95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB1688

 

Introduced 2/9/2007, by Sen. Don Harmon

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/500-82 new

    Amends the Illinois Insurance Code. Sets out the types of insurance producers that are exempt from the provisions of the Section. Requires an insurance producer to disclose in writing certain information to customers prior to binding coverage, disclose to each customer its compensation relating to that customer's policy prior to binding or renewing coverage, and disclose to each customer at the end of each calendar year all compensation received during the preceding year or anticipated to be received from any insurer or third party in connection with the placement of, renewal of, servicing of, or consultation on that customer's policy. Provides that an insurance producer may retain interest earned on premiums collected on behalf of insurers only after prior notification to the customers from whom such premiums are collected. Makes other changes.


LRB095 07160 KBJ 27288 b

 

 

A BILL FOR

 

SB1688 LRB095 07160 KBJ 27288 b

1     AN ACT concerning insurance.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Insurance Code is amended by adding
5 Section 500-82 as follows:
 
6     (215 ILCS 5/500-82 new)
7     Sec. 500-82. Business practices of certain insurance
8 producers.
9     (a) The following types of insurance producers shall be
10 exempt from the provisions of this Section:
11         (1) an insurance producer that is obligated by contract
12     to sell, solicit, or negotiate insurance on behalf of only
13     one insurer or group of affiliated insurers;
14         (2) an insurance producer that acts only as an
15     intermediary between an insurer and another insurance
16     producer, for example, a managing general agent, a sales
17     manager, or a wholesale broker;
18         (3) a reinsurance intermediary; and
19         (4) a limited lines producer.
20     (b) In this Section:
21     "Affiliate" is a person that controls, is controlled by or
22 is under common control with another person.
23     "Compensation" is any remuneration of material value

 

 

SB1688 - 2 - LRB095 07160 KBJ 27288 b

1 received by an insurance producer in connection with the
2 placement of, renewal of, servicing of, or consultation on any
3 policy, including, but not limited to, money credits, loans,
4 forgiveness of principal or interest, vacations, prizes,
5 gifts, or the payment of employee salaries or expenses.
6     "Customer" is a person who signs an application or
7 submission for insurance or the authorized representative of an
8 insured or prospective insured who actually negotiates the
9 placement or renewal of insurance. A person shall not be
10 considered a customer for purposes of this Section if the
11 person is merely a participant in or beneficiary of an employee
12 benefit plan or is covered by a group or blanket insurance
13 policy or group annuity contract sold, solicited, or negotiated
14 by the insurance producer or an affiliate.
15     "Government authority" is any judicial, insurance
16 regulatory, or other administrative authority of the United
17 States or any state.
18     (c) In placing, renewing, servicing, or consulting on any
19 policy, an insurance producer shall:
20         (1) prior to binding coverage, disclose in writing the
21     following to each customer:
22             (A) all quotes and indications sought and all
23         quotes and indications received by the insurance
24         producer in connection with the coverage of the
25         customer's risk with all terms, including, but not
26         limited to, any interest of the insurance producer in

 

 

SB1688 - 3 - LRB095 07160 KBJ 27288 b

1         or contractual agreements with any of the prospective
2         insurers; and
3             (B) for each quote or indication, all compensation
4         to be received by the insurance producer from any
5         insurer or third party in connection with the placement
6         of, renewal of, servicing of, or consultation on
7         insurance for that customer, in dollars if known at the
8         time or as a percent of premium if the dollar amount is
9         not known at the time, or if the amount of such
10         compensation is contingent, a description of the
11         method and specific factors that will be utilized to
12         calculate such compensation;
13         (2) provide disclosure to each customer of its
14     compensation in plain, unambiguous written language in
15     dollars if known at the time or as a percent of premium, or
16     if the amount of such compensation is contingent, a
17     description of the method and specific factors that will be
18     utilized to calculate such compensation relating to that
19     customer's policy and obtain written consent therefor from
20     each customer prior to binding or renewing coverage; and
21         (3) disclose to each customer at the end of each
22     calendar year all compensation received during the
23     preceding year or anticipated to be received from any
24     insurer or third party in connection with the placement,
25     renewal, servicing of, or consultation on that customer's
26     policy.

 

 

SB1688 - 4 - LRB095 07160 KBJ 27288 b

1     (d) An insurance producer may retain interest earned on
2 premiums collected on behalf of insurers only after prior
3 notification to the customers from whom such premiums are
4 collected.