SB2589 EnrolledLRB099 18821 MLM 43206 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 123B-2, 123B-3, 123B-4, and 123B-7 as
6follows:
 
7    (215 ILCS 5/123B-2)  (from Ch. 73, par. 735B-2)
8    (Section scheduled to be repealed on January 1, 2017)
9    Sec. 123B-2. Definitions. As used in this Article:
10    (1) "Director" means the Director of the Department of
11Insurance.
12    (2) "Completed operations liability" means liability
13arising out of the installation, maintenance, or repair of any
14product at a site which is not owned or controlled by:
15        (a) any person who performs that work; or
16        (b) any person who hires an independent contractor to
17    perform that work; but shall include liability for
18    activities which are completed or abandoned before the date
19    of the occurrence giving rise to the liability.
20    (3) "Domicile", for purposes of determining the state in
21which a purchasing group is domiciled, means:
22        (a) for a corporation, the state in which the
23    purchasing group is incorporated; and

 

 

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1        (b) for an unincorporated entity, the state of its
2    principal place of business.
3    (4) "Hazardous financial condition" means that, based on
4its present or reasonably anticipated financial condition, a
5risk retention group, although not yet financially impaired or
6insolvent, is unlikely to be able:
7        (a) to meet obligations to policyholders with respect
8    to known claims and reasonably anticipated claims; or
9        (b) to pay other obligations in the normal course of
10    business.
11    (5) "Insurance" means primary insurance, excess insurance,
12reinsurance, surplus lines insurance, and any other
13arrangement for shifting and distributing risk which is
14determined to be insurance under the laws of Illinois.
15    (6) "Liability" means:
16        (a) legal liability for damages (including costs of
17    defense, legal costs and fees, and other claims expenses)
18    because of injuries to other persons, damage to their
19    property, or other damage or loss to such other persons
20    resulting from or arising out of:
21            (i) any business (whether for profit or not for
22        profit), trade, product, services (including
23        professional services), premises, or operations; or
24            (ii) any activity of any state or local government,
25        or any agency or political subdivision thereof; but
26        (b) does not include personal risk liability and an

 

 

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1    employer's liability with respect to its employees other
2    than legal liability under the Federal Employers'
3    Liability Act (45 U.S.C. 51 et seq.).
4    (7) "Personal risk liability" means liability for damage
5because of injury to any person, damage to property, or other
6loss or damage resulting from any personal, familial, or
7household responsibilities or activities, rather than from
8responsibilities or activities referred to in paragraph (a) of
9subsection (6) of this Section;
10    (8) "Plan of operation or a feasibility study" means an
11analysis which presents the expected activities and results of
12a risk retention group including, at a minimum:
13        (a) information sufficient to verify that its members
14    are engaged in businesses or activities similar or related
15    with respect to the liability to which such members are
16    exposed by virtue of any related, similar, or common
17    business, trade, product, services, premises or
18    operations;
19        (b) for each state in which it intends to operate, the
20    coverages, deductibles, coverage limits, rates, and rating
21    classification systems for each line of insurance the group
22    intends to offer;
23        (c) historical and expected loss experience of the
24    proposed members and national experience of similar
25    exposures to the extent this experience is reasonably
26    available;

 

 

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1        (d) pro forma financial statements and projections;
2        (e) appropriate opinions by a qualified, independent
3    casualty actuary, including a determination of minimum
4    premium or participation levels required to commence
5    operations and to prevent a hazardous financial condition;
6        (f) identification of management, underwriting and
7    claims procedures, marketing methods, managerial oversight
8    methods, investment policies and reinsurance agreements;
9    and
10        (f-5) identification of each state in which the risk
11    retention group has obtained, or sought to obtain, a
12    charter and license and a description of its status in each
13    such state; and
14        (g) such other matters as may be prescribed by the
15    commissioner of the state in which the group is chartered
16    for liability insurance companies authorized by the
17    insurance laws of such state.
18    (9) "Product liability" means liability for damages
19because of any personal injury, death, emotional harm,
20consequential economic damage, or property damage (including
21damages resulting from the loss of use of property) arising out
22of the manufacture, design, importation, distribution,
23packaging, labeling, lease, or sale of a product, but does not
24include the liability of any person for those damages if the
25product involved was in the possession of such a person when
26the incident giving rise to the claim occurred.

