102ND GENERAL ASSEMBLY State of Illinois 2021 and 2022 SB3865

Introduced 1/21/2022, by Sen. Mike Simmons

SYNOPSIS AS INTRODUCED:

See Index

Amends various Acts to make changes concerning references to noncitizen individuals and non-domestic entities. Effective immediately.

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A BILL FOR

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1 AN ACT concerning State government.

2 Be it enacted by the People of the State of Illinois,

3 represented in the General Assembly:

4 Section 5. The Illinois Notary Public Act is amended by

5 changing Section 2-102 as follows:

6 (5 ILCS 312/2-102) (from Ch. 102, par. 202-102)

7 (Text of Section before amendment by P.A. 102-160)

8 Sec. 2-102. Application. Every applicant for appointment

9 and commission as a notary shall complete an application in a

10 format prescribed by the Secretary of State to be filed with

11 the Secretary of State, stating:

12 (a) the applicant's official name, as it appears on

13 his or her current driver's license or state-issued

14 identification card;

15 (b) the county in which the applicant resides or, if

16 the applicant is a resident of a state bordering Illinois,

17 the county in Illinois in which that person's principal

18 place of work or principal place of business is located;

19 (c) the applicant's residence address, as it appears

20 on his or her current driver's license or state-issued

21 identification card;

22 (c-5) the applicant's business address if different

23 than the applicant's residence address, if performing

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1 notarial acts constitutes any portion of the applicant's

2 job duties;

3 (d) that the applicant has resided in the State of

4 Illinois for 30 days preceding the application or that the

5 applicant who is a resident of a state bordering Illinois

6 has worked or maintained a business in Illinois for 30

7 days preceding the application;

8 (e) that the applicant is a citizen of the United

9 States or a noncitizen ~~an alien~~lawfully admitted for

10 permanent residence in the United States;

11 (f) the applicant's date of birth;

12 (g) that the applicant is able to read and write the

13 English language;

14 (h) that the applicant has never been the holder of a

15 notary public appointment that was revoked or suspended

16 during the past 10 years;

17 (i) that the applicant has not been convicted of a

18 felony;

19 (i-5) that the applicant's signature authorizes the

20 Office of the Secretary of State to conduct a verification

21 to confirm the information provided in the application,

22 including a criminal background check of the applicant, if

23 necessary; and

24 (j) any other information the Secretary of State deems

25 necessary.

26 (Source: P.A. 99-112, eff. 1-1-16; 100-809, eff. 1-1-19.)

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1 (Text of Section after amendment by P.A. 102-160)

2 Sec. 2-102. Application.

3 (a) Application for notary public commission. Every

4 applicant for appointment and commission as a notary shall

5 complete an application in a format prescribed by the

6 Secretary of State to be filed with the Secretary of State,

7 stating:

8 (1) the applicant's official name, as it appears on

9 his or her current driver's license or state-issued

10 identification card;

11 (2) the county in which the applicant resides or, if

12 the applicant is a resident of a state bordering Illinois,

13 the county in Illinois in which that person's principal

14 place of work or principal place of business is located;

15 (3) the applicant's residence address, as it appears

16 on his or her current driver's license or state-issued

17 identification card;

18 (4) the applicant's e-mail address;

19 (5) the applicant's business address if different than

20 the applicant's residence address, if performing notarial

21 acts constitutes any portion of the applicant's job

22 duties;

23 (6) that the applicant has resided in the State of

24 Illinois for 30 days preceding the application or that the

25 applicant who is a resident of a state bordering Illinois

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1 has worked or maintained a business in Illinois for 30

2 days preceding the application;

3 (7) that the applicant is a citizen of the United

4 States or lawfully admitted for permanent residence in the

5 United States;

6 (8) the applicant's date of birth;

7 (9) that the applicant is proficient in the ~~the~~

8 English language;

9 (10) that the applicant has not had a prior

10 application or commission revoked due to a finding or

11 decision by the Secretary of State;

12 (11) that the applicant has not been convicted of a

13 felony;

14 (12) that the applicant's signature authorizes the

15 Office of the Secretary of State to conduct a verification

16 to confirm the information provided in the application,

17 including a criminal background check of the applicant, if

18 necessary;

19 (13) that the applicant has provided satisfactory

20 proof to the Secretary of State that the applicant has

21 successfully completed any required course of study on

22 notarization; and

23 (14) any other information the Secretary of State

24 deems necessary.

25 (b) Any notary appointed under subsection (a) shall have

26 the authority to conduct remote notarizations.

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1 (c) Application for electronic notary public commission.

2 An application for an electronic notary public commission must

3 be filed with the Secretary of State in a manner prescribed by

4 the Secretary of State. Every applicant for appointment and

5 commission as an electronic notary public shall complete an

6 application to be filed with the Secretary of State, stating:

7 (1) all information required to be included in an

8 application for appointment as an electronic notary

9 public, as provided under subsection (a);

10 (2) that the applicant is commissioned as a notary

11 public under this Act;

12 (3) the applicant's email address;

13 (4) that the applicant has provided satisfactory proof

14 to the Secretary of State that the applicant has

15 successfully completed any required course of study on

16 electronic notarization and passed a qualifying

17 examination;

18 (5) a description of the technology or device that the

19 applicant intends to use to create his or her electronic

20 signature in performing electronic notarial acts;

21 (6) the electronic signature of the applicant; and

22 (7) any other information the Secretary of State deems

23 necessary.

24 (d) Electronic notarial acts. Before an electronic notary

25 public performs an electronic notarial act using audio-video

26 communication, he or she must be granted an electronic notary

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1 public commission by the Secretary of State under this

2 Section, and identify the technology that the electronic

3 notary public intends to use, which must be approved by the

4 Secretary of State.

5 (e) Approval of commission. Upon the applicant's

6 fulfillment of the requirements for a notarial commission or

7 an electronic notary public commission, the Secretary of State

8 shall approve the commission and issue to the applicant a

9 unique commission number.

10 (f) Rejection of application. The Secretary of State may

11 reject an application for a notarial commission or an

12 electronic notary public commission if the applicant fails to

13 comply with any Section of this Act.

14 (Source: P.A. 102-160 (See Section 99 of P.A. 102-160 for

15 effective date of P.A. 102-160).)

16 Section 10. The Illinois TRUST Act is amended by changing

17 Section 10 as follows:

18 (5 ILCS 805/10)

19 Sec. 10. Definitions. In this Act:

20 "Citizenship or immigration status" means all matters

21 regarding citizenship of the United States or any other

22 country or the authority to reside in or otherwise be present

23 in the United States.

24 "Civil immigration warrant" means any document that is not

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1 approved or ordered by a judge that can form the basis for an

2 individual's arrest or detention for a civil immigration

3 enforcement purpose. "Civil immigration warrant" includes Form

4 I-200 ~~"Warrant for the Arrest of Alien"~~, Form I-203 ~~"Order to~~

5 ~~Detain or Release Alien"~~, Form I-205 "Warrant of

6 Removal/Deportation", Form I-286 "Notice of Custody

7 Determination", any predecessor or successor form, and all

8 warrants, hits, or requests contained in the "Immigration

9 Violator File" of the FBI's National Crime Information Center

10 (NCIC) database. "Civil immigration warrant" does not include

11 any criminal warrant.

12 "Contact information" means home address, work address,

13 telephone number, electronic mail address, social media

14 information, or any other personal identifying information

15 that could be used as a means to contact an individual.

16 "Immigration agent" means an agent of federal Immigration

17 and Customs Enforcement, federal Customs and Border

18 Protection, or any similar or successor agency.

19 "Immigration detainer" means a request to a State or local

20 law enforcement agency to provide notice of release or

21 maintain custody of an individual based on an alleged

22 violation of a civil immigration law, including detainers

23 issued under Sections 1226 or 1357 of Title 8 of the United

24 States Code or 287.7 or 236.1 of Title 8 of the Code of Federal

25 Regulations. "Immigration detainer" includes Form I-247A

26 "Immigration Detainer � Notice of Action" and any predecessor

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1 or successor form.

2 "Law enforcement agency" means an agency of the State or

3 of a unit of local government charged with enforcement of

4 State, county, or municipal laws or with managing custody of

5 detained persons in the State.

6 "Law enforcement official" means any individual with the

7 power to arrest or detain individuals, including law

8 enforcement officers, corrections officer, and others employed

9 or designated by a law enforcement agency. "Law enforcement

10 official" includes any probation officer.

11 (Source: P.A. 102-234, eff. 8-2-21.)

12 Section 15. The Department of Commerce and Economic

13 Opportunity Law of the Civil Administrative Code of Illinois

14 is amended by changing Section 605-800 as follows:

15 (20 ILCS 605/605-800) (was 20 ILCS 605/46.19a in part)

16 Sec. 605-800. Training grants for skills in critical

17 demand.

18 (a) Grants to provide training in fields affected by

19 critical demands for certain skills may be made as provided in

20 this Section.

21 (b) The Director may make grants to eligible employers or

22 to other eligible entities on behalf of employers as

23 authorized in subsection (c) to provide training for employees

24 in fields for which there are critical demands for certain

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1 skills. No participating employee may be an unauthorized

2 noncitizen (a person that is not lawfully admitted for

3 permanent residence) ~~alien, as defined in 8 U.S.C. 1324a~~.

4 (c) The Director may accept applications for training

5 grant funds and grant requests from: (i) entities sponsoring

6 multi-company eligible employee training projects as defined

7 in subsection (d), including business associations, strategic

8 business partnerships, institutions of secondary or higher

9 education, large manufacturers for supplier network companies,

10 federal Job Training Partnership Act administrative entities

11 or grant recipients, and labor organizations when those

12 projects will address common training needs identified by

13 participating companies; and (ii) individual employers that

14 are undertaking eligible employee training projects as defined

15 in subsection (d), including intermediaries and training

16 agents.

17 (d) The Director may make grants to eligible applicants as

18 defined in subsection (c) for employee training projects that

19 include, but need not be limited to, one or more of the

20 following:

21 (1) Training programs in response to new or changing

22 technology being introduced in the workplace.

23 (2) Job-linked training that offers special skills for

24 career advancement or that is preparatory for, and leads

25 directly to, jobs with definite career potential and

26 long-term job security.

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1 (3) Training necessary to implement total quality

2 management or improvement or both management and

3 improvement systems within the workplace.

4 (4) Training related to new machinery or equipment.

5 (5) Training of employees of companies that are

6 expanding into new markets or expanding exports from

7 Illinois.

8 (6) Basic, remedial, or both basic and remedial

9 training of employees as a prerequisite for other

10 vocational or technical skills training or as a condition

11 for sustained employment.

12 (7) Self-employment training of the unemployed and

13 underemployed with comprehensive, competency-based

14 instructional programs and services, entrepreneurial

15 education and training initiatives for youth and adult

16 learners in cooperation with the Illinois Institute for

17 Entrepreneurial Education, training and education,

18 conferences, workshops, and best practice information for

19 local program operators of entrepreneurial education and

20 self-employment training programs.

21 (8) Other training activities or projects, or both

22 training activities and projects, related to the support,

23 development, or evaluation of job training programs,

24 activities, and delivery systems, including training needs

25 assessment and design.

26 (e) Grants shall be made on the terms and conditions that

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1 the Department shall determine. No grant made under subsection

2 (d), however, shall exceed 50% of the direct costs of all

3 approved training programs provided by the employer or the

4 employer's training agent or other entity as defined in

5 subsection (c). Under this Section, allowable costs include,

6 but are not limited to:

7 (1) Administrative costs of tracking, documenting,

8 reporting, and processing training funds or project costs.

9 (2) Curriculum development.

10 (3) Wages and fringe benefits of employees.

11 (4) Training materials, including scrap product costs.

12 (5) Trainee travel expenses.

13 (6) Instructor costs, including wages, fringe

14 benefits, tuition, and travel expenses.

15 (7) Rent, purchase, or lease of training equipment.

16 (8) Other usual and customary training costs.

17 (f) The Department may conduct on-site grant monitoring

18 visits to verify trainee employment dates and wages and to

19 ensure that the grantee's financial management system is

20 structured to provide for accurate, current, and complete

21 disclosure of the financial results of the grant program in

22 accordance with all provisions, terms, and conditions

23 contained in the grant contract. Each applicant must, on

24 request by the Department, provide to the Department a

25 notarized certification signed and dated by a duly authorized

26 representative of the applicant, or that representative's

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1 authorized designee, certifying that all participating

2 employees are employed at an Illinois facility and, for each

3 participating employee, stating the employee's name and

4 providing either (i) the employee's social security number or

5 (ii) a statement that the applicant has adequate written

6 verification that the employee is employed at an Illinois

7 facility. The Department may audit the accuracy of

8 submissions. Applicants sponsoring multi-company training

9 grant programs shall obtain information meeting the

10 requirement of this subsection from each participating company

11 and provide it to the Department upon request.

12 (g) The Director may establish and collect a schedule of

13 charges from subgrantee entities and other system users under

14 federal job-training programs for participating in and

15 utilizing the Department's automated job-training program

16 information systems if the systems and the necessary

17 participation and utilization are requirements of the federal

18 job-training programs. All monies collected pursuant to this

19 subsection shall be deposited into the Federal Workforce

20 Training Fund and may be used, subject to appropriation by the

21 General Assembly, only for the purpose of financing the

22 maintenance and operation of the automated federal

23 job-training information systems.

24 (Source: P.A. 99-933, eff. 1-27-17.)

25 Section 20. The Illinois Guaranteed Job Opportunity Act is

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1 amended by changing Section 25 as follows:

2 (20 ILCS 1510/25)

3 Sec. 25. Program eligibility.

4 (a) General Rule. An individual is eligible to participate

5 in the job projects assisted under this Act if the individual:

6 (1) is at least 16 years of age;

7 (2) has resided in the eligible area for at least 30

8 days;

9 (3) has been unemployed for 35 days prior to the

10 determination of employment for job projects assisted

11 under this Act;

12 (4) is a citizen of the United States, is a national of

13 the United States, is a lawfully admitted permanent

14 resident noncitizen ~~alien~~, is a lawfully admitted refugee

15 or parolee, or is otherwise authorized by the United

16 States Attorney General to work in the United States; and

17 (5) is a recipient of assistance under Article IV of

18 the Illinois Public Aid Code.

19 (b) Limitations.

20 (1) (Blank).

21 (2) (Blank).

22 (3) No individual participating in the job opportunity

23 project assisted under this Act may work in any

24 compensated job other than the job assisted under this Act

25 for more than 20 hours per week.

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1 (4) Individuals participating under this Act shall

2 seek employment during the period of employment assisted

3 under this Act.

4 (5) Any individual eligible for retirement benefits

5 under the Social Security Act, under any retirement system

6 for Federal Government employees, under the railroad

7 retirement system, under the military retirement system,

8 under a State or local government pension plan or

9 retirement system, or any private pension program is not

10 eligible to receive a job under a job project assisted

11 under this Act.

12 (Source: P.A. 93-46, eff. 7-1-03.)

13 Section 25. The Illinois Income Tax Act is amended by

14 changing Section 1501 as follows:

15 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)

16 Sec. 1501. Definitions.

17 (a) In general. When used in this Act, where not otherwise

18 distinctly expressed or manifestly incompatible with the

19 intent thereof:

20 (1) Business income. The term "business income" means

21 all income that may be treated as apportionable business

22 income under the Constitution of the United States.

23 Business income is net of the deductions allocable

24 thereto. Such term does not include compensation or the

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1 deductions allocable thereto. For each taxable year

2 beginning on or after January 1, 2003, a taxpayer may

3 elect to treat all income other than compensation as

4 business income. This election shall be made in accordance

5 with rules adopted by the Department and, once made, shall

6 be irrevocable.

7 (1.5) Captive real estate investment trust:

8 (A) The term "captive real estate investment

9 trust" means a corporation, trust, or association:

10 (i) that is considered a real estate

11 investment trust for the taxable year under

12 Section 856 of the Internal Revenue Code;

13 (ii) the certificates of beneficial interest

14 or shares of which are not regularly traded on an

15 established securities market; and

16 (iii) of which more than 50% of the voting

17 power or value of the beneficial interest or

18 shares, at any time during the last half of the

19 taxable year, is owned or controlled, directly,

20 indirectly, or constructively, by a single

21 corporation.

22 (B) The term "captive real estate investment

23 trust" does not include:

24 (i) a real estate investment trust of which

25 more than 50% of the voting power or value of the

26 beneficial interest or shares is owned or

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1 controlled, directly, indirectly, or

2 constructively, by:

3 (a) a real estate investment trust, other

4 than a captive real estate investment trust;

5 (b) a person who is exempt from taxation

6 under Section 501 of the Internal Revenue

7 Code, and who is not required to treat income

8 received from the real estate investment trust

9 as unrelated business taxable income under

10 Section 512 of the Internal Revenue Code;

11 (c) a listed Australian property trust, if

12 no more than 50% of the voting power or value

13 of the beneficial interest or shares of that

14 trust, at any time during the last half of the

15 taxable year, is owned or controlled, directly

16 or indirectly, by a single person;

17 (d) an entity organized as a trust,

18 provided a listed Australian property trust

19 described in subparagraph (c) owns or

20 controls, directly or indirectly, or

21 constructively, 75% or more of the voting

22 power or value of the beneficial interests or

23 shares of such entity; or

24 (e) an entity that is organized outside of

25 the laws of the United States and that

26 satisfies all of the following criteria:

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1 (1) at least 75% of the entity's total

2 asset value at the close of its taxable

3 year is represented by real estate assets

4 (as defined in Section 856(c)(5)(B) of the

5 Internal Revenue Code, thereby including

6 shares or certificates of beneficial

7 interest in any real estate investment

8 trust), cash and cash equivalents, and

9 U.S. Government securities;

10 (2) the entity is not subject to tax

11 on amounts that are distributed to its

12 beneficial owners or is exempt from

13 entity-level taxation;

14 (3) the entity distributes at least

15 85% of its taxable income (as computed in

16 the jurisdiction in which it is organized)

17 to the holders of its shares or

18 certificates of beneficial interest on an

19 annual basis;

20 (4) either (i) the shares or

21 beneficial interests of the entity are

22 regularly traded on an established

23 securities market or (ii) not more than

24 10% of the voting power or value in the

25 entity is held, directly, indirectly, or

26 constructively, by a single entity or

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1 individual; and

2 (5) the entity is organized in a

3 country that has entered into a tax treaty

4 with the United States; or

5 (ii) during its first taxable year for which

6 it elects to be treated as a real estate

7 investment trust under Section 856(c)(1) of the

8 Internal Revenue Code, a real estate investment

9 trust the certificates of beneficial interest or

10 shares of which are not regularly traded on an

11 established securities market, but only if the

12 certificates of beneficial interest or shares of

13 the real estate investment trust are regularly

14 traded on an established securities market prior

15 to the earlier of the due date (including

16 extensions) for filing its return under this Act

17 for that first taxable year or the date it

18 actually files that return.

19 (C) For the purposes of this subsection (1.5), the

20 constructive ownership rules prescribed under Section

21 318(a) of the Internal Revenue Code, as modified by

22 Section 856(d)(5) of the Internal Revenue Code, apply

23 in determining the ownership of stock, assets, or net

24 profits of any person.

25 (D) For the purposes of this item (1.5), for

26 taxable years ending on or after August 16, 2007, the

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1 voting power or value of the beneficial interest or

2 shares of a real estate investment trust does not

3 include any voting power or value of beneficial

4 interest or shares in a real estate investment trust

5 held directly or indirectly in a segregated asset

6 account by a life insurance company (as described in

7 Section 817 of the Internal Revenue Code) to the

8 extent such voting power or value is for the benefit of

9 entities or persons who are either immune from

10 taxation or exempt from taxation under subtitle A of

11 the Internal Revenue Code.

12 (2) Commercial domicile. The term "commercial

13 domicile" means the principal place from which the trade

14 or business of the taxpayer is directed or managed.

15 (3) Compensation. The term "compensation" means wages,

16 salaries, commissions and any other form of remuneration

17 paid to employees for personal services.

18 (4) Corporation. The term "corporation" includes

19 associations, joint-stock companies, insurance companies

20 and cooperatives. Any entity, including a limited

21 liability company formed under the Illinois Limited

22 Liability Company Act, shall be treated as a corporation

23 if it is so classified for federal income tax purposes.

24 (5) Department. The term "Department" means the

25 Department of Revenue of this State.

26 (6) Director. The term "Director" means the Director

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1 of Revenue of this State.

2 (7) Fiduciary. The term "fiduciary" means a guardian,

3 trustee, executor, administrator, receiver, or any person

4 acting in any fiduciary capacity for any person.

5 (8) Financial organization.

6 (A) The term "financial organization" means any

7 bank, bank holding company, trust company, savings

8 bank, industrial bank, land bank, safe deposit

9 company, private banker, savings and loan association,

10 building and loan association, credit union, currency

11 exchange, cooperative bank, small loan company, sales

12 finance company, investment company, or any person

13 which is owned by a bank or bank holding company. For

14 the purpose of this Section a "person" will include

15 only those persons which a bank holding company may

16 acquire and hold an interest in, directly or

17 indirectly, under the provisions of the Bank Holding

18 Company Act of 1956 (12 U.S.C. 1841, et seq.), except

19 where interests in any person must be disposed of

20 within certain required time limits under the Bank

21 Holding Company Act of 1956.

22 (B) For purposes of subparagraph (A) of this

23 paragraph, the term "bank" includes (i) any entity

24 that is regulated by the Comptroller of the Currency

25 under the National Bank Act, or by the Federal Reserve

26 Board, or by the Federal Deposit Insurance Corporation

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1 and (ii) any federally or State chartered bank

2 operating as a credit card bank.

3 (C) For purposes of subparagraph (A) of this

4 paragraph, the term "sales finance company" has the

5 meaning provided in the following item (i) or (ii):

6 (i) A person primarily engaged in one or more

7 of the following businesses: the business of

8 purchasing customer receivables, the business of

9 making loans upon the security of customer

10 receivables, the business of making loans for the

11 express purpose of funding purchases of tangible

12 personal property or services by the borrower, or

13 the business of finance leasing. For purposes of

14 this item (i), "customer receivable" means:

15 (a) a retail installment contract or

16 retail charge agreement within the meaning of

17 the Sales Finance Agency Act, the Retail

18 Installment Sales Act, or the Motor Vehicle

19 Retail Installment Sales Act;

20 (b) an installment, charge, credit, or

21 similar contract or agreement arising from the

22 sale of tangible personal property or services

23 in a transaction involving a deferred payment

24 price payable in one or more installments

25 subsequent to the sale; or

26 (c) the outstanding balance of a contract

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1 or agreement described in provisions (a) or

2 (b) of this item (i).

3 A customer receivable need not provide for

4 payment of interest on deferred payments. A sales

5 finance company may purchase a customer receivable

6 from, or make a loan secured by a customer

7 receivable to, the seller in the original

8 transaction or to a person who purchased the

9 customer receivable directly or indirectly from

10 that seller.

11 (ii) A corporation meeting each of the

12 following criteria:

13 (a) the corporation must be a member of an

14 "affiliated group" within the meaning of

15 Section 1504(a) of the Internal Revenue Code,

16 determined without regard to Section 1504(b)

17 of the Internal Revenue Code;

18 (b) more than 50% of the gross income of

19 the corporation for the taxable year must be

20 interest income derived from qualifying loans.

21 A "qualifying loan" is a loan made to a member

22 of the corporation's affiliated group that

23 originates customer receivables (within the

24 meaning of item (i)) or to whom customer

25 receivables originated by a member of the

26 affiliated group have been transferred, to the

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1 extent the average outstanding balance of

2 loans from that corporation to members of its

3 affiliated group during the taxable year do

4 not exceed the limitation amount for that

5 corporation. The "limitation amount" for a

6 corporation is the average outstanding

7 balances during the taxable year of customer

8 receivables (within the meaning of item (i))

9 originated by all members of the affiliated

10 group. If the average outstanding balances of

11 the loans made by a corporation to members of

12 its affiliated group exceed the limitation

13 amount, the interest income of that

14 corporation from qualifying loans shall be

15 equal to its interest income from loans to

16 members of its affiliated groups times a

17 fraction equal to the limitation amount

18 divided by the average outstanding balances of

19 the loans made by that corporation to members

20 of its affiliated group;

21 (c) the total of all shareholder's equity

22 (including, without limitation, paid-in

23 capital on common and preferred stock and

24 retained earnings) of the corporation plus the

25 total of all of its loans, advances, and other

26 obligations payable or owed to members of its

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1 affiliated group may not exceed 20% of the

2 total assets of the corporation at any time

3 during the tax year; and

4 (d) more than 50% of all interest-bearing

5 obligations of the affiliated group payable to

6 persons outside the group determined in

7 accordance with generally accepted accounting

8 principles must be obligations of the

9 corporation.

10 This amendatory Act of the 91st General Assembly

11 is declaratory of existing law.

12 (D) Subparagraphs (B) and (C) of this paragraph

13 are declaratory of existing law and apply

14 retroactively, for all tax years beginning on or

15 before December 31, 1996, to all original returns, to

16 all amended returns filed no later than 30 days after

17 the effective date of this amendatory Act of 1996, and

18 to all notices issued on or before the effective date

19 of this amendatory Act of 1996 under subsection (a) of

20 Section 903, subsection (a) of Section 904, subsection

21 (e) of Section 909, or Section 912. A taxpayer that is

22 a "financial organization" that engages in any

23 transaction with an affiliate shall be a "financial

24 organization" for all purposes of this Act.

25 (E) For all tax years beginning on or before

26 December 31, 1996, a taxpayer that falls within the

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1 definition of a "financial organization" under

2 subparagraphs (B) or (C) of this paragraph, but who

3 does not fall within the definition of a "financial

4 organization" under the Proposed Regulations issued by

5 the Department of Revenue on July 19, 1996, may

6 irrevocably elect to apply the Proposed Regulations

7 for all of those years as though the Proposed

8 Regulations had been lawfully promulgated, adopted,

9 and in effect for all of those years. For purposes of

10 applying subparagraphs (B) or (C) of this paragraph to

11 all of those years, the election allowed by this

12 subparagraph applies only to the taxpayer making the

13 election and to those members of the taxpayer's

14 unitary business group who are ordinarily required to

15 apportion business income under the same subsection of

16 Section 304 of this Act as the taxpayer making the

17 election. No election allowed by this subparagraph

18 shall be made under a claim filed under subsection (d)

19 of Section 909 more than 30 days after the effective

20 date of this amendatory Act of 1996.

21 (F) Finance Leases. For purposes of this

22 subsection, a finance lease shall be treated as a loan

23 or other extension of credit, rather than as a lease,

24 regardless of how the transaction is characterized for

25 any other purpose, including the purposes of any

26 regulatory agency to which the lessor is subject. A

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1 finance lease is any transaction in the form of a lease

2 in which the lessee is treated as the owner of the

3 leased asset entitled to any deduction for

4 depreciation allowed under Section 167 of the Internal

5 Revenue Code.

6 (9) Fiscal year. The term "fiscal year" means an

7 accounting period of 12 months ending on the last day of

8 any month other than December.

9 (9.5) Fixed place of business. The term "fixed place

10 of business" has the same meaning as that term is given in

11 Section 864 of the Internal Revenue Code and the related

12 Treasury regulations.

13 (10) Includes and including. The terms "includes" and

14 "including" when used in a definition contained in this

15 Act shall not be deemed to exclude other things otherwise

16 within the meaning of the term defined.

17 (11) Internal Revenue Code. The term "Internal Revenue

18 Code" means the United States Internal Revenue Code of

19 1954 or any successor law or laws relating to federal

20 income taxes in effect for the taxable year.

21 (11.5) Investment partnership.

22 (A) The term "investment partnership" means any

23 entity that is treated as a partnership for federal

24 income tax purposes that meets the following

25 requirements:

26 (i) no less than 90% of the partnership's cost

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1 of its total assets consists of qualifying

2 investment securities, deposits at banks or other

3 financial institutions, and office space and

4 equipment reasonably necessary to carry on its

5 activities as an investment partnership;

6 (ii) no less than 90% of its gross income

7 consists of interest, dividends, and gains from

8 the sale or exchange of qualifying investment

9 securities; and

10 (iii) the partnership is not a dealer in

11 qualifying investment securities.

12 (B) For purposes of this paragraph (11.5), the

13 term "qualifying investment securities" includes all

14 of the following:

15 (i) common stock, including preferred or debt

16 securities convertible into common stock, and

17 preferred stock;

18 (ii) bonds, debentures, and other debt

19 securities;

20 (iii) foreign and domestic currency deposits

21 secured by federal, state, or local governmental

22 agencies;

23 (iv) mortgage or asset-backed securities

24 secured by federal, state, or local governmental

25 agencies;

26 (v) repurchase agreements and loan

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1 participations;

2 (vi) foreign currency exchange contracts and

3 forward and futures contracts on foreign

4 currencies;

5 (vii) stock and bond index securities and

6 futures contracts and other similar financial

7 securities and futures contracts on those

8 securities;

9 (viii) options for the purchase or sale of any

10 of the securities, currencies, contracts, or

11 financial instruments described in items (i) to

12 (vii), inclusive;

13 (ix) regulated futures contracts;

14 (x) commodities (not described in Section

15 1221(a)(1) of the Internal Revenue Code) or

16 futures, forwards, and options with respect to

17 such commodities, provided, however, that any item

18 of a physical commodity to which title is actually

19 acquired in the partnership's capacity as a dealer

20 in such commodity shall not be a qualifying

21 investment security;

22 (xi) derivatives; and

23 (xii) a partnership interest in another

24 partnership that is an investment partnership.

25 (12) Mathematical error. The term "mathematical error"

26 includes the following types of errors, omissions, or

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1 defects in a return filed by a taxpayer which prevents

2 acceptance of the return as filed for processing:

3 (A) arithmetic errors or incorrect computations on

4 the return or supporting schedules;

5 (B) entries on the wrong lines;

6 (C) omission of required supporting forms or

7 schedules or the omission of the information in whole

8 or in part called for thereon; and

9 (D) an attempt to claim, exclude, deduct, or

10 improperly report, in a manner directly contrary to

11 the provisions of the Act and regulations thereunder

12 any item of income, exemption, deduction, or credit.

13 (13) Nonbusiness income. The term "nonbusiness income"

14 means all income other than business income or

15 compensation.

16 (14) Nonresident. The term "nonresident" means a

17 person who is not a resident.

18 (15) Paid, incurred and accrued. The terms "paid",

19 "incurred" and "accrued" shall be construed according to

20 the method of accounting upon the basis of which the

21 person's base income is computed under this Act.

22 (16) Partnership and partner. The term "partnership"

23 includes a syndicate, group, pool, joint venture or other

24 unincorporated organization, through or by means of which

25 any business, financial operation, or venture is carried

26 on, and which is not, within the meaning of this Act, a

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1 trust or estate or a corporation; and the term "partner"

2 includes a member in such syndicate, group, pool, joint

3 venture or organization.

4 The term "partnership" includes any entity, including

5 a limited liability company formed under the Illinois

6 Limited Liability Company Act, classified as a partnership

7 for federal income tax purposes.

8 The term "partnership" does not include a syndicate,

9 group, pool, joint venture, or other unincorporated

10 organization established for the sole purpose of playing

11 the Illinois State Lottery.

12 (17) Part-year resident. The term "part-year resident"

13 means an individual who became a resident during the

14 taxable year or ceased to be a resident during the taxable

15 year. Under Section 1501(a)(20)(A)(i) residence commences

16 with presence in this State for other than a temporary or

17 transitory purpose and ceases with absence from this State

18 for other than a temporary or transitory purpose. Under

19 Section 1501(a)(20)(A)(ii) residence commences with the

20 establishment of domicile in this State and ceases with

21 the establishment of domicile in another State.

22 (18) Person. The term "person" shall be construed to

23 mean and include an individual, a trust, estate,

24 partnership, association, firm, company, corporation,

25 limited liability company, or fiduciary. For purposes of

26 Section 1301 and 1302 of this Act, a "person" means (i) an

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1 individual, (ii) a corporation, (iii) an officer, agent,

2 or employee of a corporation, (iv) a member, agent or

3 employee of a partnership, or (v) a member, manager,

4 employee, officer, director, or agent of a limited

5 liability company who in such capacity commits an offense

6 specified in Section 1301 and 1302.

7 (18A) Records. The term "records" includes all data

8 maintained by the taxpayer, whether on paper, microfilm,

9 microfiche, or any type of machine-sensible data

10 compilation.

11 (19) Regulations. The term "regulations" includes

12 rules promulgated and forms prescribed by the Department.

13 (20) Resident. The term "resident" means:

14 (A) an individual (i) who is in this State for

15 other than a temporary or transitory purpose during

16 the taxable year; or (ii) who is domiciled in this

17 State but is absent from the State for a temporary or

18 transitory purpose during the taxable year;

19 (B) The estate of a decedent who at his or her

20 death was domiciled in this State;

21 (C) A trust created by a will of a decedent who at

22 his death was domiciled in this State; and

23 (D) An irrevocable trust, the grantor of which was

24 domiciled in this State at the time such trust became

25 irrevocable. For purpose of this subparagraph, a trust

26 shall be considered irrevocable to the extent that the

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1 grantor is not treated as the owner thereof under

2 Sections 671 through 678 of the Internal Revenue Code.

3 (21) Sales. The term "sales" means all gross receipts

4 of the taxpayer not allocated under Sections 301, 302 and

5 303.

6 (22) State. The term "state" when applied to a

7 jurisdiction other than this State means any state of the

8 United States, the District of Columbia, the Commonwealth

9 of Puerto Rico, any Territory or Possession of the United

10 States, and any foreign country, or any political

11 subdivision of any of the foregoing. For purposes of the

12 foreign tax credit under Section 601, the term "state"

13 means any state of the United States, the District of

14 Columbia, the Commonwealth of Puerto Rico, and any

15 territory or possession of the United States, or any

16 political subdivision of any of the foregoing, effective

17 for tax years ending on or after December 31, 1989.

18 (23) Taxable year. The term "taxable year" means the

19 calendar year, or the fiscal year ending during such

20 calendar year, upon the basis of which the base income is

21 computed under this Act. "Taxable year" means, in the case

22 of a return made for a fractional part of a year under the

23 provisions of this Act, the period for which such return

24 is made.

25 (24) Taxpayer. The term "taxpayer" means any person

26 subject to the tax imposed by this Act.

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1 (25) International banking facility. The term

2 international banking facility shall have the same meaning

3 as is set forth in the Illinois Banking Act or as is set

4 forth in the laws of the United States or regulations of

5 the Board of Governors of the Federal Reserve System.

6 (26) Income Tax Return Preparer.

7 (A) The term "income tax return preparer" means

8 any person who prepares for compensation, or who

9 employs one or more persons to prepare for

10 compensation, any return of tax imposed by this Act or

11 any claim for refund of tax imposed by this Act. The

12 preparation of a substantial portion of a return or

13 claim for refund shall be treated as the preparation

14 of that return or claim for refund.

15 (B) A person is not an income tax return preparer

16 if all he or she does is

17 (i) furnish typing, reproducing, or other

18 mechanical assistance;

19 (ii) prepare returns or claims for refunds for

20 the employer by whom he or she is regularly and

21 continuously employed;

22 (iii) prepare as a fiduciary returns or claims

23 for refunds for any person; or

24 (iv) prepare claims for refunds for a taxpayer

25 in response to any notice of deficiency issued to

26 that taxpayer or in response to any waiver of

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1 restriction after the commencement of an audit of

2 that taxpayer or of another taxpayer if a

3 determination in the audit of the other taxpayer

4 directly or indirectly affects the tax liability

5 of the taxpayer whose claims he or she is

6 preparing.

7 (27) Unitary business group.

