100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB3244

 

Introduced 2/15/2018, by Sen. John G. Mulroe

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/531.02  from Ch. 73, par. 1065.80-2
215 ILCS 5/531.03  from Ch. 73, par. 1065.80-3
215 ILCS 5/531.05  from Ch. 73, par. 1065.80-5
215 ILCS 5/531.06  from Ch. 73, par. 1065.80-6
215 ILCS 5/531.07  from Ch. 73, par. 1065.80-7
215 ILCS 5/531.08  from Ch. 73, par. 1065.80-8
215 ILCS 5/531.09  from Ch. 73, par. 1065.80-9
215 ILCS 5/531.11  from Ch. 73, par. 1065.80-11
215 ILCS 5/531.12  from Ch. 73, par. 1065.80-12
215 ILCS 5/531.13  from Ch. 73, par. 1065.80-13
215 ILCS 5/531.14  from Ch. 73, par. 1065.80-14
215 ILCS 5/531.19  from Ch. 73, par. 1065.80-19
215 ILCS 5/531.20 new
215 ILCS 125/Art. VI rep.

    Amends the of the Illinois Insurance Code. Merges the Health Maintenance Organization Guaranty Association Article of the Health Maintenance Organization Act into the Illinois Life and Health Insurance Guaranty Association Law. Makes conforming changes. Provides that the rights, powers, privileges, assets, property, duties, debts, obligations, and liabilities of each association prior to merger shall remain with the members of the respective association. Provides the rights, powers, privileges, assets, property, debts, obligations, and liabilities of each association after the merger. Repeals the Health Maintenance Organization Guaranty Association Article of the Health Maintenance Organization Act. Makes other changes. Effective immediately.


LRB100 18858 SMS 34100 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3244LRB100 18858 SMS 34100 b

1    AN ACT concerning regulation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Insurance Code is amended by
5changing Sections 531.02, 531.03, 531.05, 531.06, 531.07,
6531.08, 531.09, 531.11, 531.12, 531.13, 531.14, and 531.19 and
7by adding Section 531.20 as follows:
 
8    (215 ILCS 5/531.02)  (from Ch. 73, par. 1065.80-2)
9    Sec. 531.02. Purpose. The purpose of this Article is to
10protect, subject to certain limitations, the persons specified
11in paragraph (1) of Section 531.03 against failure in the
12performance of contractual obligations, under life, or health
13insurance policies, and annuity policies, plans, or contracts
14and health or medical care service contracts specified in
15paragraph (2) of Section 531.03, due to the impairment or
16insolvency of the member insurer issuing such policies, plans,
17or contracts. To provide this protection, (1) an association of
18member insurers is created to enable the guaranty of payment of
19benefits and of continuation of coverages, (2) members of the
20Association are subject to assessment to provide funds to carry
21out the purpose of this Article, and (3) the Association is
22authorized to assist the Director, in the prescribed manner, in
23the detection and prevention of member insurer impairments or

 

 

SB3244- 2 -LRB100 18858 SMS 34100 b

1insolvencies.
2(Source: P.A. 86-753.)
 
3    (215 ILCS 5/531.03)  (from Ch. 73, par. 1065.80-3)
4    Sec. 531.03. Coverage and limitations.
5    (1) This Article shall provide coverage for the policies
6and contracts specified in subsection paragraph (2) of this
7Section:
8        (a) to persons who, regardless of where they reside
9    (except for non-resident certificate holders under group
10    policies or contracts), are the beneficiaries, assignees
11    or payees, including health care providers rendering
12    services covered under a health insurance policy or
13    certificate, of the persons covered under paragraph (b) of
14    this subsection subparagraph (1)(b), and
15        (b) to persons who are owners of or certificate holders
16    or enrollees under the policies or contracts (other than
17    unallocated annuity contracts and structured settlement
18    annuities) and in each case who:
19            (i) are residents; or
20            (ii) are not residents, but only under all of the
21        following conditions:
22                (A) the member insurer that issued the
23            policies or contracts is domiciled in this State;
24                (B) the states in which the persons reside have
25            associations similar to the Association created by

 

 

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1            this Article;
2                (C) the persons are not eligible for coverage
3            by an association in any other state due to the
4            fact that the insurer or health maintenance
5            organization was not licensed in that state at the
6            time specified in that state's guaranty
7            association law.
8        (c) For unallocated annuity contracts specified in
9    subsection (2), paragraphs (a) and (b) of this subsection
10    (1) shall not apply and this Article shall (except as
11    provided in paragraphs (e) and (f) of this subsection)
12    provide coverage to:
13            (i) persons who are the owners of the unallocated
14        annuity contracts if the contracts are issued to or in
15        connection with a specific benefit plan whose plan
16        sponsor has its principal place of business in this
17        State; and
18            (ii) persons who are owners of unallocated annuity
19        contracts issued to or in connection with government
20        lotteries if the owners are residents.
21        (d) For structured settlement annuities specified in
22    subsection (2), paragraphs (a) and (b) of this subsection
23    (1) shall not apply and this Article shall (except as
24    provided in paragraphs (e) and (f) of this subsection)
25    provide coverage to a person who is a payee under a
26    structured settlement annuity (or beneficiary of a payee if

 

 

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1    the payee is deceased), if the payee:
2            (i) is a resident, regardless of where the contract
3        owner resides; or
4            (ii) is not a resident, but only under both of the
5        following conditions:
6                (A) with regard to residency:
7                    (I) the contract owner of the structured
8                settlement annuity is a resident; or
9                    (II) the contract owner of the structured
10                settlement annuity is not a resident but the
11                insurer that issued the structured settlement
12                annuity is domiciled in this State and the
13                state in which the contract owner resides has
14                an association similar to the Association
15                created by this Article; and
16                (B) neither the payee or beneficiary nor the
17            contract owner is eligible for coverage by the
18            association of the state in which the payee or
19            contract owner resides.
20        (e) This Article shall not provide coverage to:
21            (i) a person who is a payee or beneficiary of a
22        contract owner resident of this State if the payee or
23        beneficiary is afforded any coverage by the
24        association of another state; or
25            (ii) a person covered under paragraph (c) of this
26        subsection (1), if any coverage is provided by the

 

 

SB3244- 5 -LRB100 18858 SMS 34100 b

1        association of another state to that person.
2        (f) This Article is intended to provide coverage to a
3    person who is a resident of this State and, in special
4    circumstances, to a nonresident. In order to avoid
5    duplicate coverage, if a person who would otherwise receive
6    coverage under this Article is provided coverage under the
7    laws of any other state, then the person shall not be
8    provided coverage under this Article. In determining the
9    application of the provisions of this paragraph in
10    situations where a person could be covered by the
11    association of more than one state, whether as an owner,
12    payee, enrollee, beneficiary, or assignee, this Article
13    shall be construed in conjunction with other state laws to
14    result in coverage by only one association.
15    (2)(a) This Article shall provide coverage to the persons
16specified in subsection paragraph (1) of this Section for
17policies or contracts of direct, (i) nongroup life insurance,
18health insurance (that, for the purposes of this Article,
19includes health maintenance organization subscriber contracts
20and certificates), annuities annuity and supplemental
21policies, or contracts to any of these, (ii) for certificates
22under direct group policies or contracts, (iii) for unallocated
23annuity contracts and (iv) for contracts to furnish health care
24services and subscription certificates for medical or health
25care services issued by persons licensed to transact insurance
26business in this State under this the Illinois Insurance Code.

 

 

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1Annuity contracts and certificates under group annuity
2contracts include but are not limited to guaranteed investment
3contracts, deposit administration contracts, unallocated
4funding agreements, allocated funding agreements, structured
5settlement agreements, lottery contracts and any immediate or
6deferred annuity contracts.
7    (b) Except as otherwise provided in paragraph (c) of this
8subsection, this This Article shall not provide coverage for:
9        (i) that portion of a policy or contract not guaranteed
10    by the member insurer, or under which the risk is borne by
11    the policy or contract owner;
12        (ii) any such policy or contract or part thereof
13    assumed by the impaired or insolvent insurer under a
14    contract of reinsurance, other than reinsurance for which
15    assumption certificates have been issued;
16        (iii) any portion of a policy or contract to the extent
17    that the rate of interest on which it is based or the
18    interest rate, crediting rate, or similar factor is
19    determined by use of an index or other external reference
20    stated in the policy or contract employed in calculating
21    returns or changes in value:
22            (A) averaged over the period of 4 years prior to
23        the date on which the member insurer becomes an
24        impaired or insolvent insurer under this Article,
25        whichever is earlier, exceeds the rate of interest
26        determined by subtracting 2 percentage points from

 

 

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1        Moody's Corporate Bond Yield Average averaged for that
2        same 4-year period or for such lesser period if the
3        policy or contract was issued less than 4 years before
4        the member insurer becomes an impaired or insolvent
5        insurer under this Article, whichever is earlier; and
6            (B) on and after the date on which the member
7        insurer becomes an impaired or insolvent insurer under
8        this Article, whichever is earlier, exceeds the rate of
9        interest determined by subtracting 3 percentage points
10        from Moody's Corporate Bond Yield Average as most
11        recently available;
12        (iv) any unallocated annuity contract issued to or in
13    connection with a benefit plan protected under the federal
14    Pension Benefit Guaranty Corporation, regardless of
15    whether the federal Pension Benefit Guaranty Corporation
16    has yet become liable to make any payments with respect to
17    the benefit plan;
18        (v) any portion of any unallocated annuity contract
19    which is not issued to or in connection with a specific
20    employee, union or association of natural persons benefit
21    plan or a government lottery;
22        (vi) an obligation that does not arise under the
23    express written terms of the policy or contract issued by
24    the member insurer to the enrollee, certificate holder,
25    contract owner, or policy owner, including without
26    limitation:

 

 

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1            (A) a claim based on marketing materials;
2            (B) a claim based on side letters, riders, or other
3        documents that were issued by the member insurer
4        without meeting applicable policy or contract form
5        filing or approval requirements;
6            (C) a misrepresentation of or regarding policy or
7        contract benefits;
8            (D) an extra-contractual claim; or
9            (E) a claim for penalties or consequential or
10        incidental damages;
11        (vii) any stop-loss insurance, as defined in clause (b)
12    of Class 1 or clause (a) of Class 2 of Section 4, and
13    further defined in subsection (d) of Section 352;
14        (viii) any policy or contract providing any hospital,
15    medical, prescription drug, or other health care benefits
16    pursuant to Part C or Part D of Subchapter XVIII, Chapter 7
17    of Title 42 of the United States Code (commonly known as
18    Medicare Part C & D), Subchapter XIX, Chapter 7 of Title 42
19    of the United States Code (commonly known as Medicaid), or
20    any regulations issued pursuant thereto;
21        (ix) any portion of a policy or contract to the extent
22    that the assessments required by Section 531.09 of this
23    Code with respect to the policy or contract are preempted
24    or otherwise not permitted by federal or State law;
25        (x) any portion of a policy or contract issued to a
26    plan or program of an employer, association, or other

 

 

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1    person to provide life, health, or annuity benefits to its
2    employees, members, or others to the extent that the plan
3    or program is self-funded or uninsured, including, but not
4    limited to, benefits payable by an employer, association,
5    or other person under:
6            (A) a multiple employer welfare arrangement as
7        defined in 29 U.S.C. Section 1002 1144;
8            (B) a minimum premium group insurance plan;
9            (C) a stop-loss group insurance plan; or
10            (D) an administrative services only contract;
11        (xi) any portion of a policy or contract to the extent
12    that it provides for:
13            (A) dividends or experience rating credits;
14            (B) voting rights; or
15            (C) payment of any fees or allowances to any
16        person, including the policy or contract owner, in
17        connection with the service to or administration of the
18        policy or contract;
19        (xii) any policy or contract issued in this State by a
20    member insurer at a time when it was not licensed or did
21    not have a certificate of authority to issue the policy or
22    contract in this State;
23        (xiii) any contractual agreement that establishes the
24    member insurer's obligations to provide a book value
25    accounting guaranty for defined contribution benefit plan
26    participants by reference to a portfolio of assets that is

 

 

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1    owned by the benefit plan or its trustee, which in each
2    case is not an affiliate of the member insurer;
3        (xiv) any portion of a policy or contract to the extent
4    that it provides for interest or other changes in value to
5    be determined by the use of an index or other external
6    reference stated in the policy or contract, but which have
7    not been credited to the policy or contract, or as to which
8    the policy or contract owner's rights are subject to
9    forfeiture, as of the date the member insurer becomes an
10    impaired or insolvent insurer under this Code, whichever is
11    earlier. If a policy's or contract's interest or changes in
12    value are credited less frequently than annually, then for
13    purposes of determining the values that have been credited
14    and are not subject to forfeiture under this Section, the
15    interest or change in value determined by using the
16    procedures defined in the policy or contract will be
17    credited as if the contractual date of crediting interest
18    or changing values was the date of impairment or
19    insolvency, whichever is earlier, and will not be subject
20    to forfeiture; or
21        (xv) that portion or part of a variable life insurance
22    or variable annuity contract not guaranteed by a member an
23    insurer.
24    (c) The exclusion from coverage referenced in subdivision
25(iii) of paragraph (b) of this subsection shall not apply to
26any portion of a policy or contract, including a rider, that

 

 

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1provides long-term care or other health insurance benefits.
2    (3) The benefits for which the Association may become
3liable shall in no event exceed the lesser of:
4        (a) the contractual obligations for which the member
5    insurer is liable or would have been liable if it were not
6    an impaired or insolvent insurer, or
7        (b)(i) with respect to any one life, regardless of the
8    number of policies or contracts:
9            (A) $300,000 in life insurance death benefits, but
10        not more than $100,000 in net cash surrender and net
11        cash withdrawal values for life insurance;
12            (B) for in health insurance benefits:
13                (I) $100,000 for coverages not defined as
14            disability income insurance or health benefit
15            plans basic hospital, medical, and surgical
16            insurance or major medical insurance or long-term
17            care insurance, including any net cash surrender
18            and net cash withdrawal values;
19                (II) $300,000 for disability income insurance
20            and $300,000 for long-term care insurance as
21            defined in Section 351A-1 of this Code; and
22                (III) $500,000 for health benefit plans basic
23            hospital medical and surgical insurance or major
24            medical insurance;
25            (C) $250,000 in the present value of annuity
26        benefits, including net cash surrender and net cash

 

 

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1        withdrawal values;
2        (ii) with respect to each individual participating in a
3    governmental retirement benefit plan established under
4    Section Sections 401, 403(b), or 457 of the U.S. Internal
5    Revenue Code covered by an unallocated annuity contract or
6    the beneficiaries of each such individual if deceased, in
7    the aggregate, $250,000 in present value annuity benefits,
8    including net cash surrender and net cash withdrawal
9    values;
10        (iii) with respect to each payee of a structured
11    settlement annuity or beneficiary or beneficiaries of the
12    payee if deceased, $250,000 in present value annuity
13    benefits, in the aggregate, including net cash surrender
14    and net cash withdrawal values, if any; or
15        (iv) with respect to either (1) one contract owner
16    provided coverage under subparagraph (ii) of paragraph (c)
17    of subsection (1) of this Section or (2) one plan sponsor
18    whose plans own directly or in trust one or more
19    unallocated annuity contracts not included in subparagraph
20    (ii) of paragraph (b) of this subsection, $5,000,000 in
21    benefits, irrespective of the number of contracts with
22    respect to the contract owner or plan sponsor. However, in
23    the case where one or more unallocated annuity contracts
24    are covered contracts under this Article and are owned by a
25    trust or other entity for the benefit of 2 or more plan
26    sponsors, coverage shall be afforded by the Association if

 

 

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1    the largest interest in the trust or entity owning the
2    contract or contracts is held by a plan sponsor whose
3    principal place of business is in this State. In no event
4    shall the Association be obligated to cover more than
5    $5,000,000 in benefits with respect to all these
6    unallocated contracts.
7    In no event shall the Association be obligated to cover
8more than (1) an aggregate of $300,000 in benefits with respect
9to any one life under subparagraphs (i), (ii), and (iii) of
10this paragraph (b) except with respect to benefits for health
11benefit plans basic hospital, medical, and surgical insurance
12and major medical insurance under item (B) of subparagraph (i)
13of this paragraph (b), in which case the aggregate liability of
14the Association shall not exceed $500,000 with respect to any
15one individual or (2) with respect to one owner of multiple
16nongroup policies of life insurance, whether the policy or
17contract owner is an individual, firm, corporation, or other
18person and whether the persons insured are officers, managers,
19employees, or other persons, $5,000,000 in benefits,
20regardless of the number of policies and contracts held by the
21owner.
22    The limitations set forth in this subsection are
23limitations on the benefits for which the Association is
24obligated before taking into account either its subrogation and
25assignment rights or the extent to which those benefits could
26be provided out of the assets of the impaired or insolvent

 

 

SB3244- 14 -LRB100 18858 SMS 34100 b

1insurer attributable to covered policies. The costs of the
2Association's obligations under this Article may be met by the
3use of assets attributable to covered policies or reimbursed to
4the Association pursuant to its subrogation and assignment
5rights.
6    For purposes of this Article, benefits provided by a
7long-term care rider to a life insurance policy or annuity
8contract shall be considered the same type of benefits as the
9base life insurance policy or annuity contract to which it
10relates.
11    (4) In performing its obligations to provide coverage under
12Section 531.08 of this Code, the Association shall not be
13required to guarantee, assume, reinsure, reissue, or perform or
14cause to be guaranteed, assumed, reinsured, reissued, or
15performed the contractual obligations of the insolvent or
16impaired insurer under a covered policy or contract that do not
17materially affect the economic values or economic benefits of
18the covered policy or contract.
19(Source: P.A. 96-1450, eff. 8-20-10; revised 10-5-17.)
 
20    (215 ILCS 5/531.05)  (from Ch. 73, par. 1065.80-5)
21    Sec. 531.05. Definitions. As used in this Act:
22    "Account" means either of the 2 3 accounts created under
23Section 531.06.
24    "Association" means the Illinois Life and Health Insurance
25Guaranty Association created under Section 531.06.