 

 

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1    (10) "Purchasing group" means any group which:
2        (a) has as one of its purposes the purchase of
3    liability insurance on a group basis;
4        (b) purchases such insurance only for its group members
5    and only to cover their similar or related liability
6    exposure, as described in paragraph (c) of this subsection
7    (10);
8        (c) is composed of members whose businesses or
9    activities are similar or related with respect to the
10    liability to which members are exposed by virtue of any
11    related, similar, or common business, trade, product,
12    services, premises, or operations; and
13        (d) is domiciled in any State.
14    (11) "Risk retention group" means any corporation or other
15limited liability association:
16        (a) whose primary activity consists of assuming and
17    spreading all, or any portion, of the liability exposure of
18    its group members;
19        (b) which is organized for the primary purpose of
20    conducting the activity described under paragraph (a) of
21    this subsection (11);
22        (c) which:
23            (i) is organized and licensed as a liability
24        insurance company and authorized to engage in the
25        business of insurance under the laws of any state; or
26            (ii) before January 1, 1985 was organized or

 

 

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1        licensed and authorized to engage in the business of
2        insurance under the laws of Bermuda or the Cayman
3        Islands and, before such date, had certified to the
4        insurance commissioner of at least one state that it
5        satisfied the capitalization requirements of such
6        state, except that any such group shall be considered
7        to be a risk retention group only if it has been
8        engaged in business continuously since such date and
9        only for the purposes of continuing to provide
10        insurance to cover product liability or completed
11        operations liability (as such terms were defined in the
12        Product Liability Risk Retention Act of 1981 before the
13        date of the enactment of the Risk Retention Act of
14        1986);
15        (d) which does not exclude any person from membership
16    in the group solely to provide for members of such a group
17    a competitive advantage over such a person;
18        (e) which:
19            (i) has as its owners (directly or indirectly) only
20        persons who comprise the membership of the risk
21        retention group and who are provided insurance by such
22        group; or
23            (ii) has as its sole owner (directly or indirectly)
24        an organization which:
25                (I) has as its members only persons who
26            comprise the membership of the risk retention

 

 

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1            group; and
2                (II) has as its owners only persons who
3            comprise the membership of the risk retention
4            group and who are provided insurance by such group;
5        (f) whose members are engaged in businesses or
6    activities similar or related with respect to the liability
7    of which such members are exposed by virtue of any related,
8    similar, or common business, trade, product, services,
9    premises, or operations;
10        (g) whose activities do not include the provision of
11    insurance other than:
12            (i) liability insurance for assuming and spreading
13        all or any portion of the liability of its group
14        members; and
15            (ii) reinsurance with respect to the liability of
16        any other risk retention group (or any members of such
17        other group) which is engaged in businesses or
18        activities so that such group or member meets the
19        requirement described in paragraph (f) of this
20        subsection (11) for membership in the risk retention
21        group which provides such reinsurance; and
22        (h) the name of which includes the phrase "Risk
23    Retention Group".
24    (12) "State" means any state of the United States or the
25District of Columbia.
26    (13) "NAIC" means the National Association of Insurance

 

 

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1Commissioners.
2(Source: P.A. 85-131.)
 
3    (215 ILCS 5/123B-3)  (from Ch. 73, par. 735B-3)
4    (Section scheduled to be repealed on January 1, 2017)
5    Sec. 123B-3. Risk retention groups organized in this State.
6    A. A risk retention group shall either:
7        (1) pursuant to the provisions of Articles II or III,
8    be organized to write only liability insurance and, except
9    as provided elsewhere in this Article, must comply with all
10    of the laws, rules, regulations and requirements
11    applicable to such insurers organized in this State and
12    with Section 123B-4 of this Article to the extent such
13    requirements are not a limitation on laws, rules,
14    regulations or requirements of this State; or
15        (2) pursuant to the provisions of Article VIIC, be
16    organized to write only liability insurance as a captive
17    insurance company and, except as provided elsewhere in this
18    Article, must comply with all of the laws, rules,
19    regulations and requirements applicable to such insurers
20    organized in this State and with Section 123B-4 of this
21    Article to the extent such requirements are not a
22    limitation on laws, rules, regulations or requirements of
23    this State.
24    Except that, as of the effective date of this amendatory
25Act of 1995, a new risk retention group must qualify under

