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91_HB1348enr
HB1348 Enrolled LRB9102806JSpc
1 AN ACT concerning insurers, amending named Acts.
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 3.1, 35A-5, 35A-10, 35A-15, 35A-20, 35A-30,
6 35A-55, 35A-60, 245, 356h, 356v, 364, 367, and 367i as
7 follows:
8 (215 ILCS 5/3.1) (from Ch. 73, par. 615.1)
9 Sec. 3.1. Definitions of admitted assets. "Admitted
10 Assets" includes the investments authorized or permitted by
11 this Code, the credit for reinsurance allowed by this Code,
12 and in addition thereto, only the following:
13 (a) Petty cash and other cash funds in the company's
14 principal or any official branch office and under the control
15 of the company.
16 (b) Immediately withdrawable funds on deposit in demand
17 accounts, in a bank or trust company as defined in Section
18 126.2MMM(1) or like funds actually in the principal or any
19 official branch office at statement date, and, in transit to
20 such bank or trust company with authentic deposit credit
21 given prior to the close of business on the fifth bank
22 working day following the statement date.
23 (c) The amount fairly estimated as recoverable on cash
24 deposited in a closed bank or trust company, if qualifying
25 under the provisions of this Section prior to the suspension
26 of such bank or trust company.
27 (d) Bills and accounts receivable collateralized by
28 securities of the kind in which the company is authorized to
29 invest.
30 (e) Bills receivable not past due covering uncollected
31 premiums taken by a company in the transaction of business
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1 described in Class 3 of Section 4, in an amount not to exceed
2 the unearned premium reserve liability calculated on each
3 respective policy.
4 (f) For in force insurance coverages written by fire,
5 casualty, and reciprocal companies, excluding group accident
6 and health business, premium deposits, gross premiums, and
7 agents' balances (net of related commissions) not more than
8 90 days past due; installments booked but deferred and not
9 yet due (net of related commissions), provided that all
10 amounts having become due from the insured are not more than
11 90 days past due; and audit and retrospective premium to the
12 extent permitted to be admitted pursuant to the Annual
13 Statement Instructions and the Accounting Practices and
14 Procedures Manual for Property and Casualty Insurers
15 published by the National Association of Insurance
16 Commissioners, unless the Director prescribes otherwise.
17 However, audit and retrospective premiums that represent
18 anticipated additional premiums on policies for which the
19 policy period has not yet expired may not be admitted.
20 (g) Net amount of uncollected premiums on group life and
21 group accident and health policies, not more than 90 days
22 past due.
23 (h) Due and uncollected accident and health premiums on
24 in force individual policies, on insurance written by Class
25 1, Section 4 companies, less commissions due thereon to
26 agents; not exceeding in the aggregate the premium reserve
27 liability computed on such business.
28 (i) Premium notes, policy loans and liens, and the net
29 amount of uncollected and deferred premiums on individual
30 life insurance policies, not in excess of the liability for
31 the legal reserves specified in Section 223 or 281 of this
32 Code on such individual life insurance policies.
33 (j) Premium and assessment notes, certificate loans and
34 liens, and the gross amount less loading, of premiums or
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1 assessments actually collected by subordinate lodges not yet
2 turned over to the Supreme Lodge on individual life insurance
3 certificates not in excess of the liability for the legal
4 reserves specified in Section 297.1 or 305.1 on such
5 individual life insurance certificates.
6 (k) Mortuary assessments due and unpaid on last call
7 made within 60 days, on insurance in force and for which
8 notices have been issued, not in excess of the liability for
9 the unpaid claims which are to be paid by the proceeds.
10 (l) Amounts fairly estimated as recoverable from
11 advances made on contracts under surety bonds.
12 (m) Amounts receivable from insurance companies
13 authorized to do business in this State and from associations
14 or bureaus owned or controlled by 5 or more separate and
15 nonaffiliated, by ownership or management, insurance
16 companies of which a majority thereof are authorized to
17 transact business in this State. The amount of those
18 receivables allowed as admitted assets may not exceed the
19 lesser of 5% of the company's total admitted assets or 10% of
20 the company's surplus as regards policyholders. Amounts
21 receivable from insurance companies or associations or
22 bureaus not meeting the preceding standards of this Section
23 if collateralized in the manner prescribed by Section 173.1.
24 (n) Tax refunds due from the United States or any state,
25 the Government of Canada or any province, or the Commonwealth
26 of Puerto Rico or amounts due to a subsidiary from a parent
27 under a tax allocation agreement that conforms with rules
28 adopted by the Director.
29 (o) The interest accrued on mortgage loans conforming to
30 this Code, not exceeding an aggregate amount on an individual
31 loan of one year's total due and accrued interest.
32 (p) The rents accrued and owing to the company on real
33 and personal property, directly or beneficially owned, not
34 exceeding on each individual property the amount of one
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1 year's total due and accrued rent.
2 (q) Interest or rents accrued on conditional sales
3 agreements, security interests, chattel mortgages and real or
4 personal property under lease to other corporations, all
5 conforming to this Code, and not exceeding on any individual
6 investment, the amount of one year's total due and accrued
7 interest or rent.
8 (r) The fixed and required interest due and accrued on
9 bonds and other like evidences of indebtedness, conforming to
10 this Code, and not in default.
11 (s) Dividends receivable on shares of stock conforming
12 to this Code; provided that the market price taken for
13 valuation purposes does not include the value of the
14 dividend.
15 (t) The interest or dividends due and payable, but not
16 credited, on deposits in banks and trust companies or on
17 accounts with savings and loan associations.
18 (u) Interest accrued on secured loans conforming to this
19 Code, not exceeding the amount of one year's interest on any
20 loan.
21 (v) Interest accrued on tax anticipation warrants.
22 (w) The value of electronic computer or data processing
23 machines or systems purchased for use in connection with the
24 business of the company, if such machines or systems whenever
25 purchased have an aggregate original cost to the company of
26 at least $75,000. The amortized value of such machines or
27 systems at the end of any calendar year shall not be greater
28 than the original purchase price less 10% for each completed
29 year, or pro rata portion for any fraction thereof, after
30 such purchase, with the total admissible value at any
31 statement date to be limited to an amount not exceeding 2% of
32 the company's admitted assets at such statement date.
33 (1) (x) Amounts, other than premium, receivable from
34 affiliates, not outstanding for more than 3 months, and
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1 arising under, management contracts or service agreements
2 which meet the requirements of Section 141.1 of the Illinois
3 Insurance Code to the extent that the affiliate has liquid
4 assets sufficient to pay the balance. The amount of those
5 receivables included in admitted assets may not exceed the
6 lesser of 5% of the company's admitted assets or 10% of the
7 company's surplus as regards policyholders. For purposes of
8 this subsection, "affiliate" has the meaning given that term
9 in Article VIII 1/2 of the Illinois Insurance Code.
10 (2) Amounts permitted under Section 136.
11 (y) Property and liability guaranty fund or guaranty
12 association assessments paid in any state, but only to the
13 extent it is probable the company will be able to offset
14 those assessments against present or future premium taxes or
15 income taxes payable in the state in which the assessments
16 were paid. The amount of those assessments allowed as
17 admitted assets may not exceed the lesser of 5% of the
18 company's total admitted assets or 10% of the company's
19 surplus as regards policyholders. The Director may disallow
20 any such assessment as an admitted asset to the extent he
21 determines a company is unlikely to realize a present or
22 future premium tax or income tax offset as a result of the
23 assessment.
24 (Source: P.A. 89-97, eff. 7-7-95; 89-669, eff. 1-1-97;
25 90-418, eff. 8-15-97.)
26 (215 ILCS 5/35A-5)
27 Sec. 35A-5. Definitions. As used in this Article, the
28 terms listed in this Section have the meaning given herein.
29 "Adjusted RBC Report" means an RBC Report that has been
30 adjusted by the Director in accordance with subsection (f)
31 (e) of Section 35A-10.
32 "Authorized control level RBC" means the number
33 determined under the risk-based capital formula in accordance
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1 with the RBC Instructions.
2 "Company action level RBC" means the product of 2.0 and
3 the insurer's authorized control level RBC.
4 "Corrective Order" means an order issued by the Director
5 in accordance with Article XII 1/2 specifying corrective
6 actions that the Director determines are required.
7 "Domestic insurer" means any insurance company domiciled
8 in this State under Article II, Article III, Article III 1/2,
9 or Article IV or a health organization as defined by this
10 Article, except this shall include only those health
11 maintenance organizations that are "domestic companies" in
12 accordance with Section 5-3 of the Health Maintenance
13 Organization Act and only those limited health service
14 organizations that are "domestic companies" in accordance
15 with Section 4003 of the Limited Health Service Organization
16 Act.
17 "Foreign insurer" means any foreign or alien insurance
18 company licensed under Article VI that is not domiciled in
19 this State and any health maintenance organization that is
20 not a "domestic company" in accordance with Section 5-3 of
21 the Health Maintenance Organization Act and any limited
22 health service organization that is not a "domestic company"
23 in accordance with Section 4003 of the Limited Health Service
24 Organization Act.
25 "Health organization" means an entity operating under a
26 certificate of authority issued pursuant to the Health
27 Maintenance Organization Act, the Dental Service Plan Act,
28 the Limited Health Service Organization Act, or the Voluntary
29 Health Services Plans Act, unless the entity is otherwise
30 defined as a "life, health, or life and health insurer"
31 pursuant to this Act.
