215 ILCS 5/ Illinois Insurance Code.

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215 ILCS 5/Art. XXXIIA

(215 ILCS 5/Art. XXXIIA heading) ARTICLE XXXIIA.

PREMIUM FINANCE REGULATION

215 ILCS 5/513a1

(215 ILCS 5/513a1) (from Ch. 73, par. 1065.60a1)

Sec. 513a1.

Scope of Article.

(a) Except as provided in subsection (b), this Article applies to all
persons engaged in the business of financing insurance premiums, entering
into premium finance agreements, or otherwise acquiring premium finance
agreements, and insurance companies and insurance producers as defined in
this Code, except in connection with premiums on the kinds of business
described as Class 1(a) or Class 1(b) of Section 4.

(b) Except for the provisions of Section 513a11 that apply to all
premium financing agreements in which the right to cancel one or more
policies of insurance on behalf of the named has been assigned to the
lender, this Article does not apply to the following entities:

(1) Credit unions, as defined in the Illinois Credit

Union Act.

(2) Banks, as defined in the Illinois Banking Act.

(3) Savings and loan associations, as defined in the

Illinois Savings and Loan Act of 1985.

(4) Persons operating under the provisions of Section

4a of the Interest Act.

(5) Persons operating under the Consumer Installment

Loan Act or the Consumer Finance Act.

(6) Persons that acquire premium finance agreements

from insurance companies and entities described in paragraphs (1) through (5).

(Source: P.A. 87-811.)

215 ILCS 5/513a2

(215 ILCS 5/513a2) (from Ch. 73, par. 1065.60a2)

Sec. 513a2.

Definitions.

(a) "Accepted agreement" means a premium finance
agreement deemed to be accepted by a premium finance company when a binder
number or policy number is provided for each policy premium listed on the
premium finance agreement and premium payment book or when the first
premium payment notice has been sent to the named insured.

(b) "Financing insurance premiums" means
to be engaged in the practice of:

(1) advancing monies directly or indirectly to an

insurer pursuant to the terms of an acquired premium finance agreement; or

(2) allowing 10% or more of a producer's or

registered firm's premium accounts receivable to be more than 90 days past due.

(c) "Premium finance agreement" means a
promissory note, loan contract, or agreement by which an insured or
prospective insured promises to pay to another person an amount advanced or
to be advanced thereunder to an insurer in payment of premiums on an
insurance contract together with a service charge and which contains an
assignment of or is otherwise secured by the unearned premium payable by
the insurer upon cancellation of the insurance contract; provided, however,
that a premium finance agreement shall not include an installment sale
contract, lease agreement, security agreement, or mortgage covering
personal or real property that includes a charge for insurance or pursuant
to which the vendor, lessor, lienholder, or mortgagee is authorized to pay
or advance the premium for insurance with respect to that property.

(d) "Premium finance company" means any person
engaged in the business of financing insurance premiums, of entering into
premium finance agreements with insureds, or of acquiring premium finance
agreements.

(Source: P.A. 90-655, eff. 7-30-98.)

215 ILCS 5/513a3

(215 ILCS 5/513a3) (from Ch. 73, par. 1065.60a3)

Sec. 513a3.

License required.

(a) No person may act as a premium finance company or hold himself out
to be engaged in the business of financing insurance premiums, either
directly or indirectly, without first having obtained a license as a
premium finance company from the Director.

(b) An insurance producer shall be deemed to be engaged in the
business of financing insurance premiums if 10% or more of the producer's total
premium accounts receivable are more than 90 days past due.

(c) In addition to any other penalty set forth in this Article, any
person violating subsection (a) of this Section may, after hearing as set
forth in Article XXIV of this Code, be required to pay a civil penalty of
not more than $2,000 for each offense.

(d) In addition to any other penalty set forth in this Article, any
person violating subsection (a) of this Section is guilty of a Class A
misdemeanor.  Any individual violating subsection (a) of this Section, and
misappropriating or converting any monies collected in conjunction with the
violation, is guilty of a Class 4 felony.

(Source: P.A. 93-32, eff. 7-1-03.)