 

 

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1paragraph (1) of this subsection, and any risk retention group
2presently organized in accordance with paragraph (2) of this
3subsection shall amend its articles of incorporation and comply
4with paragraph (1) of this subsection within 6 months of the
5effective date of this amendatory Act of 1995 or cease
6operating under this Article.
7    B. Before it may offer insurance in any state, each risk
8retention group shall also submit for approval to the Director
9a plan of operation or a feasibility study and revisions of
10such plan or study if the group intends to offer any additional
11lines of liability insurance. In the event of any subsequent
12material change in any item of its plan or study, such risk
13retention group shall submit an appropriate revision to the
14Director within 10 days of any such change for approval by the
15Director. The group shall not offer any additional kinds of
16liability insurance, in this State or in any other state, until
17a revision of such plan or study is approved by the Director.
18    C. At the time of filing its application for organization,
19the risk retention group shall provide to the Director in
20summary form the following information: the identity of the
21initial members of the group, the identity of those individuals
22who organized the group or who will provide administrative
23services or otherwise influence or control the activities of
24the group, the amount and nature of initial capitalization, the
25coverages to be afforded, and the states in which the group
26intends to operate. Upon receipt of this information, the

 

 

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1Director shall forward the information to the NAIC. Providing
2notification to the NAIC is in addition to and shall not be
3sufficient to satisfy the requirements of Section 123B-4 of
4this Code or any other provisions of this Article.
5    D. The name under which a risk retention group may be
6organized and licensed shall include the phrase "Risk Retention
7Group".
8    E. Notwithstanding any other provision to the contrary, all
9risk retention groups chartered in this State shall file an
10annual statement with the Department and NAIC the National
11Association of Insurance Commissioners (NAIC). The annual
12statement shall be in a form prescribed by the Director. The
13statement may be required to be in diskette form. The statement
14shall be completed in accordance with the annual statement
15instructions and the NAIC Accounting Practices and Procedures
16Manual.
17    F. As used in this subsection F:
18    "Board of directors" means the governing body of the risk
19retention group elected by shareholders or members to establish
20policy, elect or appoint officers and committees, and make
21other governing decisions.
22    "Director" means a natural person designated in the
23articles of the risk retention group, or designated, elected,
24or appointed by any other manner, name, or title, to act as a
25director.
26    "Material relationship" means a relationship of a person

 

 

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1with the risk retention group that includes, but is not limited
2to:
3        (a) The receipt in any one 12-month period of
4    compensation or payment of any other item of value by the
5    person, a member of the person's immediate family, or any
6    business with which the person is affiliated from the risk
7    retention group or a consultant or services provider to the
8    risk retention group is greater than or equal to 5% of the
9    risk retention group's gross written premium for the
10    12-month period or 2% of its surplus, whichever is greater,
11    as measured at the end of any fiscal quarter falling in a
12    12-month period. The person or immediate family member of
13    that person is not independent until one year after his or
14    her compensation from the risk retention group falls below
15    the threshold.
16        (b) A relationship with the auditor as follows: a
17    director or an immediate family member of a director who is
18    affiliated with or employed in a professional capacity by a
19    present or former internal or external auditor of the risk
20    retention group is not independent until one year after the
21    end of the affiliation, employment, or auditing
22    relationship.
23        (c) A relationship with a related entity as follows: a
24    director or an immediate family member of a director who is
25    employed as an executive officer of another company where
26    any of the risk retention group's present executives serve

 

 

