State of Illinois
92nd General Assembly
Legislation

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92_SB0870enr

 
SB870 Enrolled                                 LRB9201509JSpc

 1        AN ACT concerning insurer security deposits.

 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 Sections 26, 53, 74, 278, 327, and 341 as follows:

 6        (215 ILCS 5/26) (from Ch. 73, par. 638)
 7        Sec.  26.  Deposit.   A  Every  company  subject  to  the
 8    provisions  of  this Article shall make and maintain with the
 9    Director for the protection of all  creditors,  policyholders
10    and   policy   obligations  of  the  company,  a  deposit  of
11    securities which are  authorized  investments  under  Section
12    126.11A(1),  126.11A(2),  126.24A(1),  or 126.24A(2) having a
13    fair market value equal to the minimum  capital  and  surplus
14    required  to be maintained under Section 13. The Director may
15    release the required deposit of securities upon receipt of an
16    order of a court having  proper  jurisdiction  or  upon:  (i)
17    certification  by  the  company  that  it  has no outstanding
18    creditors, policyholders, or policy obligations in effect and
19    no plans to engage in the business of insurance; (ii) receipt
20    of a lawful resolution of the company's  board  of  directors
21    effecting  the surrender of its articles of incorporation for
22    administrative dissolution by the Director; and (iii) receipt
23    of the name and forwarding address  for  each  of  the  final
24    officers  and  directors of the company, together with a plan
25    of dissolution approved by the Director.
26    (Source: P.A. 90-418, eff. 8-15-97.)

27        (215 ILCS 5/53) (from Ch. 73, par. 665)
28        Sec.  53.  Deposit.  A  Each  company  subject   to   the
29    provisions  of  this Article shall make and maintain with the
30    Director for the protection of all  creditors,  policyholders
 
SB870 Enrolled              -2-                LRB9201509JSpc
 1    and   policy   obligations  of  the  company,  a  deposit  of
 2    securities which are  authorized  investments  under  Section
 3    126.11A(1),  126.11A(2),  126.24A(1),  or 126.24A(2) having a
 4    fair market value equal to the minimum surplus required to be
 5    maintained under Section 43. The  Director  may  release  the
 6    required  deposit of securities upon receipt of an order of a
 7    court having proper jurisdiction or upon:  (i)  certification
 8    by   the  company  that  it  has  no  outstanding  creditors,
 9    policyholders, or policy obligations in effect and  no  plans
10    to  engage  in  the  business of insurance; (ii) receipt of a
11    lawful  resolution  of  the  company's  board  of   directors
12    effecting  the surrender of its articles of incorporation for
13    administrative dissolution by the Director; and (iii) receipt
14    of the name and forwarding address  for  each  of  the  final
15    officers  and  directors of the company, together with a plan
16    of dissolution approved by the Director.
17    (Source: P.A. 90-418, eff. 8-15-97.)

18        (215 ILCS 5/74) (from Ch. 73, par. 686)
19        Sec. 74. Deposit.  A Each domestic reciprocal subject  to
20    the  provisions  of this Article shall make and maintain with
21    the  Director,  for  the   protection   of   all   creditors,
22    policyholders  and  policy  obligations  of the reciprocal, a
23    deposit of securities that are authorized  investments  under
24    Section  126.11A(1),  126.11A(2),  126.24A(1), or 126.24A(2),
25    having a fair market value equal to the surplus  required  to
26    be  maintained under Section 66. The Director may release the
27    required deposit of securities upon receipt of an order of  a
28    court  having  proper jurisdiction or upon: (i) certification
29    by  the  reciprocal  company  that  it  has  no   outstanding
30    creditors, policyholders, or policy obligations in effect and
31    no plans to engage in the business of insurance; (ii) receipt
32    of   a  lawful  resolution  of  the  governing  body  of  the
33    reciprocal's attorney-in-fact effecting the surrender of  its
 
SB870 Enrolled              -3-                LRB9201509JSpc
 1    certificate  of authority and declaration of organization for
 2    administrative dissolution by the Director; and (iii) receipt
 3    of the name and forwarding address  for  each  of  the  final
 4    officers  and directors of the reciprocal's attorney-in-fact,
 5    together with a plan of dissolution approved by the Director.
 6    (Source: P.A. 90-418, eff. 8-15-97; 90-655, eff. 7-30-98.)

