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Public Act 92-0075
SB870 Enrolled LRB9201509JSpc
AN ACT concerning insurer security deposits.
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 26, 53, 74, 278, 327, and 341 as follows:
(215 ILCS 5/26) (from Ch. 73, par. 638)
Sec. 26. Deposit. A Every company subject to the
provisions of this Article shall make and maintain with the
Director for the protection of all creditors, policyholders
and policy obligations of the company, a deposit of
securities which are authorized investments under Section
126.11A(1), 126.11A(2), 126.24A(1), or 126.24A(2) having a
fair market value equal to the minimum capital and surplus
required to be maintained under Section 13. The Director may
release the required deposit of securities upon receipt of an
order of a court having proper jurisdiction or upon: (i)
certification by the company that it has no outstanding
creditors, policyholders, or policy obligations in effect and
no plans to engage in the business of insurance; (ii) receipt
of a lawful resolution of the company's board of directors
effecting the surrender of its articles of incorporation for
administrative dissolution by the Director; and (iii) receipt
of the name and forwarding address for each of the final
officers and directors of the company, together with a plan
of dissolution approved by the Director.
(Source: P.A. 90-418, eff. 8-15-97.)
(215 ILCS 5/53) (from Ch. 73, par. 665)
Sec. 53. Deposit. A Each company subject to the
provisions of this Article shall make and maintain with the
Director for the protection of all creditors, policyholders
and policy obligations of the company, a deposit of
securities which are authorized investments under Section
126.11A(1), 126.11A(2), 126.24A(1), or 126.24A(2) having a
fair market value equal to the minimum surplus required to be
maintained under Section 43. The Director may release the
required deposit of securities upon receipt of an order of a
court having proper jurisdiction or upon: (i) certification
by the company that it has no outstanding creditors,
policyholders, or policy obligations in effect and no plans
to engage in the business of insurance; (ii) receipt of a
lawful resolution of the company's board of directors
effecting the surrender of its articles of incorporation for
administrative dissolution by the Director; and (iii) receipt
of the name and forwarding address for each of the final
officers and directors of the company, together with a plan
of dissolution approved by the Director.
(Source: P.A. 90-418, eff. 8-15-97.)
(215 ILCS 5/74) (from Ch. 73, par. 686)
Sec. 74. Deposit. A Each domestic reciprocal subject to
the provisions of this Article shall make and maintain with
the Director, for the protection of all creditors,
policyholders and policy obligations of the reciprocal, a
deposit of securities that are authorized investments under
Section 126.11A(1), 126.11A(2), 126.24A(1), or 126.24A(2),
having a fair market value equal to the surplus required to
be maintained under Section 66. The Director may release the
required deposit of securities upon receipt of an order of a
court having proper jurisdiction or upon: (i) certification
by the reciprocal company that it has no outstanding
creditors, policyholders, or policy obligations in effect and
no plans to engage in the business of insurance; (ii) receipt
of a lawful resolution of the governing body of the
reciprocal's attorney-in-fact effecting the surrender of its
certificate of authority and declaration of organization for
administrative dissolution by the Director; and (iii) receipt
of the name and forwarding address for each of the final
officers and directors of the reciprocal's attorney-in-fact,
together with a plan of dissolution approved by the Director.
(Source: P.A. 90-418, eff. 8-15-97; 90-655, eff. 7-30-98.)
(215 ILCS 5/278) (from Ch. 73, par. 890)
Sec. 278. Reserve deposits. A Each company subject to
this Article shall from time to time deposit with the
Director, securities of the kind authorized for investment by
a company transacting the kind of business enumerated in
Class 1 of Section 4, in such amount that the market value of
the securities deposited shall, at all times, be at least
equal to the total of the reserved required by this Code on
the life contracts issued by said company until there shall
be on deposit at least $200,000. Thereafter, while the
reserves on all such contracts are maintained, further
deposits shall be optional with the company. Each separate
deposit, except in the case of newly organized companies
during the first 2 years of existence, shall be in the sum of
not less than $1,000 and such securities may be deposited at
any time. Any such company may at any time, withdraw any of
such securities in excess of the minimum herein required and
may from time to time exchange any of such securities by
depositing others of the kind in which the company is
authorized to invest, of equal value. So long as the said
company shall remain solvent and maintain its deposits as
herein required, it may collect the interest or other income
of the securities deposited as the same may accrue. All such
deposits shall be held by the Director in trust for the
benefit of the holders of life contracts upon which contracts
reserves at least equal to the minimum reserves prescribed by
Section 281 are required. The Director may release the
required deposit of securities upon receipt of an order of a
court having proper jurisdiction or upon: (i) certification
by the company that it has no outstanding life contracts on
which reserves are required, life insurance policyholders, or
policy obligations in effect and no plans to engage in the
business of insurance; (ii) receipt of a lawful resolution of
the company's board of directors effecting the surrender of
its articles of incorporation for administrative dissolution
by the Director; and (iii) receipt of the name and forwarding
address for each of the final officers and directors of the
company, together with a plan of dissolution approved by the
Director.
