SB2201 95TH GENERAL ASSEMBLY

LRB095 17502 MJR 43576 b

95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB2201

Introduced 2/14/2008, by Sen. William R. Haine

SYNOPSIS AS INTRODUCED:

215 ILCS 5/1402
215 ILCS 5/1407

Amends the Illinois Insurance Code. Provides that the definition for "financial institution" includes any farm credit lending institution, including, but not limited to, a farm credit bank, farm credit association, or production credit association, whether operating under the authority of the federal Farm Credit Administration or any similar federal or State authority, and any subsidiary of that farm credit lending institution. Provides that no discount on or return of any portion of a premium or commission, whether in the form of a rebate or as part of any dividend or other financial consideration offered to a customer of any financial institution, may be offered or paid if that discount or return would provide an incentive for the customer to purchase an insurance policy, to purchase additional insurance coverage, or to obtain credit from or through a particular financial institution. Effective immediately.

A BILL FOR

AN ACT concerning regulation.

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 1402 and 1407 as follows:

(215 ILCS 5/1402)

Sec. 1402. Definitions. For the purposes of this Article:

"Financial institution" means:

(1) a State bank, a national bank, or an out-of-state bank, as those terms are defined in the Illinois Banking Act, or any subsidiary of a State bank, a national bank, or an out-of-state bank;

(2) a foreign banking corporation, as that term is defined in the Foreign Banking Office Act, or any subsidiary of a foreign banking corporation;

(3) a corporate fiduciary, as that term is defined in the Corporate Fiduciary Act;

(4) a savings bank organized under the Savings Bank Act, an out-of-state savings bank chartered under the laws of a state other than Illinois, a territory of the United States, or the District of Columbia, or a federal savings bank organized under federal law, or any subsidiary of a savings bank, an out-of-state savings bank or a federal savings bank;

(5) an association or federal association, as those terms are defined in the Illinois Savings and Loan Act of 1985, or any subsidiary of an association or federal association;

(6) an out-of-state savings and loan association chartered under the laws of a state other than Illinois, a territory of the United States or the District of Columbia, or a federal savings and loan association organized under federal law whose principal business office is located outside of Illinois, or any subsidiary of an out-of-state savings and loan association or federal savings and loan association whose principal business office is located outside of Illinois; or

(7) a credit union as defined in the Illinois Credit Union Act, or any subsidiary of a credit union; or .

(8) any farm credit lending institution, including, but not limited to, a farm credit bank, farm credit association, and production credit association, whether operating under the authority of the federal Farm Credit Administration or any similar federal or State authority, and any subsidiary of that farm credit lending institution.

To the extent that any entity other than a financial institution conducts insurance activities in this State on behalf of or on the premises of the financial institution, such entity shall be subject to this Article for the purposes of those activities.

"Insurance" means all lines of insurance defined and regulated as insurance under this Code, but for the purposes of this Article, "insurance" shall not include the following lines of insurance, provided that this paragraph shall not be deemed to preclude or otherwise limit regulation of the following lines of insurance pursuant to and to the extent otherwise provided by any other insurance law of this State:

(1) credit life, credit accident and health, credit involuntary unemployment, credit casualty and credit property insurance;

(2) extended service contracts and warranty agreements;

(3) insurance obtained by the debtor to provide payment for the difference between the remaining balance on a loan or other extension of credit and the amount of insurance coverage on the collateral securing the loan or other extension of credit;

(4) insurance placed by a financial institution on collateral used in connection with a loan or other extension of credit when a debtor breaches the contractual obligation to provide that insurance;

(5) title insurance regulated by the Title Insurance Act; and

(6) private mortgage insurance and financial guarantee insurance.

(Source: P.A. 90-41, eff. 10-1-97.)

(215 ILCS 5/1407)

Sec. 1407. Rebating and discounting.

(a) No financial institution may offer a rebate on an insurance product in violation of Section 151 of this Code. No discount on or return of any portion of a premium or commission, whether in the form of a rebate or as part of any dividend or other financial consideration offered to a customer of any financial institution, may be offered or paid if that discount or return would provide an incentive for the customer to purchase an insurance policy, to purchase additional insurance coverage, or to obtain credit from or through a particular financial institution.

(b) No financial institution may offer a discount on a loan or extension of credit for the purpose of inducing the customer to purchase insurance required in connection with the loan or extension of credit.

(Source: P.A. 90-41, eff. 10-1-97.)

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