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90_HB0223sam002
LRB9001100JSgcam03
1 AMENDMENT TO HOUSE BILL 223
2 AMENDMENT NO. . Amend House Bill 223, AS AMENDED, in
3 the introductory clause to Section 5 of the bill by replacing
4 "and 499.1" with ", 499.1, 534.3, 534.4, 538.4, 545, 546,
5 802.1, and 803.1"; and
6 in the body of Section 5 of the bill by inserting immediately
7 below the last line of Sec. 499.1 the following:
8 "(215 ILCS 5/534.3) (from Ch. 73, par. 1065.84-3)
9 Sec. 534.3. Covered claim; unearned premium defined.
10 (a) "Covered claim" means an unpaid claim for a loss
11 arising out of and within the coverage of an insurance policy
12 to which this Article applies and which is in force at the
13 time of the occurrence giving rise to the unpaid claim,
14 including claims presented during any extended discovery
15 period which was purchased from the company before the entry
16 of a liquidation order or which is purchased or obtained from
17 the liquidator after the entry of a liquidation order, made
18 by a person insured under such policy or by a person
19 suffering injury or damage for which a person insured under
20 such policy is legally liable, and for unearned premium, if:
21 (i) The company issuing the policy becomes an
22 insolvent company as defined in Section 534.4 after the
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1 effective date of this Article; and
2 (ii) The claimant or insured is a resident of this
3 State at the time of the insured occurrence, or the
4 property from which a first party claim for damage to
5 property arises is permanently located in this State or,
6 in the case of an unearned premium claim, the
7 policyholder is a resident of this State at the time the
8 policy was issued; provided, that for entities other than
9 an individual, the residence of a claimant, insured, or
10 policyholder is the state in which its principal place of
11 business is located at the time of the insured event.
12 (b) "Covered claim" does not include:
13 (i) any amount in excess of the applicable limits
14 of liability provided by an insurance policy to which
15 this Article applies; nor
16 (ii) any claim for punitive or exemplary damages;
17 nor
18 (iii) any first party claim by an insured who is an
19 affiliate of the insolvent company; nor
20 (iv) any first party or third party claim by or
21 against an insured whose net worth on December 31 of the
22 year next preceding the date the insurer becomes an
23 insolvent insurer exceeds $25,000,000 $50 million;
24 provided that an insured's net worth on such date shall
25 be deemed to include the aggregate net worth of the
26 insured and all of its affiliates as calculated on a
27 consolidated basis. However, this exclusion shall not
28 apply to third party claims against the insured where the
29 insured has applied for or consented to the appointment
30 of a receiver, trustee, or liquidator for all or a
31 substantial part of its assets, filed a voluntary
32 petition in bankruptcy, filed a petition or an answer
33 seeking a reorganization or arrangement with creditors or
34 to take advantage of any insolvency law, or if an order,
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1 judgment, or decree is entered by a court of competent
2 jurisdiction, on the application of a creditor,
3 adjudicating the insured bankrupt or insolvent or
4 approving a petition seeking reorganization of the
5 insured or of all or substantial part of its assets; nor
6 (v) any claim for any amount due any reinsurer,
7 insurer, insurance pool, or underwriting association as
8 subrogated recoveries, reinsurance recoverables,
9 contribution, indemnification or otherwise. No such claim
10 held by a reinsurer, insurer, insurance pool, or
11 underwriting association may be asserted in any legal
12 action against a person insured under a policy issued by
13 an insolvent company other than to the extent such claim
14 exceeds the Fund obligation limitations set forth in
15 Section 537.2 of this Code.
16 (c) "Unearned Premium" means the premium for the
17 unexpired period of a policy which has been terminated prior
18 to the expiration of the period for which premium has been
19 paid and does not mean premium which is returnable to the
20 insured for any other reason.
21 (Source: P.A. 89-97, eff. 7-7-95.)
