HB3796 96TH GENERAL ASSEMBLY

LRB096 08395 RPM 18507 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB3796

Introduced 2/25/2009, by Rep. Karen A. Yarbrough

SYNOPSIS AS INTRODUCED:

215 ILCS 5/13	from Ch. 73, par. 625
215 ILCS 5/43	from Ch. 73, par. 655
215 ILCS 5/66	from Ch. 73, par. 678

Amends the Illinois Insurance Code. In the provisions concerning minimum capital and surplus requirements, increases the minimum capital and surplus requirements for businesses authorized to write certain kinds of insurance policies.

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 13, 43, and 66 as follows:

(215 ILCS 5/13) (from Ch. 73, par. 625)

(Section scheduled to be repealed on January 1, 2017)

Sec. 13. Minimum capital and surplus requirements.

(1) A company organized after December 31, 2009 1985 under this Article must have and at all times maintain a paid-up capital of not less than the minimum capital requirement applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), $1,250,000 $1,000,000; more than one clause, $1,250,000 $1,000,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j) $1,250,000 $1,000,000; more than one clause, $1,250,000 $1,000,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, $1,250,000 $400,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,250,000 $1,000,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $1,250,000 $100,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

Any company organized prior to January 1, 2010 1986 and regulated under this Article must have and at all times maintain paid-up capital of not less than the minimum capital that was required for that particular company at the time it was organized, unless any clause or clauses have been added. If any clause or clauses have been added, then such company must have and at all times maintain paid-up capital of not less than the minimum capital requirement applicable to the class or classes and clause or clauses of Section 4 at the time that the additional clause or clauses are authorized.

(2) A company organized after December 31, 2009 1985 under this Article must have at the time its Certificate of Authority is issued by the Director paid-in surplus of not less than the minimum paid-in surplus requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), $1,250,000 $1,000,000; more than one clause, $1,250,000 $1,000,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,250,000 $1,000,000; more than one clause, $1,250,000 $1,000,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $1,250,000 $600,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,250,000 $1,000,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $1,250,000 $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(3) Any company organized after December 31, 2009 1985 under this Article must have and at all times maintain, in addition to the minimum capital required by paragraph (1) of this Section, minimum surplus requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), $1,000,000 $500,000; more than one clause, $1,000,000 $500,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,000,000 $500,000; more than one clause, $1,000,000 $500,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $1,000,000 $300,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,000,000 $500,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $1,000,000 $50,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(4) Any company organized prior to January 1, 2010 1986 and regulated under this Article, in addition to the minimum capital which is required by paragraph (1) of this Section, must have and at all times maintain until December 31, 2010 1986, minimum surplus of $500,000 $300,000; and on December 31, 2010 1986 and thereafter such company must have and maintain at all times, surplus of no less than the following amounts:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), $1,000,000 $500,000; more than one clause, $1,000,000 $500,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,000,000 $500,000; more than one clause, $1,000,000 $500,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $1,000,000 $300,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,000,000 $500,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $1,000,000 $50,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(5) Any company organized prior to January 1, 2010 1986 and regulated under this Article must have on December 31, 2012 1990 and thereafter maintain until December 31, 2014 1995 the greater of (a) minimum capital required by paragraph (1) of this Section plus the surplus required to be maintained after December 31, 2010 1986 by paragraph (4) of this Section; or (b) combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), $1,750,000 $1,200,000; more than one clause, $1,750,000 $1,200,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $1,750,000 $1,200,000; more than one clause, $1,750,000 $1,200,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $1,750,000 $600,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $1,750,000 $1,200,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $1,750,000 $100,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(6) Any company organized prior to January 1, 2010 1986 and regulated under this Article must have on December 31, 2014 1995 and thereafter maintain at all times combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), $2,250,000 $1,500,000; more than one clause, $2,250,000 $1,500,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $2,250,000 $1,500,000; more than one clause, $2,250,000 $1,500,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $2,250,000 $700,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $2,250,000 $1,500,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $2,250,000 $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(7) Any company organized prior to January 1, 2010 1986 and regulated under this Article experiencing a change in control, as control is defined in Section 131.1(b) of this Code, must have simultaneously with the change in control and thereafter maintain at all times combined capital and surplus of not less than the minimum requirement applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), $2,250,000 $1,500,000; more than one clause, $2,250,000 $1,500,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), $2,250,000 $1,500,000; more than one clause, $2,250,000 $1,500,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (l), or Class 3, any or all clauses or any combination thereof, $2,250,000 $700,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, $2,250,000 $1,500,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $2,250,000 $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

Notwithstanding, the foregoing provisions of this paragraph (7), any company which experiences a change in control, as control is defined in Section 131.1(b) of this Code, by reason of any laws of descent, distribution or probate, shall be exempt from the requirements of this paragraph (7) for a period of 2 years following the date of death or incompetency giving rise to the change in control.