 7        (215 ILCS 5/278) (from Ch. 73, par. 890)
 8        Sec. 278. Reserve deposits.  A Each  company  subject  to
 9    this  Article  shall  from  time  to  time  deposit  with the
10    Director, securities of the kind authorized for investment by
11    a company transacting the  kind  of  business  enumerated  in
12    Class 1 of Section 4, in such amount that the market value of
13    the  securities  deposited  shall,  at all times, be at least
14    equal to the total of the reserved required by this  Code  on
15    the  life  contracts issued by said company until there shall
16    be on  deposit  at  least  $200,000.  Thereafter,  while  the
17    reserves  on  all  such  contracts  are  maintained,  further
18    deposits  shall  be  optional with the company. Each separate
19    deposit, except in the  case  of  newly  organized  companies
20    during the first 2 years of existence, shall be in the sum of
21    not  less than $1,000 and such securities may be deposited at
22    any time. Any such company may at any time, withdraw  any  of
23    such  securities in excess of the minimum herein required and
24    may from time to time exchange  any  of  such  securities  by
25    depositing  others  of  the  kind  in  which  the  company is
26    authorized to invest, of equal value. So  long  as  the  said
27    company  shall  remain  solvent  and maintain its deposits as
28    herein required, it may collect the interest or other  income
29    of  the securities deposited as the same may accrue. All such
30    deposits shall be held by  the  Director  in  trust  for  the
31    benefit of the holders of life contracts upon which contracts
32    reserves at least equal to the minimum reserves prescribed by
33    Section  281  are  required.  The  Director  may  release the
 
SB870 Enrolled              -4-                LRB9201509JSpc
 1    required deposit of securities upon receipt of an order of  a
 2    court  having  proper jurisdiction or upon: (i) certification
 3    by the company that it has no outstanding life  contracts  on
 4    which reserves are required, life insurance policyholders, or
 5    policy  obligations  in  effect and no plans to engage in the
 6    business of insurance; (ii) receipt of a lawful resolution of
 7    the company's board of directors effecting the  surrender  of
 8    its articles of incorporation  for administrative dissolution
 9    by the Director; and (iii) receipt of the name and forwarding
10    address  for  each of the final officers and directors of the
11    company, together with a plan of dissolution approved by  the
12    Director.
13    (Source: Laws 1959, p. 1148.)

14        (215 ILCS 5/327) (from Ch. 73, par. 939)
15        Sec. 327. Benefit fund.
16        (1)  An  Every  association shall maintain a benefit fund
17    which shall be used solely  for  the  payment  of  claims  of
18    members  and  no part thereof shall be used for defraying the
19    expenses of the association. Such fund, any portion of  which
20    may  be  deposited  with the Director, may be held in cash or
21    invested in securities of the United States Government or  of
22    the State of Illinois, and not otherwise. All moneys or other
23    assets  of  the  benefit  account,  as  defined  in  the  Act
24    mentioned  in  Section 316, of any association shall upon the
25    effective date of this Code  be  deemed  transferred  to  and
26    become a part of its benefit fund. The minimum amount of such
27    benefit  fund  at all times after one year from the effective
28    date of this Code shall be $1,000, plus the sum of  $200  for
29    each 100 members in excess of 500. If the benefit fund of any
30    association  at  any  time  after one year from the effective
31    date of this Code shall  be  less  than  the  minimum  amount
32    required by this Section and is not increased to such minimum
33    within 90 days, the association shall be deemed insolvent and
 