8 (A) The term "unitary business group" means a

9 group of persons related through common ownership

10 whose business activities are integrated with,

11 dependent upon and contribute to each other. The group

12 will not include those members whose business activity

13 outside the United States is 80% or more of any such

14 member's total business activity; for purposes of this

15 paragraph and clause (a)(3)(B)(ii) of Section 304,

16 business activity within the United States shall be

17 measured by means of the factors ordinarily applicable

18 under subsections (a), (b), (c), (d), or (h) of

19 Section 304 except that, in the case of members

20 ordinarily required to apportion business income by

21 means of the 3 factor formula of property, payroll and

22 sales specified in subsection (a) of Section 304,

23 including the formula as weighted in subsection (h) of

24 Section 304, such members shall not use the sales

25 factor in the computation and the results of the

26 property and payroll factor computations of subsection

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1 (a) of Section 304 shall be divided by 2 (by one if

2 either the property or payroll factor has a

3 denominator of zero). The computation required by the

4 preceding sentence shall, in each case, involve the

5 division of the member's property, payroll, or revenue

6 miles in the United States, insurance premiums on

7 property or risk in the United States, or financial

8 organization business income from sources within the

9 United States, as the case may be, by the respective

10 worldwide figures for such items. Common ownership in

11 the case of corporations is the direct or indirect

12 control or ownership of more than 50% of the

13 outstanding voting stock of the persons carrying on

14 unitary business activity. Unitary business activity

15 can ordinarily be illustrated where the activities of

16 the members are: (1) in the same general line (such as

17 manufacturing, wholesaling, retailing of tangible

18 personal property, insurance, transportation or

19 finance); or (2) are steps in a vertically structured

20 enterprise or process (such as the steps involved in

21 the production of natural resources, which might

22 include exploration, mining, refining, and marketing);

23 and, in either instance, the members are functionally

24 integrated through the exercise of strong centralized

25 management (where, for example, authority over such

26 matters as purchasing, financing, tax compliance,

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1 product line, personnel, marketing and capital

2 investment is not left to each member).

3 (B) In no event, for taxable years ending prior to

4 December 31, 2017, shall any unitary business group

5 include members which are ordinarily required to

6 apportion business income under different subsections

7 of Section 304 except that for tax years ending on or

8 after December 31, 1987 this prohibition shall not

9 apply to a holding company that would otherwise be a

10 member of a unitary business group with taxpayers that

11 apportion business income under any of subsections

12 (b), (c), (c-1), or (d) of Section 304. If a unitary

13 business group would, but for the preceding sentence,

14 include members that are ordinarily required to

15 apportion business income under different subsections

16 of Section 304, then for each subsection of Section

17 304 for which there are two or more members, there

18 shall be a separate unitary business group composed of

19 such members. For purposes of the preceding two

20 sentences, a member is "ordinarily required to

21 apportion business income" under a particular

22 subsection of Section 304 if it would be required to

23 use the apportionment method prescribed by such

24 subsection except for the fact that it derives

25 business income solely from Illinois. As used in this

26 paragraph, for taxable years ending before December

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1 31, 2017, the phrase "United States" means only the 50

2 states and the District of Columbia, but does not

3 include any territory or possession of the United

4 States or any area over which the United States has

5 asserted jurisdiction or claimed exclusive rights with

6 respect to the exploration for or exploitation of

7 natural resources. For taxable years ending on or

8 after December 31, 2017, the phrase "United States",

9 as used in this paragraph, means only the 50 states,

10 the District of Columbia, and any area over which the

11 United States has asserted jurisdiction or claimed

12 exclusive rights with respect to the exploration for

13 or exploitation of natural resources, but does not

14 include any territory or possession of the United

15 States.

16 (C) Holding companies.

17 (i) For purposes of this subparagraph, a

18 "holding company" is a corporation (other than a

19 corporation that is a financial organization under

20 paragraph (8) of this subsection (a) of Section

21 1501 because it is a bank holding company under

22 the provisions of the Bank Holding Company Act of

23 1956 (12 U.S.C. 1841, et seq.) or because it is

24 owned by a bank or a bank holding company) that

25 owns a controlling interest in one or more other

26 taxpayers ("controlled taxpayers"); that, during

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1 the period that includes the taxable year and the

2 2 immediately preceding taxable years or, if the

3 corporation was formed during the current or

4 immediately preceding taxable year, the taxable

5 years in which the corporation has been in

6 existence, derived substantially all its gross

7 income from dividends, interest, rents, royalties,

8 fees or other charges received from controlled

9 taxpayers for the provision of services, and gains

10 on the sale or other disposition of interests in

11 controlled taxpayers or in property leased or

12 licensed to controlled taxpayers or used by the

13 taxpayer in providing services to controlled

14 taxpayers; and that incurs no substantial expenses

15 other than expenses (including interest and other

16 costs of borrowing) incurred in connection with

17 the acquisition and holding of interests in

18 controlled taxpayers and in the provision of

19 services to controlled taxpayers or in the leasing

20 or licensing of property to controlled taxpayers.

21 (ii) The income of a holding company which is

22 a member of more than one unitary business group

23 shall be included in each unitary business group

24 of which it is a member on a pro rata basis, by

25 including in each unitary business group that

26 portion of the base income of the holding company

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1 that bears the same proportion to the total base

2 income of the holding company as the gross

3 receipts of the unitary business group bears to

4 the combined gross receipts of all unitary

5 business groups (in both cases without regard to

6 the holding company) or on any other reasonable

7 basis, consistently applied.

8 (iii) A holding company shall apportion its

9 business income under the subsection of Section

10 304 used by the other members of its unitary

11 business group. The apportionment factors of a

12 holding company which would be a member of more

13 than one unitary business group shall be included

14 with the apportionment factors of each unitary

15 business group of which it is a member on a pro

16 rata basis using the same method used in clause

17 (ii).

18 (iv) The provisions of this subparagraph (C)

19 are intended to clarify existing law.

20 (D) If including the base income and factors of a

21 holding company in more than one unitary business

22 group under subparagraph (C) does not fairly reflect

23 the degree of integration between the holding company

24 and one or more of the unitary business groups, the

25 dependence of the holding company and one or more of

26 the unitary business groups upon each other, or the

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1 contributions between the holding company and one or

2 more of the unitary business groups, the holding

3 company may petition the Director, under the

4 procedures provided under Section 304(f), for

5 permission to include all base income and factors of

6 the holding company only with members of a unitary

7 business group apportioning their business income

8 under one subsection of subsections (a), (b), (c), or

9 (d) of Section 304. If the petition is granted, the

10 holding company shall be included in a unitary

11 business group only with persons apportioning their

12 business income under the selected subsection of

13 Section 304 until the Director grants a petition of

14 the holding company either to be included in more than

15 one unitary business group under subparagraph (C) or

16 to include its base income and factors only with

17 members of a unitary business group apportioning their

18 business income under a different subsection of

19 Section 304.

20 (E) If the unitary business group members'

21 accounting periods differ, the common parent's

22 accounting period or, if there is no common parent,

23 the accounting period of the member that is expected

24 to have, on a recurring basis, the greatest Illinois

25 income tax liability must be used to determine whether

26 to use the apportionment method provided in subsection

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1 (a) or subsection (h) of Section 304. The prohibition

2 against membership in a unitary business group for

3 taxpayers ordinarily required to apportion income

4 under different subsections of Section 304 does not

5 apply to taxpayers required to apportion income under

6 subsection (a) and subsection (h) of Section 304. The

7 provisions of this amendatory Act of 1998 apply to tax

8 years ending on or after December 31, 1998.

9 (28) Subchapter S corporation. The term "Subchapter S

10 corporation" means a corporation for which there is in

11 effect an election under Section 1362 of the Internal

12 Revenue Code, or for which there is a federal election to

13 opt out of the provisions of the Subchapter S Revision Act

14 of 1982 and have applied instead the prior federal

15 Subchapter S rules as in effect on July 1, 1982.

16 (30) Foreign person. The term "foreign person" means

17 any person who is a nonresident noncitizen ~~alien~~

18 individual and any nonindividual entity, regardless of

19 where created or organized, whose business activity

20 outside the United States is 80% or more of the entity's

21 total business activity.

22 (b) Other definitions.

23 (1) Words denoting number, gender, and so forth, when

24 used in this Act, where not otherwise distinctly expressed

25 or manifestly incompatible with the intent thereof:

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1 (A) Words importing the singular include and apply

2 to several persons, parties or things;

3 (B) Words importing the plural include the

4 singular; and

5 (C) Words importing the masculine gender include

6 the feminine as well.

7 (2) "Company" or "association" as including successors

8 and assigns. The word "company" or "association", when

9 used in reference to a corporation, shall be deemed to

10 embrace the words "successors and assigns of such company

11 or association", and in like manner as if these last-named

12 words, or words of similar import, were expressed.

13 (3) Other terms. Any term used in any Section of this

14 Act with respect to the application of, or in connection

15 with, the provisions of any other Section of this Act

16 shall have the same meaning as in such other Section.

17 (Source: P.A. 99-213, eff. 7-31-15; 100-22, eff. 7-6-17.)

18 Section 30. The Interstate Insurance Receivership Compact

19 Act is amended by changing Section 5 as follows:

20 (45 ILCS 160/5)

21 Sec. 5. Ratification of Compact. The State of Illinois

22 ratifies and approves the Interstate Insurance Receivership

23 Compact and enters into that Compact with all other

24 jurisdictions legally joining in it in substantially the

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1 following form:

2 ARTICLE I. PURPOSES

3 The purposes of this Compact are, through means of joint

4 and cooperative action among the compacting states:

5 (1) to promote, develop and facilitate orderly, efficient,

6 cost-effective, and uniform insurer receivership laws and

7 operations;

8 (2) to coordinate interaction between insurer receivership

9 and Guaranty Association operations;

10 (3) to create the Interstate Insurance Receivership

11 Commission; and

12 (4) to perform these and such other related functions as

13 may be consistent with the state regulation of the business of

14 insurance pursuant to the McCarran-Ferguson Act.

15 ARTICLE II. DEFINITIONS

16 For the purposes of this Compact:

17 (1) "By-laws" means those by-laws prescribed by the

18 Commission for its governance or for directing or controlling

19 the Commission's actions or conduct.

20 (2) "Compacting state" means any state which has enacted

21 enabling legislation for this Compact.

22 (3) "Commission" means the Interstate Insurance

23 Receivership Commission established by this Compact.

24 (4) "Commissioner" means the chief insurance regulatory

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1 official of a state.

2 (5) "Deputy Receiver" means a person appointed or retained

3 by a Receiver and who is the Receiver's duly authorized

4 representative for administering one or more estates.

5 (6) "Domiciliary state" means the state in which an

6 insurer is incorporated or organized; or, in the case ofa

7 non-domestic ~~an alien~~insurer, its state of entry; or in the

8 case of an unauthorized insurer not incorporated, organized,

9 or entered in any state, a state where the insurer is engaged

10 in or doing business.

11 (7) "Estate" means the assets and liabilities of any

12 insurer in receivership.

13 (8) "Guaranty Association" means an insurance guaranty

14 fund or association or any similar entity now or hereafter

15 created by statute in a compacting state, other than a

16 receivership, to pay or assume, in whole or in part, the

17 contractual claim obligations of insolvent insurers.

18 (9) "Insurer" means any person or entity that has done,

19 purports to do, is doing, or is licensed to do any insurance or

20 reinsurance business, or is or has been subject to the

21 authority of, or to liquidation, rehabilitation, supervision,

22 conservation, or ancillary receivership by, any Commissioner.

23 (10) "Member" means the Commissioner of a compacting state

24 or his or her designee, who shall be a person officially

25 connected with the Commissioner and who is wholly or

26 principally employed by the Commissioner.

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1 (11) "Non-compacting state" means a state which has not

2 enacted enabling legislation for this Compact.

3 (12) "Operating procedures" means procedures promulgated

4 by the Commission implementing a rule, an existing law in a

5 compacting state, or a provision of this Compact.

6 (13) "Publication" means the act of publishing in the

7 official state publication in a compacting state or in such

8 other publication as may be established by the Commission.

9 (14) "Receiver" means receiver, liquidator, rehabilitator,

10 conservator, or ancillary receiver as the context requires.

11 (15) "Receivership" means any liquidation, rehabilitation,

12 conservation, or ancillary receivership proceeding as the

13 context requires.

14 (16) "Rules" means acts of the Commission, duly

15 promulgated pursuant to Article VII of this Compact,

16 substantially affecting interested parties in addition to the

17 Commission, which shall have the force and effect of law in the

18 compacting states.

19 (17) "State" means any state, district or territory of the

20 United States of America.

21 ARTICLE III. ESTABLISHMENT OF THE COMMISSION AND VENUE

22 (1) The compacting states hereby create and establish an

23 entity known as the Interstate Insurance Receivership

24 Commission.

25 (2) The Commission is a body corporate of each compacting

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1 state.

2 (3) The Commission is a not-for-profit entity, separate

3 and distinct from the compacting states.

4 (4) The Commission is solely responsible for its

5 liabilities except as otherwise provided in this Compact.

6 (5) Except as otherwise specifically provided in state or

7 federal law in the jurisdiction where the Commission's

8 principal office is located or where the Commission is acting

9 as Receiver, venue is proper and judicial proceedings by or

10 against the Commission shall be brought in a court of

11 competent jurisdiction where the Commission's principal office

12 is located.

13 ARTICLE IV. POWERS OF THE COMMISSION

14 The Commission shall have all of the following powers:

15 (1) To promulgate rules which shall have the force and

16 effect of statutory law and shall be binding in the compacting

17 states to the extent and in the manner provided in this

18 Compact.

19 (2) To promulgate operating procedures which shall be

20 binding in the compacting states to the extent and in the

21 manner provided in this Compact.

22 (3) To oversee, supervise, and coordinate the activities

23 of receivers in compacting states.

24 (4) To act as Receiver of insurers organized under the

25 laws of, engaged in, or doing the business of insurance in a

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1 compacting state upon the request of the Commissioner of such

2 state or when grounds for receivership by the Commission exist

3 under Article IX of this Compact.

4 (5) To act as Deputy Receiver of insurers organized under

5 the laws of, engaged in, or doing the business of insurance in

6 a non-compacting state in accordance with Article IX of this

7 Compact.

8 (6) To act as ancillary Receiver in a compacting state of

9 an insurer domiciled in a non-compacting state.

10 (7) To monitor the activities and functions of Guaranty

11 Associations in the compacting states.

12 (8) To delegate its operating authority or functions;

13 provided, that its rulemaking authority under Article VII of

14 this Compact shall not be delegated.

15 (9) To bring or prosecute legal proceedings or actions in

16 its name as the Commission, or in the name of the Commission

17 acting as Receiver.

18 (10) To bring or prosecute legal proceedings or actions as

19 Receiver on behalf of an estate or its policyholders and

20 creditors; provided, that any Guaranty Association's standing

21 to sue or be sued under applicable law shall not be affected.

22 (11) To issue subpoenas requiring the attendance and

23 testimony of witnesses and the production of evidence.

24 (12) To establish and maintain offices.

25 (13) To purchase and maintain insurance and bonds.

26 (14) To borrow, accept, or contract for services of

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1 personnel including, but not limited to, members and their

2 staff.

3 (15) To elect or appoint such officers, attorneys,

4 employees, or agents, and to fix their compensation, define

5 their duties, and determine their qualifications; and to

6 establish the Commission's personnel policies and programs

7 relating to, among other things, conflicts of interest, rates

8 of compensation, and qualifications of personnel.

9 (16) To accept any and all donations and grants of money,

10 equipment, supplies, materials, and services, and to receive,

11 utilize, and dispose of the same.

12 (17) To lease, purchase, accept gifts or donations of, or

13 otherwise to own, hold, improve or use, any property, real,

14 personal, or mixed.

15 (18) To sell, convey, mortgage, pledge, lease, exchange,

16 abandon, or otherwise dispose of any property, real, personal,

17 or mixed.

18 (19) To enforce compliance with Commission rules,

19 operating procedures, and by-laws.

20 (20) To provide for dispute resolution among compacting

21 states and Receivers.

22 (21) To represent and advise compacting states on issues

23 relating to insurers domiciled or doing business in

24 non-compacting jurisdictions, consistent with the purposes of

25 this compact.

26 (22) To provide advice and training to receivership

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1 personnel of compacting states, and to be a resource for

2 compacting states by maintaining a reference library of

3 relevant materials.

4 (23) To establish a budget and make expenditures.

5 (24) To borrow money.

6 (25) To appoint committees including, but not limited to,

7 an industry advisory committee and an executive committee of

8 members.

9 (26) To provide and receive information relating to

10 receiverships and Guaranty Associations and to cooperate with

11 law enforcement agencies.

12 (27) To adopt and use a corporate seal.

13 (28) To perform such other functions as may be necessary

14 or appropriate to achieve the purposes of this Compact as may

15 be consistent with the state regulation of the business of

16 insurance pursuant to the McCarran-Ferguson Act.

17 ARTICLE V. ORGANIZATION OF THE COMMISSION

18 Section A. Membership, voting, and by-laws.

19 (1) A compacting state shall have and be limited to one

20 member. A member shall be qualified to serve in such capacity

21 under or pursuant to the applicable law of the compacting

22 state. A compacting state retains the discretionary right to

23 determine the due election or appointment and qualification of

24 its own Commissioner, and to fill all vacancies of its member.

25 (2) A member shall be entitled to one vote.

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1 (3) The Commission shall, by a majority of the members,

2 prescribe by-laws to govern its conduct as may be necessary or

3 appropriate to carry out the purposes of the Compact,

4 including, but not limited to:

5 (a) establishing the fiscal year of the Commission;

6 (b) providing reasonable standards and procedures:

7 (i) for the establishment of committees, and (ii)

8 governing any general or specific delegation of any authority

9 or function of the Commission;

10 (c) providing reasonable procedures for calling and

11 conducting meetings of the Commission and for ensuring

12 reasonable notice of each such meeting;

13 (d) establishing the titles and responsibilities of

14 the officers of the Commission;

15 (e) providing reasonable standards and procedures for

16 the establishment of the personnel policies and programs

17 of the Commission. Notwithstanding any civil service or

18 other similar laws of any compacting state, the by-laws

19 shall exclusively govern the personnel policies and

20 programs of the Commission; and

21 (f) providing a mechanism for winding up the

22 operations of the Commission and the equitable return of

23 any surplus funds that may exist after the dissolution of

24 the Compact after the payment or reserving of all of its

25 debts and obligations, or both.

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1 Section B. Officers and personnel.

2 (1) The Commission shall, by a majority of the members,

3 elect annually from among its members a chairperson and a vice

4 chairperson, each of whom shall have such authorities and

5 duties as may be specified in the by-laws. The chairperson or,

6 in his or her absence or disability, a member designated in

7 accordance with the by-laws, shall preside at all meetings of

8 the Commission. The officers so elected shall serve without

9 compensation or remuneration from the Commission; provided,

10 that subject to the availability of budgeted funds, the

11 officers shall be reimbursed for any actual and necessary

12 costs and expenses incurred by them in the performance of

13 their duties and responsibilities as officers of the

14 Commission.

15 (2) The Commission may, by a majority of the members,

16 appoint or retain an executive director for such period, upon

17 such terms and conditions and for such compensation as the

18 Commission may deem appropriate. The executive director shall

19 serve as secretary to the Commission, but shall not be a member

20 of the Commission. The executive director shall hire and

21 supervise such other staff as may be authorized by the

22 Commission.

23 Section C. Corporate records of the Commission. The

24 Commission shall maintain its corporate books and records in

25 accordance with the by-laws.

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1 Section D. Qualified immunity, defense, and

2 indemnification.

3 (1) The members, officers, executive director, and

4 employees of the Commission shall be immune from suit and

5 liability, either personally or in their official capacity,

6 for any claim for damage to or loss of property or personal

7 injury or other civil liability caused or arising out of or

8 relating to any actual or alleged act, error, or omission that

9 occurred, or that such person had a reasonable basis for

10 believing occurred within the scope of Commission employment,

11 duties, or responsibilities; provided, that nothing in this

12 paragraph shall be construed to protect any such person from

13 suit or liability, or both, for any damage, loss, injury, or

14 liability caused by the intentional or willful and wanton

15 misconduct of any such person, or to protect the Commission

16 acting as Receiver under Article IX of this Compact.

17 (2) The Commission shall defend any Commissioner of a

18 compacting state, his or her representatives or employees, or

19 the Commission's representatives or employees in any civil

20 action seeking to impose liability against such person arising

21 out of or relating to any actual or alleged act, error, or

22 omission that occurred within the scope of Commission

23 employment, duties, or responsibilities or that such person

24 had a reasonable basis for believing occurred within the scope

25 of Commission employment, duties, or responsibilities;

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1 provided, that the actual or alleged act, error, or omission

2 did not result from gross negligence or intentional wrongdoing

3 on the part of such person.

4 (3) The Commission shall indemnify and hold the

5 Commissioner of a compacting state, his or her representatives

6 or employees, or the Commission's representatives or employees

7 harmless in the amount of any settlement or judgment obtained

8 against such person arising out of or relating to any actual or

9 alleged act, error, or omission that occurred within the scope

10 of Commission employment, duties, or responsibilities or that

11 such person had a reasonable basis for believing occurred

12 within the scope of Commission employment, duties, or

13 responsibilities; provided, that the actual or alleged act,

14 error, or omission did not result from gross negligence or

15 intentional wrongdoing on the part of such person.

16 (4) The costs and expenses of defense and indemnification

17 of the Commission acting as Receiver of an estate shall be paid

18 as administrative expenses from the assets of that estate

19 unless such costs and expenses are covered by insurance

20 maintained by the Commission.

21 ARTICLE VI. MEETINGS AND ACTS OF THE COMMISSION

22 (1) The Commission shall meet and take such actions as are

23 consistent with the provisions of this Compact.

24 (2) Except as otherwise provided in this Compact and

25 unless a greater percentage is required by the by-laws, in

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1 order to constitute an act of the Commission, such act shall

2 have been taken at a meeting of the Commission and shall have

3 received an affirmative vote of a majority of the members.

4 (3) Each member of the Commission shall have the right and

5 power to cast a vote to which that compacting state is entitled

6 and to participate in the business and affairs of the

7 Commission. A member shall vote in person and shall not

8 delegate his or her vote to another member. The by-laws may

9 provide for members' participation in meetings by telephone or

10 other means of telecommunication.

11 (4) The Commission shall meet at least once during each

12 calendar year. The chairperson of the Commission may call

13 additional meetings at any time and, upon the request of a

14 majority of the members, shall call additional meetings.

15 (5) The Commission's rules shall establish conditions and

16 procedures under which the Commission shall make its

17 information and official records available to the public for

18 inspection or copying. The Commission may exempt from

19 disclosure any information or official records to the extent

20 disclosure would adversely affect personal privacy rights or

21 proprietary interests. In promulgating such rules, the

22 Commission may consider any special circumstances pertaining

23 to insurer insolvencies, but shall be guided by the principles

24 embodied in state and federal freedom of information laws. The

25 Commission may promulgate additional rules under which it may

26 make available to law enforcement agencies records and

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1 information otherwise exempt from disclosure and may enter

2 into agreements with law enforcement agencies to receive or

3 exchange information or records subject to nondisclosure and

4 confidentiality provisions.

5 (6) Public notice shall be given of all meetings, and all

6 meetings shall be open to the public, except as set forth in

7 the rules or as otherwise provided in this Compact. The

8 Commission shall promulgate rules consistent with the

9 principles contained in the federal Government in Sunshine

10 Act, 5 U.S.C. Section 552b, as may be amended. The Commission

11 and any of its committees may close a meeting to the public

12 where it determines by two-thirds vote that an open meeting

13 would be likely to:

14 (a) relate solely to the Commission's internal

15 personnel practices and procedures;

16 (b) disclose matters specifically exempted from

17 disclosure by statute;

18 (c) disclose trade secrets or commercial or financial

19 information which is privileged or confidential;

20 (d) involve accusing any person of a crime or formally

21 censuring any person;

22 (e) disclose information of a personal nature where

23 disclosure would constitute a clearly unwarranted invasion

24 of personal privacy;

25 (f) disclose investigatory records compiled for law

26 enforcement purposes;

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1 (g) disclose information contained in or related to

2 examination, operating, or condition reports prepared by,

3 on behalf of, or for the use of the Commission with respect

4 to a regulated entity for the purpose of regulation or

5 supervision of such entity;

6 (h) disclose information, the premature disclosure of

7 which would significantly endanger the stability of a

8 regulated entity;

9 (i) specifically relate to the Commission's issuance

10 of a subpoena or its participation in a civil action or

11 proceeding.

12 (7) For every meeting closed pursuant to paragraph (6),

13 the Commission's chief legal officer shall publicly certify

14 that, in his or her opinion, the meeting may be closed to the

15 public and shall reference each relevant exemptive provision.

16 The Commission shall keep minutes which shall fully and

17 clearly describe all matters discussed in any meeting and

18 shall provide a full and accurate summary of any actions taken

19 and the reasons therefor, including a description of each of

20 the views expressed on any item and the record of any roll call

21 vote (reflected in the vote of each member on the question).

22 All documents considered in connection with any action shall

23 be identified in such minutes.

24 ARTICLE VII. RULEMAKING FUNCTIONS OF THE COMMISSION

25 (1) The Commission shall promulgate rules and operating

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1 procedures in order to effectively and efficiently achieve the

2 purposes of this Compact; provided, that the Commission shall

3 not promulgate any rules: (i) directly relating to Guaranty

4 Associations including, but not limited to, rules governing

5 coverage, funding, or assessment mechanisms, or (ii) (except

6 pursuant to rules promulgated under Article VII(3) of this

7 Compact) altering the statutory priorities for distributing

8 assets out of an estate.

9 (2) Rulemaking shall occur pursuant to the criteria set

10 forth in this Article and the rules and operating procedures

11 promulgated pursuant thereto. Such rulemaking shall

12 substantially conform to the principles of the federal

13 Administrative Procedure Act, 5 U.S.C.S. Section 551 et seq.

14 and the Federal Advisory Committee Act, 5 U.S.C.S. app. 2,

15 Section 1 et seq., as may be amended.

16 (3) Other than the promulgation of such rules as are

17 necessary for the orderly operation of the Commission, the

18 first rule to be considered by the Commission shall be uniform

19 provisions governing insurer receiverships including, but not

20 limited to, provisions requiring compacting states to

21 implement, execute, and administer in a fair, just, effective,

22 and efficient manner rules and operating procedures relating

23 to receiverships. The Commission shall within 3 years of the

24 adoption of this Compact by 2 or more states, promulgate such

25 uniform provisions through the rulemaking process. Such

26 uniform provisions shall become law in all of the compacting

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1 states upon legislative enactment in a majority of the

2 compacting states.

3 (4) All rules and amendments shall become binding as of

4 the date specified in each rule or amendment; provided, that

5 if a compacting state expressly rejects such rule or amendment

6 through legislative enactment as of the expiration of the

7 second full calendar year after such rule is promulgated, such

8 rule or amendment shall have no further force or effect in the

9 rejecting compacting state. If a majority of compacting states

10 reject a rule, then such rule shall have no further force or

11 effect in any compacting state.

12 (5) When promulgating a rule or operating procedure, the

13 Commission shall:

14 (a) effect publication of the proposed rulemaking,

15 stating with particularity the text of the rule or

16 operating procedure which is proposed and the reason for

17 the proposed rule or operating procedure;

18 (b) allow persons to submit written data, facts,

19 opinions and arguments, which information the Commission

20 shall make publicly available;

21 (c) provide an opportunity for an informal hearing;

22 and

23 (d) promulgate a final rule or operating procedure and

24 its effective date, if appropriate, based on the

25 rulemaking record.

26 (6) Not later than 60 days after a rule or operating

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1 procedure is promulgated, any interested person may file a

2 petition in a court of competent jurisdiction where the

3 Commission's principal office is located for judicial review

4 of such rule or operating procedure. If the court finds that

5 the Commission's action is not supported by substantial

6 evidence in the rulemaking record, the court shall hold the

7 rule unlawful and set it aside.

8 ARTICLE VIII. OVERSIGHT AND

9 DISPUTE RESOLUTION BY THE COMMISSION

10 Section A. Oversight.

11 (1) The Commission shall oversee the administration and

12 operations of receiverships in compacting states and shall

13 monitor receiverships being administered in non-compacting

14 states which may significantly affect compacting states.

15 (2) To aid its monitoring, oversight, and coordination

16 responsibilities, the Commission shall establish operating

17 procedures requiring each member to submit written reports to

18 the Commission as follows:

19 (a) An initial report to the Commission upon a finding

20 or other official action by the compacting state that

21 grounds exist for receivership of an insurer doing

22 business in more than one state. Thereafter, reports shall

23 be submitted periodically and as otherwise required

24 pursuant to the Commission's operating procedures. The

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1 Commission shall be entitled to receive notice of, and

2 shall have standing to appear in, compacting states'

3 receiverships.

4 (b) An initial report of the status of an insurer

5 within a reasonable time after the initiation of a

6 receivership.

7 (3) The Commission shall promulgate operating procedures

8 requiring Receivers to submit to the Commission periodic

9 written reports and such additional information and

10 documentation as the Commission may reasonably request. Each

11 compacting state's Receivers shall establish the capability to

12 obtain and provide all such records, data, and information

13 required by the Commission in accordance with the Commission's

14 operating procedures.

15 (4) Except as to privileged records, data, and

16 information, the laws of any compacting state pertaining to

17 confidentiality or nondisclosure shall not relieve any

18 compacting state Commissioner of the responsibility to

19 disclose any relevant records, data, or information to the

20 Commission; provided, that disclosure to the Commission shall

21 not be deemed to waive or otherwise affect any confidentiality

22 requirement; and further provided, that the Commission shall

23 be subject to the compacting state's laws pertaining to

24 confidentiality and nondisclosure with respect to all such

25 records, data, and information in its possession.

26 (5) The courts and executive agencies in each compacting

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1 state shall enforce this Compact and shall take all actions

2 necessary and appropriate to effectuate the Compact's purposes

3 and intent. In any receivership or other judicial or

4 administrative proceeding in a compacting state pertaining to

5 the subject matter of this Compact which may affect the

6 powers, responsibilities, or actions of the Commission, the

7 Commission shall be entitled to receive all service of process

8 in any such proceeding and shall have standing to intervene in

9 the receivership or proceeding for all purposes.

10 (6) The Commission shall analyze and correlate records,

11 data, information, and reports received from Receivers and

12 Guaranty Associations and shall make recommendations for

13 improving their performance to the compacting states. The

14 Commission shall include summary information and data

15 regarding its oversight functions in its annual report.

16 Section B. Dispute resolution.

17 (1) The Commission shall attempt, upon the request of a

18 member, to resolve any disputes or other issues which are

19 subject to this Compact and which may arise among compacting

20 states and non-compacting states.

21 (2) The compacting states shall report to the Commission

22 on issues or activities of concern to them and cooperate with

23 and support the Commission in the discharge of its duties and

24 responsibilities.

25 (3) The Commission shall promulgate an operating procedure

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1 providing for binding dispute resolution for disputes among

2 Receivers.

3 (4) The Commission shall facilitate voluntary dispute

4 resolution for disputes among Guaranty Associations and

5 Receivers.

6 ARTICLE IX. RECEIVERSHIP FUNCTIONS OF THE COMMISSION

7 (1) The Commission has authority to act as Receiver of any

8 insurer domiciled, engaged in, or doing business in a

9 compacting state upon the request of the Commissioner of such

10 compacting state or as otherwise provided in this Compact.

11 (a) The Commission as Receiver shall have all powers

12 and duties pursuant to the receivership laws of the

13 domiciliary state.

14 (b) The Commission shall maintain accounts of receipts

15 and disbursements of the estates for which it is acting as

16 Receiver, consistent with the accounting practices and

17 procedures set forth in the by-laws.

18 (c) The Commission shall cause an annual audit of each

19 estate for which it is acting as Receiver, to be conducted

20 by an independent certified public accountant. The costs

21 and expenses of such audit shall be paid as administrative

22 expenses from the assets of the estate. The Commission

23 shall not cause an audit to be conducted of any estate that

24 lacks sufficient assets to conduct such audit.

25 (d) The Commission as Receiver is authorized to

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1 delegate its receivership duties and functions and to

2 effectuate such delegation through contracts with others.

3 (2) The Commission shall act as Receiver of any insurer

4 domiciled or doing business in a compacting state in the event

5 that the member acting as Receiver in that compacting state

6 fails to comply with duly promulgated Commission rules or

7 operating procedures. The Commission shall notify such member

8 in writing of noncompliance with Commission rules or operating

9 procedures. If the member acting as Receiver fails to remedy

10 such noncompliance within 10 days after receipt of such

11 notification, the Commission may petition the supervising

12 court before which such receivership is pending for an order

13 substituting and appointing the Commission as Receiver of the

14 estate.

15 (3) The Commission shall not act as Receiver of an estate

16 which appears to lack sufficient assets to fund such

17 receivership unless the compacting state makes provisions for

18 the payment of the estate's administrative expenses

19 satisfactory to the Commission.

20 (4) The Commission may act as Deputy Receiver for any

21 insurer domiciled or doing business in a non-compacting state

22 in accordance with such state's laws upon request of that

23 non-compacting state's Commissioner and approval of the

24 Commission.

25 (5) With respect to receiverships pending in a compacting

26 state on the effective date of the enactment of this Compact by

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1 the compacting state:

2 (a) the Commission may act as Receiver of an insurer

3 upon the request of that compacting state's member and

4 approval of the Commission; and

5 (b) the Commission shall oversee, monitor, and

6 coordinate the activities of all receiverships pending in

7 that compacting state regardless whether the Commission is

8 acting as Receiver of estates in such state.

9 ARTICLE X. FINANCE

10 (1) The Commission shall pay or provide for the payment of

11 the reasonable expenses of its establishment and organization.

12 (2) Except as otherwise provided in this Compact or by act

13 of the Commission, the costs and expenses of each compacting

14 state shall be the sole and exclusive responsibility of the

15 respective compacting state. The Commission may pay or provide

16 for actual and necessary costs and expenses for attendance of

17 its members at official meetings of the Commission or its

18 designated committees.

19 (3) The Commission shall levy on and collect an annual

20 assessment from each compacting state and each insurer

21 authorized to do business in a compacting state, and writing

22 direct insurance, to cover the cost of the internal operations

23 and activities of the Commission and its staff in a total

24 amount sufficient to cover the Commission's annual budget.

25 (a) The aggregate annual assessment amount shall be

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1 allocated 75% to insurers, hereinafter referred to as the

2 "insurers' portion", and 25% to compacting states,

3 hereinafter referred to as the "compacting states'

4 portion". The insurer portion shall be allocated to each

5 insurer by the percentage derived from a fraction, the

6 numerator of which shall be the gross direct written

7 premium received on that insurer's business in all

8 compacting states and the denominator of which shall be

9 the gross direct written premium received by all insurers

10 on business in all compacting states. The compacting

11 states' portion shall be allocated to each compacting

12 state by the percentage derived from a fraction, the

13 numerator of which shall be the gross direct written

14 premium received by all insurers on business in that

15 compacting state and the denominator shall be the gross

16 direct written premium received on all insurers on

17 business in all compacting states. A compacting state's

18 portion shall be funded as designated by that state's

19 legislature. In no event shall an insurer's assessment be

20 less than $50 or more than $25,000; provided, that

21 affiliated insurers' combined assessments shall not exceed

22 $50,000. Upon the request of an insurer, the Commission

23 may exempt or defer the assessment of any insurer if such

24 assessment would cause the insurer's financial impairment.

25 (b) These assessments shall not be used to pay any

26 costs or expenses incurred by the Commission and its staff

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1 acting as Receiver of estates. Such costs and expenses

2 shall be paid as administrative expenses from the assets

3 of the estates as provided by law, except as otherwise

4 provided in this Compact.

5 (c) An insurer authorized to do business in a

6 compacting state shall timely pay assessments to the

7 Commission. Failure to pay such assessments shall not be

8 grounds for the revocation, suspension, or denial of an

9 insurer's authority to do business, but shall subject the

10 insurer to suit by the Commission for recovery of any

11 assessment due, attorneys' fees, and costs, together with

12 interest from the date the assessment is due at a rate of

13 10% per annum, and to civil forfeiture in an amount to be

14 determined by the Commissioner of that compacting state in

15 which the insurer received the greatest premium in the

16 year next preceding the first year for which the insurer

17 shall be delinquent in payment of assessments.

18 (4) The Commission shall be reimbursed in the following

19 manner for the costs and expenses incurred by the Commission

20 and its staff acting as Receiver of estates to the extent that

21 an insurer's assets may be insufficient for the effective

22 administration of its estate:

23 (a) if the insurer is domiciled in a compacting state,

24 the estate shall be closed unless that compacting state

25 makes provisions for reimbursing the Commission; and

26 (b) if the insurer is unauthorized to do business in a

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1 compacting state or if the insurer is domiciled in a

2 non-compacting state and subject to ancillary

3 receivership, then the Commission and such state shall

4 make provisions for reimbursing the Commission prior to

5 the Commission becoming Receiver of such insurer.

