   insurer   or
19        domestic  surplus line insurer as defined in Section 445a
20        from whom coverage has been procured;
21             (f)  the kind or kinds of insurance procured; and
22             (g)  amount of premium subject to  tax  required  by
23        Section 12 of the Fire Investigation Act.
24             Proposals,  endorsements,  and other documents which
25        are incidental to the insurance but  which  do  does  not
26        affect  the  premium charged are exempted from filing and
27        countersignature.
28             The submission of insuring contracts to the  Surplus
29        Line  Association of Illinois constitutes a certification
30        by the surplus line producer or by the insurance producer
31        who presented the risk to the surplus line  producer  for
32        placement  as  a  surplus  line  risk that after diligent
33        effort the required insurance could not be procured  from
34        insurers  companies  which  are  authorized  to  transact
 
HB2994 Engrossed            -6-               LRB9205492JSpcA
 1        business  in  this State other than domestic surplus line
 2        insurers  as  defined  in  Section  445a  and  that  such
 3        procurement was otherwise in accordance with the  surplus
 4        line law.
 5        (6)  Countersignature required.  It shall be unlawful for
 6    an  insurance  producer  to  deliver any unauthorized company
 7    insurer insurance contract or domestic surplus  line  insurer
 8    contract  unless  such insurance contract is countersigned by
 9    the Surplus Line Association of Illinois.
10        (7)  Inspection of records.  A Each surplus line producer
11    shall maintain separate records of  the  business  transacted
12    under  his  or  her  license,  including  complete  copies of
13    surplus line insurance contracts maintained on  paper  or  by
14    electronic  means,  which  records shall be open at all times
15    for inspection by  the  Director  and  by  the  Surplus  Line
16    Association of Illinois.
17        (8)  Violations  and penalties.  The Director may suspend
18    or revoke or refuse to renew a surplus line producer  license
19    for  any violation of this Code. In addition to or in lieu of
20    suspension or revocation, the Director may subject a  surplus
21    line  producer  to  a  civil penalty of up to $1,000 for each
22    cause  for  suspension  or  revocation.   Such   penalty   is
23    enforceable  under  subsection  (5)  of  Section 403A of this
24    Code.
25        (9)  Director may declare  insurer  ineligible.   If  the
26    Director  determines  that  the  further  assumption of risks
27    might be hazardous to the policyholders  of  an  unauthorized
28    insurer,  the Director may order the Surplus Line Association
29    of Illinois not to countersign insurance contracts evidencing
30    insurance in such insurer and order surplus line producers to
31    cease procuring insurance from such insurer.
32        (10)  Service of process upon  Director.   All  Insurance
33    contracts  delivered  under  this  Section  from unauthorized
34    insurers shall contain a provision designating  the  Director
 
HB2994 Engrossed            -7-               LRB9205492JSpcA
 1    and  his successors in office the true and lawful attorney of
 2    the insurer upon whom may be served all lawful process in any
 3    action, suit or proceeding arising out of such insurance  and
 4    further designate the surplus line producer or other resident
 5    of this State an agent of the unauthorized insurer to which a
 6    copy  of  such process shall be forwarded by the Director for
 7    delivery to the insurer.  Service of process  made  upon  the
 8    Director  to  be  valid  hereunder must state the name of the
 9    insured, the name of the unauthorized  insurer  and  identify
10    the  contract  of  insurance.   The Director at his option is
11    authorized to forward a copy of the process  to  the  Surplus
12    Line Association of Illinois for delivery to the unauthorized
13    insurer surplus line producer or other designated resident of
14    this  State  or  the  Director may deliver the process to the
15    unauthorized insurer by other means which he considers to  be
16    reasonably prompt and certain.
17        (11)  The  Illinois  Surplus  Line  law does not apply to
18    insurance of property and operations of railroads or aircraft
19    engaged in  interstate  or  foreign  commerce,  insurance  of
20    vessels,  crafts  or  hulls, cargoes, marine builder's risks,
21    marine protection and indemnity,  or  other  risks  including
22    strikes and war risks insured under ocean or wet marine forms
23    of policies.
24        (12)  Surplus line insurance procured under this Section,
25    including  insurance  procured  from  a domestic surplus line
26    insurer, is not subject to the  provisions  of  the  Illinois
27    Insurance  Code  other  than Sections 123, 123.1, 401, 401.1,
28    402, 403, 403A, 408, 412, 445, 445.1,  445.2,  445.3,  445.4,
29    and  all of the provisions of Article XXXI to the extent that
30    the provisions of Article XXXI are not inconsistent with  the
31    terms of this Act.
32    (Source: P.A. 90-794, eff. 8-14-98.)

33        (215 ILCS 5/500-5 new)
 
HB2994 Engrossed            -8-               LRB9205492JSpcA
 1        Sec.  500-5.  Scope  of Article.  This Article applies to
 2    all persons and insurance companies as defined in this  Code.
 3    This  Article  does  not  apply  to  surplus  lines producers
 4    licensed pursuant  to  Section  445  except  as  provided  in
 5    Section  500-40  and subsection (b) of Section 500-90 of this
 6    Article.

 7        (215 ILCS 5/500-10 new)
 8        Sec.   500-10.  Definitions.    In   addition   to    the
 9    definitions   in   Section  2  of  the  Code,  the  following
10    definitions apply to this Article:
11        "Business  entity"  means  a  corporation,   association,
12    partnership,  limited  liability  company,  limited liability
13    partnership, or other legal entity.
14        "Car  rental  limited  line  licensee"  means  a   person
15    authorized  under  the  provisions of Section 500-105 to sell
16    certain coverages relating to the rental of vehicles.
17        "Home state" means the District of Columbia and any state
18    or territory of the  United  States  in  which  an  insurance
19    producer maintains his or her principal place of residence or
20    principal  place  of  business  and  is licensed to act as an
21    insurance producer.
22        "Insurance" means  any  of  the  lines  of  authority  in
23    Section  500-35,  any  health  care  plan  under  the  Health
24    Maintenance Organization Act, or any limited health care plan
25    under the Limited Health Service Organization Act.
26        "Insurance  producer"  means  a  person  required  to  be
27    licensed  under  the  laws of this State to sell, solicit, or
28    negotiate insurance.
29        "Insurer" means a company as defined in subsection (e) of
30    Section 2 of this Code, a health maintenance organization  as
31    defined  in  the  Health  Maintenance Organization  Act, or a
32    limited health service organization as defined in the Limited
33    Health Service Organization Act.
 
HB2994 Engrossed            -9-               LRB9205492JSpcA
 1        "License"  means  a  document  issued  by  the   Director
 2    authorizing an individual to act as an insurance producer for
 3    the   lines   of  authority  specified  in  the  document  or
 4    authorizing  a  business  entity  to  act  as  an   insurance
 5    producer.   The license itself does not create any authority,
 6    actual, apparent, or inherent, in the holder to represent  or
 7    commit an insurance carrier.
 8        "Limited  lines insurance" means those lines of insurance
 9    defined in Section 500-100 or any  other  line  of  insurance
10    that  the Director may deem it necessary to recognize for the
11    purposes of complying with subsection (e) of Section 500-40.
12        "Limited lines producer" means a person authorized by the
13    Director  to  sell,  solicit,  or  negotiate  limited   lines
14    insurance.
15        "Negotiate"  means the act of conferring directly with or
16    offering  advice  directly  to  a  purchaser  or  prospective
17    purchaser of a particular contract  of  insurance  concerning
18    any  of the substantive benefits, terms, or conditions of the
19    contract, provided that the person engaged in that act either
20    sells  insurance  or  obtains  insurance  from  insurers  for
21    purchasers.
22        "Person" means an individual or a business entity.
23        "Rental agreement"  means  a  written  agreement  setting
24    forth  the  terms  and  conditions governing  the  use  of  a
25    vehicle provided by a rental company for rental or lease.
26        "Rental company" means a person, or a franchisee  of  the
27    person,   in  the    business  of providing primarily private
28    passenger vehicles to the public under a rental agreement for
29    a period not to exceed 30 days.
30        "Rental period" means the term of the rental agreement.
31        "Renter" means a person obtaining the use  of  a  vehicle
32    from  a  rental company under the terms of a rental agreement
33    for a period not to exceed 30 days.
34        "Sell" means to exchange a contract of insurance  by  any
 
HB2994 Engrossed            -10-              LRB9205492JSpcA
 1    means, for money or its equivalent, on behalf of an insurance
 2    company.
 3        "Solicit" means attempting to sell insurance or asking or
 4    urging  a  person to apply for a particular kind of insurance
 5    from a particular company.
 6        "Terminate" means the cancellation  of  the  relationship
 7    between   an  insurance  producer  and  the  insurer  or  the
 8    termination of a producer's authority to transact insurance.
 9        "Uniform Business Entity Application" means  the  current
10    version    of   the   National   Association   of   Insurance
11    Commissioners'  Uniform  Business  Entity   Application   for
12    nonresident business entities.
13        "Uniform  Application"  means  the current version of the
14    National  Association  of  Insurance  Commissioners'  Uniform
15    Application for nonresident producer licensing.
16        "Vehicle" or "rental vehicle" means   a   motor   vehicle
17    of   (1)   the  private  passenger type,  including passenger
18    vans, mini vans, and sport utility vehicles or (2) the  cargo
19    type,  including   cargo   vans,  pickup trucks,  and  trucks
20    with  a  gross  vehicle weight of less than 26,000 pounds the
21    operation of which does not require the operator to possess a
22    commercial driver's license.

