State of Illinois
2013 and 2014


Introduced , by Rep. Monique D. Davis


215 ILCS 5/143  from Ch. 73, par. 755
215 ILCS 5/356z.12
215 ILCS 5/1202  from Ch. 73, par. 1065.902
215 ILCS 5/1204  from Ch. 73, par. 1065.904

    Amends the Illinois Insurance Code. Deletes language that provides that the Department of Insurance shall mail a quarterly invoice to companies transacting certain kinds of business in this State for the appropriate filing fees required under the provision concerning fees and charges. Deletes language that provides that certain notice regarding coverage for a dependent shall be provided to an insured by the insurer in a notice delivered to an insured on a semi-annual basis. Provides that the Director of Insurance shall make an annual report to the General Assembly no later than July 1 (rather than April 15) every year which shall include the Director's findings and recommendations regarding certain duties. Replaces references to Secretary of Financial and Professional Regulation with Director of Insurance and makes conforming changes. Deletes language specifying the types of insurance and makes changes regarding the additional information to be included in the report that the Director requires insurers to submit showing those insurers' direct writings in this State and companywide.

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HB1552LRB098 02751 RPM 39104 b

1    AN ACT concerning insurance.
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 143, 356z.12, and 1202 and by reenacting and
6changing Section 1204 as follows:
7    (215 ILCS 5/143)  (from Ch. 73, par. 755)
8    Sec. 143. Policy forms.
9    (1) Life, accident and health. No company transacting the
10kind or kinds of business enumerated in Classes 1 (a), 1 (b)
11and 2 (a) of Section 4 shall issue or deliver in this State a
12policy or certificate of insurance or evidence of coverage,
13attach an endorsement or rider thereto, incorporate by
14reference bylaws or other matter therein or use an application
15blank in this State until the form and content of such policy,
16certificate, evidence of coverage, endorsement, rider, bylaw
17or other matter incorporated by reference or application blank
18has been filed electronically with the Director, either through
19the System for Electronic Rate and Form Filing (SERFF) or as
20otherwise prescribed by the Director, and approved by the
21Director. The Department shall mail a quarterly invoice to the
22company for the appropriate filing fees required under Section
23408. Any such endorsement or rider that unilaterally reduces



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1benefits and is to be attached to a policy subsequent to the
2date the policy is issued must be filed with, reviewed, and
3formally approved by the Director prior to the date it is
4attached to a policy issued or delivered in this State. It
5shall be the duty of the Director to withhold approval of any
6such policy, certificate, endorsement, rider, bylaw or other
7matter incorporated by reference or application blank filed
8with him if it contains provisions which encourage
9misrepresentation or are unjust, unfair, inequitable,
10ambiguous, misleading, inconsistent, deceptive, contrary to
11law or to the public policy of this State, or contains
12exceptions and conditions that unreasonably or deceptively
13affect the risk purported to be assumed in the general coverage
14of the policy. In all cases the Director shall approve or
15disapprove any such form within 60 days after submission unless
16the Director extends by not more than an additional 30 days the
17period within which he shall approve or disapprove any such
18form by giving written notice to the insurer of such extension
19before expiration of the initial 60 days period. The Director
20shall withdraw his approval of a policy, certificate, evidence
21of coverage, endorsement, rider, bylaw, or other matter
22incorporated by reference or application blank if he
23subsequently determines that such policy, certificate,
24evidence of coverage, endorsement, rider, bylaw, other matter,
25or application blank is misrepresentative, unjust, unfair,
26inequitable, ambiguous, misleading, inconsistent, deceptive,



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1contrary to law or public policy of this State, or contains
2exceptions or conditions which unreasonably or deceptively
3affect the risk purported to be assumed in the general coverage
4of the policy or evidence of coverage.
5    If a previously approved policy, certificate, evidence of
6coverage, endorsement, rider, bylaw or other matter
7incorporated by reference or application blank is withdrawn for
8use, the Director shall serve upon the company an order of
9withdrawal of use, either personally or by mail, and if by
10mail, such service shall be completed if such notice be
11deposited in the post office, postage prepaid, addressed to the
12company's last known address specified in the records of the
13Department of Insurance. The order of withdrawal of use shall
14take effect 30 days from the date of mailing but shall be
15stayed if within the 30-day period a written request for
16hearing is filed with the Director. Such hearing shall be held
17at such time and place as designated in the order given by the
18Director. The hearing may be held either in the City of
19Springfield, the City of Chicago or in the county where the
20principal business address of the company is located. The
21action of the Director in disapproving or withdrawing such form
22shall be subject to judicial review under the Administrative
23Review Law.
24    This subsection shall not apply to riders or endorsements
25issued or made at the request of the individual policyholder
26relating to the manner of distribution of benefits or to the