6 (5) To fund the cost of the initial operations of the

7 Commission until its first annual budget is adopted and

8 related assessments have been made, contributions from

9 compacting states and others may be accepted and a one time

10 assessment on insurers doing a direct insurance business in

11 the compacting states may be made not to exceed $450 per

12 insurer.

13 (6) The Commission's adopted budget for a fiscal year

14 shall not be approved until it has been subject to notice and

15 comment as set forth in Article VII of this Compact. The budget

16 shall determine the amount of the annual assessment. The

17 Commission may accumulate a net worth not to exceed 30% of its

18 then annual cost of operation to provide for contingencies and

19 events not contemplated. These accumulated funds shall be held

20 separately and shall not be used for any other purpose. The

21 Commission's budget may include a provision for a contribution

22 to the Commission's net worth.

23 (7) The Commission shall be exempt from all taxation in

24 and by the compacting states.

25 (8) The Commission shall not pledge the credit of any

26 compacting state, except by and with the appropriate legal

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1 authority of that compacting state.

2 (9) The Commission shall keep complete and accurate

3 accounts of all its internal receipts (including grants and

4 donations) and disbursements of all funds, other than

5 receivership assets, under its control. The internal financial

6 accounts of the Commission shall be subject to the accounting

7 procedures established under its by-laws. The financial

8 accounts and reports including the system of internal controls

9 and procedures of the Commission shall be audited annually by

10 an independent certified public accountant. Upon the

11 determination of the Commission, but no less frequently than

12 every 3 years, the review of such independent auditor shall

13 include a management and performance audit of the Commission.

14 The report of such independent audit shall be made available

15 to the public and shall be included in and become part of the

16 annual report of the Commission to the Governors and

17 legislatures of the compacting states. The Commission's

18 internal accounts, any workpapers related to any internal

19 audit, and any workpapers related to the independent audit,

20 shall be confidential; provided, that such materials shall be

21 made available: (i) in compliance with the order of any court

22 of competent jurisdiction; (ii) pursuant to such reasonable

23 rules as the Commission shall promulgate; and (iii) to any

24 Commissioner, Governor of a compacting state, or their duly

25 authorized representatives.

26 (10) No compacting state shall have any claim to or

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1 ownership of any property held by or vested in the Commission

2 or the Commission acting as Receiver or to any other

3 Commission funds held pursuant to the provisions of this

4 Compact.

5 ARTICLE XI. COMPACTING STATES, EFFECTIVE DATE, AND AMENDMENT

6 (1) Any state is eligible to become a compacting state.

7 (2) The Compact shall become effective and binding upon

8 legislative enactment of the Compact into law by 2 compacting

9 states. Thereafter, it shall become effective and binding as

10 to any other compacting state upon enactment of the Compact

11 into law by that state.

12 (3) Amendments to the Compact may be proposed by the

13 Commission for enactment by the compacting states. No

14 amendment shall become effective and binding upon the

15 Commission and the compacting states unless and until it is

16 enacted into law by unanimous consent of the compacting

17 states.

18 ARTICLE XII. WITHDRAWAL, DEFAULT, AND TERMINATION

19 Section A. Withdrawal.

20 (1) Once effective, the Compact shall continue in force

21 and remain binding upon each and every compacting state;

22 provided, that a compacting state may withdraw from the

23 Compact ("withdrawing state") by enacting a statute

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1 specifically repealing the statute which enacted the Compact

2 into law.

3 (2) The effective date of withdrawal is the effective date

4 of the repeal; provided, that the repeal shall not apply to any

5 receiverships, for which the Commission is acting as Receiver,

6 pending on the date of the repeal except by mutual agreement of

7 the Commission and the withdrawing state.

8 (3) The withdrawing state shall immediately notify the

9 Chairperson of the Commission in writing upon the introduction

10 of legislation repealing this Compact in the withdrawing

11 state.

12 (4) The Commission shall notify the other compacting

13 states of the withdrawing state's intent to withdraw within 60

14 days of its receipt thereof.

15 (5) The withdrawing state is responsible for all

16 assessments, obligations, and liabilities incurred through the

17 effective date of withdrawal, including any obligations, the

18 performance of which extend beyond the effective date of

19 withdrawal, except to the extent those obligations may have

20 been released or relinquished by mutual agreement of the

21 Commission and the withdrawing state. Notwithstanding the

22 foregoing, the withdrawing state is responsible for the costs

23 and expenses of its estates subject to this Compact pending on

24 the date of repeal; the Commission and the other estates

25 subject to this Compact shall not bear any costs and expenses

26 related to the withdrawing state's estates unless otherwise

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1 mutually agreed upon between the Commission and the

2 withdrawing state.

3 (6) Reinstatement following withdrawal of any compacting

4 state shall occur upon the withdrawing state reenacting the

5 Compact or upon such later date as determined by the

6 Commission.

7 Section B. Default.

8 (1) If the Commission determines that any compacting state

9 has at any time defaulted ("defaulting state") in the

10 performance of any of its obligations or responsibilities

11 under this Compact, the by-laws, or duly promulgated rules,

12 all rights, privileges, and benefits conferred by this Compact

13 and any agreements entered into pursuant to this Compact shall

14 be suspended from the effective date of default as fixed by the

15 Commission. The grounds for default include, but are not

16 limited to, failure of a compacting state to perform such

17 obligations or responsibilities and any other grounds

18 designated in Commission rules. The Commission shall

19 immediately notify the defaulting state in writing of the

20 defaulting state's suspension pending a cure of the default.

21 The Commission shall stipulate the conditions and the time

22 period within which the defaulting state must cure its

23 default. If the defaulting state fails to cure the default

24 within the time period specified by the Commission, the

25 defaulting state shall be terminated from the Compact upon an

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1 affirmative vote of a majority of the compacting states and

2 all rights, privileges, and benefits conferred by this Compact

3 shall be terminated from the effective date of termination.

4 (2) Within 60 days of the effective date of termination of

5 a defaulting state, the Commission shall notify the Governor

6 and the Majority and Minority Leaders of the defaulting

7 state's legislature of such termination.

8 (3) The termination of a defaulting state shall apply to

9 all receiverships, for which the Commission is acting as

10 Receiver, pending on the effective date of termination except

11 by mutual agreement of the Commission and the defaulting

12 state.

13 (4) The defaulting state is responsible for all

14 assessments, obligations, and liabilities incurred through the

15 effective date of termination and is responsible for the costs

16 and expenses relating to its estates subject to this Compact

17 pending on the date of the termination. The Commission and the

18 other estates subject to this Compact shall not bear any costs

19 or expenses relating the defaulting state's estates unless

20 otherwise mutually agreed upon between the Commission and the

21 defaulting state.

22 (5) Reinstatement following termination of any compacting

23 state requires both a reenactment of the Compact by the

24 defaulting state and the approval of the Commission pursuant

25 to the rules.

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1 Section C. Dissolution of Compact.

2 (1) The Compact dissolves effective upon the date of the

3 withdrawal or the termination by default of the compacting

4 state which reduces membership in the Compact to one

5 compacting state.

6 (2) Upon the dissolution of this Compact, the Compact

7 becomes null and void and shall be of no further force or

8 effect, and the business and affairs of the Commission shall

9 be wound up and any surplus funds shall be distributed in

10 accordance with the by-laws.

11 ARTICLE XIII. SEVERABILITY AND CONSTRUCTION

12 (1) The provisions of this Compact shall be severable, and

13 if any phrase, clause, sentence, or provision is deemed

14 unenforceable, the remaining provisions of the Compact shall

15 be enforceable.

16 (2) The provisions of this Compact shall be liberally

17 construed to effectuate its purposes.

18 ARTICLE XIV. BINDING EFFECT OF COMPACT AND OTHER LAWS

19 Section A. Other laws.

20 (1) Nothing herein prevents the enforcement of any other

21 law of a compacting state that is not inconsistent with this

22 Compact.

23 (2) All compacting states' laws conflicting with this

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1 Compact are superseded to the extent of the conflict.

2 Section B. Binding effect of this Compact.

3 (1) All lawful actions of the Commission, including all

4 rules and operating procedures promulgated by the Commission,

5 are binding upon the compacting states.

6 (2) All agreements between the Commission and the

7 compacting states are binding in accordance with their terms.

8 (3) Upon the request of a party to a conflict over meaning

9 or interpretation of Commission actions, and upon a majority

10 vote of the compacting states, the Commission may issue

11 advisory opinions regarding such meaning or interpretation.

12 (4) In the event any provision of this Compact exceeds the

13 constitutional limits imposed on the legislature of any

14 compacting state, the obligations, duties, powers, or

15 jurisdiction sought to be conferred by such provision upon the

16 Commission shall be ineffective and such obligations, duties,

17 powers or jurisdiction shall remain in the compacting state

18 and shall be exercised by the agency thereof to which such

19 obligations, duties, powers, or jurisdiction are delegated by

20 law in effect at the time this Compact becomes effective.

21 (Source: P.A. 95-331, eff. 8-21-07.)

22 Section 35. The Interstate Insurance Product Regulation

23 Compact is amended by changing Section 10 as follows:

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1 (45 ILCS 162/10)

2 Sec. 10. Ratification. The State of Illinois ratifies,

3 approves, and adopts the following interstate compact:

4 Article I. PURPOSES

5 The purposes of this Compact are, through means of joint

6 and cooperative action among the Compacting States:

7 1. To promote and protect the interest of consumers of

8 individual and group annuity, life insurance, disability

9 income and long-term care insurance products;

10 2. To develop uniform standards for insurance products

11 covered under the Compact;

12 3. To establish a central clearinghouse to receive and

13 provide prompt review of insurance products covered under

14 the Compact and, in certain cases, advertisements related

15 thereto, submitted by insurers authorized to do business

16 in one or more Compacting States;

17 4. To give appropriate regulatory approval to those

18 product filings and advertisements satisfying the

19 applicable uniform standard;

20 5. To improve coordination of regulatory resources and

21 expertise between state insurance departments regarding

22 the setting of uniform standards and review of insurance

23 products covered under the Compact;

24 6. To create the Interstate Insurance Product

25 Regulation Commission; and

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1 7. To perform these and such other related functions

2 as may be consistent with the state regulation of the

3 business of insurance.

4 Article II. DEFINITIONS

5 For purposes of this Compact:

6 1. "Advertisement" means any material designed to

7 create public interest in a Product, or induce the public

8 to purchase, increase, modify, reinstate, borrow on,

9 surrender, replace or retain a policy, as more

10 specifically defined in the Rules and Operating Procedures

11 of the Commission.

12 2. "Bylaws" mean those bylaws established by the

13 Commission for its governance, or for directing or

14 controlling the Commission's actions or conduct.

15 3. "Compacting State" means any State which has

16 enacted this Compact legislation and which has not

17 withdrawn pursuant to Article XIV, Section 1, or been

18 terminated pursuant to Article XIV, Section 2.

19 4. "Commission" means the "Interstate Insurance

20 Product Regulation Commission" established by this

21 Compact.

22 5. "Commissioner" means the chief insurance regulatory

23 official of a State including, but not limited to

24 commissioner, superintendent, director or administrator.

25 6. "Domiciliary State" means the state in which an

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1 Insurer is incorporated or organized; or, in the case of a

2 non-domestic ~~an alien~~ Insurer, its state of entry.

3 7. "Insurer" means any entity licensed by a State to

4 issue contracts of insurance for any of the lines of

5 insurance covered by this Act.

6 8. "Member" means the person chosen by a Compacting

7 State as its representative to the Commission, or his or

8 her designee.

9 9. "Non-compacting State" means any State which is not

10 at the time a Compacting State.

11 10. "Operating Procedures" mean procedures promulgated

12 by the Commission implementing a Rule, Uniform Standard or

13 a provision of this Compact.

14 11. "Product" means the form of a policy or contract,

15 including any application, endorsement, or related form

16 which is attached to and made a part of the policy or

17 contract, and any evidence of coverage or certificate, for

18 an individual or group annuity, life insurance, disability

19 income or long-term care insurance product that an Insurer

20 is authorized to issue.

21 12. "Rule" means a statement of general or particular

22 applicability and future effect promulgated by the

23 Commission, including a Uniform Standard developed

24 pursuant to Article VII of this Compact, designed to

25 implement, interpret, or prescribe law or policy or

26 describing the organization, procedure, or practice

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1 requirements of the Commission, which shall have the force

2 and effect of law in the Compacting States.

3 13. "State" means any state, district or territory of

4 the United States of America.

5 14. "Third-Party Filer" means an entity that submits a

6 Product filing to the Commission on behalf of an Insurer.

7 15. "Uniform Standard" means a standard adopted by the

8 Commission for a Product line, pursuant to Article VII of

9 this Compact, and shall include all of the Product

10 requirements in aggregate; provided, that each Uniform

11 Standard shall be construed, whether express or implied,

12 to prohibit the use of any inconsistent, misleading or

13 ambiguous provisions in a Product and the form of the

14 Product made available to the public shall not be unfair,

15 inequitable or against public policy as determined by the

16 Commission.

17 Article III. ESTABLISHMENT OF THE COMMISSION AND VENUE

18 1. The Compacting States hereby create and establish a

19 joint public agency known as the "Interstate Insurance Product

20 Regulation Commission." Pursuant to Article IV, the Commission

21 will have the power to develop Uniform Standards for Product

22 lines, receive and provide prompt review of Products filed

23 therewith, and give approval to those Product filings

24 satisfying applicable Uniform Standards; provided, it is not

25 intended for the Commission to be the exclusive entity for

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1 receipt and review of insurance product filings. Nothing

2 herein shall prohibit any Insurer from filing its product in

3 any State wherein the Insurer is licensed to conduct the

4 business of insurance; and any such filing shall be subject to

5 the laws of the State where filed.

6 2. The Commission is a body corporate and politic, and an

7 instrumentality of the Compacting States.

8 3. The Commission is solely responsible for its

9 liabilities except as otherwise specifically provided in this

10 Compact.

11 4. Venue is proper and judicial proceedings by or against

12 the Commission shall be brought solely and exclusively in a

13 Court of competent jurisdiction where the principal office of

14 the Commission is located.

15 Article IV. POWERS OF THE COMMISSION

16 The Commission shall have the following powers:

17 1. To promulgate Rules, pursuant to Article VII of

18 this Compact, which shall have the force and effect of law

19 and shall be binding in the Compacting States to the

20 extent and in the manner provided in this Compact;

21 2. To exercise its rule-making authority and establish

22 reasonable Uniform Standards for Products covered under

23 the Compact, and Advertisement related thereto, which

24 shall have the force and effect of law and shall be binding

25 in the Compacting States, but only for those Products

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1 filed with the Commission, provided, that a Compacting

2 State shall have the right to opt out of such Uniform

3 Standard pursuant to Article VII, to the extent and in the

4 manner provided in this Compact, and, provided further,

5 that any Uniform Standard established by the Commission

6 for long-term care insurance products may provide the same

7 or greater protections for consumers as, but shall not

8 provide less than, those protections set forth in the

9 National Association of Insurance Commissioners' Long-Term

10 Care Insurance Model Act and Long-Term Care Insurance

11 Model Regulation, respectively, adopted as of 2001. The

12 Commission shall consider whether any subsequent

13 amendments to the NAIC Long-Term Care Insurance Model Act

14 or Long-Term Care Insurance Model Regulation adopted by

15 the NAIC require amending of the Uniform Standards

16 established by the Commission for long-term care insurance

17 products;

18 3. To receive and review in an expeditious manner

19 Products filed with the Commission, and rate filings for

20 disability income and long-term care insurance Products,

21 and give approval of those Products and rate filings that

22 satisfy the applicable Uniform Standard, where such

23 approval shall have the force and effect of law and be

24 binding on the Compacting States to the extent and in the

25 manner provided in the Compact;

26 4. To receive and review in an expeditious manner

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1 Advertisement relating to long-term care insurance

2 products for which Uniform Standards have been adopted by

3 the Commission, and give approval to all Advertisement

4 that satisfies the applicable Uniform Standard. For any

5 product covered under this Compact, other than long-term

6 care insurance products, the Commission shall have the

7 authority to require an insurer to submit all or any part

8 of its Advertisement with respect to that product for

9 review or approval prior to use, if the Commission

10 determines that the nature of the product is such that an

11 Advertisement of the product could have the capacity or

12 tendency to mislead the public. The actions of Commission

13 as provided in this section shall have the force and

14 effect of law and shall be binding in the Compacting

15 States to the extent and in the manner provided in the

16 Compact;

17 5. To exercise its rule-making authority and designate

18 Products and Advertisement that may be subject to a

19 self-certification process without the need for prior

20 approval by the Commission.

21 6. To promulgate Operating Procedures, pursuant to

22 Article VII of this Compact, which shall be binding in the

23 Compacting States to the extent and in the manner provided

24 in this Compact;

25 7. To bring and prosecute legal proceedings or actions

26 in its name as the Commission; provided, that the standing

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1 of any state insurance department to sue or be sued under

2 applicable law shall not be affected;

3 8. To issue subpoenas requiring the attendance and

4 testimony of witnesses and the production of evidence;

5 9. To establish and maintain offices;

6 10. To purchase and maintain insurance and bonds;

7 11. To borrow, accept or contract for services of

8 personnel, including, but not limited to, employees of a

9 Compacting State;

10 12. To hire employees, professionals or specialists,

11 and elect or appoint officers, and to fix their

12 compensation, define their duties and give them

13 appropriate authority to carry out the purposes of the

14 Compact, and determine their qualifications; and to

15 establish the Commission's personnel policies and programs

16 relating to, among other things, conflicts of interest,

17 rates of compensation and qualifications of personnel;

18 13. To accept any and all appropriate donations and

19 grants of money, equipment, supplies, materials and

20 services, and to receive, utilize and dispose of the same;

21 provided that at all times the Commission shall strive to

22 avoid any appearance of impropriety;

23 14. To lease, purchase, accept appropriate gifts or

24 donations of, or otherwise to own, hold, improve or use,

25 any property, real, personal or mixed; provided that at

26 all times the Commission shall strive to avoid any

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1 appearance of impropriety;

2 15. To sell, convey, mortgage, pledge, lease,

3 exchange, abandon or otherwise dispose of any property,

4 real, personal or mixed;

5 16. To remit filing fees to Compacting States as may

6 be set forth in the Bylaws, Rules or Operating Procedures;

7 17. To enforce compliance by Compacting States with

8 Rules, Uniform Standards, Operating Procedures and Bylaws;

9 18. To provide for dispute resolution among Compacting

10 States;

11 19. To advise Compacting States on issues relating to

12 Insurers domiciled or doing business in Non-compacting

13 jurisdictions, consistent with the purposes of this

14 Compact;

15 20. To provide advice and training to those personnel

16 in state insurance departments responsible for product

17 review, and to be a resource for state insurance

18 departments;

19 21. To establish a budget and make expenditures;

20 22. To borrow money;

21 23. To appoint committees, including advisory

22 committees comprising Members, state insurance regulators,

23 state legislators or their representatives, insurance

24 industry and consumer representatives, and such other

25 interested persons as may be designated in the Bylaws;

26 24. To provide and receive information from, and to

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1 cooperate with law enforcement agencies;

2 25. To adopt and use a corporate seal; and

3 26. To perform such other functions as may be

4 necessary or appropriate to achieve the purposes of this

5 Compact consistent with the state regulation of the

6 business of insurance.

7 Article V. ORGANIZATION OF THE COMMISSION

8 1. Membership, Voting and Bylaws.

9 a. Each Compacting State shall have and be limited to one

10 Member. Each Member shall be qualified to serve in that

11 capacity pursuant to applicable law of the Compacting State.

12 Any Member may be removed or suspended from office as provided

13 by the law of the State from which he or she shall be

14 appointed. Any vacancy occurring in the Commission shall be

15 filled in accordance with the laws of the Compacting State

16 wherein the vacancy exists. Nothing herein shall be construed

17 to affect the manner in which a Compacting State determines

18 the election or appointment and qualification of its own

19 Commissioner.

20 b. Each Member shall be entitled to one vote and shall have

21 an opportunity to participate in the governance of the

22 Commission in accordance with the Bylaws. Notwithstanding any

23 provision herein to the contrary, no action of the Commission

24 with respect to the promulgation of a Uniform Standard shall

25 be effective unless two-thirds (2/3) of the Members vote in

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1 favor thereof.

2 c. The Commission shall, by a majority of the Members,

3 prescribe Bylaws to govern its conduct as may be necessary or

4 appropriate to carry out the purposes, and exercise the

5 powers, of the Compact, including, but not limited to:

6 i. establishing the fiscal year of the Commission;

7 ii. providing reasonable procedures for appointing

8 and electing members, as well as holding meetings, of

9 the Management Committee;

10 iii. providing reasonable standards and

11 procedures: (i) for the establishment and meetings of

12 other committees, and (ii) governing any general or

13 specific delegation of any authority or function of

14 the Commission;

15 iv. providing reasonable procedures for calling

16 and conducting meetings of the Commission that

17 consists of a majority of Commission members, ensuring

18 reasonable advance notice of each such meeting, and

19 providing for the right of citizens to attend each

20 such meeting with enumerated exceptions designed to

21 protect the public's interest, the privacy of

22 individuals, and insurers' proprietary information,

23 including trade secrets. The Commission may meet in

24 camera only after a majority of the entire membership

25 votes to close a meeting en toto or in part. As soon as

26 practicable, the Commission must make public (i) a

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1 copy of the vote to close the meeting revealing the

2 vote of each Member with no proxy votes allowed, and

3 (ii) votes taken during such meeting;

4 v. establishing the titles, duties and authority

5 and reasonable procedures for the election of the

6 officers of the Commission;

7 vi. providing reasonable standards and procedures

8 for the establishment of the personnel policies and

9 programs of the Commission. Notwithstanding any civil

10 service or other similar laws of any Compacting State,

11 the Bylaws shall exclusively govern the personnel

12 policies and programs of the Commission;

13 vii. promulgating a code of ethics to address

14 permissible and prohibited activities of commission

15 members and employees; and

16 viii. providing a mechanism for winding up the

17 operations of the Commission and the equitable

18 disposition of any surplus funds that may exist after

19 the termination of the Compact after the payment

20 and/or reserving of all of its debts and obligations.

21 d. The Commission shall publish its bylaws in a convenient

22 form and file a copy thereof and a copy of any amendment

23 thereto, with the appropriate agency or officer in each of the

24 Compacting States.

25 2. Management Committee, Officers and Personnel.

26 a. A Management Committee comprising no more than fourteen

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1 (14) members shall be established as follows:

2 (i) One (1) member from each of the six (6)

3 Compacting States with the largest premium volume for

4 individual and group annuities, life, disability

5 income and long-term care insurance products,

6 determined from the records of the NAIC for the prior

7 year;

8 (ii) Four (4) members from those Compacting States

9 with at least two percent (2%) of the market based on

10 the premium volume described above, other than the six

11 (6) Compacting States with the largest premium volume,

12 selected on a rotating basis as provided in the

13 Bylaws, and;

14 (iii) Four (4) members from those Compacting

15 States with less than two percent (2%) of the market,

16 based on the premium volume described above, with one

17 (1) selected from each of the four (4) zone regions of

18 the NAIC as provided in the Bylaws.

19 b. The Management Committee shall have such authority and

20 duties as may be set forth in the Bylaws, including but not

21 limited to:

22 i. managing the affairs of the Commission in a

23 manner consistent with the Bylaws and purposes of the

24 Commission;

25 ii. establishing and overseeing an organizational

26 structure within, and appropriate procedures for, the

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1 Commission to provide for the creation of Uniform

2 Standards and other Rules, receipt and review of

3 product filings, administrative and technical support

4 functions, review of decisions regarding the

5 disapproval of a product filing, and the review of

6 elections made by a Compacting State to opt out of a

7 Uniform Standard; provided that a Uniform Standard

8 shall not be submitted to the Compacting States for

9 adoption unless approved by two-thirds (2/3) of the

10 members of the Management Committee;

11 iii. overseeing the offices of the Commission; and

12 iv. planning, implementing, and coordinating

13 communications and activities with other state,

14 federal and local government organizations in order to

15 advance the goals of the Commission.

16 c. The Commission shall elect annually officers from the

17 Management Committee, with each having such authority and

18 duties, as may be specified in the Bylaws.

19 d. The Management Committee may, subject to the approval

20 of the Commission, appoint or retain an executive director for

21 such period, upon such terms and conditions and for such

22 compensation as the Commission may deem appropriate. The

23 executive director shall serve as secretary to the Commission,

24 but shall not be a Member of the Commission. The executive

25 director shall hire and supervise such other staff as may be

26 authorized by the Commission.

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1 3. Legislative and Advisory Committees.

2 a. A legislative committee comprising state legislators or

3 their designees shall be established to monitor the operations

4 of, and make recommendations to, the Commission, including the

5 Management Committee; provided that the manner of selection

6 and term of any legislative committee member shall be as set

7 forth in the Bylaws. Prior to the adoption by the Commission of

8 any Uniform Standard, revision to the Bylaws, annual budget or

9 other significant matter as may be provided in the Bylaws, the

10 Management Committee shall consult with and report to the

11 legislative committee.

12 b. The Commission shall establish two (2) advisory

13 committees, one of which shall comprise consumer

14 representatives independent of the insurance industry, and the

15 other comprising insurance industry representatives.

16 c. The Commission may establish additional advisory

17 committees as its Bylaws may provide for the carrying out of

18 its functions.

19 4. Corporate Records of the Commission. The Commission

20 shall maintain its corporate books and records in accordance

21 with the Bylaws.

22 5. Qualified Immunity, Defense and Indemnification.

23 a. The Members, officers, executive director, employees

24 and representatives of the Commission shall be immune from

25 suit and liability, either personally or in their official

26 capacity, for any claim for damage to or loss of property or

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1 personal injury or other civil liability caused by or arising

2 out of any actual or alleged act, error or omission that

3 occurred, or that the person against whom the claim is made had

4 a reasonable basis for believing occurred within the scope of

5 Commission employment, duties or responsibilities; provided,

6 that nothing in this paragraph shall be construed to protect

7 any such person from suit and/or liability for any damage,

8 loss, injury or liability caused by the intentional or willful

9 and wanton misconduct of that person.

10 b. The Commission shall defend any Member, officer,

11 executive director, employee or representative of the

12 Commission in any civil action seeking to impose liability

13 arising out of any actual or alleged act, error or omission

14 that occurred within the scope of Commission employment,

15 duties or responsibilities, or that the person against whom

16 the claim is made had a reasonable basis for believing

17 occurred within the scope of Commission employment, duties or

18 responsibilities; provided, that nothing herein shall be

19 construed to prohibit that person from retaining his or her

20 own counsel; and provided further, that the actual or alleged

21 act, error or omission did not result from that person's

22 intentional or willful and wanton misconduct.

23 c. The Commission shall indemnify and hold harmless any

24 Member, officer, executive director, employee or

25 representative of the Commission for the amount of any

26 settlement or judgment obtained against that person arising

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1 out of any actual or alleged act, error or omission that

2 occurred within the scope of Commission employment, duties or

3 responsibilities, or that such person had a reasonable basis

4 for believing occurred within the scope of Commission

5 employment, duties or responsibilities, provided, that the

6 actual or alleged act, error or omission did not result from

7 the intentional or willful and wanton misconduct of that

8 person.

9 Article VI. MEETINGS AND ACTS OF THE COMMISSION

10 1. The Commission shall meet and take such actions as are

11 consistent with the provisions of this Compact and the Bylaws.

12 2. Each Member of the Commission shall have the right and

13 power to cast a vote to which that Compacting State is entitled

14 and to participate in the business and affairs of the

15 Commission. A Member shall vote in person or by such other

16 means as provided in the Bylaws. The Bylaws may provide for

17 Members' participation in meetings by telephone or other means

18 of communication.

19 3. The Commission shall meet at least once during each

20 calendar year. Additional meetings shall be held as set forth

21 in the Bylaws.

22 Article VII. RULES & OPERATING PROCEDURES: RULEMAKING

23 FUNCTIONS OF THE COMMISSION AND OPTING OUT OF UNIFORM

24 STANDARDS

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1 1. Rulemaking Authority. The Commission shall promulgate

2 reasonable Rules, including Uniform Standards, and Operating

3 Procedures in order to effectively and efficiently achieve the

4 purposes of this Compact. Notwithstanding the foregoing, in

5 the event the Commission exercises its rulemaking authority in

6 a manner that is beyond the scope of the purposes of this Act,

7 or the powers granted hereunder, then such an action by the

8 Commission shall be invalid and have no force and effect.

9 2. Rulemaking Procedure. Rules and Operating Procedures

10 shall be made pursuant to a rulemaking process that conforms

11 to the Model State Administrative Procedure Act of 1981 as

12 amended, as may be appropriate to the operations of the

13 Commission. Before the Commission adopts a Uniform Standard,

14 the Commission shall give written notice to the relevant state

15 legislative committee(s) in each Compacting State responsible

16 for insurance issues of its intention to adopt the Uniform

17 Standard. The Commission in adopting a Uniform Standard shall

18 consider fully all submitted materials and issue a concise

19 explanation of its decision.

20 3. Effective Date and Opt Out of a Uniform Standard. A

21 Uniform Standard shall become effective ninety (90) days after

22 its promulgation by the Commission or such later date as the

23 Commission may determine; provided, however, that a Compacting

24 State may opt out of a Uniform Standard as provided in this

25 Article. "Opt out" shall be defined as any action by a

26 Compacting State to decline to adopt or participate in a

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1 promulgated Uniform Standard. All other Rules and Operating

2 Procedures, and amendments thereto, shall become effective as

3 of the date specified in each Rule, Operating Procedure or

4 amendment.

5 4. Opt Out Procedure. A Compacting State may opt out of a

6 Uniform Standard, either by legislation or regulation duly

7 promulgated by the Insurance Department under the Compacting

8 State's Administrative Procedure Act. If a Compacting State

9 elects to opt out of a Uniform Standard by regulation, it must

10 (a) give written notice to the Commission no later than ten

11 (10) business days after the Uniform Standard is promulgated,

12 or at the time the State becomes a Compacting State and (b)

13 find that the Uniform Standard does not provide reasonable

14 protections to the citizens of the State, given the conditions

15 in the State. The Commissioner shall make specific findings of

16 fact and conclusions of law, based on a preponderance of the

17 evidence, detailing the conditions in the State which warrant

18 a departure from the Uniform Standard and determining that the

19 Uniform Standard would not reasonably protect the citizens of

20 the State. The Commissioner must consider and balance the

21 following factors and find that the conditions in the State

22 and needs of the citizens of the State outweigh: (i) the intent

23 of the legislature to participate in, and the benefits of, an

24 interstate agreement to establish national uniform consumer

25 protections for the Products subject to this Act; and (ii) the

26 presumption that a Uniform Standard adopted by the Commission

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1 provides reasonable protections to consumers of the relevant

2 Product.

3 Notwithstanding the foregoing, a Compacting State may, at

4 the time of its enactment of this Compact, prospectively opt

5 out of all Uniform Standards involving long-term care

6 insurance products by expressly providing for such opt out in

7 the enacted Compact, and such an opt out shall not be treated

8 as a material variance in the offer or acceptance of any State

9 to participate in this Compact. Such an opt out shall be

10 effective at the time of enactment of this Compact by the

11 Compacting State and shall apply to all existing Uniform

12 Standards involving long-term care insurance products and

13 those subsequently promulgated.

14 5. Effect of Opt Out. If a Compacting State elects to opt

15 out of a Uniform Standard, the Uniform Standard shall remain

16 applicable in the Compacting State electing to opt out until

17 such time the opt out legislation is enacted into law or the

18 regulation opting out becomes effective.

19 Once the opt out of a Uniform Standard by a Compacting

20 State becomes effective as provided under the laws of that

21 State, the Uniform Standard shall have no further force and

22 effect in that State unless and until the legislation or

23 regulation implementing the opt out is repealed or otherwise

24 becomes ineffective under the laws of the State. If a

25 Compacting State opts out of a Uniform Standard after the

26 Uniform Standard has been made effective in that State, the

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1 opt out shall have the same prospective effect as provided

2 under Article XIV for withdrawals.

3 6. Stay of Uniform Standard. If a Compacting State has

4 formally initiated the process of opting out of a Uniform

5 Standard by regulation, and while the regulatory opt out is

6 pending, the Compacting State may petition the Commission, at

7 least fifteen (15) days before the effective date of the

8 Uniform Standard, to stay the effectiveness of the Uniform

9 Standard in that State. The Commission may grant a stay if it

10 determines the regulatory opt out is being pursued in a

11 reasonable manner and there is a likelihood of success. If a

12 stay is granted or extended by the Commission, the stay or

13 extension thereof may postpone the effective date by up to

14 ninety (90) days, unless affirmatively extended by the

15 Commission; provided, a stay may not be permitted to remain in

16 effect for more than one (1) year unless the Compacting State

17 can show extraordinary circumstances which warrant a

18 continuance of the stay, including, but not limited to, the

19 existence of a legal challenge which prevents the Compacting

20 State from opting out. A stay may be terminated by the

21 Commission upon notice that the rulemaking process has been

22 terminated.

23 7. Not later than thirty (30) days after a Rule or

24 Operating Procedure is promulgated, any person may file a

25 petition for judicial review of the Rule or Operating

26 Procedure; provided, that the filing of such a petition shall

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1 not stay or otherwise prevent the Rule or Operating Procedure

2 from becoming effective unless the court finds that the

3 petitioner has a substantial likelihood of success. The court

4 shall give deference to the actions of the Commission

5 consistent with applicable law and shall not find the Rule or

6 Operating Procedure to be unlawful if the Rule or Operating

7 Procedure represents a reasonable exercise of the Commission's

8 authority.

9 Article VIII. COMMISSION RECORDS AND ENFORCEMENT

10 1. The Commission shall promulgate Rules establishing

11 conditions and procedures for public inspection and copying of

12 its information and official records, except such information

13 and records involving the privacy of individuals and insurers'

14 trade secrets. The Commission may promulgate additional Rules

15 under which it may make available to federal and state

16 agencies, including law enforcement agencies, records and

17 information otherwise exempt from disclosure, and may enter

18 into agreements with such agencies to receive or exchange

19 information or records subject to nondisclosure and

20 confidentiality provisions.

21 2. Except as to privileged records, data and information,

22 the laws of any Compacting State pertaining to confidentiality

23 or nondisclosure shall not relieve any Compacting State

24 Commissioner of the duty to disclose any relevant records,

25 data or information to the Commission; provided, that

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1 disclosure to the Commission shall not be deemed to waive or

2 otherwise affect any confidentiality requirement; and further

3 provided, that, except as otherwise expressly provided in this

4 Act, the Commission shall not be subject to the Compacting

5 State's laws pertaining to confidentiality and nondisclosure

6 with respect to records, data and information in its

7 possession. Confidential information of the Commission shall

8 remain confidential after such information is provided to any

9 Commissioner.

10 3. The Commission shall monitor Compacting States for

11 compliance with duly adopted Bylaws, Rules, including Uniform

12 Standards, and Operating Procedures. The Commission shall

13 notify any non-complying Compacting State in writing of its

14 noncompliance with Commission Bylaws, Rules or Operating

15 Procedures. If a non-complying Compacting State fails to

16 remedy its noncompliance within the time specified in the

17 notice of noncompliance, the Compacting State shall be deemed

18 to be in default as set forth in Article XIV.

19 4. The Commissioner of any State in which an Insurer is

20 authorized to do business, or is conducting the business of

21 insurance, shall continue to exercise his or her authority to

22 oversee the market regulation of the activities of the Insurer

23 in accordance with the provisions of the State's law. The

24 Commissioner's enforcement of compliance with the Compact is

25 governed by the following provisions:

26 a. With respect to the Commissioner's market regulation of

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1 a Product or Advertisement that is approved or certified to

2 the Commission, the content of the Product or Advertisement

3 shall not constitute a violation of the provisions, standards

4 or requirements of the Compact except upon a final order of the

5 Commission, issued at the request of a Commissioner after

6 prior notice to the Insurer and an opportunity for hearing

7 before the Commission.

8 b. Before a Commissioner may bring an action for violation

9 of any provision, standard or requirement of the Compact

10 relating to the content of an Advertisement not approved or

11 certified to the Commission, the Commission, or an authorized

12 Commission officer or employee, must authorize the action.

13 However, authorization pursuant to this Paragraph does not

14 require notice to the Insurer, opportunity for hearing or

15 disclosure of requests for authorization or records of the

16 Commission's action on such requests.

17 Article IX. DISPUTE RESOLUTION

18 The Commission shall attempt, upon the request of a

19 Member, to resolve any disputes or other issues that are

20 subject to this Compact and which may arise between two or more

21 Compacting States, or between Compacting States and

22 Non-compacting States, and the Commission shall promulgate an

23 Operating Procedure providing for resolution of such disputes.

24 Article X. PRODUCT FILING AND APPROVAL

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1 1. Insurers and Third-Party Filers seeking to have a

2 Product approved by the Commission shall file the Product

3 with, and pay applicable filing fees to, the Commission.

