SB0765 94TH GENERAL ASSEMBLY

LRB094 06750 LJB 36852 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB0765

Introduced 2/18/2005, by Sen. Iris Y. Martinez

SYNOPSIS AS INTRODUCED:

215 ILCS 5/500-10
215 ILCS 5/500-40
215 ILCS 5/500-106 new
215 ILCS 5/500-135

Amends the Illinois Insurance Code. Provides for the issuance of limited licenses for term life insurance and prohibits a term life licensee from selling any kind of insurance other than term life insurance. Sets forth requirements for a term life limited lines licensee of another state to obtain a license in Illinois and for a term life limited lines licensee in Illinois to obtain a license in another state. Sets forth requirements for applications for a term life limited lines license and provides that a license shall remain in effect so long as fees are paid and education requirements are met. Allows a licensee who allows his or her license to lapse to be issued a new license within 12 months after expiration of the original license upon the payment of a penalty. Sets forth requirements for the information to be contained on the license. Sets forth the amount of the fee required to be paid for the license.

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 Sections 500-10, 500-40, and 500-135 and by adding Section 500-106 as follows:

(215 ILCS 5/500-10)

Sec. 500-10. Definitions. In addition to the definitions in Section 2 of the Code, the following definitions apply to this Article:

"Business entity" means a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity.

"Car rental limited line licensee" means a person authorized under the provisions of Section 500-105 to sell certain coverages relating to the rental of vehicles.

"Home state" means the District of Columbia and any state or territory of the United States in which an insurance producer maintains his or her principal place of residence or principal place of business and is licensed to act as an insurance producer.

"Insurance" means any of the lines of authority in Section 500-35, any health care plan under the Health Maintenance Organization Act, or any limited health care plan under the Limited Health Service Organization Act.

"Insurance producer" means a person required to be licensed under the laws of this State to sell, solicit, or negotiate insurance.

"Insurer" means a company as defined in subsection (e) of Section 2 of this Code, a health maintenance organization as defined in the Health Maintenance Organization Act, or a limited health service organization as defined in the Limited Health Service Organization Act.

"License" means a document issued by the Director authorizing an individual to act as an insurance producer for the lines of authority specified in the document or authorizing a business entity to act as an insurance producer. The license itself does not create any authority, actual, apparent, or inherent, in the holder to represent or commit an insurance carrier.

"Limited lines insurance" means those lines of insurance defined in Section 500-100, term life insurance as defined in Section 500-106, or any other line of insurance that the Director may deem it necessary to recognize for the purposes of complying with subsection (e) of Section 500-40.

"Limited lines producer" means a person authorized by the Director to sell, solicit, or negotiate limited lines insurance.

"Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers.

"Person" means an individual or a business entity.

"Rental agreement" means a written agreement setting forth the terms and conditions governing the use of a vehicle provided by a rental company for rental or lease.

"Rental company" means a person, or a franchisee of the person, in the business of providing primarily private passenger vehicles to the public under a rental agreement for a period not to exceed 30 days.

"Rental period" means the term of the rental agreement.

"Renter" means a person obtaining the use of a vehicle from a rental company under the terms of a rental agreement for a period not to exceed 30 days.

"Self-service storage facility limited line licensee" means a person authorized under the provisions of Section 500-107 to sell certain coverages relating to the rental of self-service storage facilities.

"Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company.

"Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.

"Term life licensee" means a person licensed under the provisions of Section 500-106 of this Code to sell only term life insurance.

"Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance.

"Uniform Business Entity Application" means the current version of the National Association of Insurance Commissioners' Uniform Business Entity Application for nonresident business entities.

"Uniform Application" means the current version of the National Association of Insurance Commissioners' Uniform Application for nonresident producer licensing.

"Vehicle" or "rental vehicle" means a motor vehicle of (1) the private passenger type, including passenger vans, mini vans, and sport utility vehicles or (2) the cargo type, including cargo vans, pickup trucks, and trucks with a gross vehicle weight of less than 26,000 pounds the operation of which does not require the operator to possess a commercial driver's license.

(Source: P.A. 92-386, eff. 1-1-02; 93-288, eff. 1-1-04.)

(215 ILCS 5/500-40)

Sec. 500-40. Nonresident licensing.

(a) Unless denied a license pursuant to Section 500-70, a nonresident person shall receive a nonresident producer license if:

(1) the person is currently licensed as a resident and in good standing in his or her home state;

(2) the person has submitted the proper request for a license and has paid the fees required by Section 500-135;

(3) the person has submitted or transmitted to the Director the application for a license that the person submitted to his or her home state or, instead of that application, a completed Uniform Application; and

(4) the person's home state awards nonresident producer licenses to residents of this State on the same basis.

(b) The Director may verify the producer's licensing status through the Producer Database maintained by the National Association of Insurance Commissioners or its affiliates or subsidiaries or by obtaining certification from the public official having supervision of insurance in the applicant's state of residence that the applicant has passed the written examination for the class of insurance applied for.

(c) A nonresident producer who moves from one state to another state or a resident producer who moves from this State to another state must file a change of address and provide certification from the new resident state within 30 days after the change of legal residence. No fee or license application is required.

(d) Notwithstanding any other provision of this Article, a person licensed as a surplus lines producer in his or her home state shall receive a nonresident surplus lines producer license pursuant to subsection (a) of this Section. Except as provided in subsection (a), nothing in this Section supersedes any provision of Section 445 of this Code.

