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Public Act 91-0796
SB1701 Enrolled LRB9112329JSpc
AN ACT concerning insurance exchanges.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Sections 107.02, 107.15a, 107.15b, 107.17, 107.21,
107.26, and 107.29 as follows:
(215 ILCS 5/107.02) (from Ch. 73, par. 719.02)
Sec. 107.02. Incorporation.
(a) There is hereby authorized created an exchange for
the reinsurance and insurance of risks. An exchange formed
pursuant to this Article shall be a privately owned
organization separate and distinct from the State. Within 60
days after this Act becomes law, the Director of Insurance
shall appoint an interim Board of Directors to adopt
temporary by-laws, hire employees, and take such other steps
as are authorized or necessary to establish the Exchange.
When subscriptions totalling $4,000,000 have been received
pursuant to Section 107.07, the Board of Directors shall
apply to the Director for a Certificate of Authority. The
Director shall approve such Certificate within 30 days unless
he determines that the requirements of this Article have not
been met and specifies his objections in writing. Within 30
days after receiving proof from the Exchange that the
objections have been met, the Director shall approve the
application of the Exchange.
(b) After the effective date of this amendatory Act of
1997, the Director may organize, in accordance with
subsection (a), an additional exchange for the reinsurance
and insurance of risks. The additional exchange shall comply
with the provisions of this Article.
(Source: P.A. 90-499, eff. 8-19-97.)
(215 ILCS 5/107.15a) (from Ch. 73, par. 719.15a)
Sec. 107.15a. Duties and powers of trustees. The Board
of Trustees shall have such power as may be necessary for the
management and operations of the Exchange and the
Association. Such powers shall include but not be limited
to:
(a) establishment of the qualifications,
requirements, limitations and obligations for syndicates,
limited syndicates, subscribers, and Exchange brokers;
(b) denying access to the Exchange to applicants
which do not meet such qualifications, requirements, and
obligations;
(c) imposing penalties on syndicates, limited
syndicates, subscribers and Exchange brokers for
violations of the regulations of the Exchange or orders
of the Board;
(d) assessing fees annually on syndicates, limited
syndicates, subscribers and Exchange brokers, and making
assessments on syndicates, limited syndicates and
subscribers for the expenses of the Exchange;
(e) suspending, in whole or in part, access to the
Exchange or expelling syndicates, limited syndicates,
subscribers or Exchange brokers who do not continue to
meet the qualifications, requirements, and obligations
established by the Board, who fail or refuse to pay
penalties, fees, or assessments when due, or whose
continued operation the Board determines would be
injurious to the best interests of the Exchange,
policyholders, claimants, or creditors;
(f) obtaining immediate access for the benefit of
the Immediate Access Security Association to the
following assets of the impaired or insolvent syndicate:
(i) the full amount held in its security trust
or custodial account; and
(ii) the assets of its subscribers under their
certificates of guaranty;.
(g) organizing a guaranty mechanism or fund for the
protection of policyholders.
(Source: P.A. 91-77, eff. 7-9-99.)
(215 ILCS 5/107.15b)
Sec. 107.15b. Board rulemaking authority.
(a) The Board has the authority to adopt such rules as
it deems necessary to carry out its duties under this Article
and to maintain a well-regulated marketplace. A syndicate,
limited syndicate, subscriber, or exchange broker, as a
condition of its authority to transact business through the
Exchange, shall comply with this Article, all existing rules
of the Exchange, and all rules or modifications of existing
rules adopted by the Board and not disapproved by the
Director, including, but not limited to, rules extending
requirements and obligations with effect after the
suspension, expulsion, or voluntary withdrawal of the
syndicate, limited syndicate, subscriber, or exchange broker
from access to the Exchange.
(b) A rule or modification to an existing rule adopted
by the Board after the effective date of this amendatory Act
of 1997 shall be filed with the Director not less than 30
days before the proposed effective date of the rule or
modification. The Director, upon written order, may
disapprove the rule or modification, in whole or in part,
upon a finding that the rule or modification would cause the
exchange to be operated in a manner that would be hazardous
to the public or its policyholders.
(c) An order by the Director disapproving a rule or
modification shall be deemed to be a final administrative
decision and shall be subject to judicial review pursuant to
the provisions of the Administrative Review Law.
(d) Neither the Board nor the Exchange is an agency of
the State for purposes of the Illinois Administrative
Procedure Act or otherwise.
(Source: P.A. 90-499, eff. 1-1-98.)
(215 ILCS 5/107.17) (from Ch. 73, par. 719.17)
Sec. 107.17. Governance. The business and affairs of
the Exchange shall be managed by an Executive Committee with
the advice and consent of the Board of Trustees.
There shall be 2 classes of trustees: Subscriber
trustees and public trustees. Both public trustees and
subscriber trustees shall be elected by a majority vote of
the subscribers. In addition, the public trustees shall be
approved by the Director.
The trustees shall be 13 in number. There shall be at
least 5 public trustees who shall be individual persons who
are not insurers, subscribers, exchange brokers, or employees
of insurers, subscribers, exchange brokers, syndicates, or
affiliates thereof.
