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09300SB2301sam001 |
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LRB093 19642 SAS 47776 a |
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| less than $15,000,000
determined in
accordance with |
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| accounting rules that are applicable to
authorized |
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| insurers;
and
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| (b) that has standards of solvency and management that |
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| are adequate
for the protection of policyholders; and
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| (c) where an unauthorized insurer does not meet the
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| standards set forth
in (a) and (b) above, a surplus line |
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| producer may, if necessary, procure
insurance from that |
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| insurer only if prior written warning of
such fact or
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| condition is given to the insured by the insurance producer |
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| or surplus line
producer.
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| (2) Surplus line producer; license. Any licensed producer |
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| who is a
resident of this State, or any nonresident who |
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| qualifies under Section
500-40, may be licensed as a surplus |
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| line producer upon:
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| (a) completing a prelicensing course of study. The
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| course provided for by this Section shall be conducted
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| under rules and
regulations prescribed by the Director. The |
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| Director may administer the
course or may make |
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| arrangements, including contracting with
an outside
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| educational service, for administering the course and
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| collecting the non-refundable application fee provided for |
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| in this subsection.
Any
charges assessed
by the Director or |
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| the educational service for administering
the course
shall |
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| be paid directly by the individual applicants. Each |
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| applicant
required to take the course shall enclose with |
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| the application a non-refundable
$20
application
fee |
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| payable to the Director plus a separate course
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| administration fee. An applicant who fails to appear for |
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| the
course as scheduled, or appears but fails to complete |
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| the
course, shall not be
entitled to any refund, and shall |
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| be required to submit a new request to
attend the course |
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| together with all the requisite fees before being |
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| rescheduled
for another course at a later date; and
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09300SB2301sam001 |
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LRB093 19642 SAS 47776 a |
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| (b) payment of an annual license fee of $400; and
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| (c) procurement of the surety bond required in |
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| subsection (4) of this
Section.
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| A surplus line producer so licensed shall keep a separate
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| account of
the business transacted thereunder which shall be |
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| open at all times to the
inspection of the Director or his |
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| representative.
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| The prelicensing course of study requirement in (a) above
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| shall not apply to insurance
producers who were licensed under |
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| the Illinois surplus line law on or before
the effective
date
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| of this amendatory Act of the 92nd General Assembly.
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| (3) Taxes and reports.
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| (a) Surplus line tax and penalty for late payment.
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| For each policy or contract of insurance issued under his |
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| or her license, and any subsequent endorsments thereto, a |
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| surplus line producer shall compute a surplus line tax based on |
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| the gross premium less returned premium according to the |
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| following table:
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19 | | Policy Effective Date | Tax Rate |
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20 | | Prior to July 1, 2003 | 3.0% |
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21 | | July 1, 2003 & thereafter | 3.5% |
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| The tax rate in effect on the policy effective date shall |
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| apply to the policy and to all subsequent endorsements for that |
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| policy.
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| A surplus line producer shall file with the Director on |
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| or
before
February 1 and August 1 of each year a report in |
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| the form prescribed by the
Director on all surplus line |
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| insurance policies and endorsements filed with the Surplus |
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| Line Association of Illinois pursuant to subsection (4) of |
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| this Section
procured from unauthorized insurers
during |
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| the preceding
6 month period ending December 31 or June 30
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| respectively, and on the filing of such report shall pay to |
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| the Director
for the use and benefit of the State the |
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| surplus line taxes for the reported policies and |
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09300SB2301sam001 |
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LRB093 19642 SAS 47776 a |
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| endorsements. At no time shall a surplus line producer pay |
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| surplus line tax, relating to a surplus line insurance |
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| policy or endorsement, that is different than the tax |
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| computed at the rate that was in effect at the time that |
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| policy incepted.
a sum equal to 3.5% of the
gross
premiums |
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| less returned premiums upon all surplus line insurance |
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| procured
or cancelled during the preceding 6 months.
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| Any surplus line producer who fails to pay the full |
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| amount due under this
subsection is liable, in addition to |
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| the amount due, for such
penalty and interest charges as |
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| are provided for under Section 412 of
this Code. The |
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| Director, through the
Attorney General, may
institute an |
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| action in the name of the People of the State of Illinois, |
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| in
any court of competent jurisdiction, for the recovery of |
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| the amount of such
taxes and penalties due, and prosecute |
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| the same to final judgment, and take
such steps as are |
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| necessary to collect the same.
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| (b) Fire Marshal Tax.
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| Each surplus line producer shall file with the Director |
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| on or before
March 31 of each year a report in the form |
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| prescribed by the Director on all
fire insurance policies |
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| and endorsements filed with the Surplus Line Association of |
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| Illinois pursuant to subsection (4) of this Section during |
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| the preceding calendar year and
procured from unauthorized |
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| insurers subject to tax under
Section 12 of the Fire |
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| Investigation
Act
and shall pay to the Director the fire |
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| marshal tax required thereunder for the reported policies |
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| and endorsements . At no time shall a surplus line producer |
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| pay fire marshal tax relating to a surplus line insurance |
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| policy or endorsement that is different than the tax |
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| computed at the rate that was in effect at the time that |
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| policy incepted.
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| (c) Taxes and fees charged to insured. The taxes |
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| imposed under this
subsection and the countersigning fees |
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09300SB2301sam001 |
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LRB093 19642 SAS 47776 a |
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| charged by the Surplus Line
Association of Illinois may be |
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| charged to and collected from surplus line
insureds.
