4 |
| Section 5. The Illinois Insurance Code is amended by | 5 |
| changing Sections
531.02, 531.03,
531.04, 531.05,
531.06, | 6 |
| 531.07, 531.08,
531.09, 531.10,
531.11, 531.12,
531.14, | 7 |
| 531.15,
531.17, and 531.19, and adding Section 531.02a as | 8 |
| follows:
| 9 |
| (215 ILCS 5/531.02) (from Ch. 73, par. 1065.80-2)
| 10 |
| Sec. 531.02. Purpose. The purpose of this Article is to | 11 |
| protect,
subject to certain limitations, the persons specified | 12 |
| in paragraph (1) of
Section 531.03 against failure
in the | 13 |
| performance of contractual obligations, under life and
or
| 14 |
| health
insurance policies, and annuity contracts and health or | 15 |
| medical care
service
contracts specified in paragraph (2) of | 16 |
| Section 531.03, due to the
impairment or insolvency of the
| 17 |
| insurer issuing such policies or contracts. To provide this | 18 |
| protection,
(1) an association of insurers is created to enable | 19 |
| the guaranty of payment
of benefits and of continuation of | 20 |
| coverages as limited by this Article ,
(2) members of the | 21 |
| Association
are subject to assessment to provide funds to carry | 22 |
| out the purpose of this
Article, and (3) the Association is | 23 |
| authorized to assist the Director, in
the prescribed manner, in | 24 |
| the detection and prevention of insurer impairments
or | 25 |
| insolvencies.
| 26 |
| (Source: P.A. 86-753.)
| 27 |
| (215 ILCS 5/531.02a new)
| 28 |
| Sec. 531.02a. Restrictions on recoveries by health care | 29 |
| providers. In the
event of the insolvency of a member insurer, | 30 |
| no provider of health
care
services
shall seek to recover any | 31 |
| amount from any insured until a final determination
has been |
|
|
|
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| 1 |
| made
as to the Association's liability for such services | 2 |
| (including the resolution
of any dispute or
litigation | 3 |
| resulting therefrom).
| 4 |
| In the event that a provider seeks to recover any such | 5 |
| amount before a final
determination of the Association's | 6 |
| liability (or the resolution of any dispute
or litigation
| 7 |
| resulting therefrom) has been made, the provider shall be | 8 |
| liable for all
reasonable costs and
attorney fees incurred by | 9 |
| the Director and the Association in enforcing this
provision or | 10 |
| any court orders related thereto.
| 11 |
| (215 ILCS 5/531.03) (from Ch. 73, par. 1065.80-3)
| 12 |
| Sec. 531.03. Coverage and limitations.
| 13 |
| (1) This Article shall provide
coverage for the policies | 14 |
| and contracts specified in paragraph (2) of this
Section:
| 15 |
| (a) to persons who, regardless of where they reside | 16 |
| (except for
non-resident certificate holders under group | 17 |
| policies or contracts), are the
beneficiaries, assignees | 18 |
| or payees of the persons covered under subparagraph
(1)(b), | 19 |
| and
| 20 |
| (b) to persons who are owners of or certificate holders | 21 |
| under such
policies or contracts (other than unallocated | 22 |
| annuity contracts and
structured settlement annuities) and | 23 |
| in each case
; or, in the case of
unallocated annuity | 24 |
| contracts, to
the persons who are the contract holders, and
| 25 |
| who :
| 26 |
| (i) are residents of this State , or
| 27 |
| (ii) are not residents, but only under all of the | 28 |
| following conditions:
| 29 |
| (A) the insurer
insurers
that
which issued | 30 |
| such
policies or contracts
is
are domiciled
in this | 31 |
| State;
| 32 |
| (B) the states in which such persons reside | 33 |
| have associations
similar to the association | 34 |
| created by this Article
such insurers never held
a | 35 |
| license or certificate of authority in
the states |
|
|
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| in which such persons reside ; and
| 2 |
| (C) the persons are not eligible for coverage | 3 |
| by an association in
any other state due to the | 4 |
| fact that the insurer was not licensed in the state
| 5 |
| at the time specified in the state's guaranty | 6 |
| association law.
such states
have associations | 7 |
| similar to the association created
by this Act; and
| 8 |
| (D) such persons are not eligible for coverage | 9 |
| by such
associations.
| 10 |
| (c) For unallocated annuity contracts specified in | 11 |
| paragraph (2) of this
Section,
subparagraphs (a) and (b) of | 12 |
| this paragraph shall not apply, and this Article
shall | 13 |
| (except as
provided in subparagraphs (e) and (f) of this | 14 |
| paragraph) provide coverage to:
| 15 |
| (i) persons who are the owners of the unallocated | 16 |
| annuity contracts if
the
contracts are issued to or in | 17 |
| connection with a specific benefit plan whose
plan | 18 |
| sponsor has its principal place of business is in this | 19 |
| State; and
| 20 |
| (ii) persons who are owners of unallocated annuity | 21 |
| contracts issued to
or
in
connection with government | 22 |
| lotteries if the owners are residents.
| 23 |
| (d) For structured settlement annuities specified in | 24 |
| paragraph (2) of this
Section,
subparagraphs (a) and (b) of | 25 |
| this paragraph shall not apply, and this Article
shall | 26 |
| (except as
provided in subparagraphs (e) and (f) of this | 27 |
| paragraph) provide coverage to a
person who is a
payee | 28 |
| under a structured settlement annuity (or beneficiary of a | 29 |
| payee if the
payee is
deceased), if the payee:
| 30 |
| (i) is a resident, regardless of where the contract | 31 |
| owner resides; or
| 32 |
| (ii) is not a resident, but only under both of the | 33 |
| following conditions:
| 34 |
| (A)(1) the contract owner of the structured | 35 |
| settlement annuity
is a resident, or
| 36 |
| (II) the contract owner of the structured |
|
|
|
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| 1 |
| settlement annuity
is not a resident, but
| 2 |
| the insurer that issued the structured | 3 |
| settlement
annuity is domiciled in this State; and
| 4 |
| the state in which the contract owner resides | 5 |
| has an
association similar to the association | 6 |
| created by this
Article; and
| 7 |
| (B) neither the payee (or beneficiary) nor the | 8 |
| contract owner is
eligible for coverage by the | 9 |
| association of the state in which the
payee or | 10 |
| contract owner resides.
| 11 |
| (e) This Article shall not provide coverage for:
| 12 |
| (i) a person who is a payee (or beneficiary) of a | 13 |
| contract owner
resident
of this State,
if the payee (or | 14 |
| beneficiary) is afforded any coverage by the | 15 |
| association of
another
state, or
| 16 |
| (ii) a person covered under subparagraph (c) of | 17 |
| this paragraph, if any
coverage is
provided by the | 18 |
| association of another state to or through the trustee | 19 |
| who is
the
contract owner.
| 20 |
| (f) This Article is intended to provide coverage to a | 21 |
| person who is a
resident
of this
State and, in special | 22 |
| circumstances, to a nonresident. In order to avoid
| 23 |
| duplicate coverage, if a
person who would otherwise receive | 24 |
| coverage under this Article is provided
coverage under the
| 25 |
| laws of any other state, the person shall not be provided | 26 |
| coverage under this
Article. In
determining the | 27 |
| application of the provisions of this paragraph in | 28 |
| situations
where a person
could be covered by the | 29 |
| association of more than one state, whether as an
owner, | 30 |
| payee,
beneficiary, or assignee, this Article shall be | 31 |
| construed in conjunction with
other state laws to
result in | 32 |
| coverage by only one association.
| 33 |
| (2)(a) Except as otherwise provided, this Article shall | 34 |
| provide coverage
to the persons
specified in paragraph (l) of | 35 |
| this Section for direct, (i)
individual or other nongroup life, | 36 |
| health, and annuity and
supplemental policies, or contracts, |
|
|
|
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| 1 |
| and supplemental contracts to any of
these,
(ii) for
| 2 |
| certificates under direct group policies or contracts, (iii)
| 3 |
| and for
unallocated
annuity contracts , in each case issued by | 4 |
| member insurers. "Annuity
contracts" and "certificates under | 5 |
| group annuity contracts" shall have the
meaning set forth in | 6 |
| subdivision (2) of Section 531.05
and (iv) for
contracts to | 7 |
| furnish
health care services and subscription certificates for | 8 |
| medical or health
care services issued by persons licensed to | 9 |
| transact insurance business
in this State under the Illinois | 10 |
| Insurance Code.
Annuity contracts and certificates under group | 11 |
| annuity contracts include
but are not limited to guaranteed | 12 |
| investment contracts, deposit
administration contracts, | 13 |
| unallocated funding agreements, allocated funding
agreements, | 14 |
| structured settlement agreements, lottery contracts
and any | 15 |
| immediate or deferred annuity contracts .
| 16 |
| (b) This Article shall not provide coverage for:
| 17 |
| (i) any
that portion or provision
part of such policies | 18 |
| or
contracts not guaranteed by the insurer, or under which | 19 |
| the
risk is borne by the policy or contract owner
| 20 |
| policyholder ; provided
however, that nothing in this
| 21 |
| subparagraph (2)(b) (i) shall make this Article | 22 |
| inapplicable
to assessment life and
accident and health | 23 |
| insurance policies or contracts; or
| 24 |
| (ii) any such policy or contract or part thereof | 25 |
| assumed by the impaired
or insolvent insurer under a | 26 |
| contract of reinsurance, unless
other than
reinsurance
for | 27 |
| which assumption certificates have been issued pursuant to | 28 |
| the
reinsurance policy or contract by the impaired or | 29 |
| insolvent insurer ; or
| 30 |
| (iii) any interest rate, crediting rate, or similar | 31 |
| factor employed in
calculating returns or changes in value | 32 |
| (whether or not determined by use of an
index or other
| 33 |
| external reference stated in the policy or contract), and | 34 |
| any portion of a
policy or contract to the extent that it | 35 |
| is based on such a rate or factor,
that
any portion of a | 36 |
| policy or contract to the extent such portion
represents an |
|
|
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| accrued value that the rate of interest on which it is | 2 |
| accrued
| 3 |
| (A) averaged over the period of 4
four years prior | 4 |
| to the date
on which
the Association becomes obligated | 5 |
| with respect to such policy or contract,
exceeds a rate | 6 |
| of interest determined by subtracting 2
two percentage
| 7 |
| points
from Moody's Corporate Bond Yield Average | 8 |
| averaged for that same 4
four
year
period or for such | 9 |
| lesser period if the policy or contract was issued less
| 10 |
| than 4
four years before the Association became | 11 |
| obligated; and
| 12 |
| (B) on and after the date on which the Association | 13 |
| becomes obligated
with respect to such policy or | 14 |
| contract, exceeds the rate of interest
determined by | 15 |
| subtracting 3
three percentage points from Moody's
| 16 |
| Corporate
Bond Yield Average on a month-to-month basis
| 17 |
| as most recently
available ; or
| 18 |
| (iv) any provision or portion of a policy or contract | 19 |
| issued to a plan
or program
of an employer, association, or | 20 |
| other person to provide life, health, or
annuity benefits | 21 |
| to
its employees, members, or others, to the extent that | 22 |
| the plan or program is
self-funded
or uninsured, including | 23 |
| but not limited to benefits payable by an employer,
| 24 |
| association,
or other person under:
| 25 |
| (A) a multiple-employer welfare arrangement as | 26 |
| defined in 29 U.S.C.
1144;
| 27 |
| (B) a minimum premium group insurance plan;
| 28 |
| (C) a stop-loss group insurance plan and any | 29 |
| stop-loss insurance, as
defined in clause (b) of Class | 30 |
| 1 or clause (a) of Class 2 of Section 4, and
further
| 31 |
| defined in subsection (d) of Section 352;
| 32 |
| (D) an administrative services only contract; or
| 33 |
| (E) a cost-plus contract; or
| 34 |
| (v) any provision or portion of a policy or contract to | 35 |
| the extent that it
provides:
| 36 |
| (A) dividends or experience rating credits which, |
|
|
|
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| in each case, were not
paid or credited as of the date | 2 |
| of impairment or insolvency, whichever is
earlier;
| 3 |
| (B) voting rights;
| 4 |
| (C) obligations to report to the policy owner or | 5 |
| contract owner more
frequently than annually;
| 6 |
| (D) payment of any fees or allowances to any | 7 |
| person, including the
policy
or contract owner, in | 8 |
| connection with the service to or administration of the
| 9 |
| policy
or contract; or
| 10 |
| (E) other nonmonetary obligations; or
| 11 |
| (vi)
(iv) any unallocated annuity contract issued to or | 12 |
| in
connection with a
an employee
benefit plan
the | 13 |
| beneficiaries of which are protected by
protected under the | 14 |
| federal
Pension Benefit Guaranty Corporation law, | 15 |
| regardless of whether the federal
Pension Benefit Guaranty | 16 |
| Corporation has yet become liable to make any payments
with | 17 |
| respect to the benefit plan ; or
| 18 |
| (vii)
(v) any portion of any unallocated annuity | 19 |
| contract which
is not issued
to or in connection with a | 20 |
| specific employee, union or association of
natural persons | 21 |
| benefit plan or a government lottery; or
| 22 |
| (viii)
(vi)
any policy or contract or portion thereof | 23 |
| issued
by any burial society organized under Article XIX of | 24 |
| this Code
Act ,
any
fraternal benefit society organized | 25 |
| under Article XVII of this Code
Act , any
mutual benefit | 26 |
| association organized under Article XVIII of this
Code
Act , | 27 |
| and any foreign fraternal benefit society licensed under
| 28 |
| Article
VI of this Code
Act ; or
| 29 |
| (ix)
(vii)
any policy or contract or portion thereof | 30 |
| issued
by any health maintenance organization established
| 31 |
| pursuant to the Health
Maintenance Organization Act
| 32 |
| including any health maintenance organization business of | 33 |
| a member insurer; or
| 34 |
| (x)
(viii)
any policy or contract or portion thereof | 35 |
| issued
by any health services plan corporation established | 36 |
| pursuant to the
Voluntary Health Services Plans Act;
or
|
|
|
|
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| 1 |
| (ix) (blank); or
| 2 |
| (xi)
(x)
any policy or contract or portion thereof | 3 |
| issued by
any dental service plan corporation established
| 4 |
| pursuant to the Dental
Service Plan Act; or
| 5 |
| (xi) any stop-loss insurance, as defined in clause (b) | 6 |
| of Class 1 or
clause (a) of Class 2 of Section 4, and | 7 |
| further defined in subsection (d) of
Section 352; or
| 8 |
| (xii) any
that portion or part of a variable life | 9 |
| insurance or
variable
annuity
policy or contract not | 10 |
| guaranteed by an insurer ; or .