(Source: Laws 1959, p. 1148.)
(215 ILCS 5/327) (from Ch. 73, par. 939)
Sec. 327. Benefit fund.
(1) An Every association shall maintain a benefit fund
which shall be used solely for the payment of claims of
members and no part thereof shall be used for defraying the
expenses of the association. Such fund, any portion of which
may be deposited with the Director, may be held in cash or
invested in securities of the United States Government or of
the State of Illinois, and not otherwise. All moneys or other
assets of the benefit account, as defined in the Act
mentioned in Section 316, of any association shall upon the
effective date of this Code be deemed transferred to and
become a part of its benefit fund. The minimum amount of such
benefit fund at all times after one year from the effective
date of this Code shall be $1,000, plus the sum of $200 for
each 100 members in excess of 500. If the benefit fund of any
association at any time after one year from the effective
date of this Code shall be less than the minimum amount
required by this Section and is not increased to such minimum
within 90 days, the association shall be deemed insolvent and
the Director shall proceed against it under Article XIII.
The Director may release any required benefit fund deposit
upon receipt of an order of a court having proper
jurisdiction or upon: (i) certification by the association
that it has no outstanding member creditors, member
certificates, or member obligations in effect and no plans to
engage in the business of insurance; (ii) receipt of a lawful
resolution of the association's board of directors effecting
the surrender of its charter and articles of incorporation
for administrative dissolution by the Director; and (iii)
receipt of the name and forwarding address for each of the
final officers and directors of the company, together with a
plan of dissolution approved by the Director.
(2) Whenever the association shall have been notified of
any loss under its certificate of membership, which exceeds
in amount the benefit fund of the association, the president
shall convene the directors of the association who shall levy
an assessment against all members for an amount sufficient to
pay all such losses of the association at the time said
assessment is made and for an amount in excess thereof
sufficient to maintain the minimum amount of the benefit fund
as provided in this Section. Assessments provided for in this
section shall be distributed equally against all members of
the association except for children under 16 years of age.
The board of directors shall assess each such child an amount
not to exceed one half of the amount levied against each
other member.
(3) In order to provide for an unexpected number of
deaths, an association shall have the right to levy
additional assessments whenever in the discretion of the
board of directors the same shall be deemed advisable except
that no assessment may be levied if the amount in the benefit
fund exceeds, or if such assessment will increase the amount
of the benefit fund in excess of a sum equal to $25 per
member in good standing. The entire proceeds of all such
additional assessments shall be placed in the benefit fund.
(Source: Laws 1957, p. 68.)
(215 ILCS 5/341) (from Ch. 73, par. 953)
Sec. 341. Deposit required.
(1) A Every burial society shall maintain with the
Director a deposit of cash or securities in an amount of at
least $1,000 one thousand dollars. A Any society having a
membership of more than 2,500 twenty-five hundred members and
less than 5,000 five thousand members shall maintain a
deposit with the Director of $5,000 five thousand dollars. A
Any society having a membership of more than 5,000 five
thousand members and less than 10,000 ten thousand members
shall maintain a deposit with the Director of $10,000 ten
thousand dollars. A Any society having more than 10,000 ten
thousand members shall maintain a deposit with the Director
of $10,000 ten thousand dollars and an additional $1,000 one
thousand dollars for each 1,000 one thousand members in
excess of 10,000 ten thousand.
(2) All deposits as required herein shall be in cash or
in securities permitted by section 346.