 

 

SB3244- 15 -LRB100 18858 SMS 34100 b

1    "Authorized assessment" or the term "authorized" when used
2in the context of assessments means a resolution by the Board
3of Directors has been passed whereby an assessment shall be
4called immediately or in the future from member insurers for a
5specified amount. An assessment is authorized when the
6resolution is passed.
7    "Benefit plan" means a specific employee, union, or
8association of natural persons benefit plan.
9    "Called assessment" or the term "called" when used in the
10context of assessments means that a notice has been issued by
11the Association to member insurers requiring that an authorized
12assessment be paid within the time frame set forth within the
13notice. An authorized assessment becomes a called assessment
14when notice is mailed by the Association to member insurers.
15    "Director" means the Director of Insurance of this State.
16    "Contractual obligation" means any obligation under a
17policy or contract or certificate under a group policy or
18contract, or portion thereof for which coverage is provided
19under Section 531.03.
20    "Covered person" means any person who is entitled to the
21protection of the Association as described in Section 531.02.
22    "Covered contract" or "covered policy" means any policy or
23contract within the scope of this Article under Section 531.03.
24    "Extra-contractual claims" shall include, but are not
25limited to, claims relating to bad faith in the payment of
26claims, punitive or exemplary damages, or attorneys' fees and

 

 

SB3244- 16 -LRB100 18858 SMS 34100 b

1costs.
2    "Health benefit plan" means any hospital or medical expense
3policy or certificate or health maintenance organization
4subscriber contract or any other similar health contract.
5"Health benefit plan" does not include:
6        (1) accident only insurance;
7        (2) credit insurance;
8        (3) dental only insurance;
9        (4) vision only insurance;
10        (5) Medicare supplement insurance;
11        (6) benefits for long-term care, home health care,
12    community-based care, or any combination thereof;
13        (7) disability income insurance;
14        (8) coverage for on-site medical clinics; or
15        (9) specified disease, hospital confinement indemnity,
16    or limited benefit health insurance if the types of
17    coverage do not provide coordination of benefits and are
18    provided under separate policies or certificates.
19    "Impaired insurer" means (A) a member insurer which, after
20the effective date of this amendatory Act of the 96th General
21Assembly, is not an insolvent insurer, and is placed under an
22order of rehabilitation or conservation by a court of competent
23jurisdiction or (B) a member insurer deemed by the Director
24after the effective date of this amendatory Act of the 96th
25General Assembly to be potentially unable to fulfill its
26contractual obligations and not an insolvent insurer.

 

 

SB3244- 17 -LRB100 18858 SMS 34100 b

1    "Insolvent insurer" means a member insurer that, after the
2effective date of this amendatory Act of the 96th General
3Assembly, is placed under a final order of liquidation by a
4court of competent jurisdiction with a finding of insolvency.
5    "Member insurer" means an insurer or health maintenance
6organization licensed or holding a certificate of authority to
7transact in this State any kind of insurance or health
8maintenance organization business for which coverage is
9provided under Section 531.03 of this Code and includes an
10insurer or health maintenance organization whose license or
11certificate of authority in this State may have been suspended,
12revoked, not renewed, or voluntarily withdrawn or whose
13certificate of authority may have been suspended pursuant to
14Section 119 of this Code, but does not include:
15        (1) a hospital or medical service organization,
16    whether profit or nonprofit;
17        (2) (blank); a health maintenance organization;
18        (3) any burial society organized under Article XIX of
19    this Code, any fraternal benefit society organized under
20    Article XVII of this Code, any mutual benefit association
21    organized under Article XVIII of this Code, and any foreign
22    fraternal benefit society licensed under Article VI of this
23    Code or a fraternal benefit society;
24        (4) a mandatory State pooling plan;
25        (5) a mutual assessment company or other person that
26    operates on an assessment basis;

 

 

SB3244- 18 -LRB100 18858 SMS 34100 b

1        (6) an insurance exchange;
2        (7) an organization that is permitted to issue
3    charitable gift annuities pursuant to Section 121-2.10 of
4    this Code;
5        (8) any health services plan corporation established
6    pursuant to the Voluntary Health Services Plans Act;
7        (9) any dental service plan corporation established
8    pursuant to the Dental Service Plan Act; or
9        (10) an entity similar to any of the above.
10    "Moody's Corporate Bond Yield Average" means the Monthly
11Average Corporates as published by Moody's Investors Service,
12Inc., or any successor thereto.
13    "Owner" of a policy or contract and "policyholder", "policy
14owner", and "contract owner" mean the person who is identified
15as the legal owner under the terms of the policy or contract or
16who is otherwise vested with legal title to the policy or
17contract through a valid assignment completed in accordance
18with the terms of the policy or contract and properly recorded
19as the owner on the books of the member insurer. The terms
20owner, contract owner, policyholder, and policy owner do not
21include persons with a mere beneficial interest in a policy or
22contract.
23    "Person" means an individual, corporation, limited
24liability company, partnership, association, governmental body
25or entity, or voluntary organization.
26    "Plan sponsor" means:

 

 

SB3244- 19 -LRB100 18858 SMS 34100 b

1        (1) the employer in the case of a benefit plan
2    established or maintained by a single employer;
3        (2) the employee organization in the case of a benefit
4    plan established or maintained by an employee
5    organization; or
6        (3) in a case of a benefit plan established or
7    maintained by 2 or more employers or jointly by one or more
8    employers and one or more employee organizations, the
9    association, committee, joint board of trustees, or other
10    similar group of representatives of the parties who
11    establish or maintain the benefit plan.
12    "Premiums" mean amounts or considerations, by whatever
13name called, received on covered policies or contracts less
14returned premiums, considerations, and deposits and less
15dividends and experience credits.
16    "Premiums" does not include:
17        (A) amounts or considerations received for policies or
18    contracts or for the portions of policies or contracts for
19    which coverage is not provided under Section 531.03 of this
20    Code except that assessable premium shall not be reduced on
21    account of the provisions of subparagraph (iii) of
22    paragraph (b) of subsection (2) (a) of Section 531.03 of
23    this Code relating to interest limitations and the
24    provisions of paragraph (b) of subsection (3) of Section
25    531.03 relating to limitations with respect to one
26    individual, one participant, and one policy owner or

 

 

SB3244- 20 -LRB100 18858 SMS 34100 b

1    contract owner;
2        (B) premiums in excess of $5,000,000 on an unallocated
3    annuity contract not issued under a governmental
4    retirement benefit plan (or its trustee) established under
5    Section 401, 403(b) or 457 of the United States Internal
6    Revenue Code; or
7        (C) with respect to multiple nongroup policies of life
8    insurance owned by one owner, whether the policy owner or
9    contract owner is an individual, firm, corporation, or
10    other person, and whether the persons insured are officers,
11    managers, employees, or other persons, premiums in excess
12    of $5,000,000 with respect to these policies or contracts,
13    regardless of the number of policies or contracts held by
14    the owner.
15    "Principal place of business" of a plan sponsor or a person
16other than a natural person means the single state in which the
17natural persons who establish policy for the direction,
18control, and coordination of the operations of the entity as a
19whole primarily exercise that function, determined by the
20Association in its reasonable judgment by considering the
21following factors:
22        (A) the state in which the primary executive and
23    administrative headquarters of the entity is located;
24        (B) the state in which the principal office of the
25    chief executive officer of the entity is located;
26        (C) the state in which the board of directors (or

 

 

SB3244- 21 -LRB100 18858 SMS 34100 b

1    similar governing person or persons) of the entity conducts
2    the majority of its meetings;
3        (D) the state in which the executive or management
4    committee of the board of directors (or similar governing
5    person or persons) of the entity conducts the majority of
6    its meetings;
7        (E) the state from which the management of the overall
8    operations of the entity is directed; and
9        (F) in the case of a benefit plan sponsored by
10    affiliated companies comprising a consolidated
11    corporation, the state in which the holding company or
12    controlling affiliate has its principal place of business
13    as determined using the above factors. However, in the case
14    of a plan sponsor, if more than 50% of the participants in
15    the benefit plan are employed in a single state, that state
16    shall be deemed to be the principal place of business of
17    the plan sponsor.
18    The principal place of business of a plan sponsor of a
19benefit plan described in paragraph (3) of the definition of
20"plan sponsor" this Section shall be deemed to be the principal
21place of business of the association, committee, joint board of
22trustees, or other similar group of representatives of the
23parties who establish or maintain the benefit plan that, in
24lieu of a specific or clear designation of a principal place of
25business, shall be deemed to be the principal place of business
26of the employer or employee organization that has the largest

 

 

SB3244- 22 -LRB100 18858 SMS 34100 b

1investment in the benefit plan in question.
2    "Receivership court" means the court in the insolvent or
3impaired insurer's state having jurisdiction over the
4conservation, rehabilitation, or liquidation of the member
5insurer.
6    "Resident" means a person to whom a contractual obligation
7is owed and who resides in this State on the date of entry of a
8court order that determines a member insurer to be an impaired
9insurer or a court order that determines a member insurer to be
10an insolvent insurer. A person may be a resident of only one
11state, which in the case of a person other than a natural
12person shall be its principal place of business. Citizens of
13the United States that are either (i) residents of foreign
14countries or (ii) residents of United States possessions,
15territories, or protectorates that do not have an association
16similar to the Association created by this Article, shall be
17deemed residents of the state of domicile of the member insurer
18that issued the policies or contracts.
19    "Structured settlement annuity" means an annuity purchased
20in order to fund periodic payments for a plaintiff or other
21claimant in payment for or with respect to personal injury
22suffered by the plaintiff or other claimant.
23    "State" means a state, the District of Columbia, Puerto
24Rico, and a United States possession, territory, or
25protectorate.
26    "Supplemental contract" means a written agreement entered

 

 

SB3244- 23 -LRB100 18858 SMS 34100 b

1into for the distribution of proceeds under a life, health, or
2annuity policy or a life, health, or annuity contract.
3    "Unallocated annuity contract" means any annuity contract
4or group annuity certificate which is not issued to and owned
5by an individual, except to the extent of any annuity benefits
6guaranteed to an individual by an insurer under such contract
7or certificate.
8(Source: P.A. 96-1450, eff. 8-20-10.)
 