| 11 |
| (xiii) any policy or contract or portion thereof to the | 12 |
| extent that
assessments with
respect to such policy or | 13 |
| contract or portion thereof are prohibited or
preempted by
| 14 |
| federal or state law; or
| 15 |
| (xiv) any obligation that does not arise under the | 16 |
| express written terms
of
the
policy or contract issued by | 17 |
| the insurer to the contract owner or policy owner,
| 18 |
| including
without limitation:
| 19 |
| (A) claims based on marketing materials;
| 20 |
| (B) claims based on side letters, riders, or other | 21 |
| documents that were
issued
by
the insurer without | 22 |
| meeting applicable policy or contract form filing or
| 23 |
| approval requirements;
| 24 |
| (C) misrepresentations of or regarding policy or | 25 |
| contract benefits;
| 26 |
| (D) extra-contractual claims;
| 27 |
| (E) a claim for penalties or consequential or | 28 |
| incidental damages; or
| 29 |
| (xv) any contractual agreement that establishes the | 30 |
| member insurer's
obligations to
provide a book value | 31 |
| accounting guaranty for defined contribution benefit plan
| 32 |
| participants by
reference to a portfolio of assets that is | 33 |
| owned by the benefit plan or its
trustee, which in each
| 34 |
| case is not an affiliate of the member insurer; or
| 35 |
| (xvi) any portion of a policy or contract that, on the | 36 |
| date the
Association
becomes
obligated, exceeds in value |
|
|
|
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| the maximum benefit levels specified in paragraph
(3)(b) of | 2 |
| this
Section; or
| 3 |
| (xvii) any portion of a policy or contract to the | 4 |
| extent it provides for
interest or other
changes in value | 5 |
| to be determined by the use of an index or other external
| 6 |
| reference stated in
the policy or contract, but which have | 7 |
| not been credited to the policy or
contract, or as to
which | 8 |
| the policy or contract owner's rights are subject to | 9 |
| forfeiture, as of
the date the member
insurer becomes an | 10 |
| impaired or insolvent insurer under this Article, | 11 |
| whichever
is earlier. If a
policy's or contract's interest | 12 |
| or changes in value are credited less
frequently than | 13 |
| annually,
then for purposes of determining the values that | 14 |
| have been credited and are not
subject to
forfeiture under | 15 |
| this subdivision 531.03(2)(b)(xvii), the interest or | 16 |
| change in
value determined by
using the procedures defined | 17 |
| in the policy or contract shall be credited as if
the | 18 |
| contractual date
of crediting interest or changing values | 19 |
| was the date of impairment or
insolvency, whichever is
| 20 |
| earlier, and shall not be subject to forfeiture; or
| 21 |
| (xviii) a policy or contract issued in this State by a | 22 |
| member insurer
at a
time when it
was not licensed or did | 23 |
| not have a certificate of authority to issue the policy
or | 24 |
| contract in this
State.
| 25 |
| (3) The benefits that
for which the Association may become
| 26 |
| obligated to cover
liable shall in
no event exceed the lesser | 27 |
| of:
| 28 |
| (a) the contractual obligations for which the insurer | 29 |
| is liable or would
have been liable if it were not an | 30 |
| impaired or insolvent insurer, or
| 31 |
| (b)(i) with respect to any one life, regardless of the | 32 |
| number of policies
or
contracts:
| 33 |
| (A) $300,000 in life insurance death benefits, but | 34 |
| not more than
$100,000 in net cash surrender and net | 35 |
| cash withdrawal values for life
insurance;
| 36 |
| (B) $300,000 in health insurance benefits, |
|
|
|
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| including any net cash
surrender and net cash | 2 |
| withdrawal values;
| 3 |
| (C) $100,000 in the present value of annuity | 4 |
| benefits, including net
cash surrender and net cash | 5 |
| withdrawal values;
| 6 |
| (ii) with respect to each individual participating in a | 7 |
| governmental
retirement benefit plan established under | 8 |
| Section 401, 403(b) or 457 of the
United States
U.S.
| 9 |
| Internal Revenue Code covered by an unallocated annuity | 10 |
| contract or the
beneficiaries of each such individual if | 11 |
| deceased, in the aggregate,
$100,000 in present value | 12 |
| annuity benefits, including net cash surrender
and net cash | 13 |
| withdrawal values; provided, however, that in no event | 14 |
| shall
the Association be liable to expend more than | 15 |
| $300,000 in the aggregate
with respect to any one | 16 |
| individual under subparagraph (1) and this
subparagraph;
| 17 |
| (iii) with respect to each payee of a structured | 18 |
| settlement annuity
contract
(or
the beneficiary or | 19 |
| beneficiaries of the payee if deceased), $100,000 in the
| 20 |
| present value
of annuity benefits, in the aggregate | 21 |
| including net cash surrender and net cash
withdrawal | 22 |
| values;
| 23 |
| (iv) provided, however, that in no event shall the | 24 |
| Association be liable
to expend more than $300,000 in the | 25 |
| aggregate with respect any one life under
subparagraphs | 26 |
| (3)(b)(i), (ii), and (iii);
| 27 |
| (v) with respect to one owner of multiple non-group | 28 |
| policies or
contracts of
life
insurance, whether the policy | 29 |
| owner is an individual, firm, corporation, or
other person,
| 30 |
| and whether the persons insured are officers, managers, | 31 |
| employees, or other
persons,
$5,000,000 in benefits, | 32 |
| regardless of the number of policies and contracts held
by | 33 |
| the
owner;
| 34 |
| (vi)
(iii) with respect to either (i) one contract | 35 |
| owner
provided coverage
under subparagraph (1)(c)(ii) of | 36 |
| this Section; or (ii)
any one plan
sponsor whose plans own |
|
|
|
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| 1 |
| directly or in trust one or more
contract holder
covered by | 2 |
| any
unallocated
annuity contracts
contract not included in | 3 |
| subparagraph (3)(b)(ii) of
this Section
above , $5,000,000
| 4 |
| in benefits, irrespective of the number of such contracts | 5 |
| held by that contract
owner or plan sponsor;
holder .
| 6 |
| provided, however, that in the case where one or more
| 7 |
| unallocated
annuity contracts not included in subparagraph | 8 |
| (3)(b)(ii) of this Section are
covered
contracts under this | 9 |
| Article and are owned by a trust or other entity for the
| 10 |
| benefit of
2 or more plan sponsors, coverage shall be | 11 |
| afforded by the Association if the
largest
interest in the | 12 |
| trust or entity owning the contract or contracts is held by | 13 |
| a
plan sponsor
whose principal place of business is in this | 14 |
| State and in no event shall the
Association
be obligated to | 15 |
| cover more than $5,000,000 in benefits with respect to all
| 16 |
| these
unallocated contracts; and provided further that | 17 |
| where one or more unallocated
annuity
contracts not | 18 |
| included in subparagraph (3)(b)(ii) of this Section are | 19 |
| owned by
a benefit
plan, or the trustee of a benefit plan, | 20 |
| with fewer than 50 participants, the
Association
shall not | 21 |
| be liable for an amount that in the aggregate is greater | 22 |
| than
$100,000 times
the number of individuals who are | 23 |
| participants in the benefit plan;
| 24 |
| (vii) The limitations set forth in this paragraph (3) | 25 |
| are limitations on
the
coverage for which the Association | 26 |
| is obligated before taking into account
either its
| 27 |
| subrogation and assignment rights or the extent to which | 28 |
| such coverage could be
provided out of the assets of the | 29 |
| impaired or insolvent insurer attributable to
covered
| 30 |
| policies or contracts. The costs of the Association's | 31 |
| obligations under this
Article may be
met by the use of | 32 |
| assets attributable to covered policies or contracts or
| 33 |
| reimbursed to
the Association pursuant to its subrogation | 34 |
| and assignment rights.
| 35 |
| (4) In performing its obligations to provide coverage under | 36 |
| Section 531.08
of
this
Article, the Association shall not be |
|
|
|
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| 1 |
| required to guarantee, assume, reinsure,
or perform, or
cause | 2 |
| to be guaranteed, assumed, reinsured, or performed, the | 3 |
| contractual
obligations of the
insolvent or impaired insurer | 4 |
| under a covered policy or contract that do not
materially | 5 |
| affect
the economic values or economic benefits of the covered | 6 |
| policy or contract.
| 7 |
| (Source: P.A. 90-177, eff. 7-23-97; 91-357, eff. 7-29-99.)
| 8 |
| (215 ILCS 5/531.04) (from Ch. 73, par. 1065.80-4)
| 9 |
| Sec. 531.04. Construction. ) This Article is to be liberally
| 10 |
| construed to
effect the purpose established under Section | 11 |
| 531.02 which constitutes an
aid and guide to
interpretation .
| 12 |
| (Source: P.A. 81-899.)
| 13 |
| (215 ILCS 5/531.05) (from Ch. 73, par. 1065.80-5)
| 14 |
| Sec. 531.05. Definitions. As used in this Act:
| 15 |
| (1) "Account" means either of the 2
3 accounts created | 16 |
| under Section
531.06.
| 17 |
| (2) "Annuity contracts" and "certificates under group | 18 |
| annuity contracts"
include but
are not limited to guaranteed | 19 |
| investment contracts, deposit administration
contracts,
| 20 |
| unallocated funding agreements, allocated funding agreements, | 21 |
| structured
settlement
annuities, annuities issued to or in | 22 |
| connection with government lotteries, and
any immediate
or | 23 |
| deferred annuity contracts.
| 24 |
| (3)
(2) "Association" means the Illinois Life and Health | 25 |
| Insurance
Guaranty Association created under Section 531.06.
| 26 |
| (3) "Director" means the Director of Insurance of this | 27 |
| State.
| 28 |
| (4) "Authorized assessment" or the term "authorized" when | 29 |
| used in the
context of
assessments means a resolution by the | 30 |
| board of directors has been passed
whereby an
assessment may be | 31 |
| called immediately or in the future from member insurers for
a | 32 |
| specified
amount. An assessment is authorized when the | 33 |
| resolution is passed or, where the
terms of the
resolution | 34 |
| specify an effective date, on such effective date.
|
|
|
|
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LRB093 18698 SAS 44426 b |
|
| 1 |
| (5) "Benefit plan" means a plan for the provision of | 2 |
| pension, severance,
health, or
other benefits sponsored by one | 3 |
| or more specific employers, unions, or
associations of natural
| 4 |
| persons.
| 5 |
| (6) "Board" or "board of directors" means the board of | 6 |
| directors of the
Association.
| 7 |
| (7) "Called assessment" or the term "called" when used in | 8 |
| the context of
assessments
means that a notice has been issued | 9 |
| by the Association to member insurers
requiring that all
or | 10 |
| part of an authorized assessment be paid at such time and | 11 |
| subject to such
conditions as are
set forth within the notice. | 12 |
| An authorized assessment becomes a called
assessment when
| 13 |
| notice is mailed by the Association to member insurers.
| 14 |
| (8) "Certificates under group annuity contracts" is | 15 |
| defined in paragraph (2)
of this Section.
| 16 |
| (9)
(4) "Contractual obligation" means any obligation | 17 |
| under a
policy or
contract or certificate under a group policy | 18 |
| or contract, or portion
thereof for which coverage is provided | 19 |
| under Section 531.03.
| 20 |
| (10)
(5) "Covered person" means any person who is entitled | 21 |
| to the
protection of the Association as described in Section | 22 |
| 531.02.
| 23 |
| (11)
(6) "Covered policy" means any policy or contract or | 24 |
| portion
of a policy or contract for which coverage is provided
| 25 |
| within the scope
of this Article under Section 531.03.
| 26 |
| (12) "Director" means the Director of Insurance of this | 27 |
| State.
| 28 |
| (13) "Extra-contractual claim" includes, for example, | 29 |
| claims relating to bad
faith in the payment or adjudication of | 30 |
| claims, claims for punitive or
exemplary damages or attorney's | 31 |
| fees and costs, and claims for breaches of
statutory or | 32 |
| fiduciary duty.
| 33 |
| (14)
(7) "Impaired insurer" means a member insurer | 34 |
| determined
deemed by the Director
in a written notice to the | 35 |
| Association after the effective date of this
Article to be | 36 |
| potentially unable to
fulfill its contractual obligations and |
|
|
|
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LRB093 18698 SAS 44426 b |
|
| 1 |
| not an insolvent insurer.
| 2 |
| (15)
(8) "Insolvent insurer" means (a) a member insurer
| 3 |
| that is found to be
either at the time the policy was issued or | 4 |
| when the
insured event
occurred, or any company which has | 5 |
| acquired such direct policy obligations
through purchase, | 6 |
| merger, consolidation, reinsurance or otherwise, whether
or | 7 |
| not such acquiring company held a certificate of authority to | 8 |
| transact
insurance in this State at the time such policy was | 9 |
| issued or when the
insured event occurred; and (b) becomes
| 10 |
| insolvent , and is placed under a
final order of liquidation, | 11 |
| rehabilitation , or conservation by a court of
competent | 12 |
| jurisdiction.
