SB2016 94TH GENERAL ASSEMBLY

LRB094 11224 LJB 42237 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB2016

Introduced 2/25/2005, by Sen. Susan Garrett

SYNOPSIS AS INTRODUCED:

215 ILCS 5/500-147 new
815 ILCS 505/2Z	from Ch. 121 1/2, par. 262Z
815 ILCS 505/10b	from Ch. 121 1/2, par. 270b

Amends the Illinois Insurance Code. Requires certain insurance producers to disclose to the customer any compensation the producer receives from an insurer or third party. Grants customers the right to request additional information. Makes a violation a violation of the Consumer Fraud and Deceptive Business Practices Act. Amends the Consumer Fraud and Deceptive Business Practices Act to include the violations and to delete a provision exempting certain acts of insurance producers, registered firms, and limited insurance representatives from the Act. Effective immediately.

A BILL FOR

AN ACT concerning insurance.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by adding Section 500-147 as follows:

(215 ILCS 5/500-147 new)

Sec. 500-147. Compensation disclosure; unfair trade practices.

(a) Where any insurance producer or any affiliate of a producer receives any compensation from a customer for the placement of insurance or represents a customer with respect to the placement of insurance, neither the producer nor the affiliate shall accept or receive any compensation from an insurer or other third party for that placement of insurance unless the producer or affiliate has, prior to the customer's purchase, obtained the customer's documented acknowledgement that compensation will be received by the producer or affiliate. The disclosure required by this subsection (a) shall be in a form prescribed by the Secretary and signed by the customer and shall disclose all of the following:

(1) The producer or affiliate may receive compensation from an insurer or other third party in connection with the placement of insurance coverage. The compensation received by the producer or affiliate may differ depending upon the product and the insurer or other third party. The producer or affiliate may receive additional compensation from the insurer or other third party based upon other factors, such as premium volume placed with a particular insurer and loss or claims experience. Some insurers or other third parties may offer a producer or affiliate more compensation than others for the same customer's business.

(2) The customer may request additional information regarding the formula for determining producer or affiliate compensation by submitting a written request within 30 days of signing the initial disclosure. The producer or affiliate shall provide the requested information within 10 business days. In the case of a purchase over the telephone or by electronic means for which written consent cannot reasonably be obtained, consent documented by the producer or affiliate shall be acceptable.

(b) A customer has the right to request additional information within 30 days of signing the disclosure. The producer or affiliate has 10 business days to provide a customer with the requested information. Upon written request from a customer, the producer or affiliate is required to disclose the formula for calculating the commission from the insurer or other third party for the placement of insurance.

(c) Subsection (a) of this Section shall not apply to any of the following:

(1) An insurance producer or affiliate who is obligated by contract to sell, solicit, or negotiate insurance on behalf of only one insurer.

(2) A person licensed as an insurance producer who acts only as an intermediary between an insurer and the customer's producer, for example a managing general agent, a sales manager, or wholesale broker.

(3) A reinsurance intermediary.

(d) A person shall not be considered a customer for purposes of this Section if the person is merely (i) a participant or beneficiary of an employee benefit plan or (ii) covered by a group or blanket insurance policy or group annuity contract sold, solicited, or negotiated by the insurance producer or affiliate.

(e) For purposes of this Section:

"Affiliate" means a person that controls or is controlled by an insurance producer or is under the common control of another person or entity.

"Compensation from an insurer or other third party" means payments, commissions, fees, awards, overrides, bonuses, contingent commissions, loans, stock options, gifts, prizes, or any other form of valuable consideration, whether or not payable pursuant to a written agreement.

(f) A violation of this Section shall be considered an unfair trade practice under the Consumer Fraud and Deceptive Business Practices Act and shall be subject to the penalties contained in that Act in an action brought by the Attorney General.

Section 10. The Consumer Fraud and Deceptive Business Practices Act is amended by changing Sections 2Z and 10b as follows:

(815 ILCS 505/2Z) (from Ch. 121 1/2, par. 262Z)

Sec. 2Z. Violations of other Acts. Any person who knowingly violates the Automotive Repair Act, the Home Repair and Remodeling Act, the Dance Studio Act, the Physical Fitness Services Act, the Hearing Instrument Consumer Protection Act, the Illinois Union Label Act, the Job Referral and Job Listing Services Consumer Protection Act, the Travel Promotion Consumer Protection Act, the Credit Services Organizations Act, the Automatic Telephone Dialers Act, the Pay-Per-Call Services Consumer Protection Act, the Telephone Solicitations Act, the Illinois Funeral or Burial Funds Act, the Cemetery Care Act, the Safe and Hygienic Bed Act, the Pre-Need Cemetery Sales Act, the High Risk Home Loan Act, subsection (a) or (b) of Section 3-10 of the Cigarette Tax Act, subsection (a) or (b) of Section 3-10 of the Cigarette Use Tax Act, the Electronic Mail Act, paragraph (6) of subsection (k) of Section 6-305 of the Illinois Vehicle Code, Section 500-147 of the Illinois Insurance Code, or the Automatic Contract Renewal Act commits an unlawful practice within the meaning of this Act.

