| ||||
Public Act 098-0814 | ||||
| ||||
| ||||
AN ACT concerning regulation.
| ||||
Be it enacted by the People of the State of Illinois, | ||||
represented in the General Assembly:
| ||||
Section 5. The Illinois Insurance Code is amended by | ||||
changing Sections 286.1, 291.1, 294.1, 297.1, 300.1, and 315.6 | ||||
and by adding Sections 295.2 and 315.9 as follows:
| ||||
(215 ILCS 5/286.1) (from Ch. 73, par. 898.1)
| ||||
(Section scheduled to be repealed on January 1, 2017)
| ||||
Sec. 286.1. Purposes and Powers. | ||||
(a) A society shall operate for the
benefit of members and | ||||
their beneficiaries by:
| ||||
(1) Providing benefits as specified in Section 297.1 of | ||||
this amendatory Act; and
| ||||
(2) Operating for one or more social, intellectual, | ||||
educational,
charitable, benevolent, moral, fraternal, | ||||
patriotic or religious purposes
for the benefit of its | ||||
members, which may also be extended to others.
Such | ||||
purposes may be carried out directly by the society or | ||||
indirectly
through subsidiary corporations or affiliated | ||||
organizations.
| ||||
(b) Every society shall have the power to adopt laws and | ||||
rules for the
government of the society, the admission of its | ||||
members and the management
of its affairs. It shall have the |
power to change, alter, add to or amend
such laws and rules and | ||
shall have such other powers as are necessary and
incidental to | ||
carrying into effect the objects and purposes of the society.
| ||
(c) A domestic society that provides any of the benefits | ||
specified in Section 297.1 of this Code must be governed by a | ||
board of directors and managed by qualified officers subject to | ||
the following requirements: | ||
(1) The laws of a society must provide that: | ||
(i) the board of directors shall have the powers | ||
and perform the duties ordinarily possessed and | ||
exercised by a board of directors under this Code, | ||
including, but not limited to, the authority and | ||
responsibility for the hiring and the discharge of a | ||
president, chief executive officer, or an equivalent | ||
position, except that a society that elects its | ||
president, chief executive officer, or equivalent | ||
position pursuant to its by-laws, as of the effective | ||
date of this amendatory Act of the 98th General | ||
Assembly, may continue to do so if it elects a | ||
president, chief executive officer, or equivalent | ||
position that meets qualifications set forth in a rule | ||
adopted by the Director; and | ||
(ii) the board of directors may remove a director | ||
for cause and replace the director with another | ||
qualified director. | ||
After the effective date of this amendatory Act of the |
98th General Assembly, a domestic society shall amend its | ||
laws, as necessary, to comply with this paragraph (1) as | ||
soon as reasonably practicable, but in no event later than | ||
January 1, 2019. | ||
(2) A person convicted of a felony may not be a | ||
director or an officer of a domestic society. | ||
(3) A society shall provide information regarding | ||
qualifications of board candidates to voting members prior | ||
to the time of election. | ||
(4) Each newly elected director of a domestic society | ||
shall participate in a board training or orientation | ||
program within 6 months after their election to the board | ||
that includes information regarding board duties and | ||
responsibilities. | ||
(5) At least annually, the board of directors shall | ||
conduct a self-assessment. | ||
(6) Each domestic society shall establish an audit | ||
committee. The composition and responsibilities of the | ||
audit committee shall comply with the Illinois | ||
Administrative Code provisions relating to annual | ||
financial reporting. | ||
(Source: P.A. 84-303 .)