32 "Life, health, or life and health insurer" means an
33 insurance company that has authority to transact the kinds of
34 insurance described in either or both clause (a) or clause
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1 (b) of Class 1 of Section 4 or a licensed property and
2 casualty insurer writing only accident and health insurance.
3 "Mandatory control level RBC" means the product of 0.70
4 and the insurer's authorized control level RBC.
5 "NAIC" means the National Association of Insurance
6 Commissioners.
7 "Negative trend" means, with respect to a life, health,
8 or life and health insurer, a negative trend over a period of
9 time, as determined in accordance with the trend test
10 calculation included in the RBC Instructions.
11 "Property and casualty insurer" means an insurance
12 company that has authority to transact the kinds of insurance
13 in either or both Class 2 or Class 3 of Section 4 or a
14 licensed insurer writing only insurance authorized under
15 clause (c) of Class 1, but does not include monoline mortgage
16 guaranty insurers, financial guaranty insurers, and title
17 insurers.
18 "RBC" means risk-based capital.
19 "RBC Instructions" means the RBC Report including
20 risk-based capital instructions adopted by the NAIC as those
21 instructions may be amended by the NAIC from time to time in
22 accordance with the procedures adopted by the NAIC.
23 "RBC level" means an insurer's company action level RBC,
24 regulatory action level RBC, authorized control level RBC, or
25 mandatory control level RBC.
26 "RBC Plan" means a comprehensive financial plan
27 containing the elements specified in subsection (b) of
28 Section 35A-15.
29 "RBC Report" means the risk-based capital report required
30 under Section 35A-10.
31 "Receivership" means conservation, rehabilitation, or
32 liquidation under Article XIII.
33 "Regulatory action level RBC" means the product of 1.5
34 and the insurer's authorized control level RBC.
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1 "Revised RBC Plan" means an RBC Plan rejected by the
2 Director and revised by the insurer with or without the
3 Director's recommendations.
4 "Total adjusted capital" means the sum of (1) an
5 insurer's statutory capital and surplus and (2) any other
6 items that the RBC Instructions may provide.
7 (Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)
8 (215 ILCS 5/35A-10)
9 Sec. 35A-10. RBC Reports.
10 (a) On or before each March 1 (the "filing date"), every
11 domestic insurer shall prepare and submit to the Director a
12 report of its RBC levels as of the end of the previous
13 calendar year in the form and containing the information
14 required by the RBC Instructions. Every domestic insurer
15 shall also file its RBC Report with the NAIC in accordance
16 with the RBC Instructions. In addition, if requested in
17 writing by the chief insurance regulatory official of any
18 state in which it is authorized to do business, every
19 domestic insurer shall file its RBC Report with that official
20 no later than the later of 15 days after the insurer receives
21 the written request or the filing date.
22 (b) A life, health, or life and health insurer's RBC
23 shall be determined under the formula set forth in the RBC
24 Instructions. The formula shall take into account (and may
25 adjust for the covariance between):
26 (1) the risk with respect to the insurer's assets;
27 (2) the risk of adverse insurance experience with
28 respect to the insurer's liabilities and obligations;
29 (3) the interest rate risk with respect to the
30 insurer's business; and
31 (4) all other business risks and other relevant
32 risks set forth in the RBC Instructions.
33 These risks shall be determined in each case by applying the
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1 factors in the manner set forth in the RBC Instructions.
2 (c) A property and casualty insurer's RBC shall be
3 determined in accordance with the formula set forth in the
4 RBC Instructions. The formula shall take into account (and
5 may adjust for the covariance between):
6 (1) asset risk;
7 (2) credit risk;
8 (3) underwriting risk; and
9 (4) all other business risks and other relevant
10 risks set forth in the RBC Instructions.
11 These risks shall be determined in each case by applying the
12 factors in the manner set forth in the RBC Instructions.
13 (d) A health organization's RBC shall be determined in
14 accordance with the formula set forth in the RBC
15 Instructions. The formula shall take the following into
16 account (and may adjust for the covariance between):
17 (1) asset risk;
18 (2) credit risk;
19 (3) underwriting risk; and
20 (4) all other business risks and other relevant
21 risks set forth in the RBC Instructions.
22 These risks shall be determined in each case by applying the
23 factors in the manner set forth in the RBC Instructions.
24 (e) (d) An excess of capital over the amount produced by
25 the risk-based capital requirements contained in this Code
26 and the formulas, schedules, and instructions referenced in
27 this Code is desirable in the business of insurance.
28 Accordingly, insurers should seek to maintain capital above
29 the RBC levels required by this Code. Additional capital is
30 used and useful in the insurance business and helps to secure
31 an insurer against various risks inherent in, or affecting,
32 the business of insurance and not accounted for or only
33 partially measured by the risk-based capital requirements
34 contained in this Code.
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1 (f) (e) If a domestic insurer files an RBC Report that,
2 in the judgment of the Director, is inaccurate, the Director
3 shall adjust the RBC Report to correct the inaccuracy and
4 shall notify the insurer of the adjustment. The notice shall
5 contain a statement of the reason for the adjustment.
6 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
7 (215 ILCS 5/35A-15)
8 Sec. 35A-15. Company action level event.
9 (a) A company action level event means any of the
10 following events:
11 (1) The filing of an RBC Report by an insurer that
12 indicates that:
13 (A) the insurer's total adjusted capital is
14 greater than or equal to its regulatory action level
15 RBC, but less than its company action level RBC; or
16 (B) The insurer, if a life, health, or life
17 and health insurer, has total adjusted capital that
18 is greater than or equal to its company action level
19 RBC, but less than the product of its authorized
20 control level RBC and 2.5 and has a negative trend.
21 (2) The notification by the Director to the insurer
22 of an Adjusted RBC Report that indicates an event
23 described in paragraph (1), provided the insurer does not
24 challenge the Adjusted RBC Report under Section 35A-35.
25 (3) The notification by the Director to the insurer
26 that the Director has, after a hearing, rejected the
27 insurer's challenge under Section 35A-35 to an Adjusted
28 RBC Report that indicates the event described in
29 paragraph (1).
30 (b) In the event of a company action level event, the
31 insurer shall prepare and submit to the Director an RBC Plan
32 that does all of the following:
33 (1) Identifies the conditions that contribute to
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1 the company action level event.
2 (2) Contains proposed corrective actions that the
3 insurer intends to take and that are expected to result
4 in the elimination of the company action level event. A
5 health organization is not prohibited from proposing
6 recognition of a parental guarantee or a letter of credit
7 to eliminate the company action level event; however the
8 Director shall, at his discretion, determine whether or
9 the extent to which the proposed parental guarantee or
10 letter of credit is an acceptable part of a satisfactory
11 RBC Plan or Revised RBC Plan.
12 (3) Provides projections of the insurer's financial
13 results in the current year and at least the 4 succeeding
14 years, both in the absence of proposed corrective actions
15 and giving effect to the proposed corrective actions,
16 including projections of statutory operating income, net
17 income, capital, and surplus. The projections for both
18 new and renewal business may include separate projections
19 for each major line of business and separately identify
20 each significant income, expense, and benefit component.
21 (4) Identifies the key assumptions affecting the
22 insurer's projections and the sensitivity of the
23 projections to the assumptions.
24 (5) Identifies the quality of, and problems
25 associated with, the insurer's business including, but
26 not limited to, its assets, anticipated business growth
27 and associated surplus strain, extraordinary exposure to
28 risk, mix of business, and use of reinsurance, if any, in
29 each case.
30 (c) The insurer shall submit the RBC Plan to the
31 Director within 45 days after the company action level event
32 occurs or within 45 days after the Director notifies the
33 insurer that the Director has, after a hearing, rejected its
34 challenge under Section 35A-35 to an Adjusted RBC Report.
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1 (d) Within 60 days after an insurer submits an RBC Plan
2 to the Director, the Director shall notify the insurer
3 whether the RBC Plan shall be implemented or is, in the
4 judgment of the Director, unsatisfactory. If the Director
5 determines the RBC Plan is unsatisfactory, the notification
6 to the insurer shall set forth the reasons for the
7 determination and may set forth proposed revisions that will
8 render the RBC Plan satisfactory in the judgment of the
9 Director. Upon notification from the Director, the insurer
10 shall prepare a Revised RBC Plan, which may incorporate by
11 reference any revisions proposed by the Director. The
12 insurer shall submit the Revised RBC Plan to the Director
13 within 45 days after the Director notifies the insurer that
14 the RBC Plan is unsatisfactory or within 45 days after the
15 Director notifies the insurer that the Director has, after a
16 hearing, rejected its challenge under Section 35A-35 to the
17 determination that the RBC Plan is unsatisfactory.
