101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4137

 

Introduced 1/22/2020, by Rep. Bob Morgan

 

SYNOPSIS AS INTRODUCED:
 
New Act

    Creates the Flood Insurance Act. Allows the Department of Insurance to require, through prior form approval, that an authorized insurer issues an insurance policy, contract, or endorsement that meets the private flood insurance requirements in a specified provision of federal law. Provides that flood coverage rates are not subject to prior approval by the Department of Insurance, but the Department may audit an insurer's residential flood insurance rates to ensure that rates are based on actuarial data, methodologies, and standards that are not excessive, inadequate, or unfairly discriminatory. Requires insurers to notify the Department at least 30 days before writing flood insurance in this State, to notify the Department of any changes in rates within 30 days after the effective date of the change, and to file a plan of operation and financial projections, or revisions to the plan. Requires an agent of an insurer to maintain certain evidence in his or her records. Authorizes the Department of Insurance to certify that a private flood insurance policy provides flood coverage which equals or exceeds the coverage offered by the National Flood Insurance Program, or that a private flood insurance policy meets federal requirements. Provides that an insurer or agent who knowingly misrepresents that a flood insurance policy is certified under this Act commits an unfair or deceptive act under the Uniform Deceptive Trade Practices Act.


LRB101 15156 BMS 64305 b

 

 

A BILL FOR

 

HB4137LRB101 15156 BMS 64305 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 1. Short title. This Act may be cited as the Flood
5Insurance Act.
 
6    Section 5. Purpose. The purpose of this Act is to protect
7lives and property from the increasing peril of flood and to
8encourage a robust private flood insurance market to provide
9consumer choices and alternatives to the existing National
10Flood Insurance Program.
 
11    Section 10. Prior form approval. The Department of
12Insurance may require, through prior form approval, that an
13authorized insurer issues an insurance policy, contract, or
14endorsement that meets the private flood insurance
15requirements as specified in 42 U.S.C. 4012a(b) and may not
16contain any provision that is not in compliance with 42 U.S.C.
174012a(b).
 
18    Section 15. Rates.
19    (a) Flood coverage rates established pursuant to this Act
20are not subject to prior approval by the Department of
21Insurance. An insurer must ensure that the rates are based on

 

 

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1actuarial data, methodologies, standards, and guidelines
2relating to personal lines residential flood coverage that are
3not excessive, inadequate, or unfairly discriminatory. The
4Department of Insurance may audit an insurer's personal lines
5residential flood rates to validate adherence and may require
6corrective measures.
7    (b) An insurer shall notify the Department of Insurance of
8any change to personal lines residential flood rates within 30
9days after the effective date of the change. The notice must
10include the name of the insurer and the average statewide
11percentage change in rates. Actuarial data with regard to such
12rates for flood coverage must be maintained by the insurer for
132 years after the effective date of the rate change.
 
14    Section 20. Duties of the insurer. Authorized insurers
15must:
16        (1) notify the Department of Insurance at least 30 days
17    before writing flood insurance in this State; and
18        (2) file a plan of operation and financial projections,
19    or revisions to such plan.
 
20    Section 25. Duties of an agent.
21    (a) The purpose of this Section is to reduce policyholder
22confusion and ensure adoption and acceptance of a consumer's
23actual flood risk and to ensure that the interaction between
24the insurance agent and customer occurred and that the

 

 

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1consumer's choice about flood insurance is documented with full
2transparency.
3    (b) An agent of an insurer must maintain in his or her
4records written or electronic evidence, to be signed by the
5applicant, acknowledging that:
6        (1) the agent has explained the National Flood
7    Insurance Program and private market alternatives to
8    national flood insurance coverage, including how rates may
9    affect the applicant if they choose a private insurance
10    market alternative to their existing National Flood
11    Insurance Program policy;
12        (2) a homeowner's property insurance policy, unless
13    endorsed for flood insurance coverage, does not include
14    coverage for the risk of flood; and
15        (3) unless purchased, the applicant has declined flood
16    coverage.
17    There is no specific, prescribed format for the agent
18disclosure documentation.
 
19    Section 30. Miscellaneous provisions.
20    (a) With respect to the regulation of flood coverage
21written in this State by authorized insurers, this Act
22supersedes any other provision in the Illinois Insurance Code
23in the event of a conflict.
24    (b) If federal law or rule requires a certification by the
25Department of Insurance as a condition of qualifying for

 

 

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1private flood insurance or disaster assistance, the Director of
2Insurance may provide the certification, and such
3certification is not subject to review under the Illinois
4Administrative Procedure Act.
5    (c) An authorized insurer offering flood insurance may
6request the Department of Insurance to certify that a policy,
7contract, or endorsement provides coverage for the risk of
8flood that equals or exceeds the flood coverage offered by the
9National Flood Insurance Program. To be eligible for
10certification, such policy, contract, or endorsement must
11contain a provision stating that it meets the private flood
12insurance requirements specified in 42 U.S.C. 4012a(b) and may
13not contain any provision that is not in compliance with 42
14U.S.C. 4012a(b).
15    (d) The authorized insurer or its agent may reference or
16include a certification provided by the Department of Insurance
17under subsection (b) or (c) in advertising or communications
18with an agent, a lending institution, an insured, or a
19potential insured only for a policy, contract, or endorsement
20that is certified under this Section. The authorized insurer
21may include a statement that notifies an insured of the
22certification on the declarations page or other policy
23documentation related to flood coverage certified under this
24Section.
25    (e) An insurer or agent who knowingly misrepresents that a
26flood policy, contract, or endorsement is certified under this

 

 

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1Section commits an unfair or deceptive act under the Uniform
2Deceptive Trade Practices Act.
 
3    Section 35. Rulemaking authority. The Director of
4Insurance may adopt reasonable rules as necessary to implement
5the purposes and provisions of this Act.