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| [ Engrossed ] | [ Enrolled ] | [ Senate Amendment 001 ] |
92_SB1996
LRB9215940JSpc
1 AN ACT concerning insurance.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Insurance Code is amended by
5 changing Section 500-80 as follows:
6 (215 ILCS 5/500-80)
7 Sec. 500-80. Commissions.
8 (a) An insurer or insurance producer may not pay a
9 commission, service fee, brokerage, or other valuable
10 consideration to a person for selling, soliciting, or
11 negotiating insurance in this State if that person is
12 required to be licensed under this Article and is not so
13 licensed at the time of selling, soliciting, or negotiating
14 the insurance.
15 (b) A person may not accept a commission, service fee,
16 brokerage, or other valuable consideration for selling,
17 soliciting, or negotiating insurance in this State if that
18 person is required to be licensed under this Article and is
19 not so licensed.
20 (c) Renewal or other deferred commissions may be paid to
21 a person for selling, soliciting, or negotiating insurance in
22 this State if the person was required to be licensed under
23 this Article at the time of the sale, solicitation, or
24 negotiation and was so licensed at that time.
25 (d) An insurer or insurance producer may pay or assign
26 commissions, service fees, brokerages, or other valuable
27 consideration to an insurance agency or to persons who do not
28 sell, solicit, or negotiate insurance in this State, unless
29 the payment would violate Section 151 of this Code.
30 (e) When an insurance producer or business entity
31 charges a fee or compensation separate from commissions
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1 deductible from, or directly attributable to, premiums on
2 insurance policies or contracts, it must comply with all of
3 the following:
4 (1) It must provide written disclosure to the
5 consumer or contracting party that clearly specifies the
6 amount or extent of the compensation or fee prior to the
7 delivery of the corresponding policy. A copy of the
8 written disclosure must be maintained by the producer or
9 business entity that collects the compensation or fee for
10 a period of 3 years.
11 (2) If the combined compensation or fee exceeds 10%
12 of a directly attributable premium amount of a
13 corresponding contract or policy, the disclosure must
14 also include the signature of the consumer or contracting
15 party acknowledging the compensation or fee.
16 (3) The compensation or fee shall be returned to
17 the consumer or contracting party within 30 days after
18 the properly documented receipt of a notice to the
19 producer or business entity that the corresponding
20 contract or policy has been cancelled. The amount to be
21 returned shall be calculated on a pro-rated basis for the
22 remaining time the policy will not be in force, not to
23 exceed 90 days. Compensation or fees returned shall not
24 include or offset for any processing or cancellation
25 charges attributable to effecting the return.
26 (4) If the consumer or contracting party's policy
27 file contains documentation that the producer performed a
28 service corresponding to the applicable coverage or
29 policy and the written disclosure stated that the fees
30 were fully earned, then those fees shall be fully earned
31 at inception of the disclosure statement's execution.
32 Except as to commissions deductible from premiums on
33 insurance policies or contracts for insurance, an
34 insurance producer or business entity does not have any
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1 right to compensation from an insured or prospective
2 insured for or on account of the transaction of insurance
3 business unless the right to compensation is stated on a
4 separate written memorandum that clearly specifies the
5 amount or extent of the service fee and that is provided
6 to the applicant or insured before the performance of the
7 service or the issuance of the policy, whichever is
8 first. A copy of the memorandum must be maintained by
9 any producer who collects or receives the service fee or
10 any portion of the service fee. If the compensation or
11 service fee exceeds 10% of the premium amount or
12 potential premium amount of the contract or policy, the
13 memorandum shall include the signature of the insured or
14 prospective insured acknowledging the compensation or
15 service fee.
16 (f) Any compensation or service fee received on a
17 contract or policy that is later canceled, within the first
18 half of the contract or policy period, for any reason must be
19 returned to the insured by the insurance producer or business
20 entity at a prorated amount. The prorated amount shall be
21 based on the length of the term of the policy or contract
22 compared to the time that contract or policy was in force
23 such that the amount returned reflects the portion of the
24 term of the contract or policy during which the contract was
25 not in force. There shall be no compensation or service fee
26 assessed or received on a contract or policy by the insurance
27 producer or business entity for processing such cancellation.
28 (Source: P.A. 92-386, eff. 1-1-02.)
29 Section 99. Effective date. This Act takes effect upon
30 becoming law.