18 (e) In the event the Director notifies an insurer that
19 its RBC Plan or Revised RBC Plan is unsatisfactory, the
20 Director may, at the Director's discretion and subject to the
21 insurer's right to a hearing under Section 35A-35, specify in
22 the notification that the notification constitutes a
23 regulatory action level event.
24 (f) Every domestic insurer that files an RBC Plan or
25 Revised RBC Plan with the Director shall file a copy of the
26 RBC Plan or Revised RBC Plan with the chief insurance
27 regulatory official in any state in which the insurer is
28 authorized to do business if that state has a law
29 substantially similar to the confidentiality provisions in
30 subsection (a) of Section 35A-50 and if that official
31 requests in writing a copy of the plan. The insurer shall
32 file a copy of the RBC Plan or Revised RBC Plan in that state
33 no later than the later of 15 days after receiving the
34 written request for the copy or the date on which the RBC
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1 Plan or Revised RBC Plan is filed under subsection (c) or (d)
2 of this Section.
3 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
4 (215 ILCS 5/35A-20)
5 Sec. 35A-20. Regulatory action level event.
6 (a) A regulatory action level event means any of the
7 following events:
8 (1) The filing of an RBC Report by the insurer that
9 indicates that the insurer's total adjusted capital is
10 greater than or equal to its authorized control level
11 RBC, but less than its regulatory action level RBC.
12 (2) The notification by the Director to an insurer
13 of an Adjusted RBC Report that indicates the event
14 described in paragraph (1), provided the insurer does not
15 challenge the Adjusted RBC Report under Section 35A-35.
16 (3) The notification by the Director to the insurer
17 that the Director has, after a hearing, rejected the
18 insurer's challenge under Section 35A-35 to an Adjusted
19 RBC Report that indicates the event described in
20 paragraph (1).
21 (4) The failure of the insurer to file an RBC
22 Report by the filing date, unless the insurer has
23 provided an explanation for the failure that is
24 satisfactory to the Director and has cured the failure
25 within 10 days after the filing date.
26 (5) The failure of the insurer to submit an RBC
27 Plan to the Director within the time period set forth in
28 subsection (c) of Section 35A-15.
29 (6) The notification by the Director to the insurer
30 that the insurer's RBC Plan or revised RBC Plan is, in
31 the judgment of the Director, unsatisfactory and that the
32 notification constitutes a regulatory action level event
33 with respect to the insurer, provided the insurer does
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1 not challenge the determination under Section 35A-35.
2 (7) The notification by the Director to the insurer
3 that the Director has, after a hearing, rejected the
4 insurer's challenge under Section 35A-35 to the
5 determination made by the Director under paragraph (6).
6 (8) The notification by the Director to the insurer
7 that the insurer has failed to adhere to its RBC Plan or
8 Revised RBC Plan, but only if that failure has a
9 substantial adverse effect on the ability of the insurer
10 to eliminate the company action level event in accordance
11 with its RBC Plan or Revised RBC Plan and the Director
12 has so stated in the notification, provided the insurer
13 does not challenge the determination under Section
14 35A-35.
15 (9) The notification by the Director to the insurer
16 that the Director has, after a hearing, rejected the
17 insurer's challenge under Section 35A-35 to the
18 determination made by the Director under paragraph (8).
19 (b) In the event of a regulatory action level event, the
20 Director shall do all of the following:
21 (1) Require the insurer to prepare and submit an
22 RBC Plan or, if applicable, a Revised RBC Plan to the
23 Director within 45 days after the regulatory action level
24 event occurs or within 45 days after the Director
25 notifies the insurer that the Director has, after a
26 hearing, rejected its challenge under Section 35A-35 to
27 either an Adjusted RBC Report or a Revised RBC Plan.
28 However, if the insurer previously prepared and submitted
29 an RBC Plan or a Revised RBC Plan in accordance with any
30 provision of this Article, the Director may determine
31 that the previously prepared RBC Plan or Revised RBC Plan
32 satisfies the requirement of this subsection (b)(1).
33 (2) Perform any examination or analysis of the
34 assets, liabilities, and operations of the insurer,
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1 including a review of its RBC Plan or Revised RBC Plan,
2 that the Director deems necessary.
3 (3) After the examination or analysis, issue a
4 Corrective Order specifying the corrective actions the
5 Director determines are required.
6 (c) In determining corrective actions, the Director may
7 take into account any factors the Director deems relevant
8 based upon the examination or analysis of the assets,
9 liabilities, and operations of the insurer including, but not
10 limited to, the results of any sensitivity tests undertaken
11 under the RBC Instructions. The regulatory action level event
12 shall be deemed sufficient grounds for the Director to issue
13 a Corrective Order in accordance with Article XII 1/2. The
14 Director shall have rights, powers, and duties with respect
15 to the insurer that are set forth in Article XII 1/2 and the
16 insurer shall be entitled to the protections afforded
17 insurers under Article XII 1/2.
18 (d) The Director may retain actuaries, investment
19 experts, and other consultants necessary to review an
20 insurer's RBC Plan or Revised RBC Plan, examine or analyze
21 the assets, liabilities, and operations of the insurer, and
22 formulate the Corrective Order with respect to the insurer.
23 The fees, costs, and expenses related to the actuaries,
24 investment experts, and other consultants shall be reasonable
25 and customary for the nature of the services provided and
26 shall be borne by the affected insurer or the party
27 designated by the Director.
28 (Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)
29 (215 ILCS 5/35A-30)
30 Sec. 35A-30. Mandatory control level event.
31 (a) A mandatory control level event means any of the
32 following events:
33 (1) The filing of an RBC Report that indicates that
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1 the insurer's total adjusted capital is less than its
2 mandatory control level RBC.
3 (2) The notification by the Director to the insurer
4 of an Adjusted RBC Report that indicates the event
5 described in paragraph (1), provided the insurer does not
6 challenge the Adjusted RBC Report under Section 35A-35.
7 (3) The notification by the Director to the insurer
8 that the Director has, after a hearing, rejected the
9 insurer's challenge under Section 35A-35 to the Adjusted
10 RBC Report that indicates the event described in
11 paragraph (1).
12 (b) In the event of a mandatory control level event with
13 respect to a life, health, or life and health insurer, the
14 Director shall take actions necessary to place the insurer in
15 receivership under Article XIII. In that event, the
16 mandatory control level event shall be deemed sufficient
17 grounds for the Director to take action under Article XIII,
18 and the Director shall have the rights, powers, and duties
19 with respect to the insurer that are set forth in Article
20 XIII. If the Director takes action under this subsection
21 regarding an Adjusted RBC Report, the insurer shall be
22 entitled to the protections of Article XIII. If the Director
23 finds that there is a reasonable expectation that the
24 mandatory control level event may be eliminated within 90
25 days after it occurs, the Director may delay action for not
26 more than 90 days after the mandatory control level event.
27 (c) In the case of a mandatory control level event with
28 respect to a property and casualty insurer, the Director
29 shall take the actions necessary to place the insurer in
30 receivership under Article XIII or, in the case of an insurer
31 that is writing no business and that is running-off its
32 existing business, may allow the insurer to continue its
33 run-off under the supervision of the Director. In either
34 case, the mandatory control level event is deemed sufficient
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1 grounds for the Director to take action under Article XIII,
2 and the Director has the rights, powers, and duties with
3 respect to the insurer that are set forth in Article XIII.
4 If the Director takes action regarding an Adjusted RBC
5 Report, the insurer shall be entitled to the protections of
6 Article XIII. If the Director finds that there is a
7 reasonable expectation that the mandatory control level event
8 may be eliminated within 90 days after it occurs, the
9 Director may delay action for not more than 90 days after the
10 mandatory control level event.
11 (d) In the case of a mandatory control level event with
12 respect to a health organization, the Director shall take the
13 actions necessary to place the insurer in receivership under
14 Article XIII or, in the case of an insurer that is writing no
15 business and that is running-off its existing business, may
16 allow the insurer to continue its run-off under the
17 supervision of the Director. In either case, the mandatory
18 control level event is deemed sufficient grounds for the
19 Director to take action under Article XIII, and the Director
20 has the rights, powers, and duties with respect to the
21 insurer that are set forth in Article XIII. If the Director
22 takes action regarding an Adjusted RBC Report, the insurer
23 shall be entitled to the protections of Article XIII. If the
24 Director finds that there is a reasonable expectation that
25 the mandatory control level event may be eliminated within 90
26 days after it occurs, the Director may delay action for not
27 more than 90 days after the mandatory control level event.
28 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
29 (215 ILCS 5/35A-55)
30 Sec. 35A-55. Provisions of Article supplemental;
31 exemptions.