(8) Any company organized prior to September 10, 1971 or converted from a mutual company to a stock company between July 1, 1983 and June 30, 1985, which had less than $1,000,000 capital and surplus on January 1, 1986, and whose authority is limited to Class 2 of Section 4 of this Code and which is regulated under this Article, shall be exempt from the requirements of paragraphs (5) and (6) of this Section.

(9) The Director shall take action under Section 34 of this Code against any company which fails to maintain the minimum surplus required by this Section. The words "minimum surplus" mean the net total of the following accounts, where applicable, as they appear in the annual statement of a stock company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners: paid-in surplus; contributed surplus; unassigned or earned surplus; and special surplus.

(Source: P.A. 87-315.)

(215 ILCS 5/43) (from Ch. 73, par. 655)

(Section scheduled to be repealed on January 1, 2017)

Sec. 43. Minimum surplus requirements.

(1) No company organized after December 31, 1985 under this Article may receive a certificate of authority from the Director to issue policies or contracts of insurance until it has complied with the requirements in respect of original surplus applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance it is organized to write, as set forth in the following table:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), a surplus of at least $2,500,000 $2,000,000; more than one clause, a surplus of at least $2,500,000 $2,000,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $2,500,000 $2,000,000; more than one clause, a surplus of at least $2,500,000 $2,000,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $2,500,000 $1,000,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, a surplus of at least $2,500,000 $2,000,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $2,500,000 $250,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(2) Every company subject to this Article and organized on or after June 28, 1965 must have and at all times maintain a minimum surplus equal to 2/3 of the original surplus required for that particular company at the time it was organized. Any such company organized prior to June 28, 1965 must have and at all times maintain a minimum surplus equal to that which would have been required for that particular company at the time it was issued a Certificate of Authority. Any company which has added any clause or clauses must have and at all times maintain minimum surplus not less than the minimum surplus requirement applicable to the class or classes and clause or clauses of Section 4 at the time that the additional clause or clauses are authorized. Any company organized prior to October 1, 1972 must have and at all times maintain, in addition to the minimum surplus required to be maintained by that particular company, additional minimum surplus of not less than $300,000.

(3) Any company organized prior to January 1, 2010 1986 and regulated under this Article, in addition to the minimum surplus which is required by paragraph (2) of this Section must have by December 31, 2010 1986 and at all times maintain until December 31, 2012 1990 additional minimum surplus of $200,000.

(4) Provided, however, mutual companies organized prior to October 1, 1972 and authorized to engage only in insurance business as specified in Class 2(f) of Section 4 on an assessable basis shall not be required to establish an additional minimum surplus as provided herein.

(5) Subsections (2) and (3) shall be applicable until December 31, 2012 1990 for all companies organized prior to January 1, 2010 1986; thereafter, such companies must have and maintain surplus as required by subsections (7) and (8).

(6) Every company subject to this Article and organized after December 31, 2009 1985 under this Article must maintain minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), a surplus of at least $2,250,000 $1,500,000; more than one clause, a surplus of at least $2,250,000 $1,500,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $2,250,000 $1,500,000; more than one clause, a surplus of at least $2,250,000 $1,500,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $2,250,000 $700,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, a surplus of at least $2,250,000 $1,500,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $2,250,000 $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(7) Any company organized prior to January 1, 2010 1986, regulated under this Article must have by December 31, 2012 1990, and thereafter maintain until December 31, 2014 1995, surplus not less than the minimum applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), a surplus of at least $1,750,000 $1,200,000; more than one clause, a surplus of at least $1,750,000 $1,200,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $1,750,000 $1,200,000; more than one clause, a surplus of at least $1,750,000 $1,200,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $1,750,000 $600,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, a surplus of at least $1,750,000 $1,200,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $1,750,000 $100,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(8) Any company organized prior to January 1, 2010 1986, regulated under this Article must have by December 31, 2014 1995, and thereafter maintain at all times, surplus not less than the minimum applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Life, Accident, Health and Legal Expense

(a) Class 1, Clauses (a), (b) or (c), a surplus of at least $2,250,000 $1,500,000; more than one clause, a surplus of at least $2,250,000 $1,500,000.

Casualty, Fidelity and Surety

(b) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $2,250,000 $1,500,000; more than one clause, a surplus of at least $2,250,000 $1,500,000.

Fire, Marine and Legal Expense

(c) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $2,250,000 $700,000.

Multiple Line

(d) Class 2, any or all clauses other than those specified in (c) above, and Class 3, any or all clauses, a surplus of at least $2,250,000 $1,500,000.

Glass and Livestock and Domestic Animals

(e) Class 2, Clause (f) only or (k) only, $2,250,000 $150,000; provided any company to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(9) The Director shall take action under Section 60 of this Code against any company which fails to maintain the minimum surplus required by this section. The words "minimum surplus" mean the "surplus as regards policyholders", as it appears on the annual statement of a mutual company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners.

(Source: P.A. 84-934.)

(215 ILCS 5/66) (from Ch. 73, par. 678)

(Section scheduled to be repealed on January 1, 2017)

Sec. 66. Minimum surplus requirements.