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1reservation of rights and benefits under his life insurance
3    (2) Casualty, fire, and marine. The Director shall require
4the filing of all policy forms issued or delivered by any
5company transacting the kind or kinds of business enumerated in
6Classes 2 (except Class 2 (a)) and 3 of Section 4 in an
7electronic format either through the System for Electronic Rate
8and Form Filing (SERFF) or as otherwise prescribed and approved
9by the Director. In addition, he may require the filing of any
10generally used riders, endorsements, certificates, application
11blanks, and other matter incorporated by reference in any such
12policy or contract of insurance. The Department shall mail a
13quarterly invoice to the company for the appropriate filing
14fees required under Section 408. Companies that are members of
15an organization, bureau, or association may have the same filed
16for them by the organization, bureau, or association. If the
17Director shall find from an examination of any such policy
18form, rider, endorsement, certificate, application blank, or
19other matter incorporated by reference in any such policy so
20filed that it (i) violates any provision of this Code, (ii)
21contains inconsistent, ambiguous, or misleading clauses, or
22(iii) contains exceptions and conditions that will
23unreasonably or deceptively affect the risks that are purported
24to be assumed by the policy, he shall order the company or
25companies issuing these forms to discontinue their use. Nothing
26in this subsection shall require a company transacting the kind



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1or kinds of business enumerated in Classes 2 (except Class 2
2(a)) and 3 of Section 4 to obtain approval of these forms
3before they are issued nor in any way affect the legality of
4any policy that has been issued and found to be in conflict
5with this subsection, but such policies shall be subject to the
6provisions of Section 442.
7    (3) This Section shall not apply (i) to surety contracts or
8fidelity bonds, (ii) to policies issued to an industrial
9insured as defined in Section 121-2.08 except for workers'
10compensation policies, nor (iii) to riders or endorsements
11prepared to meet special, unusual, peculiar, or extraordinary
12conditions applying to an individual risk.
13(Source: P.A. 97-486, eff. 1-1-12.)
14    (215 ILCS 5/356z.12)
15    Sec. 356z.12. Dependent coverage.
16    (a) A group or individual policy of accident and health
17insurance or managed care plan that provides coverage for
18dependents and that is amended, delivered, issued, or renewed
19after the effective date of this amendatory Act of the 95th
20General Assembly shall not terminate coverage or deny the
21election of coverage for an unmarried dependent by reason of
22the dependent's age before the dependent's 26th birthday.
23    (b) A policy or plan subject to this Section shall, upon
24amendment, delivery, issuance, or renewal, establish an
25initial enrollment period of not less than 90 days during which



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1an insured may make a written election for coverage of an
2unmarried person as a dependent under this Section. After the
3initial enrollment period, enrollment by a dependent pursuant
4to this Section shall be consistent with the enrollment terms
5of the plan or policy.
6    (c) A policy or plan subject to this Section shall allow
7for dependent coverage during the annual open enrollment date
8or the annual renewal date if the dependent, as of the date on
9which the insured elects dependent coverage under this
10subsection, has:
11        (1) a period of continuous creditable coverage of 90
12    days or more; and
13        (2) not been without creditable coverage for more than
14    63 days.
15An insured may elect coverage for a dependent who does not meet
16the continuous creditable coverage requirements of this
17subsection (c) and that dependent shall not be denied coverage
18due to age.
19    For purposes of this subsection (c), "creditable coverage"
20shall have the meaning provided under subsection (C)(1) of
21Section 20 of the Illinois Health Insurance Portability and
22Accountability Act.
23    (d) Military personnel. A group or individual policy of
24accident and health insurance or managed care plan that
25provides coverage for dependents and that is amended,
26delivered, issued, or renewed after the effective date of this