23        (215 ILCS 5/500-15 new)
24        Sec. 500-15.  License required.
25        (a)  A  person  may  not  sell,  solicit,  or   negotiate
26    insurance in this State for any class or classes of insurance
27    unless  the  person is licensed for that line of authority in
28    accordance with this Article.
29        (b)  A person may not, for a fee, engage in the  business
30    of  offering  any  advice,  counsel, opinion, or service with
31    respect to the benefits, advantages, or  disadvantages  under
32    any  policy  of  insurance  that could be issued in Illinois,
33    unless that person is:
 
HB2994 Engrossed            -11-              LRB9205492JSpcA
 1             (1)  engaged or employed as an attorney licensed  to
 2        practice  law  and  performing  duties incidental to that
 3        position;
 4             (2)  a   licensed   insurance   producer,    limited
 5        insurance representative, or temporary insurance producer
 6        offering  advice  concerning  a  class of insurance as to
 7        which he or she is licensed to transact business;
 8             (3)  a trust officer of  a  bank  performing  duties
 9        incidental to his or her position;
10             (4)  an  actuary  or  a  certified public accountant
11        engaged or employed in a consulting capacity,  performing
12        duties incidental to that position; or
13             (5)  a  licensed  public  adjuster acting within the
14        scope of his or her license.
15        (c)  In addition to any other penalty set forth  in  this
16    Article,  an individual who knowingly violates subsection (a)
17    is guilty of a Class A misdemeanor.
18        (d)  In addition to any other penalty set forth  in  this
19    Article,  any  individual violating subsection (a) or (b) and
20    misappropriating  or  converting  any  moneys  collected   in
21    conjunction with the violation is guilty of a Class 4 felony.

22        (215 ILCS 5/500-20 new)
23        Sec. 500-20.  Exceptions to licensing.
24        (a)  Nothing  in  this  Article  shall  be  construed  to
25    require  an  insurer to obtain an insurance producer license.
26    In this Section, the  term  "insurer"  does  not  include  an
27    insurer's  officers,  directors,  employees, subsidiaries, or
28    affiliates.
29        (b)  A license as an  insurance  producer  shall  not  be
30    required of the following:
31             (1)  an officer, director, or employee of an insurer
32        or  of  an insurance producer, provided that the officer,
33        director, or employee does not receive any commission  on
 
HB2994 Engrossed            -12-              LRB9205492JSpcA
 1        policies  written  or  sold  to  insure  risks  residing,
 2        located, or to be performed in this State and:
 3                  (A)  the  officer's,  director's, or employee's
 4             activities    are     executive,     administrative,
 5             managerial, clerical, or a combination of these, and
 6             are   only   indirectly   related   to   the   sale,
 7             solicitation, or negotiation of insurance;
 8                  (B)  the  officer's , director's, or employee's
 9             function  relates  to  underwriting,  loss  control,
10             inspection,   or    the    processing,    adjusting,
11             investigating,  or settling of a claim on a contract
12             of insurance; or
13                  (C)  the  officer,  director,  or  employee  is
14             acting in the capacity of a special agent or  agency
15             supervisor  assisting  insurance  producers  if  the
16             person's   activities   are   limited  to  providing
17             technical  advice   and   assistance   to   licensed
18             insurance  producers  and  do  not include the sale,
19             solicitation, or negotiation of insurance;
20             (2)  a person who secures and furnishes  information
21        for  the  purpose of group life insurance, group property
22        and casualty insurance,  group  annuities,  or  group  or
23        blanket  accident and health insurance or for the purpose
24        of   enrolling   individuals   under    plans,    issuing
25        certificates   under  plans  or  otherwise  assisting  in
26        administering  plans  or  who   performs   administrative
27        services  related  to mass marketed property and casualty
28        insurance, if no commission is paid to the person for the
29        service;
30             (3)  an employer or  association  or  its  officers,
31        directors,  employees,  or  the  trustees  of an employee
32        trust plan, to the extent that the  employers,  officers,
33        employees,  directors,  or  trustees  are  engaged in the
34        administration or operation  of  a  program  of  employee
 
HB2994 Engrossed            -13-              LRB9205492JSpcA
 1        benefits   for   the   employer's  or  association's  own
 2        employees  or  the  employees  of  its  subsidiaries   or
 3        affiliates,  which  program involves the use of insurance
 4        issued  by  an  insurer,  as  long  as   the   employers,
 5        associations, officers, directors, employees, or trustees
 6        are   not   in   any   manner  compensated,  directly  or
 7        indirectly, by the company issuing the contracts;
 8             (4)  employees of insurers or organizations employed
 9        by insurers who are engaging in the  inspection,  rating,
10        or  classification  of risks or in the supervision of the
11        training  of  insurance  producers  and   who   are   not
12        individually   engaged  in  the  sale,  solicitation,  or
13        negotiation of insurance;
14             (5)  a person whose activities  in  this  State  are
15        limited  to  advertising  without  the  intent to solicit
16        insurance in this State through communications in printed
17        publications or forms  of  electronic  mass  media  whose
18        distribution  is  not limited to residents of this State,
19        provided that the  person  does  not  sell,  solicit,  or
20        negotiate  insurance  that  would  insure risks residing,
21        located, or to be performed in this State;
22             (6)  a person who is not a resident  of  this  State
23        who   sells,   solicits,  or  negotiates  a  contract  of
24        insurance for commercial property and casualty  risks  to
25        an  insured  with  risks  located  in more than one state
26        insured under that contract, provided that the person  is
27        otherwise  licensed  as  an  insurance  producer to sell,
28        solicit, or negotiate that insurance in the  state  where
29        the insured maintains its principal place of business and
30        the  contract  of insurance insures risks located in that
31        state;  or
32             (7)  a salaried, full-time employee who counsels  or
33        advises  his  or  her  employer relative to the insurance
34        interests of the  employer  or  of  the  subsidiaries  or
 
HB2994 Engrossed            -14-              LRB9205492JSpcA
 1        business  affiliates  of  the  employer provided that the
 2        employee does not sell or solicit insurance or receive  a
 3        commission.

 4        (215 ILCS 5/500-25 new)
 5        Sec. 500-25.  Application for examination.
 6        (a)  A  resident  individual  applying  for  an insurance
 7    producer license  must  pass  a  written  examination  unless
 8    exempt  pursuant to Section 500-45.  Both part one and part 2
 9    of the examination must be passed  within  90  days  of  each
10    other.  The  examination  shall  test  the  knowledge  of the
11    individual  concerning  the  lines  of  authority  for  which
12    application is made, the duties and  responsibilities  of  an
13    insurance  producer, and the insurance laws and rules of this
14    State.  Examinations  required  by  this  Section   must   be
15    developed   and  conducted  under  rules  prescribed  by  the
16    Director.
17        (b)  The  Director  may  make   arrangements,   including
18    contracting    with   an   outside   testing   service,   for
19    administering examinations and collecting  the  nonrefundable
20    fee set forth in Section 500-135.
21        (c)  An individual applying for an examination must remit
22    a  nonrefundable  fee  as  prescribed  by the Director as set
23    forth in Section 500-135, plus a separate remittance  payable
24    to  the  designated  testing  service  for the total fees the
25    testing service charges for  each  of  the  various  services
26    being requested by the applicant.
27        (d)  An   individual   who   fails   to  appear  for  the
28    examination as scheduled or fails to  pass  the  examination,
29    must  reapply  for an examination and remit all required fees
30    and forms before being rescheduled for another examination.

31        (215 ILCS 5/500-30 new)
32        Sec. 500-30.  Application for license.
 
HB2994 Engrossed            -15-              LRB9205492JSpcA
 1        (a)  An individual  applying  for  a  resident  insurance
 2    producer license must make application on a form specified by
 3    the   Director   and   declare   under  penalty  of  refusal,
 4    suspension, or revocation of the license that the  statements
 5    made  in  the  application are true, correct, and complete to
 6    the best of the individual's knowledge  and  belief.   Before
 7    approving  the  application,  the Director must find that the
 8    individual:
 9             (1)  is at least 18 years of age;
10             (2)  has not committed any act that is a ground  for
11        denial,  suspension,  or  revocation set forth in Section
12        500-70;
13             (3)  has completed, if required by the  Director,  a
14        pre-licensing  course of study for the lines of authority
15        for which the individual has applied (an  individual  who
16        successfully    completes    the    Fire   and   Casualty
17        pre-licensing courses also  meets  the  requirements  for
18        Personal Lines-Property and Casualty);
19             (4)  has paid the fees set forth in Section 500-135;
20        and
21             (5)  has  successfully  passed  the examinations for
22        the lines of authority for which the person has applied.
23        (b)  A pre-licensing course of study for  each  class  of
24    insurance   for   which  an  insurance  producer  license  is
25    requested  must  be  established  in  accordance  with  rules
26    prescribed by the Director and must consist of the  following
27    minimum hours:
28    Class of Insurance                                Number of
29                                                        Hours
30    Life (Class 1 (a))                                   15.0
31    Accident and Health (Class 1(b) or 2(a))             15.0
32    Fire (Class 3)                                       15.0
33    Casualty (Class 2)                                   15.0
34    Personal Lines-Property Casualty                     15.0
 
HB2994 Engrossed            -16-              LRB9205492JSpcA
 1    Motor Vehicle (Class 2(b) or 3(e))                   7.5
 2        (c)  A  business  entity  acting as an insurance producer
 3    must obtain an insurance producer license.  Application  must
 4    be made using the Uniform Business Entity Application. Before
 5    approving the application, the Director must find that:
 6             (1)  the business entity has paid the fees set forth
 7        in Section 500-135; and
 8             (2)  the  business  entity has designated a licensed
 9        producer responsible for the business entity's compliance
10        with the insurance laws and rules of this State.
11        (d)  The Director may require  any  documents  reasonably
12    necessary   to   verify   the  information  contained  in  an
13    application.