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1    on that other company's board of directors is not
2    independent until one year after the end of the service or
3    the employment relationship.
4    Within one year after the effective date of this amendatory
5Act of the 99th General Assembly, existing risk retention
6groups shall be in compliance with the following governance
7standards and new risk retention groups shall be in compliance
8with the standards at the time of licensure:
9        (1) The board of directors of the risk retention group
10    shall have a majority of independent directors. If the risk
11    retention group is a reciprocal, then the attorney-in-fact
12    shall adhere to the same standards regarding independence
13    of operations and governance as imposed on the risk
14    retention group's board of directors or subscribers
15    advisory committee under these standards and, to the extent
16    permissible under State law, service providers of a
17    reciprocal risk retention group shall contract with the
18    risk retention group and not the attorney-in-fact.
19        No director qualifies as independent unless the board
20    of directors affirmatively determines that the director
21    has no material relationship with the risk retention group.
22    Each risk retention group shall disclose these
23    determinations to the Department at least annually and the
24    Director may approve or refute the board's determination.
25    For this purpose, any person that is a direct or indirect
26    owner of or subscriber in the risk retention group (or is

 

 

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1    an officer, director, or employee of an owner and insured,
2    unless some other position of the officer, director, or
3    employee constitutes a material relationship), as
4    contemplated by 15 U.S.C. 3901(a)(4)(E)(ii), shall be
5    deemed independent.
6        A material relationship shall not be deemed to exist by
7    reason that a majority of the membership of the related
8    entity's board of directors is the same as the membership
9    of the board of directors of the risk retention group
10    unless the director decides otherwise.
11        (2) The term of any material service provider contract
12    with the risk retention group shall not exceed 5 years. Any
13    contract, or its renewal, shall require the approval of the
14    majority of the risk retention group's independent
15    directors. The risk retention group's board of directors
16    shall have the right to terminate any service provider,
17    audit, or actuarial contracts at any time for cause after
18    providing adequate notice as defined in the contract. The
19    service provider contract is deemed material if the amount
20    to be paid for the contract is greater than or equal to 5%
21    of the risk retention group's annual gross written premium
22    or 2% of its surplus, whichever is greater.
23        No service provider in a material relationship with the
24    risk retention group shall enter into a contract with the
25    risk retention group unless the risk retention group has
26    notified the Director of Insurance in writing of its

 

 

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1    intention to enter into a transaction at least 30 days
2    prior thereto and the Director of Insurance has not
3    disapproved it within that period.
4        For the purposes of this paragraph (2), "service
5    providers" includes captive managers, auditors,
6    accountants, actuaries, investment advisors, lawyers,
7    managing general underwriters, and other parties
8    responsible for underwriting, determination of rates,
9    collection of premium, adjusting and settling claims or
10    preparation of financial statements.
11        "Lawyers" does not include defense counsel retained by
12    the risk retention group to defend claims, unless the
13    amount of fees paid to the lawyers meet the definition of a
14    material relationship.
15        (3) The risk retention group's board of directors shall
16    adopt a written policy in the plan of operation as approved
17    by the board that requires the board to:
18            (a) ensure that all owner-insureds of the risk
19        retention group receive evidence of ownership
20        interest;
21            (b) develop a set of governance standards
22        applicable to the risk retention group;
23            (c) oversee the evaluation of the risk retention
24        group's management, including, but not limited to, the
25        performance of the captive manager, managing general
26        underwriter, or other party or parties responsible for

 

 

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1        underwriting, determination of rates, collection of
2        premium, adjusting or settling claims or the
3        preparation of financial statements;
4            (d) review and approve the amount to be paid for
5        all material service providers; and
6            (e) review and approve at least annually:
7                (i) the risk retention group's goals and
8            objectives relevant to the compensation of
9            officers and service providers;
10                (ii) the officers' and service providers'
11            performance in light of those goals and
12            objectives; and
13                (iii) the continued engagement of the officers
14            and material service providers.
15        (4) The risk retention group shall have an audit
16    committee composed of at least 3 independent board members
17    as defined in this subsection F. A non-independent board
18    member may participate in the activities of the audit
19    committee, if invited by the members, but cannot be a
20    member of the committee.
21        The audit committee shall have a written charter that
22    defines the committee's purpose, which at a minimum must be
23    to:
24            (a) assist board oversight of: (I) the integrity of
25        the financial statements, (II) the compliance with
26        legal and regulatory requirements, and (III) the

