093_HB2575

 
                                     LRB093 03701 JLS 06798 b

 1        AN ACT in relation to 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 Sections 500-77 and 500-80 as follows:

 6        (215 ILCS 5/500-77)
 7        Sec.   500-77.  Policyholder  information  and  exclusive
 8    ownership of expirations.
 9        (a)  As used in this  Section,  "expirations"  means  all
10    information  relative  to  an insurance policy including, but
11    not limited to, the name and  address  of  the  insured,  the
12    location  and  description of the property insured, the value
13    of the insurance policy,  the  inception  date,  the  renewal
14    date,  and  the  expiration date of the insurance policy, the
15    premiums, the limits and  a  description  of  the  terms  and
16    coverage  of the insurance policy, and any other personal and
17    privileged information, as defined by Section  1003  of  this
18    Code,  compiled  by  a  business  entity  registered  firm or
19    furnished by  the  insured  to  the  insurer  or  any  agent,
20    contractor, or representative of the insurer.
21        For  purposes  of  this  Section  only, a business entity
22    registered firm also  includes  a  sole  proprietorship  that
23    transacts the business of insurance as an insurance agency.
24        (b)  All  "expirations"  as  defined in subsection (a) of
25    this Section shall be mutually and exclusively owned  by  the
26    insured   and  the  business  entity  registered  firm.   The
27    limitations  on  the  use  of  expirations  as  provided   in
28    subsections  (c)  and (d) of this Section shall be for mutual
29    benefit of the insured and  the  business  entity  registered
30    firm.
31        (c)  Except  as  otherwise  provided in this Section, for
 
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 1    purposes of soliciting, selling, or negotiating  the  renewal
 2    or   sale  of  insurance  coverage,  insurance  products,  or
 3    insurance services or for  any  other  marketing  purpose,  a
 4    business  entity  registered  firm  shall  own  and  have the
 5    exclusive use of expirations, records, and other  written  or
 6    electronically  stored  information  directly  related  to an
 7    insurance application submitted by, or  an  insurance  policy
 8    written  through,  the  business  entity registered firm.  No
 9    insurance company,  managing  general  agent,  surplus  lines
10    insurance  broker,  wholesale  broker,  group  self-insurance
11    fund,  third-party  administrator, or any other entity, other
12    than a financial institution as defined in  Section  1402  of
13    this  Code,  shall  use  such  expirations, records, or other
14    written or  electronically  stored  information  to  solicit,
15    sell, or negotiate the renewal or sale of insurance coverage,
16    insurance  products,  or insurance services to the insured or
17    for any other  marketing  purposes,  either  directly  or  by
18    providing such information to others,  without, separate from
19    the  general  agency  contract,  the  written  consent of the
20    business entity registered firm. However,  such  expirations,
21    records,   or   other   written   or   electronically  stored
22    information may be used for any purpose necessary for placing
23    such  business  through  the  insurance  producer   including
24    reviewing an application and issuing or renewing a policy and
25    for loss control services.
26        (d)  With  respect  to a business entity registered firm,
27    this Section shall not apply:
28             (1)  when the insured requests either orally  or  in
29        writing  that  another  business  entity  registered firm
30        obtain  quotes  for  insurance  from  another   insurance
31        company   or   when   the  insured  requests  in  writing
32        individually   or   through   another   business   entity
33        registered firm, that the  insurance  company  renew  the
34        policy;
 
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 1             (2)  to  policies  in  the  Illinois  Fair Plan, the
 2        Illinois  Automobile  Insurance  Plan,  or  the  Illinois
 3        Assigned  Risk  Plan  for  coverage  under  the  Workers'
 4        Compensation Act and the Workers'  Occupational  Diseases
 5        Act;
 6             (3)  when  the  insurance producer is employed by or
 7        has agreed  to  act  exclusively  or  primarily  for  one
 8        company  or group of affiliated insurance companies or to
 9        a producer  who  submits  to  the  company  or  group  of
10        affiliated  companies  that  are  organized  to  transact
11        business  in  this  State  as  a  reciprocal  company, as
12        defined in Article IV of  this  Code,  every  request  or
13        application  for  insurance  for  the  classes  and lines
14        underwritten  by  the  company  or  group  of  affiliated
15        companies;
16             (4)  to policies providing  life  and  accident  and
17        health insurance;
18             (5)  when  the business entity registered firm is in
19        default for nonpayment of  premiums  under  the  contract
20        with  the  insurer  or  is  guilty  of  conversion of the
21        insured's or insurer's premiums or its license is revoked
22        by or surrendered to the Department;
23             (6)  to any insurance  company's  obligations  under
24        Sections 143.17 and 143.17a of this Code; or
25             (7)  to  any  insurer that, separate from a producer
26        or business entity registered  firm,  creates,  develops,
27        compiles, and assembles its own, identifiable expirations
28        as defined in subsection (a).
29        For purposes of this Section, an insurance producer shall
30    be  deemed to have agreed to act primarily for one company or
31    a group of affiliated insurance companies if the producer (i)
32    receives  75%  or  more  of  his  or  her  insurance  related
33    commissions  from  one  company  or  a  group  of  affiliated
34    companies or (ii) places 75% or more of his or  her  policies
 