32 (a) The provisions of this Article are supplemental to
33 the provisions of any other laws of this State and do not
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1 preclude or limit other powers or duties of the Director
2 under any other laws.
3 (b) The Director may exempt from the application of this
4 Article any domestic property and casualty insurer that:
5 (1) writes direct business only in this State;
6 (2) writes direct annual premiums of $2,000,000 or
7 less; and
8 (3) assumes no reinsurance in excess of 5% of
9 direct premium written.
10 (c) The Director may exempt from the application of this
11 Article any company that is organized under Article IV of
12 this Code, that writes direct business only in this State,
13 and that assumes no reinsurance in excess of 5% of direct
14 written premiums.
15 (d) The Director may exempt from the application of this
16 Article any domestic health organization upon a showing by
17 the health organization of the reasons for requesting the
18 exemption and a determination by the Director of good cause
19 for an exemption.
20 (e) (d) The Director may by rule impose upon any insurer
21 exempted from the application of this Article under
22 subsection (b), or (c), or (d) of this Section conditions to
23 the exemption that require maintenance of adequate capital.
24 These conditions shall not exceed the requirements of this
25 Article.
26 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
27 (215 ILCS 5/35A-60)
28 Sec. 35A-60. Phase-in of Article.
29 (a) For RBC Reports filed with respect to the December
30 31, 1993 annual statement, instead of the provisions of
31 Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following
32 provisions apply:
33 (1) In the event of a company action level event,
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1 the Director shall take no action under this Article.
2 (2) In the event of a regulatory action level event
3 under paragraph (1), (2), or (3) of subsection (a) of
4 Section 35A-20, the Director shall take the actions
5 required under Section 35A-15.
6 (3) In the event of a regulatory action level event
7 under paragraph (4), (5), (6), (7), (8), or (9) of
8 subsection (a) of Section 35A-20 or an authorized control
9 level event, the Director shall take the actions required
10 under Section 35A-20.
11 (4) In the event of a mandatory control level
12 event, the Director shall take the actions required under
13 Section 35A-25.
14 (b) For RBC Reports required to be filed by property and
15 casualty insurers with respect to the December 31, 1995
16 annual statement, instead of the provisions of Section
17 35A-15, 35A-20, 35A-25, and 35A-30, the following provisions
18 apply:
19 (1) In the event of a company action level event
20 with respect to a domestic insurer, the Director shall
21 take no regulatory action under this Article.
22 (2) In the event of a an regulatory action level
23 event under paragraph (1), (2) or (3) of subsection (a)
24 of Section 35A-20, the Director shall take the actions
25 required under Section 35A-15.
26 (3) In the event of a an regulatory action level
27 event under paragraph (4), (5), (6), (7), (8), or (9) of
28 subsection (a) of Section 35A-20 or an authorized control
29 level event, the Director shall take the actions required
30 under Section 35A-20.
31 (4) In the event of a mandatory control level
32 event, the Director shall take the actions required under
33 Section 35A-25.
34 (c) For RBC Reports required to be filed by health
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1 organizations with respect to the December 31, 1999 annual
2 statement and the December 31, 2000 annual statement, instead
3 of the provisions of Sections 35A-15, 35A-20, 35A-25, and
4 35A-30, the following provisions apply:
5 (1) In the event of a company action level event
6 with respect to a domestic insurer, the Director shall
7 take no regulatory action under this Article.
8 (2) In the event of a regulatory action level event
9 under paragraph (1), (2), or (3) of subsection (a) of
10 Section 35A-20, the Director shall take the actions
11 required under Section 35A-15.
12 (3) In the event of a regulatory action level event
13 under paragraph (4), (5), (6), (7), (8), or (9) of
14 subsection (a) of Section 35A-20 or an authorized control
15 level event, the Director shall take the actions required
16 under Section 35A-20.
17 (4) In the event of a mandatory control level
18 event, the Director shall take the actions required under
19 Section 35A-25.
20 This subsection does not apply to a health organization
21 that provides or arranges for a health care plan under which
22 enrollees may access health care services from contracted
23 providers without a referral from their primary care
24 physician.
25 Nothing in this subsection shall preclude or limit other
26 powers or duties of the Director under any other laws.
27 (Source: P.A. 88-364; 89-97, eff. 7-7-95.)
28 (215 ILCS 5/245) (from Ch. 73, par. 857)
29 Sec. 245. Salaries; pensions.
30 (1) No domestic life company shall directly or
31 indirectly pay any salary, compensation or emolument to any
32 officer, trustee or director thereof, or any salary,
33 compensation or emolument amounting in any year to more than
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1 $200,000 $100,000 to any person, firm or corporation, unless
2 such payment be first authorized by a vote of the board of
3 directors of such company, which vote shall be duly recorded
4 in the records of the company. No such domestic life company
5 shall make any agreement with any of its officers, trustees
6 or salaried employees whereby it agrees that for any services
7 rendered or to be rendered he shall receive any salary,
8 compensation or emolument, directly or indirectly, that will
9 extend beyond a period of three years from the date of such
10 agreement except that payment of an amount not in excess of
11 20% of the salary of any of its officers, trustees, or
12 salaried employees may by written agreement be deferred
13 beyond such period of three years, which agreement may
14 include conditions to be met by such officer, trustee, or
15 salaried employee before payment will be made. The limitation
16 as to time contained herein shall not apply to a contract for
17 renewal commissions with any such officer, trustee or
18 salaried employee who is also an agent of the company nor
19 shall such limitation be construed as preventing a domestic
20 company from entering into contracts with its agents for the
21 payment of renewal commissions.
22 (2) No such life company shall grant any pension to any
23 officer, director or trustee thereof or to any member of his
24 family after his death except that it may provide a pension
25 pursuant to the terms of the uniform retirement plan adopted
26 by the board of directors and for any person who is or has
27 been a salaried officer or employee of such company and who
28 may retire by reason of age or disability.
29 (3) No such company shall hereafter create or establish
30 any account or fund for the purpose of promoting the health
31 or welfare of its employees except from annual accretions to
32 earned surplus computed in the manner provided by this Code.
33 Contributions to such fund by any company in any calendar
34 year shall not exceed 15% of the accretion to earned surplus
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1 in such calendar year. Before such account or fund shall be
2 established, maintained or operated, the plan for such
3 account or fund and its method of operation shall be approved
4 by the board of directors of the company, and submitted to
5 the shareholders in the case of a stock company, or members
6 in the case of a mutual company, at a special meeting called
7 for the purpose of considering such plan. Contributions to
8 the fund from sources other than the company may be provided
9 for in the operation of the plan. No amount held in such fund
10 or account whether contributed by the company or from any
11 other source shall be considered an admitted asset as defined
12 in this Code, nor considered in determining the solvency of
13 such company, nor be subject to the provisions of this Code.
14 (Source: P.A. 86-384.)
15 (215 ILCS 5/356h) (from Ch. 73, par. 968h)
16 Sec. 356h. No individual or group policy of accident and
17 health insurance which covers the insured's immediate family
18 or children, as well as covering the insured, shall exclude a
19 child from coverage or limit coverage for a child solely
20 because the child is an adopted child, or solely because the
21 child does not reside with the insured. For purposes of this
22 Section, a child who is in the custody of the insured,
23 pursuant to an interim court order of adoption or, in the
24 case of group insurance, placement of adoption, whichever
25 comes first, vesting temporary care of the child in the
26 insured, is an adopted child, regardless of whether a final
27 order granting adoption is ultimately issued.
28 (Source: P.A. 86-649.)
29 (215 ILCS 5/356v)
30 Sec. 356v. Use of information derived from genetic
31 testing. After the effective date of this amendatory Act of
32 1997, an insurer must comply with the provisions of the
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1 Genetic Information Privacy Act in connection with the
2 amendment, delivery, issuance, or renewal of, or claims for
3 or denial of coverage under, an individual or group policy of
4 accident and health insurance. Additionally, genetic
5 information shall not be treated as a condition described in
6 item (1) of subsection (A) of Section 20 of the Illinois
7 Health Insurance Portability and Accountability Act in the
8 absence of a diagnosis of the condition related to that
9 genetic information.
10 (Source: P.A. 90-25, eff. 1-1-98; 90-655, eff. 7-30-98.)
11 (215 ILCS 5/364) (from Ch. 73, par. 976)
12 Sec. 364. Discrimination prohibited. Discrimination
13 between individuals of the same class of risk in the issuance
14 of its policies or in the amount of premiums or rates charged
15 for any insurance covered by this article, or in the benefits
16 payable thereon, or in any of the terms or conditions of such
17 policy, or in any other manner whatsoever is prohibited.
18 Nothing in this provision shall prohibit an insurer from
19 providing incentives for insureds to utilize the services of
20 a particular hospital or person. It is hereby expressly
21 provided that whenever the terms "physician" or "doctor"
22 appear or are used in any way in any policy of accident or
23 health insurance issued in this state, said terms shall
24 include within their meaning persons licensed to practice
25 dentistry under the Illinois Dental Practice Act with regard
26 to benefits payable for services performed by a person so
27 licensed, which such services are within the coverage
28 provided by the particular policy or contract of insurance
29 and are within the professional services authorized to be
30 performed by such person under and in accordance with the
31 said Act.