14        (215 ILCS 5/500-35 new)
15        Sec. 500-35.  License.
16        (a)  Unless denied a license pursuant to Section  500-70,
17    persons  who have met the requirements of Sections 500-25 and
18    500-30 shall be issued a 2-year insurance  producer  license.
19    An insurance producer may receive qualification for a license
20    in one or more of the following lines of authority:
21             (1)  Life:   insurance   coverage   on  human  lives
22        including benefits of endowment and  annuities,  and  may
23        include  benefits  in the event of death or dismemberment
24        by accident and benefits for disability income.
25             (2)  Variable life and  variable  annuity  products:
26        insurance coverage provided under variable life insurance
27        contracts and variable annuities.
28             (3)  Accident  and  health  or  sickness:  insurance
29        coverage for sickness, bodily injury, or accidental death
30        and may include benefits for disability income.
31             (4)  Property:  insurance coverage for the direct or
32        consequential loss or damage to property of every kind.
33             (5)  Casualty:  insurance  coverage  against   legal
 
HB2994 Engrossed            -17-              LRB9205492JSpcA
 1        liability,   including   that   for   death,  injury,  or
 2        disability or damage to real or personal property.
 3             (6)  Personal lines: property and casualty insurance
 4        coverage sold to individuals and families  for  primarily
 5        noncommercial purposes.
 6             (7)  Any  other  line  of  insurance permitted under
 7        State laws or rules.
 8        (b)  An insurance producer license shall remain in effect
 9    unless revoked or suspended as long as the fee set  forth  in
10    Section  500-135  is  paid  and  education  requirements  for
11    resident individual producers are met by the due date.
12             (1)  Before   each  license  renewal,  an  insurance
13        producer must satisfactorily complete at least  30  hours
14        of  course  study  in accordance with rules prescribed by
15        the Director. The Director may not approve  a  course  of
16        study  unless the course provides for classroom, seminar,
17        or self-study instruction methods.  A course given  in  a
18        combination  instruction  method  of classroom or seminar
19        and self-study shall be deemed to be a self-study  course
20        unless  the classroom or seminar certified hours meets or
21        exceeds two-thirds  of  total  hours  certified  for  the
22        course.   The self-study material used in the combination
23        course must be directly related  to  and  complement  the
24        classroom portion of the course in order to be considered
25        for  credit.   An instruction method other than classroom
26        or   seminar   shall   be    considered   as   self-study
27        methodology.   Self-study  credit   hours   require   the
28        successful  completion  of  an  examination  covering the
29        self-study  material.  The   examination   may   not   be
30        self-evaluated.  However,  if  the self-study material is
31        completed through the use  of  an  approved  computerized
32        interactive  format  whereby  the  computer validates the
33        successful completion  of  the  self-study  material,  no
34        additional   examination  is  required.   The  self-study
 
HB2994 Engrossed            -18-              LRB9205492JSpcA
 1        credit hours contained in a  certified  course  shall  be
 2        considered  classroom  hours  when at least two-thirds of
 3        the hours are given as classroom or seminar instruction.
 4             (2)  An  insurance  producer  license  automatically
 5        terminates  when   an   insurance   producer   fails   to
 6        successfully   meet  the  requirements  of  item  (1)  of
 7        subsection  (b)  of  this  Section.   The  producer  must
 8        complete the course in advance of  the  renewal  date  to
 9        allow the education provider time to report the credit to
10        the Department.
11        (c)  A    provider   of  a  pre-licensing  or  continuing
12    education course required by Section 500-30 and this  Section
13    must  pay  a  registration fee and a course certification fee
14    for each  course  being  certified  as  provided  by  Section
15    500-135.
16        (d)  An  individual  insurance producer who allows his or
17    her license to lapse may, within 12 months after the due date
18    of the renewal fee, be issued a license without the necessity
19    of passing a written examination. However, a penalty  in  the
20    amount  of  double  the  unpaid renewal fee shall be required
21    after the due date.
22        (e)  A licensed  insurance  producer  who  is  unable  to
23    comply  with  license  renewal  procedures  due  to  military
24    service may request a waiver of those procedures.
25        (f)  The   license  must  contain  the  licensee's  name,
26    address, and personal  identification  number,  the  date  of
27    issuance,  the  lines  of authority, the expiration date, and
28    any other information the Director deems necessary.
29        (g)  Licensees must inform  the  Director  by  any  means
30    acceptable  to  the Director of a change of address within 30
31    days after the change.
32        (h)  In  order  to  assist  in  the  performance  of  the
33    Director's  duties,  the  Director  may   contract   with   a
34    non-governmental entity including the National Association of
 
HB2994 Engrossed            -19-              LRB9205492JSpcA
 1    Insurance   Commissioners   (NAIC),   or  any  affiliates  or
 2    subsidiaries  that  the  NAIC  oversees,   to   perform   any
 3    ministerial  functions, including collection of fees, related
 4    to   producer   licensing   that   the   Director   and   the
 5    non-governmental entity may deem appropriate.

 6        (215 ILCS 5/500-40 new)
 7        Sec. 500-40.  Nonresident licensing.
 8        (a)  Unless denied a license pursuant to Section  500-70,
 9    a  nonresident  person  shall  receive a nonresident producer
10    license if:
11             (1)  the person is currently licensed as a  resident
12        and in good standing in his or her home state;
13             (2)  the person has submitted the proper request for
14        a  license  and  has  paid  the  fees required by Section
15        500-135;
16             (3)  the person has submitted or transmitted to  the
17        Director  the  application  for a license that the person
18        submitted to his or her home state or,  instead  of  that
19        application, a completed Uniform Application; and
20             (4)  the  person's  home  state  awards  nonresident
21        producer  licenses to residents of this State on the same
22        basis.
23        (b)  The Director may  verify  the  producer's  licensing
24    status  through  the  Producer  Database  maintained  by  the
25    National   Association  of  Insurance  Commissioners  or  its
26    affiliates or subsidiaries or by obtaining certification from
27    the public official having supervision of  insurance  in  the
28    applicant's  state of residence that the applicant has passed
29    the written examination for the class  of  insurance  applied
30    for.
31        (c)  A  nonresident  producer who moves from one state to
32    another state or a resident  producer  who  moves  from  this
33    State  to  another  state  must  file a change of address and
 
HB2994 Engrossed            -20-              LRB9205492JSpcA
 1    provide certification from the new resident state  within  30
 2    days  after  the change of legal residence. No fee or license
 3    application is required.
 4        (d)  Notwithstanding any other provision of this Article,
 5    a person licensed as a surplus lines producer in his  or  her
 6    home state shall receive a nonresident surplus lines producer
 7    license  pursuant  to subsection (a) of this Section.  Except
 8    as provided  in  subsection  (a),  nothing  in  this  Section
 9    supersedes any provision of Section 445 of this Code.
10        (e)  Notwithstanding any other provision of this Article,
11    a  person  licensed as a limited lines producer in his or her
12    home state shall receive a nonresident limited lines producer
13    license, pursuant to subsection (a) of this Section, granting
14    the same scope of authority  as  granted  under  the  license
15    issued  by  the  producer's  home state.  For the purposes of
16    this subsection, limited  line  insurance  is  any  authority
17    granted by the home state that restricts the authority of the
18    license  to  less  than the total authority prescribed in the
19    associated major lines pursuant to items (1) through  (5)  of
20    subsection (a) of Section 500-35.

21        (215 ILCS 5/500-45 new)
22        Sec. 500-45.  Exemption from examination.
23        (a)  An  individual who applies for an insurance producer
24    license in this State who was  previously  licensed  for  the
25    same  lines  of  authority  in  another  state  shall  not be
26    required  to  complete   any   pre-licensing   education   or
27    examination.  This  exemption is only available if the person
28    is currently licensed in that state or if the application  is
29    received  within  90  days  after  the  cancellation  of  the
30    applicant's  previous license and if the prior state issues a
31    certification  that,  at  the  time  of   cancellation,   the
32    applicant  was  in good standing in that state or the state's
33    Producer  Database  records,  maintained  by   the   National
 
HB2994 Engrossed            -21-              LRB9205492JSpcA
 1    Association  of  Insurance  Commissioners, its affiliates, or
 2    subsidiaries indicate that the producer is or was licensed in
 3    good standing for the line of authority requested.
 4        (b)  A  person  licensed  as  an  insurance  producer  in
 5    another state who moves to this State must  make  application
 6    within 90 days after establishing legal residence to become a
 7    resident licensee pursuant to Section 500-30. A pre-licensing
 8    education  or  examination  is not required of that person to
 9    obtain any line of authority previously  held  in  the  prior
10    state except when the Director determines otherwise by rule.

11        (215 ILCS 5/500-50 new)
12        Sec.     500-50.  Insurance     producers;    examination
13    statistics.
14        (a)  The  use  of  examinations  for   the   purpose   of
15    determining  qualifications  of  persons  to  be  licensed as
16    insurance producers has a direct and far-reaching  effect  on
17    persons  seeking  those licenses, on insurance companies, and
18    on the public. It is in  the  public  interest  and  it  will
19    further  the  public  welfare to insure that examinations for
20    licensing do not have the effect of unlawfully discriminating
21    against applicants for licensing as  insurance  producers  on
22    the basis of race, color, national origin, or sex.
23        (b)  As  used  in  this Section, the following words have
24    the meanings given in this subsection.
25        Examination. "Examination" means the examination in  each
26    line of insurance administered pursuant to Section 500-30.
27        Examinee.   "Examinee"   means  a  person  who  takes  an
28    examination.
29        Part. "Part" means a portion of an examination for  which
30    a score is calculated.
31        Operational   item.   "Operational  item"  means  a  test
32    question considered in determining an examinee's score.
33        Test  form.  "Test  form"  means  the  test  booklet   or
 
HB2994 Engrossed            -22-              LRB9205492JSpcA
 1    instrument used for a part of an examination.
 2        Pretest  item.  "Pretest  item"  means a prospective test
 3    question that is included in a test form in order  to  assess
 4    its  performance,  but  is  not  considered in determining an
 5    examinee's score.
 6        Minority  group  or  examinees.   "Minority   group"   or
 7    "minority examinees" means African American, American Indian,
 8    Asian, and Hispanic examinees.
 9        Correct-answer  rate.  "Correct-answer  rate" for an item
10    means the number of examinees who provided the correct answer
11    on an item divided by the number of  examinees  who  answered
12    the item.
13        Correlation. "Correlation" means a statistical measure of
14    the   relationship   between   performance  on  an  item  and
15    performance on a part of the examination.
16        (c)  The Director shall ask each examinee to  self-report
17    on  a  voluntary basis on the answer sheet, application form,
18    or by other appropriate means, the following information:
19             (1)  race or  ethnicity  (African  American;  white;
20        American Indian; Asian; Hispanic; or other);
21             (2)  education  (8th  grade  or less; less than 12th
22        grade; high school diploma or G.E.D.; some  college,  but
23        no 4-year degree; or 4-year degree or more); and
24             (3)  gender (male or female).
25        The  Director must advise all examinees that they are not
26    required to provide this information, that they will  not  be
27    penalized  for  not  doing so, and that the Director will use
28    the  information  provided  exclusively  for   research   and
29    statistical  purposes and to improve the quality and fairness
30    of the examinations.
31        (d)  No later than May 1 of each year, the Director  must
32    prepare, publicly announce, and publish an Examination Report
33    of   summary   statistical   information   relating  to  each
34    examination administered during the preceding calendar  year.
 