22 (215 ILCS 5/534.4) (from Ch. 73, par. 1065.84-4)
23 Sec. 534.4. "Insolvent company" means a company
24 organized as a stock company, mutual company, reciprocal or
25 Lloyds (a) which holds a certificate of authority to transact
26 insurance in this State either at the time the policy was
27 issued or when the insured event occurred, or any company
28 which has assumed such policy obligation through merger,
29 consolidation or reinsurance, whether or not such assuming
30 company held a certificate of authority to transact insurance
31 in this State at the time such policy was issued or when the
32 insured event occurred; and (b) against which a final an
33 Order of Liquidation with a finding of insolvency to which
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1 there is no further right of appeal has been entered by a
2 court of competent jurisdiction in the company's State of
3 domicile after the effective date of this Article, and which
4 Order of Liquidation has not been stayed or been the subject
5 of a writ or supersedeas or other comparable order.
6 (Source: P.A. 85-576.)
7 (215 ILCS 5/538.4) (from Ch. 73, par. 1065.88-4)
8 Sec. 538.4. Legal actions by Fund. The Fund may sue or
9 be sued, including taking any legal actions necessary or
10 proper for recovery of any unpaid assessments under Sections
11 537.1 or 537.6. The Fund's power to sue includes, but is not
12 limited to, the power and right to intervene as a party
13 before any court that has jurisdiction over an insolvent
14 insurer when the Fund is a creditor or potential creditor of
15 the insolvent insurer.
16 (Source: P.A. 89-97, eff. 7-7-95.)
17 (215 ILCS 5/545) (from Ch. 73, par. 1065.95)
18 Sec. 545. Effect of paid claims.
19 (a) Every insured or claimant seeking the protection of
20 this Article shall cooperate with the Fund to the same extent
21 as such person would have been required to cooperate with the
22 insolvent company. The Fund shall have all the rights, duties
23 and obligations under the policy to the extent of the covered
24 claim payment, provided the Fund shall have no cause of
25 action against the insured of the insolvent company for any
26 sums it has paid out except such causes of action as the
27 insolvent company would have had if such sums had been paid
28 by the insolvent company and except as provided in paragraph
29 (d) of this Section.
30 (b) The Fund and any similar organization in another
31 state shall be recognized as claimants in the liquidation of
32 an insolvent company for any amounts paid by them on covered
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1 claims obligations as determined under this Article or
2 similar laws in other states and shall receive dividends at
3 the priority set forth in paragraph (d) of subsection (1) of
4 Section 205 of this Code. The liquidator of an insolvent
5 company shall be bound by determinations of covered claim
6 eligibility under the Act and by settlements of claims made
7 the amounts of covered claim payments by the Fund or a
8 similar organization in another state on the receipt of
9 certification of such payments, to the extent those
10 determinations or settlements satisfy obligations of the
11 Fund, but the receiver shall not be bound in any way by those
12 determinations or settlements to the extent that there
13 remains a claim in the estate for amounts in excess of the
14 payments by the Fund. In submitting their claim for covered
15 claim payments the Fund and any similar organization in
16 another state shall not be subject to the requirements of
17 Sections 208 and 209 of this Code and shall not be affected
18 by the failure of the person receiving a covered claim
19 payment to file a proof of claim.
20 (c) The expenses of the Fund and of any similar
21 organization in any other state, other than expenses incurred
22 in the performance of duties under Section 547 or similar
23 duties under the statute governing a similar organization in
24 another state, shall be accorded the same priority as the
25 liquidator's expenses. The liquidator shall make prompt
26 reimbursement to the Fund and any similar organization for
27 such expense payments.
28 (d) The Fund has the right to recover from the following
29 persons the amount of any covered claims and allocated claims
30 expenses which the Fund paid or incurred on behalf of such
31 person in satisfaction, in whole or in part, of liability
32 obligations of such person to any other person:
33 (i) any insured whose net worth on December 31 of
34 the year next preceding the date the company becomes an
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1 insolvent company exceeds $25,000,000 $50 million;
2 provided that an insured's net worth on such date shall
3 be deemed to include the aggregate net worth of the
4 insured and all of its affiliates as calculated on a
5 consolidated basis.
6 (ii) any insured who is an affiliate of the
7 insolvent company.
8 (Source: P.A. 89-206, eff. 7-21-95.)