9    (215 ILCS 5/531.06)  (from Ch. 73, par. 1065.80-6)
10    Sec. 531.06. Creation of the Association. There is created
11a non-profit legal entity to be known as the Illinois Life and
12Health Insurance Guaranty Association. All member insurers are
13and must remain members of the Association as a condition of
14their authority to transact insurance or a health maintenance
15organization business in this State. The Association must
16perform its functions under the plan of operation established
17and approved under Section 531.10 and must exercise its powers
18through a board of directors established under Section 531.07.
19For purposes of administration and assessment, the Association
20must maintain 2 accounts:
21        (1) The life insurance and annuity account, which
22    includes the following subaccounts:
23            (a) Life Insurance Account;
24            (b) Annuity account, which shall include annuity
25        contracts owned by a governmental retirement plan (or

 

 

SB3244- 24 -LRB100 18858 SMS 34100 b

1        its trustee) established under Section 401, 403(b), or
2        457 of the United States Internal Revenue Code, but
3        shall otherwise exclude unallocated annuities; and
4            (c) Unallocated annuity account, which shall
5        exclude contracts owned by a governmental retirement
6        benefit plan (or its trustee) established under
7        Section 401, 403(b), or 457 of the United States
8        Internal Revenue Code.
9        (2) The health insurance account.
10    The Association shall be supervised by the Director and is
11subject to the applicable provisions of the Illinois Insurance
12Code. Meetings or records of the Association may be opened to
13the public upon majority vote of the board of directors of the
14Association.
15(Source: P.A. 95-331, eff. 8-21-07; 96-1450, eff. 8-20-10.)
 
16    (215 ILCS 5/531.07)  (from Ch. 73, par. 1065.80-7)
17    Sec. 531.07. Board of Directors.) The board of directors
18of the Association consists of not less than 7 nor more than 11
19members serving terms as established in the plan of operation.
20The insurer members insurers of the board are to be selected by
21member insurers subject to the approval of the Director. In
22addition, 2 persons who must be public representatives may be
23appointed by the Director to the board of directors. A public
24representative may not be an officer, director, or employee of
25an insurance company or a health maintenance organization or

 

 

SB3244- 25 -LRB100 18858 SMS 34100 b

1any person engaged in the business of insurance. Vacancies on
2the board must be filled for the remaining period of the term
3in the manner described in the plan of operation.
4    In approving selections or in appointing members to the
5board, the Director must consider, whether all member insurers
6are fairly represented.
7    Members of the board may be reimbursed from the assets of
8the Association for expenses incurred by them as members of the
9board of directors but members of the board may not otherwise
10be compensated by the Association for their services.
11(Source: P.A. 96-1450, eff. 8-20-10.)
 
12    (215 ILCS 5/531.08)  (from Ch. 73, par. 1065.80-8)
13    Sec. 531.08. Powers and duties of the Association.
14    (a) In addition to the powers and duties enumerated in
15other Sections of this Article:
16        (1) If a member insurer is an impaired insurer, then
17    the Association may, in its discretion and subject to any
18    conditions imposed by the Association that do not impair
19    the contractual obligations of the impaired insurer and
20    that are approved by the Director:
21            (A) guarantee, assume, reissue, or reinsure or
22        cause to be guaranteed, assumed, reissued, or
23        reinsured, any or all of the policies or contracts of
24        the impaired insurer; or
25            (B) provide such money, pledges, loans, notes,

 

 

SB3244- 26 -LRB100 18858 SMS 34100 b

1        guarantees, or other means as are proper to effectuate
2        paragraph (A) and assure payment of the contractual
3        obligations of the impaired insurer pending action
4        under paragraph (A).
5        (2) If a member insurer is an insolvent insurer, then
6    the Association shall, in its discretion, either:
7            (A) guaranty, assume, reissue, or reinsure or
8        cause to be guaranteed, assumed, reissued, or
9        reinsured the policies or contracts of the insolvent
10        insurer or assure payment of the contractual
11        obligations of the insolvent insurer and provide
12        money, pledges, loans, notes, guarantees, or other
13        means reasonably necessary to discharge the
14        Association's duties; or
15            (B) provide benefits and coverages in accordance
16        with the following provisions:
17                (i) with respect to policies and contracts
18            life and health insurance policies and annuities,
19            ensure payment of benefits for premiums identical
20            to the premiums and benefits (except for terms of
21            conversion and renewability) that would have been
22            payable under the policies or contracts of the
23            insolvent insurer for claims incurred:
24                    (a) with respect to group policies and
25                contracts, not later than the earlier of the
26                next renewal date under those policies or

 

 

SB3244- 27 -LRB100 18858 SMS 34100 b

1                contracts or 45 days, but in no event less than
2                30 days, after the date on which the
3                Association becomes obligated with respect to
4                the policies and contracts;
5                    (b) with respect to nongroup policies,
6                contracts, and annuities not later than the
7                earlier of the next renewal date (if any) under
8                the policies or contracts or one year, but in
9                no event less than 30 days, from the date on
10                which the Association becomes obligated with
11                respect to the policies or contracts;
12                (ii) make diligent efforts to provide all
13            known insureds, enrollees, or annuitants (for
14            nongroup policies and contracts), or group policy
15            owners or contract owners with respect to group
16            policies and contracts, 30 days notice of the
17            termination (pursuant to subparagraph (i) of this
18            paragraph (B)) of the benefits provided;
19                (iii) with respect to nongroup policies and
20            contracts life and health insurance policies and
21            annuities covered by the Association, make
22            available to each known insured, enrollee, or
23            annuitant, or owner if other than the insured,
24            enrollee, or annuitant, and with respect to an
25            individual formerly an insured, enrollee, or
26            formerly an annuitant under a group policy or

 

 

SB3244- 28 -LRB100 18858 SMS 34100 b

1            contract who is not eligible for replacement group
2            coverage, make available substitute coverage on an
3            individual basis in accordance with the provisions
4            of paragraph (3), if the insureds, enrollees, or
5            annuitants had a right under law or the terminated
6            policy, contract, or annuity to convert coverage
7            to individual coverage or to continue an
8            individual policy, contract, or annuity in force
9            until a specified age or for a specified time,
10            during which the insurer or health maintenance
11            organization had no right unilaterally to make
12            changes in any provision of the policy, contract,
13            or annuity or had a right only to make changes in
14            premium by class.
15    (b) In providing the substitute coverage required under
16subparagraph (iii) of paragraph (B) of item (2) of subsection
17(a) of this Section, the Association may offer either to
18reissue the terminated coverage or to issue an alternative
19policy or contract at actuarially justified rates, subject to
20the prior approval of the Director.
21    Alternative or reissued policies or contracts shall be
22offered without requiring evidence of insurability, and shall
23not provide for any waiting period or exclusion that would not
24have applied under the terminated policy or contract.
25    The Association may reinsure any alternative or reissued
26policy or contract.

 

 

SB3244- 29 -LRB100 18858 SMS 34100 b

1    Alternative policies or contracts adopted by the
2Association shall be subject to the approval of the Director.
3The Association may adopt alternative policies or contracts of
4various types for future issuance insurance without regard to
5any particular impairment or insolvency.
6    Alternative policies or contracts shall contain at least
7the minimum statutory provisions required in this State and
8provide benefits that shall not be unreasonable in relation to
9the premium charged. The Association shall set the premium in
10accordance with a table of rates which it shall adopt. The
11premium shall reflect the amount of insurance to be provided
12and the age and class of risk of each insured, but shall not
13reflect any changes in the health of the insured after the
14original policy or contract was last underwritten.
15    Any alternative policy or contract issued by the
16Association shall provide coverage of a type similar to that of
17the policy or contract issued by the impaired or insolvent
18insurer, as determined by the Association.
19    (c) If the Association elects to reissue terminated
20coverage at a premium rate different from that charged under
21the terminated policy or contract, the premium shall be
22actuarially justified and set by the Association in accordance
23with the amount of insurance or coverage provided and the age
24and class of risk, subject to approval of the Director or by a
25court of competent jurisdiction.
26    (d) The Association's obligations with respect to coverage

 

 

SB3244- 30 -LRB100 18858 SMS 34100 b

1under any policy or contract of the impaired or insolvent
2insurer or under any reissued or alternative policy or contract
3shall cease on the date such coverage or policy or contract is
4replaced by another similar policy or contract by the
5policyholder, the insured, the enrollee, or the Association.
6    (e) When proceeding under this Section with respect to any
7policy or contract carrying guaranteed minimum interest rates,
8the Association shall assure the payment or crediting of a rate
9of interest consistent with subparagraph (2)(b)(iii)(B) of
10Section 531.03.
11    (f) Nonpayment of premiums thirty-one days after the date
12required under the terms of any guaranteed, assumed,
13alternative or reissued policy or contract or substitute
14coverage shall terminate the Association's obligations under
15such policy, contract, or coverage under this Act with respect
16to such policy, contract, or coverage, except with respect to
17any claims incurred or any net cash surrender value which may
18be due in accordance with the provisions of this Act.
19    (g) Premiums due for coverage after entry of an order of
20liquidation of an insolvent insurer shall belong to and be
21payable at the direction of the Association, and the
22Association shall be liable for unearned premiums due to policy
23or contract owners arising after the entry of such order.
24    (h) In carrying out its duties under paragraph (2) of
25subsection (a) of this Section, the Association may:
26        (1) subject to approval by a court in this State,