| ||
(215 ILCS 5/291.1) (from Ch. 73, par. 903.1)
| ||
(Section scheduled to be repealed on January 1, 2017)
| ||
Sec. 291.1. Organization. A domestic society organized on |
or after
the effective date of this amendatory Act shall be | ||
formed as follows:
| ||
(a) Seven or more citizens of the United States, a | ||
majority of whom are
citizens of this State, who desire to | ||
form a fraternal benefit society may
make, sign and | ||
acknowledge, before some officer competent to take
| ||
acknowledgement of deeds, articles of incorporation, in | ||
which shall be stated:
| ||
(1) The proposed corporate name of the society, | ||
which shall not so
closely resemble the name of any | ||
society or insurance company already
authorized to | ||
transact business in this State as to be misleading or | ||
confusing;
| ||
(2) The place where its principal office shall be | ||
located within this State;
| ||
(3) The purposes for which it is being formed and | ||
the mode in which its
corporate powers are to be | ||
exercised. Such purposes shall not include more
| ||
liberal powers than are granted by this amendatory Act; | ||
and
| ||
(4) The names and residences of the incorporators | ||
and the names,
residences and official titles of all | ||
the officers, trustees, directors or
other persons who | ||
are to have and exercise the general control of the
| ||
management of the affairs and funds of the society for | ||
the first year or
until the ensuing election, at which |
all such officers shall be elected by
the supreme | ||
governing body, which election shall be held not later | ||
than one
year from the date of issuance of the | ||
permanent certificate of authority;
| ||
(b) Duplicate originals of the articles of | ||
incorporation, certified
copies of the society's bylaws | ||
and rules, copies of all proposed forms of
certificates, | ||
applicants and rates therefor, and circulars to be issued
| ||
by the society and a bond conditioned upon the return to | ||
applicants of the
advanced payments if the organization is | ||
not completed within one year
shall be filed with the | ||
Director, who may require such further information
as the | ||
Director deems necessary. The bond with sureties approved | ||
by the
Director shall be in such amount, not less than | ||
$300,000
nor more than $1,500,000, as
required by the | ||
Director. All documents filed are to be in the
English | ||
language. If the Director finds that the purposes of the | ||
society
conform to the requirements of this amendatory Act | ||
and all provisions of the law
have been complied with, the | ||
Director shall approve the articles of
incorporation and | ||
issue the incorporators a preliminary certificate of
| ||
authority authorizing the society to solicit members as | ||
hereinafter provided;
| ||
(c) No preliminary certificate of authority issued | ||
under the provisions
of this Section shall be valid after | ||
one year from its date of issue or
after such further |
period, not exceeding one year, as may be authorized by
the | ||
Director, upon cause shown, unless the 500 applicants
| ||
hereinafter required have been secured and the | ||
organization has
been completed as herein provided. The | ||
articles of incorporation and all other
proceedings | ||
thereunder shall become null and void in one year from the
| ||
date of the preliminary certificate of authority or at the | ||
expiration of
the extended period, unless the society shall | ||
have completed its
organization and received a certificate | ||
of authority to do business as
hereinafter provided;
| ||
(d) Upon receipt of a preliminary certificate of | ||
authority from the
Director, the society may solicit | ||
members for the purpose of completing its
organization, | ||
shall collect from each applicant the amount of not less | ||
than
one regular monthly premium in accordance with its | ||
table of rates and
shall issue to each such applicant a | ||
receipt for the amount so collected.
No society shall incur | ||
any liability other than for the return of such
advance | ||
premium nor issue any certificate nor pay, allow or offer | ||
or
promise to pay or allow any benefit to any person until:
| ||
(1) Actual bona fide applications for benefits | ||
have been secured on not
less than 500 applicants and | ||
any necessary evidence of
insurability has been | ||
furnished to and approved by the society;
| ||
(2) At least 10 subordinate lodges have been | ||
established into which the
500 applicants have been |
admitted;
| ||
(3) There has been submitted to the Director, under | ||
oath of the
president or secretary, or corresponding | ||
officer of the society, a list of
such applicants, | ||
giving their names, addresses, date each was admitted,
| ||
name and number of the subordinate lodge of which each | ||
applicant is a
member, amount of benefits to be granted | ||
and premiums therefor; and
| ||
(4) It shall have been shown to the Director, by | ||
sworn statement of the
treasurer or corresponding | ||
officer of such society, that a least 500
applicants | ||
have each paid in cash at least one regular monthly
| ||
premium as herein provided, which premiums in the | ||
aggregate shall amount to
at least $150,000. Said | ||
advance premiums
shall be held in trust during the | ||
period of organization, and, if the society
has not | ||
qualified for a certificate of authority within one | ||
year unless
extended by the Director, as herein | ||
provided, such premiums shall be
returned to said | ||
applicants; and
| ||
(5) In the case of a domestic society that is | ||
organized after the effective date of this amendatory | ||
Act of the 98th General Assembly, the society meets the | ||
following requirements: | ||
(i) maintains a minimum surplus of $2,000,000, | ||
or such higher amount as the Director may deem |
necessary; and | ||
(ii) meets any other requirements as | ||
determined by the Director. | ||
(e) The Director may make such examination and require | ||
such further
information as the Director deems necessary. | ||
Upon presentation of
satisfactory evidence that the | ||
society has complied with all the provisions
of law, the | ||
Director shall issue to the society a certificate of | ||
authority
to that effect and that the society is authorized | ||
to transact business
pursuant to the provisions of this | ||
amendatory Act; and
| ||
(f) Any incorporated society authorized to transact | ||
business in this
State at the time this amendatory Act | ||
becomes effective shall not be
required to reincorporate.