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| (4) Bond. Each surplus line producer, as a condition to |
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| receiving a
surplus line producer's license, shall execute and |
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| deliver to the Director
a surety bond to the People of the |
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| State in the penal sum of $20,000, with
a surety which is |
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| authorized to transact business in this State,
conditioned that |
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| the surplus line producer will pay to the Director the tax,
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| interest and penalties levied under subsection (3) of this |
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| Section.
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| (5) Submission of documents to Surplus Line Association of |
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| Illinois.
A surplus line producer shall submit every insurance |
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| contract
issued
under his or her license to the Surplus Line |
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| Association of Illinois for
recording and countersignature. |
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| The submission and countersignature may be
effected through |
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| electronic means. The submission shall set
forth:
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| (a) the name of the insured;
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| (b) the description and location of the insured |
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| property or
risk;
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| (c) the amount insured;
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| (d) the gross premiums charged or returned;
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| (e) the name of the unauthorized insurer or domestic |
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| surplus line
insurer as defined in Section 445a from whom |
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| coverage has been procured;
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| (f) the kind or kinds of insurance procured; and
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| (g) amount of premium subject to tax required by |
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| Section 12 of the Fire
Investigation Act.
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| Proposals, endorsements, and other documents which are
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| incidental to the insurance but which do not affect the |
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| premium
charged
are exempted from filing and |
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| countersignature.
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| The submission of insuring contracts
to the Surplus |
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| Line Association of
Illinois constitutes a certification |
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| by the surplus line producer or by the
insurance producer |
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09300SB2301sam001 |
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LRB093 19642 SAS 47776 a |
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| who presented the risk to the surplus line producer for
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| placement as a surplus line risk that
after diligent effort |
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| the required insurance could not be procured from
insurers |
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| which are authorized to transact business in this
State |
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| other than
domestic surplus line insurers as defined in |
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| Section 445a and that
such procurement was otherwise in |
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| accordance with the surplus line law.
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| (6) Countersignature required. It shall be unlawful for an |
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| insurance
producer to deliver any unauthorized insurer
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| contract or domestic
surplus line insurer contract unless such
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| insurance contract is countersigned by the Surplus Line |
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| Association of
Illinois.
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| (7) Inspection of records. A surplus line producer shall
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| maintain
separate records of the business transacted under his |
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| or her license,
including complete copies of surplus line |
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| insurance contracts maintained on
paper or by electronic means, |
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| which
records shall be open at all times for inspection by the |
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| Director and by
the Surplus Line Association of Illinois.
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| (8) Violations and penalties. The Director may suspend or |
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| revoke or
refuse to renew a surplus line producer license for |
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| any violation of this Code.
In addition to or in lieu of |
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| suspension or revocation, the Director may
subject a surplus |
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| line producer
to a civil penalty of up to $2,000 for each cause |
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| for suspension
or
revocation. Such penalty is enforceable under |
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| subsection (5) of Section
403A of this Code.
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| (9) Director may declare insurer ineligible. If the
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| Director determines
that the further assumption of risks might |
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| be hazardous to the
policyholders of an unauthorized insurer, |
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| the Director may
order the
Surplus Line Association of
Illinois |
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| not to countersign insurance contracts evidencing insurance in
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| such insurer and order surplus line producers to cease
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| procuring insurance
from such insurer.
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| (10) Service of process upon Director. Insurance contracts
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| delivered under this Section from unauthorized insurers shall |
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09300SB2301sam001 |
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LRB093 19642 SAS 47776 a |
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| contain a
provision designating the
Director and his successors |
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| in office the true and lawful attorney of the
insurer upon whom |
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| may be served all lawful process in any
action, suit or
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| proceeding arising out of such insurance.
Service of process |
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| made upon the Director to be valid hereunder must state
the |
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| name of the insured, the name of the unauthorized insurer
and |
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| identify
the contract of insurance. The Director at his option |
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| is authorized to
forward a copy of the process to the Surplus |
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| Line Association of Illinois
for delivery to the unauthorized |
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| insurer or the Director may deliver the process to the
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| unauthorized insurer by other means which he considers to be
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| reasonably
prompt and certain.
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| (11) The Illinois Surplus Line law does not apply to |
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| insurance of
property and operations of railroads or aircraft |
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| engaged in interstate or
foreign commerce, insurance of |
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| vessels, crafts or hulls, cargoes, marine
builder's risks, |
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| marine protection and indemnity, or other risks including
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| strikes and war risks insured under ocean or wet marine forms |
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| of policies.
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| (12) Surplus line insurance procured under this Section, |
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| including
insurance procured from a domestic surplus line |
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| insurer, is not subject
to the provisions of the Illinois |
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| Insurance Code other than Sections 123,
123.1, 401, 401.1, 402, |
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| 403, 403A, 408, 412, 445, 445.1, 445.2, 445.3,
445.4, and all |
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| of the provisions of Article XXXI to the extent that the
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| provisions of Article XXXI are not inconsistent with the terms |
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| of this Act.
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| (Source: P.A. 92-386, eff. 1-1-02; 93-29, eff. 6-20-03; 93-32, |
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| eff.
7-1-03.)
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| Section 99. Effective date. This Act takes effect upon |
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| becoming law.".
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