HB2994 Engrossed            -23-              LRB9205492JSpcA
 1    Each  Examination  Report  shall  show  with  respect to each
 2    examination:
 3             (1)  For all examinees combined  and  separately  by
 4        race  or  ethnicity,  by educational level, by gender, by
 5        educational level within race or ethnicity, by  education
 6        level  within  gender,  and  by  race or ethnicity within
 7        gender:
 8                  (A)  number of examinees;
 9                  (B)  percentage and  number  of  examinees  who
10             passed each part;
11                  (C)  percentage  and  number  of  examinees who
12             passed all parts;
13                  (D)  mean scaled scores on each part; and
14                  (E)  standard deviation  of  scaled  scores  on
15             each part.
16             (2)  For  male  examinees, female examinees, African
17        American  examinees,  white  examinees,  American  Indian
18        examinees,  Asian  examinees,  and  Hispanic   examinees,
19        respectively,  with  a high school diploma or G.E.D., the
20        distribution of scaled scores on each part.
21        No later than May 1  of  each  year,  the  Director  must
22    prepare  and  make  available  on  request  an Item Report of
23    summary statistical information relating to each  operational
24    item  on  each  test  form  administered during the preceding
25    calendar  year.  The  Item  Report  shall  show,   for   each
26    operational  item,  for all examinees combined and separately
27    for African American  examinees,  white  examinees,  American
28    Indian  examinees,  Asian  examinees, Hispanic examinees, and
29    other examinees, the correct-answer rates and correlations.
30        The  Director  is  not  required   to   report   separate
31    statistical  information for any group or subgroup comprising
32    fewer than 50 examinees.
33        (e)  The Director must obtain a regular analysis  of  the
34    data  collected  under  this  Section, and any other relevant
 
HB2994 Engrossed            -24-              LRB9205492JSpcA
 1    information, for purposes of  the  development  of  new  test
 2    forms.  The analysis shall continue the implementation of the
 3    item selection methodology as recommended in the Final Report
 4    of the Illinois Insurance  Producer's  Licensing  Examination
 5    Advisory  Committee  dated  November 19, 1991, and filed with
 6    the Department unless some other methodology is determined by
 7    the Director to be as  effective  in  minimizing  differences
 8    between white and minority examinee pass-fail rates.
 9        (f)  The Director has the discretion to set cutoff scores
10    for  the  examinations,  provided  that scaled scores on test
11    forms  administered  after  July  1,  1993,  shall  be   made
12    comparable  to  scaled  scores  on test forms administered in
13    1991 by use of professionally acceptable  methods  so  as  to
14    minimize  changes in passing rates related to the presence or
15    absence of or changes in equating  or  scaling  equations  or
16    methods  or  content outlines. Each calendar year, the scaled
17    cutoff  score  for  each  part  of  each  examination   shall
18    fluctuate  by  no more than the standard error of measurement
19    from the scaled cutoff score employed  during  the  preceding
20    year.
21        (g)  No later than May 1, 2003 and no later than May 1 of
22    every  fourth  year  thereafter, the Director must release to
23    the public and make generally  available  one  representative
24    test  form  and  set  of  answer  keys  for each part of each
25    examination.
26        (h)  The Director must maintain, for a period of 3  years
27    after they are prepared or used, all registration forms, test
28    forms,  answer  sheets,  operational items and pretest items,
29    item analyses, and other statistical analyses relating to the
30    examinations.  All personal identifying information regarding
31    examinees and the content of test items  must  be  maintained
32    confidentially  as  necessary  for purposes of protecting the
33    personal privacy of examinees and  the  maintenance  of  test
34    security.
 
HB2994 Engrossed            -25-              LRB9205492JSpcA
 1        (i)  In administering the examinations, the Director must
 2    make  such  accommodations  for  disabled  examinees  as  are
 3    reasonably  warranted  by the particular disability involved,
 4    including the provision of additional time  if  necessary  to
 5    complete  an  examination  or special assistance in taking an
 6    examination.

 7        (215 ILCS 5/500-55 new)
 8        Sec. 500-55.  Assumed names. An insurance producer  doing
 9    business  under any name other than the producer's legal name
10    must notify the Director before using the assumed name.

11        (215 ILCS 5/500-60 new)
12        Sec. 500-60.  Temporary licensing.
13        (a)  The  Director  may  issue  a   temporary   insurance
14    producer  license for a period not to exceed 180 days and, at
15    the discretion of  the  Director,  may  renew  the  temporary
16    producer license for an additional 180 days without requiring
17    an  examination  if  the  Director  deems  that the temporary
18    license is  necessary  for  the  servicing  of  an  insurance
19    business in the following cases:
20             (1)  to  the  surviving  spouse  or  court-appointed
21        personal  representative of a licensed insurance producer
22        who dies or becomes mentally or  physically  disabled  to
23        allow  adequate  time  for  the  sale  of  the  insurance
24        business  owned  by  the  producer or for the recovery or
25        return of the producer to the business or to provide  for
26        the  training  and  licensing of new personnel to operate
27        the producer's business;
28             (2)  to a member or employee of  a  business  entity
29        licensed  as  an  insurance  producer,  upon the death or
30        disability of an individual designated  in  the  business
31        entity application or the license;  or
32             (3)  to   the   designee  of  a  licensed  insurance
 
HB2994 Engrossed            -26-              LRB9205492JSpcA
 1        producer entering active service in the armed  forces  of
 2        the United States of America.
 3        (b)  The Director may by order limit the authority of any
 4    temporary  licensee  in  any  way deemed necessary to protect
 5    insureds and  the  public.   The  Director  may  require  the
 6    temporary  licensee  to  have  a  suitable  sponsor  who is a
 7    licensed producer or insurer and who  assumes  responsibility
 8    for  all  acts of the temporary licensee and may impose other
 9    similar requirements designed to  protect  insureds  and  the
10    public.  The Director may by order revoke a temporary license
11    if  the interest of insureds or the public are endangered.  A
12    temporary license may not continue after  the  owner  or  the
13    personal representative disposes of the business.
14        (c)  Before  any  temporary insurance producer license is
15    issued, there must be  filed  with  the  Director  a  written
16    application  by  the person desiring the license in the form,
17    with the supplements, and containing  the   information  that
18    the  Director  requires.    License  fees, as provided for in
19    Section 500-135, must  be  paid  upon  the  issuance  of  the
20    original  temporary  insurance  producer license, but not for
21    any renewal thereof.

22        (215 ILCS 5/500-65 new)
23        Sec. 500-65.  Temporary insurance producer license for an
24    applicant.
25        (a)  The  Director  may  grant  a   temporary   insurance
26    producer  license  to  an applicant for an insurance producer
27    license, without requiring an examination, for a period of 90
28    days, when the applicant otherwise meets the requirements  of
29    this  Article.  During that 90-day period, the applicant must
30    be  enrolled  in  a  training  course  or  training   program
31    conducted by or on behalf of the appointing insurance company
32    and  be  in  the  process  of  fulfilling  the  pre-licensing
33    requirements of Sections 500-25 and 500-30.
 
HB2994 Engrossed            -27-              LRB9205492JSpcA
 1        (b)  An  individual  applicant may not hold more than one
 2    temporary  insurance  producer  license  during  his  or  her
 3    lifetime.
 4        (c)  The Director may refuse to grant temporary insurance
 5    producer licenses to applicants  from  an  insurance  company
 6    when  during a 6-month period more than 50% of that company's
 7    temporary insurance producer license holders have  failed  to
 8    obtain insurance producer licenses prior to the expiration of
 9    their temporary insurance producer licenses.
10        (d)  Before the Director approves any temporary insurance
11    producer   license,  the  insurance  company  requesting  the
12    license must file with the Director an  application  and  the
13    fee required by Section 500-135. The application must be made
14    on the form and in the manner the Director requires.