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1amendatory Act of the 95th General Assembly shall not terminate
2coverage or deny the election of coverage for an unmarried
3dependent by reason of the dependent's age before the
4dependent's 30th birthday if the dependent (i) is an Illinois
5resident, (ii) served as a member of the active or reserve
6components of any of the branches of the Armed Forces of the
7United States, and (iii) has received a release or discharge
8other than a dishonorable discharge. To be eligible for
9coverage under this subsection (d), the eligible dependent
10shall submit to the insurer a form approved by the Illinois
11Department of Veterans' Affairs stating the date on which the
12dependent was released from service.
13    (e) Calculation of the cost of coverage provided to an
14unmarried dependent under this Section shall be identical.
15    (f) Nothing in this Section shall prohibit an employer from
16requiring an employee to pay all or part of the cost of
17coverage provided under this Section.
18    (g) No exclusions or limitations may be applied to coverage
19elected pursuant to this Section that do not apply to all
20dependents covered under the policy.
21    (h) A policy or plan subject to this Section shall not
22condition eligibility for dependent coverage provided pursuant
23to this Section on enrollment in any educational institution.
24    (i) Notice regarding coverage for a dependent as provided
25pursuant to this Section shall be provided to an insured by the



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1        (1) upon application or enrollment;
2        (2) in the certificate of coverage or equivalent
3    document prepared for an insured and delivered on or about
4    the date on which the coverage commences; and
5        (3) (blank) in a notice delivered to an insured on a
6    semi-annual basis.
7(Source: P.A. 95-958, eff. 6-1-09.)
8    (215 ILCS 5/1202)  (from Ch. 73, par. 1065.902)
9    Sec. 1202. Duties. The Director shall:
10    (a) determine the relationship of insurance premiums and
11related income as compared to insurance costs and expenses and
12provide such information to the General Assembly and the
13general public;
14    (b) study the insurance system in the State of Illinois,
15and recommend to the General Assembly what it deems to be the
16most appropriate and comprehensive cost containment system for
17the State;
18    (c) respond to the requests by agencies of government and
19the General Assembly for special studies and analysis of data
20collected pursuant to this Article. Such reports shall be made
21available in a form prescribed by the Director. The Director
22may also determine a fee to be charged to the requesting agency
23to cover the direct and indirect costs for producing such a
24report, and shall permit affected insurers the right to review
25the accuracy of the report before it is released. The fees



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1shall be deposited into the Statistical Services Revolving Fund
2and credited to the account of the Department of Insurance;
3    (d) make an interim report to the General Assembly no later
4than August 15, 1987, and a annual report to the General
5Assembly no later than July 1 April 15 every year thereafter
6which shall include the Director's findings and
7recommendations regarding its duties as provided under
8subsections (a), (b), and (c) of this Section.
9(Source: P.A. 91-357, eff. 7-29-99.)
10    (215 ILCS 5/1204)  (from Ch. 73, par. 1065.904)
11    (Text of Section WITH the changes made by P.A. 94-677,
12which has been held unconstitutional)
13    Sec. 1204. (A) The Director Secretary shall promulgate
14rules and regulations which shall require each insurer licensed
15to write property or casualty insurance in the State and each
16syndicate doing business on the Illinois Insurance Exchange to
17record and report its loss and expense experience and other
18data as may be necessary to assess the relationship of
19insurance premiums and related income as compared to insurance
20costs and expenses. The Director Secretary may designate one or
21more rate service organizations or advisory organizations to
22gather and compile such experience and data. The Director
23Secretary shall require each insurer licensed to write property
24or casualty insurance in this State and each syndicate doing
25business on the Illinois Insurance Exchange to submit a report,



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1on a form furnished by the Director Secretary, showing its
2direct writings in this State and companywide.
3    (B) (Blank). Such report required by subsection (A) of this
4Section may include, but not be limited to, the following
5specific types of insurance written by such insurer:
6        (1) Political subdivision liability insurance reported
7    separately in the following categories:
8            (a) municipalities;
9            (b) school districts;
10            (c) other political subdivisions;
11        (2) Public official liability insurance;
12        (3) Dram shop liability insurance;
13        (4) Day care center liability insurance;
14        (5) Labor, fraternal or religious organizations
15    liability insurance;
16        (6) Errors and omissions liability insurance;
17        (7) Officers and directors liability insurance
18    reported separately as follows:
19            (a) non-profit entities;
20            (b) for-profit entities;
21        (8) Products liability insurance;
22        (9) Medical malpractice insurance;
23        (10) Attorney malpractice insurance;
24        (11) Architects and engineers malpractice insurance;
25    and
26        (12) Motor vehicle insurance reported separately for