| 13 |
| (16)
(9) "Member insurer" means any person licensed or that
| 14 |
| who holds a
certificate
of authority to transact in this
State | 15 |
| any kind of insurance business to which this Article applies | 16 |
| under
Section 531.03. For purposes of this Article "member | 17 |
| insurer" includes
any person whose certificate of authority may | 18 |
| have been suspended pursuant
to Section 119 , revoked, | 19 |
| voluntarily withdrawn, or not renewed subsequent to
the date on | 20 |
| which a member insurer became an impaired insurer or an | 21 |
| insolvent
insurer, whichever is earlier. "Member insurer" does | 22 |
| not include any of the
following: .
| 23 |
| (a) a mandatory State pooling plan;
| 24 |
| (b) an insurance exchange;
| 25 |
| (c) an organization (other than an insurer authorized | 26 |
| to transact business
in this State) issuing charitable gift | 27 |
| annuities; or
| 28 |
| (d) any entity similar to any of the above.
| 29 |
| (17)
(10) "Moody's Corporate Bond Yield Average" means the | 30 |
| Monthly
Average
Corporates as published by Moody's Investors | 31 |
| Service, Inc., or any successor
thereto.
| 32 |
| (18) "Owner" of a policy or contract and "policy owner" and | 33 |
| "contract
owner"
mean the
person who is identified as the legal | 34 |
| owner under the terms of the policy or
contract or who is
| 35 |
| otherwise vested with legal title to the policy or contract | 36 |
| through a valid
assignment completed
in accordance with the |
|
|
|
HB5929 |
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LRB093 18698 SAS 44426 b |
|
| 1 |
| terms of the policy or contract and properly recorded as
the | 2 |
| owner on
the books of the insurer. The terms "owner", "contract | 3 |
| owner", and "policy
owner" do not
include persons with a mere | 4 |
| beneficial interest in a policy or contract.
| 5 |
| (19) "Person" means any individual, corporation, trust, | 6 |
| limited liability
company, partnership, association, | 7 |
| governmental body or entity, or voluntary
organization.
| 8 |
| (20) "Plan sponsor" means:
| 9 |
| (a) the employer in the case of a benefit plan | 10 |
| established or maintained
by a
single employer;
| 11 |
| (b) the employee organization in the case of a benefit | 12 |
| plan established or
maintained by an employee | 13 |
| organization; or
| 14 |
| (c) in a case of a benefit plan established or | 15 |
| maintained by 2 or
more
employers or jointly by one or more | 16 |
| employers and one or more employee
organizations, the | 17 |
| association, committee, joint board of trustees, or other
| 18 |
| similar group of representatives of the parties who | 19 |
| establish or maintain the
benefit plan.
| 20 |
| (21)
(11) "Premiums" means direct gross insurance | 21 |
| premiums ,
or
subscriptions , or
and annuity
considerations (by | 22 |
| whatever name called) received on covered policies or
| 23 |
| contracts, less returned
return premiums ,
and
considerations , | 24 |
| and deposits
thereon and less dividends and
experience credits
| 25 |
| paid or credited to policy or contract owners
policyholders
on | 26 |
| such direct business. "Premiums" do not include premiums and
| 27 |
| considerations on contracts between insurers and reinsurers.
| 28 |
| "Premiums" do not include any amounts or considerations
| 29 |
| received for any
policies or
contracts or for the portions of | 30 |
| any policies or contracts for which
coverage is not provided | 31 |
| under paragraph (2) of Section 531.03 except that
assessable | 32 |
| premium shall not be reduced on account of subparagraph
| 33 |
| (2)(b)(iii) of Section 531.03 relating to interest limitations | 34 |
| and
subparagraph (3)(b) of Section 531.03 relating to | 35 |
| limitations with respect
to any one life, any one individual, | 36 |
| any one participant , and any one
policy or contract owner.
|
|
|
|
HB5929 |
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LRB093 18698 SAS 44426 b |
|
| 1 |
| contractholder;
provided that "Premiums" shall not include :
| 2 |
| (a) any premiums in excess of $5,000,000
five
million | 3 |
| dollars on any unallocated annuity contract not issued | 4 |
| under a
governmental retirement benefit plan (or its | 5 |
| trustee) established under
Sections 401, 403(b) or 457
of | 6 |
| the United States Internal Revenue Code ; or .
| 7 |
| (b) with respect to multiple non-group policies or | 8 |
| contracts of life
insurance
owned by one owner, whether the | 9 |
| policy or contract owner is an individual,
firm,
| 10 |
| corporation, or other person, and whether the persons | 11 |
| insured are officers,
managers,
employees, or other | 12 |
| persons, premiums in excess of $5,000,000 with respect to
| 13 |
| these
policies or contracts, regardless of the number of | 14 |
| policies or contracts held
by the owner.
| 15 |
| (12) "Person" means any individual, corporation, | 16 |
| partnership,
association or voluntary organization.
| 17 |
| (22) "Principal place of business" of a plan sponsor or a | 18 |
| person other
than a
natural
person means the single state in | 19 |
| which the natural persons who establish policy
for the
| 20 |
| direction, control, and coordination of the operations of the | 21 |
| entity as a whole
primarily exercise
that function, determined | 22 |
| by the Association in its reasonable judgment by
considering | 23 |
| the
following factors:
| 24 |
| (a) the state in which the primary executive and | 25 |
| administrative
headquarters
of
the entity are located;
| 26 |
| (b) the state in which the principal office of the | 27 |
| chief executive officer
of
the
entity is located;
| 28 |
| (c) the state in which the board of directors (or | 29 |
| similar governing person
or
persons) of the entity conducts | 30 |
| the majority of its meetings;
| 31 |
| (d) the state in which the executive or management | 32 |
| committee of the board
of
directors (or similar governing | 33 |
| person or persons) of the entity conducts the
majority of
| 34 |
| its meetings;
| 35 |
| (e) the state from which the management of the overall | 36 |
| operations of the
entity
is directed; and
|
|
|
|
HB5929 |
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LRB093 18698 SAS 44426 b |
|
| 1 |
| (f) in the case of a benefit plan sponsored by | 2 |
| affiliated companies
comprising
a
consolidated | 3 |
| corporation, the state in which the holding company or | 4 |
| controlling
affiliate
has its principal place of business | 5 |
| as determined using the above factors.
| 6 |
| However, in the case of a plan sponsor, if more than 50% of | 7 |
| the
participants in the
benefit plan are employed in a single | 8 |
| state, that state shall be deemed to be
the principal place
of | 9 |
| business of the plan sponsor; except that the principal place | 10 |
| of business of
a plan sponsor
of a benefit plan described in | 11 |
| paragraph (20)(c) of this Section shall be
deemed to be the
| 12 |
| principal place of business of the association, committee, | 13 |
| joint board of
trustees, or other
similar group of | 14 |
| representatives of the parties who establish or maintain the
| 15 |
| benefit plan;
provided, however, that in the absence of a | 16 |
| specific or clear designation of
such a principal
place of | 17 |
| business, the principal place of business shall be deemed to be | 18 |
| the
principal place of
business of the employer or employee | 19 |
| organization that has the largest
investment in the
benefit | 20 |
| plan in question.
| 21 |
| (23) "Receivership court" means the court in the insolvent | 22 |
| or impaired
insurer's state
of domicile having jurisdiction | 23 |
| over the conservation, rehabilitation, or
liquidation of the
| 24 |
| insurer.
| 25 |
| (24)
(13) "Resident" means any person
to whom a contractual | 26 |
| obligation
is owed and,
except in the case of a contract owner | 27 |
| of an unallocated annuity contract
issued to a benefit
plan or | 28 |
| trustee of a benefit plan,
who resides in this State
on the | 29 |
| date the
Director determines a member insurer to be an impaired | 30 |
| insurer or a court order
determines a
member insurer to be an | 31 |
| insolvent insurer, whichever occurs first. In the case
of an
| 32 |
| unallocated annuity contract issued to a benefit plan, or the | 33 |
| trustee of a
benefit plan, the
contract owner shall be a | 34 |
| "resident" of the state in which the principal place
of | 35 |
| business of the
plan sponsor was located on such date
at the
| 36 |
| time the insurer is determined to be impaired or insolvent and |
|
|
|
HB5929 |
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LRB093 18698 SAS 44426 b |
|
| 1 |
| to whom
contractual obligations are owed .
A person may be a | 2 |
| resident of only one state which, in the case of a
person other | 3 |
| than a natural person, shall be its principal place of | 4 |
| business.
Citizens of the United States that are either (i) | 5 |
| residents of foreign
countries or (ii) residents of
United | 6 |
| States possessions, territories, or protectorates that do not | 7 |
| have an
association similar
to the Association shall be deemed | 8 |
| residents of the state of domicile of the
insurer that issued
| 9 |
| the policies or contracts.
| 10 |
| (25) "State" means a state, the District of Columbia, | 11 |
| Puerto Rico, and a
United States
possession, territory, or | 12 |
| protectorate.
| 13 |
| (26) "Structured settlement annuity contract" means an | 14 |
| annuity contract
purchased in
order to fund periodic payments | 15 |
| for a plaintiff or other claimant in payment
for or with | 16 |
| respect
to personal injury suffered by the plaintiff or other | 17 |
| claimant.
| 18 |
| (27) "Subaccount" means any of the 3 subaccounts of the | 19 |
| life insurance
and
annuity account created under subdivision | 20 |
| (1) of 531.06.
| 21 |
| (28)
(14) "Supplemental contract" means any written
| 22 |
| agreement
entered into for
the
distribution of proceeds under a | 23 |
| life, health, or annuity policy or
contract
proceeds .
| 24 |
| (29)
(15) "Unallocated annuity contract" means any annuity | 25 |
| contract
or group
annuity certificate which is not issued to | 26 |
| and owned by an individual,
except to the extent of any annuity | 27 |
| benefits guaranteed to an individual by
an insurer under such | 28 |
| contract or certificate.
| 29 |
| (Source: P.A. 86-753.)
| 30 |
| (215 ILCS 5/531.06) (from Ch. 73, par. 1065.80-6)
| 31 |
| Sec. 531.06. Creation of the Association. There is created | 32 |
| a
non-profit legal entity to be known as the Illinois Life and | 33 |
| Health
Insurance Guaranty Association. All member insurers are | 34 |
| and must remain
members of the Association as a condition of | 35 |
| their authority to transact
insurance in this State. The |
|
|
|
HB5929 |
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LRB093 18698 SAS 44426 b |
|
| 1 |
| Association must perform its functions under
the plan of | 2 |
| operation established and approved under Section 531.10 and | 3 |
| must
exercise its powers through a board of directors | 4 |
| established under
Section 531.07. For purposes of | 5 |
| administration and assessment, the Association
must maintain 2 | 6 |
| accounts:
| 7 |
| (1) The life insurance and annuity account which includes | 8 |
| the following
subaccounts:
| 9 |
| (a) Life insurance account;
| 10 |
| (b) Annuity account
which shall include annuity contracts | 11 |
| owned by a
governmental retirement plan (or its trustee) | 12 |
| established under Section 401,
403(b), or
457 of the United | 13 |
| States Internal Revenue Code, but shall otherwise exclude
| 14 |
| unallocated
annuity contracts ; and
| 15 |
| (c) Unallocated annuity account which shall
exclude | 16 |
| contracts owned by a
governmental retirement benefit plan (or | 17 |
| its trustee) established under Section
401,
403(b), or 457 of | 18 |
| the United States Internal Revenue Code
include contracts | 19 |
| qualified
under Section 403(b) of the United State Internal | 20 |
| Revenue Code .
| 21 |
| (2) The health insurance account.
| 22 |
| The Association shall be supervised by the Director
and is | 23 |
| subject to the applicable provisions of the Illinois Insurance
| 24 |
| Code.
| 25 |
| (Source: P.A. 86-753.)
| 26 |
| (215 ILCS 5/531.07) (from Ch. 73, par. 1065.80-7)
| 27 |
| Sec. 531.07. Board of Directors. ) The board of directors of | 28 |
| the
Association consists of not less than 5 nor more than 9 | 29 |
| members serving
terms as established in the plan of operation. | 30 |
| The members of the board
are to be selected by member insurers | 31 |
| subject to the approval of the
Director. Vacancies on the board | 32 |
| must be filled for the remaining period
of the term in the | 33 |
| manner described in the plan of operation. To select
the | 34 |
| initial board of directors, and initially organize the | 35 |
| Association,
the Director must give notice to all member |
|
|
|
HB5929 |
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LRB093 18698 SAS 44426 b |
|
| 1 |
| insurers of the time and
place of the organizational meeting. | 2 |
| In determining voting rights at the
organizational meeting each | 3 |
| member insurer is entitled to one vote in
person or by proxy. | 4 |
| If the board of directors is not selected within
60 days after | 5 |
| notice of the organizational meeting, the Director may
appoint | 6 |
| the initial members.
| 7 |
| In approving selections or in appointing members to the | 8 |
| board, the
Director must consider , whether all member insurers | 9 |
| are
fairly represented.
| 10 |
| Members of the board may be reimbursed from the assets of | 11 |
| the Association
for expenses incurred by them as members of the | 12 |
| board of directors but
members of the board may not otherwise | 13 |
| be compensated by the Association for
their services.
| 14 |
| (Source: P.A. 81-899.)