15        (215 ILCS 5/500-70 new)
16        Sec. 500-70.  License denial, nonrenewal, or revocation.
17        (a)  The   Director  may  place  on  probation,  suspend,
18    revoke, or refuse to issue or renew an  insurance  producer's
19    license  or  may levy a civil penalty in accordance with this
20    Section or take any combination of actions, for  any  one  or
21    more of the following causes:
22             (1)  providing incorrect, misleading, incomplete, or
23        materially untrue information in the license application;
24             (2)  violating  any insurance laws, or violating any
25        rule, subpoena, or order of the Director  or  of  another
26        state's insurance commissioner;
27             (3)  obtaining  or  attempting  to  obtain a license
28        through misrepresentation or fraud;
29             (4)  improperly  withholding,  misappropriating   or
30        converting  any  moneys  or  properties  received  in the
31        course of doing insurance business;
32             (5)  intentionally misrepresenting the terms  of  an
33        actual  or proposed insurance contract or application for
 
HB2994 Engrossed            -28-              LRB9205492JSpcA
 1        insurance;
 2             (6)  having been convicted of a felony;
 3             (7)  having admitted or been found to have committed
 4        any insurance unfair trade practice or fraud;
 5             (8)  using  fraudulent,   coercive,   or   dishonest
 6        practices,       or      demonstrating      incompetence,
 7        untrustworthiness or financial  irresponsibility  in  the
 8        conduct of business in this State or elsewhere;
 9             (9)  having  an  insurance  producer license, or its
10        equivalent, denied, suspended, or revoked  in  any  other
11        state, province, district or territory;
12             (10)  forging a name to an application for insurance
13        or to a document related to an insurance transaction;
14             (11)  improperly  using notes or any other reference
15        material to complete  an  examination  for  an  insurance
16        license;
17             (12)  knowingly accepting insurance business from an
18        individual who is not licensed;
19             (13)  failing  to  comply  with an administrative or
20        court order imposing a child support obligation;
21             (14)  failing to pay state income tax or penalty  or
22        interest or comply with any administrative or court order
23        directing payment of state income tax or failed to file a
24        return  or  to pay any final assessment of any tax due to
25        the Department of Revenue; or
26             (15)  failing to make satisfactory repayment to  the
27        Illinois  Student  Assistance Commission for a delinquent
28        or defaulted student loan.
29        (b)  If the  action  by  the  Director  is  to  nonrenew,
30    suspend,  or revoke a license or to deny an application for a
31    license, the Director shall notify the applicant or  licensee
32    and  advise,  in  writing,  the  applicant or licensee of the
33    reason for the suspension, revocation, denial  or  nonrenewal
34    of  the  applicant's  or licensee's license. The applicant or
 
HB2994 Engrossed            -29-              LRB9205492JSpcA
 1    licensee may make written demand upon the Director within  30
 2    days  after  the  date  of  mailing  for a hearing before the
 3    Director to determine the reasonableness  of  the  Director's
 4    action.   The  hearing  must be held within not fewer than 20
 5    days nor more than 30 days after the mailing of the notice of
 6    hearing and shall be held pursuant to 50 Ill. Adm. Code 2402.
 7        (c)  The license of a business entity may  be  suspended,
 8    revoked,  or  refused  if  the Director finds, after hearing,
 9    that an individual licensee's violation was known  or  should
10    have  been known by one or more of the partners, officers, or
11    managers acting on behalf of  the  partnership,  corporation,
12    limited  liability  company, or limited liability partnership
13    and the violation was neither reported to  the  Director  nor
14    corrective action taken.
15        (d)  In  addition to or instead of any applicable denial,
16    suspension, or revocation of a license, a person  may,  after
17    hearing,  be  subject  to a civil penalty of up to $5,000 for
18    each cause for denial, suspension,  or  revocation,  however,
19    the civil penalty may total no more than $20,000.
20        (e)  The  Director  has  the  authority  to  enforce  the
21    provisions  of and impose any penalty or remedy authorized by
22    this Article against any person who  is  under  investigation
23    for or charged with a violation of this Code or rules even if
24    the  person's license or registration has been surrendered or
25    has lapsed by operation of law.
26        (f)  Upon the suspension,  denial,  or  revocation  of  a
27    license,  the  licensee  or other person having possession or
28    custody of the license  shall  promptly  deliver  it  to  the
29    Director  in  person  or by  mail. The Director shall publish
30    all  suspensions,   denials,   or   revocations   after   the
31    suspensions,  denials,  or  revocations  become  final  in  a
32    manner  designed to notify interested insurance companies and
33    other persons.
34        (g)  A  person  whose  license  is   revoked   or   whose
 
HB2994 Engrossed            -30-              LRB9205492JSpcA
 1    application is denied pursuant to  this Section is ineligible
 2    to  apply for any license for 3 years after the revocation or
 3    denial.  A person whose license as an insurance producer  has
 4    been  revoked,  suspended,  or  denied   may not be employed,
 5    contracted, or engaged  in  any  insurance  related  capacity
 6    during the  time  the revocation, suspension, or denial is in
 7    effect.

 8        (215 ILCS 5/500-75 new)
 9        Sec.  500-75.  Disclosure.  A  policy the solicitation of
10    which  involves  an  insurance  producer,  limited  insurance
11    representative, or temporary insurance producer must identify
12    the name  of  the  producer,  representative,  or  firm.   An
13    individual  life  or  accident  and  health application and a
14    master policy application for life  or  accident  and  health
15    group  coverages  must  bear  the  name  and signature of the
16    licensee who solicited and wrote the application.

17        (215 ILCS 5/500-80 new)
18        Sec. 500-80.  Commissions.
19        (a)  An insurer or  insurance  producer  may  not  pay  a
20    commission,   service   fee,  brokerage,  or  other  valuable
21    consideration  to  a  person  for  selling,  soliciting,   or
22    negotiating  insurance  in  this  State  if  that  person  is
23    required  to  be  licensed  under  this Article and is not so
24    licensed at the time of selling, soliciting,  or  negotiating
25    the insurance.
26        (b)  A  person  may not accept a commission, service fee,
27    brokerage,  or  other  valuable  consideration  for  selling,
28    soliciting, or negotiating insurance in this  State  if  that
29    person  is  required to be licensed under this Article and is
30    not so licensed.
31        (c)  Renewal or other deferred commissions may be paid to
32    a person for selling, soliciting, or negotiating insurance in
 
HB2994 Engrossed            -31-              LRB9205492JSpcA
 1    this State if the person was required to  be  licensed  under
 2    this  Article  at  the  time  of  the  sale, solicitation, or
 3    negotiation and was so licensed at that time.
 4        (d)  An insurer or insurance producer may pay  or  assign
 5    commissions,  service  fees,  brokerages,  or  other valuable
 6    consideration to an insurance agency or to persons who do not
 7    sell, solicit, or negotiate insurance in this  State,  unless
 8    the payment would violate Section 151 of this Code.
 9        (e)  Except as to commissions deductible from premiums on
10    insurance  policies  or contracts for insurance, an insurance
11    producer or business  entity  does  not  have  any  right  to
12    compensation from an insured or prospective insured for or on
13    account  of  the transaction of insurance business unless the
14    right  to  compensation  is  stated  on  a  separate  written
15    memorandum that clearly specifies the amount or extent of the
16    service fee and that is provided to the applicant or  insured
17    before  the performance of the service or the issuance of the
18    policy, whichever is first.  A copy of the memorandum must be
19    maintained by any  producer  who  collects  or  receives  the
20    service  fee  or  any  portion  of  the  service fee.  If the
21    compensation or service fee exceeds 10% of the premium amount
22    or potential premium amount of the contract  or  policy,  the
23    memorandum  shall  include  the  signature  of the insured or
24    prospective insured acknowledging the compensation or service
25    fee.
26        (f)  Any  compensation  or  service  fee  received  on  a
27    contract or policy that is later canceled for any reason must
28    be returned to the  insured  by  the  insurance  producer  or
29    business  entity  at  a prorated amount.  The prorated amount
30    shall be based on the length of the term  of  the  policy  or
31    contract  compared to the time that contract or policy was in
32    force such that the amount returned reflects the  portion  of
33    the  term of the contract or policy during which the contract
34    was not in force.
 
HB2994 Engrossed            -32-              LRB9205492JSpcA
 1        (215 ILCS 5/500-85 new)
 2        Sec. 500-85.  Notification  of   termination;   immunity;
 3    confidentiality.
 4        (a)  An   insurer  or  authorized  representative  of  an
 5    insurer  that   terminates   the   appointment,   employment,
 6    contract,  or  other  insurance  business relationship with a
 7    producer must notify the Director within  30  days  following
 8    the  effective  date  of  the  termination,  using  a  format
 9    prescribed  by the Director, if the reason for termination is
10    one of the reasons set forth in Section 500-70 or the insurer
11    has knowledge the producer was found by a  court,  government
12    body,  or  self-regulatory  organization authorized by law to
13    have engaged in any of the activities in Section 500-70. Upon
14    written request by the Director,  the  insurer  must  provide
15    additional  information,  documents,  records,  or other data
16    pertaining to the termination or activity of the producer.
17        (b)  The insurer or the authorized representative of  the
18    insurer  must  promptly  notify  the  Director  in  a  format
19    acceptable  to  the  Director  if,  upon  further  review  or
20    investigation,  the  insurer discovers additional information
21    that would have been reportable to the Director in accordance
22    with subsection  (a)  had  the  insurer  then  known  of  its
23    existence.
24        (c)  Within   15   days  after  making  the  notification
25    required by subsections (a) and (b), the insurer must mail  a
26    copy  of  the notification to the producer at his or her last
27    known address.  If the producer is terminated for  cause  for
28    any of the reasons listed in Section 500-70, the insurer must
29    provide  a copy of the notification to the producer at his or
30    her last known address  by  certified  mail,  return  receipt
31    requested,  postage  prepaid or by overnight delivery using a
32    nationally recognized carrier.
33        Within 30  days  after  the  producer  has  received  the
34    original  or  additional  notification, the producer may file
 
HB2994 Engrossed            -33-              LRB9205492JSpcA
 1    written comments concerning the substance of the notification
 2    with the Director. The producer  must,  by  the  same  means,
 3    simultaneously  send  a copy of the comments to the reporting
 4    insurer,  and  the  comments  shall  become  a  part  of  the
 5    Director's  file  and  accompany  every  copy  of  a   report
 6    distributed or disclosed for any reason about the producer as
 7    permitted under subsection (e).
 8        (d)  There  shall  be  no  liability  on the part of, nor
 9    shall a cause of action  of  any  nature  arise  against,  an
10    insurer,  the  authorized  representative  of  the insurer, a
11    producer, the Director,  or  an  organization  of  which  the
12    Director is a member for any information, documents, records,
13    or statements provided pursuant to this Section.