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1    commercial and private passenger vehicles as follows:
2            (a) motor vehicle physical damage insurance;
3            (b) motor vehicle liability insurance.
4    (C) Such report may include, but need not be limited to the
5following data, both specific to this State and companywide, in
6the aggregate or by type of insurance for the previous year on
7a calendar year basis:
8        (1) Direct premiums written;
9        (2) Direct premiums earned;
10        (3) Number of policies;
11        (4) Net investment income, using appropriate estimates
12    where necessary;
13        (5) Losses paid;
14        (6) Losses incurred;
15        (7) Loss reserves:
16            (a) Losses unpaid on reported claims;
17            (b) Losses unpaid on incurred but not reported
18        claims;
19        (8) Number of claims:
20            (a) Paid claims;
21            (b) Arising claims;
22        (9) Loss adjustment expenses:
23            (a) Allocated loss adjustment expenses;
24            (b) Unallocated loss adjustment expenses;
25        (10) Net underwriting gain or loss;
26        (11) Net operation gain or loss, including net



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1    investment income;
2        (12) Any other information requested by the Director
3    Secretary.
4    (C-3) Additional information by an advisory organization
5as defined in Section 463 of this Code.
6        (1) An advisory organization as defined in Section 463
7    of this Code shall report annually the following
8    information in such format as may be prescribed by the
9    Director Secretary:
10            (a) paid and incurred losses for each of the past
11        10 years;
12            (b) medical payments and medical charges, if
13        collected, for each of the past 10 years;
14            (c) the following indemnity payment information:
15        cumulative payments by accident year by calendar year
16        of development. This array will show payments made and
17        frequency of claims in the following categories:
18        medical only, permanent partial disability (PPD),
19        permanent total disability (PTD), temporary total
20        disability (TTD), and fatalities;
21            (d) injuries by frequency and severity;
22            (e) by class of employee.
23        (2) The report filed with the Director Secretary of
24    Financial and Professional Regulation under paragraph (1)
25    of this subsection (C-3) shall be made available, on an
26    aggregate basis, to the General Assembly and to the general



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1    public. The identity of the petitioner, the respondent, the
2    attorneys, and the insurers shall not be disclosed.
3        (3) Reports required under this subsection (C-3) shall
4    be filed with the Director Secretary no later than
5    September 1 in 2006 and no later than September 1 of each
6    year thereafter.
7    (C-5) Additional information required from medical
8malpractice insurers. (1) In addition to the other requirements
9of this Section, the following information shall be included in
10the report required by subsection (A) of this Section in such
11form and under such terms and conditions as may be prescribed
12by the Director Secretary: (a) paid and incurred losses, paid
13allocated loss adjustment expenses, incurred allocated loss
14adjustment expenses, paid claim counts, incurred claim counts,
15earned exposures, and earned premiums by county for each of the
16past 10 policy years. ; (b) earned exposures by ISO code,
17policy type, and policy year by county for each of the past 10
18years; and (c) the following actuarial information:
19                (i) Base class and territory equivalent
20            exposures by report year by relative accident
21            year.
22                (ii) Cumulative loss array by accident year by
23            calendar year of development. This array will show
24            frequency of claims in the following categories:
25            open, closed with indemnity (CWI), closed with
26            expense (CWE), and closed no pay (CNP); paid



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1            severity in the following categories: indemnity
2            and allocated loss adjustment expenses (ALAE) on
3            closed claims; and indemnity and expense reserves
4            on pending claims.
5                (iii) Cumulative loss array by report year by
6            calendar year of development. This array will show
7            frequency of claims in the following categories:
8            open, closed with indemnity (CWI), closed with
9            expense (CWE), and closed no pay (CNP); paid
10            severity in the following categories: indemnity
11            and allocated loss adjustment expenses (ALAE) on
12            closed claims; and indemnity and expense reserves
13            on pending claims.
14                (iv) Maturity year and tail factors.
15                (v) Any expense, contingency ddr (death,
16            disability, and retirement), commission, tax,
17            and/or off-balance factors.
18         (2) The following information must also be annually
19        provided to the Department:
20            (a) copies of the company's reserve and surplus
21        studies; and
22            (b) consulting actuarial report and data
23        supporting the company's rate filing.
24        (3) All information collected by the Secretary under
25    paragraphs (1) and (2) shall be made available, on a
26    company-by-company basis, to the General Assembly and the