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 1    with one company or a group of affiliated companies.
 2        Nothing  in  this Section prohibits an insurance company,
 3    with respect to any  items  herein,  from  conveying  to  the
 4    insured or the business entity registered firm any additional
 5    benefits  or  ownership rights including, but not limited to,
 6    the ownership of expirations on  any  policy  issued  or  the
 7    imposition of further restrictions on the insurance company's
 8    use of the insured's personal information.
 9        (e)  Nothing   in   this  Section  prevents  a  financial
10    institution, as defined in Section 1402 of  this  Code,  from
11    obtaining  from  the  insured,  the  insurer, or the business
12    entity registered firm the expiration dates of  an  insurance
13    policy  placed on collateral or otherwise used as security in
14    connection with a loan made  or  serviced  by  the  financial
15    institution  when  the  financial  institution  requires  the
16    expiration dates for evidence of insurance.
17        (f)  For    purposes    of   this   Section,   "financial
18    institution" does not include an insurance company,  business
19    entity registered firm, managing general agent, surplus lines
20    broker,  wholesale  broker, group self-funded insurance fund,
21    or third-party administrator.
22        (g)  The Director may  adopt  rules  in  accordance  with
23    Section 401 of this Code for the enforcement of this Section.
24        (h)  This  Section applies to the expirations relative to
25    all policies of insurance bound, applied for, sold,  renewed,
26    or  otherwise  taking  effect  on  or  after June 1, 2001 the
27    effective date of this amendatory Act  of  the  92nd  General
28    Assembly.
29    (Source: P.A. 92-5, eff. 6-1-01; 92-651, eff. 7-11-02.)

30        (215 ILCS 5/500-80)
31        Sec. 500-80.  Commissions.
32        (a)  An  insurer  or  insurance  producer  may  not pay a
33    commission,  service  fee,  brokerage,  or   other   valuable
 
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 1    consideration   to  a  person  for  selling,  soliciting,  or
 2    negotiating  insurance  in  this  State  if  that  person  is
 3    required to be licensed under this  Article  and  is  not  so
 4    licensed  at  the time of selling, soliciting, or negotiating
 5    the insurance.
 6        (b)  A person may not accept a commission,  service  fee,
 7    brokerage,  or  other  valuable  consideration  for  selling,
 8    soliciting,  or  negotiating  insurance in this State if that
 9    person is required to be licensed under this Article  and  is
10    not so licensed.
11        (c)  Renewal or other deferred commissions may be paid to
12    a person for selling, soliciting, or negotiating insurance in
13    this  State  if  the person was required to be licensed under
14    this Article at  the  time  of  the  sale,  solicitation,  or
15    negotiation and was so licensed at that time.
16        (d)  An  insurer  or insurance producer may pay or assign
17    commissions, service  fees,  brokerages,  or  other  valuable
18    consideration to an insurance agency or to persons who do not
19    sell,  solicit,  or negotiate insurance in this State, unless
20    the payment would violate Section 151 of this Code.
21        (e)  When  an  insurance  producer  or  business   entity
22    charges  any  fee  or  compensation separate from commissions
23    deductible from, or directly  attributable  to,  premiums  on
24    insurance  policies  or contracts, it must comply with all of
25    the following:
26             (1)  It  must  provide  written  disclosure  to  the
27        consumer or contracting party that clearly specifies  the
28        amount  or extent of the compensation or fee prior to the
29        delivery of the corresponding policy or  the  performance
30        of the service.  A copy of the written disclosure must be
31        maintained  for  a  period  of 7 years by the producer or
32        business entity that collects the compensation or fee for
33        a period of 7 years.
34             (2)  If the combined compensation or fee exceeds 10%
 
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 1        of  a  directly  attributable   premium   amount   of   a
 2        corresponding  contract  or  policy,  the disclosure must
 3        also include the signature of the consumer or contracting
 4        party acknowledging the compensation or fee.
 5             (3)  If an insurance policy or contract is cancelled
 6        for any reason within 90  days  following  the  inception
 7        date, the producer or business entity shall refund to the
 8        consumer  a  prorated  portion of the fee or compensation
 9        within 30 days after  the  producer  or  business  entity
10        receives  proper  documentation  that  the  corresponding
11        insurance  policy  or  contract has been cancelled. At no
12        time shall a  producer  or  business  entity  charge  the
13        consumer  a  fee  or compensation for cancellation of any
14        insurance policy or contract.
15             (4)  If the policy file contains documentation  that
16        the  producer  performed  a  service corresponding to the
17        applicable coverage or policy and the written  disclosure
18        stated  that  the fees were fully earned, then those fees
19        shall be fully earned at inception  of  the  disclosure's
20        execution.
21    (Source: P.A. 92-386, eff. 1-1-02; 92-587, eff. 6-26-02.)

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