| 15 |
| (215 ILCS 5/531.08) (from Ch. 73, par. 1065.80-8)
| 16 |
| Sec. 531.08. Powers and duties of the Association. In | 17 |
| addition to
the powers and duties enumerated in other Sections | 18 |
| of this Article:
| 19 |
| (1) If an
a domestic insurer is an impaired insurer, | 20 |
| the Association
may, in its discretion and subject to any | 21 |
| conditions imposed by the Association other than
those | 22 |
| which impair the contractual obligations of the impaired | 23 |
| insurer ,
and approval
approved by the impaired insurer and | 24 |
| the Director:
| 25 |
| (a) Guarantee , assume, or reinsure, or cause to be | 26 |
| guaranteed, assumed , or
reinsured, any or all of the | 27 |
| covered policies of covered persons of the
impaired | 28 |
| insurer;
| 29 |
| (b) Provide such monies, pledges, notes, | 30 |
| guarantees, or other means
as are proper to effectuate | 31 |
| subparagraph
paragraph
(1) (a), and assure payment of | 32 |
| the
contractual obligations of the impaired insurer | 33 |
| pending action under
subparagraph
paragraph
(1) (a) . ;
| 34 |
| ( c) Loan money to the impaired insurer;
| 35 |
| (2) If an
a domestic, foreign, or alien insurer is an |
|
|
|
HB5929 |
- 21 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| insolvent
insurer, the Association
shall, in its | 2 |
| discretion, either
subject to the approval of the Director;
| 3 |
| (a)(i) Guarantee, assume , or reinsure or cause to | 4 |
| be guaranteed,
assumed, or reinsured the covered | 5 |
| policies of covered persons of the
insolvent insurer; | 6 |
| or
| 7 |
| (ii) Otherwise assure
Assure payment of the | 8 |
| contractual obligations of the insolvent
insurer to | 9 |
| covered persons; and
| 10 |
| (iii) Provide such monies, pledges, loans, notes, | 11 |
| guaranties, or other means
as are reasonably necessary | 12 |
| to discharge such duties under subparagraphs (2)(a)(i) | 13 |
| and (2)(a)(ii) ; or
| 14 |
| (b) Provide
with respect to only life and health | 15 |
| insurance policies, provide
benefits and coverages in | 16 |
| accordance with Section 531.08(3).
| 17 |
| (c) Provided however
that this paragraph
| 18 |
| subsection (2) shall not apply when the Director has | 19 |
| determined
that the foreign or alien insurer's
| 20 |
| insurers domiciliary jurisdiction or state of
entry | 21 |
| provides, by statute, protection substantially similar | 22 |
| to that
provided by this Article for residents of this | 23 |
| State and such protection
will be provided in a timely | 24 |
| manner.
| 25 |
| (3) When proceeding under subparagraph (2)(b) of this | 26 |
| Section the
Association shall, with respect to only life | 27 |
| and health insurance policies and annuity contracts :
| 28 |
| (a) assure payment of benefits for premiums | 29 |
| identical to the premiums
and benefits (except for | 30 |
| terms of conversion and renewability) that would
have | 31 |
| been payable under the policies or contracts of the | 32 |
| insolvent insurer, for claims
incurred:
| 33 |
| (i) with respect to group policies and | 34 |
| contracts , not later than the earlier of the
next | 35 |
| renewal date under such policies or contracts or 60
| 36 |
| sixty days, but in no
event less than 30
thirty
|
|
|
|
HB5929 |
- 22 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| days, after the date on which the Association
| 2 |
| becomes obligated with respect to such policies | 3 |
| and contracts ;
| 4 |
| (ii) with respect to individual and other
| 5 |
| non-group policies and contracts , not later than | 6 |
| the earlier of
the next renewal date (if any) under | 7 |
| such policies or contracts or one year, but in no
| 8 |
| event less than 30
thirty days, from the date on | 9 |
| which the Association becomes
obligated with | 10 |
| respect to such policies or contracts ;
| 11 |
| (b) make diligent efforts to provide all known | 12 |
| policy and contract owners 30
insureds or group
| 13 |
| policyholders with respect to group policies thirty
| 14 |
| days notice of the
termination (pursuant to | 15 |
| subparagraph (3)(a)) of the benefits provided; and
| 16 |
| (c) with respect to individual and other non-group | 17 |
| life and health policies and annuity contracts covered | 18 |
| by the Association , make available to each known
| 19 |
| insured, or owner if other than the insured or | 20 |
| annuitant , and with respect to an
individual formerly | 21 |
| insured or formerly an annuitant under a group policy | 22 |
| on contract who is not eligible for
replacement group | 23 |
| coverage, make available substitute coverage on an
| 24 |
| individual basis in accordance with the provisions of | 25 |
| subparagraph (3)(d) of
this Section, if the insureds or | 26 |
| annuitants had a right under law or the terminated
| 27 |
| policy or annuity contract to convert coverage to | 28 |
| individual coverage or to continue a
an individual
| 29 |
| non-group policy or annuity contract in force until a | 30 |
| specified age or for a specified time,
during which the | 31 |
| insurer has no right unilaterally to make changes in | 32 |
| any
provision of the policy or annuity contract or had | 33 |
| a right only to make changes in premium by
class.
| 34 |
| (d)(i) In providing the substitute coverage | 35 |
| required under subparagraph
(3)(c) of this Section, | 36 |
| the Association may offer either to reissue the
|
|
|
|
HB5929 |
- 23 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| terminated coverage or to issue an alternative policy | 2 |
| or contract .
| 3 |
| (ii) Alternative or reissued policies or contracts
| 4 |
| shall be offered without requiring
evidence of | 5 |
| insurability, and shall not provide for any waiting | 6 |
| period or
exclusion that would not have applied under | 7 |
| the terminated policy or contract .
| 8 |
| (iii) The Association may cause
reinsure any | 9 |
| alternative or reissued policy or contract to be | 10 |
| assumed or reinsured .
| 11 |
| (e)(i) Alternative policies or contracts adopted | 12 |
| by the Association shall be subject
to the approval of | 13 |
| either (A) the Director or (B) the domiciliary | 14 |
| commissioner and the receivership court . The | 15 |
| Association may adopt alternative
policies or | 16 |
| contracts of various types for future issuance
| 17 |
| insurance without regard to any
particular impairment | 18 |
| or insolvency.
| 19 |
| (ii) Alternative policies or contracts shall | 20 |
| contain at least the minimum statutory
provisions | 21 |
| required in this State and provide benefits that shall | 22 |
| not be
unreasonable in relation to the premium charged. | 23 |
| The
Association shall set the premium in accordance | 24 |
| with a table of rates which
it shall adopt. The premium | 25 |
| shall reflect the amount of insurance to be
provided | 26 |
| and the age and class of risk of each insured, but | 27 |
| shall not
reflect any changes in the health of the | 28 |
| insured after the original policy
was last | 29 |
| underwritten.
| 30 |
| (iii) Any alternative policy or contract issued by | 31 |
| the Association shall provide
coverage of a type | 32 |
| similar to that of the policy or contract issued by the | 33 |
| impaired or
insolvent insurer, as determined by the | 34 |
| Association.
| 35 |
| (f) If the Association elects to reissue | 36 |
| terminated coverage at a
premium rate different from |
|
|
|
HB5929 |
- 24 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| that charged under the terminated policy or contract , | 2 |
| the
premium shall be set by the Association in | 3 |
| accordance with the amount of
insurance provided and | 4 |
| the age and class of risk, subject to approval of
| 5 |
| either (A) the Director or (B) by the domiciliary | 6 |
| commissioner and the receivership court
by a court of | 7 |
| competent jurisdiction .
| 8 |
| (g) The Association's obligations with respect to | 9 |
| coverage under any
policy or contract of the impaired | 10 |
| or insolvent insurer or under any reissued or
| 11 |
| alternative policy or contract shall cease on the date | 12 |
| such coverage or policy or contract is
replaced by | 13 |
| another similar policy or contract by the policy owner
| 14 |
| policyholder , the insured, or the
Association.
| 15 |
| (4) When proceeding under subparagraph (2)(b) of this | 16 |
| Section with
respect to any policy or contract carrying | 17 |
| guaranteed minimum interest
rates, the Association shall | 18 |
| assure the payment or crediting of a rate of
interest | 19 |
| consistent with subparagraph (2)(b)(iii) (B) of Section | 20 |
| 531.03.
| 21 |
| (5) Nonpayment of premiums 31
thirty-one days after the | 22 |
| date required under
the terms of any guaranteed, assumed, | 23 |
| alternative or reissued policy or
contract or substitute | 24 |
| coverage shall terminate the Association's
obligations | 25 |
| under such policy or contract or coverage under this | 26 |
| Article
Act with respect to
such policy or contract or | 27 |
| coverage, except with respect to any claims incurred or any
| 28 |
| net cash surrender value which may be due in accordance | 29 |
| with the provisions of
this Article
Act .
| 30 |
| (6) Premiums due for coverage after entry of an order | 31 |
| of liquidation of
an insolvent insurer shall belong to and | 32 |
| be payable at the direction of the
Association,
and the | 33 |
| Association shall be liable for unearned premiums due to | 34 |
| policy or
contract owners arising after the entry of such | 35 |
| order.
| 36 |
| (7) The protection provided by this Article shall not |
|
|
|
HB5929 |
- 25 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| apply when any
guaranty protection is provided to residents | 2 |
| of this State by the laws of the
domicilary state or | 3 |
| jurisdiction of the impaired or insolvent insurer other
| 4 |
| than this State. | 5 |
| (8)
(7) (a) In carrying out its duties under paragraph
| 6 |
| subsection (2) of this Section ,
the Association may
| 7 |
| permanent policy liens, or contract liens, may be imposed | 8 |
| in connection
with any guarantee, assumption or | 9 |
| reinsurance agreement, if the court :
| 10 |
| (a)
(i)
subject to approval by the receivership | 11 |
| court or a court
of competent jurisdiction is this | 12 |
| State, impose permanent policy or contract
liens in | 13 |
| connection with a guarantee, assumption, or | 14 |
| reinsurance agreement, if
the Association
finds
Finds
| 15 |
| that the amounts which can be assessed under this | 16 |
| Article
Act are
less than the amounts needed to assure | 17 |
| full and prompt performance of
the insolvent insurer's | 18 |
| contractual obligations, or that the economic or
| 19 |
| financial conditions as they affect member insurers | 20 |
| are sufficiently
adverse to render the imposition of | 21 |
| policy or contract liens, to be in
the public interest; | 22 |
| and
| 23 |
| (b) subject to
approval by the receivership court | 24 |
| or a court of competent jurisdiction in this
State,
| 25 |
| impose temporary moratoriums or liens on payments of | 26 |
| cash values and policy
loans, or
any other right to | 27 |
| withdraw funds held in conjunction with policies or
| 28 |
| contracts, in
addition to any contractual provisions | 29 |
| for deferral of cash or policy or
contract loan
value. | 30 |
| In addition, in the event of a temporary moratorium or | 31 |
| moratorium charge
imposed by the receivership court or | 32 |
| a court of competent jurisdiction in this
State on
| 33 |
| payment of cash values or policy or contract loans, or | 34 |
| on any other right to
withdraw
funds held in | 35 |
| conjunction with policies or contracts, out of the | 36 |
| assets of the
impaired or
insolvent insurer, the |
|
|
|
HB5929 |
- 26 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| Association may defer the payment of cash values, | 2 |
| policy
or
contract loans, or other rights by the | 3 |
| Association for the period of the
moratorium or
| 4 |
| moratorium charge imposed by the receivership court or | 5 |
| a court of competent
jurisdiction in this State, except | 6 |
| for claims covered by the Association to be
paid in
| 7 |
| accordance with a hardship procedure (i) established | 8 |
| by the liquidator or
rehabilitator
and approved by the | 9 |
| receivership court or (ii) approved by a court of | 10 |
| competent
jurisdiction in this State.
| 11 |
| (ii) Approves the specific policy liens or | 12 |
| contract liens to be used.
| 13 |
| (b) Before being obligated under subsection (2) the
| 14 |
| Association may request that there be imposed temporary | 15 |
| moratoriums or
liens on payments of cash values and policy | 16 |
| loans in addition to any
contractual provisions for | 17 |
| deferral of cash or policy loan
values, and such
temporary | 18 |
| moratoriums and liens may be imposed if they are approved | 19 |
| by
the court.
| 20 |
| (9) A deposit in this State, held pursuant to law or | 21 |
| required by the
Director
for the
benefit of creditors, | 22 |
| including policy and contract owners, not turned over to
| 23 |
| the domiciliary
liquidator upon the entry of a final order | 24 |
| of liquidation or order approving a
rehabilitation plan
of | 25 |
| an insurer domiciled in this State or in a reciprocal state | 26 |
| shall be
promptly paid to the
Association. The Association | 27 |
| (i) shall be entitled to retain a portion of any
amount so | 28 |
| paid to it
equal to the percentage determined by dividing | 29 |
| the aggregate amount of policy
and contract
owners' claims | 30 |
| related to that insolvency for which the Association has
| 31 |
| provided statutory
benefits by the aggregate amount of all | 32 |
| policy and contract owners' claims in
this State related
to | 33 |
| that insolvency and (ii) shall remit to the domiciliary | 34 |
| receiver the amount
so paid to the
Association, less the | 35 |
| amount retained pursuant to clause (i). Any amount so
paid | 36 |
| to the
Association and retained by it pursuant to clause |
|
|
|
HB5929 |
- 27 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| (i) shall be treated as a
distribution of estate
assets | 2 |
| pursuant to subsection (2) of Section 205 of this Code or | 3 |
| similar
provision of the
state of domicile of
the impaired | 4 |
| or insolvent insurer. | 5 |
| (10) The Association may fulfill its obligations under | 6 |
| paragraph (2) of this
Section by
providing benefits in | 7 |
| connection with policies or contracts of the insolvent
| 8 |
| insurer whose terms
have been modified pursuant to an order | 9 |
| of the receivership court or a court of
competent
| 10 |
| jurisdiction in this State, provided that the economic | 11 |
| values and economic
benefits of such
modified policies or | 12 |
| contracts, after the Association has acted to fulfill its
| 13 |
| obligations, are not
materially less than the economic | 14 |
| values and economic benefits that covered
persons would
| 15 |
| have received after the Association had acted to fulfill | 16 |
| its obligations if
the terms of such
policies or contracts | 17 |
| had not been modified. In determining what economic
values | 18 |
| and
economic benefits covered persons would have received | 19 |
| after the Association had
acted to
fulfill its obligations | 20 |
| if the terms of the insolvent insurer's policies or
| 21 |
| contracts had not been
modified, the Association shall take | 22 |
| into account (i) the coverage limitations
set forth in
| 23 |
| paragraphs (2) and (3) of Section 531.03, (ii) any | 24 |
| substitute coverage that the
Association
would have | 25 |
| provided pursuant to paragraphs (3) and (22) of this | 26 |
| Section, and
(iii) any
permanent policy or contract liens | 27 |
| and any temporary moratoriums that would
have been
| 28 |
| necessary under paragraph (8) of this Section but for the | 29 |
| modifications in
terms approved by
the court.