4 Nothing in this Act shall be construed to restrict or

5 otherwise prevent an insurer from filing its Product with the

6 insurance department in any State wherein the insurer is

7 licensed to conduct the business of insurance, and such filing

8 shall be subject to the laws of the States where filed.

9 2. The Commission shall establish appropriate filing and

10 review processes and procedures pursuant to Commission Rules

11 and Operating Procedures. Notwithstanding any provision herein

12 to the contrary, the Commission shall promulgate Rules to

13 establish conditions and procedures under which the Commission

14 will provide public access to Product filing information. In

15 establishing such Rules, the Commission shall consider the

16 interests of the public in having access to such information,

17 as well as protection of personal medical and financial

18 information and trade secrets, that may be contained in a

19 Product filing or supporting information.

20 3. Any Product approved by the Commission may be sold or

21 otherwise issued in those Compacting States for which the

22 Insurer is legally authorized to do business.

23 Article XI. REVIEW OF COMMISSION DECISIONS REGARDING FILINGS

24 1. Not later than thirty (30) days after the Commission

25 has given notice of a disapproved Product or Advertisement

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1 filed with the Commission, the Insurer or Third Party Filer

2 whose filing was disapproved may appeal the determination to a

3 review panel appointed by the Commission. The Commission shall

4 promulgate Rules to establish procedures for appointing such

5 review panels and provide for notice and hearing. An

6 allegation that the Commission, in disapproving a Product or

7 Advertisement filed with the Commission, acted arbitrarily,

8 capriciously, or in a manner that is an abuse of discretion or

9 otherwise not in accordance with the law, is subject to

10 judicial review in accordance with Article III, section 5.

11 2. The Commission shall have authority to monitor, review

12 and reconsider Products and Advertisement subsequent to their

13 filing or approval upon a finding that the product does not

14 meet the relevant Uniform Standard. Where appropriate, the

15 Commission may withdraw or modify its approval after proper

16 notice and hearing, subject to the appeal process in section 1

17 above.

18 Article XII. FINANCE

19 1. The Commission shall pay or provide for the payment of

20 the reasonable expenses of its establishment and organization.

21 To fund the cost of its initial operations, the Commission may

22 accept contributions and other forms of funding from the

23 National Association of Insurance Commissioners, Compacting

24 States and other sources. Contributions and other forms of

25 funding from other sources shall be of such a nature that the

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1 independence of the Commission concerning the performance of

2 its duties shall not be compromised.

3 2. The Commission shall collect a filing fee from each

4 Insurer and Third Party Filer filing a product with the

5 Commission to cover the cost of the operations and activities

6 of the Commission and its staff in a total amount sufficient to

7 cover the Commission's annual budget.

8 3. The Commission's budget for a fiscal year shall not be

9 approved until it has been subject to notice and comment as set

10 forth in Article VII of this Compact.

11 4. The Commission shall be exempt from all taxation in and

12 by the Compacting States.

13 5. The Commission shall not pledge the credit of any

14 Compacting State, except by and with the appropriate legal

15 authority of that Compacting State.

16 6. The Commission shall keep complete and accurate

17 accounts of all its internal receipts, including grants and

18 donations, and disbursements of all funds under its control.

19 The internal financial accounts of the Commission shall be

20 subject to the accounting procedures established under its

21 Bylaws. The financial accounts and reports including the

22 system of internal controls and procedures of the Commission

23 shall be audited annually by an independent certified public

24 accountant. Upon the determination of the Commission, but no

25 less frequently than every three (3) years, the review of the

26 independent auditor shall include a management and performance

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1 audit of the Commission. The Commission shall make an Annual

2 Report to the Governor and legislature of the Compacting

3 States, which shall include a report of the independent audit.

4 The Commission's internal accounts shall not be confidential

5 and such materials may be shared with the Commissioner of any

6 Compacting State upon request, provided, however, that any

7 work papers related to any internal or independent audit and

8 any information regarding the privacy of individuals and

9 insurers' proprietary information, including trade secrets,

10 shall remain confidential.

11 7. No Compacting State shall have any claim to or

12 ownership of any property held by or vested in the Commission

13 or to any Commission funds held pursuant to the provisions of

14 this Compact.

15 Article XIII. COMPACTING STATES, EFFECTIVE DATE AND AMENDMENT

16 1. Any State is eligible to become a Compacting State.

17 2. The Compact shall become effective and binding upon

18 legislative enactment of the Compact into law by two

19 Compacting States; provided, the Commission shall become

20 effective for purposes of adopting Uniform Standards for,

21 reviewing, and giving approval or disapproval of, Products

22 filed with the Commission that satisfy applicable Uniform

23 Standards only after twenty-six (26) States are Compacting

24 States or, alternatively, by States representing greater than

25 forty percent (40%) of the premium volume for life insurance,

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1 annuity, disability income and long-term care insurance

2 products, based on records of the NAIC for the prior year.

3 Thereafter, it shall become effective and binding as to any

4 other Compacting State upon enactment of the Compact into law

5 by that State.

6 3. Amendments to the Compact may be proposed by the

7 Commission for enactment by the Compacting States. No

8 amendment shall become effective and binding upon the

9 Commission and the Compacting States unless and until all

10 Compacting States enact the amendment into law.

11 Article XIV. WITHDRAWAL, DEFAULT AND TERMINATION

12 1. Withdrawal.

13 a. Once effective, the Compact shall continue in force and

14 remain binding upon each and every Compacting State; provided,

15 that a Compacting State may withdraw from the Compact

16 ("Withdrawing State") by enacting a statute specifically

17 repealing the statute which enacted the Compact into law.

18 b. The effective date of withdrawal is the effective date

19 of the repealing statute. However, the withdrawal shall not

20 apply to any product filings approved or self-certified, or

21 any Advertisement of such products, on the date the repealing

22 statute becomes effective, except by mutual agreement of the

23 Commission and the Withdrawing State unless the approval is

24 rescinded by the Withdrawing State as provided in subsection

25 e. of this section.

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1 c. The Commissioner of the Withdrawing State shall

2 immediately notify the Management Committee in writing upon

3 the introduction of legislation repealing this Compact in the

4 Withdrawing State.

5 d. The Commission shall notify the other Compacting States

6 of the introduction of such legislation within ten (10) days

7 after its receipt of notice thereof.

8 e. The Withdrawing State is responsible for all

9 obligations, duties and liabilities incurred through the

10 effective date of withdrawal, including any obligations, the

11 performance of which extend beyond the effective date of

12 withdrawal, except to the extent those obligations may have

13 been released or relinquished by mutual agreement of the

14 Commission and the Withdrawing State. The Commission's

15 approval of Products and Advertisement prior to the effective

16 date of withdrawal shall continue to be effective and be given

17 full force and effect in the Withdrawing State, unless

18 formally rescinded by the Withdrawing State in the same manner

19 as provided by the laws of the Withdrawing State for the

20 prospective disapproval of products or advertisement

21 previously approved under state law.

22 f. Reinstatement following withdrawal of any Compacting

23 State shall occur upon the effective date of the Withdrawing

24 State reenacting the Compact.

25 2. Default.

26 a. If the Commission determines that any Compacting State

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1 has at any time defaulted ("Defaulting State") in the

2 performance of any of its obligations or responsibilities

3 under this Compact, the Bylaws or duly promulgated Rules or

4 Operating Procedures, then, after notice and hearing as set

5 forth in the Bylaws, all rights, privileges and benefits

6 conferred by this Compact on the Defaulting State shall be

7 suspended from the effective date of default as fixed by the

8 Commission. The grounds for default include, but are not

9 limited to, failure of a Compacting State to perform its

10 obligations or responsibilities, and any other grounds

11 designated in Commission Rules. The Commission shall

12 immediately notify the Defaulting State in writing of the

13 Defaulting State's suspension pending a cure of the default.

14 The Commission shall stipulate the conditions and the time

15 period within which the Defaulting State must cure its

16 default. If the Defaulting State fails to cure the default

17 within the time period specified by the Commission, the

18 Defaulting State shall be terminated from the Compact and all

19 rights, privileges and benefits conferred by this Compact

20 shall be terminated from the effective date of termination.

21 b. Product approvals by the Commission or product

22 self-certifications, or any Advertisement in connection with

23 such product, that are in force on the effective date of

24 termination shall remain in force in the Defaulting State in

25 the same manner as if the Defaulting State had withdrawn

26 voluntarily pursuant to paragraph 1 of this Article.

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1 c. Reinstatement following termination of any Compacting

2 State requires a reenactment of the Compact.

3 3. Dissolution of Compact.

4 a. The Compact dissolves effective upon the date of the

5 withdrawal or default of the Compacting State which reduces

6 membership in the Compact to one Compacting State.

7 b. Upon the dissolution of this Compact, the Compact

8 becomes null and void and shall be of no further force or

9 effect, and the business and affairs of the Commission shall

10 be wound up and any surplus funds shall be distributed in

11 accordance with the Bylaws.

12 Article XV. SEVERABILITY AND CONSTRUCTION

13 1. The provisions of this Compact shall be severable; and

14 if any phrase, clause, sentence or provision is deemed

15 unenforceable, the remaining provisions of the Compact shall

16 be enforceable.

17 2. The provisions of this Compact shall be liberally

18 construed to effectuate its purposes.

19 Article XVI. BINDING EFFECT OF COMPACT AND OTHER LAWS

20 1. Other Laws.

21 a. Nothing herein prevents the enforcement of any other

22 law of a Compacting State, except as provided in paragraph b of

23 this Article.

24 b. For any Product approved or certified to the

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1 Commission, the Rules, Uniform Standards and any other

2 requirements of the Commission shall constitute the exclusive

3 provisions applicable to the content, approval and

4 certification of such Products. For Advertisement that is

5 subject to the Commission's authority, any Rule, Uniform

6 Standard or other requirement of the Commission which governs

7 the content of the Advertisement shall constitute the

8 exclusive provision that a Commissioner may apply to the

9 content of the Advertisement. Notwithstanding the foregoing,

10 no action taken by the Commission shall abrogate or restrict:

11 (i) the access of any person to state courts; (ii) remedies

12 available under state law related to breach of contract, tort,

13 or other laws not specifically directed to the content of the

14 Product; (iii) state law relating to the construction of

15 insurance contracts; or (iv) the authority of the attorney

16 general of the state, including but not limited to maintaining

17 any actions or proceedings, as authorized by law.

18 c. All insurance products filed with individual States

19 shall be subject to the laws of those States.

20 2. Binding Effect of this Compact.

21 a. All lawful actions of the Commission, including all

22 Rules and Operating Procedures promulgated by the Commission,

23 are binding upon the Compacting States.

24 b. All agreements between the Commission and the

25 Compacting States are binding in accordance with their terms.

26 c. Upon the request of a party to a conflict over the

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1 meaning or interpretation of Commission actions, and upon a

2 majority vote of the Compacting States, the Commission may

3 issue advisory opinions regarding the meaning or

4 interpretation in dispute.

5 d. In the event any provision of this Compact exceeds the

6 constitutional limits imposed on the legislature of any

7 Compacting State, the obligations, duties, powers or

8 jurisdiction sought to be conferred by that provision upon the

9 Commission shall be ineffective as to that Compacting State,

10 and those obligations, duties, powers or jurisdiction shall

11 remain in the Compacting State and shall be exercised by the

12 agency thereof to which those obligations, duties, powers or

13 jurisdiction are delegated by law in effect at the time this

14 Compact becomes effective.

15 (Source: P.A. 96-1481, eff. 11-29-10.)

16 Section 40. The Counties Code is amended by changing

17 Section 3-12007 as follows:

18 (55 ILCS 5/3-12007) (from Ch. 34, par. 3-12007)

19 Sec. 3-12007. Proposed rules for classified service. (a)

20 The Director of Personnel shall prepare and submit to the

21 commission proposed rules for the classified service. The

22 director shall give at least 10 days' notice to the heads of

23 all departments or agencies affected and they shall be given

24 an opportunity, upon their request, to appear before the

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1 commission to express their views thereon before action is

2 taken by the commission.

3 (b) The rules, as adopted pursuant to subsection (a) of

4 Section 3-12005 shall provide for:

5 (1) preparation, maintenance and revision of a position

6 classification plan for all positions in the classified

7 service, based upon the similarity of duties performed and

8 responsibilities assumed, so that the same qualifications may

9 reasonably be required and the same schedule of pay may be

10 applied to all positions in the same class. Each position

11 authorized by the Board shall be allocated by the director to

12 the proper class and assigned to the appropriate pay range for

13 that class.

14 (2) promotion which shall give appropriate consideration

15 to the applicant's qualifications, record of performance,

16 seniority, and conduct. Vacancies shall be filled by promotion

17 whenever practicable and in the best interest of the county

18 service, and preference may be given to employees within the

19 department in which the vacancy occurs.

20 (3) open competitive examinations to determine the

21 relative fitness of applicants for the respective competitive

22 positions.

23 (4) competitive selection of employees for all classes in

24 the classified service.

25 (5) establishment of lists of eligibles for appointment

26 and promotion, upon which lists shall be placed the names of

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1 successful candidates in the order of their relative

2 excellence in the respective examinations. The duration of

3 eligible lists for initial appointment shall be for no more

4 than one year unless extended by the director for not more than

5 one additional year; lists of eligibles for promotion shall be

6 maintained for as long as the tests on which they are based are

7 considered valid by the director.

8 (6) certification by the director to the appointing

9 authorities of not more than the top 5 names from the list of

10 eligibles for a single vacancy.

11 (7) rejection of candidates who do not comply with

12 reasonable job requirements in regard to such factors as age,

13 physical condition, training and experience, or who are

14 addicted to alcohol or narcotics or have been guilty of

15 infamous or disgraceful conduct or are illegal noncitizens

16 ~~aliens~~.

17 (8) periods of probationary employment. During the initial

18 probation period following appointment any employee may be

19 discharged or demoted without charges or hearing except that

20 any applicant or employee, regardless of status, who has

21 reason to believe that he/she has been discriminated against

22 because of religious opinions or affiliation, or race, sex, or

23 national origin in any personnel action may appeal to the

24 commission in accordance with the provisions of this Division

25 or in appropriate rules established by the commission pursuant

26 to subsection (a) of Section 3-12005.

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1 (9) provisional employment without competitive

2 examinations when there is no appropriate eligible list

3 available. No person hired as a provisional employee shall

4 continue on the county payroll longer than 6 months per

5 calendar year nor shall successive provisional appointments be

6 allowed.

7 (10) transfer from a position in one department to a

8 position in another department involving similar

9 qualifications, duties, responsibilities and salary.

10 (11) procedures for authorized reinstatement within one

11 year of persons who resign in good standing.

12 (12) layoff by reason of lack of funds or work or abolition

13 of the position, or material changes in duties or

14 organization, and for the layoff of nontenured employees

15 first, and for the reemployment of permanent employees so laid

16 off, giving consideration in both layoff and reemployment to

17 performance record and seniority in service.

18 (13) keeping records of performance of all employees in

19 the classified service.

20 (14) suspension, demotion or dismissal of an employee for

21 misconduct, inefficiency, incompetence, insubordination,

22 malfeasance or other unfitness to render effective service and

23 for the investigation and hearing of appeals of any employee

24 recommended for suspension, demotion or dismissal by a

25 department head for any of the foregoing reasons.

26 (15) establishment of a plan for resolving employee

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1 grievances and complaints, including an appeals procedure.

2 (16) hours of work, holidays and attendance regulations,

3 and for annual, sick and special leaves of absence, with or

4 without pay, or at reduced pay.

5 (17) development of employee morale, safety and training

6 programs.

7 (18) establishment of a period of probation, the length of

8 which shall be determined by the complexity of the work

9 involved, but which shall not exceed one year without special

10 written approval from the commission.

11 (19) such other rules, not inconsistent with this

12 Division, as may be proper and necessary for its enforcement.

13 (Source: P.A. 86-962.)

14 Section 45. The Illinois Municipal Code is amended by

15 changing Section 11-74.2-14 as follows:

16 (65 ILCS 5/11-74.2-14) (from Ch. 24, par. 11-74.2-14)

17 Sec. 11-74.2-14. The corporate authorities may at any time

18 transfer and sell the fee simple title, or any lesser estate

19 that they acquired to all or any part of the real property

20 within the redevelopment area. No such sale shall be

21 inconsistent with the provisions of paragraph (e) of Section

22 11-74.2-8.

23 Such sales and transfers may be made to:

24 (1) Any individual, association or corporation, organized

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1 under the laws of this State or of any other State or country,

2 which may legally make such investments in this State,

3 including foreign and non-domestic ~~alien~~insurance companies,

4 as defined in Section 2 of the "Illinois Insurance Code"; or

5 (2) Any body politic and corporate, public corporation or

6 private individual, corporation, association or interest

7 empowered by law to acquire, develop and use such real

8 property for such uses, public or private, as are in

9 accordance with the final redevelopment plan.

10 To provide that the real property sold by the corporate

11 authorities is used in accordance with the final redevelopment

12 plan, the corporate authorities shall inquire into and satisfy

13 themselves concerning the financial ability of the purchaser

14 to complete the redevelopment in accordance with the

15 redevelopment plan and shall require the purchaser to execute

16 in writing such undertakings as the corporate authorities may

17 deem necessary to obligate the purchaser to:

18 (1) Use the land for the purposes designated in the

19 approved plan;

20 (2) Commence and complete the building of the improvements

21 or the renovation of the property within the periods of time

22 which the corporate authorities fix as reasonable; and

23 (3) Comply with such other conditions as are necessary to

24 carry out the purposes of the final redevelopment plan.

25 Any redevelopment area may be sold either as an entirety

26 or in such parcels as the corporate authorities may select. It

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1 is not necessary that title be acquired to all real property

2 within the redevelopment area before the sale of a part

3 thereof may be made as provided in this Section. All real

4 property sold shall be sold at its use value which may be less

5 than its acquisition cost. For purposes of this Division, use

6 value represents the value at which the corporate authorities

7 determine that such land should be made available in order

8 that it may be developed or redeveloped for the purposes

9 specified in the final redevelopment plan.

10 (Source: P.A. 81-3.)

11 Section 50. The Metropolitan Water Reclamation District

12 Act is amended by changing Section 11.15 as follows:

13 (70 ILCS 2605/11.15) (from Ch. 42, par. 331.15)

14 Sec. 11.15. No person shall be employed upon contracts for

15 work to be done by any such sanitary district unless he or she

16 is a citizen of the United States, a national of the United

17 States under Section 1401 of Title 8 of the United States Code,

18 a person ~~an alien~~ lawfully admitted for permanent residence

19 under Section 1101 of Title 8 of the United States Code, an

20 individual who has been granted asylum under Section 1158 of

21 Title 8 of the United States Code, or an individual who is

22 otherwise legally authorized to work in the United States.

23 (Source: P.A. 98-280, eff. 8-9-13; 99-231, eff. 8-3-15.)

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1 Section 55. The Board of Higher Education Act is amended

2 by changing Section 9.16 as follows:

3 (110 ILCS 205/9.16) (from Ch. 144, par. 189.16)

4 Sec. 9.16. Underrepresentation of certain groups in higher

5 education. To require public institutions of higher education

6 to develop and implement methods and strategies to increase

7 the participation of minorities, women and individuals with

8 disabilities who are traditionally underrepresented in

9 education programs and activities. For the purpose of this

10 Section, minorities shall mean persons who are citizens of the

11 United States or lawful permanent residentnoncitizens ~~aliens~~

12 of the United States and who are any of the following:

13 (1) American Indian or Alaska Native (a person having

14 origins in any of the original peoples of North and South

15 America, including Central America, and who maintains

16 tribal affiliation or community attachment).

17 (2) Asian (a person having origins in any of the

18 original peoples of the Far East, Southeast Asia, or the

19 Indian subcontinent, including, but not limited to,

20 Cambodia, China, India, Japan, Korea, Malaysia, Pakistan,

21 the Philippine Islands, Thailand, and Vietnam).

22 (3) Black or African American (a person having origins

23 in any of the black racial groups of Africa).

24 (4) Hispanic or Latino (a person of Cuban, Mexican,

25 Puerto Rican, South or Central American, or other Spanish

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1 culture or origin, regardless of race).

2 (5) Native Hawaiian or Other Pacific Islander (a

3 person having origins in any of the original peoples of

4 Hawaii, Guam, Samoa, or other Pacific Islands).

5 The Board shall adopt any rules necessary to administer

6 this Section. The Board shall also do the following:

7 (a) require all public institutions of higher education to

8 develop and submit plans for the implementation of this

9 Section;

10 (b) conduct periodic review of public institutions of

11 higher education to determine compliance with this Section;

12 and if the Board finds that a public institution of higher

13 education is not in compliance with this Section, it shall

14 notify the institution of steps to take to attain compliance;

15 (c) provide advice and counsel pursuant to this Section;

16 (d) conduct studies of the effectiveness of methods and

17 strategies designed to increase participation of students in

18 education programs and activities in which minorities, women

19 and individuals with disabilities are traditionally

20 underrepresented, and monitor the success of students in such

21 education programs and activities;

22 (e) encourage minority student recruitment and retention

23 in colleges and universities. In implementing this paragraph,

24 the Board shall undertake but need not be limited to the

25 following: the establishment of guidelines and plans for

26 public institutions of higher education for minority student

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1 recruitment and retention, the review and monitoring of

2 minority student programs implemented at public institutions

3 of higher education to determine their compliance with any

4 guidelines and plans so established, the determination of the

5 effectiveness and funding requirements of minority student

6 programs at public institutions of higher education, the

7 dissemination of successful programs as models, and the

8 encouragement of cooperative partnerships between community

9 colleges and local school attendance centers which are

10 experiencing difficulties in enrolling minority students in

11 four-year colleges and universities;

12 (f) mandate all public institutions of higher education to

13 submit data and information essential to determine compliance

14 with this Section. The Board shall prescribe the format and

15 the date for submission of this data and any other education

16 equity data; and

17 (g) report to the General Assembly and the Governor

18 annually with a description of the plans submitted by each

19 public institution of higher education for implementation of

20 this Section, including financial data relating to the most

21 recent fiscal year expenditures for specific minority

22 programs, the effectiveness of such plans and programs and the

23 effectiveness of the methods and strategies developed by the

24 Board in meeting the purposes of this Section, the degree of

25 compliance with this Section by each public institution of

26 higher education as determined by the Board pursuant to its

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1 periodic review responsibilities, and the findings made by the

2 Board in conducting its studies and monitoring student success

3 as required by paragraph d) of this Section. With respect to

4 each public institution of higher education such report also

5 shall include, but need not be limited to, information with

6 respect to each institution's minority program budget

7 allocations; minority student admission, retention and

8 graduation statistics; admission, retention, and graduation

9 statistics of all students who are the first in their

10 immediate family to attend an institution of higher education;

11 number of financial assistance awards to undergraduate and

12 graduate minority students; and minority faculty

13 representation. This paragraph shall not be construed to

14 prohibit the Board from making, preparing or issuing

15 additional surveys or studies with respect to minority

16 education in Illinois.

17 (Source: P.A. 102-465, eff. 1-1-22.)

18 Section 60. The Dental Student Grant Act is amended by

19 changing Section 3.06 as follows:

20 (110 ILCS 925/3.06) (from Ch. 144, par. 1503.06)

21 Sec. 3.06. "Eligible dental student" means a person who

22 meets all of the following qualifications:

23 (a) That the individual is a resident of this State and a

24 citizen or lawful permanent residentnoncitizen ~~alien~~ of the

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1 United States;

2 (b) That the individual has been accepted in a dental

3 school located in Illinois;

4 (c) That the individual exhibits financial need as

5 determined by the Department;

6 (d) That the individual has earned an educational diploma

7 at an institution of education located in this State or has

8 been a resident of the State for no less than 3 years prior to

9 applying for the grant;

10 (e) That the individual is a member of a racial minority as

11 defined in Section 3.07; and

12 (f) That the individual meets other qualifications which

13 shall be established by the Department.

14 (Source: P.A. 87-665.)

15 Section 65. The Diversifying Higher Education Faculty in

16 Illinois Act is amended by changing Sections 2 and 7 as

17 follows:

18 (110 ILCS 930/2) (from Ch. 144, par. 2302)

19 Sec. 2. Definitions. As used in this Act, unless the

20 context otherwise requires:

21 "Board" means the Board of Higher Education.

22 "DFI" means the Diversifying Higher Education Faculty in

23 Illinois Program of financial assistance to minorities who are

24 traditionally underrepresented as participants in

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1 postsecondary education. The program shall assist them in

2 pursuing a graduate or professional degree and shall also

3 assist program graduates to find employment at an Illinois

4 institution of higher education, including a community

5 college, in a faculty or staff position.

6 "Program Board" means the entity created to administer the

7 grant program authorized by this Act.

8 "Qualified institution of higher education" means a

9 qualifying publicly or privately operated educational

10 institution located within Illinois (i) that offers

11 instruction leading toward or prerequisite to an academic or

12 professional degree beyond the baccalaureate degree, excluding

13 theological schools, and (ii) that is authorized to operate in

14 the State of Illinois.

15 "Racial minority" means a person who is a citizen of the

16 United States or a lawful permanent residentnoncitizen ~~alien~~

17 of the United States and who is any of the following:

18 (1) American Indian or Alaska Native (a person having

19 origins in any of the original peoples of North and South

20 America, including Central America, and who maintains

21 tribal affiliation or community attachment).

22 (2) Asian (a person having origins in any of the

23 original peoples of the Far East, Southeast Asia, or the

24 Indian subcontinent, including, but not limited to,

25 Cambodia, China, India, Japan, Korea, Malaysia, Pakistan,

26 the Philippine Islands, Thailand, and Vietnam).

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1 (3) Black or African American (a person having origins

2 in any of the black racial groups of Africa).

3 (4) Hispanic or Latino (a person of Cuban, Mexican,

4 Puerto Rican, South or Central American, or other Spanish

5 culture or origin, regardless of race).

6 (5) Native Hawaiian or Other Pacific Islander (a

7 person having origins in any of the original peoples of

8 Hawaii, Guam, Samoa, or other Pacific Islands).

9 (Source: P.A. 102-465, eff. 1-1-22.)

10 (110 ILCS 930/7) (from Ch. 144, par. 2307)

11 Sec. 7. Eligibility for DFI grants. An individual is

12 eligible for an award under the provisions of this Act when the

13 Program Board finds:

14 (a) That the individual is a resident of this State

15 and a citizen or lawful permanent residentnoncitizen

16 ~~alien~~ of the United States;

17 (b) That the individual is a member of a racial

18 minority as defined under the terms of this Act;

19 (c) That the individual has earned any educational

20 diploma at an institution of education located in this

21 State, or is a resident of the State for no less than three

22 years prior to applying for the grant, and the individual

23 must hold a baccalaureate degree from an institution of

24 higher learning;

25 (d) That the individual's financial resources are such

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1 that, in the absence of a DFI grant, the individual will be

2 prevented from pursuing a graduate or professional degree

3 at a qualified institution of higher education of his or

4 her choice;

5 (e) That the individual has above average academic

6 ability to pursue a graduate or professional degree; and

7 (f) That the individual meets other qualifications

8 which shall be established by the Program Board.

9 Grant funds shall be awarded only to those persons

10 pursuing a graduate or professional degree program at a

11 qualified institution of higher education.

12 The Board shall by rule promulgate, pursuant to the

13 Illinois Administrative Procedure Act, precise standards to be

14 used by the Program Board to determine whether a program

15 applicant has above average academic ability to pursue a

16 graduate or professional degree.

17 (Source: P.A. 93-862, eff. 8-4-04.)

18 Section 70. The Higher Education Student Assistance Act is

19 amended by changing Sections 65.50 and 65.110 as follows:

20 (110 ILCS 947/65.50)

21 Sec. 65.50. Teacher training full-time undergraduate

22 scholarships.

23 (a) Five hundred new scholarships shall be provided each

24 year for qualified high school students or high school

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1 graduates who desire to pursue full-time undergraduate studies

2 in teacher education at public or private universities or

3 colleges and community colleges in this State. The Commission,

4 in accordance with rules and regulations promulgated for this

5 program, shall provide funding and shall designate each year's

6 new recipients from among those applicants who qualify for

7 consideration by showing:

8 (1) that he or she is a resident of this State and a

9 citizen or a lawful permanent residentnoncitizen ~~alien~~ of

10 the United States;

11 (2) that he or she has successfully completed the

12 program of instruction at an approved high school or is a

13 student in good standing at such a school and is engaged in

14 a program that will be completed by the end of the academic

15 year, and in either event that his or her cumulative grade

16 average was or is in the upper 1/4 of the high school

17 class;

18 (3) that he or she has superior capacity to profit by a

19 higher education; and

20 (4) that he or she agrees to teach in Illinois schools

21 in accordance with subsection (b).

22 No rule or regulation promulgated by the State Board of

23 Education prior to the effective date of this amendatory Act

24 of 1993 pursuant to the exercise of any right, power, duty,

25 responsibility or matter of pending business transferred from

26 the State Board of Education to the Commission under this

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1 Section shall be affected thereby, and all such rules and

2 regulations shall become the rules and regulations of the

3 Commission until modified or changed by the Commission in

4 accordance with law.

5 If in any year the number of qualified applicants exceeds

6 the number of scholarships to be awarded, the Commission shall

7 give priority in awarding scholarships to students in

8 financial need. The Commission shall consider factors such as

9 the applicant's family income, the size of the applicant's

10 family and the number of other children in the applicant's

11 family attending college in determining the financial need of

12 the individual.

13 Unless otherwise indicated, these scholarships shall be

14 good for a period of up to 4 years while the recipient is

15 enrolled for residence credit at a public or private

16 university or college or at a community college. The

17 scholarship shall cover tuition, fees and a stipend of $1,500

18 per year. For purposes of calculating scholarship awards for

19 recipients attending private universities or colleges, tuition

20 and fees for students at private colleges and universities

21 shall not exceed the average tuition and fees for students at

22 4-year public colleges and universities for the academic year

23 in which the scholarship is made.

24 (b) Upon graduation from or termination of enrollment in a

25 teacher education program, any person who accepted a

26 scholarship under the undergraduate scholarship program

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1 continued by this Section, including persons whose graduation

2 or termination of enrollment occurred prior to the effective

3 date of this amendatory Act of 1993, shall teach in any school

4 in this State for at least 4 of the 7 years immediately

5 following his or her graduation or termination. If the

6 recipient spends up to 4 years in military service before or

7 after he or she graduates, the period of military service

8 shall be excluded from the computation of that 7 year period. A

9 recipient who is enrolled full-time in an academic program

10 leading to a graduate degree in education shall have the

11 period of graduate study excluded from the computation of that

12 7 year period.

13 Any person who fails to fulfill the teaching requirement

14 shall pay to the Commission an amount equal to one-fourth of

15 the scholarship received for each unfulfilled year of the

16 4-year teaching requirement, together with interest at 8% per

17 year on that amount. However, this obligation to repay does

18 not apply when the failure to fulfill the teaching requirement

19 results from involuntarily leaving the profession due to a

20 decrease in the number of teachers employed by the school

21 board or a discontinuation of a type of teaching service under

22 Section 24-12 of the School Code or from the death or

23 adjudication as incompetent of the person holding the

24 scholarship. No claim for repayment may be filed against the

25 estate of such a decedent or incompetent.

26 Each person applying for such a scholarship shall be

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1 provided with a copy of this subsection at the time he or she

2 applies for the benefits of such scholarship.

3 (c) This Section is substantially the same as Sections

4 30-14.5 and 30-14.6 of the School Code, which are repealed by

5 this amendatory Act of 1993, and shall be construed as a

6 continuation of the teacher training undergraduate scholarship

7 program established by that prior law, and not as a new or

8 different teacher training undergraduate scholarship program.

9 The State Board of Education shall transfer to the Commission,

10 as the successor to the State Board of Education for all

11 purposes of administering and implementing the provisions of

12 this Section, all books, accounts, records, papers, documents,

13 contracts, agreements, and pending business in any way

14 relating to the teacher training undergraduate scholarship

15 program continued under this Section, and all scholarships at

16 any time awarded under that program by, and all applications

17 for any such scholarship at any time made to, the State Board

18 of Education shall be unaffected by the transfer to the

19 Commission of all responsibility for the administration and

20 implementation of the teacher training undergraduate

21 scholarship program continued under this Section. The State

22 Board of Education shall furnish to the Commission such other

23 information as the Commission may request to assist it in

24 administering this Section.

25 (Source: P.A. 88-228.)

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1 (110 ILCS 947/65.110)

2 Sec. 65.110. Post-Master of Social Work School Social Work

3 Professional Educator License scholarship.

4 (a) Subject to appropriation, beginning with awards for

5 the 2022-2023 academic year, the Commission shall award

6 annually up to 250 Post-Master of Social Work School Social

7 Work Professional Educator License scholarships to a person

8 who:

9 (1) holds a valid Illinois-licensed clinical social

10 work license or social work license;

11 (2) has obtained a master's degree in social work from

12 an approved program;

13 (3) is a United States citizen or eligible noncitizen;

14 and

15 (4) submits an application to the Commission for such

16 scholarship and agrees to take courses to obtain an

17 Illinois Professional Educator License with an endorsement

18 in School Social Work.

19 (b) If an appropriation for this Section for a given

20 fiscal year is insufficient to provide scholarships to all

21 qualified applicants, the Commission shall allocate the

22 appropriation in accordance with this subsection (b). If funds

23 are insufficient to provide all qualified applicants with a

24 scholarship as authorized by this Section, the Commission

25 shall allocate the available scholarship funds for that fiscal

26 year to qualified applicants who submit a complete application

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1 on or before a date specified by the Commission, based on the

2 following order of priority:

3 (1) firstly, to students who received a scholarship

4 under this Section in the prior academic year and who

5 remain eligible for a scholarship under this Section;

6 (2) secondly, to new, qualified applicants who are

7 members of a racial minority, as defined in subsection

8 (c); and

9 (3) finally, to other new, qualified applicants in

10 accordance with this Section.

11 (c) Scholarships awarded under this Section shall be

12 issued pursuant to rules adopted by the Commission. In

13 awarding scholarships, the Commission shall give priority to

14 those applicants who are members of a racial minority. Racial

15 minorities are underrepresented as school social workers in

16 elementary and secondary schools in this State, and the

17 General Assembly finds that it is in the interest of this State

18 to provide them with priority consideration for programs that

19 encourage their participation in this field and thereby foster

20 a profession that is more reflective of the diversity of

21 Illinois students and the parents they will serve. A more

22 reflective workforce in school social work allows improved

23 outcomes for students and a better utilization of services.

24 Therefore, the Commission shall give priority to those

25 applicants who are members of a racial minority. In this

26 subsection (c), "racial minority" means a person who is a

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1 citizen of the United States or a lawful permanent resident

2 noncitizen ~~alien~~ of the United States and who is:

3 (1) Black (a person having origins in any of the black

4 racial groups in Africa);

5 (2) Hispanic (a person of Spanish or Portuguese

6 culture with origins in Mexico, South or Central America,

7 or the Caribbean Islands, regardless of race);

8 (3) Asian American (a person having origins in any of

9 the original peoples of the Far East, Southeast Asia, the

10 Indian Subcontinent, or the Pacific Islands); or

11 (4) American Indian or Alaskan Native (a person having

12 origins in any of the original peoples of North America).

13 (d) Each scholarship shall be applied to the payment of

14 tuition and mandatory fees at the University of Illinois,

15 Southern Illinois University, Chicago State University,

16 Eastern Illinois University, Governors State University,

17 Illinois State University, Northeastern Illinois University,

18 Northern Illinois University, and Western Illinois University.

19 Each scholarship may be applied to pay tuition and mandatory

20 fees required to obtain an Illinois Professional Educator

21 License with an endorsement in School Social Work.

22 (e) The Commission shall make tuition and fee payments

23 directly to the qualified institution of higher learning that

24 the applicant attends.