32 No company, in any policy of accident or health insurance
33 issued in this State, shall make or permit any distinction or
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1 discrimination against individuals solely because of
2 handicaps or disabilities in the amount of payment of
3 premiums or rates charged for policies of insurance, in the
4 amount of any dividends or other benefits payable thereon, or
5 in any other terms and conditions of the contract it makes,
6 except where the distinction or discrimination is based on
7 sound actuarial principles or is related to actual or
8 reasonably anticipated experience.
9 No company shall refuse to insure, or refuse to continue
10 to insure, or limit the amount or extent or kind of coverage
11 available to an individual, or charge an individual a
12 different rate for the same coverage solely because of
13 blindness or partial blindness. With respect to all other
14 conditions, including the underlying cause of the blindness
15 or partial blindness, persons who are blind or partially
16 blind shall be subject to the same standards of sound
17 actuarial principles or actual or reasonably anticipated
18 experience as are sighted persons. Refusal to insure includes
19 denial by an insurer of disability insurance coverage on the
20 grounds that the policy defines "disability" as being
21 presumed in the event that the insured loses his or her
22 eyesight. However, an insurer may exclude from coverage
23 disabilities consisting solely of blindness or partial
24 blindness when such condition existed at the time the policy
25 was issued.
26 (Source: P.A. 85-1209.)
27 (215 ILCS 5/367) (from Ch. 73, par. 979)
28 Sec. 367. Group accident and health insurance.
29 (1) Group accident and health insurance is hereby
30 declared to be that form of accident and health insurance
31 covering not less than 2 10 employees, members, or employees
32 of members, (except in case of volunteer fire departments the
33 number shall not be less than 5 members) written under a
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1 master policy issued to any governmental corporation, unit,
2 agency or department thereof, or to any corporation,
3 copartnership, individual employer, or to any association
4 upon application of an executive officer or trustee of such
5 association having a constitution or bylaws and formed in
6 good faith for purposes other than that of obtaining
7 insurance, where officers, members, employees, employees of
8 members or classes or department thereof, may be insured for
9 their individual benefit. In addition a group accident and
10 health policy may be written to insure any group which may be
11 insured under a group life insurance policy. The term
12 "employees" shall include the officers, managers and
13 employees of subsidiary or affiliated corporations, and the
14 individual proprietors, partners and employees of affiliated
15 individuals and firms, when the business of such subsidiary
16 or affiliated corporations, firms or individuals, is
17 controlled by a common employer through stock ownership,
18 contract or otherwise.
19 (2) Any insurance company authorized to write accident
20 and health insurance in this State shall have power to issue
21 group accident and health policies. No policy of group
22 accident and health insurance may be issued or delivered in
23 this State unless a copy of the form thereof shall have been
24 filed with the department and approved by it in accordance
25 with Section 355, and it contains in substance those
26 provisions contained in Sections 357.1 through 357.30 as may
27 be applicable to group accident and health insurance and the
28 following provisions:
29 (a) A provision that the policy, the application of
30 the employer, or executive officer or trustee of any
31 association, and the individual applications, if any, of
32 the employees, members or employees of members insured
33 shall constitute the entire contract between the parties,
34 and that all statements made by the employer, or the
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1 executive officer or trustee, or by the individual
2 employees, members or employees of members shall (in the
3 absence of fraud) be deemed representations and not
4 warranties, and that no such statement shall be used in
5 defense to a claim under the policy, unless it is
6 contained in a written application.
7 (b) A provision that the insurer will issue to the
8 employer, or to the executive officer or trustee of the
9 association, for delivery to the employee, member or
10 employee of a member, who is insured under such policy,
11 an individual certificate setting forth a statement as to
12 the insurance protection to which he is entitled and to
13 whom payable.
14 (c) A provision that to the group or class thereof
15 originally insured shall be added from time to time all
16 new employees of the employer, members of the association
17 or employees of members eligible to and applying for
18 insurance in such group or class.
19 (3) Anything in this code to the contrary
20 notwithstanding, any group accident and health policy may
21 provide that all or any portion of any indemnities provided
22 by any such policy on account of hospital, nursing, medical
23 or surgical services, may, at the insurer's option, be paid
24 directly to the hospital or person rendering such services;
25 but the policy may not require that the service be rendered
26 by a particular hospital or person. Payment so made shall
27 discharge the insurer's obligation with respect to the amount
28 of insurance so paid. Nothing in this subsection (3) shall
29 prohibit an insurer from providing incentives for insureds to
30 utilize the services of a particular hospital or person.
31 (4) Special group policies may be issued to school
32 districts providing medical or hospital service, or both, for
33 pupils of the district injured while participating in any
34 athletic activity under the jurisdiction of or sponsored or
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1 controlled by the district or the authorities of any school
2 thereof. The provisions of this Section governing the
3 issuance of group accident and health insurance shall,
4 insofar as applicable, control the issuance of such policies
5 issued to schools.
6 (5) No policy of group accident and health insurance may
7 be issued or delivered in this State unless it provides that
8 upon the death of the insured employee or group member the
9 dependents' coverage, if any, continues for a period of at
10 least 90 days subject to any other policy provisions relating
11 to termination of dependents' coverage.
12 (6) No group hospital policy covering miscellaneous
13 hospital expenses issued or delivered in this State shall
14 contain any exception or exclusion from coverage which would
15 preclude the payment of expenses incurred for the processing
16 and administration of blood and its components.
17 (7) No policy of group accident and health insurance,
18 delivered in this State more than 120 days after the
19 effective day of the Section, which provides inpatient
20 hospital coverage for sicknesses shall exclude from such
21 coverage the treatment of alcoholism. This subsection shall
22 not apply to a policy which covers only specified sicknesses.
23 (8) No policy of group accident and health insurance,
24 which provides benefits for hospital or medical expenses
25 based upon the actual expenses incurred, issued or delivered
26 in this State shall contain any specific exception to
27 coverage which would preclude the payment of actual expenses
28 incurred in the examination and testing of a victim of an
29 offense defined in Sections 12-13 through 12-16 of the
30 Criminal Code of 1961, or an attempt to commit such offense,
31 to establish that sexual contact did occur or did not occur,
32 and to establish the presence or absence of sexually
33 transmitted disease or infection, and examination and
34 treatment of injuries and trauma sustained by the victim of
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1 such offense, arising out of the offense. Every group policy
2 of accident and health insurance which specifically provides
3 benefits for routine physical examinations shall provide full
4 coverage for expenses incurred in the examination and testing
5 of a victim of an offense defined in Sections 12-13 through
6 12-16 of the Criminal Code of 1961, or an attempt to commit
7 such offense, as set forth in this Section. This subsection
8 shall not apply to a policy which covers hospital and medical
9 expenses for specified illnesses and injuries only.
10 (9) For purposes of enabling the recovery of State
11 funds, any insurance carrier subject to this Section shall
12 upon reasonable demand by the Department of Public Health
13 disclose the names and identities of its insureds entitled to
14 benefits under this provision to the Department of Public
15 Health whenever the Department of Public Health has
16 determined that it has paid, or is about to pay, hospital or
17 medical expenses for which an insurance carrier is liable
18 under this Section. All information received by the
19 Department of Public Health under this provision shall be
20 held on a confidential basis and shall not be subject to
21 subpoena and shall not be made public by the Department of
22 Public Health or used for any purpose other than that
23 authorized by this Section.
24 (10) Whenever the Department of Public Health finds that
25 it has paid all or part of any hospital or medical expenses
26 which an insurance carrier is obligated to pay under this
27 Section, the Department of Public Health shall be entitled to
28 receive reimbursement for its payments from such insurance
29 carrier provided that the Department of Public Health has
30 notified the insurance carrier of its claim before the
31 carrier has paid the benefits to its insureds or the
32 insureds' assignees.
33 (11) (a) No group hospital, medical or surgical expense
34 policy shall contain any provision whereby benefits
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1 otherwise payable thereunder are subject to reduction
2 solely on account of the existence of similar benefits
3 provided under other group or group-type accident and
4 sickness insurance policies where such reduction would
5 operate to reduce total benefits payable under these
6 policies below an amount equal to 100% of total allowable
7 expenses provided under these policies.
8 (b) When dependents of insureds are covered under 2
9 policies, both of which contain coordination of benefits
10 provisions, benefits of the policy of the insured whose
11 birthday falls earlier in the year are determined before
12 those of the policy of the insured whose birthday falls
13 later in the year. Birthday, as used herein, refers only
14 to the month and day in a calendar year, not the year in
15 which the person was born. The Department of Insurance
16 shall promulgate rules defining the order of benefit
17 determination pursuant to this paragraph (b).