SB870 Enrolled              -5-                LRB9201509JSpc
 1    the  Director  shall  proceed  against it under Article XIII.
 2    The Director may release any required  benefit  fund  deposit
 3    upon   receipt   of   an  order  of  a  court  having  proper
 4    jurisdiction or upon: (i) certification  by  the  association
 5    that   it   has   no  outstanding  member  creditors,  member
 6    certificates, or member obligations in effect and no plans to
 7    engage in the business of insurance; (ii) receipt of a lawful
 8    resolution of the association's board of directors  effecting
 9    the  surrender  of  its charter and articles of incorporation
10    for administrative dissolution by  the  Director;  and  (iii)
11    receipt  of  the  name and forwarding address for each of the
12    final officers and directors of the company, together with  a
13    plan of dissolution approved by the Director.
14        (2)  Whenever the association shall have been notified of
15    any  loss  under its certificate of membership, which exceeds
16    in amount the benefit fund of the association, the  president
17    shall convene the directors of the association who shall levy
18    an assessment against all members for an amount sufficient to
19    pay  all  such  losses  of  the  association at the time said
20    assessment is made  and  for  an  amount  in  excess  thereof
21    sufficient to maintain the minimum amount of the benefit fund
22    as provided in this Section. Assessments provided for in this
23    section  shall  be distributed equally against all members of
24    the association except for children under 16  years  of  age.
25    The board of directors shall assess each such child an amount
26    not  to  exceed  one  half  of the amount levied against each
27    other member.
28        (3)  In order to provide  for  an  unexpected  number  of
29    deaths,   an   association  shall  have  the  right  to  levy
30    additional assessments whenever  in  the  discretion  of  the
31    board  of directors the same shall be deemed advisable except
32    that no assessment may be levied if the amount in the benefit
33    fund exceeds, or if such assessment will increase the  amount
34    of  the  benefit  fund  in  excess  of a sum equal to $25 per
 
SB870 Enrolled              -6-                LRB9201509JSpc
 1    member in good standing. The  entire  proceeds  of  all  such
 2    additional assessments shall be placed in the benefit fund.
 3    (Source: Laws 1957, p. 68.)

 4        (215 ILCS 5/341) (from Ch. 73, par. 953)
 5        Sec. 341. Deposit required.
 6        (1)  A  Every  burial  society  shall  maintain  with the
 7    Director a deposit of cash or securities in an amount  of  at
 8    least  $1,000  one  thousand  dollars. A Any society having a
 9    membership of more than 2,500 twenty-five hundred members and
10    less than  5,000  five  thousand  members  shall  maintain  a
11    deposit  with the Director of $5,000 five thousand dollars. A
12    Any society having a  membership  of  more  than  5,000  five
13    thousand  members  and  less than 10,000 ten thousand members
14    shall maintain a deposit with the  Director  of  $10,000  ten
15    thousand  dollars.  A Any society having more than 10,000 ten
16    thousand members shall maintain a deposit with  the  Director
17    of  $10,000 ten thousand dollars and an additional $1,000 one
18    thousand dollars for  each  1,000  one  thousand  members  in
19    excess of 10,000 ten thousand.
20        (2)  All  deposits as required herein shall be in cash or
21    in securities permitted by section 346.
22        (3)  The Director may release  the  required  deposit  of
23    cash or securities upon receipt of an order of a court having
24    proper  jurisdiction or upon: (i) certification by the burial
25    society that it has no outstanding creditors,  policyholders,
26    certificate  holders,  or member obligations in effect and no
27    plans to engage in the business of insurance; (ii) receipt of
28    a  lawful  resolution  of  the  burial  society's  board   of
29    directors   effecting   the  surrender  of  its  articles  of
30    incorporation for administrative dissolution by the Director;
31    and (iii) receipt of the name and forwarding address for each
32    of the final officers and directors of  the  burial  society,
33    together with a plan of dissolution approved by the Director.
 
SB870 Enrolled              -7-                LRB9201509JSpc
 1    (Source: Laws 1937, p. 696.)