 

 

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1        qualifications, independence, and performance of the
2        independent auditor and actuary;
3            (b) discuss the annual audited financial
4        statements and quarterly financial statements with
5        management;
6            (c) discuss the annual audited financial
7        statements with its independent auditor and, if
8        advisable, discuss its quarterly financial statements
9        with its independent auditor;
10            (d) discuss policies with respect to risk
11        assessment and risk management;
12            (e) meet separately and periodically, either
13        directly or through a designated representative of the
14        committee, with management and independent auditors;
15            (f) review with the independent auditor any audit
16        problems or difficulties and management's response;
17            (g) set clear hiring policies of the risk retention
18        group as to the hiring of employees or former employees
19        of the independent auditor;
20            (h) require the external auditor to rotate the lead
21        or coordinating audit partner having primary
22        responsibility for the risk retention group's audit as
23        well as the audit partner responsible for reviewing
24        that audit so that neither individual performs audit
25        services for more than 5 consecutive fiscal years; and
26            (i) report regularly to the board of directors.

 

 

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1        The Department may waive the requirement to establish
2    an audit committee composed of independent board members if
3    the risk retention group is able to demonstrate to the
4    Department that it is impracticable to do so and the risk
5    retention group's board of directors itself is otherwise
6    able to accomplish the purposes of an audit committee as
7    described in this paragraph (4).
8        (5) The board of directors shall adopt and disclose
9    governance standards, either through electronic or other
10    means, and provide information to members and insureds upon
11    request, including, but not limited to:
12            (a) a process by which the directors are elected by
13        the owner or insureds;
14            (b) director qualification standards;
15            (c) director responsibilities;
16            (d) director access to management and, as
17        necessary and appropriate, independent advisors;
18            (e) director compensation;
19            (f) director orientation and continuing education;
20            (g) the policies and procedures that are followed
21        for management succession; and
22            (h) the policies and procedures that are followed
23        for annual performance evaluation of the board.
24        (6) The board of directors shall adopt and disclose a
25    code of business conduct and ethics for directors,
26    officers, and employees and promptly disclose to the board

 

 

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1    of directors any waivers of the code for directors or
2    executive officers. The code of business conduct and ethics
3    shall include, but is not limited to, the following topics:
4            (a) conflicts of interest;
5            (b) matters covered under the corporate
6        opportunities doctrine under the state of domicile;
7            (c) confidentiality;
8            (d) fair dealing;
9            (e) protection and proper use of risk retention
10        group assets;
11            (f) compliance with all applicable laws, rules,
12        and regulations; and
13            (g) the required reporting of any illegal or
14        unethical behavior that affects the operation of the
15        risk retention group.
16        (7) The captive manager, president, or chief executive
17    officer of the risk retention group shall promptly notify
18    the Department in writing if he or she becomes aware of any
19    material non-compliance with any of these governance
20    standards.
21(Source: P.A. 89-97, eff. 7-7-95.)
 
22    (215 ILCS 5/123B-4)  (from Ch. 73, par. 735B-4)
23    (Section scheduled to be repealed on January 1, 2017)
24    Sec. 123B-4. Risk retention groups not organized in this
25State. Any risk retention group organized and licensed in a

 

 

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1state other than this State and seeking to do business as a
2risk retention group in this State shall comply with the laws
3of this State as follows:
4    A. Notice of operations and designation of the Director as
5agent.
6    Before offering insurance in this State, a risk retention
7group shall submit to the Director on a form prescribed by the
8NAIC approved by the Director:
9        (1) a statement identifying the state or states in
10    which the risk retention group is organized and licensed as
11    a liability insurance company, its date of organization,
12    its principal place of business, and such other
13    information, including information on its membership, as
14    the Director may require to verify that the risk retention
15    group is qualified under subsection (11) of Section 123B-2
16    of this Article;
17        (2) a copy of its plan of operations or a feasibility
18    study and revisions of such plan or study submitted to its
19    state of domicile; provided, however, that the provision
20    relating to the submission of a plan of operation or a
21    feasibility study shall not apply with respect to any line
22    or classification of liability insurance which (a) was
23    defined in the Product Liability Risk Retention Act of 1981
24    before October 27, 1986, and (b) was offered before such
25    date by any risk retention group which had been organized
26    and operating for not less than 3 years before such date;