(Source: P.A. 92-426, eff. 1-1-02; 93-561, eff. 1-1-04; 93-950, eff. 1-1-05.)

(815 ILCS 505/10b) (from Ch. 121 1/2, par. 270b)

(Text of Section WITH the changes made by P.A. 89-7, which has been held unconstitutional)

Sec. 10b. Nothing in this Act shall apply to any of the following:

(1) Actions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States.

(2) The provisions of "An act to protect trademark owners, distributors, and the public against injurious and uneconomic practices in the distribution of articles of standard quality under a trademark, brand or name," approved July 8, 1935, as amended.

(3) Acts done by the publisher, owner, agent, or employee of a newspaper, periodical or radio or television station in the publication or dissemination of an advertisement, when the owner, agent or employee did not have knowledge of the false, misleading or deceptive character of the advertisement, did not prepare the advertisement, or did not have a direct financial interest in the sale or distribution of the advertised product or service.

(4) The communication of any false, misleading or deceptive information, provided by the seller of real estate located in Illinois, by a real estate salesman or broker licensed under "The Real Estate Brokers License Act", unless the salesman or broker knows of the false, misleading or deceptive character of such information. This provision shall be effective as to any communication, whenever occurring.

(5) Claims seeking damages for conduct that results in bodily injury, death, or damage to property other than the property that is the subject of the practice claimed to be unlawful.

This item (5) applies to causes of action filed on or after its effective date.

(6) (Blank). The communication of any false, misleading, or deceptive information by an insurance producer, registered firm, or limited insurance representative, as those terms are defined in the Illinois Insurance Code, or by an insurance agency or brokerage house concerning the sale, placement, procurement, renewal, binding, cancellation of, or terms of any type of insurance or any policy of insurance unless the insurance producer has actual knowledge of the false, misleading, or deceptive character of the information. This provision shall be effective as to any communications, whenever occurring. This item (6) applies to all causes of action that accrue on or after the effective date of this amendatory Act of 1995.

(Source: P.A. 89-7, eff. 3-9-95; 89-152, eff. 1-1-96.)

(Text of Section WITHOUT the changes made by P.A. 89-7, which has been held unconstitutional)

Sec. 10b. Nothing in this Act shall apply to any of the following:

(1) Actions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States.

(2) The provisions of "An act to protect trademark owners, distributors, and the public against injurious and uneconomic practices in the distribution of articles of standard quality under a trademark, brand or name," approved July 8, 1935, as amended.

(3) Acts done by the publisher, owner, agent, or employee of a newspaper, periodical or radio or television station in the publication or dissemination of an advertisement, when the owner, agent or employee did not have knowledge of the false, misleading or deceptive character of the advertisement, did not prepare the advertisement, or did not have a direct financial interest in the sale or distribution of the advertised product or service.

(4) The communication of any false, misleading or deceptive information, provided by the seller of real estate located in Illinois, by a real estate salesman or broker licensed under "The Real Estate Brokers License Act", unless the salesman or broker knows of the false, misleading or deceptive character of such information. This provision shall be effective as to any communication, whenever occurring.

(5) (Blank). This item (5)

(6) (Blank). The communication of any false, misleading, or deceptive information by an insurance producer, registered firm, or limited insurance representative, as those terms are defined in the Illinois Insurance Code, or by an insurance agency or brokerage house concerning the sale, placement, procurement, renewal, binding, cancellation of, or terms of any type of insurance or any policy of insurance unless the insurance producer has actual knowledge of the false, misleading, or deceptive character of the information. This provision shall be effective as to any communications, whenever occurring. This item (6) applies to all causes of action that accrue on or after the effective date of this amendatory Act of 1995.

(Source: P.A. 84-894; 89-152, eff. 1-1-96; revised 1-22-98.)

Section 99. Effective date. This Act takes effect upon becoming law.