| 30 |
| (11)
(8) There shall be no liability on the part of and | 31 |
| no cause of action
shall arise against the Association or | 32 |
| against any transferee from the
Association in connection | 33 |
| with the transfer by reinsurance or otherwise of
all or any | 34 |
| part of an impaired or insolvent insurer's business by | 35 |
| reason of
any action taken or any failure to take any | 36 |
| action by the impaired or
insolvent insurer at any time.
|
|
|
|
HB5929 |
- 28 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| (12)
(9) If the Association fails to act within a | 2 |
| reasonable period of
time with respect to an insolvent | 3 |
| insurer as provided in paragraph
subsection (2) of this | 4 |
| Section with respect to an
insolvent insurer , the
Director | 5 |
| may assume
shall have the powers and duties of the | 6 |
| Association under this
Article
Act with regard to the
such
| 7 |
| insolvent insurer
insurers .
| 8 |
| (13)
(10) The Association or its designated | 9 |
| representatives
may render assistance and advice to the
| 10 |
| Director, upon his or her request, concerning | 11 |
| rehabilitation, payment of
claims, continuations of | 12 |
| coverage, or the performance of other
contractual | 13 |
| obligations of any impaired or insolvent insurer.
| 14 |
| (14) The
Association has standing to appear or | 15 |
| intervene before any court or agency with
jurisdiction
over | 16 |
| an impaired or insolvent insurer concerning which the | 17 |
| Association is or
may become
obligated under this Article, | 18 |
| or with jurisdiction over any person or property
against | 19 |
| whom or
which the Association may have rights through | 20 |
| subrogation or otherwise. Such
standing
extends to all | 21 |
| matters germane to the powers and duties of the Association
| 22 |
| including, but not
limited to, proposals for reinsuring, | 23 |
| modifying, or guaranteeing the policies
or
contracts of the
| 24 |
| impaired or insolvent insurer and the determination of the | 25 |
| policies or
contracts and
contractual obligations.
| 26 |
| (11)
The Association has standing to appear before any | 27 |
| court concerning
all matters germane to the powers and | 28 |
| duties of
the Association, including, but not limited to, | 29 |
| proposals for reinsuring
or guaranteeing the covered | 30 |
| policies of the impaired or insolvent
insurer and the | 31 |
| determination of the covered policies and contractual
| 32 |
| obligations.
| 33 |
| (15)
(12) (a) Any person receiving benefits under this | 34 |
| Article is deemed
to have assigned the rights under , and | 35 |
| any causes of action against any person for losses arising | 36 |
| under, resulting from, or otherwise relating to the covered |
|
|
|
HB5929 |
- 29 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| policy
or contract to the Association
to the extent of the | 2 |
| benefits received because of this Article whether
the | 3 |
| benefits are payments of contractual obligations ,
or
| 4 |
| continuation of
coverage , or provision of substitute | 5 |
| coverages . The Association may require an assignment to it | 6 |
| of such
rights and causes of action by any payee, policy or | 7 |
| contract owner, beneficiary, insured,
certificate holder ,
| 8 |
| or
annuitant as a condition precedent to the receipt of any | 9 |
| rights or
benefits conferred by this Article upon such | 10 |
| person. The Association is
subrogated to these rights | 11 |
| against the assets of any insolvent insurer.
| 12 |
| (b) The subrogation rights of the Association under | 13 |
| this subsection
have the same priority against the assets | 14 |
| of the insolvent insurer as
that possessed by the person | 15 |
| entitled to receive benefits under this
Article. The | 16 |
| Association's
subrogation rights
against the assets of the | 17 |
| insolvent insurer shall not be reduced by any
recoveries | 18 |
| from
persons other than the estate of the insolvent insurer | 19 |
| obtained by the
Association
pursuant to assignment rights | 20 |
| provided under this subsection, except that the
| 21 |
| Association's subrogation rights against the assets of the | 22 |
| insolvent insurer
with respect
to a covered policy or | 23 |
| contract shall be deemed fulfilled where any and all
such
| 24 |
| recoveries from third parties with respect to the covered | 25 |
| policy or contract,
together with
any distributions of | 26 |
| estate assets with respect to the covered policy or
| 27 |
| contract, have
made the Association whole, after | 28 |
| accounting for any and all legal fees and
expenses
| 29 |
| (including interest) incurred by the Association in | 30 |
| achieving such recoveries.
| 31 |
| (c) In addition to the rights set forth in | 32 |
| subparagraphs (15)(a) and (b) of
this
Section, the | 33 |
| Association has all common law rights of subrogation and | 34 |
| any other
equitable or legal remedy that would have been | 35 |
| available to the impaired or
insolvent
insurer or owner, | 36 |
| beneficiary, or payee of a policy or contract with respect |
|
|
|
HB5929 |
- 30 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| to
the policy or
contract (including without limitation, in | 2 |
| the case of a structured settlement
annuity
contract, any | 3 |
| rights of the owner, beneficiary, or payee of the annuity
| 4 |
| contract, to the
extent of benefits received pursuant to | 5 |
| this Article, against a person
originally or by
succession | 6 |
| responsible for the losses arising from the personal injury | 7 |
| relating
to the
annuity contract or payment therefor), | 8 |
| excepting any such person responsible by
reason
of serving | 9 |
| as an assignee in respect of a qualified assignment under | 10 |
| United
States
Internal Revenue Code Section 130.
| 11 |
| (d) If subparagraph (a), (b), or (c) of this paragraph | 12 |
| is invalid or
ineffective with
respect to any person or | 13 |
| claim for any reason, the amount payable by the
Association
| 14 |
| with respect to the related covered obligations shall be | 15 |
| reduced by the amount
realized
by any other person with | 16 |
| respect to the person or claim that is attributable to
the
| 17 |
| policies and contracts (or portion thereof) covered by the | 18 |
| Association.
| 19 |
| (e) If the Association has provided benefits with | 20 |
| respect to a covered
obligation
and a person recovers | 21 |
| amounts as to which the Association has rights as
described | 22 |
| in
subparagraph (a), (b), (c) or (d) of this paragraph, the | 23 |
| person shall pay to
the
Association the portion of the | 24 |
| recovery attributable to the policies and
contracts (or | 25 |
| portion thereof) covered by the Association.
| 26 |
| (16)
(13)
In addition to the rights and powers | 27 |
| elsewhere in this Article,
the
The Association may do any | 28 |
| of the following :
| 29 |
| (a) Enter into such contracts as are necessary or | 30 |
| proper to carry
out the provisions and purposes of this | 31 |
| Article .
;
| 32 |
| (b) Sue or be sued, including taking any legal | 33 |
| actions necessary or
proper for recovery of any unpaid | 34 |
| assessments under Section 531.09 and to settle any | 35 |
| litigation, any threatened or potential litigation, | 36 |
| and any claims or potential claims by or against the |
|
|
|
HB5929 |
- 31 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| Association . The
Association shall not be liable for | 2 |
| punitive or exemplary damages;
| 3 |
| (c) Borrow money to effect the purposes of this | 4 |
| Article. Any notes
or other evidence of indebtedness of | 5 |
| the Association not in default are
legal investments | 6 |
| for domestic insurers and may be carried as admitted
| 7 |
| assets.
| 8 |
| (d) Employ or retain such persons as are necessary | 9 |
| or appropriate to handle the
financial transactions of | 10 |
| the Association, and to perform such other
functions as | 11 |
| become necessary or proper under this Article.
| 12 |
| (e) Negotiate and contract with any liquidator, | 13 |
| rehabilitator,
conservator, or ancillary receiver to | 14 |
| carry out the powers and duties of
the Association.
| 15 |
| (f) Take such legal action as may be necessary or | 16 |
| appropriate to avoid or recover payment of
improper | 17 |
| claims.
| 18 |
| (g) Exercise, for the purposes of this Article and | 19 |
| to the extent
approved by the Director, the powers of a | 20 |
| domestic life or health
insurer, but in no case may the | 21 |
| Association issue insurance policies or
annuity | 22 |
| contracts other than those issued to perform the | 23 |
| contractual
obligations of the impaired or insolvent | 24 |
| insurer.
| 25 |
| (h) Exercise all the rights of the Director under | 26 |
| Section 193(4) of
this Code with respect to covered | 27 |
| policies after the association becomes
obligated by | 28 |
| statute.
| 29 |
| (i) Request information from a person seeking | 30 |
| coverage from the
Association
in
order to aid the | 31 |
| Association in determining its obligations under this | 32 |
| Article
with respect
to the person. The person shall | 33 |
| promptly comply with the request as a
condition
| 34 |
| precedent to the receipt of any right or benefit | 35 |
| conferred by this Article.
| 36 |
| (j) Take other necessary or appropriate action to |
|
|
|
HB5929 |
- 32 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| discharge its duties and
obligations under this | 2 |
| Article or to exercise its powers under this Article.
| 3 |
| (17)(a) At any time within one year after the date on | 4 |
| which the
Association
becomes responsible for the | 5 |
| obligations of a member insurer (the coverage
date), the
| 6 |
| Association may elect to succeed to the rights and | 7 |
| obligations of the member
insurer
that accrue on or after | 8 |
| the coverage date and that relate to policies and
contracts
| 9 |
| covered (in whole or in part) by the Association under any | 10 |
| one or more
indemnity
reinsurance agreements entered into | 11 |
| by the member insurer as a ceding insurer
and
selected by | 12 |
| the Association. However, the Association may not exercise | 13 |
| an
election with
respect to a reinsurance agreement if the | 14 |
| receiver, rehabilitator, or
liquidator
of the
member | 15 |
| insurer has previously and expressly disaffirmed the | 16 |
| reinsurance
agreement.
The election shall be effected by a | 17 |
| notice to the receiver, rehabilitator, or
liquidator and to
| 18 |
| the affected reinsurers. If the Association makes an | 19 |
| election, subparagraphs
(i) through
(iv) of this paragraph | 20 |
| shall apply with respect to the agreements selected by
the
| 21 |
| Association:
| 22 |
| (i) The Association shall be responsible for all | 23 |
| unpaid premiums due under
the
agreements (for periods | 24 |
| both before and after the coverage date) and shall
be | 25 |
| responsible for the performance of all other | 26 |
| obligations to be performed
after the coverage date, in | 27 |
| each case which relate to policies and contracts
| 28 |
| covered (in whole or in part) by the Association. The | 29 |
| Association may
charge policies and contracts covered | 30 |
| in part by the Association, through
reasonable | 31 |
| allocation methods, the costs for reinsurance in | 32 |
| excess of the
obligations of the Association. | 33 |
| (ii) The Association shall be entitled to any | 34 |
| amounts payable by the
reinsurer
under the agreements | 35 |
| with respect to losses or events that occur in periods
| 36 |
| after the coverage date and that relate to policies and |
|
|
|
HB5929 |
- 33 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| contracts covered by
the Association (in whole or in | 2 |
| part), provided that, upon receipt of any
such amounts, | 3 |
| the Association shall be obliged to pay to the | 4 |
| beneficiary
under the policy or contract on account of | 5 |
| which the amounts were paid a
portion of the amount | 6 |
| equal to the excess of:
| 7 |
| (A) the amount received by the Association over
| 8 |
| (B) the benefits paid by the Association on account | 9 |
| of the policy or
contract less the retention of the | 10 |
| impaired or insolvent member
insurer applicable to the | 11 |
| loss or event.
| 12 |
| (iii) Within 30 days following the Association's | 13 |
| election, the
Association
and each indemnity reinsurer | 14 |
| shall calculate the net balance due to or from
the | 15 |
| Association under each reinsurance agreement as of the | 16 |
| date of the
Association's election, giving full credit | 17 |
| to all items paid by either the
member insurer (or its | 18 |
| receiver, rehabilitator, or liquidator) or the | 19 |
| indemnity
reinsurer during the period between the | 20 |
| coverage date and the date of the
Association's | 21 |
| election. Either the Association or indemnity | 22 |
| reinsurer shall
pay the net balance due the other | 23 |
| within 5 days after the completion of
the calculation. | 24 |
| If the receiver, rehabilitator, or liquidator
has | 25 |
| received any amounts due the Association pursuant to | 26 |
| subparagraph
(17)(a)(ii), the receiver, rehabilitator, | 27 |
| or liquidator shall remit the same to
the
Association | 28 |
| as promptly as practicable.