| ||
(Source: P.A. 84-303 .)
| ||
(215 ILCS 5/294.1) (from Ch. 73, par. 906.1)
| ||
(Section scheduled to be repealed on January 1, 2017)
| ||
Sec. 294.1. Reinsurance. | ||
(a) A domestic society may enter into reinsurance
| ||
transactions only in accordance with Article XI of this Code.
| ||
(b) A domestic society may reinsure the risks of another | ||
society in connection with a merger transaction with approval | ||
by the Director. | ||
(Source: P.A. 84-303 .)
|
(215 ILCS 5/295.2 new) | ||
Sec. 295.2. Maintenance of solvency. | ||
(a) In the event a domestic society has an authorized | ||
control level event described in Section 35A-25 of this Code | ||
under circumstances the Director determines will not be | ||
promptly remedied, the Director may, in addition to all other | ||
actions required or permitted by subsection (b) of Section | ||
35A-25 of this Code, issue an order declaring the domestic | ||
society to be in hazardous condition and ordering that all | ||
steps be taken to remedy such condition pursuant to this | ||
Section. | ||
(b) A domestic society may negotiate an agreement to | ||
transfer members, certificates, and other assets and | ||
liabilities of the society, in whole or in part, to another | ||
organization through merger, consolidation, assumption, or | ||
other means. Such transfer shall be concluded within the | ||
timeframe established by the Director and subject to approval | ||
by the Director. Such transfer agreement shall be deemed fully | ||
approved by the domestic society upon majority vote of its | ||
board of directors. Such transfer shall be effective | ||
notwithstanding the provisions of Section 295.1 of this Code or | ||
any other law or regulation or laws of the domestic society | ||
requiring another form of notice to or approval by members, | ||
which shall be superseded by this Section. | ||
(c) In the event of an agreement to transfer under this | ||
Section to an organization without a certificate of authority |
in this State, the Director may grant a limited certificate of | ||
authority to such organization, upon request, if the | ||
organization does not apply for and obtain a certificate of | ||
authority to transact business in this State. Such limited | ||
certificate of authority shall grant the organization | ||
authority to service the certificates following the transfer | ||
and fulfill all obligations owed to certificate holders but not | ||
to otherwise transact insurance business in this State. | ||
(d) The board of directors of a domestic society may | ||
suspend or modify its qualifications for membership as | ||
necessary or appropriate to facilitate an agreement to transfer | ||
under this Section, notwithstanding the laws of the society, or | ||
any other law or regulation to the contrary.
| ||
(215 ILCS 5/297.1) (from Ch. 73, par. 909.1)
| ||
(Section scheduled to be repealed on January 1, 2017)
| ||
Sec. 297.1. Benefits. | ||
(a) A society may provide the following contractual
| ||
benefits in any form:
| ||
(1) Death benefits;
| ||
(2) Endowment benefits;
| ||
(3) Annuity benefits;
| ||
(4) Temporary or permanent disability benefits;
| ||
(5) Hospital, medical or nursing benefits;
| ||
(6) Monument or tombstone benefits to the memory of | ||
deceased members; and
|
(7) Such other benefits as authorized for life insurers | ||
and which are
not inconsistent with this amendatory Act.
| ||
(b) A society shall specify in its rules those persons who | ||
may be
issued, or covered by, the contractual benefits in | ||
subsection (a),
consistent with providing benefits to members | ||
and their dependents.