25 (f) Any person who has accepted a scholarship under this

26 Section must, within one year after graduation or termination

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1 of enrollment in a Post-Master of Social Work Professional

2 Education License with an endorsement in School Social Work

3 program, begin working as a school social worker at a public or

4 nonpublic not-for-profit preschool, elementary school, or

5 secondary school located in this State for at least 2 of the 5

6 years immediately following that graduation or termination,

7 excluding, however, from the computation of that 5-year

8 period: (i) any time up to 3 years spent in the military

9 service, whether such service occurs before or after the

10 person graduates; (ii) the time that person is a person with a

11 temporary total disability for a period of time not to exceed 3

12 years, as established by the sworn affidavit of a qualified

13 physician; and (iii) the time that person is seeking and

14 unable to find full-time employment as a school social worker

15 at a State public or nonpublic not-for-profit preschool,

16 elementary school, or secondary school.

17 (g) If a recipient of a scholarship under this Section

18 fails to fulfill the work obligation set forth in subsection

19 (f), the Commission shall require the recipient to repay the

20 amount of the scholarships received, prorated according to the

21 fraction of the obligation not completed, at a rate of

22 interest equal to 5%, and, if applicable, reasonable

23 collection fees. The Commission is authorized to establish

24 rules relating to its collection activities for repayment of

25 scholarships under this Section. All repayments collected

26 under this Section shall be forwarded to the State Comptroller

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1 for deposit into this State's General Revenue Fund.

2 A recipient of a scholarship under this Section is not

3 considered to be in violation of the failure to fulfill the

4 work obligation under subsection (f) if the recipient (i)

5 enrolls on a full-time basis as a graduate student in a course

6 of study related to the field of social work at a qualified

7 Illinois institution of higher learning; (ii) is serving, not

8 in excess of 3 years, as a member of the armed services of the

9 United States; (iii) is a person with a temporary total

10 disability for a period of time not to exceed 3 years, as

11 established by the sworn affidavit of a qualified physician;

12 (iv) is seeking and unable to find full-time employment as a

13 school social worker at an Illinois public or nonpublic

14 not-for-profit preschool, elementary school, or secondary

15 school that satisfies the criteria set forth in subsection (f)

16 and is able to provide evidence of that fact; or (v) becomes a

17 person with a permanent total disability, as established by

18 the sworn affidavit of a qualified physician.

19 (Source: P.A. 102-621, eff. 1-1-22.)

20 Section 75. The Mental Health Graduate Education

21 Scholarship Act is amended by changing Section 20 as follows:

22 (110 ILCS 952/20)

23 Sec. 20. Scholarships.

24 (a) Beginning with the fall term of the 2009-2010 academic

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1 year, the Department, in accordance with rules adopted by it

2 for this program, shall provide scholarships to individuals

3 selected from among those applicants who qualify for

4 consideration by showing all of the following:

5 (1) That the individual has been a resident of this

6 State for at least one year prior to application and is a

7 citizen or a lawful permanent resident noncitizen ~~alien~~ of

8 the United States.

9 (2) That the individual enrolled in or accepted into a

10 mental health graduate program at an approved institution.

11 (3) That the individual agrees to meet the mental

12 health employment obligation.

13 (b) If in any year the number of qualified applicants

14 exceeds the number of scholarships to be awarded, the

15 Department shall, in consultation with the Advisory Council,

16 consider the following factors in granting priority in

17 awarding scholarships:

18 (1) Financial need, as shown on a standardized

19 financial needs assessment form used by an approved

20 institution.

21 (2) A student's merit, as shown through his or her

22 grade point average, class rank, and other academic and

23 extracurricular activities.

24 The Department may add to and further define these merit

25 criteria by rule.

26 (c) Unless otherwise indicated, scholarships shall be

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1 awarded to recipients at approved institutions for a period of

2 up to 2 years if the recipient is enrolled in a master's degree

3 program and up to 4 years if the recipient is enrolled in a

4 doctoral degree program.

5 (Source: P.A. 96-672, eff. 8-25-09.)

6 Section 80. The Nursing Education Scholarship Law is

7 amended by changing Sections 5 and 6.5 as follows:

8 (110 ILCS 975/5) (from Ch. 144, par. 2755)

9 Sec. 5. Nursing education scholarships. Beginning with the

10 fall term of the 2004-2005 academic year, the Department, in

11 accordance with rules and regulations promulgated by it for

12 this program, shall provide scholarships to individuals

13 selected from among those applicants who qualify for

14 consideration by showing:

15 (1) that he or she has been a resident of this State

16 for at least one year prior to application, and is a

17 citizen or a lawful permanent resident noncitizen~~alien~~ of

18 the United States;

19 (2) that he or she is enrolled in or accepted for

20 admission to an associate degree in nursing program,

21 hospital-based diploma in nursing program, baccalaureate

22 degree in nursing program, graduate degree in nursing

23 program, or practical nursing program at an approved

24 institution; and

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1 (3) that he or she agrees to meet the nursing

2 employment obligation.

3 If in any year the number of qualified applicants exceeds

4 the number of scholarships to be awarded, the Department

5 shall, in consultation with the Illinois Nursing Workforce

6 Center Advisory Board, consider the following factors in

7 granting priority in awarding scholarships:

8 (A) Financial need, as shown on a standardized

9 financial needs assessment form used by an approved

10 institution, of students who will pursue their

11 education on a full-time or close to full-time basis

12 and who already have a certificate in practical

13 nursing, a diploma in nursing, or an associate degree

14 in nursing and are pursuing a higher degree.

15 (B) A student's status as a registered nurse who

16 is pursuing a graduate degree in nursing to pursue

17 employment in an approved institution that educates

18 licensed practical nurses and that educates registered

19 nurses in undergraduate and graduate nursing programs.

20 (C) A student's merit, as shown through his or her

21 grade point average, class rank, and other academic

22 and extracurricular activities. The Department may add

23 to and further define these merit criteria by rule.

24 Unless otherwise indicated, scholarships shall be awarded

25 to recipients at approved institutions for a period of up to 2

26 years if the recipient is enrolled in an associate degree in

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1 nursing program, up to 3 years if the recipient is enrolled in

2 a hospital-based diploma in nursing program, up to 4 years if

3 the recipient is enrolled in a baccalaureate degree in nursing

4 program, up to 5 years if the recipient is enrolled in a

5 graduate degree in nursing program, and up to one year if the

6 recipient is enrolled in a certificate in practical nursing

7 program. At least 40% of the scholarships awarded shall be for

8 recipients who are pursuing baccalaureate degrees in nursing,

9 30% of the scholarships awarded shall be for recipients who

10 are pursuing associate degrees in nursing or a diploma in

11 nursing, 10% of the scholarships awarded shall be for

12 recipients who are pursuing a certificate in practical

13 nursing, and 20% of the scholarships awarded shall be for

14 recipients who are pursuing a graduate degree in nursing.

15 Beginning with the fall term of the 2021-2022 academic

16 year and continuing through the 2024-2025 academic year,

17 subject to appropriation from the Hospital Licensure Fund, in

18 addition to any other funds available to the Department for

19 such scholarships, the Department may award a total of

20 $500,000 annually in scholarships under this Section.

21 (Source: P.A. 102-641, eff. 8-27-21.)

22 (110 ILCS 975/6.5)

23 Sec. 6.5. Nurse educator scholarships.

24 (a) Beginning with the fall term of the 2009-2010 academic

25 year, the Department shall provide scholarships to individuals

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1 selected from among those applicants who qualify for

2 consideration by showing the following:

3 (1) that he or she has been a resident of this State

4 for at least one year prior to application and is a citizen

5 or a lawful permanent resident noncitizen ~~alien~~ of the

6 United States;

7 (2) that he or she is enrolled in or accepted for

8 admission to a graduate degree in nursing program at an

9 approved institution; and

10 (3) that he or she agrees to meet the nurse educator

11 employment obligation.

12 (b) If in any year the number of qualified applicants

13 exceeds the number of scholarships to be awarded under this

14 Section, the Department shall, in consultation with the

15 Illinois Nursing Workforce Center Advisory Board, consider the

16 following factors in granting priority in awarding

17 scholarships:

18 (1) Financial need, as shown on a standardized

19 financial needs assessment form used by an approved

20 institution, of students who will pursue their education

21 on a full-time or close to full-time basis and who already

22 have a diploma in nursing and are pursuing a higher

23 degree.

24 (2) A student's status as a registered nurse who is

25 pursuing a graduate degree in nursing to pursue employment

26 in an approved institution that educates licensed

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1 practical nurses and that educates registered nurses in

2 undergraduate and graduate nursing programs.

3 (3) A student's merit, as shown through his or her

4 grade point average, class rank, experience as a nurse,

5 including supervisory experience, experience as a nurse in

6 the United States military, and other academic and

7 extracurricular activities.

8 (c) Unless otherwise indicated, scholarships under this

9 Section shall be awarded to recipients at approved

10 institutions for a period of up to 3 years.

11 (d) Within 12 months after graduation from a graduate

12 degree in nursing program for nurse educators, any recipient

13 who accepted a scholarship under this Section shall begin

14 meeting the required nurse educator employment obligation. In

15 order to defer his or her continuous employment obligation, a

16 recipient must request the deferment in writing from the

17 Department. A recipient shall receive a deferment if he or she

18 notifies the Department, within 30 days after enlisting, that

19 he or she is spending up to 4 years in military service. A

20 recipient shall receive a deferment if he or she notifies the

21 Department, within 30 days after enrolling, that he or she is

22 enrolled in an academic program leading to a graduate degree

23 in nursing. The recipient must begin meeting the required

24 nurse educator employment obligation no later than 6 months

25 after the end of the deferment or deferments.

26 Any person who fails to fulfill the nurse educator

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1 employment obligation shall pay to the Department an amount

2 equal to the amount of scholarship funds received per year for

3 each unfulfilled year of the nurse educator employment

4 obligation, together with interest at 7% per year on the

5 unpaid balance. Payment must begin within 6 months following

6 the date of the occurrence initiating the repayment. All

7 repayments must be completed within 6 years from the date of

8 the occurrence initiating the repayment. However, this

9 repayment obligation may be deferred and re-evaluated every 6

10 months when the failure to fulfill the nurse educator

11 employment obligation results from involuntarily leaving the

12 profession due to a decrease in the number of nurses employed

13 in this State or when the failure to fulfill the nurse educator

14 employment obligation results from total and permanent

15 disability. The repayment obligation shall be excused if the

16 failure to fulfill the nurse educator employment obligation

17 results from the death or adjudication as incompetent of the

18 person holding the scholarship. No claim for repayment may be

19 filed against the estate of such a decedent or incompetent.

20 The Department may allow a nurse educator employment

21 obligation fulfillment alternative if the nurse educator

22 scholarship recipient is unsuccessful in finding work as a

23 nurse educator. The Department shall maintain a database of

24 all available nurse educator positions in this State.

25 (e) Each person applying for a scholarship under this

26 Section must be provided with a copy of this Section at the

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1 time of application for the benefits of this scholarship.

2 (f) Rulemaking authority to implement this amendatory Act

3 of the 96th General Assembly, if any, is conditioned on the

4 rules being adopted in accordance with all provisions of the

5 Illinois Administrative Procedure Act and all rules and

6 procedures of the Joint Committee on Administrative Rules; any

7 purported rule not so adopted, for whatever reason, is

8 unauthorized.

9 (Source: P.A. 100-513, eff. 1-1-18.)

10 Section 85. The Residential Mortgage License Act of 1987

11 is amended by changing Section 1-4 as follows:

12 (205 ILCS 635/1-4)

13 Sec. 1-4. Definitions. The following words and phrases

14 have the meanings given to them in this Section:

15 (a) "Residential real property" or "residential real

16 estate" shall mean any real property located in Illinois,

17 upon which is constructed or intended to be constructed a

18 dwelling. Those terms include a manufactured home as

19 defined in subdivision (53) of Section 9-102 of the

20 Uniform Commercial Code which is real property as defined

21 in Section 5-35 of the Conveyance and Encumbrance of

22 Manufactured Homes as Real Property and Severance Act.

23 (b) "Making a residential mortgage loan" or "funding a

24 residential mortgage loan" shall mean for compensation or

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1 gain, either directly or indirectly, advancing funds or

2 making a commitment to advance funds to a loan applicant

3 for a residential mortgage loan.

4 (c) "Soliciting, processing, placing, or negotiating a

5 residential mortgage loan" shall mean for compensation or

6 gain, either directly or indirectly, accepting or offering

7 to accept an application for a residential mortgage loan,

8 assisting or offering to assist in the processing of an

9 application for a residential mortgage loan on behalf of a

10 borrower, or negotiating or offering to negotiate the

11 terms or conditions of a residential mortgage loan with a

12 lender on behalf of a borrower including, but not limited

13 to, the submission of credit packages for the approval of

14 lenders, the preparation of residential mortgage loan

15 closing documents, including a closing in the name of a

16 broker.

17 (d) "Exempt person or entity" shall mean the

18 following:

19 (1) (i) Any banking organization or foreign

20 banking corporation licensed by the Illinois

21 Commissioner of Banks and Real Estate or the United

22 States Comptroller of the Currency to transact

23 business in this State; (ii) any national bank,

24 federally chartered savings and loan association,

25 federal savings bank, federal credit union; (iii)

26 (blank); (iv) any bank, savings and loan association,

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1 savings bank, or credit union organized under the laws

2 of this or any other state; (v) any Illinois Consumer

3 Installment Loan Act licensee; (vi) any insurance

4 company authorized to transact business in this State;

5 (vii) any entity engaged solely in commercial mortgage

6 lending; (viii) any service corporation of a savings

7 and loan association or savings bank organized under

8 the laws of this State or the service corporation of a

9 federally chartered savings and loan association or

10 savings bank having its principal place of business in

11 this State, other than a service corporation licensed

12 or entitled to reciprocity under the Real Estate

13 License Act of 2000; or (ix) any first tier subsidiary

14 of a bank, the charter of which is issued under the

15 Illinois Banking Act by the Illinois Commissioner of

16 Banks and Real Estate, or the first tier subsidiary of

17 a bank chartered by the United States Comptroller of

18 the Currency and that has its principal place of

19 business in this State, provided that the first tier

20 subsidiary is regularly examined by the Illinois

21 Commissioner of Banks and Real Estate or the

22 Comptroller of the Currency, or a consumer compliance

23 examination is regularly conducted by the Federal

24 Reserve Board.

25 (1.5) Any employee of a person or entity mentioned

26 in item (1) of this subsection, when acting for such

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1 person or entity, or any registered mortgage loan

2 originator when acting for an entity described in

3 subsection (tt) of this Section.

4 (1.8) Any person or entity that does not originate

5 mortgage loans in the ordinary course of business, but

6 makes or acquires residential mortgage loans with his

7 or her own funds for his or her or its own investment

8 without intent to make, acquire, or resell more than 3

9 residential mortgage loans in any one calendar year.

10 (2) (Blank).

11 (2.1) A bona fide nonprofit organization.

12 (2.2) An employee of a bona fide nonprofit

13 organization when acting on behalf of that

14 organization.

15 (3) Any person employed by a licensee to assist in

16 the performance of the residential mortgage licensee's

17 activities regulated by this Act who is compensated in

18 any manner by only one licensee.

19 (4) (Blank).

20 (5) Any individual, corporation, partnership, or

21 other entity that originates, services, or brokers

22 residential mortgage loans, as these activities are

23 defined in this Act, and who or which receives no

24 compensation for those activities, subject to the

25 Commissioner's regulations and the federal Secure and

26 Fair Enforcement for Mortgage Licensing Act of 2008

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1 and the rules promulgated under that Act with regard

2 to the nature and amount of compensation.

3 (6) (Blank).

4 (7) Any entity engaged solely in providing loan

5 processing services through the sponsoring of

6 individuals acting pursuant to subsection (d) of

7 Section 7-1A of this Act.

8 (e) "Licensee" or "residential mortgage licensee"

9 shall mean a person, partnership, association,

10 corporation, or any other entity who or which is licensed

11 pursuant to this Act to engage in the activities regulated

12 by this Act.

13 (f) "Mortgage loan" "residential mortgage loan" or

14 "home mortgage loan" shall mean any loan primarily for

15 personal, family, or household use that is secured by a

16 mortgage, deed of trust, or other equivalent consensual

17 security interest on a dwelling as defined in Section

18 103(v) of the federal Truth in Lending Act, or residential

19 real estate upon which is constructed or intended to be

20 constructed a dwelling.

21 (g) "Lender" shall mean any person, partnership,

22 association, corporation, or any other entity who either

23 lends or invests money in residential mortgage loans.

24 (h) "Ultimate equitable owner" shall mean a person

25 who, directly or indirectly, owns or controls an ownership

26 interest in a corporation, foreign corporation,

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1 non-domestic ~~alien~~ business organization, trust, or any

2 other form of business organization regardless of whether

3 the person owns or controls the ownership interest through

4 one or more persons or one or more proxies, powers of

5 attorney, nominees, corporations, associations,

6 partnerships, trusts, joint stock companies, or other

7 entities or devices, or any combination thereof.

8 (i) "Residential mortgage financing transaction" shall

9 mean the negotiation, acquisition, sale, or arrangement

10 for or the offer to negotiate, acquire, sell, or arrange

11 for, a residential mortgage loan or residential mortgage

12 loan commitment.

13 (j) "Personal residence address" shall mean a street

14 address and shall not include a post office box number.

15 (k) "Residential mortgage loan commitment" shall mean

16 a contract for residential mortgage loan financing.

17 (l) "Party to a residential mortgage financing

18 transaction" shall mean a borrower, lender, or loan broker

19 in a residential mortgage financing transaction.

20 (m) "Payments" shall mean payment of all or any of the

21 following: principal, interest and escrow reserves for

22 taxes, insurance and other related reserves, and

23 reimbursement for lender advances.

24 (n) "Commissioner" shall mean the Commissioner of

25 Banks and Real Estate, except that, beginning on April 6,

26 2009 (the effective date of Public Act 95-1047), all

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1 references in this Act to the Commissioner of Banks and

2 Real Estate are deemed, in appropriate contexts, to be

3 references to the Secretary of Financial and Professional

4 Regulation, or his or her designee, including the Director

5 of the Division of Banking of the Department of Financial

6 and Professional Regulation.

7 (n-1) "Director" shall mean the Director of the

8 Division of Banking of the Department of Financial and

9 Professional Regulation, except that, beginning on July

10 31, 2009 (the effective date of Public Act 96-112), all

11 references in this Act to the Director are deemed, in

12 appropriate contexts, to be the Secretary of Financial and

13 Professional Regulation, or his or her designee, including

14 the Director of the Division of Banking of the Department

15 of Financial and Professional Regulation.

16 (o) "Loan brokering", "brokering", or "brokerage

17 service" shall mean the act of helping to obtain from

18 another entity, for a borrower, a loan secured by

19 residential real estate situated in Illinois or assisting

20 a borrower in obtaining a loan secured by residential real

21 estate situated in Illinois in return for consideration to

22 be paid by either the borrower or the lender including,

23 but not limited to, contracting for the delivery of

24 residential mortgage loans to a third party lender and

25 soliciting, processing, placing, or negotiating

26 residential mortgage loans.

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1 (p) "Loan broker" or "broker" shall mean a person,

2 partnership, association, corporation, or limited

3 liability company, other than those persons, partnerships,

4 associations, corporations, or limited liability companies

5 exempted from licensing pursuant to Section 1-4,

6 subsection (d), of this Act, who performs the activities

7 described in subsections (c), (o), and (yy) of this

8 Section.

9 (q) "Servicing" shall mean the collection or

10 remittance for or the right or obligation to collect or

11 remit for any lender, noteowner, noteholder, or for a

12 licensee's own account, of payments, interests, principal,

13 and trust items such as hazard insurance and taxes on a

14 residential mortgage loan in accordance with the terms of

15 the residential mortgage loan; and includes loan payment

16 follow-up, delinquency loan follow-up, loan analysis and

17 any notifications to the borrower that are necessary to

18 enable the borrower to keep the loan current and in good

19 standing. "Servicing" includes management of third-party

20 entities acting on behalf of a residential mortgage

21 licensee for the collection of delinquent payments and the

22 use by such third-party entities of said licensee's

23 servicing records or information, including their use in

24 foreclosure.

25 (r) "Full service office" shall mean an office,

26 provided by the licensee and not subleased from the

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1 licensee's employees, and staff in Illinois reasonably

2 adequate to handle efficiently communications, questions,

3 and other matters relating to any application for, or an

4 existing home mortgage secured by residential real estate

5 situated in Illinois with respect to which the licensee is

6 brokering, funding originating, purchasing, or servicing.

7 The management and operation of each full service office

8 must include observance of good business practices such as

9 proper signage; adequate, organized, and accurate books

10 and records; ample phone lines, hours of business, staff

11 training and supervision, and provision for a mechanism to

12 resolve consumer inquiries, complaints, and problems. The

13 Commissioner shall issue regulations with regard to these

14 requirements and shall include an evaluation of compliance

15 with this Section in his or her periodic examination of

16 each licensee.

17 (s) "Purchasing" shall mean the purchase of

18 conventional or government-insured mortgage loans secured

19 by residential real estate situated in Illinois from

20 either the lender or from the secondary market.

21 (t) "Borrower" shall mean the person or persons who

22 seek the services of a loan broker, originator, or lender.

23 (u) "Originating" shall mean the issuing of

24 commitments for and funding of residential mortgage loans.

25 (v) "Loan brokerage agreement" shall mean a written

26 agreement in which a broker or loan broker agrees to do

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1 either of the following:

2 (1) obtain a residential mortgage loan for the

3 borrower or assist the borrower in obtaining a

4 residential mortgage loan; or

5 (2) consider making a residential mortgage loan to

6 the borrower.

7 (w) "Advertisement" shall mean the attempt by

8 publication, dissemination, or circulation to induce,

9 directly or indirectly, any person to enter into a

10 residential mortgage loan agreement or residential

11 mortgage loan brokerage agreement relative to a mortgage

12 secured by residential real estate situated in Illinois.

13 (x) (Blank).

14 (y) "Government-insured mortgage loan" shall mean any

15 mortgage loan made on the security of residential real

16 estate insured by the Department of Housing and Urban

17 Development or Farmers Home Loan Administration, or

18 guaranteed by the Veterans Administration.

19 (z) "Annual audit" shall mean a certified audit of the

20 licensee's books and records and systems of internal

21 control performed by a certified public accountant in

22 accordance with generally accepted accounting principles

23 and generally accepted auditing standards.

24 (aa) "Financial institution" shall mean a savings and

25 loan association, savings bank, credit union, or a bank

26 organized under the laws of Illinois or a savings and loan

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1 association, savings bank, credit union or a bank

2 organized under the laws of the United States and

3 headquartered in Illinois.

4 (bb) "Escrow agent" shall mean a third party,

5 individual or entity charged with the fiduciary obligation

6 for holding escrow funds on a residential mortgage loan

7 pending final payout of those funds in accordance with the

8 terms of the residential mortgage loan.

9 (cc) "Net worth" shall have the meaning ascribed

10 thereto in Section 3-5 of this Act.

11 (dd) "Affiliate" shall mean:

12 (1) any entity that directly controls or is

13 controlled by the licensee and any other company that

14 is directly affecting activities regulated by this Act

15 that is controlled by the company that controls the

16 licensee;

17 (2) any entity:

18 (A) that is controlled, directly or

19 indirectly, by a trust or otherwise, by or for the

20 benefit of shareholders who beneficially or

21 otherwise control, directly or indirectly, by

22 trust or otherwise, the licensee or any company

23 that controls the licensee; or

24 (B) a majority of the directors or trustees of

25 which constitute a majority of the persons holding

26 any such office with the licensee or any company

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1 that controls the licensee;

2 (3) any company, including a real estate

3 investment trust, that is sponsored and advised on a

4 contractual basis by the licensee or any subsidiary or

5 affiliate of the licensee.

6 (ee) "First tier subsidiary" shall be defined by

7 regulation incorporating the comparable definitions used

8 by the Office of the Comptroller of the Currency and the

9 Illinois Commissioner of Banks and Real Estate.

10 (ff) "Gross delinquency rate" means the quotient

11 determined by dividing (1) the sum of (i) the number of

12 government-insured residential mortgage loans funded or

13 purchased by a licensee in the preceding calendar year

14 that are delinquent and (ii) the number of conventional

15 residential mortgage loans funded or purchased by the

16 licensee in the preceding calendar year that are

17 delinquent by (2) the sum of (i) the number of

18 government-insured residential mortgage loans funded or

19 purchased by the licensee in the preceding calendar year

20 and (ii) the number of conventional residential mortgage

21 loans funded or purchased by the licensee in the preceding

22 calendar year.

23 (gg) "Delinquency rate factor" means the factor set by

24 rule of the Commissioner that is multiplied by the average

25 gross delinquency rate of licensees, determined annually

26 for the immediately preceding calendar year, for the

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1 purpose of determining which licensees shall be examined

2 by the Commissioner pursuant to subsection (b) of Section

3 4-8 of this Act.

4 (hh) (Blank).

5 (ii) "Confidential supervisory information" means any

6 report of examination, visitation, or investigation

7 prepared by the Commissioner under this Act, any report of

8 examination visitation, or investigation prepared by the

9 state regulatory authority of another state that examines

10 a licensee, any document or record prepared or obtained in

11 connection with or relating to any examination,

12 visitation, or investigation, and any record prepared or

13 obtained by the Commissioner to the extent that the record

14 summarizes or contains information derived from any

15 report, document, or record described in this subsection.

16 "Confidential supervisory information" does not include

17 any information or record routinely prepared by a licensee

18 and maintained in the ordinary course of business or any

19 information or record that is required to be made publicly

20 available pursuant to State or federal law or rule.

21 (jj) "Mortgage loan originator" means an individual

22 who for compensation or gain or in the expectation of

23 compensation or gain:

24 (i) takes a residential mortgage loan application;

25 or

26 (ii) offers or negotiates terms of a residential

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1 mortgage loan.

2 "Mortgage loan originator" includes an individual

3 engaged in loan modification activities as defined in

4 subsection (yy) of this Section. A mortgage loan

5 originator engaged in loan modification activities shall

6 report those activities to the Department of Financial and

7 Professional Regulation in the manner provided by the

8 Department; however, the Department shall not impose a fee

9 for reporting, nor require any additional qualifications

10 to engage in those activities beyond those provided

11 pursuant to this Act for mortgage loan originators.

12 "Mortgage loan originator" does not include an

13 individual engaged solely as a loan processor or

14 underwriter except as otherwise provided in subsection (d)

15 of Section 7-1A of this Act.

16 "Mortgage loan originator" does not include a person

17 or entity that only performs real estate brokerage

18 activities and is licensed in accordance with the Real

19 Estate License Act of 2000, unless the person or entity is

20 compensated by a lender, a mortgage broker, or other

21 mortgage loan originator, or by any agent of that lender,

22 mortgage broker, or other mortgage loan originator.

23 "Mortgage loan originator" does not include a person

24 or entity solely involved in extensions of credit relating

25 to timeshare plans, as that term is defined in Section

26 101(53D) of Title 11, United States Code.

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1 (kk) "Depository institution" has the same meaning as

2 in Section 3 of the Federal Deposit Insurance Act, and

3 includes any credit union.

4 (ll) "Dwelling" means a residential structure or

5 mobile home which contains one to 4 family housing units,

6 or individual units of condominiums or cooperatives.

7 (mm) "Immediate family member" means a spouse, child,

8 sibling, parent, grandparent, or grandchild, and includes

9 step-parents, step-children, step-siblings, or adoptive

10 relationships.

11 (nn) "Individual" means a natural person.

12 (oo) "Loan processor or underwriter" means an

13 individual who performs clerical or support duties as an

14 employee at the direction of and subject to the

15 supervision and instruction of a person licensed, or

16 exempt from licensing, under this Act. "Clerical or

17 support duties" includes subsequent to the receipt of an

18 application:

19 (i) the receipt, collection, distribution, and

20 analysis of information common for the processing or

21 underwriting of a residential mortgage loan; and

22 (ii) communicating with a consumer to obtain the

23 information necessary for the processing or

24 underwriting of a loan, to the extent that the

25 communication does not include offering or negotiating

26 loan rates or terms, or counseling consumers about

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1 residential mortgage loan rates or terms. An

2 individual engaging solely in loan processor or

3 underwriter activities shall not represent to the

4 public, through advertising or other means of

5 communicating or providing information, including the

6 use of business cards, stationery, brochures, signs,

7 rate lists, or other promotional items, that the

8 individual can or will perform any of the activities

9 of a mortgage loan originator.

10 (pp) "Nationwide Multistate Licensing System and

11 Registry" means a mortgage licensing system developed and

12 maintained by the Conference of State Bank Supervisors and

13 the American Association of Residential Mortgage

14 Regulators for the licensing and registration of licensed

15 mortgage loan originators.

16 (qq) "Nontraditional mortgage product" means any

17 mortgage product other than a 30-year fixed rate mortgage.

18 (rr) "Person" means a natural person, corporation,

19 company, limited liability company, partnership, or

20 association.

21 (ss) "Real estate brokerage activity" means any

22 activity that involves offering or providing real estate

23 brokerage services to the public, including:

24 (1) acting as a real estate agent or real estate

25 broker for a buyer, seller, lessor, or lessee of real

26 property;

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1 (2) bringing together parties interested in the

2 sale, purchase, lease, rental, or exchange of real

3 property;

4 (3) negotiating, on behalf of any party, any

5 portion of a contract relating to the sale, purchase,

6 lease, rental, or exchange of real property, other

7 than in connection with providing financing with

8 respect to any such transaction;

9 (4) engaging in any activity for which a person

10 engaged in the activity is required to be registered

11 or licensed as a real estate agent or real estate

12 broker under any applicable law; or

13 (5) offering to engage in any activity, or act in

14 any capacity, described in this subsection (ss).

15 (tt) "Registered mortgage loan originator" means any

16 individual that:

17 (1) meets the definition of mortgage loan

18 originator and is an employee of:

19 (A) a depository institution;

20 (B) a subsidiary that is:

21 (i) owned and controlled by a depository

22 institution; and

23 (ii) regulated by a federal banking

24 agency; or

25 (C) an institution regulated by the Farm

26 Credit Administration; and

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1 (2) is registered with, and maintains a unique

2 identifier through, the Nationwide Multistate

3 Licensing System and Registry.

4 (uu) "Unique identifier" means a number or other

5 identifier assigned by protocols established by the

6 Nationwide Multistate Licensing System and Registry.

7 (vv) "Residential mortgage license" means a license

8 issued pursuant to Section 1-3, 2-2, or 2-6 of this Act.

9 (ww) "Mortgage loan originator license" means a

10 license issued pursuant to Section 7-1A, 7-3, or 7-6 of

11 this Act.

12 (xx) "Secretary" means the Secretary of the Department

13 of Financial and Professional Regulation, or a person

14 authorized by the Secretary or by this Act to act in the

15 Secretary's stead.

16 (yy) "Loan modification" means, for compensation or

17 gain, either directly or indirectly offering or

18 negotiating on behalf of a borrower or homeowner to adjust

19 the terms of a residential mortgage loan in a manner not

20 provided for in the original or previously modified

21 mortgage loan.

22 (zz) "Short sale facilitation" means, for compensation

23 or gain, either directly or indirectly offering or

24 negotiating on behalf of a borrower or homeowner to

25 facilitate the sale of residential real estate subject to

26 one or more residential mortgage loans or debts

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1 constituting liens on the property in which the proceeds

2 from selling the residential real estate will fall short

3 of the amount owed and the lien holders are contacted to

4 agree to release their lien on the residential real estate

5 and accept less than the full amount owed on the debt.

6 (aaa) "Bona fide nonprofit organization" means an

7 organization that is described in Section 501(c)(3) of the

8 Internal Revenue Code, is exempt from federal income tax

9 under Section 501(a) of the Internal Revenue Code, does

10 not operate in a commercial context, and does all of the

11 following:

12 (1) Promotes affordable housing or provides home

13 ownership education or similar services.

14 (2) Conducts its activities in a manner that

15 serves public or charitable purposes.

16 (3) Receives funding and revenue and charges fees

17 in a manner that does not create an incentive for

18 itself or its employees to act other than in the best

19 interests of its clients.

20 (4) Compensates its employees in a manner that

21 does not create an incentive for its employees to act

22 other than in the best interests of its clients.

23 (5) Provides to, or identifies for, the borrower

24 residential mortgage loans with terms favorable to the

25 borrower and comparable to residential mortgage loans

26 and housing assistance provided under government

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1 housing assistance programs.

2 The Commissioner may define by rule and regulation any

3 terms used in this Act for the efficient and clear

4 administration of this Act.

5 (Source: P.A. 100-783, eff. 8-10-18; 100-851, eff. 8-14-18;

6 100-1153, eff. 12-19-18; 101-81, eff. 7-12-19.)

7 Section 90. The Illinois Insurance Code is amended by

8 changing Sections 2, 35A-5, 37, and 58 and the heading of

9 Article III.5 and Sections 60a, 60b, 60c, 60d, 60e, 60f, 60g,

10 60h, 60i, 60j, 63, 86, 87, 88, 103, 104, and 105 and the

11 heading of Article VI and Sections 108, 109, 110, 111, 112,

12 113, 113.1, 114, 115, 116, 117, 118, 119, 120, 123, 123.1,

13 123.3, 123C-8, 126.1, 126.12, 126.25, 131.13, 132.3, 133, 136,

14 141a, 144, 144.1, 146, 148, 154.5, 156, 156.1, 157, 161, 162,

15 163, 164, 166, 169, 170, 173.1, 179A-5, and 179E-5 and the

16 heading of Article XII and Sections 180, 185.1, 188, 188.1,

17 197, 201, 223, 241, 292.1, 302.1, 308.1, 309.1, 310.1, 357.29,

18 370, 404, 408, 412, 413, 415, 444, 444.1, 445, 448, 451,

19 531.09, 531.11, 534.5, 543.1, and 1103 as follows:

20 (215 ILCS 5/2) (from Ch. 73, par. 614)

21 Sec. 2. General definitions.

22 In this Code, unless the context otherwise requires,

23 (a) "Director" means the Director of Insurance.

24 (b) "Department" means the Department of Insurance.

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1 (c) "State" or "State of the United States" includes the

2 District of Columbia and a territory or possession of the

3 United States.

4 (d) "Country" or "Foreign Country" includes a state,

5 province or political subdivision thereof.

6 (e) "Company" means an insurance or surety company and

7 shall be deemed to include a corporation, company,

8 partnership, association, society, order, individual or

9 aggregation of individuals engaging in or proposing or

10 attempting to engage in any kind of insurance or surety

11 business, including the exchanging of reciprocal or

12 inter-insurance contracts between individuals, partnerships

13 and corporations.

14 (f) "Domestic Company" means a company incorporated or

15 organized under the laws of this State.

16 (g) "Foreign Company" means a company incorporated or

17 organized under the laws of any state of the United States

18 other than this State.

19 (h) "Non-domestic ~~Alien~~ Company" means a company

20 incorporated or organized under the laws of any country other

21 than the United States.

22 (i) "Mutual Legal Reserve Life Company" means a mutual

23 life company issuing contracts without contingent liability on

24 the policyholder.

25 (j) "Assessment Legal Reserve Life Company" means a life

26 company issuing contracts providing for contingent liability

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1 on the policyholder.

2 (k) "Reciprocal" includes Inter-Insurance Exchange.

3 (l) "Person" includes an individual, aggregation of

4 individuals, corporation, association and partnership.

5 (m) Personal pronouns include all genders, the singular

6 includes the plural and the plural includes the singular.

7 (n) "Policy" means an insurance policy or contract and

8 includes certificates of fraternal benefit societies,

9 assessment companies, mutual benefit associations, and burial

10 societies.

11 (o) "Policyholder" means a holder of an insurance policy

12 or contract and includes holders of certificates of fraternal

13 benefit societies, assessment companies, mutual benefit

14 associations, and burial societies.

15 (p) "Articles of Incorporation" means the basic instrument

16 of an incorporated company and all amendments thereto and

17 includes "Charter," "Articles of Organization," "Articles of

18 Reorganization," "Articles of Association," and "Deed of

19 Settlement."

20 (q) "Officer" when used to refer to an officer of a company

21 includes an attorney-in-fact for a reciprocal or Lloyds.

22 (Source: Laws 1937, p. 696.)

23 (215 ILCS 5/35A-5)

24 Sec. 35A-5. Definitions. As used in this Article, the

25 terms listed in this Section have the meaning given herein.