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1    general public. This provision shall supersede any other
2    provision of State law that may otherwise protect such
3    information from public disclosure as confidential.
4    (D) In addition to the information which may be requested
5under subsection (C), the Director Secretary may also request
6on a companywide, aggregate basis, Federal Income Tax
7recoverable, net realized capital gain or loss, net unrealized
8capital gain or loss, and all other expenses not requested in
9subsection (C) above.
10    (E) Violations - Suspensions - Revocations.
11        (1) Any company or person subject to this Article, who
12    willfully or repeatedly fails to observe or who otherwise
13    violates any of the provisions of this Article or any rule
14    or regulation promulgated by the Director Secretary under
15    authority of this Article or any final order of the
16    Director Secretary entered under the authority of this
17    Article shall by civil penalty forfeit to the State of
18    Illinois a sum not to exceed $2,000. Each day during which
19    a violation occurs constitutes a separate offense.
20        (2) No forfeiture liability under paragraph (1) of this
21    subsection may attach unless a written notice of apparent
22    liability has been issued by the Director Secretary and
23    received by the respondent, or the Director Secretary sends
24    written notice of apparent liability by registered or
25    certified mail, return receipt requested, to the last known
26    address of the respondent. Any respondent so notified must



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1    be granted an opportunity to request a hearing within 10
2    days from receipt of notice, or to show in writing, why he
3    should not be held liable. A notice issued under this
4    Section must set forth the date, facts and nature of the
5    act or omission with which the respondent is charged and
6    must specifically identify the particular provision of
7    this Article, rule, regulation or order of which a
8    violation is charged.
9        (3) No forfeiture liability under paragraph (1) of this
10    subsection may attach for any violation occurring more than
11    2 years prior to the date of issuance of the notice of
12    apparent liability and in no event may the total civil
13    penalty forfeiture imposed for the acts or omissions set
14    forth in any one notice of apparent liability exceed
15    $100,000.
16        (4) All administrative hearings conducted pursuant to
17    this Article are subject to 50 Ill. Adm. Code 2402 and all
18    administrative hearings are subject to the Administrative
19    Review Law.
20        (5) The civil penalty forfeitures provided for in this
21    Section are payable to the General Revenue Fund of the
22    State of Illinois, and may be recovered in a civil suit in
23    the name of the State of Illinois brought in the Circuit
24    Court in Sangamon County or in the Circuit Court of the
25    county where the respondent is domiciled or has its
26    principal operating office.



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1        (6) In any case where the Director Secretary issues a
2    notice of apparent liability looking toward the imposition
3    of a civil penalty forfeiture under this Section that fact
4    may not be used in any other proceeding before the Director
5    Secretary to the prejudice of the respondent to whom the
6    notice was issued, unless (a) the civil penalty forfeiture
7    has been paid, or (b) a court has ordered payment of the
8    civil penalty forfeiture and that order has become final.
9        (7) When any person or company has a license or
10    certificate of authority under this Code and knowingly
11    fails or refuses to comply with a lawful order of the
12    Director Secretary requiring compliance with this Article,
13    entered after notice and hearing, within the period of time
14    specified in the order, the Director Secretary may, in
15    addition to any other penalty or authority provided, revoke
16    or refuse to renew the license or certificate of authority
17    of such person or company, or may suspend the license or
18    certificate of authority of such person or company until
19    compliance with such order has been obtained.
20        (8) When any person or company has a license or
21    certificate of authority under this Code and knowingly
22    fails or refuses to comply with any provisions of this
23    Article, the Director Secretary may, after notice and
24    hearing, in addition to any other penalty provided, revoke
25    or refuse to renew the license or certificate of authority
26    of such person or company, or may suspend the license or



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1    certificate of authority of such person or company, until
2    compliance with such provision of this Article has been
3    obtained.
4        (9) No suspension or revocation under this Section may
5    become effective until 5 days from the date that the notice
6    of suspension or revocation has been personally delivered
7    or delivered by registered or certified mail to the company
8    or person. A suspension or revocation under this Section is
9    stayed upon the filing, by the company or person, of a
10    petition for judicial review under the Administrative
11    Review Law.
12(Source: P.A. 94-277, eff. 7-20-05; 94-677, eff. 8-25-05;
1395-331, eff. 8-21-07.)