(e) Notwithstanding any other provision of this Article, except as provided in Section 500-106 of this Code, a person licensed as a limited lines producer in his or her home state shall receive a nonresident limited lines producer license, pursuant to subsection (a) of this Section, granting the same scope of authority as granted under the license issued by the producer's home state. For the purposes of this subsection, limited line insurance is any authority granted by the home state that restricts the authority of the license to less than the total authority prescribed in the associated major lines pursuant to items (1) through (5) of subsection (a) of Section 500-35.

(Source: P.A. 92-386, eff. 1-1-02.)

(215 ILCS 5/500-106 new)

Sec. 500-106. Limited lines licenses for term life insurance.

(a) An individual who is at least 18 years of age and whom the Secretary considers to be competent, trustworthy, and of good business reputation may obtain a limited lines producer license to transact only term life insurance as provided in this Section. For the purposes of this Section, "term life insurance" means a life insurance policy that does not develop non-forfeiture values and is not convertible into an annuity or a life insurance policy that develops non-forfeiture values.

(b) A term life licensee shall not sell, solicit, or negotiate any kind of insurance other than term life insurance, unless expressly authorized to do so under a license issued by the Secretary.

(c) A term life licensee shall not sell term life insurance that replaces existing insurance, except that a term life licensee may introduce a prospective insured seeking replacement insurance to a licensed insurance producer authorized to transact life insurance in this State and may receive compensation for the introduction. For the purposes of this Section, "replacement" has the meaning set forth in 50 Ill. Adm. Code 917.30.

(d) A term life limited lines license shall not be used by the term life licensee as a basis for obtaining a nonresident limited line license in any other state pursuant to any law of the other state that permits a person licensed as a limited line producer in the person's home state to receive a nonresident limited lines producer license in the other state, unless the other state's law provides for a limited license for term life insurance and imposes requirements on the licensee that are substantially similar to the requirements imposed by this Section. A person licensed under a limited lines license to sell, solicit, or negotiate term life insurance in his or her home state shall, upon application, receive a nonresident term life limited lines license pursuant to this Section granting the same scope of authority as granted under the limited lines license issued by the person's home state, provided that the person's home state imposes requirements in connection with the term life limited lines license that are substantially similar to the requirements imposed by this Section.

(e) The application for a term life limited lines license must be submitted on a form prescribed by the Secretary by a designee of the insurance company appointing the applicant. The appointing insurance company must certify that the applicant has completed at least 10 hours of prelicensing education regarding term life insurance and must pay the fee required by Section 500-135 of this Code.

(f) A term life licensee may represent more than one insurance company.

(g) A term life limited lines license shall remain in effect as long as the fee set forth in Section 500-135 of this Code is paid and the education requirements set forth in this subsection (h) are met by the due date, unless the license is revoked or suspended pursuant to Section 500-70 of this Code. Before each license renewal, a term life licensee shall satisfactorily complete at least 20 hours of course study in accordance with rules prescribed by the Secretary pursuant to Section 500-35 of this Code.

(h) An individual term life licensee who allows his or her license to lapse may, within 12 months after the due date of the renewal fee, be issued a term life license without the necessity of completing the prelicensing education. However, a penalty in the amount of double the unpaid renewal fee shall be required after the due date in addition to the renewal fee.

(i) A term life limited lines license may be terminated by the appointing insurance company or the licensee.

(j) Except as provided in this Section, a term life licensee is not subject to the requirements of Sections 500-25, 500-30, or 500-35 of this Code

(k) A term life limited lines license shall contain the name, address, and personal identification number of the licensee, the date the license was issued, general conditions relative to the license's expiration or termination, and any other information the Secretary considers proper. A term life limited lines license shall also contain the name and address of the appointing insurance company.

(l) A term life licensee must inform the Secretary by any means acceptable to the Secretary of a change of address within 30 days after the change.

(215 ILCS 5/500-135)

Sec. 500-135. Fees.

(a) The fees required by this Article are as follows:

(1) a fee of $180 for a person who is a resident of Illinois, and $250 for a person who is not a resident of Illinois, payable once every 2 years for an insurance producer license;

(2) a fee of $50 for the issuance of a temporary insurance producer license;

(3) a fee of $150 payable once every 2 years for a business entity;

(4) an annual $50 fee for a limited line producer license issued under items (1) through (7) of subsection (a) of Section 500-100;

(5) a $50 application fee for the processing of a request to take the written examination for an insurance producer license;

(6) an annual registration fee of $1,000 for registration of an education provider;

(7) a certification fee of $50 for each certified pre-licensing or continuing education course and an annual fee of $20 for renewing the certification of each such course;

(8) a fee of $180 for a person who is a resident of Illinois, and $250 for a person who is not a resident of Illinois, payable once every 2 years for a car rental limited line license;

(9) a fee of $200 payable once every 2 years for a limited lines license other than the licenses issued under items (1) through (7) of subsection (a) of Section 500-100, a car rental limited line license, or a self-service storage facility limited line license;

(10) a fee of $50 payable once every 2 years for a self-service storage facility limited line license.

(11) a fee of $50 payable once every 2 years for a term life limited lines license.

(b) Except as otherwise provided, all fees paid to and collected by the Director under this Section shall be paid promptly after receipt thereof, together with a detailed statement of such fees, into a special fund in the State Treasury to be known as the Insurance Producer Administration Fund. The moneys deposited into the Insurance Producer Administration Fund may be used only for payment of the expenses of the Department in the execution, administration, and enforcement of the insurance laws of this State, and shall be appropriated as otherwise provided by law for the payment of those expenses with first priority being any expenses incident to or associated with the administration and enforcement of this Article.

(Source: P.A. 92-386, eff. 1-1-02; 93-32, eff. 7-1-03; 93-288, eff. 1-1-04; revised 9-12-03.)