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1 "Adjusted RBC Report" means an RBC Report that has been

2 adjusted by the Director in accordance with subsection (f) of

3 Section 35A-10.

4 "Authorized control level RBC" means the number determined

5 under the risk-based capital formula in accordance with the

6 RBC Instructions.

7 "Company action level RBC" means the product of 2.0 and

8 the insurer's authorized control level RBC.

9 "Corrective Order" means an order issued by the Director

10 in accordance with Article XII 1/2 specifying corrective

11 actions that the Director determines are required.

12 "Domestic insurer" means any insurance company domiciled

13 in this State under Article II, Article III, Article III 1/2,

14 or Article IV or a health organization as defined by this

15 Article, except this shall include only those health

16 maintenance organizations that are "domestic companies" in

17 accordance with Section 5-3 of the Health Maintenance

18 Organization Act and only those limited health service

19 organizations that are "domestic companies" in accordance with

20 Section 4003 of the Limited Health Service Organization Act.

21 "Fraternal benefit society" means any insurance company

22 licensed under Article XVII of this Code.

23 "Foreign insurer" means any foreign or non-domestic ~~alien~~

24 insurance company licensed under Article VI that is not

25 domiciled in this State and any health maintenance

26 organization that is not a "domestic company" in accordance

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1 with Section 5-3 of the Health Maintenance Organization Act

2 and any limited health service organization that is not a

3 "domestic company" in accordance with Section 4003 of the

4 Limited Health Service Organization Act.

5 "Health organization" means an entity operating under a

6 certificate of authority issued pursuant to the Health

7 Maintenance Organization Act, the Dental Service Plan Act, the

8 Limited Health Service Organization Act, or the Voluntary

9 Health Services Plans Act, unless the entity is otherwise

10 defined as a "life, health, or life and health insurer"

11 pursuant to this Act.

12 "Life, health, or life and health insurer" means an

13 insurance company that has authority to transact the kinds of

14 insurance described in either or both clause (a) or clause (b)

15 of Class 1 of Section 4 or a licensed property and casualty

16 insurer writing only accident and health insurance.

17 "Mandatory control level RBC" means the product of 0.70

18 and the insurer's authorized control level RBC.

19 "NAIC" means the National Association of Insurance

20 Commissioners.

21 "Negative trend" means, with respect to a life, health, or

22 life and health insurer or a fraternal benefit society, a

23 negative trend over a period of time, as determined in

24 accordance with the trend test calculation included in the

25 Life or Fraternal RBC Instructions.

26 "Property and casualty insurer" means an insurance company

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1 that has authority to transact the kinds of insurance in

2 either or both Class 2 or Class 3 of Section 4 or a licensed

3 insurer writing only insurance authorized under clause (c) of

4 Class 1, but does not include monoline mortgage guaranty

5 insurers, financial guaranty insurers, and title insurers.

6 "RBC" means risk-based capital.

7 "RBC Instructions" means the RBC Report including

8 risk-based capital instructions adopted by the NAIC as those

9 instructions may be amended by the NAIC from time to time in

10 accordance with the procedures adopted by the NAIC.

11 "RBC level" means an insurer's company action level RBC,

12 regulatory action level RBC, authorized control level RBC, or

13 mandatory control level RBC.

14 "RBC Plan" means a comprehensive financial plan containing

15 the elements specified in subsection (b) of Section 35A-15.

16 "RBC Report" means the risk-based capital report required

17 under Section 35A-10.

18 "Receivership" means conservation, rehabilitation, or

19 liquidation under Article XIII.

20 "Regulatory action level RBC" means the product of 1.5 and

21 the insurer's authorized control level RBC.

22 "Revised RBC Plan" means an RBC Plan rejected by the

23 Director and revised by the insurer with or without the

24 Director's recommendations.

25 "Total adjusted capital" means the sum of (1) an insurer's

26 statutory capital and surplus and (2) any other items that the

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1 RBC Instructions may provide.

2 (Source: P.A. 98-157, eff. 8-2-13.)

3 (215 ILCS 5/37) (from Ch. 73, par. 649)

4 (Section scheduled to be repealed on January 1, 2027)

5 Sec. 37. Name. The corporate name of any company organized

6 under this Article shall contain the word "Mutual" and shall

7 not be the same as, or deceptively similar to, the name of any

8 domestic company, or of any foreign or non-domestic ~~alien~~

9 company authorized to transact business in this State.

10 (Source: Laws 1937, p. 696.)

11 (215 ILCS 5/58) (from Ch. 73, par. 670)

12 (Section scheduled to be repealed on January 1, 2027)

13 Sec. 58. Governmental agencies and corporations may be

14 members. Any government or governmental agency, state or

15 political subdivision thereof, public or private corporation,

16 board, association, estate, trustee or fiduciary in this State

17 or elsewhere, may make application, enter into agreements for

18 and hold policies or contracts in or with, and be a member of,

19 any domestic, foreign or non-domestic ~~alien~~ mutual company

20 subject to the provisions of this Code. Any officer,

21 representative, trustee, receiver or legal representative of

22 any such member or policyholder, shall be recognized as acting

23 for or on its behalf for the purpose of such contract or

24 membership, but shall not be personally liable upon such

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1 contract by reason of acting in such representative capacity.

2 (Source: Laws 1937, p. 696.)

3 (215 ILCS 5/Art. III.5 heading)

4 ARTICLE III 1/2. NON-DOMESTIC ~~ALIEN~~ COMPANIES

5 (215 ILCS 5/60a) (from Ch. 73, par. 672a)

6 Sec. 60a. Non-domestic ~~Alien~~ companies; Illinois State of

7 entry.

8 (1) A non-domestic ~~An alien~~company may use Illinois as a

9 state of entry to transact insurance in the United States by

10 obtaining a certificate of authority pursuant to Section 111

11 and maintaining in this State a deposit of assets in trust in

12 accordance with the provisions of Section 60b.

13 (2) A United States branch of a non-domestic ~~an alien~~

14 company that uses Illinois as a state of entry to transact

15 insurance in the United States shall be considered a domestic

16 company, and as such shall be subject to all applicable

17 provisions of this Code. Transactions between the United

18 States branch and the home office of a non-domestic ~~an alien~~

19 company shall not be subject to the provisions of Section

20 131.20 and subsection (1) of Section 131.20a, but remittances

21 of profits of the United States branch to the home office ofa

22 non-domestic ~~an alien~~company shall be considered dividends

23 subject to the requirements of subsection (2) of Section

24 131.20a.

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1 (Source: P.A. 89-97, eff. 7-7-95.)

2 (215 ILCS 5/60b) (from Ch. 73, par. 672b)

3 Sec. 60b. Non-domestic ~~Alien~~ companies; Illinois trusteed

4 assets.

5 (1) A non-domestic ~~An alien~~ company may not use Illinois

6 as a state of entry to transact insurance in the United States

7 unless it maintains in this State a deposit of assets in trust

8 for the benefit of policyholders in the United States, which

9 assets shall be its "Trusteed Assets". The United States

10 branch of a non-domestic ~~an alien~~company shall maintain

11 Trusteed Assets at least equal to (a) the sum of (i) its

12 minimum capital and surplus, and (ii) the amount of its

13 liabilities to policyholders, net of reinsurance for which

14 credit is allowed pursuant to Article XI, as reflected in its

15 most recent financial statement on file with the Director,

16 minus (b) the sum of (i) the amount of all of its general state

17 deposits (including all interest accrued and due and payable

18 to the holder of the deposit), (ii) the amount of its special

19 state deposits (including all interest accrued and due and

20 payable to the holder of the deposit), (iii) the amount of its

21 reinsurance recoverable on paid losses (where such reinsurance

22 is the type for which credit would be allowed pursuant to

23 Article XI), (iv) the amounts of its notes and bills

24 receivable, taken for premiums; (v) with respect to a company

25 authorized to write the kinds of insurance specified in

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1 Classes 2 and 3 of Section 4 of this Code, the amount of its

2 agents' balances and uncollected premiums; and (vi) the amount

3 of its funds held by or deposited with reinsureds.

4 (2) Only those assets that qualify as authorized

5 investments as provided in Article VIII (and in Sections 131.2

6 and 131.3) shall be included in a non-domestic ~~an alien~~

7 company's Trusteed Assets.

8 (Source: P.A. 88-45; 89-97, eff. 7-7-95.)

9 (215 ILCS 5/60c) (from Ch. 73, par. 672c)

10 Sec. 60c. Requirements and contents of trust agreement.

11 Trust agreements governing Trusteed Assets required by Section

12 60b shall satisfy the following conditions:

13 (1) Legal title to the Trusteed Assets shall be vested in

14 the trustee or trustees, and their successors lawfully

15 appointed, in trust for the benefit and security of

16 policyholders of the non-domestic ~~alien~~ company in the United

17 States.

18 (2) The agreement shall provide for substitution of a new

19 trustee or trustees, subject to the Director's approval.

20 (3) All Trusteed Assets shall at all times be maintained

21 as a trust fund separate and distinct from all other assets.

22 (4) The trustee or trustees shall maintain a record at all

23 times sufficient to identify the assets of the trust.

24 (5) Withdrawal of or from the Trusteed Assets shall be

25 made only as provided in Section 60d.

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1 (Source: P.A. 85-1373.)

2 (215 ILCS 5/60d) (from Ch. 73, par. 672d)

3 Sec. 60d. Withdrawal of Trusteed Assets. (1) The trust

4 agreement shall provide that no withdrawals of Trusteed Assets

5 shall be made by the non-domestic~~alien~~ company or permitted

6 by the trustee or trustees without the prior approval of the

7 Director, except as follows:

8 (a) Any or all income, earnings, dividends, or interest

9 accumulations of the Trusteed Assets may be paid over to the

10 United States branch of the non-domestic~~alien~~ company upon

11 request of the company or its manager, provided that no

12 withdrawal shall be made that reduces the Trusteed Assets

13 below the amount required by Section 60b.

14 (b) For the purpose of substituting other assets

15 authorized for investment by Article VIII and at least equal

16 in value (as reflected in the most recent financial statement

17 on file with the Director) to those being withdrawn, if such

18 withdrawal is requested in writing by the non-domestic ~~alien~~

19 company's (i) United States manager or (ii) other United

20 States representative pursuant to general or specific written

21 authority previously given or delegated by thenon-domestic

22 ~~alien~~company's board of directors or other similar governing

23 body, and a copy of such authority has been filed with the

24 trustee or trustees.

25 (c) For the purpose of making deposits required by law in

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1 any state for the protection of thenon-domestic ~~alien~~

2 company's policyholders in the United States. The trustee or

3 trustees shall transfer any assets so withdrawn, and in the

4 amount so required to be deposited in the other state,

5 directly to the depository required to receive such deposit in

6 such other state.

7 (d) For the payment of obligations due from the United

8 States branch of thenon-domestic ~~alien~~ company to

9 policyholders in the United States, provided that no

10 withdrawal shall be made that reduces the Trusteed Assets

11 below the amount required by Section 60b.

12 (e) For the purpose of withdrawing any amount of the

13 Trusteed Assets in excess of the amount required by Section

14 60b, as determined by the non-domestic ~~alien~~company's then

15 most current annual statement on file with the Director.

16 (f) For the purpose of transferring the Trusteed Assets to

17 an appointed liquidator, conservator, or rehabilitator

18 pursuant to the order of a court of competent jurisdiction.

19 (2) If at any time the non-domestic ~~alien~~ company becomes

20 insolvent, or if its Trusteed Assets are less than required

21 under Section 60b, the Director shall in writing order the

22 trustee to suspend the right of the non-domestic ~~alien~~company

23 or any other person to withdraw assets as otherwise authorized

24 under paragraphs (a), (b), (c), (d) and (e) of subsection (1);

25 and the trustee shall comply with such order until otherwise

26 ordered by the Director.

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1 (Source: P.A. 85-1373.)

2 (215 ILCS 5/60e) (from Ch. 73, par. 672e)

3 Sec. 60e. Domestication of Non-domestic ~~Alien~~ Company;

4 definitions. As used in Sections 60e through 60i:

5 (1) "Domestication" means the reorganization of the United

6 States branch ofa non-domestic ~~an alien~~ company as the result

7 of which a domestic company shall succeed to all the business

8 and assets and assume all the liabilities of the United States

9 branch of the non-domestic ~~alien~~ company.

10 (2) "United States branch" means the business unit through

11 which business is transacted within the United States bya

12 non-domestic ~~an alien~~company and the assets and liabilities

13 of such insurer within the United States pertaining to such

14 business.

15 (3) "Domestic Company" means a stock or mutual insurer

16 incorporated under the laws of this State.

17 (Source: P.A. 85-1373.)

18 (215 ILCS 5/60f) (from Ch. 73, par. 672f)

19 Sec. 60f. Domestication procedure. (1) Upon compliance

20 with Sections 60e through 60i, anynon-domestic ~~alien~~ company

21 authorized to do business in this State may, with the prior

22 written approval of the Director, domesticate its United

23 States branch by entering into an agreement in writing with a

24 domestic company providing for the acquisition by the domestic

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1 company of all of the assets and the assumption of all of the

2 liabilities of the United States branch.

3 (2) The acquisition of assets and assumption of

4 liabilities of the United States branch by the domestic

5 company shall be effected by filing with the Director an

6 instrument of transfer and assumption in form satisfactory to

7 the Director and executed by the non-domestic ~~alien~~ company

8 and the domestic company.

9 (Source: P.A. 85-1373.)

10 (215 ILCS 5/60g) (from Ch. 73, par. 672g)

11 Sec. 60g. Domestication agreement; authorization;

12 execution. (1) The domestication agreement referred to in

13 Section 60f shall be authorized, adopted, approved, signed,

14 and acknowledged by the non-domestic ~~alien~~company in

15 accordance with the laws of the country under which it is

16 organized.

17 (2) In the case of a domestic company, the domestication

18 agreement shall be approved, adopted, and authorized by its

19 board of directors and executed by its president or any vice

20 president and attested by its secretary or assistant secretary

21 under its corporate seal.

22 (Source: P.A. 85-1373.)

23 (215 ILCS 5/60h) (from Ch. 73, par. 672h)

24 Sec. 60h. Director's approval of domestication agreement.

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1 An executed counterpart of the domestication agreement,

2 together with certified copies of the corporate proceedings of

3 the domestic company and the non-domestic ~~alien~~ company,

4 approving, adopting and authorizing the execution of the

5 domestication agreement, shall be submitted to the Director

6 for approval. The Director shall thereupon consider the

7 agreement, and, if the Director finds that the same is in

8 accordance with the provisions hereof and that the interests

9 of policyholders of the United States branch of the

10 non-domestic ~~alien~~insurer and of the domestic company are not

11 materially adversely affected, the Director shall approve the

12 domestication agreement and authorize the consummation thereof

13 in compliance with the provisions of Section 60i. The Director

14 shall approve or disapprove the domestication agreement within

15 60 days after it is submitted to the Director.

16 (Source: P.A. 85-1373.)

17 (215 ILCS 5/60i) (from Ch. 73, par. 672i)

18 Sec. 60i. Consummation of domestication; transfer of

19 assets and deposits. (1) Upon the filing with the Director of a

20 certified copy of the instrument of transfer and assumption

21 pursuant to which a domestic company succeeds to the business

22 and assets of the United States branch of a non-domestic~~an~~

23 ~~alien~~ company and assumes all its liabilities, the

24 domestication of the United States branch shall be deemed to

25 be effective; and thereupon all the rights, franchises, and

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1 interests of the United States branch in and to every species

2 of property, real, personal, and mixed, and things in actions

3 thereunder belonging shall be deemed as transferred to and

4 vested in the domestic company, and simultaneously therewith

5 the domestic company shall be deemed to have assumed all of the

6 liabilities of the United States branch. The domestic company

7 shall be considered as having the age as the oldest of the 2

8 parties to the domestication agreement for purposes of

9 complying with the requirements of laws relating to age of

10 company.

11 (2) All deposits of the United States branch held by the

12 Director, or by state officers or other state regulatory

13 agencies pursuant to requirements of state laws, shall be

14 deemed to be held as security for the satisfaction by the

15 domestic company of all liabilities to policyholders within

16 the United States assumed from the United States branch; and

17 such deposits shall be deemed to be assets of the domestic

18 company and shall be reported as such in the annual financial

19 statements and other reports which the domestic company may be

20 required to file. Upon the ultimate release by any such state

21 officer or agency of any such deposits, the securities and

22 cash constituting such released deposit shall be delivered and

23 paid over to the domestic company as the lawful successor in

24 interest to the United States branch.

25 (3) Contemporaneously with the consummation of the

26 domestication of the United States branch, the Director shall

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1 direct the trustee, if any, of the U. S. branch's Trusteed

2 Assets to transfer and deliver to the domestic company all

3 assets, if any, held by such trustee.

4 (Source: P.A. 85-1373.)

5 (215 ILCS 5/60j) (from Ch. 73, par. 672j)

6 Sec. 60j. Trustees of non-domestic ~~alien~~ companies. (1)

7 The directors of a non-domestic ~~an alien~~company may appoint

8 citizens or corporations of the United States as its trustees

9 to hold funds and assets in trust for the benefit of the

10 policyholders and creditors of the company in the United

11 States. A certified copy of the record of such appointment and

12 of the deed of trust, approved by the Director, shall be filed

13 with him.

14 (2) The Director may examine such trustee and any officers

15 and agents, books and papers thereof, with respect to the

16 affairs of such non-domestic ~~alien~~company in the same manner

17 as he may examine officers, agents, books, papers and affairs

18 of companies.

19 (3) The funds and assets so held by such trustees shall,

20 with the deposits otherwise made by the United States branch

21 of the non-domestic ~~alien~~company in the United States

22 together with loans in connection with its policies to

23 policyholders, and all other funds and assets held by the

24 United States branch of the non-domestic~~alien~~ company in the

25 United States, constitute the assets of the company for the

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1 purpose of making its financial statements required by this

2 Code. For purposes of making financial statements required by

3 this Code, the liabilities of a non-domestic ~~an alien~~ company

4 shall be limited to only those liabilities incurred in

5 connection with its United States business.

6 (4) In applying the risk limitations as provided in

7 Section 144 or any limit on premium volume, the Director shall

8 calculate such limitations based solely on thenon-domestic

9 ~~alien~~company's assets in the United States that, pursuant to

10 subsection (3) of this Section, constitute the assets of the

11 company for purposes of making its financial statements

12 required by this Code and its surplus as regards policyholders

13 as reflected in the most recent financial statement on file

14 with the Director.

15 (Source: P.A. 85-1373.)

16 (215 ILCS 5/63) (from Ch. 73, par. 675)

17 (Section scheduled to be repealed on January 1, 2027)

18 Sec. 63. Name. The name or designation under which

19 contracts are to be exchanged shall include the words

20 "Reciprocal" or "Inter-Insurance Exchange" or be supplemented

21 by the following words immediately below the name or

22 designation under which such contracts are exchanged: "A

23 Reciprocal" or "An Inter-Insurance Exchange." Such name or

24 designation shall not be the same as or deceptively similar to

25 the name or designation adopted by any other domestic company

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1 or any foreign or non-domestic ~~alien~~ company authorized to

2 transact business in this State.

3 (Source: Laws 1937, p. 696.)

4 (215 ILCS 5/86) (from Ch. 73, par. 698)

5 (Section scheduled to be repealed on January 1, 2027)

6 Sec. 86. Scope of Article.

7 (1) This Article applies to all groups including

8 incorporated and individual unincorporated underwriters

9 transacting an insurance business in this State through an

10 attorney-in-fact under the name Lloyds or under a Lloyds plan

11 of operation. Groups that meet the requirements of subsection

12 (3) are referred to in this Code as "Lloyds", and incorporated

13 and individual unincorporated underwriters are referred to as

14 "underwriters".

15 (2) As used in this Code:

16 "Domestic Lloyds" means a Lloyds having its home office in

17 this State.

18 "Foreign Lloyds" means a Lloyds having its home office in

19 any state of the United States other than this State.

20 "Non-domestic ~~Alien~~Lloyds" means a Lloyds having its home

21 office or principal place of business in any country other

22 than the United States.

23 (3) A domestic Lloyds must: (i) be established pursuant to

24 a statute or written charter; (ii) provide for governance by a

25 board of directors or similar body; and (iii) establish and

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1 monitor standards of solvency of its underwriters. A foreign

2 or non-domestic ~~alien~~ Lloyds must be subject to requirements

3 of its state or country of domicile. Those requirements must

4 be substantially similar to those required of domestic Lloyds.

5 Domestic, foreign, and non-domestic ~~alien~~Lloyds shall not be

6 subject to Section 144 of this Code.

7 (4) All foreign and non-domestic ~~alien~~entities and

8 individuals transacting an insurance business as domestic,

9 foreign, or non-domestic ~~alien~~Lloyds shall notify the

10 Director and the Secretary of State under the provisions of

11 this Article, shall be regulated exclusively by the Director,

12 and shall not be required to obtain a certificate of authority

13 from the Secretary of State pursuant to any other law of this

14 State so long as they solely transact business as a domestic,

15 foreign, ornon-domestic ~~alien~~ Lloyds. Upon notification, the

16 Secretary of State may require submission of additional

17 information to determine whether a foreign or non-domestic

18 ~~alien~~individual or entity is transacting business solely as a

19 domestic, foreign, or non-domestic~~alien~~ Lloyds.

20 (Source: P.A. 100-863, eff. 8-14-18.)

21 (215 ILCS 5/87) (from Ch. 73, par. 699)

22 (Section scheduled to be repealed on January 1, 2027)

23 Sec. 87. Certificate of authority.It shall be unlawful

24 for any domestic, foreign or non-domestic ~~alien~~Lloyds to

25 transact business in this State unless it has first obtained

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1 and has in force a certificate of authority issued by the

2 Director. All certificates of authority issued under the

3 provisions of this Article shall terminate on the thirtieth

4 day of June next following the date of issuance and may be

5 renewed upon compliance with this Code.

6 (Source: Laws 1937, p. 696.)

7 (215 ILCS 5/88) (from Ch. 73, par. 700)

8 (Section scheduled to be repealed on January 1, 2027)

9 Sec. 88. Name. The name of any Lloyds authorized to

10 transact business under this Article shall not be the same as,

11 or deceptively similar to, the name of any domestic company or

12 of any foreign or non-domestic ~~alien~~company authorized to

13 transact business in this State.

14 (Source: Laws 1937, p. 696.)

15 (215 ILCS 5/103) (from Ch. 73, par. 715)

16 (Section scheduled to be repealed on January 1, 2027)

17 Sec. 103. Non-domestic ~~Alien~~Lloyds.

18 (1) Each non-domestic ~~alien~~ Lloyds authorized to transact

19 business in this State shall

20 (a) maintain in this State or any other state of the

21 United States in which they are authorized to transact

22 business, cash or securities of a character conformable to

23 the requirements of Article VIII of this Code for domestic

24 companies at least equal at all times to the minimum of

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1 admitted assets required by this Article for a domestic

2 Lloyds doing the same kind or kinds of business;

3 (b) make deposits of underwriters in this State in

4 accordance with the requirements imposed upon domestic

5 Lloyds;

6 (c) file with the Director an authenticated copy of

7 its power of attorney and an authenticated copy of the

8 trust agreement or other agreement under which deposits

9 made by underwriters in this State are held;

10 (d) notify the Director forthwith of any amendment to

11 its power of attorney, deposit agreement or other

12 documents by filing with the Director an authenticated

13 copy of such document as amended; and

14 (e) notify the Director forthwith of any change in its

15 name or change of attorney-in-fact or change of address of

16 its attorney-in-fact.

17 (2) A non-domestic ~~An alien~~ Lloyds shall not establish

18 branches under other or different names or titles.

19 (3) There shall be filed with the Director by the

20 attorney-in-fact for such Lloyds, who or which shall be a

21 resident person or corporation of this State, at the time of

22 filing the annual statement, or more often if required by the

23 Director, a verified statement setting forth

24 (a) the names and addresses of all underwriters of

25 such Lloyds; and

26 (b) a description of the cash and securities deposited

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1 in trust by each underwriter.

2 (4) Additional underwriters may join and be included in

3 any such Lloyds subject to such conditions and requirements as

4 may from time to time be imposed by such Lloyds and upon

5 meeting the requirements of this Section, such additional

6 underwriters who may so join such Lloyds shall be bound by the

7 documents on file with the Director in the same manner as

8 though they had personally executed the same and shall have

9 the same rights, powers and duties as all other underwriters

10 of such Lloyds. The attorney-in-fact authorized by the

11 underwriters to act for them shall thereafter be the

12 attorney-in-fact for such additional underwriters to the

13 extent of the power of attorney or other document or

14 authorization by such underwriters to the attorney-in-fact.

15 (Source: P.A. 90-794, eff. 8-14-98.)

16 (215 ILCS 5/104) (from Ch. 73, par. 716)

17 (Section scheduled to be repealed on January 1, 2027)

18 Sec. 104. Policy forms.Every policy issued in this State

19 by any domestic, foreign or non-domestic ~~alien~~Lloyds shall

20 have printed upon its face and back the name of such Lloyds,

21 the name and address of its attorney-in-fact in this State or

22 agent for service of process in this State, and in type not

23 smaller than ten point the words "Not Incorporated."

24 (Source: Laws 1937, p. 696.)

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1 (215 ILCS 5/105) (from Ch. 73, par. 717)

2 (Section scheduled to be repealed on January 1, 2027)

3 Sec. 105. Director as agent; service of process.

4 (1) The attorney-in-fact of every Lloyds transacting

5 business in this State shall file with the Director a duly

6 executed instrument whereby such Lloyds shall appoint and

7 constitute the Director, his successor or successors in

8 office, the true and lawful agent of such Lloyds upon whom all

9 lawful process in any action or legal proceeding against such

10 Lloyds may be served, and shall agree that any lawful process

11 against such Lloyds which may be served upon said agent shall

12 be of the same force and validity as if served upon the

13 attorney-in-fact, and that the authority thereof shall

14 continue in force irrevocably so long as any liability of such

15 Lloyds in this State shall remain outstanding.

16 (2) In any suit instituted against any domestic, foreign

17 or non-domestic ~~alien~~Lloyds transacting business in this

18 State, it shall not be necessary to name the underwriters as

19 parties defendant, but such Lloyds may be named as the party

20 defendant in any such suit and service may be had upon all the

21 underwriters by service upon the last appointed

22 attorney-in-fact or by service upon the Director, and not

23 otherwise. Any such suit may be brought in the county in which

24 the cause of action arises or in which the claimant resides.

25 When such process is served upon the Director as agent to

26 accept service, duplicate copies of such process shall be

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1 delivered to him and he shall immediately forward one copy of

2 each such process to the last appointed attorney-in-fact by

3 certified or registered mail, postage prepaid, giving the day

4 and hour of such service.

5 (Source: P.A. 88-535.)

6 (215 ILCS 5/Art. VI heading)

7 ARTICLE VI. FOREIGN OR NON-DOMESTIC ~~ALIEN~~ COMPANIES

8 (Article scheduled to be repealed on January 1, 2027)

9 (215 ILCS 5/108) (from Ch. 73, par. 720)

10 (Section scheduled to be repealed on January 1, 2027)

11 Sec. 108. Companies that may be admitted to do business.

12 (1) Upon complying with the provisions of this Article, a

13 foreign or non-domestic~~alien~~ company organized as a stock

14 company, mutual company, reciprocal, Lloyds or fraternal

15 benefit society may be admitted to transact in this State the

16 kind or kinds of business which a domestic company similarly

17 organized may be authorized to transact under this Code. Any

18 certificate of authority issued to a non-domestic ~~an alien~~

19 Lloyds shall be subject to all of the provisions of Section

20 103.

21 (2) No foreign or non-domestic ~~alien~~ mutual benefit

22 society or burial society shall hereafter be admitted to

23 transact business in this State.

24 (3) No foreign or non-domestic ~~alien~~ company shall

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1 transact in this State any insurance business not classified

2 under Section 4.

3 (Source: P.A. 82-498.)

4 (215 ILCS 5/109) (from Ch. 73, par. 721)

5 (Section scheduled to be repealed on January 1, 2027)

6 Sec. 109. Application for certificate of authority.

7 (1) A foreign or non-domestic ~~alien~~ company in order to

8 procure a certificate of authority to transact business in

9 this State shall make application therefor to the Director.

10 The application shall set forth:

11 (a) the name of the company, and the state or country

12 under the laws of which it is organized or authorized;

13 (b) the title of the Act under or by which it was

14 incorporated or organized, the date of its incorporation

15 or organization and, if a corporation, the period of its

16 duration;

17 (c) the class or classes of insurance business, as

18 provided in Section 4, in which it proposes to engage in

19 this State, and the kinds of insurances in each class it

20 proposes to write in this State;

21 (d) if a life company, that it is not engaged in any

22 state in practices which, if engaged in in this State,

23 would constitute a violation of Section 237;

24 (e) whether or not it was authorized to transact

25 business in this State during any part of the 3-year

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1 period prior to its application and, if so, for what

2 period;

3 (f) whether or not it survives or was formed by a

4 merger, consolidation, reorganization, or reincorporation

5 effected within 3 years prior to its application and, if

6 so, whether and for what period or periods any of the

7 companies that are parties to the merger, consolidation,

8 reorganization, or reincorporation were authorized to

9 transact business in this State within the 3-year period

10 prior to its application; and

11 (g) such additional information as the Director may

12 require to enable the Director to determine whether the

13 company is entitled to a certificate of authority to

14 transact business in this State and to determine and

15 assess the taxes, fees and charges payable as in this Code

16 prescribed.

17 (2) Such application shall be made on forms prescribed and

18 furnished by the Director and shall be executed by the company

19 by its president or a vice-president or executive officer

20 corresponding thereto, and verified by such officer, and if a

21 corporation, the corporate seal shall be thereto affixed,

22 attested by its secretary or other proper officer.

23 (Source: P.A. 90-655, eff. 7-30-98.)

24 (215 ILCS 5/110) (from Ch. 73, par. 722)

25 (Section scheduled to be repealed on January 1, 2027)

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1 Sec. 110. Delivery to director of application and

2 documents. There shall be delivered to the Director

3 (a) the application of the company for a certificate

4 of authority;

5 (b) a copy of its articles of incorporation or

6 articles of association as amended, duly certified by the

7 proper officer of the state or country under whose laws

8 the company is organized or incorporated, or if a

9 reciprocal or Lloyds the power of attorney of the

10 attorney-in-fact;

11 (c) if a non-domestic ~~an alien~~ company, a copy of the

12 appointment and authority of its United States manager,

13 certified by a proper officer of the company;

14 (d) a copy of its by-laws or regulations, and if a

15 fraternal benefit society, a copy of its constitution,

16 certified by its secretary or officer corresponding

17 thereto;

18 (e) the instrument authorizing service of process on

19 the Director required by section 112;

20 (f) a statement of its financial condition and

21 business as of the end of the preceding calendar year

22 complying as to form, content and verification with the

23 requirements of this Code for annual statements, or a

24 financial statement as of such later date as the Director

25 may require;

26 (g) a copy of the last report of examination certified

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1 to by an insurance commissioner or other proper

2 supervisory official; and

3 (h) a certificate from the proper official of the

4 state or country wherein it is incorporated or organized

5 that it is duly incorporated or organized and is

6 authorized to write the kind or kinds of insurance which

7 it proposes to write in this State.

8 (Source: Laws 1965, p. 422.)

9 (215 ILCS 5/111) (from Ch. 73, par. 723)

10 (Section scheduled to be repealed on January 1, 2027)

11 Sec. 111. Conditions of issuance of certificate of

12 authority.

13 (1) Before a certificate of authority to transact business

14 in this State is issued to a foreign ornon-domestic ~~alien~~

15 company, such company shall satisfy the Director that:

16 (a) the company is duly organized under the laws of

17 the state or country under whose laws it professes to be

18 organized and authorized to do the business it is

19 transacting or proposes to transact;

20 (b) its name is not the same as, or deceptively

21 similar to, the name of any domestic company, or of any

22 foreign or non-domestic ~~alien~~company authorized to

23 transact business in this State;

24 (c) if a company transacting business of the kind or

25 kinds enumerated in Class 1 of Section 4, it is not

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1 engaging in practices in any state which if engaged in

2 this State, would constitute a violation of Section 237;

3 and it is not transacting any kinds of business other than

4 those enumerated in Class 1 of Section 4;

5 (d) if a stock company, it has a paid up capital and

6 surplus at least equal to the capital and original surplus

7 required by this Code for a domestic company doing the

8 same kind or kinds of business or, if a mutual company or

9 reciprocal, it has a surplus and provision for contingent

10 liability of policyholders, at least equal to the original

11 surplus and provision for contingent liability of

12 policyholders required for a similar domestic company

13 doing the same kind or kinds of business, or, if a

14 fraternal benefit society, it meets the requirements

15 prescribed in this Code for the organization of a domestic

16 company or society, or if a Lloyds it meets the

17 requirements of Article V;

18 (e) its funds are invested in accordance with the laws

19 of its domicile; and

20 (f) in the case of a stock company its minimum capital

21 and surplus and required reserves, or in the case of a

22 mutual company or a reciprocal proposing to issue policies

23 without contingent liability, its minimum surplus and

24 required reserves, or in the case of any other company,

25 all its funds, are invested in securities or property

26 which afford a degree of financial security equal to that

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1 required for similar domestic companies, provided that

2 this clause shall not be construed as requiring the

3 application of limitations relating either to the kind or

4 amount of securities prescribed by this Code for the

5 investments of domestic companies.

6 (2) In determining whether a non-domestic ~~an alien~~ company

7 complies with the provisions of subsection (1) of this section

8 the Director shall consider only business transacted in the

9 United States, only the assets described in Section 60j and

10 only liabilities in connection with its United States

11 business.

12 (3) Before a certificate of authority is issued to a

13 foreign or non-domestic ~~alien~~company, other than a Lloyds, it

14 shall deposit with the Director securities which are

15 authorized investments for similar domestic companies under

16 Section 126.11A(1), 126.11A(2), 126.24A(1), or 126.24A(2) of

17 the amount, if any, required of a domestic company similarly

18 organized and doing the same kind or kinds of business; or in

19 lieu of such deposit such foreign or non-domestic ~~alien~~

20 company shall satisfy the Director that it has on deposit with

21 an official of a state of the United States or a depositary

22 designated or authorized for such purpose by such official,

23 authorized by the law of such state to accept such deposit,

24 securities of at least a like amount, for the benefit and

25 security of all creditors, policyholders and policy

26 obligations of such company.

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1 (4) Before issuing a certificate of authority to a foreign

2 or non-domestic ~~alien~~company, the Director may cause an

3 examination to be made of the condition and affairs of such

4 company.

5 (Source: P.A. 90-418, eff. 8-15-97; 90-794, eff. 8-14-98.)

6 (215 ILCS 5/112) (from Ch. 73, par. 724)

7 (Section scheduled to be repealed on January 1, 2027)

8 Sec. 112. Service of process - Director as attorney.

9 (1) Every foreign or non-domestic ~~alien~~ company desiring

10 to transact business in this State shall file with the

11 Director a duly executed instrument whereby the company shall

12 appoint and constitute the Director and his successor or

13 successors in office the true and lawful attorney of such

14 company upon whom all lawful process in any action or legal

15 proceeding against it may be served and shall agree that any

16 such lawful process against it which may be served upon its

17 said attorney as provided in this section shall be of the same

18 force and validity as if served upon the company and that the

19 authority thereof shall continue in force irrevocably so long

20 as any liability of the company in the State shall remain

21 outstanding.

22 (2) Process authorized by such instrument or by any

23 similar instrument heretofore executed shall be served by

24 delivering to and leaving with the Director duplicate copies

25 of such process with payment of the fee prescribed by this

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1 Code, and the service thereof upon such attorney shall be

2 deemed service upon the company. The Director shall forthwith

3 forward one copy of each such process by certified or

4 registered mail prepaid to the company, or in the case ofa

5 non-domestic ~~an alien~~ company, to the United States Manager or

6 last appointed United States general agent of the company,

7 giving the day and the hour of such service. Service of such

8 process shall not be complete until the copy thereof has been

9 so mailed and received by the company, and the certified

10 receipt or registry receipt shall be prima facie evidence of

11 the completion of such service. Service of process on a

12 reciprocal or Lloyds shall be governed by sections 77 and 105

13 respectively.

14 (Source: P.A. 83-598.)