 

 

SB3244- 31 -LRB100 18858 SMS 34100 b

1    impose permanent policy or contract liens in connection
2    with a guarantee, assumption, or reinsurance agreement if
3    the Association finds that the amounts which can be
4    assessed under this Article are less than the amounts
5    needed to assure full and prompt performance of the
6    Association's duties under this Article or that the
7    economic or financial conditions as they affect member
8    insurers are sufficiently adverse to render the imposition
9    of such permanent policy or contract liens to be in the
10    public interest; or
11        (2) subject to approval by a court in this State,
12    impose temporary moratoriums or liens on payments of cash
13    values and policy loans or any other right to withdraw
14    funds held in conjunction with policies or contracts in
15    addition to any contractual provisions for deferral of cash
16    or policy loan value. In addition, in the event of a
17    temporary moratorium or moratorium charge imposed by the
18    receivership court on payment of cash values or policy
19    loans or on any other right to withdraw funds held in
20    conjunction with policies or contracts, out of the assets
21    of the impaired or insolvent insurer, the Association may
22    defer the payment of cash values, policy loans, or other
23    rights by the Association for the period of the moratorium
24    or moratorium charge imposed by the receivership court,
25    except for claims covered by the Association to be paid in
26    accordance with a hardship procedure established by the

 

 

SB3244- 32 -LRB100 18858 SMS 34100 b

1    liquidator or rehabilitator and approved by the
2    receivership court.
3    (i) There shall be no liability on the part of and no cause
4of action shall arise against the Association or against any
5transferee from the Association in connection with the transfer
6by reinsurance or otherwise of all or any part of an impaired
7or insolvent insurer's business by reason of any action taken
8or any failure to take any action by the impaired or insolvent
9insurer at any time.
10    (j) If the Association fails to act within a reasonable
11period of time as provided in subsection (2) of this Section
12with respect to an insolvent insurer, the Director shall have
13the powers and duties of the Association under this Act with
14regard to such insolvent insurers.
15    (k) The Association or its designated representatives may
16render assistance and advice to the Director, upon his request,
17concerning rehabilitation, payment of claims, continuations of
18coverage, or the performance of other contractual obligations
19of any impaired or insolvent insurer.
20    (l) The Association shall have standing to appear or
21intervene before a court or agency in this State with
22jurisdiction over an impaired or insolvent insurer concerning
23which the Association is or may become obligated under this
24Article or with jurisdiction over any person or property
25against which the Association may have rights through
26subrogation or otherwise. Standing shall extend to all matters

 

 

SB3244- 33 -LRB100 18858 SMS 34100 b

1germane to the powers and duties of the Association, including,
2but not limited to, proposals for reinsuring, reissuing,
3modifying, or guaranteeing the policies or contracts of the
4impaired or insolvent insurer and the determination of the
5policies or contracts and contractual obligations. The
6Association shall also have the right to appear or intervene
7before a court or agency in another state with jurisdiction
8over an impaired or insolvent insurer for which the Association
9is or may become obligated or with jurisdiction over any person
10or property against whom the Association may have rights
11through subrogation or otherwise.
12    (m)(1) A person receiving benefits under this Article shall
13be deemed to have assigned the rights under and any causes of
14action against any person for losses arising under, resulting
15from, or otherwise relating to the covered policy or contract
16to the Association to the extent of the benefits received
17because of this Article, whether the benefits are payments of
18or on account of contractual obligations, continuation of
19coverage, or provision of substitute or alternative policies,
20contracts, or coverages. The Association may require an
21assignment to it of such rights and cause of action by any
22enrollee, payee, policy, or contract owner, beneficiary,
23insured, or annuitant as a condition precedent to the receipt
24of any right or benefits conferred by this Article upon the
25person.
26    (2) The subrogation rights of the Association under this

 

 

SB3244- 34 -LRB100 18858 SMS 34100 b

1subsection have the same priority against the assets of the
2impaired or insolvent insurer as that possessed by the person
3entitled to receive benefits under this Article.
4    (3) In addition to paragraphs (1) and (2), the Association
5shall have all common law rights of subrogation and any other
6equitable or legal remedy that would have been available to the
7impaired or insolvent insurer or owner, beneficiary, enrollee,
8or payee of a policy or contract with respect to the policy or
9contracts, including without limitation, in the case of a
10structured settlement annuity, any rights of the owner,
11beneficiary, enrollee, or payee of the annuity to the extent of
12benefits received pursuant to this Article, against a person
13originally or by succession responsible for the losses arising
14from the personal injury relating to the annuity or payment
15therefor, excepting any such person responsible solely by
16reason of serving as an assignee in respect of a qualified
17assignment under Internal Revenue Code Section 130.
18    (4) If the preceding provisions of this subsection (l) are
19invalid or ineffective with respect to any person or claim for
20any reason, then the amount payable by the Association with
21respect to the related covered obligations shall be reduced by
22the amount realized by any other person with respect to the
23person or claim that is attributable to the policies or
24contracts, or portion thereof, covered by the Association.
25    (5) If the Association has provided benefits with respect
26to a covered obligation and a person recovers amounts as to

 

 

SB3244- 35 -LRB100 18858 SMS 34100 b

1which the Association has rights as described in the preceding
2paragraphs of this subsection (10), then the person shall pay
3to the Association the portion of the recovery attributable to
4the policies or contracts, or portion thereof, covered by the
5Association.
6    (n) The Association may:
7         (1) Enter into such contracts as are necessary or
8    proper to carry out the provisions and purposes of this
9    Article.
10         (2) Sue or be sued, including taking any legal actions
11    necessary or proper for recovery of any unpaid assessments
12    under Section 531.09. The Association shall not be liable
13    for punitive or exemplary damages.
14         (3) Borrow money to effect the purposes of this
15    Article. Any notes or other evidence of indebtedness of the
16    Association not in default are legal investments for
17    domestic member insurers and may be carried as admitted
18    assets.
19         (4) Employ or retain such persons as are necessary to
20    handle the financial transactions of the Association, and
21    to perform such other functions as become necessary or
22    proper under this Article.
23         (5) Negotiate and contract with any liquidator,
24    rehabilitator, conservator, or ancillary receiver to carry
25    out the powers and duties of the Association.
26         (6) Take such legal action as may be necessary to

 

 

SB3244- 36 -LRB100 18858 SMS 34100 b

1    avoid payment of improper claims.
2         (7) Exercise, for the purposes of this Article and to
3    the extent approved by the Director, the powers of a
4    domestic life insurer, or health insurer, or health
5    maintenance organization, but in no case may the
6    Association issue insurance policies or annuity contracts
7    other than those issued to perform the contractual
8    obligations of the impaired or insolvent insurer.
9         (8) Exercise all the rights of the Director under
10    Section 193(4) of this Code with respect to covered
11    policies after the association becomes obligated by
12    statute.
13        (9) Request information from a person seeking coverage
14    from the Association in order to aid the Association in
15    determining its obligations under this Article with
16    respect to the person, and the person shall promptly comply
17    with the request.
18        (9.5) Unless prohibited by law, in accordance with the
19    terms and conditions of the policy or contract, file for
20    actuarially justified rate or premium increases for any
21    policy or contract for which it provides coverage under
22    this Article.
23        (10) Take other necessary or appropriate action to
24    discharge its duties and obligations under this Article or
25    to exercise its powers under this Article.
26    (o) With respect to covered policies for which the

 

 

SB3244- 37 -LRB100 18858 SMS 34100 b

1Association becomes obligated after an entry of an order of
2liquidation or rehabilitation, the Association may elect to
3succeed to the rights of the insolvent insurer arising after
4the date of the order of liquidation or rehabilitation under
5any contract of reinsurance to which the insolvent insurer was
6a party, to the extent that such contract provides coverage for
7losses occurring after the date of the order of liquidation or
8rehabilitation. As a condition to making this election, the
9Association must pay all unpaid premiums due under the contract
10for coverage relating to periods before and after the date of
11the order of liquidation or rehabilitation.
12    (p) A deposit in this State, held pursuant to law or
13required by the Director for the benefit of creditors,
14including policy owners or contract owners, not turned over to
15the domiciliary liquidator upon the entry of a final order of
16liquidation or order approving a rehabilitation plan of a
17member an insurer domiciled in this State or in a reciprocal
18state, pursuant to Article XIII 1/2 of this Code, shall be
19promptly paid to the Association. The Association shall be
20entitled to retain a portion of any amount so paid to it equal
21to the percentage determined by dividing the aggregate amount
22of policy owners' or contract owners' claims related to that
23insolvency for which the Association has provided statutory
24benefits by the aggregate amount of all policy owners' or
25contract owners' claims in this State related to that
26insolvency and shall remit to the domiciliary receiver the

 

 

SB3244- 38 -LRB100 18858 SMS 34100 b

1amount so paid to the Association less the amount retained
2pursuant to this subsection (13). Any amount so paid to the
3Association and retained by it shall be treated as a
4distribution of estate assets pursuant to applicable State
5receivership law dealing with early access disbursements.
6    (q) The Board of Directors of the Association shall have
7discretion and may exercise reasonable business judgment to
8determine the means by which the Association is to provide the
9benefits of this Article in an economical and efficient manner.
10    (r) Where the Association has arranged or offered to
11provide the benefits of this Article to a covered person under
12a plan or arrangement that fulfills the Association's
13obligations under this Article, the person shall not be
14entitled to benefits from the Association in addition to or
15other than those provided under the plan or arrangement.
16    (s) Venue in a suit against the Association arising under
17the Article shall be in Cook County. The Association shall not
18be required to give any appeal bond in an appeal that relates
19to a cause of action arising under this Article.
20    (t) The Association may join an organization of one or more
21other State associations of similar purposes to further the
22purposes and administer the powers and duties of the
23Association.
24    (u) In carrying out its duties in connection with
25guaranteeing, assuming, reissuing, or reinsuring policies or
26contracts under subsections (1) or (2), the Association may,