 2        Section  10.  The  Health Maintenance Organization Act is
 3    amended by changing Section 2-6 as follows:

 4        (215 ILCS 125/2-6) (from Ch. 111 1/2, par. 1406.2)
 5        Sec. 2-6.  Statutory  Deposits.   An  Every  organization
 6    subject to the provisions of this Act shall make and maintain
 7    with   the  Director  through  December  30,  1993,  for  the
 8    protection of enrollees of the  organization,  a  deposit  of
 9    securities  which are authorized investments under paragraphs
10    (1) and (2) of subsection (h) of Section 3-1  having  a  fair
11    market  value equal to at least $100,000.  Effective December
12    31, 1993 and through December 30,  1994,  the  deposit  shall
13    have  a  fair  market  value  at  least  equal  to  $200,000.
14    Effective December 31, 1994 and thereafter, the deposit shall
15    have  a  fair  market  value  at least equal to $300,000.  An
16    organization issued a certificate of authority  on  or  after
17    the effective date of this Amendatory Act of 1993, shall make
18    and  maintain  with  the  Director;  for  the  protection  of
19    enrollees  of the organization, a deposit of securities which
20    are authorized investments under paragraphs (1)  and  (2)  of
21    subsection  (h)  of  Section  3-1  having a fair market value
22    equal to at least $300,000.   The  amount  on  deposit  shall
23    remain  as  an  admitted  asset  of  the  organization in the
24    determination of its net worth. The Director may release  the
25    required  deposit of securities upon receipt of an order of a
26    court having proper jurisdiction or upon:  (i)  certification
27    by  the  organization  that  it  has  no outstanding enrollee
28    creditors,  enrollees,  certificate  holders,   or   enrollee
29    obligations  in effect and no plans to engage in the business
30    of insurance  as  a  health  maintenance  organization;  (ii)
31    receipt   of   a  lawful  resolution  of  the  organization's
32    governing body effecting the surrender of its certificate  of
 
SB870 Enrolled              -8-                LRB9201509JSpc
 1    authority, articles of incorporation, or other organizational
 2    documents to their issuing governmental officer for voluntary
 3    or  administrative dissolution; and (iii) receipt of the name
 4    and forwarding address for each of  the  final  officers  and
 5    directors  of  the  organization,  together  with  a  plan of
 6    dissolution approved by the Director.
 7    (Source: P.A. 88-364.)

 8        Section 15.  The Limited Health Service Organization  Act
 9    is amended by changing Section 2006 as follows:

10        (215 ILCS 130/2006) (from Ch. 73, par. 1502-6)
11        Sec. 2006.  Statutory deposits.
12        (a)  An  Every  organization subject to the provisions of
13    this Act shall make and maintain with the Director,  for  the
14    protection  of  enrollees  of  the organization, a deposit of
15    securities that are in the form authorized under Section  2-6
16    of  the  Health  Maintenance  Organization  Act having a fair
17    market value equal to the minimum net  worth  required  under
18    subsection  (a) of Section 2004.  The amount on deposit shall
19    remain as an  admitted  asset  of  the  organization  in  the
20    determination of its net worth.  The Director may release the
21    required  deposit of securities required by this Section upon
22    receipt of an order of a court having proper jurisdiction  or
23    upon:  (i)  certification  by the organization that it has no
24    outstanding  enrollee   creditors,   enrollees,   certificate
25    holders,  or  enrollee  obligations in effect and no plans to
26    engage in the business  of  insurance  as  a  limited  health
27    service  organization; (ii) receipt of a lawful resolution of
28    the organization's governing body effecting the surrender  of
29    its  certificate  of authority, articles of incorporation, or
30    other organizational documents to their issuing  governmental
31    officer  for  voluntary  or  administrative  dissolution; and
32    (iii) receipt of the name and forwarding address for each  of
 
SB870 Enrolled              -9-                LRB9201509JSpc
 1    the   final  officers  and  directors  of  the  organization,
 2    together with a plan of dissolution approved by the Director.
 3        (b)  An  LHSO  that  offers  a  POS  contract  shall,  in
 4    addition to the deposit required by subsection  (a),  deposit
 5    and  maintain  with  the Director cash or securities that are
 6    authorized investments  under  Section  1003  having  a  fair
 7    market value equal to the greater of:
 8             (1)  $50,000   if   the   LHSO's   expenditures  for
 9        out-of-plan covered services do not  exceed  10%  of  its
10        total   limited   health  expenditures  in  any  calendar
11        quarter; or
12             (2)  $100,000  if  the   LHSO's   expenditures   for
13        out-of-plan  covered  services  exceeds  10% but are less
14        than 20% of its total limited health services expenditure
15        in any calendar quarter; or
16             (3)  120% of its current actual monthly  out-of-plan
17        covered  service  claims  expense  plus  incurred but not
18        reported balances for out-of-plan covered services.
19        (c)  The combined deposit amount required in  subsections
20    (a) and (b) shall not exceed $200,000.
21    (Source: P.A. 87-1079; 88-364; 88-667, eff. 9-16-94.)

22        Section  99.  Effective date.  This Act takes effect upon
23    becoming law.

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