The Executive Committee shall be composed of 3 public
trustees elected by the Board. Members of the Executive
Committee shall serve for a term of 3 years, except that of
the initial members of the Executive Committee, one member
shall serve for a term of one year, one member shall serve
for a term of 2 years, and one member shall serve for a term
of 3 years. The terms of the initial members of the
Executive Committee shall be determined by lot.
All decisions of the Executive Committee, except those of
a ministerial nature that may be delegated by the Board,
shall be subject to the approval of the Board. All action of
the Executive Committee shall be approved unless disapproved
on a recorded vote by 9 members of the Board.
(Source: P.A. 89-206, eff. 7-21-95; 89-669, eff. 1-1-97;
90-499, eff. 1-1-98.)
(215 ILCS 5/107.21) (from Ch. 73, par. 719.21)
Sec. 107.21. Central Processing Facility. Establishment:
The Exchange shall establish a facility for centralized
record keeping, data collection, and statistical compilation
of all insurance and reinsurance transactions involving a
subscriber.
Scope: Except with respect to reinsurance contracts
where the risks are transferred from a syndicate to a limited
syndicate and security for the exposure is held in a fully
funded trust account, all monies due on contracts of
insurance and reinsurance issued by syndicates shall be
payable to the Exchange and disbursed directly to the
Facility for recording and distribution. All other
transactions of business on the Exchange shall be reported
concurrently to the Facility unless exempted by the Board.
Management: The management and operation of the Facility
shall be conducted pursuant to rules adopted by the Board.
The facility shall keep full and accurate accounts and
records of receipts and disbursements of the funds being
processed by the Facility and maintain accounting records of
all transactions of each subscriber, syndicate, and limited
syndicate. Monthly reports stating the receipts and
disbursements of the Facility shall be made to the Board.
The Board may also require any other report that it deems
necessary.
(Source: P.A. 81-1047.)
(215 ILCS 5/107.26) (from Ch. 73, par. 719.26)
Sec. 107.26. Immediate Access Security Association.
(a) There is authorized created a non-profit corporation
which shall be known as the Immediate Access Security
Association, and which shall be established as a privately
owned organization incorporated under the General Not for
Profit Corporation Act separate and distinct from the State
and not a part of the State government. All syndicates shall
be members of the Association as a condition of their
authority to transact business on the Exchange. The
Association shall be exempt from payment of all fees and all
taxes levied by this State or any of its subdivisions.
(b) In the event of the entry of an Order of
Rehabilitation, Conservation, or Liquidation against a
syndicate pursuant to Section 107.08, the Association shall
establish a claims date, which shall be not later than one
year after the date of such Order, by which time all persons
having claims arising out of insurance obligations of the
syndicate must file their claim with the Association. The
Association shall give notice to all policyholders and other
persons who may have a claim against the syndicate as shown
by the syndicate's records. Such notice shall include the
date of the Order, the claims date established by the
Association and the procedure and form for filing a claim
with the Association. The Association shall determine the
syndicate's insurance obligations based on all claims filed
on or before the claims date. The Association shall then pay
all claims for which an insurance obligation exists from the
assets of the syndicate's trust or custodial account and
certificates of guaranty. In the event those assets are
insufficient to pay all claims in full, the Association shall
make payment pursuant to a plan approved by the court
entering the Order of Rehabilitation, Conservation, or
Liquidation. The Rehabilitator, Conservator, or Liquidator
shall be bound by any settlement made by the Association. Any
person not receiving full reimbursement for his claim from
the Association shall have a claim against the assets being
administered by the Rehabilitator, Conservator, or Liquidator
for the remaining amounts. In settling claims and subject to
limitations in this Section, the Association shall have the
same rights and duties of the insolvent syndicate as if the
syndicate had not become insolvent.
(c) The Association may delegate to such other person or
entity as it deems appropriate the performance of any duty
imposed on it by this Section.
(Source: P.A. 89-97, eff. 7-7-95; 89-206, eff. 7-21-95;
89-626, eff. 8-9-96; 90-794, eff. 8-14-98.)
(215 ILCS 5/107.29)
Sec. 107.29. Exchange operations runoff.
(a) The Board may adopt a plan of operation for the
orderly runoff of the operations of the exchange. The plan
of operation shall provide that all funds, legal rights,
title to property, and causes of action of the Exchange
including, but not limited to, all assessments, subscription
payments, proceeds, investments, premium fees, surcharge
receipts, and funds maintained under Sections 107.26 and
107.27 and the rules or regulations of the Exchange
implementing those Sections or any other provision of this
Article, shall be accounted for and paid over to the Director
as receiver of any delinquent syndicate in receivership after
settlement of all claims against the exchange.
(1) In the event that 2 or more syndicates are then
in receivership, the amount paid over to each estate
shall be proportional to the relative size of the surplus
deficiency of each.
(2) Any excess remaining after the payment of any
and all claims against such receivership estates shall be
transferred, in equal shares, to the domestic companies
which result from the reorganization, merger, or
consolidation of former syndicates of the Illinois
Insurance Exchange.
(b) For purposes of this Section, "syndicate" means a
syndicate or a limited syndicate.
(Source: P.A. 90-499, eff. 8-19-97; 91-77, eff. 7-9-99.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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