Illinois General Assembly - Full Text of SB0765
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Full Text of SB0765  103rd General Assembly

SB0765sam001 103RD GENERAL ASSEMBLY

Sen. Napoleon Harris, III

Filed: 10/25/2023

 

 


 

 


 
10300SB0765sam001LRB103 03220 JDS 65002 a

1
AMENDMENT TO SENATE BILL 765

2    AMENDMENT NO. ______. Amend Senate Bill 765 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Farm Mutual Insurance Company Act of 1986
5is amended by changing Section 10 as follows:
 
6    (215 ILCS 120/10)  (from Ch. 73, par. 1260)
7    Sec. 10. Property insurable; limitations of risk.
8    (a) Until the date that is 5 years after the effective date
9of this amendatory Act of the 103rd General Assembly this
10subsection (a) applies:
11        (1) Farm mutual insurance companies are permitted to
12    insure the following classes of property:
13            (A) (a) Farm property, including residences and
14        other farm buildings and all classes of personal
15        property in connection therewith, other than motor
16        vehicles required to be licensed for road use,

 

 

10300SB0765sam001- 2 -LRB103 03220 JDS 65002 a

1        including such property temporarily located elsewhere;
2            (B) (b) Growing crops;
3            (C) (c) Buildings and personal property used in
4        the processing of agricultural products in conjunction
5        with a farming operation;
6            (D) (d) Residences, including household and
7        personal effects, and including such property
8        temporarily located elsewhere;
9            (E) (e) Churches, schools and community buildings
10        and such property as may be properly contained
11        therein.
12        No farm mutual insurance company may insure any
13    property within the limits of any city containing over
14    50,000 inhabitants at the time of the organization of the
15    company.
16        (2) No farm mutual insurance company authorized to
17    write the kinds of insurance enumerated in Section 5 of
18    this Act may expose itself to any loss on any one risk in
19    an amount in excess of $20,000 plus 10% of its
20    policyholders' surplus in excess of $20,000.
21            A farm mutual insurance company insuring against
22    the perils of wind or hail must have and maintain adequate
23    catastrophic reinsurance which limits the company's
24    exposure on any one loss occurrence to 20% of its
25    policyholders' surplus.
26        A farm mutual insurance company converting from

 

 

10300SB0765sam001- 3 -LRB103 03220 JDS 65002 a

1    unlimited catastrophic reinsurance to adequate
2    catastrophic reinsurance under this Section shall provide
3    notice of the change to policyholders in a form approved
4    by the Director of Insurance.
5        A farm mutual insurance company must additionally have
6    and maintain aggregate reinsurance coverage in an amount
7    no less than that required for a 250-year event, based on
8    an actuarially sound catastrophe model.
9        The reinsurance permitted or required by this Section
10    must be provided by (i) a farm mutual insurance company,
11    (ii) an insurance company authorized to write the kinds of
12    insurance described in Class 2 or Class 3 of Section 4 of
13    the Illinois Insurance Code, or (iii) a reinsurer and
14    reinsurance program meeting the standards set forth in
15    Article XI of the Illinois Insurance Code that permit a
16    domestic company to take credit for reinsurance.
17        Nothing in this Section shall be construed to prohibit
18    a farm mutual insurance company from purchasing
19    reinsurance coverage greater than the minimum requirement
20    set forth under this Section, including purchasing
21    unlimited catastrophic coverage.
22        No portion of any such risk which has been reinsured
23    with a farm mutual insurance company or an insurance
24    company authorized to write the kinds of insurance
25    described in Class 2 or Class 3 of Section 4 of the
26    Illinois Insurance Code shall be included in determining

 

 

10300SB0765sam001- 4 -LRB103 03220 JDS 65002 a

1    the limitation of risk described herein.
2        For purposes of this Section:
3        A single risk shall be all real and personal property
4    in one fixed location and not separated by 50 feet.
5        "Adequate catastrophic reinsurance" means reinsurance
6    in an amount no less than that required for a 500-year
7    event, based on an actuarially sound catastrophe model
8    that limits the company's exposure on any one loss
9    occurrence to (i) 20% of its policyholders' surplus or
10    (ii) an amount authorized by the Director of Insurance.
11        As regards the peril of wind or hail, the term "loss
12    occurrence" shall mean all losses occasioned by tornadoes,
13    cyclones, windstorms, hurricanes, or hail stones arising
14    from the same atmospheric disturbance and occurring during
15    any continuous period of not less than 48 hours.
16        (3) Whenever the company's financial condition is such
17    that the further assumption of risks might be hazardous to
18    policyholders, the Director of Insurance may order the
19    company to take one or more of the following steps:
20            (A) (a) To reduce the loss exposure by
21        reinsurance;
22            (B) (b) To reduce the volume of business being
23        written or renewed;
24            (C) (c) To suspend the writing of new business;
25            (D) (d) To suspend the writing of both new and
26        renewal business;