 

 

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1    and
2        (3) a statement of registration which designates the
3    Director as its agent for the purpose of receiving service
4    of legal documents or process, together with a filing fee
5    of $200 payable to the Director.
6    A risk retention group shall submit a copy of any material
7revision to its plan of operation or feasibility study required
8by subsection B of Section 123B-3 of this Code within 30 days
9after the date of the approval of the revision by the Director
10or, if no such approval is required, within 30 days after
11filing.
12    B. Financial condition. Any risk retention group doing
13business in this State shall submit to the Director:
14        (1) a copy of the group's financial statement submitted
15    to the state in which the risk retention group is organized
16    and licensed, which shall be certified by an independent
17    public accountant and contain a statement of opinion on
18    loss and loss adjustment expense reserves made by a member
19    of the American Academy of Actuaries or a qualified loss
20    reserve specialist (under criteria established by the NAIC
21    National Association of Insurance Commissioners);
22        (2) a copy of each examination of the risk retention
23    group as certified by the public official conducting the
24    examination;
25        (3) upon request by the Director, a copy of any
26    information or document pertaining to any outside audit

 

 

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1    performed with respect to the risk retention group; and
2        (4) such information as may be required to verify its
3    continuing qualification as a risk retention group under
4    subsection (11) of Section 123B-2.
5    C. Taxation.
6        (1) Each risk retention group shall be liable for the
7    payment of premium taxes and taxes on premiums of direct
8    business for risks resident or located within this State,
9    and shall report to the Director the net premiums written
10    for risks resident or located within this State. Such risk
11    retention group shall be subject to taxation, and any
12    applicable fines and penalties related thereto, on the same
13    basis as a foreign admitted insurer.
14        (2) To the extent licensed insurance producers are
15    utilized pursuant to Section 123B-11, they shall report to
16    the Director the premiums for direct business for risks
17    resident or located within this State which such licensees
18    have placed with or on behalf of a risk retention group not
19    organized in this State.
20        (3) To the extent that licensed insurance producers are
21    utilized pursuant to Section 123B-11, each such producer
22    shall keep a complete and separate record of all policies
23    procured from each such risk retention group, which record
24    shall be open to examination by the Director, as provided
25    in Section 506.1 of this Code. These records shall, for
26    each policy and each kind of insurance provided thereunder,

 

 

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1    include the following:
2            (a) the limit of the liability;
3            (b) the time period covered;
4            (c) the effective date;
5            (d) the name of the risk retention group which
6        issued the policy;
7            (e) the gross premium charged; and
8            (f) the amount of return premiums, if any.
9    D. Compliance With unfair claims practices provisions. Any
10risk retention group, its agents and representatives shall be
11subject to the unfair claims practices provisions of Sections
12154.5 through 154.8 of this Code.
13    E. Deceptive, false, or fraudulent practices. Any risk
14retention group shall comply with the laws of this State
15regarding deceptive, false, or fraudulent acts or practices.
16However, if the Director seeks an injunction regarding such
17conduct, the injunction must be obtained from a court of
18competent jurisdiction.
19    F. Examination regarding financial condition. Any risk
20retention group must submit to an examination by the Director
21to determine its financial condition if the commissioner of
22insurance of the jurisdiction in which the group is organized
23and licensed has not initiated an examination or does not
24initiate an examination within 60 days after a request by the
25Director. Any such examination shall be coordinated to avoid
26unjustified repetition and conducted in an expeditious manner

 

 

