[ Back ] [ Bottom ]
91_SB1701
LRB9112329JSpc
1 AN ACT concerning insurance exchanges.
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 107.02, 107.15a, 107.15b, 107.17, 107.21,
6 107.26, and 107.29 as follows:
7 (215 ILCS 5/107.02) (from Ch. 73, par. 719.02)
8 Sec. 107.02. Incorporation.
9 (a) There is hereby authorized created an exchange for
10 the reinsurance and insurance of risks. An exchange formed
11 pursuant to this Article shall be a privately owned
12 organization separate and distinct from the State. Within 60
13 days after this Act becomes law, the Director of Insurance
14 shall appoint an interim Board of Directors to adopt
15 temporary by-laws, hire employees, and take such other steps
16 as are authorized or necessary to establish the Exchange.
17 When subscriptions totalling $4,000,000 have been received
18 pursuant to Section 107.07, the Board of Directors shall
19 apply to the Director for a Certificate of Authority. The
20 Director shall approve such Certificate within 30 days unless
21 he determines that the requirements of this Article have not
22 been met and specifies his objections in writing. Within 30
23 days after receiving proof from the Exchange that the
24 objections have been met, the Director shall approve the
25 application of the Exchange.
26 (b) After the effective date of this amendatory Act of
27 1997, the Director may organize, in accordance with
28 subsection (a), an additional exchange for the reinsurance
29 and insurance of risks. The additional exchange shall comply
30 with the provisions of this Article.
31 (Source: P.A. 90-499, eff. 8-19-97.)
-2- LRB9112329JSpc
1 (215 ILCS 5/107.15a) (from Ch. 73, par. 719.15a)
2 Sec. 107.15a. Duties and powers of trustees. The Board
3 of Trustees shall have such power as may be necessary for the
4 management and operations of the Exchange and the
5 Association. Such powers shall include but not be limited
6 to:
7 (a) establishment of the qualifications,
8 requirements, limitations and obligations for syndicates,
9 limited syndicates, subscribers, and Exchange brokers;
10 (b) denying access to the Exchange to applicants
11 which do not meet such qualifications, requirements, and
12 obligations;
13 (c) imposing penalties on syndicates, limited
14 syndicates, subscribers and Exchange brokers for
15 violations of the regulations of the Exchange or orders
16 of the Board;
17 (d) assessing fees annually on syndicates, limited
18 syndicates, subscribers and Exchange brokers, and making
19 assessments on syndicates, limited syndicates and
20 subscribers for the expenses of the Exchange;
21 (e) suspending, in whole or in part, access to the
22 Exchange or expelling syndicates, limited syndicates,
23 subscribers or Exchange brokers who do not continue to
24 meet the qualifications, requirements, and obligations
25 established by the Board, who fail or refuse to pay
26 penalties, fees, or assessments when due, or whose
27 continued operation the Board determines would be
28 injurious to the best interests of the Exchange,
29 policyholders, claimants, or creditors;
30 (f) obtaining immediate access for the benefit of
31 the Immediate Access Security Association to the
32 following assets of the impaired or insolvent syndicate:
33 (i) the full amount held in its security trust
34 or custodial account; and
-3- LRB9112329JSpc
1 (ii) the assets of its subscribers under their
2 certificates of guaranty;.
3 (g) organizing a guaranty mechanism or fund for the
4 protection of policyholders.
5 (Source: P.A. 91-77, eff. 7-9-99.)
6 (215 ILCS 5/107.15b)
7 Sec. 107.15b. Board rulemaking authority.
8 (a) The Board has the authority to adopt such rules as
9 it deems necessary to carry out its duties under this Article
10 and to maintain a well-regulated marketplace. A syndicate,
11 limited syndicate, subscriber, or exchange broker, as a
12 condition of its authority to transact business through the
13 Exchange, shall comply with this Article, all existing rules
14 of the Exchange, and all rules or modifications of existing
15 rules adopted by the Board and not disapproved by the
16 Director, including, but not limited to, rules extending
17 requirements and obligations with effect after the
18 suspension, expulsion, or voluntary withdrawal of the
19 syndicate, limited syndicate, subscriber, or exchange broker
20 from access to the Exchange.
