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| [ Introduced ] | [ Senate Amendment 001 ] |
92_HB1989eng HB1989 Engrossed LRB9205486JSpc 1 AN ACT concerning insurance. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Illinois Insurance Code is amended by 5 changing Section 205 as follows: 6 (215 ILCS 5/205) (from Ch. 73, par. 817) 7 Sec. 205. Priority of distribution of general assets. 8 (1) The priorities of distribution of general assets 9 from the company's estate is to be as follows: 10 (a) The costs and expenses of administration, 11 including the expenses of the Illinois Insurance Guaranty 12 Fund, the Illinois Life and Health Insurance Guaranty 13 Association, the Illinois Health Maintenance Organization 14 Guaranty Association and of any similar organization in 15 any other state as prescribed in subsection (c) of 16 Section 545. 17 (b) Secured claims, including claims for taxes and 18 debts due the federal or any state or local government, 19 that are secured by liens perfected prior to the filing 20 of the complaint. 21 (c) Claims for wages actually owing to employees 22 for services rendered within 3 months prior to the date 23 of the filing of the complaint, not exceeding $1,000 to 24 each employee unless there are claims due the federal 25 government under paragraph (f), then the claims for wages 26 shall have a priority of distribution immediately 27 following that of federal claims under paragraph (f) and 28 immediately preceding claims of general creditors under 29 paragraph (g). 30 (d) Claims by policyholders, beneficiaries, 31 insureds and liability claims against insureds covered HB1989 Engrossed -2- LRB9205486JSpc 1 under insurance policies and insurance contracts issued 2 by the company, and claims of the Illinois Insurance 3 Guaranty Fund, the Illinois Life and Health Insurance 4 Guaranty Association, the Illinois Health Maintenance 5 Organization Guaranty Association and any similar 6 organization in another state as prescribed in Section 7 545. 8 (e) Claims by policyholders, beneficiaries, and 9 insureds, the allowed values of which were determined by 10 estimation under paragraph (b) of subsection (4) of 11 Section 209. 12 (f) Any other claims due the federal government. 13 (g) All other claims of general creditors not 14 falling within any other priority under this Section 15 including claims for taxes and debts due any state or 16 local government which are not secured claims and claims 17 for attorneys' fees incurred by the company in contesting 18 its conservation, rehabilitation, or liquidation. 19 (h) Claims of guaranty fund certificate holders, 20 guaranty capital shareholders, capital note holders, and 21 surplus note holders. 22 (i) Proprietary claims of shareholders, members, or 23 other owners. 24 Every claim under a written agreement, statute, or rule 25 providing that the assets in a separate account are not 26 chargeable with the liabilities arising out of any other 27 business of the insurer shall be satisfied out of the funded 28 assets in the separate account equal to, but not to exceed, 29 the reserves maintained in the separate account under the 30 separate account agreement, and to the extent, if any, the 31 claim is not fully discharged thereby, the remainder of the 32 claim shall be treated as a priority level (d) claim under 33 paragraph (d) of this subsection to the extent that reserves 34 have been established in the insurer's general account HB1989 Engrossed -3- LRB9205486JSpc 1 pursuant to statute, rule, or the separate account agreement. 2 For purposes of this provision, "separate account 3 policies, contracts, or agreements" means any policies, 4 contracts, or agreements that provide for separate accounts 5 as contemplated by Section 245.21. 6 To the extent that any assets of an insurer, other than 7 those assets properly allocated to and maintained in a 8 separate account, have been used to fund or pay any expenses, 9 taxes, or policyholder benefits that are attributable to a 10 separate account policy, contract, or agreement that should 11 have been paid by a separate account prior to the 12 commencement of receivership proceedings, then upon the 13 commencement of receivership proceedings, the separate 14 accounts that benefited from this payment or funding shall 15 first be used to repay or reimburse the company's general 16 assets or account for any unreimbursed net sums due at the 17 commencement of receivership proceedings prior to the 18 application of the separate account assets to the 19 satisfaction of liabilities or the corresponding separate 20 account policies, contracts, and agreements. 21 To the extent, if any, reserves or assets maintained in 22 the separate account are in excess of the amounts needed to 23 satisfy claims under the separate account contracts, the 24 excess shall be treated as part of the general assets of the 25 insurer's estate. 26 (2) Within 120 days after the issuance of an Order of 27 Liquidation with a finding of insolvency against a domestic 28 company, the Director shall make application to the court 29 requesting authority to disburse funds to the Illinois 30 Insurance Guaranty Fund, the Illinois Life and Health 31 Insurance Guaranty Association, the Illinois Health 32 Maintenance Organization Guaranty Association and similar 33 organizations in other states from time to time out of the 34 company's marshaled assets as funds become available in HB1989 Engrossed -4- LRB9205486JSpc 1 amounts equal to disbursements made by the Illinois Insurance 2 Guaranty Fund, the Illinois Life and Health Insurance 3 Guaranty Association, the Illinois Health Maintenance 4 Organization Guaranty Association and similar organizations 5 in other states for covered claims obligations on the 6 presentation of evidence that such disbursements have been 7 made by the Illinois Insurance Guaranty Fund, the Illinois 8 Life and Health Insurance Guaranty Association, the Illinois 9 Health Maintenance Organization Guaranty Association and 10 similar organizations in other states. 11 The Director shall establish procedures for the ratable 12 allocation and distribution of disbursements to the Illinois 13 Insurance Guaranty Fund, the Illinois Life and Health 14 Insurance Guaranty Association, the Illinois Health 15 Maintenance Organization Guaranty Association and similar 16 organizations in other states. In determining the amounts 17 available for disbursement, the Director shall reserve 18 sufficient assets for the payment of the expenses of 19 administration described in paragraph (1) (a) of this 20 Section. All funds available for disbursement after the 21 establishment of the prescribed reserve shall be promptly 22 distributed. As a condition to receipt of funds in 23 reimbursement of covered claims obligations, the Director 24 shall secure from the Illinois Insurance Guaranty Fund, the 25 Illinois Life and Health Insurance Guaranty Association, the 26 Illinois Health Maintenance Organization Guaranty Association 27 and each similar organization in other states, an agreement 28 to return to the Director on demand funds previously received 29 as may be required to pay claims of secured creditors and 30 claims falling within the priorities established in 31 paragraphs (a), (b), (c), and (d) of subsection (1) of this 32 Section in accordance with such priorities. 33 (3) The provisions of this Section are severable under 34 Section 1.31 of the Statute on Statutes. HB1989 Engrossed -5- LRB9205486JSpc 1 (Source: P.A. 89-206, eff. 7-21-95; 90-381, eff. 8-14-97.) 2 Section 99. Effective date. This Act takes effect upon 3 becoming law.