(3) The Director may release the required deposit of
cash or securities upon receipt of an order of a court having
proper jurisdiction or upon: (i) certification by the burial
society that it has no outstanding creditors, policyholders,
certificate holders, or member obligations in effect and no
plans to engage in the business of insurance; (ii) receipt of
a lawful resolution of the burial society's board of
directors effecting the surrender of its articles of
incorporation for administrative dissolution by the Director;
and (iii) receipt of the name and forwarding address for each
of the final officers and directors of the burial society,
together with a plan of dissolution approved by the Director.
(Source: Laws 1937, p. 696.)
Section 10. The Health Maintenance Organization Act is
amended by changing Section 2-6 as follows:
(215 ILCS 125/2-6) (from Ch. 111 1/2, par. 1406.2)
Sec. 2-6. Statutory Deposits. An Every organization
subject to the provisions of this Act shall make and maintain
with the Director through December 30, 1993, for the
protection of enrollees of the organization, a deposit of
securities which are authorized investments under paragraphs
(1) and (2) of subsection (h) of Section 3-1 having a fair
market value equal to at least $100,000. Effective December
31, 1993 and through December 30, 1994, the deposit shall
have a fair market value at least equal to $200,000.
Effective December 31, 1994 and thereafter, the deposit shall
have a fair market value at least equal to $300,000. An
organization issued a certificate of authority on or after
the effective date of this Amendatory Act of 1993, shall make
and maintain with the Director; for the protection of
enrollees of the organization, a deposit of securities which
are authorized investments under paragraphs (1) and (2) of
subsection (h) of Section 3-1 having a fair market value
equal to at least $300,000. The amount on deposit shall
remain as an admitted asset of the organization in the
determination of its net worth. The Director may release the
required deposit of securities upon receipt of an order of a
court having proper jurisdiction or upon: (i) certification
by the organization that it has no outstanding enrollee
creditors, enrollees, certificate holders, or enrollee
obligations in effect and no plans to engage in the business
of insurance as a health maintenance organization; (ii)
receipt of a lawful resolution of the organization's
governing body effecting the surrender of its certificate of
authority, articles of incorporation, or other organizational
documents to their issuing governmental officer for voluntary
or administrative dissolution; and (iii) receipt of the name
and forwarding address for each of the final officers and
directors of the organization, together with a plan of
dissolution approved by the Director.
(Source: P.A. 88-364.)
Section 15. The Limited Health Service Organization Act
is amended by changing Section 2006 as follows:
(215 ILCS 130/2006) (from Ch. 73, par. 1502-6)
Sec. 2006. Statutory deposits.
(a) An Every organization subject to the provisions of
this Act shall make and maintain with the Director, for the
protection of enrollees of the organization, a deposit of
securities that are in the form authorized under Section 2-6
of the Health Maintenance Organization Act having a fair
market value equal to the minimum net worth required under
subsection (a) of Section 2004. The amount on deposit shall
remain as an admitted asset of the organization in the
determination of its net worth. The Director may release the
required deposit of securities required by this Section upon
receipt of an order of a court having proper jurisdiction or
upon: (i) certification by the organization that it has no
outstanding enrollee creditors, enrollees, certificate
holders, or enrollee obligations in effect and no plans to
engage in the business of insurance as a limited health
service organization; (ii) receipt of a lawful resolution of
the organization's governing body effecting the surrender of
its certificate of authority, articles of incorporation, or
other organizational documents to their issuing governmental
officer for voluntary or administrative dissolution; and
(iii) receipt of the name and forwarding address for each of
the final officers and directors of the organization,
together with a plan of dissolution approved by the Director.
(b) An LHSO that offers a POS contract shall, in
addition to the deposit required by subsection (a), deposit
and maintain with the Director cash or securities that are
authorized investments under Section 1003 having a fair
market value equal to the greater of:
(1) $50,000 if the LHSO's expenditures for
out-of-plan covered services do not exceed 10% of its
total limited health expenditures in any calendar
quarter; or
(2) $100,000 if the LHSO's expenditures for
out-of-plan covered services exceeds 10% but are less
than 20% of its total limited health services expenditure
in any calendar quarter; or
(3) 120% of its current actual monthly out-of-plan
covered service claims expense plus incurred but not
reported balances for out-of-plan covered services.
(c) The combined deposit amount required in subsections
(a) and (b) shall not exceed $200,000.
(Source: P.A. 87-1079; 88-364; 88-667, eff. 9-16-94.)
Section 99. Effective date. This Act takes effect upon
becoming law.
Passed in the General Assembly April 19, 2001.
Approved July 12, 2001.
Effective July 12, 2001.
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