21 (b) A rule or modification to an existing rule adopted
22 by the Board after the effective date of this amendatory Act
23 of 1997 shall be filed with the Director not less than 30
24 days before the proposed effective date of the rule or
25 modification. The Director, upon written order, may
26 disapprove the rule or modification, in whole or in part,
27 upon a finding that the rule or modification would cause the
28 exchange to be operated in a manner that would be hazardous
29 to the public or its policyholders.
30 (c) An order by the Director disapproving a rule or
31 modification shall be deemed to be a final administrative
32 decision and shall be subject to judicial review pursuant to
33 the provisions of the Administrative Review Law.
-4- LRB9112329JSpc
1 (d) Neither the Board nor the Exchange is an agency of
2 the State for purposes of the Illinois Administrative
3 Procedure Act or otherwise.
4 (Source: P.A. 90-499, eff. 1-1-98.)
5 (215 ILCS 5/107.17) (from Ch. 73, par. 719.17)
6 Sec. 107.17. Governance. The business and affairs of
7 the Exchange shall be managed by an Executive Committee with
8 the advice and consent of the Board of Trustees.
9 There shall be 2 classes of trustees: Subscriber
10 trustees and public trustees. Both public trustees and
11 subscriber trustees shall be elected by a majority vote of
12 the subscribers. In addition, the public trustees shall be
13 approved by the Director.
14 The trustees shall be 13 in number. There shall be at
15 least 5 public trustees who shall be individual persons who
16 are not insurers, subscribers, exchange brokers, or employees
17 of insurers, subscribers, exchange brokers, syndicates, or
18 affiliates thereof.
19 The Executive Committee shall be composed of 3 public
20 trustees elected by the Board. Members of the Executive
21 Committee shall serve for a term of 3 years, except that of
22 the initial members of the Executive Committee, one member
23 shall serve for a term of one year, one member shall serve
24 for a term of 2 years, and one member shall serve for a term
25 of 3 years. The terms of the initial members of the
26 Executive Committee shall be determined by lot.
27 All decisions of the Executive Committee, except those of
28 a ministerial nature that may be delegated by the Board,
29 shall be subject to the approval of the Board. All action of
30 the Executive Committee shall be approved unless disapproved
31 on a recorded vote by 9 members of the Board.
32 (Source: P.A. 89-206, eff. 7-21-95; 89-669, eff. 1-1-97;
33 90-499, eff. 1-1-98.)
-5- LRB9112329JSpc
1 (215 ILCS 5/107.21) (from Ch. 73, par. 719.21)
2 Sec. 107.21. Central Processing Facility. Establishment:
3 The Exchange shall establish a facility for centralized
4 record keeping, data collection, and statistical compilation
5 of all insurance and reinsurance transactions involving a
6 subscriber.
7 Scope: Except with respect to reinsurance contracts
8 where the risks are transferred from a syndicate to a limited
9 syndicate and security for the exposure is held in a fully
10 funded trust account, all monies due on contracts of
11 insurance and reinsurance issued by syndicates shall be
12 payable to the Exchange and disbursed directly to the
13 Facility for recording and distribution. All other
14 transactions of business on the Exchange shall be reported
15 concurrently to the Facility unless exempted by the Board.
16 Management: The management and operation of the Facility
17 shall be conducted pursuant to rules adopted by the Board.
18 The facility shall keep full and accurate accounts and
19 records of receipts and disbursements of the funds being
20 processed by the Facility and maintain accounting records of
21 all transactions of each subscriber, syndicate, and limited
22 syndicate. Monthly reports stating the receipts and
23 disbursements of the Facility shall be made to the Board.
24 The Board may also require any other report that it deems
25 necessary.
26 (Source: P.A. 81-1047.)