(1) No reciprocal may after December 31, 2009 1985 receive a certificate of authority from the Director to exchange contracts under this Article in the name of the subscribers until it has complied with the requirements in respect of original surplus applicable to the class or classes and clause or clauses of section 4 describing the kind or kinds of insurance it seeks to exchange, as set forth in the following table:

Casualty, Fidelity and Surety

(a) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $2,500,000 $2,000,000; more than one clause, a surplus of at least $2,500,000 $2,000,000.

Fire and Marine

(b) Class 2, Clauses (e), (f), (k) or (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $2,500,000 $1,000,000.

Multiple Line

(c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $2,500,000 $2,000,000.

Glass and Livestock and Domestic Animals

(d) Class 2, Clause (f) only or (k) only $2,500,000 $250,000; provided any reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in any amount exceeding $5,000.

(2) Every reciprocal subject to this Article issued a certificate of authority on or after June 28, 1965 must have and at all times maintain a minimum surplus in an amount equal to 2/3 of the original surplus required for that particular company at the time it was organized. Any such reciprocal organized prior to June 28, 1965 must have and at all times maintain admitted assets in excess of all liabilities in an amount not less than the minimum amount of advance cash deposits or surplus which was required for that particular reciprocal at the time it was issued a certificate of authority. Any reciprocal which has added any clause or clauses must have and at all times maintain minimum surplus not less than the minimum surplus requirement applicable to the class or classes and clause or clauses of section 4 at the time that the additional clause or clauses are authorized. Any reciprocal organized prior to October 1, 1972 must have and at all times maintain, in addition to the minimum surplus required to be maintained by that particular reciprocal, additional minimum surplus of not less than $300,000.

(3) Any company organized prior to January 1, 2010 1986 and regulated under this Article, in addition to the minimum surplus which is required by paragraph (2) of this Section must have by December 31, 2010 1986 and at all times maintain until December 31, 2012 1990 additional minimum surplus of $200,000.

(4) Subsections (2) and (3) shall be applicable until December 31, 1990 for all reciprocals organized prior to January 1, 1986, thereafter, such reciprocals must have and maintain surplus as required by subsections (6) and (7).

(5) Every reciprocal subject to this Article and organized after December 31, 2009 1985 must have and maintain at all times minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Casualty, Fidelity and Surety

(a) Class 2, Clauses (a), (b), (c), (d), (g), (h) or (i), a surplus of at least $2,250,000 $1,500,000; more than one clause, a surplus of at least $2,250,000 $1,500,000.

Fire, Marine and Legal Expense

(b) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $2,250,000 $700,000.

Multiple Line

(c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $2,250,000 $1,500,000.

Glass and Livestock and Domestic Animals

(d) Class 2, Clause (f) only or (k) only, $2,250,000 $150,000; provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(6) Any reciprocal subject to this Article and organized prior to January 1, 2010 1986 must have by December 31, 2012 1990, and thereafter maintain until December 31, 2014 1995, minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Casualty, Fidelity and Surety

(a) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $1,750,000 $1,200,000; more than one clause, a surplus of at least $1,750,000 $1,200,000.

Fire, Marine and Legal Expense

(b) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $1,750,000 $600,000.

Multiple Line

(c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $1,750,000 $1,200,000.

Glass and Livestock and Domestic Animals

(d) Class 2, Clause (f) only or (k) only, $1,750,000 $100,000; provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in an amount exceeding $5,000.

(7) Any reciprocal subject to this Article and organized prior to January 1, 2010 1986 must have by December 31, 2014 1995 and thereafter maintain at all times minimum surplus applicable to the class or classes and clause or clauses of Section 4 describing the kind or kinds of insurance which it is authorized to write, as follows:

Casualty, Fidelity and Surety

(a) Class 2, Clauses (a), (b), (c), (d), (g), (h), (i) or (j), a surplus of at least $2,250,000 $1,500,000; more than one clause, a surplus of at least $2,250,000 $1,500,000.

Fire, Marine and Legal Expense

(b) Class 2, Clauses (e), (f), (k), (1) or Class 3, any or all clauses or any combination thereof, a surplus of at least $2,250,000 $700,000.

Multiple Line

(c) Class 2, any or all clauses other than those specified in (b) above, and Class 3, any or all clauses, a surplus of at least $2,250,000 $1,500,000.

Glass and Livestock and Domestic Animals

(d) Class 2, Clause (f) only or (k) only, $2,250,000 $150,000; provided no reciprocal to which this subparagraph is applicable shall not expose itself to any loss on any one risk in the amount exceeding $5,000.

(8) The Director shall take action under Section 83 of this Code against any reciprocal which fails to maintain the minimum surplus required by this section. The words "minimum surplus" mean the "surplus as regards policyholders" as it appears on the annual statement of a reciprocal company on the usual and proper annual statement form prescribed by the National Association of Insurance Commissioners.

(Source: P.A. 85-293.)