18 (12) Every group policy under this Section shall be
19 subject to the provisions of Sections 356g and 356n of this
20 Code.
21 (13) No accident and health insurer providing coverage
22 for hospital or medical expenses on an expense incurred basis
23 shall deny reimbursement for an otherwise covered expense
24 incurred for any organ transplantation procedure solely on
25 the basis that such procedure is deemed experimental or
26 investigational unless supported by the determination of the
27 Office of Health Care Technology Assessment within the Agency
28 for Health Care Policy and Research within the federal
29 Department of Health and Human Services that such procedure
30 is either experimental or investigational or that there is
31 insufficient data or experience to determine whether an organ
32 transplantation procedure is clinically acceptable. If an
33 accident and health insurer has made written request, or had
34 one made on its behalf by a national organization, for
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1 determination by the Office of Health Care Technology
2 Assessment within the Agency for Health Care Policy and
3 Research within the federal Department of Health and Human
4 Services as to whether a specific organ transplantation
5 procedure is clinically acceptable and said organization
6 fails to respond to such a request within a period of 90
7 days, the failure to act may be deemed a determination that
8 the procedure is deemed to be experimental or
9 investigational.
10 (14) Whenever a claim for benefits by an insured under a
11 dental prepayment program is denied or reduced, based on the
12 review of x-ray films, such review must be performed by a
13 dentist.
14 (Source: P.A. 89-187, eff. 7-19-95.)
15 (215 ILCS 5/367i) (from Ch. 73, par. 979i)
16 Sec. 367i. Discontinuance and replacement of coverage.
17 Group health insurance policies issued, amended, delivered or
18 renewed on and after the effective date of this amendatory
19 Act of 1989, shall provide a reasonable extension of benefits
20 in the event of total disability on the date the policy is
21 discontinued for any reason.
22 Any applicable extension of benefits or accrued liability
23 shall be described in the policy and group certificate.
24 Benefits payable during any extension of benefits may be
25 subject to the policy's regular benefit limits.
26 Any insurer discontinuing a group health insurance policy
27 shall provide to the policyholder for delivery to covered
28 employees or members a notice as to the date such
29 discontinuation is to be effective and urging them to refer
30 to their group certificates to determine what contract
31 rights, if any, are available to them.
32 In the event a discontinued policy is replaced by another
33 group policy, the prior insurer or plan shall be liable only
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1 to the extent of its accrued liabilities and extension of
2 benefits. Persons eligible for coverage under the succeeding
3 insurer's plan or policy shall include all employees and
4 dependents covered under the prior insurer's plan, including
5 disabled individuals covered under the prior plan but absent
6 from work on the effective date and thereafter. The prior
7 insurer shall provide extension of benefits for an insured's
8 disabling condition when no coverage is available under the
9 succeeding insurer's plan whether due to the absence of
10 coverage in the contract or lack of required creditable
11 coverage for a preexisting condition. be covered by that
12 policy. Persons not eligible for coverage under the
13 succeeding insurer's policy shall, until such time as such
14 person becomes eligible, be covered by the succeeding
15 insurer's policy in such a way as to ensure that such persons
16 shall be treated no less favorably than had the change in
17 insurers not occurred.
18 The Director shall promulgate reasonable rules as
19 necessary to carry out this Section.
20 (Source: P.A. 86-537.)
21 Section 10. The Dental Service Plan Act is amended by
22 changing Section 25 as follows:
23 (215 ILCS 110/25) (from Ch. 32, par. 690.25)
24 Sec. 25. Application of Insurance Code provisions.
25 Dental service plan corporations and all persons interested
26 therein or dealing therewith shall be subject to the
27 provisions of Articles IIA and Article XII 1/2 and Sections
28 3.1, 133, 140, 143, 143c, 149, 355.2, 367.2, 401, 401.1, 402,
29 403, 403A, 408, 408.2, and 412, and subsection (15) of
30 Section 367 of the Illinois Insurance Code.
31 (Source: P.A. 86-600; 87-587; 87-1090.)
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1 Section 15. The Health Maintenance Organization Act is
2 amended by changing Sections 1-3, 2-7, 4-9, and 5-3 as
3 follows:
4 (215 ILCS 125/1-3) (from Ch. 111 1/2, par. 1402.1)
5 Sec. 1-3. Definitions of admitted assets. "Admitted
6 Assets" includes the investments authorized or permitted by
7 Section 3-1 of this Act and, in addition thereto, only the
8 following:
9 (a) Petty cash and other cash funds in the
10 organization's principal or any official branch office and
11 under the control of the organization.
12 (b) Immediately withdrawable funds on deposit in demand
13 accounts, in a bank or trust company as defined in paragraph
14 (3) of subsection (g) of Section 3-1 or like funds actually
15 in the principal or any official branch office at statement
16 date, and, in transit to such bank or trust company with
17 authentic deposit credit given prior to the close of business
18 on the fifth bank working day following the statement date.
19 (c) The amount fairly estimated as recoverable on cash
20 deposited in a closed bank or trust company, if qualifying
21 under the provisions of this Sec. prior to the suspension of
22 such bank or trust company.
23 (d) Bills and accounts receivable collateralized by
24 securities of the kind in which the organization is
25 authorized to invest.
26 (e) Premiums receivable from groups or individuals which
27 are not more than 60 days past due. Premiums receivable from
28 the United States, any state thereof or any political
29 subdivision of either which is not more than 90 days past
30 due.
31 (f) Amounts due under insurance policies or reinsurance
32 arrangements from insurance companies authorized to do
33 business in this State.
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1 (g) Tax refunds due from the United States, any state or
2 any political subdivision thereof.
3 (h) The interest accrued on mortgage loans conforming to
4 Section 3-1 of this Act, not exceeding in aggregate amount on
5 an individual loan of one year's total due and accrued
6 interest.
7 (i) The rents accrued and owing to the organization on
8 real and personal property, directly or beneficially owned,
9 not exceeding on each individual property the amount of one
10 year's total due and accrued rent.
11 (j) Interest or rents accrued on conditional sales
12 agreements, security interests, chattel mortgages and real or
13 personal property under lease to other corporations, all
14 conforming to Section 3-1 of this Act, and not exceeding on
15 any individual investment, the amount of one year's total due
16 and accrued interest or rent.
17 (k) The fixed and required interest due and accrued on
18 bonds and other like evidences of indebtedness, conforming to
19 Section 3-1 of this Act, and not in default.
20 (l) Dividends receivable on shares of stock conforming
21 to Section 3-1 of this Act; provided that the market price
22 taken for valuation purposes does not include the value of
23 the dividend.
24 (m) The interest or dividends due and payable, but not
25 credited, on deposits in banks and trust companies or on
26 accounts with savings and loan associations.
27 (n) Interest accrued on secured loans conforming to this
28 Act, not exceeding the amount of one year's interest on any
29 loan.
30 (o) Interest accrued on tax anticipation warrants.
31 (p) The amortized value of electronic computer or data
32 processing machines or systems purchased for use in
33 connection with the business of the organization, including
34 software purchased and developed specifically for the
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1 organization's use and purposes.
2 (q) The cost of furniture, equipment and medical
3 equipment, less accumulated depreciation thereon, and
4 medical and pharmaceutical supplies that are used in the
5 delivery of health care and under the control of the
6 organization, provided such assets do not exceed 30% of
7 admitted assets.
8 (1) (r) Amounts due from affiliates pursuant to
9 management contracts or service agreements which meet the
10 requirements of Section 141.1 of the Illinois Insurance Code
11 to the extent that the affiliate has liquid assets with which
12 to pay the balance and maintain its accounts on a current
13 basis; provided that the aggregate amount due from affiliates
14 may not exceed the lesser of 10% of the organization's
15 admitted assets or 25% of the organization's net worth as
16 defined in Section 3-1. Any amount outstanding more than 3
17 months shall be deemed not current. For purpose of this
18 subsection "affiliates" are as defined in Article VIII 1/2 of
19 the Illinois Insurance Code.
20 (s) Intangible assets, including, but not limited to,
21 organization goodwill and purchased goodwill, to the extent
22 reported in the most recent annual or quarterly financial
23 statement filed with the Director preceding the effective
24 date of this Amendatory Act of 1987. However, such assets
25 shall be amortized, by the straight-line method, to a value
26 of zero no later than December 31, 1990; provided, however,
27 that no organization shall be required pursuant to the
28 foregoing provision to amortize such assets in an amount
29 greater than $300,000 in any one year, and in cases where
30 amortization of such assets by December 31, 1990 would
31 otherwise require amortization of an annual amount in excess
32 of $300,000, the organization shall be required only to
33 amortize such assets at a rate of $300,000 per year until all
34 such assets have been amortized to a value of zero, unless
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1 the continuation of the current amortization schedule would
2 result in an earlier zero value, in which case the current
3 amortization schedule shall be applied.
4 (t) Amounts due from patients or enrollees for health
5 care services rendered which are not more than 60 days past
6 due.