| 29 |
| (iv) If the Association, within 60 days of the | 30 |
| election, pays the
premiums
due for periods both before | 31 |
| and after the coverage date that relate to
policies and | 32 |
| contracts covered by the Association (in whole or in | 33 |
| part), the
reinsurer shall not be entitled to terminate | 34 |
| the reinsurance agreements
insofar as such agreements | 35 |
| relate to policies and contracts covered by the
| 36 |
| Association (in whole or in part) and shall not be |
|
|
|
HB5929 |
- 34 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| entitled to set off any
unpaid premium due for periods | 2 |
| prior to the coverage date against amounts
due the | 3 |
| Association. | 4 |
| (b) In the event the Association transfers its | 5 |
| obligations to another
insurer,
and
if the Association and | 6 |
| the other insurer agree, the other insurer shall succeed
to | 7 |
| the
rights and obligations of the Association under | 8 |
| subparagraph (17)(a) of this
Section
effective as of the | 9 |
| date agreed upon by the Association and the other insurer
| 10 |
| and
regardless of whether the Association has made the | 11 |
| election referred to
in
subparagraph (17)(a) provided | 12 |
| that:
| 13 |
| (i) the indemnity reinsurance agreements shall | 14 |
| automatically terminate for
new reinsurance unless the | 15 |
| indemnity reinsurer and the other insurer
agree to the | 16 |
| contrary;
| 17 |
| (ii) the obligations described in the proviso to | 18 |
| subparagraph (17)(a)(ii) of
this
Section shall no | 19 |
| longer apply on and after the date the indemnity
| 20 |
| reinsurance agreement is transferred to the third | 21 |
| party insurer; and
| 22 |
| (iii) this subparagraph (17)(b) shall not apply if | 23 |
| the Association has
previously
expressly determined in | 24 |
| writing that it will not exercise the election
referred
| 25 |
| to in subparagraph (17)(a) of this Section. | 26 |
| (c) The provisions of this paragraph (17) shall | 27 |
| supersede the provisions
of
any law of this State or of any | 28 |
| affected reinsurance agreement that provides
for or
| 29 |
| requires any payment of reinsurance proceeds, on account of | 30 |
| losses or events
that occur
in periods after the coverage | 31 |
| date, to the receiver, liquidator, or
rehabilitator of the
| 32 |
| insolvent member insurer. The receiver, rehabilitator, or | 33 |
| liquidator shall
remain entitled
to any amounts payable by | 34 |
| the reinsurer under the reinsurance agreement with
respect
| 35 |
| to losses or events that occur in periods prior to the | 36 |
| coverage date (subject
to applicable
setoff provisions).
|
|
|
|
HB5929 |
- 35 - |
LRB093 18698 SAS 44426 b |
|
| 1 |
| (d) Except as otherwise expressly provided in this | 2 |
| paragraph (17), nothing
herein shall alter or modify the | 3 |
| terms and conditions of the indemnity
reinsurance
| 4 |
| agreements of the insolvent member insurer. Nothing herein | 5 |
| shall abrogate or
limit any
rights of any reinsurer to | 6 |
| claim that it is entitled to rescind a reinsurance
| 7 |
| agreement. | 8 |
| Nothing herein shall give a policy or contract owner or | 9 |
| beneficiary an
independent cause
of action against an | 10 |
| indemnity reinsurer that is not otherwise set forth in the
| 11 |
| indemnity
reinsurance agreement.
| 12 |
| (14) With respect to covered policies for which the | 13 |
| Association becomes
obligated after an entry of an order of | 14 |
| liquidation or rehabilitation,
the Association may
elect | 15 |
| to succeed to the rights of the insolvent insurer arising | 16 |
| after the
date of the order of liquidation or | 17 |
| rehabilitation under any contract
of reinsurance to which
| 18 |
| the insolvent insurer was a party, to the extent that such | 19 |
| contract
provides coverage for losses occurring after the | 20 |
| date of the order of
liquidation or rehabilitation. As a | 21 |
| condition to making this election,
the Association must pay | 22 |
| all unpaid premiums due under the contract for
coverage | 23 |
| relating to periods before and after the date of the order | 24 |
| of
liquidation or rehabilitation.
| 25 |
| (18) The Association may join an organization of one or | 26 |
| more other state
associations
of similar purposes to further | 27 |
| the purposes and administer the powers and
duties of the
| 28 |
| Association.
| 29 |
| (19) The board of directors of the Association shall have | 30 |
| discretion and may
exercise
reasonable business judgment to | 31 |
| determine the means by which the Association is
to provide
the | 32 |
| benefits of this Article in an economical and efficient manner.
| 33 |
| (20) Where the Association has arranged or offered to | 34 |
| provide the benefits
of
this
Article to a covered person under | 35 |
| a plan or arrangement that fulfills the
Association's
| 36 |
| obligations under this Article, the person shall not be |
|
|
|
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| 1 |
| entitled to benefits
from the Association
in addition to or | 2 |
| other than those provided under the plan or arrangement.
| 3 |
| (21) Venue in a suit against the Association arising under | 4 |
| this Article
shall
be in Cook
County. The Association shall not | 5 |
| be required to give an appeal bond in any
case or
proceeding | 6 |
| that arises from or is based in whole or in part on claims or | 7 |
| other
rights asserted
under this Article.
| 8 |
| (22) In carrying out its duties in connection with | 9 |
| guaranteeing, assuming,
or
reinsuring
policies or contracts | 10 |
| under this Section, the Association may, subject to
approval of | 11 |
| the
Director or the receivership court, issue substitute | 12 |
| coverage for a policy or
contract that
provides an interest | 13 |
| rate, crediting rate, or similar factor determined by use
of an | 14 |
| index or other
external reference stated in the policy or | 15 |
| contract employed in calculating
returns or changes
in value by | 16 |
| issuing an alternative policy or contract in accordance with | 17 |
| the
following
provisions:
| 18 |
| (a) in lieu of the index or other external reference | 19 |
| provided for in the
original
policy or contract, the | 20 |
| alternative policy or contract provides for (i) a fixed
| 21 |
| interest rate, (ii) payment of dividends with minimum | 22 |
| guarantees, or (iii) a
different
method
for
calculating | 23 |
| interest or changes in value;
| 24 |
| (b) there is no requirement for evidence of | 25 |
| insurability, waiting period, or
other
exclusion that | 26 |
| would not have applied under the replaced policy or | 27 |
| contract;
and
| 28 |
| (c) the alternative policy or contract is | 29 |
| substantially similar to the
replaced
policy or contract in | 30 |
| all other material terms.
| 31 |
| (Source: P.A. 93-326, eff. 1-1-04.)
| 32 |
| (215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)
| 33 |
| Sec. 531.09. Assessments.
| 34 |
| (1) For the purpose of providing the funds
necessary to | 35 |
| carry out the powers and duties of the Association, the board
|
|
|
|
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| 1 |
| of directors shall assess the member insurers, separately for | 2 |
| each account
and subaccount , at such
times and for such amounts | 3 |
| as the board finds necessary. Assessments shall
be due not less | 4 |
| than 30 days after written notice to the member insurers
and | 5 |
| shall accrue interest from the due date the rate of 10% per
| 6 |
| annum
at such adjusted rate as is
established under Section | 7 |
| 6621 of Chapter 26 of the United States Code and
such interest | 8 |
| shall be compounded daily.
| 9 |
| (2) There shall be 2 classes of assessments, as follows:
| 10 |
| (a) Class A assessments shall be authorized and called
made
| 11 |
| for the
purpose of meeting administrative
costs and other | 12 |
| general expenses and examinations conducted under the
| 13 |
| authority
of the Director under subsection (5) of Section | 14 |
| 531.12 . Class A
assessments may be authorized and called | 15 |
| whether or not related to a particular
impaired or insolvent | 16 |
| insurer.
| 17 |
| (b) Class B assessments shall be authorized and called
made
| 18 |
| to the
extent necessary to carry
out the powers and duties of | 19 |
| the Association under Section 531.08 with regard
to an impaired | 20 |
| or an insolvent domestic insurer or insolvent foreign
or alien
| 21 |
| insurers .
| 22 |
| (3) (a) The amount of any Class A assessment shall be | 23 |
| determined by the
board of directors
Board and may be | 24 |
| authorized and called
made
on a pro-rata or non-pro rata basis. | 25 |
| With respect to any pro rata Class
A assessment, the board may | 26 |
| provide that no member insurer shall be assessed
less than $100 | 27 |
| as its share of such assessment, notwithstanding that such
| 28 |
| assessment is pro rata. The board may provide that any pro rata | 29 |
| assessment
shall be credited against future Class B | 30 |
| assessments. The total of all non-pro
rata
Such assessments | 31 |
| shall be in an amount determined
by the board, but shall
not
| 32 |
| exceed $500
$200
per company in any one calendar year. The | 33 |
| amount of any Class B
assessment shall be allocated for | 34 |
| assessment
purposes among the accounts
and subaccounts | 35 |
| pursuant to an allocation formula which may be based on
the | 36 |
| premiums or reserves of the impaired or insolvent insurer or |
|
|
|
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| any other
standard deemed by the board in its sole discretion | 2 |
| as being fair and
reasonable under the circumstances.
| 3 |
| (b) Class B assessments against member insurers for each | 4 |
| account and
subaccount shall
be in the proportion that the | 5 |
| premiums received on business in this State
by each assessed | 6 |
| member insurer on policies or contracts covered by
each account | 7 |
| or subaccount for the three most recent calendar years
for | 8 |
| which information is available preceding the year in which the | 9 |
| insurer
became impaired or insolvent, as the case may be, bears | 10 |
| to such premiums
received on business in this State for such | 11 |
| calendar years by all assessed
member insurers. To the extent | 12 |
| that any federal or state
law prohibits or preempts the | 13 |
| Association from making assessments on the basis
of any
such | 14 |
| premiums, assessments under this subparagraph shall be made on | 15 |
| the basis
of all
such premiums not subject to any prohibitions | 16 |
| or preemption, and the assessment
method set forth in this | 17 |
| subparagraph shall not be rendered invalid by any such
| 18 |
| prohibitions or preemption.
| 19 |
| (c) Assessments for funds to meet the requirements of the | 20 |
| Association
with respect to an impaired or insolvent insurer | 21 |
| shall not be authorized or
called
made until
the board in its | 22 |
| judgment determines that such authorization or call is
| 23 |
| necessary to implement the purposes of this Article. When in | 24 |
| the judgment
of the board an
assessment will be necessary to | 25 |
| implement the purposes of this Article, the
board may
authorize | 26 |
| a future assessment, to become effective after a member insurer | 27 |
| has
become
an impaired or insolvent insurer, and such | 28 |
| assessment shall not be
invalid because the
member insurer was | 29 |
| not an impaired or insolvent insurer at the time the board
| 30 |
| authorized such future assessment. Classification
of | 31 |
| assessments
under paragraph
subsection (2) of this Section and | 32 |
| computations of
assessments under this paragraph (3)
| 33 |
| subsection
shall be made with a reasonable degree of accuracy, | 34 |
| recognizing that exact
determinations may not always be | 35 |
| possible. The Association shall notify each
member
insurer of | 36 |
| its anticipated pro rata share of an authorized assessment not |
|
|
|
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|
| 1 |
| yet
called
within 180 days after the assessment is authorized.
| 2 |
| (4) The Association may abate or defer, in whole or in | 3 |
| part, the assessment
of a member insurer if, in the opinion of | 4 |
| the board, payment of the assessment
would endanger the ability | 5 |
| of the member insurer to fulfill its contractual
obligations. | 6 |
| In the event an assessment against a member insurer is abated
| 7 |
| or deferred, in
whole or in part, because of the limitations | 8 |
| set forth in this paragraph (4),
the amount by
which such | 9 |
| assessment is abated or deferred, may be assessed against the | 10 |
| other
member
insurers in a manner consistent with the basis for | 11 |
| assessments set forth in
this Section
531.09. Once the | 12 |
| conditions that caused a deferral have been removed or
| 13 |
| rectified, the
member insurer shall pay all assessments that | 14 |
| were deferred pursuant to a
repayment plan
approved by the | 15 |
| Association
The total of all assessments upon a member
insurer | 16 |
| for the
life and annuity
account and for each subaccount | 17 |
| thereunder may not in any one calendar
year exceed 2% and for | 18 |
| the health account may not in any one calendar
year exceed 2% | 19 |
| of such insurer's
average premiums received in this State on | 20 |
| the policies and contracts
covered by the account or subaccount | 21 |
| during the three calendar years
preceding the year in which the | 22 |
| insurer became an impaired or insolvent
insurer. If a one | 23 |
| percent assessment for any subaccount of the life and
annuity | 24 |
| account in any one year does not provide an amount sufficient | 25 |
| to
carry out the responsibilities of the Association, then | 26 |
| pursuant to
subsection 3(b), the board shall access all | 27 |
| subaccounts of the life and
annuity account for the necessary | 28 |
| additional amount, subject to the maximum
stated in this | 29 |
| subsection .
| 30 |
| (5) (a)(i) Subject to the provisions of paragraph | 31 |
| (5)(a)(ii) of this
Section,
the
total of
all assessments upon a | 32 |
| member insurer for the life and annuity account and for
each
| 33 |
| subaccount thereunder may not in any one calendar year exceed | 34 |
| 2%, and for the
health
account may not in any one calendar year | 35 |
| exceed 2%, of such insurer's average
premiums received in this | 36 |
| State on the policies and contracts covered by the
account or
|
|
|
|
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LRB093 18698 SAS 44426 b |
|
| 1 |
| subaccount during the 3 calendar years preceding the year in | 2 |
| which the
insurer
became an impaired or insolvent insurer.
| 3 |
| (ii) If 2 or more assessments are authorized in one | 4 |
| calendar year with
respect to insurers that become impaired | 5 |
| insurers or insolvent insurers in
different
calendar years, the | 6 |
| average annual premiums for purposes of the aggregate
| 7 |
| assessment
percentage limitation referenced in subparagraph | 8 |
| (5)(a)(i) of this Section
shall be equal
and limited to the | 9 |
| higher of the 3-year average annual premiums for the
applicable
| 10 |
| subaccount or account as calculated pursuant to this Section.
| 11 |
| In the event an assessment against a member insurer is abated, | 12 |
| or
deferred,
in whole or in part, because of the limitations | 13 |
| set forth in subsection (4) of
this
Section the amount by which | 14 |
| such assessment is abated or deferred, may be
assessed against | 15 |
| the other member insurers in a manner consistent with the
basis | 16 |
| for assessments set forth in this Section.