14        (215 ILCS 5/500-90 new)
15        Sec. 500-90.  Reciprocity.
16        (a)  The  Director  shall  waive  any  requirements for a
17    nonresident license applicant with a valid license  from  his
18    or her home state, except the requirements imposed by Section
19    500-40  of this Article, if the applicant's home state awards
20    nonresident licenses to residents of this State on  the  same
21    basis.
22        (b)  A  nonresident producer's satisfaction of his or her
23    home state's continuing education requirements  for  licensed
24    insurance  producers  shall  constitute  satisfaction of this
25    State's continuing education requirements if the non-resident
26    producer's home state  recognizes  the  satisfaction  of  its
27    continuing education requirements imposed upon producers from
28    this State on the same basis.

29        (215 ILCS 5/500-95 new)
30        Sec.  500-95.  Reporting  of  actions. An individual who,
31    while licensed as an insurance producer, is  convicted  of  a
32    felony,  must report the conviction to the Director within 30
 
HB2994 Engrossed            -34-              LRB9205492JSpcA
 1    days after the entry  date  of  the  judgment.   Within  that
 2    30-day  period, the individual must also provide the Director
 3    with a copy of the  judgment,  the  probation  or  commitment
 4    order, and any other relevant documents.

 5        (215 ILCS 5/500-100 new)
 6        Sec. 500-100.  Limited lines producer license.
 7        (a)  An  individual  who  is at least 18 years of age and
 8    whom the Director considers to be competent, trustworthy, and
 9    of good  business  reputation  may  obtain  a  limited  lines
10    producer license for one or more of the following classes:
11             (1)  insurance  on baggage or limited travel health,
12        accident,  or  trip  cancellation   insurance   sold   in
13        connection  with  transportation  provided  by  a  common
14        carrier;
15             (2)  industrial   life   insurance,  as  defined  in
16        Section 228 of this Code;
17             (3)  industrial accident and  health  insurance,  as
18        defined in Section 368 of this Code;
19             (4)  insurance  issued  by a company organized under
20        the Farm Mutual Insurance Company Act of 1986;
21             (5)  legal expense insurance;
22             (6)  enrollment  of  recipients  of  public  aid  or
23        medicare in a health maintenance organization;
24             (7)  a  limited  health  care  plan  issued  by   an
25        organization  having a certificate of authority under the
26        Limited Health Service Organization Act.
27        (b)  The application for a limited lines producer license
28    must be submitted on a form prescribed by the Director  by  a
29    designee  of  the  insurance  company,  health    maintenance
30    organization,   or   limited   health   service  organization
31    appointing  the  limited   insurance   representative.    The
32    insurance   company,   health  maintenance  organization,  or
33    limited health service organization must pay the fee required
 
HB2994 Engrossed            -35-              LRB9205492JSpcA
 1    by Section 500-135.
 2        (c)  A limited lines producer may represent more than one
 3    insurance  company,  health  maintenance   organization,   or
 4    limited health service organization.
 5        (d)  An  applicant  who has met the requirements of  this
 6    Section shall be issued a perpetual  limited  lines  producer
 7    license.
 8        (e)  A  limited  lines  producer  license shall remain in
 9    effect as long as the appointing insurance company  pays  the
10    respective fee required by Section 500-135 prior to January 1
11    of  each  year,  unless  the  license is revoked or suspended
12    pursuant to Section 500-70.  Failure of the insurance company
13    to pay the license fee or to  submit the  required  documents
14    shall   cause  immediate  termination  of  the  limited  line
15    insurance producer license with respect to which the  failure
16    occurs.
17        (f)  A  limited  lines producer license may be terminated
18    by the insurance company or the licensee.
19        (g)  A  person  whom  the  Director   considers   to   be
20    competent,  trustworthy,  and of good business reputation may
21    be issued a car rental limited line  license.  A  car  rental
22    limited  line  license  for  a rental company shall remain in
23    effect as long as the car rental limited line  licensee  pays
24    the  respective  fee required by Section 500-135 prior to the
25    next fee date unless the car rental  license  is  revoked  or
26    suspended  pursuant  to  Section  500-70.  Failure of the car
27    rental limited line licensee to pay the  license  fee  or  to
28    submit   the   required   documents   shall  cause  immediate
29    suspension of the car rental  limited  line  license.  A  car
30    rental  limited  line  license  for  rental  companies may be
31    voluntarily  terminated  by  the  car  rental  limited   line
32    licensee.   The  license  fee  shall  not  be  refunded  upon
33    termination of the car rental limited line license by the car
34    rental limited line licensee.
 
HB2994 Engrossed            -36-              LRB9205492JSpcA
 1        (h)  A limited lines producer issued a  license  pursuant
 2    to this Section is not subject to the requirements of Section
 3    500-30.
 4        (i)  A  limited  lines producer license  must contain the
 5    name, address  and  personal  identification  number  of  the
 6    licensee,   the   date  the  license  was  issued,    general
 7    conditions  relative   to   the   license's   expiration   or
 8    termination, and any other information the Director considers
 9    proper.  A limited line producer license, if applicable, must
10    also contain the name and address of the appointing insurance
11    company.

12        (215 ILCS 5/500-105 new)
13        Sec. 500-105.  Car rental limited line license for rental
14    companies.
15        (a)  A  rental  company must obtain a producer license or
16    obtain a car rental limited line license before  offering  or
17    selling  insurance  in  connection with and incidental to the
18    rental of vehicles.  The sale of the insurance may  occur  at
19    the rental office or by preselection of coverage in a master,
20    corporate,  group  rental,  or  individual   agreement.   The
21    following  general  categories  of coverage may be offered or
22    sold:
23             (1)  personal accident insurance covering the  risks
24        of  travel  including,  but  not limited to, accident and
25        health insurance that provides coverage,  as  applicable,
26        to   renters  and  other  rental  vehicle  occupants  for
27        accidental  death or dismemberment and reimbursement  for
28        medical  expenses  resulting from an accident that occurs
29        during the rental period;
30             (2)  liability insurance,  including  uninsured  and
31        underinsured  motorist  coverage, that provides coverage,
32        as applicable, to renters and other   authorized  drivers
33        of   rental  vehicles  for  liability  arising  from  the
 
HB2994 Engrossed            -37-              LRB9205492JSpcA
 1        operation of the rental vehicle;
 2             (3)  personal  effects   insurance   that   provides
 3        coverage,  as  applicable,  to  renters and other vehicle
 4        occupants for the loss of, or damage to, personal effects
 5        that occurs during the rental period;
 6             (4)  roadside  assistance  and  emergency   sickness
 7        protection programs; and
 8             (5)  any  other travel or auto-related coverage that
 9        a rental company offers in connection with and incidental
10        to the rental of vehicles.
11        (b)  Insurance may not be offered by a car rental limited
12    line producer pursuant to this Section unless:
13             (1)  the rental company has applied for and obtained
14        a car rental limited line license;
15             (2)  the rental period of the rental agreement  does
16        not exceed 30 consecutive days;
17             (3)  at   every   rental   location   where   rental
18        agreements  are  executed,  brochures  or  other  written
19        materials are readily available to the prospective renter
20        that:
21                  (A)  summarize   clearly   and  correctly,  the
22             material  terms  of  coverage  offered  to  renters,
23             including the identity of the insurer;
24                  (B)  disclose that the coverage offered by  the
25             rental company may provide a duplication of coverage
26             already  provided  by a renter's personal automobile
27             insurance  policy,  homeowner's  insurance   policy,
28             personal liability insurance policy, or other source
29             of coverage;
30                  (C)  state  that  the purchase by the renter of
31             the kinds of coverage specified in this  Section  is
32             not required in order to rent a vehicle; and
33                  (D)  describe the process for filing a claim in
34             the event the renter elects to purchase coverage and
 
HB2994 Engrossed            -38-              LRB9205492JSpcA
 1             in the event of a claim; and
 2             (4)  evidence of coverage in the rental agreement is
 3        disclosed  to  every  renter  who elects to purchase such
 4        coverage.
 5        (c)  Car rental company franchisees must apply for a  car
 6    rental  limited line license independent of the franchisor if
 7    insurance provided pursuant to this Section is offered by the
 8    franchisee.
 9        (d)  A car rental limited line license issued under  this
10    Section  shall  also authorize any employee of the car rental
11    limited line licensee to act individually on behalf and under
12    the supervision of the car rental limited line licensee  with
13    respect to the kinds of coverage specified in this Section.
14        (e)  A  rental  company licensed pursuant to this Section
15    must conduct a training  program  in  which  employees  being
16    trained  shall  receive  basic instruction about the kinds of
17    coverage specified in  this Section and offered for  purchase
18    by  prospective renters of rental vehicles.
19        (f)  Notwithstanding  any other provision of this Section
20    or any rule adopted by the Director,  a  car  rental  limited
21    line  producer  pursuant  to  this Section is not required to
22    treat moneys collected from renters purchasing insurance when
23    renting vehicles as funds received in a  fiduciary  capacity,
24    provided that the  charges for coverage shall be itemized and
25    be ancillary to a rental transaction.
26        (g)  The  sale  of  insurance  not  in conjunction with a
27    rental transaction shall not be permitted.
28        (h)  A  car  rental  limited  line  producer  under  this
29    Section may  not  advertise,  represent,  or  otherwise  hold
30    itself  or  any  of  its employees out as licensed  insurers,
31    insurance  producers, insurance agents, or insurance brokers.
32        (i)  Direct commissions may not be  paid  to  rental  car
33    company  employees  by the insurer or the customer purchasing
34    insurance products.   The  rental  car  company  may  include
 
HB2994 Engrossed            -39-              LRB9205492JSpcA
 1    insurance   products   in  an  overall  employee  performance
 2    compensation incentive program.
 3        (j)  An application for a car rental limited line license
 4    must be made on a form specified by the Director.