 

 

SB3244- 39 -LRB100 18858 SMS 34100 b

1subject to approval of the receivership court, issue substitute
2coverage for a policy or contract that provides an interest
3rate, crediting rate, or similar factor determined by use of an
4index or other external reference stated in the policy or
5contract employed in calculating returns or changes in value by
6issuing an alternative policy or contract in accordance with
7the following provisions:
8        (1) in lieu of the index or other external reference
9    provided for in the original policy or contract, the
10    alternative policy or contract provides for (i) a fixed
11    interest rate, or (ii) payment of dividends with minimum
12    guarantees, or (iii) a different method for calculating
13    interest or changes in value;
14        (2) there is no requirement for evidence of
15    insurability, waiting period, or other exclusion that
16    would not have applied under the replaced policy or
17    contract; and
18        (3) the alternative policy or contract is
19    substantially similar to the replaced policy or contract in
20    all other material terms.
21(Source: P.A. 96-1450, eff. 8-20-10; 97-333, eff. 8-12-11.)
 
22    (215 ILCS 5/531.09)  (from Ch. 73, par. 1065.80-9)
23    Sec. 531.09. Assessments.
24    (1) For the purpose of providing the funds necessary to
25carry out the powers and duties of the Association, the board

 

 

SB3244- 40 -LRB100 18858 SMS 34100 b

1of directors shall assess the member insurers, separately for
2each account, at such times and for such amounts as the board
3finds necessary. Assessments shall be due not less than 30 days
4after written notice to the member insurers and shall accrue
5interest from the due date at such adjusted rate as is
6established under Section 6621 of Chapter 26 of the United
7States Code and such interest shall be compounded daily.
8    (2) There shall be 2 classes of assessments, as follows:
9        (a) Class A assessments shall be made for the purpose
10    of meeting administrative costs and other general expenses
11    and examinations conducted under the authority of the
12    Director under subsection (5) of Section 531.12.
13        (b) Class B assessments shall be made to the extent
14    necessary to carry out the powers and duties of the
15    Association under Section 531.08 with regard to an impaired
16    or insolvent domestic insurer or insolvent foreign or alien
17    insurers.
18    (3)(a) The amount of any Class A assessment shall be
19determined at the discretion of the board of directors and such
20assessments shall be authorized and called on a non-pro rata
21basis. The amount of any Class B assessment, except for
22assessments related to long-term care insurance, shall be
23allocated for assessment purposes among the accounts and
24subaccounts pursuant to an allocation formula which may be
25based on the premiums or reserves of the impaired or insolvent
26insurer or any other standard deemed by the board in its sole

 

 

SB3244- 41 -LRB100 18858 SMS 34100 b

1discretion as being fair and reasonable under the
2circumstances.
3    (b) Class B assessments against member insurers for each
4account and subaccount shall be in the proportion that the
5premiums received on business in this State by each assessed
6member insurer on policies or contracts covered by each account
7or subaccount for the three most recent calendar years for
8which information is available preceding the year in which the
9member insurer became impaired or insolvent, as the case may
10be, bears to such premiums received on business in this State
11for such calendar years by all assessed member insurers.
12    (b-5) The amount of the Class B assessment for long-term
13care insurance written by the impaired or insolvent insurer
14shall be allocated according to a methodology included in the
15plan of operation and approved by the Director. The methodology
16shall provide for 50% of the assessment to be allocated to
17accident and health member insurers and 50% to be allocated to
18life and annuity member insurers.
19    (c) Assessments for funds to meet the requirements of the
20Association with respect to an impaired or insolvent insurer
21shall not be made until necessary to implement the purposes of
22this Article. Classification of assessments under subsection
23(2) and computations of assessments under this subsection shall
24be made with a reasonable degree of accuracy, recognizing that
25exact determinations may not always be possible.
26    (4) The Association may abate or defer, in whole or in

 

 

SB3244- 42 -LRB100 18858 SMS 34100 b

1part, the assessment of a member insurer if, in the opinion of
2the board, payment of the assessment would endanger the ability
3of the member insurer to fulfill its contractual obligations.
4In the event an assessment against a member insurer is abated
5or deferred in whole or in part the amount by which the
6assessment is abated or deferred may be assessed against the
7other member insurers in a manner consistent with the basis for
8assessments set forth in this Section. Once the conditions that
9caused a deferral have been removed or rectified, the member
10insurer shall pay all assessments that were deferred pursuant
11to a repayment plan approved by the Association.
12    (5) (a) Subject to the provisions of subparagraph (ii) of
13this paragraph, the total of all assessments authorized by the
14Association with respect to a member insurer for each
15subaccount of the life insurance and annuity account and for
16the health account shall not in one calendar year exceed 2% of
17that member insurer's average annual premiums received in this
18State on the policies and contracts covered by the subaccount
19or account during the 3 calendar years preceding the year in
20which the member insurer became an impaired or insolvent
21insurer.
22    If 2 or more assessments are authorized in one calendar
23year with respect to member insurers that become impaired or
24insolvent in different calendar years, the average annual
25premiums for purposes of the aggregate assessment percentage
26limitation referenced in subparagraph (a) of this paragraph

 

 

SB3244- 43 -LRB100 18858 SMS 34100 b

1shall be equal and limited to the higher of the 3-year average
2annual premiums for the applicable subaccount or account as
3calculated pursuant to this Section.
4    If the maximum assessment, together with the other assets
5of the Association in an account, does not provide in one year
6in either account an amount sufficient to carry out the
7responsibilities of the Association, the necessary additional
8funds shall be assessed as soon thereafter as permitted by this
9Article.
10    (b) The board may provide in the plan of operation a method
11of allocating funds among claims, whether relating to one or
12more impaired or insolvent insurers, when the maximum
13assessment will be insufficient to cover anticipated claims.
14    (c) If the maximum assessment for a subaccount of the life
15insurance and annuity account in one year does not provide an
16amount sufficient to carry out the responsibilities of the
17Association, then pursuant to paragraph (b) of subsection (3),
18the board shall assess the other subaccounts of the life
19insurance and annuity account for the necessary additional
20amount, subject to the maximum stated in paragraph (a) of this
21subsection.
22    (6) The board may, by an equitable method as established in
23the plan of operation, refund to member insurers, in proportion
24to the contribution of each member insurer to that account, the
25amount by which the assets of the account exceed the amount the
26board finds is necessary to carry out during the coming year

 

 

SB3244- 44 -LRB100 18858 SMS 34100 b

1the obligations of the Association with regard to that account,
2including assets accruing from net realized gains and income
3from investments. A reasonable amount may be retained in any
4account to provide funds for the continuing expenses of the
5Association and for future losses.
6    (7) An assessment is deemed to occur on the date upon which
7the board votes such assessment. The board may defer calling
8the payment of the assessment or may call for payment in one or
9more installments.
10    (8) It is proper for any member insurer, in determining its
11premium rates and policy owner policyowner dividends as to any
12kind of insurance or health maintenance organization business
13within the scope of this Article, to consider the amount
14reasonably necessary to meet its assessment obligations under
15this Article.
16    (9) The Association must issue to each member insurer
17paying a Class B assessment under this Article a certificate of
18contribution, in a form acceptable to the Director, for the
19amount of the assessment so paid. All outstanding certificates
20are of equal dignity and priority without reference to amounts
21or dates of issue. A certificate of contribution may be shown
22by the member insurer in its financial statement as an asset in
23such form and for such amount, if any, and period of time as
24the Director may approve, provided the member insurer shall in
25any event at its option have the right to show a certificate of
26contribution as an admitted asset at percentages of the

 

 

SB3244- 45 -LRB100 18858 SMS 34100 b

1original face amount for calendar years as follows:
2    100% for the calendar year after the year of issuance;
3    80% for the second calendar year after the year of
4issuance;
5    60% for the third calendar year after the year of issuance;
6    40% for the fourth calendar year after the year of
7issuance;
8    20% for the fifth calendar year after the year of issuance.
9    (10) The Association may request information of member
10insurers in order to aid in the exercise of its power under
11this Section and member insurers shall promptly comply with a
12request.
13(Source: P.A. 95-86, eff. 9-25-07 (changed from 1-1-08 by P.A.
1495-632); 96-1450, eff. 8-20-10.)
 
