HB2355 98TH GENERAL ASSEMBLY

LRB098 09200 RPM 39339 b

98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB2355

Introduced , by Rep. Frank J. Mautino

SYNOPSIS AS INTRODUCED:

215 ILCS 5/500-10
215 ILCS 5/500-100
215 ILCS 5/500-108 new

Amends the Illinois Insurance Code. Sets forth a definition of "travel insurance". Makes a change in the provision concerning limited lines producer licenses. Provides that notwithstanding any other provision of law, a travel retailer may offer and disseminate travel insurance on behalf of and under a limited lines producer business entity license only if certain conditions are met. Provides that any travel retailer offering or disseminating travel insurance shall make available to prospective purchasers brochures or other written materials that contain certain information and explanations. Prohibits a travel retailer's employee or authorized representative who is not licensed as an insurance producer from certain actions. Provides that a travel retailer whose insurance-related activities, and those of its employees and authorized representatives, are limited to offering and disseminating travel insurance on behalf of and under the direction of a limited lines producer meeting certain conditions is authorized to do so and receive related compensation, upon registration by the limited lines producer. Provides that travel insurance may be provided under an individual policy or under a group or master policy. Provides that as the insurer designee, the limited lines producer is responsible for the acts of the travel retailer and shall use reasonable means to ensure compliance by the travel retailer with the provision concerning travel insurance limited line license for limited lines travel insurance producers.

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 500-10 and 500-100 and by adding Section 500-108 as follows:

(215 ILCS 5/500-10)

(Section scheduled to be repealed on January 1, 2017)

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 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.

"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.

"Travel insurance" means insurance coverage for personal risks incident to planned travel, including, but not limited to (1) interruption or cancellation of a trip or event, (2) loss of baggage or personal effects, (3) damages to accommodations or rental vehicles, or (4) sickness, accident, disability, or death occurring during travel. "Travel insurance" does not include major medical plans that provide comprehensive medical protection for travelers with trips lasting 6 months or longer, including those working overseas as an ex-patriot or as military personnel on deployment.

"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.

"Webinar" means an online educational presentation during which a live and participating instructor and participating viewers, whose attendance is periodically verified throughout the presentation, actively engage in discussion and in the submission and answering of questions.

(Source: P.A. 97-113, eff. 7-14-11.)

(215 ILCS 5/500-100)

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

Sec. 500-100. Limited lines producer license.

(a) An individual who is at least 18 years of age and whom the Director considers to be competent, trustworthy, and of good business reputation may obtain a limited lines producer license for one or more of the following classes:

(1) travel insurance as defined in Section 500-10 of this Article on baggage or limited travel health, accident, or trip cancellation insurance sold in connection with transportation provided by a common carrier;

(2) industrial life insurance, as defined in Section 228 of this Code;

(3) industrial accident and health insurance, as defined in Section 368 of this Code;

(4) insurance issued by a company organized under the Farm Mutual Insurance Company Act of 1986;

(5) legal expense insurance;

(6) enrollment of recipients of public aid or medicare in a health maintenance organization;

(7) a limited health care plan issued by an organization having a certificate of authority under the Limited Health Service Organization Act.

(b) The application for a limited lines producer license must be submitted on a form prescribed by the Director by a designee of the insurance company, health maintenance organization, or limited health service organization appointing the limited insurance representative. The insurance company, health maintenance organization, or limited health service organization must pay the fee required by Section 500-135.

(c) A limited lines producer may represent more than one insurance company, health maintenance organization, or limited health service organization.

(d) An applicant who has met the requirements of this Section shall be issued a perpetual limited lines producer license.

(e) A limited lines producer license shall remain in effect as long as the appointing insurance company pays the respective fee required by Section 500-135 prior to January 1 of each year, unless the license is revoked or suspended pursuant to Section 500-70. Failure of the insurance company to pay the license fee or to submit the required documents shall cause immediate termination of the limited line insurance producer license with respect to which the failure occurs.

(f) A limited lines producer license may be terminated by the insurance company or the licensee.

(g) A person whom the Director considers to be competent, trustworthy, and of good business reputation may be issued a car rental limited line license. A car rental limited line license for a rental company shall remain in effect as long as the car rental limited line licensee pays the respective fee required by Section 500-135 prior to the next fee date unless the car rental license is revoked or suspended pursuant to Section 500-70. Failure of the car rental limited line licensee to pay the license fee or to submit the required documents shall cause immediate suspension of the car rental limited line license. A car rental limited line license for rental companies may be voluntarily terminated by the car rental limited line licensee. The license fee shall not be refunded upon termination of the car rental limited line license by the car rental limited line licensee.