7 (2) (u) Amounts advanced to providers under contract to
8 the organization for services to be rendered to enrollees
9 pursuant to the contract. Amounts advanced must be for
10 period of not more than 3 months and must be based on
11 historical or estimated utilization patterns with the
12 provider and must be reconciled against actual incurred
13 claims at least semi-annually. Amounts due in the aggregate
14 may not exceed 50% of the organization's net worth as defined
15 in Section 3-1. Amounts due from a single provider may not
16 exceed the lesser of 5% of the organization's admitted assets
17 or 10% of the organization's net worth.
18 (3) Amounts permitted under Section 2-7.
19 (v) Cost reimbursement due from the Health Care
20 Financing Administration for furnishing covered medicare
21 services to medicare enrollees which are not more than twelve
22 months past due.
23 (w) Prepaid rent or lease payments no greater than 3
24 months in advance, on real property used for the
25 administration of the organizations business or for the
26 delivery of medical care.
27 (Source: P.A. 88-364; revised 10-31-98.)
28 (215 ILCS 125/2-7) (from Ch. 111 1/2, par. 1407)
29 Sec. 2-7. Annual statement; audited financial reports
30 enrollment projections and budget filings.
31 (a) A health maintenance organization shall file with
32 the Director by March 1st in each year 2 copies of its
33 financial statement for the year ending December 31st
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1 immediately preceding on forms prescribed by the Director,
2 which shall conform substantially to the form of statement
3 adopted by the National Association of Insurance
4 Commissioners. Unless the Director provides otherwise, the
5 annual statement is to be prepared in accordance with the
6 annual statement instructions and the Accounting Practices
7 and Procedures Manual adopted by the National Association of
8 Insurance Commissioners. The Director shall have power to
9 make such modifications and additions in this form as he may
10 deem desirable or necessary to ascertain the condition and
11 affairs of the organization. The Director shall have
12 authority to extend the time for filing any statement by any
13 organization for reasons which he considers good and
14 sufficient. The statement shall be verified by oaths of the
15 president and secretary of the organization or, in their
16 absence, by 2 other principal officers. In addition, any
17 organization may be required by the Director, when he
18 considers that action to be necessary and appropriate for the
19 protection of enrollees, creditors, shareholders,
20 subscribers, or claimants, to file, within 60 days after
21 mailing to the organization a notice that such is required, a
22 supplemental summary statement as of the last day of any
23 calendar month occurring during the 100 days next preceding
24 the mailing of such notice designated by him on forms
25 prescribed and furnished by the Director. The Director may
26 require supplemental summary statements to be certified by an
27 independent actuary deemed competent by the Director or by an
28 independent certified public accountant. Every Health
29 Maintenance Organization shall annually, on or before the
30 first day of March, file 2 original copies of its annual
31 statement with the Director verified by at least two
32 principal officers, covering the two preceding calendar
33 years. Such annual statement shall be on forms prescribed by
34 the Director and shall include: (1) financial statements of
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1 the organization; (2) the number of persons enrolled during
2 the year, the number of enrollees at the end of the year and
3 the number of enrollments terminated during the year; and (3)
4 such other information relating to the performance of the
5 Health Maintenance Organization as is necessary to enable the
6 Director to carry out his duties under this Act.
7 Any organization failing, without just cause, to file its
8 annual statement as required in this Act shall be required,
9 after notice and hearing, to pay a penalty of $100 for each
10 day's delay, to be recovered by the Director of Insurance of
11 the State of Illinois and the penalty so recovered shall be
12 paid into the General Revenue Fund of the State of Illinois.
13 The Director may reduce the penalty if the company
14 demonstrates to the Director that the imposition of the
15 penalty would constitute a financial hardship to the
16 organization.
17 An annual statement which is not materially complete when
18 filed shall not be considered to have been properly filed
19 until those deficiencies which make the filing incomplete
20 have been corrected and file.
21 (b) Audited financial reports shall be filed on or
22 before June 1 of each year for the two calendar years
23 immediately preceding and shall provide an opinion expressed
24 by an independent certified public accountant on the
25 accompanying financial statement of the Health Maintenance
26 Organization and a detailed reconciliation for any
27 differences between the accompanying financial statements and
28 each of the related financial statements filed in accordance
29 with subsection (a) of this Section. Any organization
30 failing, without just cause, to file the annual audited
31 financial statement as required in this Act shall be
32 required, after the notice and hearing, to pay a penalty of
33 $100 for each day's delay, to be recovered by the Director of
34 Insurance of the State of Illinois and the penalty so
HB1348 Enrolled -38- LRB9102806JSpc
1 recovered shall be paid into the General Revenue Fund of the
2 State of Illinois. The Director may reduce the penalty if
3 the organization demonstrates to the Director that the
4 imposition of the penalty would constitute a financial
5 hardship to the organization.
6 (c) The Director may require that additional summary
7 financial information be filed no more often than 3 times per
8 year on reporting forms provided by him. However, he may
9 request certain key information on a more frequent basis if
10 necessary for a determination of the financial viability of
11 the organization.
12 (d) The Director shall have the authority to extend the
13 time for filing any statement by any organization for reasons
14 which the Director considers good and sufficient.
15 (Source: P.A. 85-20; revised 10-31-98.)
16 (215 ILCS 125/4-9) (from Ch. 111 1/2, par. 1409.2)
17 Sec. 4-9. Adopted children. No contract or evidence of
18 coverage issued by a Health Maintenance Organization which
19 provides for coverage of dependents of the principal
20 enrollees shall exclude a child from coverage or eligibility
21 for coverage or limit coverage for a child solely on the
22 basis that he or she is an adopted child. For purposes of
23 this Section, a child who is in the custody of a principal
24 enrollee, pursuant to an interim court order of adoption or,
25 in the case of group insurance, placement of adoption,
26 whichever comes first, vesting temporary care of the child in
27 the enrollee, is an adopted child, regardless of whether a
28 final order granting adoption is ultimately issued.
29 (Source: P.A. 86-620.)
30 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
31 Sec. 5-3. Insurance Code provisions.
32 (a) Health Maintenance Organizations shall be subject to
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1 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
2 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
3 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x,
4 367i, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444,
5 and 444.1, paragraph (c) of subsection (2) of Section 367,
6 and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2,
7 XXV, and XXVI of the Illinois Insurance Code.
8 (b) For purposes of the Illinois Insurance Code, except
9 for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
10 Health Maintenance Organizations in the following categories
11 are deemed to be "domestic companies":
12 (1) a corporation authorized under the Dental
13 Service Plan Act or the Voluntary Health Services Plans
14 Act;
15 (2) a corporation organized under the laws of this
16 State; or
17 (3) a corporation organized under the laws of
18 another state, 30% or more of the enrollees of which are
19 residents of this State, except a corporation subject to
20 substantially the same requirements in its state of
21 organization as is a "domestic company" under Article
22 VIII 1/2 of the Illinois Insurance Code.
23 (c) In considering the merger, consolidation, or other
24 acquisition of control of a Health Maintenance Organization
25 pursuant to Article VIII 1/2 of the Illinois Insurance Code,
26 (1) the Director shall give primary consideration
27 to the continuation of benefits to enrollees and the
28 financial conditions of the acquired Health Maintenance
29 Organization after the merger, consolidation, or other
30 acquisition of control takes effect;
31 (2)(i) the criteria specified in subsection (1)(b)
32 of Section 131.8 of the Illinois Insurance Code shall not
33 apply and (ii) the Director, in making his determination
34 with respect to the merger, consolidation, or other
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1 acquisition of control, need not take into account the
2 effect on competition of the merger, consolidation, or
3 other acquisition of control;
4 (3) the Director shall have the power to require
5 the following information:
6 (A) certification by an independent actuary of
7 the adequacy of the reserves of the Health
8 Maintenance Organization sought to be acquired;
9 (B) pro forma financial statements reflecting
10 the combined balance sheets of the acquiring company
11 and the Health Maintenance Organization sought to be
12 acquired as of the end of the preceding year and as
13 of a date 90 days prior to the acquisition, as well
14 as pro forma financial statements reflecting
15 projected combined operation for a period of 2
16 years;
17 (C) a pro forma business plan detailing an
18 acquiring party's plans with respect to the
19 operation of the Health Maintenance Organization
20 sought to be acquired for a period of not less than
21 3 years; and
22 (D) such other information as the Director
23 shall require.
24 (d) The provisions of Article VIII 1/2 of the Illinois
25 Insurance Code and this Section 5-3 shall apply to the sale
26 by any health maintenance organization of greater than 10% of
27 its enrollee population (including without limitation the
28 health maintenance organization's right, title, and interest
29 in and to its health care certificates).
30 (e) In considering any management contract or service
31 agreement subject to Section 141.1 of the Illinois Insurance
32 Code, the Director (i) shall, in addition to the criteria
33 specified in Section 141.2 of the Illinois Insurance Code,
34 take into account the effect of the management contract or
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1 service agreement on the continuation of benefits to
2 enrollees and the financial condition of the health
3 maintenance organization to be managed or serviced, and (ii)
4 need not take into account the effect of the management
5 contract or service agreement on competition.
