Full Text of SB0765 103rd General Assembly
SB0765enr 103RD GENERAL ASSEMBLY | | | SB0765 Enrolled | | LRB103 03220 BMS 48226 b |
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| 1 | | AN ACT concerning regulation. | 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly: | 4 | | Section 5. The Farm Mutual Insurance Company Act of 1986 | 5 | | is 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 | 9 | | of this amendatory Act of the 103rd General Assembly this | 10 | | subsection (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, | 17 | | including such property temporarily located elsewhere; | 18 | | (B) (b) Growing crops; | 19 | | (C) (c) Buildings and personal property used in | 20 | | the processing of agricultural products in conjunction | 21 | | with a farming operation; | 22 | | (D) (d) Residences, including household and | 23 | | personal effects, and including such property |
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| 1 | | temporarily located elsewhere; | 2 | | (E) (e) Churches, schools and community buildings | 3 | | and such property as may be properly contained | 4 | | 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 | 15 | | the perils of wind or hail must have and maintain adequate | 16 | | catastrophic reinsurance which limits the company's | 17 | | exposure on any one loss occurrence to 20% of its | 18 | | policyholders' surplus . | 19 | | A farm mutual insurance company converting from | 20 | | unlimited catastrophic reinsurance to adequate | 21 | | catastrophic reinsurance under this Section shall provide | 22 | | notice of the change to policyholders in a form approved | 23 | | by the Director of Insurance. | 24 | | A farm mutual insurance company must additionally have | 25 | | and maintain aggregate reinsurance coverage in an amount | 26 | | no less than that required for a 250-year event, based on |
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| 1 | | an actuarially sound catastrophe model. | 2 | | The reinsurance permitted or required by this Section | 3 | | must be provided by (i) a farm mutual insurance company, | 4 | | (ii) an insurance company authorized to write the kinds of | 5 | | insurance described in Class 2 or Class 3 of Section 4 of | 6 | | the Illinois Insurance Code, or (iii) a reinsurer and | 7 | | reinsurance program meeting the standards set forth in | 8 | | Article XI of the Illinois Insurance Code that permit a | 9 | | domestic company to take credit for reinsurance. | 10 | | Nothing in this Section shall be construed to prohibit | 11 | | a farm mutual insurance company from purchasing | 12 | | reinsurance coverage greater than the minimum requirement | 13 | | set forth under this Section, including purchasing | 14 | | unlimited catastrophic coverage. | 15 | | No portion of any such risk which has been reinsured | 16 | | with a farm mutual insurance company or an insurance | 17 | | company authorized to write the kinds of insurance | 18 | | described in Class 2 or Class 3 of Section 4 of the | 19 | | Illinois Insurance Code shall be included in determining | 20 | | the limitation of risk described herein. | 21 | | For purposes of this Section: | 22 | | A single risk shall be all real and personal property | 23 | | in one fixed location and not separated by 50 feet. | 24 | | "Adequate catastrophic reinsurance" means reinsurance | 25 | | in an amount no less than that required for a 500-year | 26 | | event, based on an actuarially sound catastrophe model |
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| 1 | | that limits the company's exposure on any one loss | 2 | | occurrence to (i) 20% of its policyholders' surplus or | 3 | | (ii) an amount authorized by the Director of Insurance. | 4 | | As regards the peril of wind or hail, the term "loss | 5 | | occurrence" shall mean all losses occasioned by tornadoes, | 6 | | cyclones, windstorms, hurricanes, or hail stones arising | 7 | | from the same atmospheric disturbance and occurring during | 8 | | any continuous period of not less than 48 hours. | 9 | | (3) Whenever the company's financial condition is such | 10 | | that the further assumption of risks might be hazardous to | 11 | | policyholders, the Director of Insurance may order the | 12 | | company to take one or more of the following steps: | 13 | | (A) (a) To reduce the loss exposure by | 14 | | reinsurance; | 15 | | (B) (b) To reduce the volume of business being | 16 | | written or renewed; | 17 | | (C) (c) To suspend the writing of new business; | 18 | | (D) (d) To suspend the writing of both new and | 19 | | renewal business; | 20 | | (E) (e) To levy a special assessment of | 21 | | policyholders; | 22 | | (F) (f) To reduce general or acquisition expenses | 23 | | by specified methods. | 24 | | (4) Whenever the Director determines that a farm | 25 | | mutual insurance company is insolvent he shall order the | 26 | | farm mutual insurance company to levy a special assessment |
