HB2335 94TH GENERAL ASSEMBLY

LRB094 07037 LJB 37179 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB2335

Introduced 2/16/2005, by Rep. Frank J. Mautino

SYNOPSIS AS INTRODUCED:

215 ILCS 5/537.6

from Ch. 73, par. 1065.87-6

Amends the Illinois Insurance Code. Requires member companies of the Illinois Insurance Guaranty Fund to recoup over a reasonable length of time a sum reasonably calculated to recoup assessments paid by the member company by way of surcharges, to be determined by the Fund, on premiums charged for insurance policies. Requires that the surcharge must be separately stated on the policy declaration statement, schedule, or endorsement. Allows the Fund to permit member companies to omit collection of the surcharge if the expense of collection exceeds the amount of the surcharge. Effective immediately.

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by changing Section 537.6 as follows:

(215 ILCS 5/537.6) (from Ch. 73, par. 1065.87-6)

Sec. 537.6. Allocation of claims; assessments.

(a) The Fund shall allocate covered claims paid and expenses incurred between the accounts established by Section 535 separately, and assess member companies separately for each account amounts necessary to pay the obligations of the Fund under Section 537.2 subsequent to the entry of an Order of Liquidation against an insolvent company, the expenses of handling covered claims subsequent to such Order of Liquidation and other expenses authorized by this Article. The assessments of each member company shall be in the proportion that the net direct written premiums of the member company for the calendar year immediately preceding the year in which the assessment is levied on the kinds of insurance in the account bears to the net direct written premiums of all member companies for such preceding calendar year on the kinds of insurance in the account. Each member company shall be notified of the assessment not later than 30 days before it is due. Before January 1, 2002, no member company may be assessed in any year on any account an amount greater than 1% of that member company's net direct written premiums on the kinds of insurance in the account for the calendar year preceding the assessment. Beginning January 1, 2002, the amount a member company may be assessed in any year on any account shall be a maximum of 2% of that member company's net direct written premium on the kinds of insurance in the account for the calendar year preceding the assessment. This 2% maximum shall apply regardless of the date of any insolvency that gives rise to the need for the assessment. If the maximum assessment, together with the other assets of the Fund in any account, does not provide, in any one year, in any account, an amount sufficient to make all necessary payments from that account, the funds available shall be paid in the manner determined by the Fund and approved by the Director and the unpaid portion shall be paid as soon thereafter as funds become available. If requested by a member company, the Director may exempt or defer the assessment of any member company, if the assessment would cause the member company's financial impairment.

(b) Each member company shall recoup over a reasonable length of time a sum reasonably calculated to recoup the assessments paid by the member company under this Section by way of a surcharge on premiums charged for insurance policies to which this Article applies. The Fund shall determine the rate of any surcharge. The amount of the surcharge shall be separately stated on the policy declaration statement, schedule, or endorsement. The plan of operation of the Fund may permit a member company to omit collection of the surcharge on premiums charged when the expense of collecting the surcharge would exceed the amount of the surcharge.

(Source: P.A. 92-77, eff. 7-12-01.)

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