9 (215 ILCS 5/546) (from Ch. 73, par. 1065.96)
10 Sec. 546. Other insurance. Non-duplication of recovery.
11 (a) An insured or claimant shall be required first to
12 exhaust all coverage provided by any other insurance policy,
13 regardless of whether or not such other insurance policy was
14 written by a member company, if the claim under such other
15 policy arises from the same facts, injury, or loss that gave
16 rise to the covered claim against the Fund. The Fund's
17 obligation under Section 537.2 shall be reduced by the amount
18 recovered or recoverable, whichever is greater, under such
19 other insurance policy. Where such other insurance policy
20 provides uninsured or underinsured motorist coverage, the
21 amount recoverable shall be deemed to be the full applicable
22 limits of such coverage. To the extent that the Fund's
23 obligation under Section 537.2 is reduced by application of
24 this Section, the liability of the person insured by the
25 insolvent insurer's policy for the claim shall be reduced in
26 the same amount. Any insured or claimant having a covered
27 claim against the Fund shall be required first to exhaust his
28 rights under any provision in any other insurance policy
29 which may be applicable to the claim, whether or not the
30 insurance policy was written by a member company. Any amount
31 payable on a covered claim under this Article shall be
32 reduced by the amount of such recovery under such insurance
33 policy.
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1 (b) Any insured or claimant having a claim which may be
2 recovered under more than one insurance guaranty fund or its
3 equivalent shall seek recovery first from the Fund of the
4 place of residence of the insured except that if it is a
5 first party claim for damage to property with a permanent
6 location, he shall first seek recovery from the Fund of the
7 location of the property; if it is a workers' compensation
8 claim, he shall first seek recovery from the Fund of the
9 residence of the claimant. Any recovery under this Article
10 shall be reduced by the amount of the recovery from any other
11 insurance guaranty fund or its equivalent.
12 (Source: P.A. 89-97, eff. 7-7-95.)
13 (215 ILCS 5/802.1)
14 Sec. 802.1. Definitions. As used in this Article:
15 (a) "Commercial Building" means any building, other than
16 a residence, permanently affixed to realty located in
17 Illinois, including basements, footings, foundations, septic
18 systems and underground pipes directly servicing the
19 building, but does not include sidewalks, driveways, parking
20 lots, living units, land, trees, plants, crops or
21 agricultural field drainage tile.
22 (b) "Commercial Coverage" means mine subsidence
23 insurance for a commercial building.
24 (c) "Insurer" or "Insurers" means insurance companies
25 and reciprocals licensed and authorized to write Class 3
26 policies of insurance, as defined in this Code, within
27 Illinois.
28 (d) "Living Unit" shall mean that physical portion
29 designated for separate ownership or occupancy for
30 residential purposes, of a building or group of buildings,
31 permanently affixed to realty located in Illinois, having
32 elements which are owned or used in common, including a
33 condominium unit, a cooperative unit or any other similar
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1 unit.
2 (e) "Living Unit Coverage" means mine subsidence
3 insurance for a living unit covering the losses described in
4 Section 805.1(d).
5 (f) "Mine Subsidence" means lateral or vertical ground
6 movement caused by a failure initiated at the mine level, of
7 man-made underground mines, including, but not limited to
8 coal mines, clay mines, limestone mines, and fluorspar mines
9 that directly damages residences or commercial buildings.
10 "Mine Subsidence" does not include lateral or vertical ground
11 movement caused by earthquake, landslide, volcanic eruption,
12 soil conditions, soil erosion, soil freezing and thawing,
13 improperly compacted soil, construction defects, roots of
14 trees and shrubs or collapse of storm and sewer drains and
15 rapid transit tunnels.
16 (g) "Mine Subsidence Insurance Fund" or "Fund" means the
17 fund established by this Article.
18 (h) "Policy" or "policies" means any contract or
19 contracts of insurance providing the coverage of the Standard
20 Fire Policy and Extended Coverage Endorsement on any
21 residence, living unit or commercial building. It does not
22 include those insurance contracts that are referred to as
23 marine or inland marine policies.
24 (i) "Premium" or "premiums" means the gross amount
25 charged to policyholders for the mine subsidence insurance
26 made available under this Article.