6 (f) Except for small employer groups as defined in the
7 Small Employer Rating, Renewability and Portability Health
8 Insurance Act and except for medicare supplement policies as
9 defined in Section 363 of the Illinois Insurance Code, a
10 Health Maintenance Organization may by contract agree with a
11 group or other enrollment unit to effect refunds or charge
12 additional premiums under the following terms and conditions:
13 (i) the amount of, and other terms and conditions
14 with respect to, the refund or additional premium are set
15 forth in the group or enrollment unit contract agreed in
16 advance of the period for which a refund is to be paid or
17 additional premium is to be charged (which period shall
18 not be less than one year); and
19 (ii) the amount of the refund or additional premium
20 shall not exceed 20% of the Health Maintenance
21 Organization's profitable or unprofitable experience with
22 respect to the group or other enrollment unit for the
23 period (and, for purposes of a refund or additional
24 premium, the profitable or unprofitable experience shall
25 be calculated taking into account a pro rata share of the
26 Health Maintenance Organization's administrative and
27 marketing expenses, but shall not include any refund to
28 be made or additional premium to be paid pursuant to this
29 subsection (f)). The Health Maintenance Organization and
30 the group or enrollment unit may agree that the
31 profitable or unprofitable experience may be calculated
32 taking into account the refund period and the immediately
33 preceding 2 plan years.
34 The Health Maintenance Organization shall include a
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1 statement in the evidence of coverage issued to each enrollee
2 describing the possibility of a refund or additional premium,
3 and upon request of any group or enrollment unit, provide to
4 the group or enrollment unit a description of the method used
5 to calculate (1) the Health Maintenance Organization's
6 profitable experience with respect to the group or enrollment
7 unit and the resulting refund to the group or enrollment unit
8 or (2) the Health Maintenance Organization's unprofitable
9 experience with respect to the group or enrollment unit and
10 the resulting additional premium to be paid by the group or
11 enrollment unit.
12 In no event shall the Illinois Health Maintenance
13 Organization Guaranty Association be liable to pay any
14 contractual obligation of an insolvent organization to pay
15 any refund authorized under this Section.
16 (Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
17 90-177, eff. 7-23-97; 90-372, eff. 7-1-98; 90-583, eff.
18 5-29-98; 90-655, eff. 7-30-98; 90-741, eff. 1-1-99; revised
19 9-8-98.)
20 Section 20. The Limited Health Service Organization Act
21 is amended by changing Sections 2007 and 4003 as follows:
22 (215 ILCS 130/2007) (from Ch. 73, par. 1502-7)
23 Sec. 2007. Annual statement; audited financial reports;
24 enrollment projections and budget; filings.
25 (a) A limited health service organization shall file
26 with the Director by March 1st in each year 2 copies of its
27 financial statement for the year ending December 31st
28 immediately preceding on forms prescribed by the Director,
29 which shall conform substantially to the form of statement
30 adopted by the National Association of Insurance
31 Commissioners. Unless the Director provides otherwise, the
32 annual statement is to be prepared in accordance with the
HB1348 Enrolled -43- LRB9102806JSpc
1 annual statement instructions and the Accounting Practices
2 and Procedures Manual adopted by the National Association of
3 Insurance Commissioners. The Director shall have power to
4 make such modifications and additions in this form as he may
5 deem desirable or necessary to ascertain the condition and
6 affairs of the organization. The Director shall have
7 authority to extend the time for filing any statement by any
8 organization for reasons which he considers good and
9 sufficient. The statement shall be verified by oaths of the
10 president and secretary of the organization or, in their
11 absence, by 2 other principal officers. In addition, any
12 organization may be required by the Director, when he
13 considers that action to be necessary and appropriate for the
14 protection of enrollees, creditors, shareholders,
15 subscribers, or claimants, to file, within 60 days after
16 mailing to the organization a notice that such is required, a
17 supplemental summary statement as of the last day of any
18 calendar month occurring during the 100 days next preceding
19 the mailing of such notice designated by him on forms
20 prescribed and furnished by the Director. The Director may
21 require supplemental summary statements to be certified by an
22 independent actuary deemed competent by the Director or by an
23 independent certified public accountant. Every limited health
24 service organization shall annually, on or before the first
25 day of March, file 2 original copies of its annual statement
26 with the Director verified by at least 2 principal officers,
27 covering the 2 preceding calendar years. Such annual
28 statement shall be on forms prescribed by the Director and
29 shall include:
30 (1) the financial statements of the organization;
31 (2) the number of persons enrolled during the year,
32 the number of enrollees at the end of the year and the
33 number of enrollments terminated during the year; and
34 (3) such other information relating to the
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1 performance of the limited health service organization as
2 the Director deems necessary to enable the Director to
3 carry out his duties under this Act.
4 Any organization failing, without just cause, to file its
5 annual statement as required in this Act shall be required,
6 after notice and opportunity for hearing, to pay a penalty of
7 $100 for each day's delay, to be recovered by the Director of
8 Insurance. The penalty so recovered shall be paid into the
9 General Revenue Fund of the State of Illinois. The Director
10 may reduce the penalty if the organization demonstrates to
11 the Director that the imposition of the penalty would
12 constitute a financial hardship to the organization.
13 An annual statement which is not materially complete when
14 filed shall not be considered to have been properly filed
15 until those deficiencies which make the filing incomplete
16 have been corrected and filed.
17 (b) Audited financial reports shall be filed on or
18 before June 1 of each year for the 2 calendar years
19 immediately preceding and shall provide an opinion expressed
20 by an independent certified public accountant on the
21 accompanying financial statement of the limited health
22 service organization and detailed reconciliation for any
23 differences between the accompanying financial statements and
24 each of the related financial statements filed in accordance
25 with subsection (a) of this Section. Any organization
26 failing, without just cause, to file the annual audited
27 financial statement as required in this Act shall be
28 required, after the notice and opportunity for hearing, to
29 pay a penalty of $100 for each day's delay, to be recovered
30 by the Director of Insurance. The penalty so recovered shall
31 be paid into the General Revenue Fund of the State of
32 Illinois. The Director may reduce the penalty if the
33 organization demonstrates to the Director that the imposition
34 of the penalty would constitute a financial hardship to the
HB1348 Enrolled -45- LRB9102806JSpc
1 organization.
2 (c) The Director may require that additional summary
3 financial information be filed no more often than 3 times per
4 year on reporting forms provided by him. However, he may
5 request certain key information on a more frequent basis if
6 necessary for a determination of the financial viability of
7 the organization.
8 (d) The Director shall have the authority to extend the
9 time for filing any statements by an organization for reasons
10 which the Director considers good and sufficient.
11 (Source: P.A. 86-600.)
12 (215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
13 Sec. 4003. Illinois Insurance Code provisions. Limited
14 health service organizations shall be subject to the
15 provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
16 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
17 154.6, 154.7, 154.8, 155.04, 355.2, 356v, 401, 401.1, 402,
18 403, 403A, 408, 408.2, 409, 412, 444, and 444.1 and Articles
19 IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of
20 the Illinois Insurance Code. For purposes of the Illinois
21 Insurance Code, except for Sections 444 and 444.1 and
22 Articles XIII and XIII 1/2, limited health service
23 organizations in the following categories are deemed to be
24 domestic companies:
25 (1) a corporation under the laws of this State; or
26 (2) a corporation organized under the laws of
27 another state, 30% of more of the enrollees of which are
28 residents of this State, except a corporation subject to
29 substantially the same requirements in its state of
30 organization as is a domestic company under Article VIII
31 1/2 of the Illinois Insurance Code.
32 (Source: P.A. 90-25, eff. 1-1-98; 90-583, eff. 5-29-98;
33 90-655, eff. 7-30-98.)
HB1348 Enrolled -46- LRB9102806JSpc
1 Section 25. The Voluntary Health Services Plans Act is
2 amended by changing Section 10 as follows:
3 (215 ILCS 165/10) (from Ch. 32, par. 604)
4 Sec. 10. Application of Insurance Code provisions.
5 Health services plan corporations and all persons interested
6 therein or dealing therewith shall be subject to the
7 provisions of Articles IIA and Article XII 1/2 and Sections
8 3.1, 133, 140, 143, 143c, 149, 354, 355.2, 356r, 356t, 356u,
9 356v, 356w, 356x, 367.2, 401, 401.1, 402, 403, 403A, 408,
10 408.2, and 412, and paragraphs (7) and (15) of Section 367 of
11 the Illinois Insurance Code.
12 (Source: P.A. 89-514, eff. 7-17-96; 90-7, eff. 6-10-97;
13 90-25, eff. 1-1-98; 90-655, eff. 7-30-98; 90-741, eff.
14 1-1-99.)
15 Section 99. Effective date. This Act takes effect upon
16 becoming law.
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