A society may provide benefits on the | ||
lives of children under the minimum age
for adult membership | ||
upon application of an adult person. | ||
(c) After the effective date of this amendatory Act of the | ||
98th General Assembly, a society shall provide an applicant for | ||
contractual benefits a disclosure statement that reads | ||
substantially as follows: | ||
". . . . . . .(name of the society) is licensed to do | ||
business in the State of Illinois as a fraternal benefit | ||
society. As such, it is not included in the Illinois Life | ||
and Health Guaranty Association (otherwise known as the | ||
Guaranty Association). This means that fraternal benefit | ||
societies cannot be assessed for the insolvency of other | ||
life insurers or other fraternal benefit societies. By law, | ||
a fraternal benefit society is responsible for its own | ||
solvency. If there is an impairment of reserves, a | ||
certificate holder may be assessed a proportionate share of | ||
the impairment. This process is described in the | ||
certificate issued by the society.". | ||
The statement must appear immediately above the | ||
applicant's signature on the society's membership application |
or certificate or policy application, in uppercase and bold | ||
type or boxed.
| ||
(Source: P.A. 84-303 .)
| ||
(215 ILCS 5/300.1) (from Ch. 73, par. 912.1)
| ||
(Section scheduled to be repealed on January 1, 2017)
| ||
Sec. 300.1. The Benefit Contract. | ||
(a) Every society authorized to do
business in this State | ||
shall issue to each owner of a benefit contract a
certificate | ||
specifying the amount of benefits provided thereby. The
| ||
certificate, together with any riders or endorsements attached | ||
thereto,
the laws of the society, the application for | ||
membership, the application
for insurance and declaration of | ||
insurability, if any, signed by the
applicant and all | ||
amendments to each thereof shall constitute the benefit
| ||
contract, as of the date of issuance, between the society and | ||
the owner,
and the certificate shall so state. A copy of the | ||
application for insurance
and declaration of insurability, if | ||
any, shall be endorsed upon or attached
to the certificate. All | ||
statements on the application shall be
representations and not | ||
warranties. Any waiver of this provision shall be void.
| ||
(b) Any changes, additions or amendments to the laws of the | ||
society duly
made or enacted subsequent to the issuance of the | ||
certificate shall bind
the owner and the beneficiaries and | ||
shall govern and control the benefit
contract in all respects | ||
the same as though such changes, additions or
amendments had |
been made prior to and were in force at the time of the
| ||
application for insurance, except that no change, addition or | ||
amendment
shall destroy or diminish benefits which the society | ||
contracted to give the
owner as of the date of issuance.
| ||
(c) Any person upon whose life a benefit contract is issued | ||
prior to
attaining the age of majority shall be bound by the | ||
terms of the
application and certificate and by all the laws | ||
and rules of the society to
the same extent as though the age | ||
of majority had been attained at the
time of application.
| ||
(d) A society shall provide in its laws and its | ||
certificates that, if its
reserves as to all or any class of | ||
certificates become impaired, its board of
directors or | ||
corresponding body may require that there shall be paid by
the | ||
owner to the society an assessment in the amount of the owner's | ||
equitable proportion of
such deficiency as ascertained by its | ||
board, and that, if the payment is not
made, either (1) it | ||
shall stand as an indebtedness against the certificate
and draw | ||
interest not to exceed the rate specified for certificate loans
| ||
under the certificates; or (2) in lieu of or in combination | ||
with (1), the
owner may accept a proportionate reduction in | ||
benefits under the
certificate. However, in no event may an | ||
assessment obligation be forgiven, credited, or repaid by | ||
whatever means or however labeled by the society in lieu of | ||
collection or reduction in benefits, unless provided to all | ||
society members and approved in writing by the Director, except | ||
that the forgiveness or repayment of any assessments issued by |
a society that remain outstanding as of the date of this | ||
amendatory Act of the 98th General Assembly may be forgiven or | ||
repaid by any manner or plan certified by an independent | ||
actuary and filed with the Director to make reasonable and | ||
adequate provision for the forgiveness or repayment of the | ||
assessment to all society members. Notwithstanding the | ||
foregoing, a society may fully repay, credit, or forgive an | ||
assessment from the date of death of any life insured under a | ||
certificate so long as the plan to forgive or repay the | ||
assessment is certified by an independent actuary and filed | ||
with the Director to make reasonable and adequate provision for | ||
the forgiveness or repayment of the assessment to all assessed | ||
society members as a result of the death. The society may | ||
specify the manner of the election and which
alternative is to | ||
be presumed if no election is made. No such assessment shall | ||
take effect unless a 30-day notification has been provided to | ||
the Director, who shall have the ability to disapprove the | ||
assessment only if the Director finds that such assessment is | ||
not in the best interests of the benefit members of the | ||
domestic society. Disapproval by the Director shall be made | ||
within 30 days after receipt of notice and shall be in writing | ||
and mailed to the domestic society. If the Director disapproves | ||
the assessment, the reasons therefore shall be stated in the | ||
written notice.
| ||
(e) Copies of any of the documents mentioned in this | ||
Section, certified
by the secretary or corresponding officer of |
the society, shall be received
in evidence of the terms and | ||
conditions thereof.
| ||
(f) No certificate shall be delivered or issued for | ||
delivery in this
State unless a copy of the form has been filed | ||
with the Director in the
manner provided for like policies | ||
issued by life insurers in this State.