15 (215 ILCS 5/113) (from Ch. 73, par. 725)

16 (Section scheduled to be repealed on January 1, 2027)

17 Sec. 113. When certificate of authority to issue.When a

18 foreign or non-domestic ~~alien~~ company has complied with the

19 requirements of this Article and all other requirements

20 imposed on such company by existing laws and has paid the

21 taxes, fees and charges imposed by law, and the operational

22 history of the company when reviewed in conjunction with its

23 loss experience, the kinds and nature of risks insured, the

24 financial condition of the company and its ownership and the

25 ratio of annual premium volume to incurred acquisition

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1 expenses and to its policyholders' surplus indicates a

2 condition such that the expanded operation of the company in

3 this State will not create a condition which might be

4 hazardous to its policyholders, creditors or the general

5 public, the Director must file in his office the documents

6 delivered to him and must issue to the company a certificate of

7 authority to transact in this State the kind or kinds of

8 business specified therein. Such certificate shall expire on

9 the 30th day of June of the calendar year succeeding the

10 calendar year in which such certificate is issued.

11 (Source: P.A. 77-1513.)

12 (215 ILCS 5/113.1) (from Ch. 73, par. 725.1)

13 (Section scheduled to be repealed on January 1, 2027)

14 Sec. 113.1. Effect of acceptance of certificate of

15 authority.

16 (1) No foreign or non-domestic ~~alien~~ company which accepts

17 a certificate of authority or renewal certificate of authority

18 to transact in this State any insurance business as described

19 in Section 4 of this Code shall transfer by sale,

20 contribution, merger, consolidation, reinsurance or otherwise,

21 its direct policy obligations under insurance contracts with

22 Illinois policyholders unless:

23 a. the transfer is made to a company authorized to

24 transact in this State the type of insurance business

25 transferred; or

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1 b. the transferring company gives 30 days prior

2 written notice to each policyholder to be transferred

3 stating that the insurance contract and the company's

4 liabilities thereunder are to be transferred to a

5 specified insurer which is not subject to regulation by

6 the Illinois Insurance Department or the administrative

7 requirements of the Illinois Insurance Code; and

8 c. the unauthorized company to which the insurance

9 business is to be transferred makes and maintains a

10 special deposit with the Director for the protection and

11 benefit of all Illinois policyholders of such unauthorized

12 company, in assets acceptable to the Director and having a

13 fair market value not less than the required statutory

14 reserves for the Illinois insurance business to be

15 transferred.

16 (2) Any and all transfers resulting in the violation of

17 this Section shall be construed as a violation of all

18 applicable provisions of Article VII of this Code; including,

19 but not limited to, Section 121-4 providing for liability to

20 insureds for claims or insured losses not honored by the

21 unauthorized insurer.

22 (3) Unless permitted by and obtained in compliance with

23 this Section, or specifically authorized by another provision

24 of this Code, it shall be unlawful for any unauthorized

25 company to obtain as direct insurer any insurance contracts

26 written in this State.

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1 (Source: P.A. 86-753.)

2 (215 ILCS 5/114) (from Ch. 73, par. 726)

3 (Section scheduled to be repealed on January 1, 2027)

4 Sec. 114. Renewal of certificate of authority.

5 (1) The Director shall renew for one year the certificate

6 of authority of a foreign ornon-domestic ~~alien~~ company on the

7 first day of July of the calendar year following the calendar

8 year in which it is admitted to transact business in this State

9 and annually thereafter, without application by the company,

10 upon payment of the annual privilege tax imposed by this Code,

11 if any, provided the Director is satisfied that

12 (a) none of the facts specified in this article as

13 grounds for revoking a certificate of authority exists;

14 and

15 (b) the company is complying with the conditions for

16 admission in respect to capital, contingent liability, the

17 investment of its assets or the maintenance of deposits in

18 this or another state and maintains the surplus which

19 similar domestic companies transacting the same kind or

20 kinds of business are required to maintain.

21 (2) Except in case of nonpayment of taxes, the Director

22 shall give notice of his intention to refuse to renew the

23 certificate of authority of a foreign ornon-domestic ~~alien~~

24 company and the grounds therefor at least twenty days before

25 the end of the term for which the existing certificate was

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1 issued, and, the company shall be given an opportunity for a

2 hearing before the end of such term.

3 (3) In the event that a company admitted to transact

4 business in this State prior to the effective date of this Code

5 has been and is transacting in this State or in any other state

6 or country the kind or kinds of business enumerated in Class 1

7 of Section 4 and in addition thereto any of the kinds of

8 business not enumerated in such class, the Director may for a

9 period of three years renew annually its certificate of

10 authority to transact such kinds of business. At the end of

11 such three year period or at the end of any extended period as

12 herein provided for, the Director may extend the period during

13 which the certificate of authority of such company may be

14 renewed annually, upon a showing by the company at a hearing

15 before the Director that

16 (a) it has made reasonable progress in the

17 discontinuance of kinds of business other than those

18 enumerated in Class 1 of Section 4; and

19 (b) complete and immediate discontinuance of such

20 kinds of business would result in undue loss to the

21 company and the policyholders would suffer materially

22 thereby; or

23 (c) there are other reasons for such extension deemed

24 by the Director to be good and sufficient. The extension

25 herein provided for shall be for such period as the

26 Director may deem proper on the showing made, but the

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1 total of such extended periods shall not exceed three

2 years.

3 (Source: P.A. 82-498.)

4 (215 ILCS 5/115) (from Ch. 73, par. 727)

5 (Section scheduled to be repealed on January 1, 2027)

6 Sec. 115. Amended certificate of authority.

7 (1) In the event that a foreign or non-domestic ~~alien~~

8 company authorized to transact business in this State changes

9 its name or desires to transact in this State a kind or kinds

10 of business other than those it is then authorized to

11 transact, it shall file with the Director an application for

12 an amended certificate of authority.

13 (2) Such application shall comply as to form and manner of

14 execution with the requirements of this Article for an

15 original application and shall set forth the name of the

16 company, the respects in which the company desires its

17 certificate of authority amended, and such other information

18 as is necessary or appropriate to enable the Director to

19 determine whether such an amended certificate of authority

20 should be issued.

21 (3) The Director shall issue such amended certificate if

22 he is satisfied that

23 (a) the company might lawfully be authorized to

24 transact the kind or kinds of business it desires to

25 transact if application for such authority were made in an

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1 original application; and

2 (b) the conditions provided for in Section 111 are

3 complied with.

4 (Source: Laws 1937, p. 696.)

5 (215 ILCS 5/116) (from Ch. 73, par. 728)

6 (Section scheduled to be repealed on January 1, 2027)

7 Sec. 116. Amendments to articles of incorporation.

8 Whenever the articles of incorporation or articles of

9 association of a foreign ornon-domestic ~~alien~~ company

10 authorized to transact business in this State shall be

11 amended, such company shall, within thirty days after the

12 effective date of such amendment, file with the Director a

13 copy thereof duly authenticated by the proper officer of the

14 state or country under the laws of which such company is

15 organized. The filing of such copy shall not of itself enlarge

16 the authority of the company in the transaction of business in

17 this State, nor authorize such company to transact business in

18 this State under any other name than the name set forth in its

19 certificate of authority.

20 (Source: Laws 1937, p. 696.)

21 (215 ILCS 5/117) (from Ch. 73, par. 729)

22 (Section scheduled to be repealed on January 1, 2027)

23 Sec. 117. Merger or consolidation.

24 (1) Whenever a foreign or non-domestic ~~alien~~ company

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1 authorized to transact business in this State shall be the

2 surviving company of a statutory merger permitted by the laws

3 of the state or country under which it is organized, and such

4 merger is not subject to the provisions of Article X; it shall

5 forthwith file with the Director

6 (a) copies of the agreement and certificate of merger

7 duly authenticated by the proper officer of the state or

8 country under the laws of which such statutory merger was

9 effected; and

10 (b) if any of the companies party to such merger were

11 not admitted to transact business in this State, a

12 statement of the financial condition and business of each

13 of such companies, as of the end of the preceding calendar

14 year complying as to form, content and verification with

15 the requirements of this Code for annual statements, or a

16 financial statement as of such later date as the Director

17 may require.

18 (2) It shall not be necessary for such surviving company

19 to procure a new certificate of authority to transact business

20 in this State nor an amended certificate unless the name of

21 such company be changed thereby or unless the company desires

22 to transact in this State a kind or kinds of business other

23 than those which it is then authorized to transact.

24 (3) Whenever a foreign or non-domestic ~~alien~~ company

25 authorized to transact business in this State shall be a party

26 to a statutory merger and such company shall not be the

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1 surviving company, or if such foreign or non-domestic ~~alien~~

2 company shall be a party to a consolidation, then the

3 certificate of authority of such foreign ornon-domestic ~~alien~~

4 company shall terminate upon such merger or consolidation, and

5 the surviving company, if not previously authorized to

6 transact business in this State, or the new company, in the

7 case of consolidation, shall be subject to the same

8 requirements for admission to transact business in this State

9 as any other foreign or non-domestic ~~alien~~ company.

10 (Source: Laws 1937, p. 696.)

11 (215 ILCS 5/118) (from Ch. 73, par. 730)

12 (Section scheduled to be repealed on January 1, 2027)

13 Sec. 118. Withdrawal from the State.

14 (1) Any foreign or non-domestic ~~alien~~ company admitted to

15 do business in this State may withdraw from this State by

16 filing with the Director a statement of withdrawal, signed and

17 verified by a president, vice-president or an executive

18 officer corresponding thereto, or in the case of a reciprocal

19 or Lloyds, by the attorney-in-fact, and setting forth

20 (a) that the company surrenders its authority to

21 transact business in this State and returns for

22 cancellation its certificate of authority;

23 (b) except in the case of a reciprocal or Lloyds, that

24 the withdrawal of the company from this State has been

25 duly authorized by the board of directors, trustees or

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1 other governing body of such company; and

2 (c) a postoffice address to which the Director may

3 mail a copy of any process against the withdrawing company

4 that may be served upon him.

5 (2) Upon the filing of such statement together with its

6 certificate of authority with the Director and payment of any

7 taxes or charges that may be due, the Director shall cancel the

8 certificate of authority and return the cancelled certificate

9 to the company. The authority of the company to transact

10 business in this State shall thereupon cease.

11 (Source: Laws 1937, p. 696.)

12 (215 ILCS 5/119) (from Ch. 73, par. 731)

13 (Section scheduled to be repealed on January 1, 2027)

14 Sec. 119. Revocation and suspension of certificate of

15 authority.

16 (1) The Director may revoke or suspend the certificate of

17 authority of a foreign ornon-domestic ~~alien~~ company or may by

18 order require such insurance company to pay to the people of

19 the State of Illinois a penalty in a sum not exceeding $500,

20 and upon the failure of such insurance company to pay such

21 penalty within 20 days after the mailing of such order,

22 postage prepaid, certified or registered, and addressed to the

23 last known place of business of such insurance company, unless

24 such order is stayed by an order of a court of competent

25 jurisdiction, the Director of Insurance may revoke or suspend

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1 the license of such insurance company for any period of time up

2 to, but not exceeding a period of, 2 years whenever he finds

3 that such company

4 (a) is insolvent;

5 (b) fails to comply with the requirements for

6 admission in respect to capital, contingent liability, the

7 investment of its assets or the maintenance of deposits in

8 this or another state or fails to maintain the surplus

9 which similar domestic companies transacting the same kind

10 or kinds of business are required to maintain;

11 (c) is in such a financial condition that its further

12 transaction of business in this State would be hazardous

13 to policyholders and creditors in this State and to the

14 public;

15 (d) has refused or neglected to pay a valid final

16 judgment against such company within 30 days after the

17 rendition of such judgment;

18 (e) has violated any law of this State or has in this

19 State violated its charter or exceeded its corporate

20 powers;

21 (f) has refused to submit its books, papers, accounts,

22 records, or affairs to the reasonable inspection or

23 examination of the Director, his actuaries, deputies or

24 examiners;

25 (g) has an officer who has refused upon reasonable

26 demand to be examined under oath touching its affairs;

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1 (h) fails to file its annual statement within 30 days

2 after the date when it is required by law to file such

3 statement;

4 (i) fails to file with the Director a copy of an

5 amendment to its charter or articles of association within

6 30 days after the effective date of such amendment;

7 (j) fails to file with the Director copies of the

8 agreement and certificate of merger and the financial

9 statements of the merged companies, if required, within 30

10 days after the effective date of the merger;

11 (k) fails to pay any fees, taxes or charges prescribed

12 by this Code within 30 days after they are due and payable;

13 provided, however, that in case of objection or legal

14 contest the company shall not be required to pay the tax

15 until 30 days after final disposition of the objection or

16 legal contest.

17 (l) fails to file any report or reports for the

18 purpose of enabling the Director to compute the taxes to

19 be paid by such company within 30 days after the date when

20 it is required by law to file such report or reports;

21 (m) has had its corporate existence dissolved or its

22 certificate of authority revoked in the state in which it

23 was organized; or

24 (n) has had all its risks reinsured in their entirety

25 in another company.

26 (2) Except for the grounds stated in clauses (a), (c) or

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1 (k) of subsection (1) of this section the Director shall not

2 revoke or suspend the certificate of authority of a foreign or

3 non-domestic ~~alien~~company until he has given the company at

4 least twenty days' notice of the revocation or suspension and

5 of the grounds therefor and has afforded the company an

6 opportunity for a hearing.

7 (Source: P.A. 83-598.)

8 (215 ILCS 5/120) (from Ch. 73, par. 732)

9 (Section scheduled to be repealed on January 1, 2027)

10 Sec. 120. Withdrawal of deposits.When a foreign or

11 non-domestic ~~alien~~ company has withdrawn from this State or

12 has had its certificate of authority to transact business in

13 this State revoked and such company desires to withdraw any

14 deposit made in this State pursuant to this Code, the Director

15 shall upon the application of the company and at its expense,

16 give notice of such intention to the insurance commissioner or

17 other proper supervisory official of each state or country

18 where it appears from information on file with the Director,

19 the company is authorized to transact business, and shall

20 publish notice of such intention in a newspaper of general

21 circulation in this State once a week for four consecutive

22 weeks. After such notice and publication the Director shall

23 deliver to such company or its assigns the securities so

24 deposited when he is satisfied upon examination and

25 investigation made by him, or under his authority, and upon

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1 the oaths of the president and secretary or other chief

2 officers of the company that all debts and liabilities of

3 every kind due and to become due which the deposit was made to

4 secure have been paid or otherwise extinguished.

5 (Source: Laws 1937, p. 696.)

6 (215 ILCS 5/123) (from Ch. 73, par. 735)

7 Sec. 123. Service of process upon an unauthorized foreign

8 or non-domestic ~~alien~~company.

9 (1) The purpose of this Section is to subject unauthorized

10 foreign and non-domestic ~~alien~~ companies to the jurisdiction

11 of courts of this State in actions by or on behalf of insureds,

12 reinsureds, or beneficiaries under insurance or reinsurance

13 contracts. The Legislature declares that it is a subject of

14 concern that many residents of this State or corporations

15 authorized to do business in this State hold policies of

16 insurance or reinsurance issued by companies not authorized to

17 do business in this State, thus presenting to such residents

18 or corporations authorized to do business in this State the

19 often insuperable obstacle of resorting to distant forums for

20 the purpose of asserting legal rights under such policies. In

21 furtherance of such State interest, the Legislature herein

22 provides a method of substituted service of process upon such

23 companies and declares that in so doing it exercises its power

24 to protect its residents and corporations authorized to do

25 business in this State and to define, for the purpose of this

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1 statute, what constitutes doing business in this State, and

2 also exercises powers and privileges available to the State by

3 virtue of Public Law 15, 79th Congress of the United States,

4 Chapter 20, 1st. Sess., S. 340, as amended, which declares

5 that the business of insurance and every person engaged

6 therein shall be subject to the laws of the several states.

7 (2) Any of the following acts in this State, effected by

8 mail or otherwise, by an unauthorized foreign ornon-domestic

9 ~~alien~~company: (a) the issuance or delivery of contracts of

10 insurance or reinsurance to residents of this State or to

11 corporations authorized to do business therein, (b) the

12 solicitation of applications for such contracts, (c) the

13 collection of premiums, membership fees, assessments or other

14 considerations for such contracts, or (d) any other

15 transaction of business, is equivalent to and shall constitute

16 an appointment by such company, of the Director and his or her

17 successor or successors in office, to be its true and lawful

18 attorney upon whom may be served all lawful process in any

19 action or proceeding against it, arising out of such policy or

20 contract of insurance or reinsurance, and the acts shall be a

21 signification of its agreement that any such process against

22 it which is so served shall be of the same legal force and

23 validity as if served upon the company.

24 (3) Service of such process shall be made by delivering

25 and leaving with the Director a copy thereof and the payment to

26 the Director of the fee prescribed by this Code. The Director

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1 shall keep a record of all process so served upon him or her.

2 Such process shall be sufficient service upon such foreign or

3 non-domestic ~~alien~~ company provided notice of such service and

4 a copy of the process are, within 10 days thereafter, sent by

5 certified or registered mail by the plaintiff's attorney of

6 record to the defendant at the last known principal place of

7 business of the defendant, and the defendant's receipt and the

8 plaintiff's attorney's affidavit of compliance herewith are

9 filed with the Clerk of the Court in which such action is

10 pending on or before the return date of the process or within

11 such further time as the court may allow.

12 (4) Service of process in any such action against any such

13 company shall in addition to the mode hereinabove described be

14 valid and legal if served upon any person within this State

15 who, in this State on behalf of such company, is

16 (a) soliciting insurance or reinsurance, or

17 (b) making, issuing, or delivering any policies or

18 contracts of insurance or reinsurance, or

19 (c) collecting or receiving any premium, membership

20 fee, assessment or other consideration for insurance or

21 reinsurance, or

22 (d) in any manner aiding or assisting in doing any of

23 the things enumerated in clauses (a), (b), or (c) of this

24 subsection; and a copy of such process is within 10 days

25 thereafter sent by certified or registered mail by the

26 plaintiff's attorney of record to the defendant at the

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1 last known principal place of business of the defendant

2 and the defendant's receipt and the plaintiff's attorney's

3 affidavit of compliance herewith are filed with the clerk

4 of the court in which such action is pending on or before

5 the return date of the process or within such further time

6 as the court may allow.

7 (5) Before any unauthorized foreign or non-domestic ~~alien~~

8 company shall file or cause to be filed any pleading in any

9 action or proceeding, including any arbitration, instituted

10 against it, such unauthorized company shall either (1) deposit

11 with the clerk of the court in which such action or proceeding

12 is pending or with the clerk of the court in the jurisdiction

13 in which the arbitration is pending cash or securities or file

14 with such clerk a bond with good and sufficient sureties, to be

15 approved by the court, in an amount to be fixed by the court

16 sufficient to secure the payment of any final judgment which

17 may be rendered in such action, proceeding, or arbitration; or

18 (2) where the unauthorized company continues to transact the

19 business of insurance by issuing new contracts of insurance or

20 reinsurance, procure a certificate of authority to transact

21 the business of insurance in this State.

22 The court in any action or proceeding, in which service is

23 made in the manner provided in subsections (3) or (4) may, in

24 its discretion, order such postponement as may be necessary to

25 afford the defendant reasonable opportunity to comply with the

26 provisions of this subsection and to defend such action.

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1 Nothing in this Section is to be construed to prevent an

2 unauthorized foreign ornon-domestic ~~alien~~ company from filing

3 a motion to quash process or to set aside service thereof made

4 in the manner provided in subsections (3) or (4) on the ground

5 either (a) that such unauthorized company has not done any of

6 the acts enumerated in subsection (2) or (b) that the person on

7 whom service was made pursuant to subsection (4) was not doing

8 any of the acts therein enumerated.

9 (6) In any action against an unauthorized foreign or

10 non-domestic ~~alien~~company upon a contract of insurance or

11 reinsurance issued or delivered in this State to a resident

12 thereof or to a corporation authorized to do business therein,

13 if the company has failed for 30 days after demand prior to the

14 commencement of the action to make payment in accordance with

15 the terms of the contract, and it appears to the court that

16 such refusal was vexatious and without reasonable cause, the

17 court may allow to the plaintiff a reasonable attorney fee and

18 include such fee in any judgment that may be rendered in such

19 action. Such fee shall not exceed 12-1/2 per cent of the amount

20 which the court or jury finds the plaintiff is entitled to

21 recover against the insurer, but in no event shall such fee be

22 less than $25. Failure of a company to defend any such action

23 shall be deemed prima facie evidence that its failure to make

24 payment was vexatious and without reasonable cause.

25 (7) No plaintiff shall be entitled to a judgment by

26 default under this Section until the expiration of 30 days

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1 from the date of the filing of the affidavit of compliance.

2 (8) The provisions of this Section shall not apply to any

3 action or proceeding against any unauthorized foreign or

4 non-domestic ~~alien~~company arising out of any contract of

5 direct insurance

6 (a) effected in accordance with Section 445, or

7 (b) covering ocean marine, aircraft, railway insurance

8 risks, or

9 (c) against legal liability arising out of the

10 ownership, operation or maintenance of any property having

11 a permanent situs outside this State, or

12 (d) against loss of or damage to any property having a

13 permanent situs outside this State,

14 where such contract of insurance contains a provision

15 designating the Director and his or her successor or

16 successors in office or a bona fide resident of Illinois to be

17 the true and lawful attorney of such non-admitted insurer upon

18 whom may be served all lawful process in any action or

19 proceeding arising out of any such contract of insurance or

20 where the insurer enters a general appearance in any such

21 action or proceeding.

22 (9) Nothing in this Section contained shall limit or

23 affect the right to serve any process, notice or demand

24 required or permitted by law to be served upon any company in

25 any other manner now or hereafter permitted by law.

26 (Source: P.A. 90-53, eff. 7-3-97.)

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1 (215 ILCS 5/123.1) (from Ch. 73, par. 735.1)

2 Sec. 123.1. Service of process upon unauthorized insurers

3 for false advertising.

4 (1) (a) The purpose of this Act is to subject to the

5 jurisdiction of the Director of Insurance of this State and to

6 the jurisdiction of the courts of this State insurers not

7 authorized to transact business in this State which place in

8 or send into this State any false advertising designed to

9 induce residents of this State to purchase insurance from

10 insurers not authorized to transact business in this State.

11 The Legislature declares it is in the interest of the citizens

12 of this State who purchase insurance from insurers which

13 solicit insurance business in this State in the manner set

14 forth in the preceding sentence that such insurers be subject

15 to the provisions of this Act. In furtherance of such state

16 interest, the Legislature herein provides a method of

17 substituted service of process upon such insurers and declares

18 that in so doing, it exercises its power to protect its

19 residents and also exercises powers and privileges available

20 to the State by virtue of Public Law 15, 79th Congress of the

21 United States, Chapter 20, 1st Session, S. 340, which declares

22 that the business of insurance and every person engaged

23 therein shall be subject to the laws of the several states; the

24 authority provided herein to be in addition to any existing

25 powers of this State.

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1 (b) The provisions of this Section shall be liberally

2 construed.

3 (2) No unauthorized foreign or non-domestic ~~alien~~ insurer

4 of the kind described in subsection (1) shall make, issue,

5 circulate or cause to be made, issued or circulated, to

6 residents of this State any estimate, illustration, circular,

7 pamphlet, or letter, or cause to be made in any newspaper,

8 magazine or other publication or over any radio or television

9 station, any announcement or statement to such residents

10 misrepresenting its financial condition or the terms of any

11 contracts issued or to be issued or the benefits or advantages

12 promised thereby, or the dividends or share of the surplus to

13 be received thereon in violation of Article XXVI, and whenever

14 the Director shall have reason to believe that any such

15 insurer is engaging in such unlawful advertising, it shall be

16 his duty to give notice of such fact by certified or registered

17 mail to such insurer and to the insurance supervisory official

18 of the domiciliary state of such insurer. For the purpose of

19 this Section the domiciliary state of a non-domestic ~~an alien~~

20 insurer shall be deemed to be the state of entry or the state

21 of the principal office in the United States.

22 (3) If after thirty days following the giving of the

23 notice mentioned in subsection (2) such insurer has failed to

24 cease making, issuing, or circulating such false

25 misrepresentations or causing the same to be made, issued or

26 circulated in this State, and if the Director has reason to

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1 believe that a proceeding by him in respect to such matters

2 would be to the interest of the public, and that such insurer

3 is issuing or delivering contracts of insurance to residents

4 of this State or collecting premiums on such contracts or

5 doing any of the acts enumerated in subsection (4), he shall

6 take action against such insurer under Article XXVI.

7 (4) (a) Any of the following acts in this State, effected

8 by mail or otherwise, by any such unauthorized foreign or

9 non-domestic ~~alien~~ insurer:

10 (i) the issuance or delivery of contracts or insurance

11 to residents of this State; or

12 (ii) the solicitation of applications for such

13 contracts; or

14 (iii) the collection of premiums, membership fees,

15 assessments or other considerations for such contracts; or

16 (iv) any other transaction of insurance business;

17 is equivalent to and shall constitute an appointment by such

18 insurer of the Director and his successor or successors in

19 office, to be its true and lawful attorney, upon whom may be

20 served all statements of charges, notices and lawful process

21 in any proceeding instituted in respect to the

22 misrepresentations set forth in subsection (2) hereof under

23 the provisions of Article XXVI, or in any action, suit or

24 proceeding for the recovery of any penalty therein provided,

25 and any such act shall be signification of its agreement that

26 such service of statement of charges, notices or process is of

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1 the same legal force and validity as personal service of such

2 statement of charges, notices or process in this State, upon

3 such insurer.

4 (b) Service of a statement of charges and notices under

5 Article XXVI shall be made by any deputy or employee of the

6 Department of Insurance delivering to and leaving with the

7 Director or some person in apparent charge of his office, two

8 copies thereof. Service of process issued by any court in any

9 action, suit or proceeding to collect any penalty under

10 Article XXVI provided, shall be made by delivering and leaving

11 with the Director, or some person in apparent charge of his

12 office, two copies thereof. The Director shall forthwith cause

13 to be mailed by certified or registered mail one of the copies

14 of such statement of charges, notices or process to the

15 defendant at its last known principal place of business, and

16 shall keep a record of all statements of charges, notices and

17 process so served. Such service of statement of charges,

18 notices or process shall be sufficient provided they shall

19 have been so mailed and the defendant's receipt or receipt

20 issued by the post office with which the letter is certified or

21 registered, showing the name of the sender of the letter and

22 the name and address of the person to whom the letter is

23 addressed, and the affidavit of the person mailing such letter

24 showing a compliance herewith are filed with the Director in

25 the case of any statement of charges or notices, or with the

26 clerk of the court in which such action is pending in the case

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1 of any process, on or before the date the defendant is required

2 to appear or within such further time as may be allowed.

3 (c) Service of statement of charges, notices and process

4 in any such proceeding, action or suit shall in addition to the

5 manner provided in paragraph (b) of this subsection be valid

6 if served upon any person within this State who on behalf of

7 such insurer is

8 (i) soliciting insurance; or

9 (ii) making, issuing or delivering any policies or

10 contracts of insurance; or

11 (iii) collecting or receiving in this State any

12 premium, membership fee, assessment or other consideration

13 for insurance; or

14 (iv) in any manner aiding or assisting in doing any of

15 the things enumerated in clauses (i), (ii) or (iii) of

16 this paragraph;

17 and a copy of such statement of charges, notices or process is

18 sent within ten days thereafter by certified or registered

19 mail by or on behalf of the Director to the defendant at the

20 last known principal place of business of the defendant, and

21 the defendant's receipt, or the receipt issued by the post

22 office with which the letter is certified or registered,

23 showing the name of the sender of the letter, the name and

24 address of the person to whom the letter is addressed, and the

25 affidavit of the person mailing the same showing a compliance

26 herewith, are filed with the Director in the case of any

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1 statement of charges or notices, or with the clerk of the court

2 in which such action is pending in the case of any process, on

3 or before the date the defendant is required to appear or

4 within such further time as the court may allow.

5 (d) No cease or desist order or judgment by default under

6 this section shall be entered until the expiration of thirty

7 days from the date of the filing of the affidavit of

8 compliance.

9 (e) Service of process and notice under the provisions of

10 this section shall be in addition to all other methods of

11 service provided by law, and nothing in this section shall

12 limit or prohibit the right to serve any statement of charges,

13 notices or process upon any insurer in any other manner now or

14 hereafter permitted by law.

15 (5) When used in this Act, "residents" shall mean and

16 include person, partnership or corporation, domestic,

17 non-domestic, ~~alien~~ or foreign.

18 (Source: P.A. 83-598.)

19 (215 ILCS 5/123.3) (from Ch. 73, par. 735.3)

20 Sec. 123.3. Insurance Sales by Companies in Hazardous

21 Financial Condition Prohibited. Notwithstanding any other

22 provision of this Code, no unauthorized foreign or

23 non-domestic ~~alien~~ company officer, director, trustee, agent

24 or employee of such company may renew, issue, or deliver or

25 cause to be renewed, issued or delivered any policy, contract,

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1 or certificate of insurance for which a premium is charged or

2 collected if the Director of Insurance has found that such

3 company is in a hazardous financial condition and such

4 officer, director, trustee, agent or employee is aware of such

5 finding.

6 If upon request of the Director, such company officer,

7 director, trustee or employee is unable or unwilling to submit

8 to the Director a copy of such unauthorized company's most

9 recent financial statement, such unwillingness or inability

10 shall be deemed prima facie evidence of a hazardous financial

11 condition.

12 However, a finding of hazardous financial condition does

13 not prevent the issuance or renewal of a policy when an insured

14 or owner exercises an option granted to him under an existing

15 policy to obtain new, renewed or converted insurance coverage.

16 Any company officer, director, trustee, agent, or employee

17 of such company violating this Section shall be guilty of a

18 Class A misdemeanor.

19 (Source: P.A. 85-1139.)

20 (215 ILCS 5/123C-8) (from Ch. 73, par. 735C-8)

21 (Section scheduled to be repealed on January 1, 2027)

22 Sec. 123C-8. Merger, consolidation, plans of exchange and

23 reorganization.

24 A. The provisions of Article X shall apply to captive

25 insurance companies; provided, however, that:

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1 (1) if the surviving or new company is to be a domestic

2 captive insurance company,

3 (a) the Director shall, in determining whether

4 such company meets the requirements set forth in

5 paragraph (b) of subsection (2) of Section 162, refer

6 only to the provisions of this Article VIIC and the

7 other provisions of Article X;

8 (b) the Director shall, in determining whether

9 such company meets the requirements of Sections 123C-3

10 and 123C-4, take into account the capital and surplus

11 of the company to be merged into the domestic captive

12 insurance company or the companies to be consolidated

13 into the domestic captive insurance company (but any

14 approval by the Director of such merger or

15 consolidation shall be contingent upon the receipt of

16 such capital and surplus by the domestic captive

17 insurance company and satisfactory evidence thereof

18 being presented to the Director);

19 (c) notwithstanding the provisions of paragraph

20 (c) of subsection (1) of Section 166, such surviving

21 or new company shall have all of the rights,

22 privileges, immunities and powers and shall be subject

23 to all of the duties and liabilities granted or

24 imposed by this Article VIIC (and not by the entire

25 Code); and

26 (2) in the event that such merger or consolidation is

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1 to be effected in conjunction with the formation and

2 licensing of a new domestic captive insurance company in

3 this State, the Director shall follow procedures for the

4 contemporaneous and expeditious review of the materials

5 presented to the Director for his approval of such

6 formation, licensing and merger or consolidation.

7 B. (1) Any domestic, foreign or non-domestic ~~alien~~ stock

8 company, mutual company, or reciprocal company, authorized or

9 which may be authorized to do business in this State, may

10 reorganize as a domestic captive insurance company under the

11 laws of this State, by complying with the provisions of

12 Article XII. Domestic companies are hereby authorized to

13 reorganize as domestic captive insurance companies.

14 (2) In the event that such reorganization is to be

15 effected in conjunction with the formation and licensing

16 of a new captive insurance company in this State, the

17 Director shall follow procedures for the contemporaneous

18 and expeditious review of the materials presented to the

19 Director for his approval of such formation, licensing and

20 reorganization.

21 (Source: P.A. 85-131.)

22 (215 ILCS 5/126.1)

23 Sec. 126.1. Purpose and scope.

24 A. Purpose. The purpose of this Article is to protect the

25 interests of insureds by promoting insurer solvency and

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1 financial strength. This will be accomplished through the

2 application of investment standards that facilitate a

3 reasonable balance of the following objectives:

4 (1) To preserve principal;

5 (2) To assure reasonable diversification as to type of

6 investment, issuer and credit quality; and

7 (3) To allow insurers to allocate investments in a

8 manner consistent with principles of prudent investment

9 management to achieve an adequate return so that

10 obligations to insureds are adequately met and financial

11 strength is sufficient to cover reasonably foreseeable

12 contingencies.

13 B. Scope. This Article shall apply only to investments and

14 investment practices of domestic insurers and United States

15 branches of non-domestic ~~alien~~insurers entered through this

16 State. This Article shall not apply to separate accounts of an

17 insurer except to the extent that the provisions of Article

18 XIV 1/2 so provide.

19 (Source: P.A. 90-418, eff. 8-15-97.)

20 (215 ILCS 5/126.12)

21 Sec. 126.12. Insurer investment pools.

22 A. An insurer may acquire investments in investment pools

23 that:

24 (1) Invest only in:

25 (a) Obligations that are rated 1 or 2 by the SVO or

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1 have an equivalent of an SVO 1 or 2 rating (or, in the

2 absence of a 1 or 2 rating or equivalent rating, the

3 issuer has outstanding obligations with an SVO 1 or 2

4 or equivalent rating) by a nationally recognized

5 statistical rating organization recognized by the SVO

6 and have:

7 (i) A remaining maturity of 397 days or less

8 or a put that entitles the holder to receive the

9 principal amount of the obligation which put may

10 be exercised through maturity at specified

11 intervals not exceeding 397 days; or

12 (ii) A remaining maturity of 3 years or less

13 and a floating interest rate that resets no less

14 frequently than quarterly on the basis of a

15 current short-term index (federal funds, prime

16 rate, treasury bills, London InterBank Offered

17 Rate (LIBOR) or commercial paper) and is subject

18 to no maximum limit, if the obligations do not

19 have an interest rate that varies inversely to

20 market interest rate changes;

21 (b) Government money market mutual funds or class

22 one money market mutual funds; or

23 (c) Securities lending, repurchase, and reverse

24 repurchase transactions that meet all the requirements

25 of Section 126.16, except the quantitative limitations

26 of Section 126.16D; or

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1 (2) Invest only in investments which an insurer may

2 acquire under this Article, if the insurer's proportionate

3 interest in the amount invested in these investments when

4 combined with amount of such investments made directly or

5 indirectly through an investment subsidiary or other

6 insurer investment pool permitted under this subsection

7 A(2) does not exceed the applicable limits of this Article

8 for such investments.

9 B. For an investment in an investment pool to be qualified

10 under this Article, the investment pool shall not:

11 (1) Acquire securities issued, assumed, guaranteed or

12 insured by the insurer or an affiliate of the insurer;

13 (2) Borrow or incur any indebtedness for borrowed

14 money, except for securities lending and reverse

15 repurchase transactions that meet the requirements of

16 Section 126.16 except the quantitative limitations of

17 Section 126.16D; or

18 (3) Acquire an investment if, as a result of such

19 transaction, the aggregate value of securities then loaned

20 or sold to, purchased from or invested in any one business

21 entity under this Section would exceed 10% of the total

22 assets of the investment pool.

23 C. The limitations of Section 126.10A shall not apply to

24 an insurer's investment in an investment pool, however an

25 insurer shall not acquire an investment in an investment pool

26 under this Section if, as a result of and after giving effect

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1 to the investment, the aggregate amount of investments then

2 held by the insurer under this Section:

3 (1) In all investment pools investing in investments

4 permitted under subsection A(2) of this Section would

5 exceed 25% of its admitted assets; or

6 (2) In all investment pools would exceed 35% of its

7 admitted assets.