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| 1 | | within 30 days of receipt of such order. If the insolvency | 2 | | is not corrected within 90 days of the mailing of such | 3 | | assessment, the company shall be subject to liquidation | 4 | | pursuant to Article XIII of the Illinois Insurance Code. | 5 | | (b) On and after the date that is 5 years after the | 6 | | effective date of this amendatory Act of the 103rd General | 7 | | Assembly this subsection (b) applies: | 8 | | (1) Farm mutual insurance companies are permitted to | 9 | | insure the following classes of property: | 10 | | (A) Farm property, including residences and other | 11 | | farm buildings and all classes of personal property in | 12 | | connection therewith, other than motor vehicles | 13 | | required to be licensed for road use, including such | 14 | | property temporarily located elsewhere; | 15 | | (B) Growing crops; | 16 | | (C) Buildings and personal property used in the | 17 | | processing of agricultural products in conjunction | 18 | | with a farming operation; | 19 | | (D) Residences, including household and personal | 20 | | effects, and including such property temporarily | 21 | | located elsewhere; | 22 | | (E) Churches, schools and community buildings and | 23 | | such property as may be properly contained therein. | 24 | | No farm mutual insurance company may insure any | 25 | | property within the limits of any city containing over | 26 | | 50,000 inhabitants at the time of the organization of the |
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| 1 | | company. | 2 | | (2) No farm mutual insurance company authorized to | 3 | | write the kinds of insurance enumerated in Section 5 of | 4 | | this Act may expose itself to any loss on any one risk in | 5 | | an amount in excess of $20,000 plus 10% of its | 6 | | policyholders' surplus in excess of $20,000. | 7 | | A farm mutual insurance company insuring against the | 8 | | perils of wind or hail must have and maintain catastrophic | 9 | | reinsurance which limits the company's exposure on any one | 10 | | loss occurrence to 20% of its policyholders' surplus. | 11 | | No portion of any such risk which has been reinsured | 12 | | with a farm mutual insurance company or an insurance | 13 | | company authorized to write the kinds of insurance | 14 | | described in Class 2 or Class 3 of Section 4 of the | 15 | | Illinois Insurance Code shall be included in determining | 16 | | the limitation of risk described herein. | 17 | | For purposes of this Section: | 18 | | A single risk shall be all real and personal property | 19 | | in one fixed location and not separated by 50 feet. | 20 | | As regards the peril of wind or hail, the term "loss | 21 | | occurrence" shall mean all losses occasioned by tornadoes, | 22 | | cyclones, windstorms, hurricanes, or hail stones arising | 23 | | from the same atmospheric disturbance and occurring during | 24 | | any continuous period of not less than 48 hours. | 25 | | (3) Whenever the company's financial condition is such | 26 | | that the further assumption of risks might be hazardous to |
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| 1 | | policyholders, the Director of Insurance may order the | 2 | | company to take one or more of the following steps: | 3 | | (A) To reduce the loss exposure by reinsurance; | 4 | | (B) To reduce the volume of business being written | 5 | | or renewed; | 6 | | (C) To suspend the writing of new business; | 7 | | (D) To suspend the writing of both new and renewal | 8 | | business; | 9 | | (E) To levy a special assessment of policyholders; | 10 | | (F) To reduce general or acquisition expenses by | 11 | | specified methods. | 12 | | (4) Whenever the Director determines that a farm | 13 | | mutual insurance company is insolvent he shall order the | 14 | | farm mutual insurance company to levy a special assessment | 15 | | within 30 days of receipt of such order. If the insolvency | 16 | | is not corrected within 90 days of the mailing of such | 17 | | assessment, the company shall be subject to liquidation | 18 | | pursuant to Article XIII of the Illinois Insurance Code. | 19 | | (Source: P.A. 88-364.) | 20 | | Section 99. Effective date. This Act takes effect upon | 21 | | becoming law. |
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