15    (215 ILCS 5/531.11)  (from Ch. 73, par. 1065.80-11)
16    Sec. 531.11. Duties and powers of the Director. In addition
17to the duties and powers enumerated elsewhere in this Article:
18    (1) The Director must do all of the following:
19        (a) Upon request of the board of directors, provide the
20    Association with a statement of the premiums in the
21    appropriate accounts for each member insurer.
22        (b) Notify the board of directors of the existence of
23    an impaired or insolvent insurer not later than 3 days
24    after a determination of impairment or insolvency is made
25    or when the Director receives notice of impairment or

 

 

SB3244- 46 -LRB100 18858 SMS 34100 b

1    insolvency.
2        (c) Give notice to an impaired insurer as required by
3    Sections 34 or 60. Notice to the impaired insurer shall
4    constitute notice to its shareholders, if any.
5        (d) In any liquidation or rehabilitation proceeding
6    involving a domestic member insurer, be appointed as the
7    liquidator or rehabilitator. If a foreign or alien member
8    insurer is subject to a liquidation proceeding in its
9    domiciliary jurisdiction or state of entry, the Director
10    shall be appointed conservator.
11    (2) The Director may suspend or revoke, after notice and
12hearing, the certificate of authority to transact business
13insurance in this State of any member insurer which fails to
14pay an assessment when due or fails to comply with the plan of
15operation. As an alternative the Director may levy a forfeiture
16on any member insurer which fails to pay an assessment when
17due. Such forfeiture may not exceed 5% of the unpaid assessment
18per month, but no forfeiture may be less than $100 per month.
19    (3) Any action of the board of directors or the Association
20may be appealed to the Director by any member insurer or any
21other person adversely affected by such action if such appeal
22is taken within 30 days of the action being appealed. Any final
23action or order of the Director is subject to judicial review
24in a court of competent jurisdiction.
25    (4) The liquidator, rehabilitator, or conservator of any
26impaired insurer may notify all interested persons of the

 

 

SB3244- 47 -LRB100 18858 SMS 34100 b

1effect of this Article.
2(Source: P.A. 96-1450, eff. 8-20-10.)
 
3    (215 ILCS 5/531.12)  (from Ch. 73, par. 1065.80-12)
4    Sec. 531.12. Prevention of Insolvencies. To aid in the
5detection and prevention of member insurer insolvencies or
6impairments:
7    (1) It shall be the duty of the Director:
8        (a) To notify the Commissioners of all other states,
9    territories of the United States, and the District of
10    Columbia when he takes any of the following actions against
11    a member insurer:
12            (i) revocation of license;
13            (ii) suspension of license;
14            (iii) makes any formal order except for an order
15        issued pursuant to Article XII 1/2 of this Code that
16        such member insurer company restrict its premium
17        writing, obtain additional contributions to surplus,
18        withdraw from the State, reinsure all or any part of
19        its business, or increase capital, surplus or any other
20        account for the security of policy owners, contract
21        owners, certificate holders, policyholders or
22        creditors.
23        Such notice shall be transmitted to all commissioners
24    within 30 days following the action taken or the date on
25    which the action occurs.

 

 

SB3244- 48 -LRB100 18858 SMS 34100 b

1        (b) To report to the board of directors when he has
2    taken any of the actions set forth in subparagraph (a) of
3    this paragraph or has received a report from any other
4    commissioner indicating that any such action has been taken
5    in another state. Such report to the board of directors
6    shall contain all significant details of the action taken
7    or the report received from another commissioner.
8        (c) To report to the board of directors when the
9    Director has reasonable cause to believe from an
10    examination, whether completed or in process, of any member
11    insurer that the member insurer may be an impaired or
12    insolvent insurer.
13        (d) To furnish to the board of directors the National
14    Association of Insurance Commissioners Insurance
15    Regulatory Information System ratios and listings of
16    companies not included in the ratios developed by the
17    National Association of Insurance Commissioners. The board
18    may use the information contained therein in carrying out
19    its duties and responsibilities under this Section. The
20    report and the information contained therein shall be kept
21    confidential by the board of directors until such time as
22    made public by the Director or other lawful authority.
23    (2) The Director may seek the advice and recommendations of
24the board of directors concerning any matter affecting his or
25her duties and responsibilities regarding the financial
26condition of member insurers companies and insurers or health

 

 

SB3244- 49 -LRB100 18858 SMS 34100 b

1maintenance organizations companies seeking admission to
2transact insurance business in this State.
3    (3) The board of directors may, upon majority vote, make
4reports and recommendations to the Director upon any matter
5germane to the liquidation, rehabilitation or conservation of
6any member insurer and insurers or health maintenance
7organizations seeking admission to transact business in this
8State. Such reports and recommendations shall not be considered
9public documents.
10    (4) The board of directors may, upon majority vote, make
11recommendations to the Director for the detection and
12prevention of member insurer insolvencies.
13    (5) The board of directors shall, at the conclusion of any
14member insurer insolvency in which the Association was
15obligated to pay covered claims prepare a report to the
16Director containing such information as it may have in its
17possession bearing on the history and causes of such
18insolvency. The board shall cooperate with the boards of
19directors of guaranty associations in other states in preparing
20a report on the history and causes for insolvency of a
21particular member insurer, and may adopt by reference any
22report prepared by such other associations.
23(Source: P.A. 96-1450, eff. 8-20-10.)
 
24    (215 ILCS 5/531.13)  (from Ch. 73, par. 1065.80-13)
25    Sec. 531.13. Tax offset. In the event the aggregate Class

 

 

SB3244- 50 -LRB100 18858 SMS 34100 b

1A, B and C assessments for all member insurers do not exceed
2$3,000,000 in any one calendar year, no member insurer shall
3receive a tax offset. However, for any one calendar year before
41998 in which the total of such assessments exceeds $3,000,000,
5the amount in excess of $3,000,000 shall be subject to a tax
6offset to the extent of 20% of the amount of such assessment
7for each of the 5 calendar years following the year in which
8such assessment was paid, and ending prior to January 1, 2003,
9and each member insurer may offset the proportionate amount of
10such excess paid by the member insurer against its liabilities
11for the tax imposed by subsections (a) and (b) of Section 201
12of the Illinois Income Tax Act. The provisions of this Section
13shall expire and be given no effect for any tax period
14commencing on and after January 1, 2003.
15(Source: P.A. 93-29, eff. 6-20-03.)
 
16    (215 ILCS 5/531.14)  (from Ch. 73, par. 1065.80-14)
17    Sec. 531.14. Miscellaneous Provisions.
18    (1) Nothing in this Article may be construed to reduce the
19liability for unpaid assessments of the insured of an impaired
20or insolvent insurer operating under a plan with assessment
21liability.
22    (2) Records must be kept of all negotiations and meetings
23in which the Association or its representatives are involved to
24discuss the activities of the Association in carrying out its
25powers and duties under Section 531.08. Records of such

 

 

SB3244- 51 -LRB100 18858 SMS 34100 b

1negotiations or meetings may be made public only upon the
2termination of a liquidation, rehabilitation, or conservation
3proceeding involving the impaired or insolvent insurer, upon
4the termination of the impairment or insolvency of the insurer,
5or upon the order of a court of competent jurisdiction. Nothing
6in this paragraph (2) limits the duty of the Association to
7render a report of its activities under Section 531.15.
8    (3) For the purpose of carrying out its obligations under
9this Article, the Association is deemed to be a creditor of the
10impaired or insolvent insurer to the extent of assets
11attributable to covered policies or contracts reduced by any
12amounts to which the Association is entitled as subrogee (under
13paragraph (8) of Section 531.08). All assets of the impaired or
14insolvent insurer attributable to covered policies or
15contracts must be used to continue all covered policies and pay
16all contractual obligations of the impaired insurer as required
17by this Article. "Assets attributable to covered policies or
18contracts", as used in this paragraph (3), is that proportion
19of the assets which the reserves that should have been
20established for such policies or contracts bear to the reserve
21that should have been established for all policies of insurance
22or health benefit plans written by the impaired or insolvent
23insurer.
24    (4) (a) Prior to the termination of any liquidation,
25rehabilitation, or conservation proceeding, the court may take
26into consideration the contributions of the respective

 

 

SB3244- 52 -LRB100 18858 SMS 34100 b

1parties, including the Association, the shareholders, contract
2owners, certificate holders, enrollees, and policy owners
3policyowners of the impaired or insolvent insurer, and any
4other party with a bona fide interest, in making an equitable
5distribution of the ownership rights of such impaired or
6insolvent insurer. In such a determination, consideration must
7be given to the welfare of the policy owners, contract owners,
8certificate holders, and enrollees policyholders of the
9continuing or successor insurer.
10    (b) No distribution to stockholders, if any, of an impaired
11or insolvent insurer may be made until and unless the total
12amount of valid claims of the Association for funds expended
13with interest in carrying out its powers and duties under
14Section 531.08, with respect to such member insurer have been
15fully recovered by the Association.
16    (5) (a) If an order for liquidation or rehabilitation of a
17member an insurer domiciled in this State has been entered, the
18receiver appointed under such order has a right to recover on
19behalf of the member insurer, from any affiliate that
20controlled it, the amount of distributions, other than stock
21dividends paid by the member insurer on its capital stock, made
22at any time during the 5 years preceding the petition for
23liquidation or rehabilitation subject to the limitations of
24paragraphs (b) to (d).
25    (b) No such dividend is recoverable if the member insurer
26shows that when paid the distribution was lawful and

 

 

SB3244- 53 -LRB100 18858 SMS 34100 b

1reasonable, and that the member insurer did not know and could
2not reasonably have known that the distribution might adversely
3affect the ability of the member insurer to fulfill its
4contractual obligations.
5    (c) Any person who as an affiliate that controlled the
6member insurer at the time the distributions were paid is
7liable up to the amount of distributions he received. Any
8person who was an affiliate that controlled the member insurer
9at the time the distributions were declared, is liable up to
10the amount of distributions he would have received if they had
11been paid immediately. If 2 persons are liable with respect to
12the same distributions, they are jointly and severally liable.
13    (d) The maximum amount recoverable under subsection (5) of
14this Section is the amount needed in excess of all other
15available assets of the insolvent insurer to pay the
16contractual obligations of the insolvent insurer.
17    (e) If any person liable under paragraph (c) of subsection
18(5) of this Section is insolvent, all its affiliates that
19controlled it at the time the dividend was paid are jointly and
20severally liable for any resulting deficiency in the amount
21recovered from the insolvent affiliate.
22    (6) As a creditor of the impaired or insolvent insurer as
23established in subsection (3) of this Section and consistent
24with subsection (2) of Section 205 of this Code, the
25Association and other similar associations shall be entitled to
26receive a disbursement of assets out of the marshaled assets,

 

 

SB3244- 54 -LRB100 18858 SMS 34100 b

1from time to time as the assets become available to reimburse
2it, as a credit against contractual obligations under this
3Article. If the liquidator has not, within 120 days after a
4final determination of insolvency of a member an insurer by the
5receivership court, made an application to the court for the
6approval of a proposal to disburse assets out of marshaled
7assets to guaranty associations having obligations because of
8the insolvency, then the Association shall be entitled to make
9application to the receivership court for approval of its own
10proposal to disburse these assets.
11(Source: P.A. 96-1450, eff. 8-20-10.)
 