 5        (215 ILCS 5/500-110 new)
 6        Sec. 500-110.  Regulatory examinations.
 7        (a)  The Director may examine any applicant for or holder
 8    of an  insurance  producer  license,  limited  line  producer
 9    license  or  temporary  insurance  producer  license  or  any
10    business entity.
11        (b)  All   persons  being  examined,  as  well  as  their
12    officers,  directors,  insurance  producers,  limited   lines
13    producers,  and temporary insurance producers must provide to
14    the Director convenient and free access,  at  all  reasonable
15    hours at their offices, to all books, records, documents, and
16    other  papers  relating  to  the  persons' insurance business
17    affairs.   The  officers,  directors,  insurance   producers,
18    limited  lines  producers, temporary insurance producers, and
19    employees  must  facilitate  and  aid  the  Director  in  the
20    examinations as much as it is in their power to do so.
21        (c)  The Director may designate an examiner or  examiners
22    to  conduct any examination under this Section.  The Director
23    or his or her designee  may  administer   oaths  and  examine
24    under  oath  any  individual  relative to the business of the
25    person being examined.
26        (d)  The examiners designated by the Director under  this
27    Section  may  make reports to the Director. A report alleging
28    substantive  violations  of  this  Article   or   any   rules
29    prescribed  by  the  Director must be in writing and be based
30    upon facts ascertained from the  books,  records,  documents,
31    papers,  and other evidence obtained by the examiners or from
32    sworn or affirmed testimony of or   written  affidavits  from
33    the   person's   officers,  directors,  insurance  producers,
 
HB2994 Engrossed            -40-              LRB9205492JSpcA
 1    limited lines producer,  temporary  insurance  producers,  or
 2    employees  or  other  individuals, as given to the examiners.
 3    The report  of  an  examination  must  be   verified  by  the
 4    examiners.
 5        (e)  If  a  report  is  made,  the  Director  must either
 6    deliver a duplicate  of  the  report   to  the  person  being
 7    examined  or  send  the  duplicate by certified or registered
 8    mail to the person's address of  record.  The Director  shall
 9    afford  the  person  an  opportunity to demand a hearing with
10    reference  to the facts and other evidence contained  in  the
11    report.   The person may request a hearing within 14 calendar
12    days  after  he  or  she  receives  the  duplicate   of   the
13    examination  report  by giving the Director written notice of
14    that  request, together  with  a  written  statement  of  the
15    person's   objections  to  the report.  The Director must, if
16    requested to do so, conduct  a  hearing  in  accordance  with
17    Sections  402 and 403 of this Code.   The Director must issue
18    a written order based upon the examination  report  and  upon
19    the  hearing,  if a hearing is held, within 90 days after the
20    report is filed, or within 90 days after  the  hearing  if  a
21    hearing  is  held.   If  the  report  is refused or otherwise
22    undeliverable, or a hearing is  not  requested  in  a  timely
23    fashion, the right to a hearing is waived.  After the hearing
24    or  the  expiration  of the time period in which a person may
25    request a hearing, if the examination reveals that the person
26    is operating in violation of any law, rule, or  prior  order,
27    the  Director  in the written order may require the person to
28    take  any  action  the  Director   considers   necessary   or
29    appropriate  in  accordance  with  the  report or examination
30    hearing.  The  order  is  subject   to   review   under   the
31    Administrative Review Law.
32        (f)  The  Director  may adopt reasonable rules to further
33    the purposes of this Section.
34        (g)  A  person  who  violates  or  aids  and  abets   any
 
HB2994 Engrossed            -41-              LRB9205492JSpcA
 1    violation  of a written order issued under this Section shall
 2    be guilty of a business offense and his or her license may be
 3    revoked or suspended  pursuant  to  Section  500-70  of  this
 4    Article  and he or she may be subjected to a civil penalty of
 5    not more than $10,000.

 6        (215 ILCS 5/500-115 new)
 7        Sec. 500-115.  Financial  responsibilities.
 8        (a)  Any money that an insurance producer,  limited  line
 9    producer,  temporary  insurance producer, business entity, or
10    surplus line producer receives for  soliciting,  negotiating,
11    effecting,   procuring,   renewing,  continuing,  or  binding
12    policies of insurance shall be held in a  fiduciary  capacity
13    and  shall  not  be misappropriated, converted, or improperly
14    withheld.   An  insurance  company  that  delivers   to   any
15    insurance  producer  in  this  State a policy or contract for
16    insurance pursuant  to  the  application  or  request  of  an
17    insurance  producer,  authorizes  the  producer to collect or
18    receive on its behalf payment of any premium that is  due  on
19    the  policy  or  contract  for  insurance  at the time of its
20    issuance or delivery and any premium that becomes due on  the
21    policy or contract not more than 90 days thereafter.
22        (b)  An  insurer  that issues a policy of insurance shall
23    be  deemed  to have  received payment of the premium  if  the
24    insured  paid any insurance producer requesting the coverage.
25    The insurer shall be  responsible  to  the  insured  for  any
26    return premium.
27        (c)  In   the  case  of open accounts receivable with the
28    balance payable to an insurance producer within  a  specified
29    period  of  90  days  or less, where the balance is not fully
30    paid within that period, a late charge not exceeding 1.5% per
31    month may be added by the insurance producer  to  the  unpaid
32    balance to induce payment of the premium.
33        (d)  If  an  insurance  producer or surplus line producer
 
HB2994 Engrossed            -42-              LRB9205492JSpcA
 1    knowingly misappropriates or converts to his or her  own  use
 2    or illegally withholds fiduciary moneys in the amount of $150
 3    or  less,  he or she is guilty of a Class A misdemeanor for a
 4    first  offense  and  a  Class   4   felony   for   subsequent
 5    conversions,  misappropriations,  and  withholdings  of  that
 6    nature.   If  an  insurance producer or surplus line producer
 7    knowingly misappropriates or converts to his or her  own  use
 8    or  illegally withholds premiums in excess of $150, he or she
 9    is guilty of a Class 3 felony.

10        (215 ILCS 5/500-120 new)
11        Sec. 500-120.  Conflicts of interest; inactive status.
12        (a)  A person, partnership, association,  or  corporation
13    licensed  by  the  Department who, due to employment with any
14    unit of government that would cause a  conflict  of  interest
15    with  the  holding  of that license, notifies the Director in
16    writing on forms prescribed by the Department and, subject to
17    rules  of  the  Department,  makes  payment   of   applicable
18    licensing  renewal fees, may elect to place the license on an
19    inactive status.
20        (b)  A licensee whose license is on inactive  status  may
21    have  the  license  restored  by  making  application  to the
22    Department  on  such  form  as  may  be  prescribed  by   the
23    Department. The application must be accompanied with a fee of
24    $50 plus the current applicable license fee.
25        (c)  A  license  may  be  placed on inactive status for a
26    2-year period, and upon request, the inactive status  may  be
27    extended  for  a  successive  2-year  period  not to exceed a
28    cumulative 4-year inactive period.  After a license has  been
29    on  inactive  status   for 4 years or more, the licensee must
30    meet all of the standards required of a new applicant  before
31    the license may be restored to active status.
32        (d)  If  requests  for inactive status are not renewed as
33    set forth in subsection (c), the license will  be  taken  off
 
HB2994 Engrossed            -43-              LRB9205492JSpcA
 1    the inactive status and the license will lapse immediately.

 2        (215 ILCS 5/500-125 new)
 3        Sec. 500-125.  Controlled  business.
 4        (a)  An  insurance producer license may not be granted or
 5    extended to any person if the Director has  reasonable  cause
 6    to believe:
 7             (1)  that  during  either  of  the  2 calendar years
 8        immediately preceding the extension date of  the  license
 9        the aggregate amount of premiums on insurance represented
10        by controlled business exceeded  the aggregate  amount of
11        premiums on all other insurance business of the licensee;
12        or
13             (2)  that  during  the  12-month period  immediately
14        following the issuance or extension of the license, if so
15        issued or extended, the aggregate amount of  premiums  on
16        controlled  business would exceed the aggregate amount of
17        premiums on all other insurance business of the applicant
18        or licensee.
19        (b)  Controlled business means insurance procured  or  to
20    be procured by or through the person upon:
21             (1)  his  own  life,  person,  property or risks, or
22        those of his spouse; or
23             (2)  the life, person, property,  or  risks  of  his
24        employer or his own business.

25        (215 ILCS 5/500-130 new)
26        Sec. 500-130.  Bond required of insurance producers.
27        (a)  An  insurance  producer  who places insurance either
28    directly  or  indirectly  with  an  insurer  with  which  the
29    insurance producer  does  not  have  an  agent  contact  must
30    maintain  in  force  while  licensed  a  bond in favor of the
31    people of the State of Illinois  executed  by  an  authorized
32    surety  company  and  payable  to any party injured under the
 
HB2994 Engrossed            -44-              LRB9205492JSpcA
 1    terms of the bond.  The bond shall be continuous in form  and
 2    in the amount of $2,500 or 5% of the premiums brokered in the
 3    previous  calendar  year,  whichever  is  greater, but not to
 4    exceed $50,000 total aggregate liability. The bond  shall  be
 5    conditioned  upon  full  accounting  and  due  payment to the
 6    person or company entitled thereto, of funds coming into  the
 7    insurance  producer's  possession as an incident to insurance
 8    transactions under the  license  or  surplus  line  insurance
 9    transactions under the license as a surplus line producer.
10        (b)  Authorized  insurance producers of a business entity
11    may meet the requirements of this Section with a bond in  the
12    name  of  the business entity, continuous in form, and in the
13    amounts  set  forth  in  subsection  (a)  of  this   Section.
14    Insurance producers may meet the requirements of this Section
15    with  a  bond  in the name of an  association.  An individual
16    producer remains responsible for assuring   that  a  producer
17    bond  is  in  effect  and  is  for  the  correct amount.  The
18    association must have been in existence  for  5  years,  have
19    common  membership,  and been formed for a purpose other than
20    obtaining a bond.
21        (c)  The surety may cancel the bond and be released  from
22    further  liability thereunder upon 30 days' written notice in
23    advance to the principal. The cancellation  does  not  affect
24    any  liability  incurred or accrued under the bond before the
25    termination of the 30-day period.
26        (d)  The  producer's  license  may  be  revoked  if   the
27    producer  acts  without  a  bond  that is required under this
28    Section.
29        (e)  If a party injured  under  the  terms  of  the  bond
30    requests  the  producer to provide the name of the surety and
31    the bond number, the producer must  provide  the  information
32    within 3 working days after receiving the request.
33        (f)  An  association  may  meet  the requirements of this
34    Section for all of its members with a bond in the name of the
 
HB2994 Engrossed            -45-              LRB9205492JSpcA
 1    association that is continuous in form and in the amounts set
 2    forth in subsection (a) of this Section.