27 (215 ILCS 5/107.26) (from Ch. 73, par. 719.26)
28 Sec. 107.26. Immediate Access Security Association.
29 (a) There is authorized created a non-profit corporation
30 which shall be known as the Immediate Access Security
31 Association, and which shall be established as a privately
32 owned organization incorporated under the General Not for
33 Profit Corporation Act separate and distinct from the State
-6- LRB9112329JSpc
1 and not a part of the State government. All syndicates shall
2 be members of the Association as a condition of their
3 authority to transact business on the Exchange. The
4 Association shall be exempt from payment of all fees and all
5 taxes levied by this State or any of its subdivisions.
6 (b) In the event of the entry of an Order of
7 Rehabilitation, Conservation, or Liquidation against a
8 syndicate pursuant to Section 107.08, the Association shall
9 establish a claims date, which shall be not later than one
10 year after the date of such Order, by which time all persons
11 having claims arising out of insurance obligations of the
12 syndicate must file their claim with the Association. The
13 Association shall give notice to all policyholders and other
14 persons who may have a claim against the syndicate as shown
15 by the syndicate's records. Such notice shall include the
16 date of the Order, the claims date established by the
17 Association and the procedure and form for filing a claim
18 with the Association. The Association shall determine the
19 syndicate's insurance obligations based on all claims filed
20 on or before the claims date. The Association shall then pay
21 all claims for which an insurance obligation exists from the
22 assets of the syndicate's trust or custodial account and
23 certificates of guaranty. In the event those assets are
24 insufficient to pay all claims in full, the Association shall
25 make payment pursuant to a plan approved by the court
26 entering the Order of Rehabilitation, Conservation, or
27 Liquidation. The Rehabilitator, Conservator, or Liquidator
28 shall be bound by any settlement made by the Association. Any
29 person not receiving full reimbursement for his claim from
30 the Association shall have a claim against the assets being
31 administered by the Rehabilitator, Conservator, or Liquidator
32 for the remaining amounts. In settling claims and subject to
33 limitations in this Section, the Association shall have the
34 same rights and duties of the insolvent syndicate as if the
-7- LRB9112329JSpc
1 syndicate had not become insolvent.
2 (c) The Association may delegate to such other person or
3 entity as it deems appropriate the performance of any duty
4 imposed on it by this Section.
5 (Source: P.A. 89-97, eff. 7-7-95; 89-206, eff. 7-21-95;
6 89-626, eff. 8-9-96; 90-794, eff. 8-14-98.)
7 (215 ILCS 5/107.29)
8 Sec. 107.29. Exchange operations runoff.
9 (a) The Board may adopt a plan of operation for the
10 orderly runoff of the operations of the exchange. The plan
11 of operation shall provide that all funds, legal rights,
12 title to property, and causes of action of the Exchange
13 including, but not limited to, all assessments, subscription
14 payments, proceeds, investments, premium fees, surcharge
15 receipts, and funds maintained under Sections 107.26 and
16 107.27 and the rules or regulations of the Exchange
17 implementing those Sections or any other provision of this
18 Article, shall be accounted for and paid over to the Director
19 as receiver of any delinquent syndicate in receivership after
20 settlement of all claims against the exchange.
21 (1) In the event that 2 or more syndicates are then
22 in receivership, the amount paid over to each estate
23 shall be proportional to the relative size of the surplus
24 deficiency of each.
25 (2) Any excess remaining after the payment of any
26 and all claims against such receivership estates shall be
27 transferred, in equal shares, to the domestic companies
28 which result from the reorganization, merger, or
29 consolidation of former syndicates of the Illinois
30 Insurance Exchange.
31 (b) For purposes of this Section, "syndicate" means a
32 syndicate or a limited syndicate.
33 (Source: P.A. 90-499, eff. 8-19-97; 91-77, eff. 7-9-99.)
-8- LRB9112329JSpc
1 Section 99. Effective date. This Act takes effect upon
2 becoming law.
[ Top ]