12    (215 ILCS 5/531.19)  (from Ch. 73, par. 1065.80-19)
13    Sec. 531.19. Prohibited advertisement of action of the
14Insurance Guaranty Association in sale of insurance.
15    (a) No person, including a member an insurer, agent or
16affiliate of a member an insurer shall make, publish,
17disseminate, circulate, or place before the public, or cause
18directly or indirectly, to be made, published, disseminated,
19circulated or placed before the public, in any newspaper,
20magazine or other publication, or in the form of a notice,
21circular, pamphlet, letter or poster, or over any radio station
22or television station, or in any other way, any advertisement,
23announcement or statement, written or oral, which uses the
24existence of the Insurance Guaranty Association of this State
25for the purpose of sales, solicitation or inducement to

 

 

SB3244- 55 -LRB100 18858 SMS 34100 b

1purchase any form of insurance or other coverage covered by
2this Article; provided, however, that this Section shall not
3apply to the Illinois Life and Health Guaranty Association or
4any other entity which does not sell or solicit insurance or
5coverage by a health maintenance organization.
6    (b) Within 180 days of August 16, 1993, the Association
7shall prepare a summary document describing the general
8purposes and current limitations of this Article and complying
9with subsection (c). This document shall be submitted to the
10Director for approval. Sixty days after receiving approval, no
11member insurer may deliver a policy or contract described in
12subparagraph (a) of paragraph (2) of Section 531.03 and not
13excluded under subparagraph (b) of that Section to a policy
14owner, or contract owner, certificate holder, or enrollee
15unless the document is delivered to the policy owner, or
16contract owner, certificate holder, or enrollee prior to or at
17the time of delivery of the policy or contract. The document
18should also be available upon request by a policy owner,
19contract owner, certificate holder, or enrollee policyholder.
20The distribution, delivery, or contents or interpretation of
21this document shall not mean that either the policy or the
22contract or the policy owner, contract owner, certificate
23holder, or enrollee thereof would be covered in the event of
24the impairment or insolvency of a member insurer. The
25description document shall be revised by the Association as
26amendments to this Article may require. Failure to receive this

 

 

SB3244- 56 -LRB100 18858 SMS 34100 b

1document does not give the policy owner policyholder, contract
2owner holder, certificate holder, enrollee, or insured any
3greater rights than those stated in this Article.
4    (c) The document prepared under subsection (b) shall
5contain a clear and conspicuous disclaimer on its face. The
6Director shall promulgate a rule establishing the form and
7content of the disclaimer. The disclaimer shall:
8        (1) State the name and address of the Life and Health
9    Insurance Guaranty Association and of the Department.
10        (2) Prominently warn the policy owner, or contract
11    owner, certificate holder, or enrollee that the Life and
12    Health Insurance Guaranty Association may not cover the
13    policy or contract or, if coverage is available, it will be
14    subject to substantial limitations and exclusions and
15    conditioned on continued residence in the State.
16        (3) State that the member insurer and its agents are
17    prohibited by law from using the existence of the Life and
18    Health Insurance Guaranty Association for the purpose of
19    sales, solicitation, or inducement to purchase any form of
20    insurance or health maintenance organization coverage.
21        (4) Emphasize that the policy owner, or contract owner,
22    certificate holder, or enrollee should not rely on coverage
23    under the Life and Health Insurance Guaranty Association
24    when selecting an insurer or health maintenance
25    organization.
26        (5) Provide other information as directed by the

 

 

SB3244- 57 -LRB100 18858 SMS 34100 b

1    Director.
2    (d) (Blank).
3(Source: P.A. 88-364; 88-627, eff. 9-9-94; 89-97, eff. 7-7-95.)
 
4    (215 ILCS 5/531.20 new)
5    Sec. 531.20. Merger of Illinois Health Maintenance
6Organization Guaranty Association with and into the Illinois
7Life and Health Insurance Guaranty Association. In order to
8provide for the merger of the Illinois Health Maintenance
9Organization Guaranty Association with and into the Illinois
10Life and Health Insurance Guaranty Association, the following
11shall apply:
12        (1) The Illinois Health Maintenance Organization
13    Guaranty Association is merged with and into the Illinois
14    Life and Health Insurance Guaranty Association, which
15    shall then continue to be known as the Illinois Life and
16    Health Insurance Guaranty Association.
17         (2) All premerger rights, powers, privileges, assets,
18    property, duties, debts, obligations, and liabilities of
19    each association related to a liquidated member shall
20    remain with the members of the respective association prior
21    to merger and subject to the laws in effect at the time the
22    order of liquidation was entered with respect to the
23    liquidated member, but shall be administered by the
24    Illinois Life and Health Insurance Guaranty Association.
25    The Illinois Life and Health Insurance Guaranty

 

 

SB3244- 58 -LRB100 18858 SMS 34100 b

1    Association shall adopt changes to its plan of operation
2    which reasonably accomplish this.
3        (3) Subject to paragraph (2), the Illinois Life and
4    Health Insurance Guaranty Association shall succeed,
5    without other transfer, to all the rights, powers,
6    privileges, assets, and property of the Illinois Health
7    Maintenance Organization Guaranty Association and shall be
8    subject to all duties, debts, obligations, and liabilities
9    of the Illinois Health Maintenance Organization that exist
10    as of the date of the merger of the Illinois Health
11    Maintenance Organization Guaranty Association into the
12    Illinois Life and Health Insurance Guaranty Association.
13    Without limiting the generality of the foregoing, the
14    Illinois Life and Health Insurance Guaranty Association
15    shall succeed to (A) all collected, uncollected, or
16    unbilled assessments of the Illinois Health Maintenance
17    Organization Guaranty Association, (B) all cash, bank
18    accounts, accrued interest, and tangible property of the
19    Illinois Health Maintenance Organization Guaranty
20    Association, (C) all rights, powers, privileges, duties,
21    and obligations of the Illinois Health Maintenance
22    Organization Guaranty Association under any of its
23    contracts or commitments, and (D) all subrogations,
24    assignments, and creditor rights and interests of the
25    Illinois Health Maintenance Organization Guaranty
26    Association.

 

 

SB3244- 59 -LRB100 18858 SMS 34100 b

1        (4) All rights of creditors and all liens upon the
2    property of the Illinois Health Maintenance Organization
3    Guaranty Association shall be preserved unimpaired,
4    provided that the liens upon property of the Illinois
5    Health Maintenance Organization Guaranty Association shall
6    be limited to the property affected thereby immediately
7    prior to the effective date of this amendatory Act of the
8    100th General Assembly.
9        (5) Any action or proceeding pending by or against the
10    Illinois Health Maintenance Organization Guaranty
11    Association may be prosecuted to judgment.
12        (6) Notwithstanding any other provision to the
13    contrary in this Article:
14            (A) It is the intent of this Section to preserve
15        only the rights, powers, privileges, assets, property,
16        debts, obligations, and liabilities of the Illinois
17        Health Maintenance Organization Guaranty Association
18        as they existed on the date of its merger into the
19        Illinois Life and Health Insurance Guaranty
20        Association, and not to provide contract owners,
21        certificate holders, enrollees and policy owners, or
22        their respective payees, beneficiaries, or assignees,
23        with duplicative or new rights, powers, privileges,
24        assets, or property.
25            (B) Accordingly, no contract owner, certificate
26        holder, enrollee and policy owner, and no contract

 

 

SB3244- 60 -LRB100 18858 SMS 34100 b

1        owner's, certificate holder's, enrollee's or policy
2        owner's payee, beneficiary, or assignee, shall be
3        entitled to (i) a recovery from the Illinois Life and
4        Health Insurance Guaranty Association that is
5        duplicative of a previous recovery from the Illinois
6        Health Maintenance Organization Guaranty Association
7        or (ii) a recovery from the Illinois Life and Health
8        Insurance Guaranty Association on account of a claim
9        against the Illinois Health Maintenance Organization
10        Guaranty Association where the Illinois Life and
11        Health Insurance Guaranty Association is liable with
12        respect to a claim under the same policy or contract
13        under this Article.
 
14    (215 ILCS 125/Art. VI rep.)
15    Section 10. The Health Maintenance Organization Act is
16amended by repealing Article VI.
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.