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| [ Introduced ] | [ Enrolled ] | [ Senate Amendment 001 ] |
92_SB0941eng SB941 Engrossed LRB9208018JSpc 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 Sections 537.2, 537.6, 537.7, and 551 as follows: 6 (215 ILCS 5/537.2) (from Ch. 73, par. 1065.87-2) 7 Sec. 537.2. Obligation of Fund. The Fund shall be 8 obligated to the extent of the covered claims existing prior 9 to the entry of an Order of Liquidation against an insolvent 10 company and arising within 30 days after the entry of such 11 Order, or before the policy expiration date if less than 30 12 days after the entry of such Order, or before the insured 13 replaces the policy or on request effects cancellation, if he 14 does so within 30 days after the entry of such Order. If the 15 entry of an Order of Liquidation occurs on or after October 16 1, 1975 and before October 1, 1977, such obligations shall 17 not: (i) exceed $100,000, or (ii) include any obligation to 18 refund the first $100 of any unearned premium claim; and if 19 the entry of an Order of Liquidation occurs on or after 20 October 1, 1977 and before January 1, 1988, such obligations 21 shall not: (i) exceed $150,000, except that this limitation 22 shall not apply to any workers compensation claims, or (ii) 23 include any obligation to refund the first $100 of any 24 unearned premium claim; and if the entry of an Order of 25 Liquidation occurs on or after January 1, 1988, such 26 obligations shall not: (i) exceed $300,000, except that this 27 limitation shall not apply to any workers compensation 28 claims, or (ii) include any obligation to refund the first 29 $100 of any unearned premium claim or to refund any unearned 30 premium over $10,000 under any one policy. In no event shall 31 the Fund be obligated to a policyholder or claimant in an SB941 Engrossed -2- LRB9208018JSpc 1 amount in excess of the face amount of the policy from which 2 the claim arises. 3 In no event shall the Fund be liable for any interest on 4 any judgment entered against the insured or the insolvent 5 company, or for any other interest claim against the insured 6 or the insolvent company, regardless of whether the insolvent 7 company would have been obligated to pay such interest under 8 the terms of its policy. The Fund shall be liable for 9 interest at the statutory rate on money judgments entered 10 against the Fund until the judgment is satisfied. 11 Any obligation of the Fund to defend an insured shall 12 cease upon the Fund's payment or tender of an amount equal to 13 the lesser of the Fund's covered claim obligation limit or 14 the applicable policy limit. 15 (Source: P.A. 85-576; 86-1155; 86-1156; 86-1475.) 16 (215 ILCS 5/537.6) (from Ch. 73, par. 1065.87-6) 17 Sec. 537.6. Allocation of claims; assessments. The Fund 18 shall allocate covered claims paid and expenses incurred 19 between the accounts established by Section 535 separately, 20 and assess member companies separately for each account 21 amounts necessary to pay the obligations of the Fund under 22 Section 537.2 subsequent to the entry of an Order of 23 Liquidation against an insolvent company, the expenses of 24 handling covered claims subsequent to such Order of 25 Liquidation and other expenses authorized by this Article. 26 The assessments of each member company shall be in the 27 proportion that the net direct written premiums of the member 28 company for the calendar year immediately preceding the year 29 in which the assessment is levied on the kinds of insurance 30 in the account bears to the net direct written premiums of 31 all member companies for such preceding calendar year on the 32 kinds of insurance in the account. Each member company shall 33 be notified of the assessment not later than 30 days before SB941 Engrossed -3- LRB9208018JSpc 1 it is due. Before January 1, 2002, no member company may be 2 assessed in any year on any account an amount greater than 1% 3 of that member company's net direct written premiums on the 4 kinds of insurance in the account for the calendar year 5 preceding the assessment. Beginning January 1, 2002, the 6 amount a member company may be assessed in any year on any 7 account shall be a maximum of 2% of that member company's net 8 direct written premium on the kinds of insurance in the 9 account for the calendar year preceding the assessment. This 10 2% maximum shall apply regardless of the date of any 11 insolvency that gives rise to the need for the assessment. 12 If the maximum assessment, together with the other assets of 13 the Fund in any account, does not provide, in any one year, 14 in any account, an amount sufficient to make all necessary 15 payments from that account, the funds available shall be paid 16 in the manner determined by the Fund and approved by the 17 Director and the unpaid portion shall be paid as soon 18 thereafter as funds become available. If requested by a 19 member company, the Director may exempt or defer the 20 assessment of any member company, if the assessment would 21 cause the member company's financial impairment. 22 (Source: P.A. 85-576.) 23 (215 ILCS 5/537.7) (from Ch. 73, par. 1065.87-7) 24 Sec. 537.7. Investigation of claims; disposition. 25 (a) The Fund shall investigate claims brought against 26 the Fund and adjust, compromise, settle, and pay covered 27 claims to the extent of the Fund's obligation and deny all 28 other claimsand may review settlements, releases and29judgments to which the insolvent company or its insureds were30parties to determine the extent to which such settlements,31releases and judgments may be properly contested. 32 (b) The Fund shall not be bound by a settlement, 33 release, compromise, waiver, or final judgment executed or SB941 Engrossed -4- LRB9208018JSpc 1 entered within 12 months prior to an order of liquidation and 2 shall have the right to assert all defenses available to the 3 Fund including, but not limited to, defenses applicable to 4 determining and enforcing its statutory rights and 5 obligations to any claim. The Fund shall be bound by a 6 settlement, release, compromise, waiver, or final judgment 7 executed or entered more than 12 months prior to an order of 8 liquidation, however, if the claim is a covered claim and the 9 settlement or judgment was not a result of fraud, collusion, 10 default, or failure to defend. In addition, with respect to 11 covered claims arising from a judgment under a decision, 12 verdict, or finding based on the default of the insolvent 13 insurer or its failure to defend, upon application by the 14 Fund, either on its own behalf or on behalf of an insured, 15 the court shall set aside the judgment, order, decision, 16 verdict, or finding, and the Fund shall be permitted to 17 defend against the claim on the merits. 18 (c)(b)The Fund shall have the right to appoint or 19 approve and to direct legal counsel retained under liability 20 insurance policies for the defense of covered claims. 21 (Source: P.A. 85-576.) 22 (215 ILCS 5/551) (from Ch. 73, par. 1065.101) 23 Sec. 551. Stay of proceedings. All proceedings arising 24 out of a claim under a policy of insurance written by an 25 insolvent company shall be stayed for 120 days from the date 26 of the entry of the Order of Liquidation to permit proper 27 defense by the Fund of all such pending causes of action.As28to any covered claims arising from a judgment under any29decision, verdict or finding based on the default of the30insolvent company or its failure to defend an insured, upon31application of the Fund, either on its own behalf or on32behalf of such insured, the court or administrator that made33such judgment, order, decision, verdict or finding shall setSB941 Engrossed -5- LRB9208018JSpc 1aside such judgment, order, decision, verdict or finding and2the Fund shall be permitted to defend against such claim on3the merits.4 (Source: P.A. 85-576.) 5 Section 99. Effective date. This Act takes effect upon 6 becoming law.