| 17 |
| (iii) If funds available from assessments, investment | 18 |
| income,
recoveries of
estate assets, or other recoveries are | 19 |
| insufficient to
the maximum assessment,
together with the other | 20 |
| assets of the Association in either account, does
not
provide | 21 |
| in any
one year in either account an amount sufficient to carry | 22 |
| out the
responsibilities
of the Association, the necessary | 23 |
| additional funds may be assessed as soon
thereafter
as | 24 |
| permitted by this Article.
| 25 |
| (iv) If the maximum assessment for any subaccount of the | 26 |
| life and annuity
account in any one year does not provide an | 27 |
| amount sufficient to carry out the
responsibilities of the | 28 |
| Association, then pursuant to subparagraph (3)(b) of
this | 29 |
| Section
531.09, the board shall access all subaccounts of the | 30 |
| life and annuity account
for the
necessary additional amount, | 31 |
| subject to the maximum stated in this paragraph
(5).
| 32 |
| (6) The board may provide in the plan of operation a method | 33 |
| of
allocating
funds among claims, whether relating to one or | 34 |
| more impaired or insolvent
insurers, when the maximum | 35 |
| assessment will be insufficient to cover anticipated
claims.
| 36 |
| (7)
(6) The board may, by an equitable method as |
|
|
|
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| 1 |
| established in the
plan of operation, refund to member | 2 |
| insurers, in proportion to the contribution
of each insurer to | 3 |
| that account, the amount by which the assets of the account
| 4 |
| exceed the amount the board finds is necessary to carry out | 5 |
| during the coming
year the obligations of the Association with | 6 |
| regard to that account,
including
assets accruing from | 7 |
| assignment, subrogation, net realized gains , and
income
from | 8 |
| investments. A
reasonable amount may be retained in any account | 9 |
| to provide funds for the
continuing expenses of the Association | 10 |
| and for future claims
losses if
refunds are
impractical .
| 11 |
| (8)
(7)
Unless otherwise determined by the board pursuant | 12 |
| to
subdivision 531.09(3)(c), an assessment is deemed to occur | 13 |
| on the date upon
which
the board
votes such assessment. The | 14 |
| board may defer calling the payment of the
assessment or may | 15 |
| call for payment in one or more installments.
| 16 |
| (9)
(8) It is proper for any member insurer, in determining | 17 |
| its
premium
rates and policyowner dividends as to any kind of | 18 |
| insurance within the scope of
this Article, to consider the | 19 |
| amount reasonably necessary to meet its
assessment
obligations | 20 |
| under this Article.
| 21 |
| (10)
(9) The Association must issue to each insurer paying | 22 |
| an
a
Class B assessment
under this Article , other than a Class | 23 |
| A assessment, a certificate of
contribution,
in a form | 24 |
| acceptable to the
Director, for the amount of the assessment so | 25 |
| paid. All outstanding
certificates
are of equal
dignity and | 26 |
| priority without reference to amounts or dates of issue. A
| 27 |
| certificate
of contribution may be shown by the insurer in its | 28 |
| financial statement as an
asset
in such form and for such | 29 |
| amount, if any, and period of time as the Director
may approve, | 30 |
| provided the insurer shall in any event at its option have
the | 31 |
| right to show a certificate of contribution as an admitted | 32 |
| asset at
percentages of the original face amount for calendar | 33 |
| years as follows:
| 34 |
| 100% for the calendar year after the year of issuance;
| 35 |
| 80% for the second calendar year after the year of | 36 |
| issuance;
|
|
|
|
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LRB093 18698 SAS 44426 b |
|
| 1 |
| 60% for the third calendar year after the year of issuance;
| 2 |
| 40% for the fourth calendar year after the year of | 3 |
| issuance;
| 4 |
| 20% for the fifth calendar year after the year of issuance.
| 5 |
| (11) The Association may request information from member | 6 |
| insurers in order
to aid in the exercise of its power under | 7 |
| Section 531.09 and member insurers
shall promptly comply with | 8 |
| such a request.
| 9 |
| (Source: P.A. 86-753.)
| 10 |
| (215 ILCS 5/531.10) (from Ch. 73, par. 1065.80-10)
| 11 |
| Sec. 531.10. Plan of Operation. )
| 12 |
| (1) (a) The Association must
submit to the Director a plan | 13 |
| of operation and any amendments thereto necessary
or suitable | 14 |
| to assure the fair, reasonable, and equitable administration of | 15 |
| the
Association. The plan of operation and any amendments | 16 |
| thereto become effective
upon approval in writing by the | 17 |
| Director.
| 18 |
| (b) If the Association fails to submit a suitable plan of | 19 |
| operation
within 180 days following the effective date of this | 20 |
| Article or if at any time
thereafter the Association fails to | 21 |
| submit suitable amendments to the plan, the
Director may, after | 22 |
| notice and hearing, adopt and promulgate such reasonable
rules | 23 |
| as are necessary or advisable to effectuate the provisions of | 24 |
| this
Article.
Such rules are in force until modified by the | 25 |
| Director or superseded by a plan
submitted by the Association | 26 |
| and approved by the Director.
| 27 |
| (2) All member insurers must comply with the plan of | 28 |
| operation.
| 29 |
| (3) The plan of operation must, in addition to requirements | 30 |
| enumerated
elsewhere in this Article:
| 31 |
| (a) Establish procedures for handling the assets of the | 32 |
| Association;
| 33 |
| (b) Establish the amount and method of reimbursing members | 34 |
| of the
board of directors under Section 531.07;
| 35 |
| (c) Establish regular places and times for meetings , |
|
|
|
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LRB093 18698 SAS 44426 b |
|
| 1 |
| including telephone
conference calls, of the board
of | 2 |
| directors;
| 3 |
| (d) Establish procedures for records to be kept of all | 4 |
| financial
transactions of the Association, its agents, and the | 5 |
| board of directors;
| 6 |
| (e) Establish the procedures whereby selections for the | 7 |
| board
of directors will be made and submitted to the Director;
| 8 |
| (f) Establish any additional procedures for assessments | 9 |
| under
Section 531.09; and
| 10 |
| (g) Contain additional provisions necessary or proper for | 11 |
| the execution
of the powers and duties of the Association.
| 12 |
| (4) The plan of operation shall establish a procedure for | 13 |
| protest by
any member insurer of assessments made by the | 14 |
| Association pursuant to
Section 531.09. Such procedures shall | 15 |
| require that:
| 16 |
| (a) Any member insurer that wishes to protest all or any | 17 |
| part of an
assessment for any year shall first pay the full | 18 |
| amount of the assessment
as set forth in the notice provided by | 19 |
| the Association. The payment shall be
available and may be used | 20 |
| to meet Association obligations during the pendency
of the | 21 |
| protest and any subsequent appeal. Such payments
shall be | 22 |
| accompanied by a statement in writing that the payment is made
| 23 |
| under protest, setting forth a brief statement of the ground | 24 |
| for the
protest. The Association shall hold such payments in a | 25 |
| separate interest
bearing account.
| 26 |
| (b) Within 60
30 days following the payment of an | 27 |
| assessment under
protest by any protesting member insurer, the | 28 |
| Association must notify the
member insurer in writing of its | 29 |
| final decision
determination with
respect to the protest
unless | 30 |
| the Association notifies the member that additional time is | 31 |
| required
to resolve the issues raised by the protest.
| 32 |
| (c) Within 30 days after a final
decision has been made, | 33 |
| the Association shall notify the protesting member
insurer in | 34 |
| writing of that final decision.
In the event the Association
| 35 |
| determines that the protesting member
insurer is entitled to a | 36 |
| refund, such refund shall be made within 30
days following the |
|
|
|
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|
| 1 |
| date upon which the Association makes its determination.
| 2 |
| (d) The final decision of the Association with respect to a | 3 |
| protest may
be
appealed to the Director pursuant to Section | 4 |
| 531.11(3).
| 5 |
| (e) In the alternative to rendering a decision with respect | 6 |
| to any
protest based on a question regarding the assessment | 7 |
| base, the Association
may refer such protests to the Director | 8 |
| for final decision, with or without
a recommendation from the | 9 |
| Association.
| 10 |
| (f) In the event the Association determines, or on appeal | 11 |
| of the
Association's
decision it is determined, that the | 12 |
| protesting member insurer is entitled to a
refund of all
or a | 13 |
| portion of the amount paid under protest, such refund shall be | 14 |
| made to the
protesting member insurer. Interest on any refund | 15 |
| due a protesting member
insurer
shall be paid at the rate | 16 |
| actually earned by the Association.
Interest on
any refund due | 17 |
| a protesting member insurer shall be paid
at the rate actually | 18 |
| earned by the Association on the separate account.
| 19 |
| (5) The plan of operation may provide that any or all | 20 |
| powers and duties
of the Association, except those under | 21 |
| paragraph (c) of subsection (10)
subdivision (16)(c) of Section | 22 |
| 531.08 and Section 531.09 are delegated to a
corporation,
| 23 |
| association or other organization which performs or will | 24 |
| perform functions
similar to those of this Association, or its | 25 |
| equivalent, in 2 or more states.
Such a corporation, | 26 |
| association or organization shall be reimbursed for any
| 27 |
| payments made on behalf of the Association and shall be paid | 28 |
| for its
performance of any function of the Association. A | 29 |
| delegation under this
subsection shall take effect only with | 30 |
| the approval of both the board of
directors and the Director, | 31 |
| and may be made only to a corporation, association
or | 32 |
| organization which extends protection not substantially less | 33 |
| favorable and
effective than that provided by this Article
Act .
| 34 |
| (Source: P.A. 84-1035.)
| 35 |
| (215 ILCS 5/531.11) (from Ch. 73, par. 1065.80-11)
|
|
|
|
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|
| 1 |
| Sec. 531.11. Duties and powers of the Director. In addition | 2 |
| to
the duties and powers enumerated elsewhere in this Article:
| 3 |
| (1) The Director must:
| 4 |
| (a) Upon request of the board of directors, provide the | 5 |
| Association with
a statement of the premiums in the | 6 |
| appropriate accounts for each
member insurer.
| 7 |
| (b) notify the board of directors of the existence of | 8 |
| an impaired or
insolvent
insurer not later than 3 days | 9 |
| after a determination of impairment or insolvency
is made | 10 |
| or when the Director receives notice of impairment or | 11 |
| insolvency.
| 12 |
| (c) give notice to an impaired insurer as required by | 13 |
| Sections
34 or 60. Notice to the impaired insurer shall | 14 |
| constitute
notice to its shareholders, if any.
| 15 |
| (d) In any liquidation or rehabilitation proceeding | 16 |
| involving
a domestic insurer, be appointed as the | 17 |
| liquidator or rehabilitator. If
a foreign or alien member | 18 |
| insurer is subject to a liquidation proceeding
in its | 19 |
| domiciliary
jurisdiction or state of entry, the Director | 20 |
| shall be appointed conservator.
| 21 |
| (2) The Director may suspend or revoke, after notice and | 22 |
| hearing,
the certificate of authority to transact insurance in | 23 |
| this State of any member
insurer which fails to pay an | 24 |
| assessment when due or fails to comply with the
plan
of | 25 |
| operation. As an alternative the Director may levy a forfeiture | 26 |
| on any
member
insurer which fails to pay an assessment when | 27 |
| due. Such forfeiture may not
exceed
5% of the unpaid assessment | 28 |
| per month, but no forfeiture may be less than
$100 per month.
| 29 |
| (3) Any final decision or action of the board of directors | 30 |
| or the
Association may be
appealed to the Director by any | 31 |
| member insurer or any other person
adversely affected by such | 32 |
| action if such appeal is taken within 30
days of the decision | 33 |
| or action being appealed. Any final action or order
of the | 34 |
| Director
is subject to judicial review in a court of competent | 35 |
| jurisdiction. An
action or order of the Director may be final | 36 |
| and subject to judicial review
even if the aggrieved party |
|
|
|
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| 1 |
| seeking judicial review has not sought
reconsideration or | 2 |
| rehearing by the Director.
| 3 |
| (4) The liquidator, rehabilitator, or conservator of any | 4 |
| impaired insurer
may notify all interested persons of the | 5 |
| effect of this Article.
| 6 |
| (Source: P.A. 89-97, eff. 7-7-95.)
| 7 |
| (215 ILCS 5/531.12) (from Ch. 73, par. 1065.80-12)
| 8 |
| Sec. 531.12. Prevention of Insolvencies. To aid in the | 9 |
| detection and
prevention of insurer insolvencies or | 10 |
| impairments:
| 11 |
| (1) It shall be the duty of the Director:
| 12 |
| (a) To notify the commissioners of all other states, | 13 |
| territories of the
United States, and the District of Columbia | 14 |
| when he or she takes any of the
following
actions against a | 15 |
| member insurer:
| 16 |
| (i) revocation of license;
| 17 |
| (ii) suspension of license;
| 18 |
| (iii) makes any formal order except for an order issued | 19 |
| pursuant to
Article XII 1/2 of this Code that such company | 20 |
| restrict its premium writing,
obtain additional contributions | 21 |
| to surplus, withdraw from the State,
reinsure all or any part | 22 |
| of its business, or increase capital, surplus or
any other | 23 |
| account for the security of policyholders or creditors.
| 24 |
| Such notice shall be transmitted to all commissioners
| 25 |
| within 30 days following
the action taken or the date on which | 26 |
| the action occurs.
| 27 |
| (b) To report to the board of directors when he or she has | 28 |
| taken any of
the actions
set forth in subparagraph (a) of this | 29 |
| paragraph or has received a report
from any other commissioner | 30 |
| indicating that any such action has been taken
in another | 31 |
| state. Such report to the board of directors shall contain all
| 32 |
| significant details of the action taken or the report received | 33 |
| from another
commissioner.
| 34 |
| (2) The Director may seek the advice and recommendations of | 35 |
| the board
of directors concerning any matter affecting the |
|
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|
HB5929 |
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LRB093 18698 SAS 44426 b |
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| Director's
his duties
and responsibilities
regarding the | 2 |
| financial condition of member companies and companies seeking
| 3 |
| admission
to transact insurance business in this State.