 

 

10300SB0765sam001- 5 -LRB103 03220 JDS 65002 a

1            (E) (e) To levy a special assessment of
2        policyholders;
3            (F) (f) To reduce general or acquisition expenses
4        by specified methods.
5        (4) Whenever the Director determines that a farm
6    mutual insurance company is insolvent he shall order the
7    farm mutual insurance company to levy a special assessment
8    within 30 days of receipt of such order. If the insolvency
9    is not corrected within 90 days of the mailing of such
10    assessment, the company shall be subject to liquidation
11    pursuant to Article XIII of the Illinois Insurance Code.
12    (b) On and after the date that is 5 years after the
13effective date of this amendatory Act of the 103rd General
14Assembly this subsection (b) applies:
15        (1) Farm mutual insurance companies are permitted to
16    insure the following classes of property:
17            (A) Farm property, including residences and other
18        farm buildings and all classes of personal property in
19        connection therewith, other than motor vehicles
20        required to be licensed for road use, including such
21        property temporarily located elsewhere;
22            (B) Growing crops;
23            (C) Buildings and personal property used in the
24        processing of agricultural products in conjunction
25        with a farming operation;
26            (D) Residences, including household and personal

 

 

10300SB0765sam001- 6 -LRB103 03220 JDS 65002 a

1        effects, and including such property temporarily
2        located elsewhere;
3            (E) Churches, schools and community buildings and
4        such property as may be properly contained therein.
5        No farm mutual insurance company may insure any
6    property within the limits of any city containing over
7    50,000 inhabitants at the time of the organization of the
8    company.
9        (2) No farm mutual insurance company authorized to
10    write the kinds of insurance enumerated in Section 5 of
11    this Act may expose itself to any loss on any one risk in
12    an amount in excess of $20,000 plus 10% of its
13    policyholders' surplus in excess of $20,000.
14        A farm mutual insurance company insuring against the
15    perils of wind or hail must have and maintain catastrophic
16    reinsurance which limits the company's exposure on any one
17    loss occurrence to 20% of its policyholders' surplus.
18        No portion of any such risk which has been reinsured
19    with a farm mutual insurance company or an insurance
20    company authorized to write the kinds of insurance
21    described in Class 2 or Class 3 of Section 4 of the
22    Illinois Insurance Code shall be included in determining
23    the limitation of risk described herein.
24        For purposes of this Section:
25        A single risk shall be all real and personal property
26    in one fixed location and not separated by 50 feet.

 

 

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1        As regards the peril of wind or hail, the term "loss
2    occurrence" shall mean all losses occasioned by tornadoes,
3    cyclones, windstorms, hurricanes, or hail stones arising
4    from the same atmospheric disturbance and occurring during
5    any continuous period of not less than 48 hours.
6        (3) Whenever the company's financial condition is such
7    that the further assumption of risks might be hazardous to
8    policyholders, the Director of Insurance may order the
9    company to take one or more of the following steps:
10            (A) To reduce the loss exposure by reinsurance;
11            (B) To reduce the volume of business being written
12        or renewed;
13            (C) To suspend the writing of new business;
14            (D) To suspend the writing of both new and renewal
15        business;
16            (E) To levy a special assessment of policyholders;
17            (F) To reduce general or acquisition expenses by
18        specified methods.
19        (4) Whenever the Director determines that a farm
20    mutual insurance company is insolvent he shall order the
21    farm mutual insurance company to levy a special assessment
22    within 30 days of receipt of such order. If the insolvency
23    is not corrected within 90 days of the mailing of such
24    assessment, the company shall be subject to liquidation
25    pursuant to Article XIII of the Illinois Insurance Code.
26(Source: P.A. 88-364.)
 

 

 

10300SB0765sam001- 8 -LRB103 03220 JDS 65002 a

1    Section 99. Effective date. This Act takes effect upon
2becoming law.".