Every life, accident, | ||
health or disability insurance certificate and every
annuity | ||
certificate issued on or after one year from the effective date | ||
of
this amendatory Act shall meet the standard contract | ||
provision requirements not
inconsistent with this amendatory | ||
Act for like policies issued by life insurers in
this State | ||
except that a society may provide for a grace period for | ||
payment
of premiums of one full month in its certificates. The | ||
certificate shall
also contain a provision stating the amount | ||
of premiums which are payable
under the certificate and a | ||
provision reciting or setting forth the
substance of any | ||
sections of the society's laws or rules in force at the
time of | ||
issuance of the certificate which, if violated, will result in | ||
the
termination or reduction of benefits payable under the | ||
certificate. If the
laws of the society provide for expulsion | ||
or suspension of a member, the
certificate shall also contain a | ||
provision that any member so expelled or
suspended, except for | ||
nonpayment of a premium or within the contestable
period for | ||
material misrepresentation in the application for membership | ||
or
insurance, shall have the privilege of maintaining the | ||
certificate in force
by continuing payment of the required |
premium.
| ||
(g) Benefit contracts issued on the lives of persons below | ||
the society's
minimum age for adult membership may provide for | ||
transfer of control or
ownership to the insured at an age | ||
specified in the certificate. A society
may require approval of | ||
an application for membership in order to effect
this transfer | ||
and may provide in all other respect for the regulation,
| ||
government and control of such certificates and all rights, | ||
obligations and
liabilities incident thereto and connected | ||
therewith. Ownership rights
prior to such transfer shall be | ||
specified in the certificate.
| ||
(h) A society may specify the terms and conditions on which | ||
benefit
contracts may be assigned.
| ||
(Source: P.A. 84-303 .)
| ||
(215 ILCS 5/315.6) (from Ch. 73, par. 927.6)
| ||
(Section scheduled to be repealed on January 1, 2017)
| ||
Sec. 315.6. Application of other Code provisions. Unless | ||
otherwise
provided in this amendatory Act, every fraternal | ||
benefit society shall be
governed
by this amendatory Act and | ||
shall be exempt from all other provisions of the
insurance laws | ||
of this State not only in governmental relations with the
State | ||
but for every other purpose, except for those provisions | ||
specified in
this amendatory Act and except as follows:
| ||
(a) Sections 1, 2, 2.1, 3.1, 117, 118, 132, 132.1, | ||
132.2, 132.3, 132.4,
132.5, 132.6, 132.7, 133, 134, 136, |
138,
139, 140, 141,
141.01, 141.1, 141.2, 141.3, 143, 143c, | ||
144.1, 147, 148, 149, 150, 151,
152, 153, 154.5, 154.6, | ||
154.7, 154.8, 155, 155.04, 155.05, 155.06, 155.07,
155.08 | ||
and 408 of this Code; and
| ||
(b) Articles VIII 1/2, XII, XII 1/2, XIII, XXIV, and | ||
XXVIII of this Code.
| ||
(Source: P.A. 88-364; 89-97, eff. 7-7-95 .)
| ||
(215 ILCS 5/315.9 new) | ||
Sec. 315.9. Voluntary dissolution. Upon application to the | ||
Director, a domestic society may request that it be dissolved | ||
and that its existence be terminated. The application shall | ||
demonstrate that the applicant has satisfied its members' | ||
certificate obligations or that it has transferred such | ||
obligations to another organization, domestic or foreign, by | ||
means of assumption or bulk reinsurance or otherwise, and that | ||
the domestic society's supreme governing body has approved the | ||
termination and dissolution. The application shall contain any | ||
other information required by the Director. Any limitation | ||
related to reinsurance by a domestic society shall not apply to | ||
reinsurance entered into in conjunction with the transfer of | ||
members' certificate obligations as a part of a voluntary | ||
dissolution. Upon approval of the application by the Director, | ||
the domestic society shall be deemed dissolved and its | ||
existence terminated as of the date set forth in the | ||
application. |