(h) A limited lines producer issued a license pursuant to this Section is not subject to the requirements of Section 500-30.

(i) A limited lines producer license must 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 Director considers proper. A limited line producer license, if applicable, must also contain the name and address of the appointing insurance company.

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

(215 ILCS 5/500-108 new)

Sec. 500-108. Travel insurance limited line license for limited lines travel insurance producers.

(a) As used in this Section:

"Limited lines travel insurance producer" means:

(1) a licensed managing general underwriter;

(2) a licensed managing general agent or third party administrator; or

(3) a licensed insurance producer or limited line producer designated by an insurer as the travel insurance supervising entity as set forth in subsection (g) of this Section.

"Offer and disseminate" means providing general information, including a description of the coverage and price, as well as processing the application, collecting premiums, and performing other non-licensable activities permitted by the State.

"Travel retailer" means a business entity that makes, arranges, or offers travel services and may offer and disseminate travel insurance as a service to its customers on behalf of and under the direction of a limited lines travel insurance producer.

(b) Notwithstanding any other provision of law, a travel retailer may offer and disseminate travel insurance on behalf of and under the direction of a limited lines producer business entity license only if all of the following conditions are met:

(1) The limited lines producer or travel retailer provides to purchasers of travel insurance the following:

(A) a description of the material terms or the actual material terms of the insurance coverage;

(B) a description of the process for filing a claim;

(C) a description of the review or cancellation process for the travel insurance policy; and

(D) the identity and contact information of the insurer and limited lines producer.

(2) At the time of licensure, the limited lines producer establishes and maintains a register on a form prescribed by the Director of each travel retailer that offers travel insurance on the limited lines producer's behalf. The register shall be maintained and updated annually by the limited lines producer and shall include the name, address, and contact information of the travel retailer and an officer or person who directs or controls the travel retailer's operations and the travel retailer's federal tax identification number. The limited lines producer shall submit the register to the Department of Insurance upon reasonable request. The limited lines producer shall also certify that the travel retailer registered complies with Section 1033 of Title 18 of the United States Code.

(3) The limited lines producer designates one of its employees as a licensed individual producer (designated responsible producer or DRP) responsible for the limited lines producer's compliance with the travel insurance laws, rules, and regulations of this State.

(4) The DRP, president, secretary, treasurer, and any other officer or person who directs or controls the limited lines producer's insurance operations comply with the fingerprinting requirements applicable to insurance producers in the resident state of the limited lines producer.

(5) The limited lines producer has paid all applicable insurance producer licensing fees as set forth in applicable State law.

(6) The limited lines producer requires each employee and authorized representative of the travel retailer whose duties include offering and disseminating travel insurance to receive a program of instruction or training, which may be subject to review by the Director. The training material shall, at a minimum, contain instructions on the types of insurance offered, ethical sales practices, and required disclosures to prospective customers.

(c) Any travel retailer offering or disseminating travel insurance shall make available to prospective purchasers brochures or other written materials that:

(1) provide the identity and contact information of the insurer and the limited lines producer;

(2) explain that the purchase of travel insurance is not required in order to purchase any other product or service from the travel retailer; and

(3) explain that an unlicensed travel retailer is permitted to provide general information about the insurance offered by the travel retailer, including a description of the coverage and price, but is not qualified or authorized to answer technical questions about the terms and conditions of the insurance offered by the travel retailer or to evaluate the adequacy of the customer's existing insurance coverage.

(d) A travel retailer's employee or authorized representative who is not licensed as an insurance producer may not:

(1) evaluate or interpret the technical terms, benefits, and conditions of the offered travel insurance coverage;

(2) evaluate or provide advice concerning a prospective purchaser's existing insurance coverage; or

(3) hold himself, herself, or itself out as a licensed insurer, licensed producer, or insurance expert.

(e) A travel retailer whose insurance-related activities, and those of its employees and authorized representatives, are limited to offering and disseminating travel insurance on behalf of and under the direction of a limited lines producer meeting the conditions stated in this Section, is authorized to do so and receive related compensation, upon registration by the limited lines producer as described in item (2) of subsection (b) of this Section.

(f) Travel insurance may be provided under an individual policy or under a group or master policy.

(g) As the insurer designee, the limited lines producer is responsible for the acts of the travel retailer and shall use reasonable means to ensure compliance by the travel retailer with this Section.