27 (j) "Rates" or "rate schedules" means the rates by which
28 premiums shall be computed for the mine subsidence insurance
29 made available under this Article.
30 (k) "Residence" means a building used principally for
31 residential purposes up to and including a four family
32 dwelling, permanently affixed to realty located in Illinois,
33 including appurtenant structures, driveways, sidewalks,
34 basements, footings, foundations, septic systems and
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1 underground pipes directly servicing the dwelling or
2 building, but does not include living units, land, trees,
3 plants, crops or agricultural field drainage tile.
4 (l) "Residential Coverage" means mine subsidence
5 insurance for a residence.
6 (m) "Intergovernmental cooperative" means an
7 intergovernmental cooperative organized pursuant to Article
8 VII, Section 10 of the Illinois Constitution and Section 6 of
9 the Intergovernmental Cooperation Act.
10 (Source: P.A. 88-379.)
11 (215 ILCS 5/803.1)
12 Sec. 803.1. Establishment of Fund.
13 (a) There is established a fund to be known as the
14 "Illinois Mine Subsidence Insurance Fund". The Fund shall
15 operate pursuant to this Article. The Fund is authorized to
16 transact business, provide services, enter into contracts and
17 sue or be sued in its own name.
18 (b) The Fund shall provide reinsurance for mine
19 subsidence losses to all insurers writing mine subsidence
20 insurance pursuant to this Article.
21 (c) The monies in the Fund shall be derived from
22 premiums for mine subsidence insurance collected on behalf of
23 the Fund pursuant to this Article, from investment income and
24 from receipt of Federal or State funds. No insurer shall
25 have any liability to the Fund or to any creditor of the
26 Fund, except as may be set forth in this Article, in the
27 Articles of Governance which may be adopted by the Fund, in a
28 reinsurance agreement executed pursuant to paragraph 810.1,
29 in the Plan of Operation established by the Fund, or in the
30 rules and procedures adopted by the Fund as authorized by the
31 reinsurance agreement.
32 (d) The Fund shall establish the rates, rating
33 schedules, deductibles and retentions, minimum premiums, and
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1 classifications for mine subsidence insurance which the Fund
2 shall file with the Director. The Director shall have 30
3 days from the date of receipt to approve or disapprove a rate
4 filing. If no action is taken by the Director within 30
5 days, the rate is deemed to be approved. The Director may,
6 in writing, extend the period for an additional 30 days if
7 the Director determines that additional time is needed.
8 (e) The Fund shall establish its rates, rating
9 schedules, deductibles and retentions, minimum premiums, and
10 classification in such a manner as to satisfy all reasonably
11 foreseeable claims and expenses the Fund is likely to incur.
12 The Fund shall give due consideration to loss experience and
13 relevant trends, premium and other income and reasonable
14 reserves established for contingencies in establishing the
15 mine subsidence rates.
16 (f) The Fund shall compile and publish an annual
17 operating report.
18 (g) The Fund shall develop at least 2 consumer
19 information publications to aid the public in understanding
20 mine subsidence and mine subsidence insurance and shall
21 establish a schedule for the distribution of the publications
22 pursuant to the reinsurance agreement. Topics that shall be
23 addressed shall include but are not limited to:
24 (1) Descriptive information about mine subsidence,
25 and what benefits mine subsidence insurance provides to
26 the property owner.
27 (2) Information that will be useful to a
28 policyholder who has filed a mine subsidence claim, such
29 as information that explains the claim investigation
30 process and claim handling procedures.
31 (h) The Fund shall be empowered to conduct research
32 programs in an effort to improve the administration of the
33 mine subsidence insurance program and help reduce and
34 mitigate mine subsidence losses consistent with the public
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1 interest.
2 (i) The Fund may enter into reinsurance agreements with
3 any intergovernmental cooperative that provides joint
4 self-insurance for mine subsidence losses of its members.
5 These reinsurance agreements shall be substantially similar
6 to reinsurance agreements described in Section 810.1.
7 (Source: P.A. 88-379; 89-206, eff. 7-21-95.)".