 3        (215 ILCS 5/500-135 new)
 4        Sec. 500-135.  Fees.
 5        (a)  The fees required by this Article are as follows:
 6             (1)  a fee of $150 payable once every 2 years for an
 7        insurance producer license;
 8             (2)  a fee of $25 for the issuance  of  a  temporary
 9        insurance producer license;
10             (3)  a  fee  of $50 payable once every 2 years for a
11        business entity;
12             (4)  an annual $25 fee for a limited  line  producer
13        license  issued under items (1) through (7) of subsection
14        (a) of Section 500-100;
15             (5)  a $25 application fee for the processing  of  a
16        request  to take the written examination for an insurance
17        producer license;
18             (6)  an  annual  registration  fee   of   $500   for
19        registration of an education provider;
20             (7)  a  certification  fee of $25 for each certified
21        pre-licensing  or  continuing  education  course  and  an
22        annual fee of $10 for renewing the certification of  each
23        such course;
24             (8)  a  fee  of $50 payable once every 2 years for a
25        car rental limited line license;
26             (9)  a fee of $150 payable once every 2 years for  a
27        limited  lines  license  other  than  the licenses issued
28        under items (1) through (7) of subsection (a) of  Section
29        500-100 or a car rental limited line license.
30        (b)  Except  as  otherwise provided, all fees paid to and
31    collected by the Director under this Section  shall  be  paid
32    promptly  after  receipt  thereof,  together  with a detailed
33    statement of such fees, into a  special  fund  in  the  State
 
HB2994 Engrossed            -46-              LRB9205492JSpcA
 1    Treasury to be known as the Insurance Producer Administration
 2    Fund.   The  moneys  deposited  into  the  Insurance Producer
 3    Administration Fund may be  used  only  for  payment  of  the
 4    expenses  of the Department in the execution, administration,
 5    and enforcement of  the insurance laws  of  this  State,  and
 6    shall  be  appropriated  as otherwise provided by law for the
 7    payment of those  expenses  with  first  priority  being  any
 8    expenses  incident  to  or associated with the administration
 9    and enforcement of this Article.

10        (215 ILCS 5/500-140 new)
11        Sec. 500-140.  Injunctive relief. A person required to be
12    licensed under this Article but failing to obtain a valid and
13    current license  under  this  Article  constitutes  a  public
14    nuisance.   The  Director may report the failure  to obtain a
15    license to the Attorney General, whose duty it  is  to  apply
16    forthwith  by  complaint  on  relation of the Director in the
17    name of the people of the State of Illinois,  for  injunctive
18    relief  in  the circuit court of the county where the failure
19    to obtain a license  occurred  to  enjoin  that  person  from
20    failing  to  obtain a license.  Upon the filing of a verified
21    petition in the court, the court, if satisfied  by  affidavit
22    or  otherwise  that  the person is required to have a license
23    and does not have a valid and current license,  may  enter  a
24    temporary restraining order without notice or bond, enjoining
25    the  defendant from acting in any capacity that requires such
26    license.  A copy of the verified complaint  shall  be  served
27    upon  the defendant,  and the proceedings shall thereafter be
28    conducted as in other civil cases.  If it is established that
29    the defendant  has  been,  or  is  engaged  in  any  unlawful
30    practice,   the   court   may  enter  an  order  or  judgment
31    perpetually enjoining the defendant from  further engaging in
32    such  practice.   In  all  proceedings  brought  under   this
33    Section,  the  court,  in  its  discretion, may apportion the
 
HB2994 Engrossed            -47-              LRB9205492JSpcA
 1    costs among the parties, including the  cost  of  filing  the
 2    complaint,  service  of  process,  witness fees and expenses,
 3    court reporter charges, and  reasonable  attorney  fees.   In
 4    case  of  the violation of any injunctive order entered under
 5    the provisions of this Section, the court may  summarily  try
 6    and   punish   the  offender  for  contempt  of  court.   The
 7    injunctive relief available under this Section is in addition
 8    to and not in  lieu  of  all  other  penalties  and  remedies
 9    provided in this Code.

10        (215 ILCS 5/500-145 new)
11        Sec.  500-145.  Rules.  The  Director  may, in accordance
12    with Section 401 of this Code, promulgate reasonable rules as
13    are necessary or proper to carry out  the  purposes  of  this
14    Article.

15        (215 ILCS 5/500-150 new)
16        Sec.  500-150.  Severability.   The  provisions  of  this
17    Article  are  severable  under Section 1.31 of the Statute on
18    Statutes.

19        (215 ILCS 5/490.1 rep.)
20        (215 ILCS 5/491.1 rep.)
21        (215 ILCS 5/492.2 rep.)
22        (215 ILCS 5/493.2 rep.)
23        (215 ILCS 5/494.1 rep.)
24        (215 ILCS 5/494.2 rep.)
25        (215 ILCS 5/495.1 rep.)
26        (215 ILCS 5/495.2 rep.)
27        (215 ILCS 5/496.2 rep.)
28        (215 ILCS 5/497.1 rep.)
29        (215 ILCS 5/498.1 rep.)
30        (215 ILCS 5/499.1 rep.)
31        (215 ILCS 5/500.1 rep.)
 
HB2994 Engrossed            -48-              LRB9205492JSpcA
 1        (215 ILCS 5/501.2 rep.)
 2        (215 ILCS 5/502.2 rep.)
 3        (215 ILCS 5/503.1 rep.)
 4        (215 ILCS 5/504 rep.)
 5        (215 ILCS 5/504.1 rep.)
 6        (215 ILCS 5/505.1 rep.)
 7        (215 ILCS 5/505.2 rep.)
 8        (215 ILCS 5/506.1 rep.)
 9        (215 ILCS 5/507.1 rep.)
10        (215 ILCS 5/508.1 rep.)
11        (215 ILCS 5/508.2 rep.)
12        (215 ILCS 5/509.1 rep.)
13        (215 ILCS 5/510.2 rep.)
14        (215 ILCS 5/511.1 rep.)
15        Section 10. The Illinois Insurance  Code  is  amended  by
16    repealing  Sections 490.1, 491.1, 492.2, 493.2, 494.1, 494.2,
17    495.1, 495.2,  496.2,  497.1,  498.1,  499.1,  500.1,  501.2,
18    502.2,  503.1, 504, 504.1, 505.1, 505.2, 506.1, 507.1, 508.1,
19    508.2, 509.1, 510.2, and 511.1.

20        Section 99.   Effective  date.   This  Act  takes  effect
21    January 1, 2002.
 
HB2994 Engrossed            -49-              LRB9205492JSpcA
 1                                INDEX
 2               Statutes amended in order of appearance
 3    215 ILCS 5/500-5 new
 4    215 ILCS 5/500-10 new
 5    215 ILCS 5/500-15 new
 6    215 ILCS 5/500-20 new
 7    215 ILCS 5/500-25 new
 8    215 ILCS 5/500-30 new
 9    215 ILCS 5/500-35 new
10    215 ILCS 5/500-40 new
11    215 ILCS 5/500-45 new
12    215 ILCS 5/500-50 new
13    215 ILCS 5/500-55 new
14    215 ILCS 5/500-60 new
15    215 ILCS 5/500-65 new
16    215 ILCS 5/500-70 new
17    215 ILCS 5/500-75 new
18    215 ILCS 5/500-80 new
19    215 ILCS 5/500-85 new
20    215 ILCS 5/500-90 new
21    215 ILCS 5/500-95 new
22    215 ILCS 5/500-100 new
23    215 ILCS 5/500-105 new
24    215 ILCS 5/500-110 new
25    215 ILCS 5/500-115 new
26    215 ILCS 5/500-120 new
27    215 ILCS 5/500-125 new
28    215 ILCS 5/500-130 new
29    215 ILCS 5/500-135 new
30    215 ILCS 5/500-140 new
31    215 ILCS 5/500-145 new
32    215 ILCS 5/500-150 new
33    215 ILCS 5/490.1 rep.
34    215 ILCS 5/491.1 rep.
 
HB2994 Engrossed            -50-              LRB9205492JSpcA
 1    215 ILCS 5/492.2 rep.
 2    215 ILCS 5/493.2 rep.
 3    215 ILCS 5/494.1 rep.
 4    215 ILCS 5/494.2 rep.
 5    215 ILCS 5/495.1 rep.
 6    215 ILCS 5/495.2 rep.
 7    215 ILCS 5/496.2 rep.
 8    215 ILCS 5/497.1 rep.
 9    215 ILCS 5/498.1 rep.
10    215 ILCS 5/499.1 rep.
11    215 ILCS 5/500.1 rep.
12    215 ILCS 5/501.2 rep.
13    215 ILCS 5/502.2 rep.
14    215 ILCS 5/503.1 rep.
15    215 ILCS 5/504 rep.
16    215 ILCS 5/504.1 rep.
17    215 ILCS 5/505.1 rep.
18    215 ILCS 5/505.2 rep.
19    215 ILCS 5/506.1 rep.
20    215 ILCS 5/507.1 rep.
21    215 ILCS 5/508.1 rep.
22    215 ILCS 5/508.2 rep.
23    215 ILCS 5/509.1 rep.
24    215 ILCS 5/510.2 rep.
25    215 ILCS 5/511.1 rep.

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