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| (3) The board of directors may, upon majority vote, make | 5 |
| reports and
recommendations
to the Director upon any matter | 6 |
| germane to the liquidation, rehabilitation
or conservation of | 7 |
| any member insurer. Such reports
and recommendations shall not | 8 |
| be considered public documents.
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| (4) The board of directors may, upon majority vote, make | 10 |
| recommendations
to the Director for the detection and | 11 |
| prevention of insurer insolvencies.
| 12 |
| (5) The board of directors may
shall , at the conclusion of | 13 |
| any
insurer insolvency
in which the Association was obligated | 14 |
| to pay covered claims prepare a report
to the Director | 15 |
| containing such information as it may have in its possession
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| bearing on the history and causes of such insolvency. The board | 17 |
| shall
cooperate
with the boards of directors of guaranty | 18 |
| associations in other states in
preparing a report on the | 19 |
| history and causes for insolvency of a particular
insurer, and | 20 |
| may adopt by reference any report prepared by such other
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| associations.
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| (Source: P.A. 86-753.)
| 23 |
| (215 ILCS 5/531.14) (from Ch. 73, par. 1065.80-14)
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| Sec. 531.14. Miscellaneous Provisions. ) (1) Nothing in | 25 |
| this
Article may be construed to reduce the liability for | 26 |
| unpaid assessments of the
insured
of an impaired or insolvent | 27 |
| insurer operating under a plan with assessment
liability.
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| (2) No member insurer may voluntarily withdraw from this | 29 |
| State or
liquidate
its property, business, and affairs, and no | 30 |
| such voluntary withdrawal or
voluntary liquidation shall be | 31 |
| effective, until such member insurer has paid
all authorized | 32 |
| assessments, whether called or
uncalled, for which it is liable | 33 |
| under this Article.
| 34 |
| (3)
(2) Records must be kept of all meetings of the board | 35 |
| of
directors
negotiations and meetings in which
the Association |
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LRB093 18698 SAS 44426 b |
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| or its representatives are involved to discuss the activities
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| of the
Association in carrying out its powers and duties under | 3 |
| Section 531.08.
The records of the Association with
respect to | 4 |
| an impaired or insolvent insurer may be made public only (a) | 5 |
| upon
the order of the
Director or a court of competent | 6 |
| jurisdiction or upon a determination by the
board, and (b)
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| during the pendency
Records of such
negotiations or meetings | 8 |
| may be made public only upon the termination of a
liquidation, | 9 |
| rehabilitation, or conservation proceeding involving the | 10 |
| impaired
or insolvent insurer, upon a showing of compelling | 11 |
| circumstances
the
termination of the impairment or insolvency
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| of the insurer, or upon the order
of a court of competent | 13 |
| jurisdiction . Nothing in this paragraph (3)
(2) limits the
duty | 14 |
| of the Association to render a report of its activities under | 15 |
| Section
531.15.
| 16 |
| (4)
(3) For the purpose of carrying out its obligations | 17 |
| under this
Article,
the Association is deemed to be a creditor | 18 |
| of the impaired or insolvent
insurer to the extent of assets | 19 |
| attributable to covered policies reduced by any
amounts to | 20 |
| which the Association is entitled as subrogee (under paragraph
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| (15)
(8)
of Section 531.08). All assets of the impaired or | 22 |
| insolvent insurer
attributable to covered policies must be used | 23 |
| to continue all covered policies
and pay all contractual | 24 |
| obligations of the impaired insurer as required by this
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| Article. "Assets attributable to covered policies", as used in | 26 |
| this paragraph
(4)
(3) , is that proportion of the
assets which | 27 |
| the reserves that should have been established
for such | 28 |
| policies bear to the reserves
reserve that should have been
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| established for all policies of
insurance written by the | 30 |
| impaired or insolvent insurer.
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| (5) As a creditor of the impaired or insolvent insurer as | 32 |
| established in
paragraph (4) of this Section 531.14 and | 33 |
| paragraph (15) of Section 531.08 and
consistent with paragraph | 34 |
| (2) of Section 205 of the Code and similar provisions
under the | 35 |
| laws of other states, the Association and other similar | 36 |
| associations
shall be entitled to receive disbursements of |
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LRB093 18698 SAS 44426 b |
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| assets out of the marshaled
assets from time to time as the | 2 |
| assets become available. If the liquidator
has not, within 120 | 3 |
| days of a final determination of insolvency of an insurer
by | 4 |
| the receivership court, made an application to the court for | 5 |
| the approval of
a proposal to disburse assets out of marshaled | 6 |
| assets to guaranty associations
having obligations because of | 7 |
| the insolvency, then the Association shall be
entitled to make | 8 |
| application to the receivership court for approval of its own
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| proposal to disburse these assets.
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| (6)
(4) (a) Prior to the termination of any liquidation,
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| rehabilitation,
or conservation proceeding, the court may take | 12 |
| into consideration the
contributions
of the respective | 13 |
| parties, including the Association, the shareholders and
the | 14 |
| policy and contract owners
policyowners of the impaired or
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| insolvent insurer, and any other party with
a bona fide | 16 |
| interest,
in making an equitable distribution of the ownership | 17 |
| rights of such impaired
or insolvent
insurer. In such a | 18 |
| determination, consideration must be given to the welfare
of | 19 |
| the
policy owners and contract owners
policyholders of the | 20 |
| continuing or
successor insurer.
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| (b) No distribution to stockholders, if any, of an impaired | 22 |
| or insolvent
insurer
may be made until and unless the total
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| amount of valid claims of the Association for funds expended in | 24 |
| carrying
out its powers and duties under Section 531.08, with | 25 |
| respect to such insurer
have been fully recovered by the | 26 |
| Association.
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| (7)
(5) (a) If an order for liquidation or rehabilitation | 28 |
| of
an insurer
domiciled in this State has been entered, the | 29 |
| receiver appointed under such
order has a right to recover on | 30 |
| behalf of the insurer, from any affiliate that
controlled it, | 31 |
| the amount of distributions, other than stock dividends paid by
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| the insurer on its capital stock, made at any time during the 5 | 33 |
| years preceding
the petition for liquidation or rehabilitation | 34 |
| subject to the limitations of
subparagraphs
paragraphs (b) to | 35 |
| (d) of this paragraph (7) .
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| (b) No such dividend is recoverable if the insurer shows |
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LRB093 18698 SAS 44426 b |
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| that when
paid the distribution was lawful and reasonable, and | 2 |
| that the insurer did not
know and could not reasonably have | 3 |
| known that the distribution might adversely
affect
the ability | 4 |
| of the insurer to fulfill its contractual obligations.
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| (c) Any person who was
as an affiliate that controlled the | 6 |
| insurer
at
the time the distributions were paid is liable up to | 7 |
| the amount of
distributions
the person
he received. Any person | 8 |
| who was an affiliate that
controlled the insurer at
the
time | 9 |
| the distributions were declared, is liable up to the amount of
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| distributions
the person
he would have received if they had | 11 |
| been paid immediately.
If 2 or more persons are
liable with | 12 |
| respect to the same distributions, they are jointly and | 13 |
| severally
liable.
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| (d) The maximum amount recoverable under this paragraph (7)
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| subsection
(5) of this Section is
the amount needed in excess | 16 |
| of all other available assets of the insolvent
insurer
to pay | 17 |
| the contractual obligations of the insolvent insurer.
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| (e) If any person liable under subparagraph
paragraph (c) | 19 |
| of
this paragraph (7)
subsection (5) of this
Section is | 20 |
| insolvent, all its
affiliates that controlled it at the time | 21 |
| the dividend was paid are jointly and
severally liable for any | 22 |
| resulting deficiency in the amount recovered from
the insolvent | 23 |
| affiliate.
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| (Source: P.A. 81-899.)
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| (215 ILCS 5/531.15) (from Ch. 73, par. 1065.80-15)
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| Sec. 531.15. Examination of the Association . Annual | 27 |
| Report. The
Association shall be subject to examination and | 28 |
| regulation by the Director.
The board of directors must submit | 29 |
| to the Director, not later than the
first day of the fifth | 30 |
| month following the end of the Association's fiscal
year, a | 31 |
| financial report for such fiscal year in a
form acceptable to | 32 |
| the Director and a report of its
activities during such fiscal | 33 |
| year. Upon the request of a member insurer,
the Association | 34 |
| shall provide the member with a copy of the report.
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| (Source: P.A. 86-753.)
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LRB093 18698 SAS 44426 b |
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| (215 ILCS 5/531.17) (from Ch. 73, par. 1065.80-17)
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| Sec. 531.17. Immunity. ) There is no liability on the part | 3 |
| of and
no cause of action of any nature may arise against any | 4 |
| member insurer or its
agents
or employees, the Association or | 5 |
| its agents or employees, members of the board
of
directors or | 6 |
| their representatives or alternate representatives , or the
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| Director or the Director's
his representatives , for any | 8 |
| decision
or
action taken or omission made by them
in the | 9 |
| performance of their powers and duties under this Article. | 10 |
| Without
limitation, the Association shall be immune from any | 11 |
| claim that any
omission
by the Association or any action of the | 12 |
| Association, taken separately or in
concert with the
Director | 13 |
| in any of his or her capacities, has caused loss or any other | 14 |
| injury
to any impaired
insurer or any insolvent insurer. | 15 |
| Immunity shall extend to the Association's
participation in
any | 16 |
| organization of one or more other state associations of similar | 17 |
| purposes
and to any such
organization and its agents or | 18 |
| employees.
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| (Source: P.A. 81-899.)
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| (215 ILCS 5/531.19) (from Ch. 73, par. 1065.80-19)
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| Sec. 531.19. Prohibited advertisement of action of the | 22 |
| Insurance
Guaranty
Association in sale of insurance.
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| (a) No person, including an insurer,
agent
or affiliate of | 24 |
| an insurer shall make, publish, disseminate, circulate,
or | 25 |
| place before the public, or cause directly or indirectly, to be | 26 |
| made,
published, disseminated, circulated or placed before the | 27 |
| public, in any
newspaper, magazine or other publication, or in | 28 |
| the form of a notice, circular,
pamphlet, letter or poster, or | 29 |
| over any radio station or television station,
or in any other | 30 |
| way, any advertisement, announcement or statement, written or
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| oral, which
uses the existence of the Insurance Guaranty
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| Association of this State
for
the purpose of sales, | 33 |
| solicitation or inducement to purchase any form of
insurance | 34 |
| covered by this Article; provided, however, that this Section
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LRB093 18698 SAS 44426 b |
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| shall not apply to the Illinois Life and Health Guaranty
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| Association or
any other entity which does not sell or solicit | 3 |
| insurance.
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| (b) Within 180 days of August 16,
1993, the Association | 5 |
| shall prepare a summary document describing the general
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| purposes and current limitations of this Article and complying | 7 |
| with subsection
(c). This document shall be submitted to the | 8 |
| Director for approval. Sixty
days after receiving approval, no | 9 |
| insurer may deliver a policy or contract
described in | 10 |
| subparagraph (2) (a) of paragraph (2) of Section 531.03 and
not
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| excluded under subparagraph (2) (b) of that Section to a policy | 12 |
| or
contract owner
holder unless the document is delivered to | 13 |
| the policy or
contract
owner
holder prior to or at the time of | 14 |
| delivery of the policy or
contract. The document should also be | 15 |
| available upon request
by
a policy or contract owner
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| policyholder . The distribution, delivery,
or contents or | 17 |
| interpretation of
this document shall not mean that either the | 18 |
| policy or the contract or the
holder thereof would be covered | 19 |
| in the event of the impairment or insolvency of
a member | 20 |
| insurer. The description document shall be revised by the | 21 |
| Association
as amendments to this Article may require. Failure | 22 |
| to receive this document
does not give the policy or
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| policyholder, contract owner
holder , certificate holder, or | 24 |
| insured
any greater rights than those stated in this Article.
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| (c) The document prepared under subsection (b) shall | 26 |
| contain a clear and
conspicuous disclaimer on its face. The | 27 |
| Director shall promulgate a rule
establishing the form and | 28 |
| content of the disclaimer. The disclaimer shall:
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| (1) State the name and address of the Illinois Life and | 30 |
| Health
Insurance Guaranty
Association and of the | 31 |
| Department.
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| (2) Prominently warn the policy or contract owner
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| holder that the
Illinois Life and
Health Insurance Guaranty | 34 |
| Association may not cover the policy or contract
or, if | 35 |
| coverage
is available, it will be subject to substantial | 36 |
| limitations and exclusions and
conditioned on continued |
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LRB093 18698 SAS 44426 b |
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| residence in the State.
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| (3) State that the insurer and its agents are | 3 |
| prohibited by law from using
the existence of the Illinois
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| Life and Health Insurance Guaranty
Association for the
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| purpose of sales, solicitation, or inducement to purchase | 6 |
| any form of
insurance.
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| (4) Emphasize that the policy or contract owner
holder
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| should not
rely on
coverage under the Illinois Life and | 9 |
| Health Insurance Guaranty Association
Law when
selecting | 10 |
| an insurer.
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| (5) Set forth the name, address, and a toll-free | 12 |
| telephone number of the
insurer
along with a statement that | 13 |
| the policy or contract owner should direct
inquiries or
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| comments to the insurer at such address or telephone | 15 |
| number.
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| (6)
(5) Provide other information as directed by the | 17 |
| Director.
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| (d) (Blank).
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| (Source: P.A. 88-364; 88-627, eff. 9-9-94; 89-97, eff. 7-7-95.)
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