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1and in accordance with the NAIC's National Association of
2Insurance Commissioners' Examiner Handbook.
3    G. Notice to purchasers. Every application form for
4insurance from a risk retention group and the front page and
5declaration page of every policy issued by a risk retention
6group shall contain in 10 point type the following notice:
7
"NOTICE
8    This policy is issued by your risk retention group. Your
9risk retention group is not subject to all of the insurance
10laws and regulations of your state. State insurance insolvency
11guaranty fund protection is not available for your risk
12retention group".
13    H. Prohibited acts regarding solicitation or sale. The
14following acts by a risk retention group are hereby prohibited:
15        (1) the solicitation or sale of insurance by a risk
16    retention group to any person who is not eligible for
17    membership in such group; and
18        (2) the solicitation or sale of insurance by, or
19    operation of, a risk retention group that is in a hazardous
20    financial condition or is financially impaired.
21    I. Prohibition on ownership by an insurance company. No
22risk retention group shall be allowed to do business in this
23State if an insurance company is directly or indirectly a
24member or owner of such risk retention group, other than in the
25case of a risk retention group all of whose members are
26insurance companies.

 

 

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1    J. Prohibited coverage. No risk retention group may offer
2insurance policy coverage prohibited by Articles IX or XI of
3this Code or declared unlawful by the Illinois Supreme Court;
4provided however, a risk retention group organized and licensed
5in a state other than this State that selects the law of this
6State to govern the validity, construction, or enforceability
7of policies issued by it is permitted to provide coverage under
8policies issued by it for penalties in the nature of
9compensatory damages including, without limitation, punitive
10damages and the multiplied portion of multiple damages, so long
11as coverage of those penalties is not prohibited by the law of
12the state under which the risk retention group is organized.
13    K. Delinquency proceedings. A risk retention group not
14organized in this State and doing business in this State shall
15comply with a lawful order issued in a voluntary dissolution
16proceeding or in a conservation, rehabilitation, liquidation,
17or other delinquency proceeding commenced by the Director or by
18another state insurance commissioner if there has been a
19finding of financial impairment after an examination under
20subsection F of Section 123B-4 of this Article.
21    L. Compliance with injunctive relief. A risk retention
22group shall comply with an injunctive order issued in another
23state by a court of competent jurisdiction or by a United
24States District Court based on a finding of financial
25impairment or hazardous financial condition.
26    M. Penalties. A risk retention group that violates any

 

 

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1provision of this Article will be subject to fines and
2penalties applicable to licensed insurers generally, including
3revocation of its license or the right to do business in this
4State, or both.
5    N. (Blank). Operations prior to August 3, 1987. In addition
6to complying with the requirements of this Section, any risk
7retention group operating in this State prior to August 3,
81987, shall within 30 days after such effective date comply
9with the provisions of subsection A of this Section.
10(Source: P.A. 93-32, eff. 7-1-03.)
 
11    (215 ILCS 5/123B-7)  (from Ch. 73, par. 735B-7)
12    (Section scheduled to be repealed on January 1, 2017)
13    Sec. 123B-7. Purchasing Groups - Exemption from Certain
14Laws Relating to the Group Purchase of Insurance. Any
15purchasing group meeting the criteria established under the
16provisions of the federal Liability Risk Retention Act of 1986
17shall be exempt from any law of this State prohibiting relating
18to the creation of risk purchasing of groups for the purchase
19of insurance; , any countersignature requirements as provided
20in this Code; , and any prohibition of group purchasing or any
21law that would discriminate against a purchasing group or its
22members, prohibit a purchasing group from obtaining insurance
23on a group basis or because the group has not been in existence
24for a minimum period of time or because any member has not
25belonged to the group for a minimum period of time, require

 

 

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1that a purchasing group must have a minimum number of members,
2common ownership or affiliation, or certain legal form, or
3require that a certain percentage of a purchasing group must
4obtain insurance on a group basis. In addition, an insurer
5shall be exempt from any law of this State which prohibits
6providing, or offering to provide, to a purchasing group or its
7members advantages based on their loss and expense experience
8not afforded to other persons with respect to rates, policy
9forms, coverages or other matters. A purchasing group shall be
10subject to all other applicable laws of this State.
11(Source: P.A. 85-131.)