8 D. For an investment in an investment pool to be qualified

9 under this Article, the manager of the investment pool shall:

10 (1) Be organized under the laws of the United States

11 or a state and designated as the pool manager in a pooling

12 agreement;

13 (2) Be the insurer, an affiliated insurer or a

14 business entity affiliated with the insurer, a qualified

15 bank, a business entity registered under the Investment

16 Advisers Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended

17 or, in the case of a reciprocal insurer or interinsurance

18 exchange, its attorney-in-fact, or in the case of a United

19 States branch of a non-domestic ~~an alien~~ insurer, its

20 United States manager or an affiliate or subsidiary of its

21 United States manager;

22 (3) Be responsible for the compilation and maintenance

23 of detailed accounting records setting forth:

24 (a) The cash receipts and disbursements reflecting

25 each participant's proportionate investment in the

26 investment pool;

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1 (b) A complete description of all underlying

2 assets of the investment pool (including amount,

3 interest rate, maturity date (if any) and other

4 appropriate designations); and

5 (c) Other records which, on a daily basis, allow

6 third parties to verify each participant's investment

7 in the investment pool; and

8 (4) Maintain the assets of the investment pool in one

9 or more accounts, in the name of or on behalf of the

10 investment pool, under a custody agreement with a

11 qualified bank. The custody agreement shall:

12 (a) State and recognize the claims and rights of

13 each participant;

14 (b) Acknowledge that the underlying assets of the

15 investment pool are held solely for the benefit of

16 each participant in proportion to the aggregate amount

17 of its investments in the investment pool; and

18 (c) Contain an agreement that the underlying

19 assets of the investment pool shall not be commingled

20 with the general assets of the custodian qualified

21 bank or any other person.

22 E. The pooling agreement for each investment pool shall be

23 in writing and shall provide that:

24 (1) An insurer and its affiliated insurers or, in the

25 case of an investment pool investing solely in investments

26 permitted under subsection A(1) of this Section, the

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1 insurer and its subsidiaries, affiliates or any pension or

2 profit sharing plan of the insurer, its subsidiaries and

3 affiliates or, in the case of a United States branch ofa

4 non-domestic ~~an alien~~ insurer, affiliates or subsidiaries

5 of its United States manager, shall, at all times, hold

6 100% of the interests in the investment pool;

7 (2) The underlying assets of the investment pool shall

8 not be commingled with the general assets of the pool

9 manager or any other person;

10 (3) In proportion to the aggregate amount of each pool

11 participant's interest in the investment pool:

12 (a) Each participant owns an undivided interest in

13 the underlying assets of the investment pool; and

14 (b) The underlying assets of the investment pool

15 are held solely for the benefit of each participant;

16 (4) A participant, or in the event of the

17 participant's insolvency, bankruptcy or receivership, its

18 trustee, receiver or other successor-in-interest, may

19 withdraw all or any portion of its investment from the

20 investment pool under the terms of the pooling agreement;

21 (5) Withdrawals may be made on demand without penalty

22 or other assessment on any business day, but settlement of

23 funds shall occur within a reasonable and customary period

24 thereafter not to exceed 10 business days. Distributions

25 under this paragraph shall be calculated in each case net

26 of all then applicable fees and expenses of the investment

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1 pool. The pooling agreement shall provide that the pool

2 manager shall distribute to a participant, at the

3 discretion of the pool manager:

4 (a) In cash, the then fair market value of the

5 participant's pro rata share of each underlying asset

6 of the investment pool;

7 (b) In kind, a pro rata share of each underlying

8 asset; or

9 (c) In a combination of cash and in kind

10 distributions, a pro rata share in each underlying

11 asset; and

12 (6) The pool manager shall make the records of the

13 investment pool available for inspection by the Director.

14 F. Except for the formation of the investment pool,

15 transactions and between a domestic insurer and an affiliated

16 insurer investment pool shall not be subject to the

17 requirements of Section 131.20a of this Code.

18 (Source: P.A. 100-201, eff. 8-18-17.)

19 (215 ILCS 5/126.25)

20 Sec. 126.25. Insurer investment pools.

21 A. An insurer may acquire investments in investment pools

22 that:

23 (1) Invest only in:

24 (a) Obligations that are rated 1 or 2 by the SVO or

25 have an equivalent of an SVO 1 or 2 rating (or, in the

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1 absence of a 1 or 2 rating or equivalent rating, the

2 issuer has outstanding obligations with an SVO 1 or 2

3 or equivalent rating) by a nationally recognized

4 statistical rating organization recognized by the SVO

5 and have:

6 (i) A remaining maturity of 397 days or less

7 or a put that entitles the holder to receive the

8 principal amount of the obligation which put may

9 be exercised through maturity at specified

10 intervals not exceeding 397 days; or

11 (ii) A remaining maturity of 3 years or less

12 and a floating interest rate that resets no less

13 frequently than quarterly on the basis of a

14 current short-term index (federal funds, prime

15 rate, treasury bills, London InterBank Offered

16 Rate (LIBOR) or commercial paper) and is subject

17 to no maximum limit, if the obligations do not

18 have an interest rate that varies inversely to

19 market interest rate changes;

20 (b) Government money market mutual funds or class

21 one money market mutual funds; or

22 (c) Securities lending, repurchase, and reverse

23 repurchase, transactions that meet all the

24 requirements of Section 126.29, except the

25 quantitative limitations of Section 126.29D; or

26 (2) Invest only in investments which an insurer may

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1 acquire under this Article, if the insurer's proportionate

2 interest in the amount invested in these investments when

3 combined with amounts of such investments made directly or

4 indirectly through an investment subsidiary or other

5 insurer investment pool permitted under this subsection

6 A(2) does not exceed the applicable limits of this Article

7 for such investments.

8 B. For an investment in an investment pool to be qualified

9 under this Article, the investment pool shall not:

10 (1) Acquire securities issued, assumed, guaranteed, or

11 insured by the insurer or an affiliate of the insurer;

12 (2) Borrow or incur any indebtedness for borrowed

13 money, except for securities lending and reverse

14 repurchase transactions that meet the requirements of

15 Section 126.29 except the quantitative limitations of

16 Section 126.29D; or

17 (3) Acquire an investment if, as a result of such

18 transaction, the aggregate value of securities then loaned

19 or sold to, purchased from or invested in any one business

20 entity under this Section would exceed 10% of the total

21 assets of the investment pool.

22 C. The limitations of Section 126.23A shall not apply to

23 an insurer's investment in an investment pool, however an

24 insurer shall not acquire an investment in an investment pool

25 under this Section if, as a result of and after giving effect

26 to the investment, the aggregate amount of investments then

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1 held by the insurer under this Section:

2 (1) In all investment pools investing in investments

3 permitted under subsection A(2) of this Section would

4 exceed 25% of its admitted assets; or

5 (2) In all investment pools would exceed 40% of its

6 admitted assets.

7 D. For an investment in an investment pool to be qualified

8 under this Article, the manager of the investment pool shall:

9 (1) Be organized under the laws of the United States

10 or a state and designated as the pool manager in a pooling

11 agreement;

12 (2) Be the insurer, an affiliated insurer or a

13 business entity affiliated with the insurer, a qualified

14 bank, a business entity registered under the Investment

15 Advisers Act of 1940 (15 U.S.C. 80a-1 et seq.), as amended

16 or, in the case of a reciprocal insurer or interinsurance

17 exchange, its attorney-in-fact, or in the case of a United

18 States branch of a non-domestic ~~an alien~~ insurer, its

19 United States manager or an affiliate or subsidiary of its

20 United States manager;

21 (3) Be responsible for the compilation and maintenance

22 of detailed accounting records setting forth:

23 (a) The cash receipts and disbursements reflecting

24 each participant's proportionate investment in the

25 investment pool;

26 (b) A complete description of all underlying

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1 assets of the investment pool (including amount,

2 interest rate, maturity date (if any) and other

3 appropriate designations); and

4 (c) Other records which, on a daily basis, allow

5 third parties to verify each participant's investment

6 in the investment pool; and

7 (4) Maintain the assets of the investment pool in one

8 or more accounts, in the name of or on behalf of the

9 investment pool, under a custody agreement with a

10 qualified bank. The custody agreement shall:

11 (a) State and recognize the claims and rights of

12 each participant;

13 (b) Acknowledge that the underlying assets of the

14 investment pool are held solely for the benefit of

15 each participant in proportion to the aggregate amount

16 of its investments in the investment pool; and

17 (c) Contain an agreement that the underlying

18 assets of the investment pool shall not be commingled

19 with the general assets of the custodian qualified

20 bank or any other person.

21 E. The pooling agreement for each investment pool shall be

22 in writing and shall provide that:

23 (1) An insurer and its affiliated insurers or, in the

24 case of an investment pool investing solely in investments

25 permitted under subsection A(1) of this Section, the

26 insurer and its subsidiaries, affiliates or any pension or

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1 profit sharing plan of the insurer, its subsidiaries and

2 affiliates or, in the case of a United States branch ofa

3 non-domestic ~~an alien~~ insurer, affiliates or subsidiaries

4 of its United States manager, shall, at all times, hold

5 100% of the interests in the investment pool;

6 (2) The underlying assets of the investment pool shall

7 not be commingled with the general assets of the pool

8 manager or any other person;

9 (3) In proportion to the aggregate amount of each pool

10 participant's interest in the investment pool:

11 (a) Each participant owns an undivided interest in

12 the underlying assets of the investment pool; and

13 (b) The underlying assets of the investment pool

14 are held solely for the benefit of each participant;

15 (4) A participant, or in the event of the

16 participant's insolvency, bankruptcy or receivership, its

17 trustee, receiver or other successor-in-interest, may

18 withdraw all or any portion of its investment from the

19 investment pool under the terms of the pooling agreement;

20 (5) Withdrawals may be made on demand without penalty

21 or other assessment on any business day, but settlement of

22 funds shall occur within a reasonable and customary period

23 thereafter not to exceed 10 business days. Distributions

24 under this paragraph shall be calculated in each case net

25 of all then applicable fees and expenses of the investment

26 pool. The pooling agreement shall provide that the pool

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1 manager shall distribute to a participant, at the

2 discretion of the pool manager:

3 (a) In cash, the then fair market value of the

4 participant's pro rata share of each underlying asset

5 of the investment pool;

6 (b) In kind, a pro rata share of each underlying

7 asset; or

8 (c) In a combination of cash and in kind

9 distributions, a pro rata share in each underlying

10 asset; and

11 (6) The pool manager shall make the records of the

12 investment pool available for inspection by the Director.

13 F. Except for the formation of the investment pool,

14 transactions between a domestic insurer and an affiliated

15 insurer investment pool shall not be subject to the

16 requirements of Section 131.20a of this Code.

17 (Source: P.A. 100-201, eff. 8-18-17.)

18 (215 ILCS 5/131.13) (from Ch. 73, par. 743.13)

19 Sec. 131.13. Registration of companies. Every company

20 which is authorized to do business in this State and which is a

21 member of an insurance holding company system must register

22 with the Director, except a foreign ornon-domestic ~~alien~~

23 company subject to registration requirements and standards

24 adopted by statute or regulation in the jurisdiction of its

25 domicile which are substantially similar to those contained in

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1 this section and Sections 131.14 through 131.20a. Any company

2 which is subject to registration under this section must

3 register within 60 days after the effective date of this

4 Article or 15 days after it becomes subject to registration,

5 whichever is later, unless the Director for good cause shown

6 extends the time for registration, and then within such

7 extended time. The Director may require any authorized company

8 which is a member of a holding company system which is not

9 subject to registration under this section to furnish a copy

10 of the registration statement or other information filed by

11 such company with the insurance regulatory authority of its

12 domiciliary jurisdiction.

13 (Source: P.A. 98-609, eff. 1-1-14.)

14 (215 ILCS 5/132.3) (from Ch. 73, par. 744.3)

15 Sec. 132.3. Authority, scope, and scheduling of

16 examinations.

17 (a) The Director or any of his examiners may conduct an

18 examination of any company as often as the Director, in his

19 sole discretion, deems appropriate, but shall, at a minimum,

20 conduct an examination of every insurer authorized or licensed

21 in this State not less frequently than once every 5 years. In

22 scheduling and determining the nature, scope, and frequency of

23 the examinations, the Director shall consider the results of

24 financial statement analyses and ratios, changes in management

25 or ownership, actuarial opinions, reports of independent

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1 certified public accountants and other criteria set forth in

2 the Examiners' Handbook adopted by the National Association of

3 Insurance Commissioners and in effect when the Director

4 exercises discretion under this subsection.

5 (b) For purposes of completing an examination of any

6 company, the Director may examine or investigate any person,

7 or the business of any person, insofar as the examination or

8 investigation is, in the sole discretion of the Director,

9 necessary or material to the examination of the company.

10 (c) In lieu of an examination of any foreign or

11 non-domestic ~~alien~~insurer authorized or licensed in this

12 State, the Director may accept an examination report on the

13 company as prepared by the insurance department for the

14 company's state of domicile or port-of-entry state until

15 January 1, 1994. Thereafter, those reports may only be

16 accepted if (1) the insurance department was at the time of the

17 examination accredited under the National Association of

18 Insurance Commissioners' Financial Regulation Standards and

19 Accreditation Program, (2) the examination is performed under

20 the supervision of an accredited insurance department or with

21 the participation of one or more examiners who are employed by

22 an accredited state insurance department, and who, after a

23 review of the examination work papers and report, state under

24 oath that the examination was performed in a manner consistent

25 with the standards and procedures required by their insurance

26 department, or (3) the Director otherwise determines that the

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1 examination was performed in a manner substantially similar to

2 the standards and procedures required by Sections 132.1

3 through 132.6 of this Code.

4 (Source: P.A. 89-97, eff. 7-7-95.)

5 (215 ILCS 5/133) (from Ch. 73, par. 745)

6 Sec. 133. Books, records, accounts and vouchers.

7 (1) Every domestic company shall keep its books, records,

8 documents, accounts and vouchers in such manner that its

9 financial condition, affairs and operations can be ascertained

10 and so that its financial statements filed with the Director

11 can be readily verified and its compliance with the law

12 determined and may cause any or all such books, records,

13 documents, accounts and vouchers to be photographed or

14 reproduced on film. Any such photographs, microphotographs,

15 optical imaging, or film reproductions of any original books,

16 records, documents, accounts and vouchers shall for all

17 purposes be considered the same as the originals thereof and a

18 transcript, exemplification or certified copy of any such

19 photograph, microphotograph, optical imaging, or film

20 reproduction shall for all purposes be deemed to be a

21 transcript, exemplification or certified copy of the original.

22 Any original so reproduced may thereafter be disposed of or

23 destroyed if provision is made for preserving and examining

24 such reproductions.

25 (2) All such original books, records, documents, accounts

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1 and vouchers, or such reproductions thereof, of the home

2 office of any domestic company or of any principal United

3 States office of a foreign or non-domestic ~~alien~~company

4 located in this State shall be preserved and kept available in

5 this State for the purpose of examination and until authority

6 to destroy or otherwise dispose of such records is secured

7 from the Director. Such original records may, however, be kept

8 and maintained outside this State if, according to a plan

9 adopted by the company's board of directors and approved by

10 the Director, it maintains suitable records in lieu thereof.

11 Every domestic company shall keep its securities within the

12 State of Illinois except where:

13 (a) on deposit with other states of the United States

14 of America, or political subdivision thereof; or

15 (b) on deposit with foreign countries where the

16 company is licensed to transact an insurance business; or

17 (c) where requisite for the normal transaction of the

18 company's business and approved by the Director.

19 (3) Any domestic company may maintain with a corporation,

20 qualified to administer trusts in this State under the

21 Corporate Fiduciary Act and that has an office in this State at

22 which the account is maintained, for its securities, a limited

23 agency, custodial or depository account, or other type of

24 account for the safekeeping of those securities, collecting

25 the income from those securities and providing supportive

26 accounting services relating to such safekeeping and

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1 collection, provided, the domestic company maintains full

2 investment discretion over those securities. Such a

3 corporation in safekeeping such securities shall have all the

4 powers, rights, duties and responsibilities as it has for

5 holding securities in its fiduciary accounts under the

6 Securities in Fiduciary Accounts Act.

7 (4) Any director, officer, agent or employee of any

8 company who destroys any such books, records or documents

9 without the authority of the Director in violation of this

10 section or who fails to keep the books, records, documents,

11 accounts and vouchers required by this section shall be guilty

12 of a business offense and shall be fined not more than

13 $5000.00.

14 (Source: P.A. 88-364; 89-437, eff. 12-15-95.)

15 (215 ILCS 5/136) (from Ch. 73, par. 748)

16 Sec. 136. Annual statement.

17 (1) Every company authorized to do business in this State

18 or accredited by this State shall submit to the Director by

19 March 1st in each year its financial statement for the year

20 ending December 31st immediately preceding in such manner and

21 in such form as prescribed by the Director, which shall

22 conform substantially to the form of statement adopted by the

23 National Association of Insurance Commissioners. Unless the

24 Director provides otherwise, the annual statement is to be

25 prepared in accordance with the annual statement instructions

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1 and the Accounting Practices and Procedures Manual adopted by

2 the National Association of Insurance Commissioners. The

3 Director shall have power to make such modifications and

4 additions in this form as he may deem desirable or necessary to

5 ascertain the condition and affairs of the company. The

6 Director shall have authority to extend the time for filing

7 any statement by any company for reasons which he considers

8 good and sufficient. In every statement the admitted assets

9 shall be shown at the actual values as of the last day of the

10 preceding year, in accordance with Section 126.7. The

11 statement shall be verified by oaths of the president and

12 secretary of the company or, in their absence, by 2 other

13 principal officers. In addition, any company may be required

14 by the Director, when he considers that action to be necessary

15 and appropriate for the protection of policyholders,

16 creditors, shareholders, or claimants, to file, within 60 days

17 after mailing to the company a notice that such is required, a

18 supplemental summary statement as of the last day of any

19 calendar month occurring during the 100 days next preceding

20 the mailing of such notice designated by him on forms

21 prescribed and furnished by the Director. The Director may

22 require supplemental summary statements to be certified by an

23 independent actuary deemed competent by the Director or by an

24 independent certified public accountant.

25 (2) The statement of a non-domestic ~~an alien~~ company shall

26 embrace only its condition and transactions in the United

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1 States and shall be verified by the oaths of its resident

2 manager or principal representative in the United States,

3 except that in the case of any life company organized under the

4 laws of Canada or any province thereof, the statement may be

5 verified by the oaths of any of its principal officers

6 designated for that purpose by its board of directors.

7 (3) For the information of the public generally the

8 Director shall cause an abstract of the information contained

9 in the annual statement to be made available to the public as

10 soon as practicable after filing with the Department, by

11 printing those abstracts in pamphlet tabular form for free

12 general distribution by the Department, or by such other

13 publication in the city of Springfield or in the city of

14 Chicago as may be reasonably necessary more fully to inform

15 the public of the financial condition of companies transacting

16 business in this State.

17 (4) Each domestic, foreign, and non-domestic ~~alien~~ insurer

18 authorized to do business in this State or accredited by this

19 State shall participate in the National Association of

20 Insurance Commissioners' Insurance Regulatory Information

21 System, including the payment of all fees and charges of the

22 system. Each company shall, on or before March 1 of each year,

23 file with the National Association of Insurance Commissioners

24 a copy of its annual financial statement along with any

25 additional filings prescribed by the Director for the

26 preceding year. The statement filed with the National

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1 Association of Insurance Commissioners shall be in the same

2 format and scope as that required by this Code and shall

3 include a signed jurat page and actuarial certification. Any

4 amendments and addendums to the annual statement shall also be

5 filed with the National Association of Insurance

6 Commissioners. Each company shall also file with the National

7 Association of Insurance Commissioners annual and quarterly

8 financial statement information in computer readable format as

9 required by the Insurance Regulatory Information System.

10 Failure of a company to file financial statement information

11 in computer readable format shall subject the company to the

12 provisions of Section 139.

13 (5) All financial analysis ratios and examination synopsis

14 concerning insurance companies that are submitted to the

15 Director by the National Association of Insurance

16 Commissioners' Insurance Regulatory Information System are

17 confidential and may not be disclosed by the Director.

18 (6) Every property and casualty insurance company doing

19 business in this State, unless otherwise exempted by the

20 Director, shall annually submit the opinion of an appointed

21 actuary entitled "Statement of Actuarial Opinion". This

22 opinion shall be filed in accordance with the appropriate

23 National Association of Insurance Commissioners Property and

24 Casualty Annual Statement Instructions.

25 (a) Every property and casualty insurance company

26 domiciled in this State that is required to submit a

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1 Statement of Actuarial Opinion shall annually submit an

2 Actuarial Opinion Summary, written by the company's

3 appointed actuary. This Actuarial Opinion Summary shall be

4 filed in accordance with the appropriate National

5 Association of Insurance Commissioners Property and

6 Casualty Annual Statement Instructions and shall be

7 considered as a document supporting the Actuarial Opinion

8 required in this subsection (6). Each foreign and

9 non-domestic ~~alien~~ property and casualty company

10 authorized to do business in this State shall provide the

11 Actuarial Opinion Summary upon request.

12 (b) An Actuarial Report and underlying workpapers as

13 required by the appropriate National Association of

14 Insurance Commissioners Property and Casualty Annual

15 Statement Instructions shall be prepared to support each

16 Actuarial Opinion. If the insurance company fails to

17 provide a supporting Actuarial Report or workpapers at the

18 request of the Director or the Director determines that

19 the supporting Actuarial Report or workpapers provided by

20 the insurance company is otherwise unacceptable to the

21 Director, the Director may engage a qualified actuary at

22 the expense of the company to review the opinion and the

23 basis for the opinion and prepare the supporting Actuarial

24 Report or workpapers.

25 (c) The appointed actuary shall not be liable for

26 damages to any person (other than the insurance company

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1 and the Director) for any act, error, omission, decision,

2 or conduct with respect to the actuary's opinion, except

3 in cases of fraud or willful misconduct on the part of the

4 appointed actuary.

5 (d) The Statement of Actuarial Opinion shall be

6 provided with the Annual Statement in accordance with the

7 appropriate National Association of Insurance

8 Commissioners Property and Casualty Annual Statement

9 Instructions and shall be treated as a public document.

10 Documents, materials, or other information in the

11 possession or control of the Director that are considered

12 an Actuarial Report, workpapers, or Actuarial Opinion

13 Summary provided in support of the opinion, and any other

14 material provided by the company to the Director in

15 connection with the Actuarial Report, workpapers or

16 Actuarial Opinion Summary, must be given confidential

17 treatment, are not subject to subpoena, and may not be

18 made public by the Director or any other persons. This

19 paragraph (d) shall not be construed to limit the

20 Director's authority to release the documents to the

21 Actuarial Board for Counseling and Discipline (ABCD), so

22 long as the material is required for the purpose of

23 professional disciplinary proceedings and that the ABCD

24 establishes procedures satisfactory to the Director for

25 preserving the confidentiality of the documents, nor shall

26 this paragraph (d) be construed to limit the Director's

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1 authority to use the documents, materials or other

2 information in furtherance of any regulatory or legal

3 action brought as part of the Director's official duties.

4 Neither the Director nor any person who received

5 documents, materials, or other information while acting

6 under the authority of the Director shall be permitted or

7 required to testify in any private civil action concerning

8 any confidential documents, materials, or information

9 subject to this subsection (6). Except where another

10 provision of this Code expressly prohibits a disclosure of

11 confidential information to the specific officials or

12 organizations described in this subsection, the Director

13 may:

14 (i) share documents, materials, or other

15 information, including the confidential and privileged

16 documents, materials or information subject to this

17 paragraph (d) with the insurance department of any

18 other state or country or with law enforcement

19 officials of this or any other state or agency of the

20 federal government at any time, as long as the agency

21 or office receiving the document, material, or other

22 information agrees in writing to hold it confidential

23 and in a manner consistent with this Code;

24 (ii) receive documents, materials, or information,

25 including otherwise confidential and privileged

26 documents, materials, or information, from the

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1 National Association of Insurance Commissioners and

2 its affiliates and subsidiaries, and from regulatory

3 and law enforcement officials of other foreign or

4 domestic jurisdictions, and shall maintain as

5 confidential or privileged any document, material, or

6 information received with notice or the understanding

7 that it is confidential or privileged under the laws

8 of the jurisdiction that is the source of the

9 document, material, or information; and

10 (iii) enter into agreements governing sharing and

11 use of information consistent with paragraph (d).

12 (e) No waiver of any applicable privilege or claim of

13 confidentiality in the documents, materials or information

14 shall occur as a result of disclosure to the Director

15 under this Section or as a result of sharing as authorized

16 in subparagraphs (i), (ii), and (iii) of paragraph (d) of

17 subsection (6) of this Section. All 2008 Annual

18 Statements, which are filed in 2009, and all subsequent

19 Annual Statement filings shall be done in accordance with

20 subsection (6) of this Section.

21 (Source: P.A. 96-145, eff. 8-7-09; 97-486, eff. 1-1-12.)

22 (215 ILCS 5/141a) (from Ch. 73, par. 753a)

23 Sec. 141a. Managing general agents and retrospective

24 compensation agreements.

25 (a) As used in this Section, the following terms have the

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1 following meanings:

2 "Actuary" means a person who is a member in good standing

3 of the American Academy of Actuaries.

4 "Gross direct written premium" means direct premium

5 including policy and membership fees, net of returns and

6 cancellations, and prior to any cessions.

7 "Insurer" means any person duly licensed in this State as

8 an insurance company pursuant to Articles II, III, III 1/2,

9 IV, V, VI, and XVII of this Code.

10 "Managing general agent" means any person, firm,

11 association, or corporation, either separately or together

12 with affiliates, that:

13 (1) manages all or part of the insurance business of

14 an insurer (including the management of a separate

15 division, department, or underwriting office), and

16 (2) acts as an agent for the insurer whether known as a

17 managing general agent, manager, or other similar term,

18 and

19 (3) with or without the authority produces, directly

20 or indirectly, and underwrites:

21 (A) within any one calendar quarter, an amount of

22 gross direct written premium equal to or more than 5%

23 of the policyholders' surplus as reported in the

24 insurer's last annual statement, or

25 (B) within any one calendar year, an amount of

26 gross direct written premium equal to or more than 8%

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1 of the policyholders' surplus as reported in the

2 insurer's last annual statement, and either

3 (4) has the authority to bind the company in

4 settlement of individual claims in amounts in excess of

5 $500, or

6 (5) has the authority to negotiate reinsurance on

7 behalf of the insurer.

8 Notwithstanding the provisions of items (1) through (5),

9 the following persons shall not be considered to be managing

10 general agents for the purposes of this Code:

11 (1) An employee of the insurer;

12 (2) A U.S. manager of the United States branch of a

13 non-domestic ~~an alien~~ insurer;

14 (3) An underwriting manager who, pursuant to a

15 contract meeting the standards of Section 141.1 manages

16 all or part of the insurance operations of the insurer, is

17 affiliated with the insurer, subject to Article VIII 1/2,

18 and whose compensation is not based on the volume of

19 premiums written;

20 (4) The attorney or the attorney in fact authorized

21 and acting for or on behalf of the subscriber

22 policyholders of a reciprocal or inter-insurance exchange,

23 under the terms of the subscription agreement, power of

24 attorney, or policy of insurance or the attorney in fact

25 for any Lloyds organization licensed in this State.

26 "Retrospective compensation agreement" means any

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1 arrangement, agreement, or contract having as its purpose the

2 actual or constructive retention by the insurer of a fixed

3 proportion of the gross premiums, with the balance of the

4 premiums, retained actually or constructively by the agent or

5 the producer of the business, who assumes to pay therefrom all

6 losses, all subordinate commission, loss adjustment expenses,

7 and his profit, if any, with other provisions of the

8 arrangement, agreement, or contract being auxiliary or

9 incidental to that purpose.

10 "Underwrite" means to accept or reject risk on behalf of

11 the insurer.

12 (b) Licensure of managing general agents.

13 (1) No person, firm, association, or corporation shall

14 act in the capacity of a managing general agent with

15 respect to risks located in this State for an insurer

16 licensed in this State unless the person is a licensed

17 producer or a registered firm in this State under Article

18 XXXI of this Code or a licensed third party administrator

19 in this State under Article XXXI 1/4 of this Code.

20 (2) No person, firm, association, or corporation shall

21 act in the capacity of a managing general agent with

22 respect to risks located outside this State for an insurer

23 domiciled in this State unless the person is a licensed

24 producer or a registered firm in this State under Article

25 XXXI of this Code or a licensed third party administrator

26 in this State under Article XXXI 1/4 of this Code.

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1 (3) The managing general agent must provide a surety

2 bond for the benefit of the insurer in an amount equal to

3 the greater of $100,000 or 5% of the gross direct written

4 premium underwritten by the managing general agent on

5 behalf of the insurer. The bond shall provide for a

6 discovery period and prior notification of cancellation in

7 accordance with the rules of the Department unless

8 otherwise approved in writing by the Director.

9 (4) The managing general agent must maintain an errors

10 and omissions policy for the benefit of the insurer with

11 coverage in an amount equal to the greater of $1,000,000

12 or 5% of the gross direct written premium underwritten by

13 the managing general agent on behalf of the insurer.

14 (5) Evidence of the existence of the bond and the

15 errors and omissions policy must be made available to the

16 Director upon his request.

17 (c) No person, firm, association, or corporation acting in

18 the capacity of a managing general agent shall place business

19 with an insurer unless there is in force a written contract

20 between the parties that sets forth the responsibilities of

21 each party, that, if both parties share responsibility for a

22 particular function, specifies the division of responsibility,

23 and that contains the following minimum provisions:

24 (1) The insurer may terminate the contract for cause

25 upon written notice to the managing general agent. The

26 insurer may suspend the underwriting authority of the

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1 managing general agent during the pendency of any dispute

2 regarding the cause for termination.

3 (2) The managing general agent shall render accounts

4 to the insurer detailing all transactions and remit all

5 funds due under the contract to the insurer on not less

6 than a monthly basis.

7 (3) All funds collected for the account of an insurer

8 shall be held by the managing general agent in a fiduciary

9 capacity in a bank that is a federally or State chartered

10 bank and that is a member of the Federal Deposit Insurance

11 Corporation. This account shall be used for all payments

12 on behalf of the insurer; however, the managing general

13 agent shall not have authority to draw on any other

14 accounts of the insurer. The managing general agent may

15 retain no more than 3 months estimated claims payments and

16 allocated loss adjustment expenses.

17 (4) Separate records of business written by the

18 managing general agent will be maintained. The insurer

19 shall have access to and the right to copy all accounts and

20 records related to its business in a form usable by the

21 insurer, and the Director shall have access to all books,

22 bank accounts, and records of the managing general agent

23 in a form usable to the Director.

24 (5) The contract may not be assigned in whole or part

25 by the managing general agent.

26 (6) The managing general agent shall provide to the

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1 company audited financial statements required under

2 paragraph (1) of subsection (d).

3 (7) That appropriate underwriting guidelines be

4 followed, which guidelines shall stipulate the following:

5 (A) the maximum annual premium volume;

6 (B) the basis of the rates to be charged;

7 (C) the types of risks that may be written;

8 (D) maximum limits of liability;

9 (E) applicable exclusions;

10 (F) territorial limitations;

11 (G) policy cancellation provisions; and

12 (H) the maximum policy period.

13 (8) The insurer shall have the right to: (i) cancel or

14 nonrenew any policy of insurance subject to applicable

15 laws and regulations concerning those actions; and (ii)

16 require cancellation of any subproducer's contract after

17 appropriate notice.

18 (9) If the contract permits the managing general agent

19 to settle claims on behalf of the insurer:

20 (A) all claims must be reported to the company in a

21 timely manner.

22 (B) a copy of the claim file must be sent to the

23 insurer at its request or as soon as it becomes known

24 that the claim:

25 (i) has the potential to exceed an amount

26 determined by the company;

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1 (ii) involves a coverage dispute;

2 (iii) may exceed the managing general agent's

3 claims settlement authority;

4 (iv) is open for more than 6 months; or

5 (v) is closed by payment of an amount set by

6 the company.

7 (C) all claim files will be the joint property of

8 the insurer and the managing general agent. However,

9 upon an order of liquidation of the insurer, the files

10 shall become the sole property of the insurer or its

11 estate; the managing general agent shall have

12 reasonable access to and the right to copy the files on

13 a timely basis.

14 (D) any settlement authority granted to the

15 managing general agent may be terminated for cause

16 upon the insurer's written notice to the managing

17 general agent or upon the termination of the contract.

18 The insurer may suspend the settlement authority

19 during the pendency of any dispute regarding the cause

20 for termination.

21 (10) Where electronic claims files are in existence,

22 the contract must address the timely transmission of the

23 data.

24 (11) If the contract provides for a sharing of interim

25 profits by the managing general agent and the managing

26 general agent has the authority to determine the amount of

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1 the interim profits by establishing loss reserves,

2 controlling claim payments, or by any other manner,

3 interim profits will not be paid to the managing general

4 agent until one year after they are earned for property

5 insurance business and until 5 years after they are earned

6 on casualty business and in either case, not until the

7 profits have been verified.

8 (12) The managing general agent shall not:

9 (A) Bind reinsurance or retrocessions on behalf of

10 the insurer, except that the managing general agent

11 may bind facultative reinsurance contracts under

12 obligatory facultative agreements if the contract with

13 the insurer contains reinsurance underwriting

14 guidelines including, for both reinsurance assumed and

15 ceded, a list of reinsurers with which automatic

16 agreements are in effect, the coverages and amounts or

17 percentages that may be reinsured, and commission

18 schedules.

19 (B) Appoint any producer without assuring that the

20 producer is lawfully licensed to transact the type of

21 insurance for which he is appointed.

22 (C) Without prior approval of the insurer, pay or

23 commit the insurer to pay a claim over a specified

24 amount, net of reinsurance, that shall not exceed 1%

25 of the insurer's policyholders' surplus as of December

26 31 of the last completed calendar year.

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1 (D) Collect any payment from a reinsurer or commit

2 the insurer to any claim settlement with a reinsurer

3 without prior approval of the insurer. If prior

4 approval is given, a report must be promptly forwarded

5 to the insurer.

6 (E) Permit its subproducer to serve on its board

7 of directors.

8 (F) Employ an individual who is also employed by

9 the insurer.

10 (13) The contract may not be written for a term of

11 greater than 5 years.

12 (d) Insurers shall have the following duties:

13 (1) The insurer shall have on file the managing

14 general agent's audited financial statements as of the end

15 of the most recent fiscal year prepared in accordance with

16 Generally Accepted Accounting Principles. The insurer

17 shall notify the Director if the auditor's opinion on

18 those statements is other than an unqualified opinion.

19 That notice shall be given to the Director within 10 days

20 of receiving the audited financial statements or becoming

21 aware that such opinion has been given.

22 (2) If a managing general agent establishes loss

23 reserves, the insurer shall annually obtain the opinion of

24 an actuary attesting to the adequacy of loss reserves

25 established for losses incurred and outstanding on

26 business produced by the managing general agent, in

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1 addition to any other required loss reserve certification.

2 (3) The insurer shall periodically (at least

3 semiannually) conduct an on-site review of the

4 underwriting and claims processing operations of the

5 managing general agent.

6 (4) Binding authority for all reinsurance contracts or

7 participation in insurance or reinsurance syndicates shall

8 rest with an officer of the insurer, who shall not be

9 affiliated with the managing general agent.

10 (5) Within 30 days of entering into or terminating a

11 contract with a managing general agent, the insurer shall

12 provide written notification of the appointment or

13 termination to the Director. Notices of appointment of a

14 managing general agent shall include a statement of duties

15 that the applicant is expected to perform on behalf of the

16 insurer, the lines of insurance for which the applicant is

17 to be authorized to act, and any other information the

18 Director may request.

19 (6) An insurer shall review its books and records each

20 quarter to determine if any producer has become a managing

21 general agent. If the insurer determines that a producer

22 has become a managing general agent, the insurer shall

23 promptly notify the producer and the Director of that

24 determination, and the insurer and producer must fully

25 comply with the provisions of this Section within 30 days

26 of the notification.

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1 (7) The insurer shall file any managing general agent

2 contract for the Director's approval within 45 days after

3 the contract becomes subject to this Section. Failure of

4 the Director to disapprove the contract within 45 days

5 shall constitute approval thereof. Upon expiration of the

6 contract, the insurer shall submit the replacement

7 contract for approval. Contracts filed under this Section

8 shall be exempt from filing under Sections 141, 141.1 and

9 131.20a.

10 (8) An insurer shall not appoint to its board of

11 directors an officer, director, employee, or controlling

12 shareholder of its managing general agents. This provision

13 shall not apply to relationships governed by Article VIII

14 1/2 of this Code.

15 (e) The acts of a managing general agent are considered to

16 be the acts of the insurer on whose behalf it is acting. A

17 managing general agent may be examined in the same manner as an

18 insurer.

19 (f) Retrospective compensation agreements for business

20 written under Section 4 of this Code in Illinois and outside of

21 Illinois by an insurer domiciled in this State must be filed

22 for approval. The standards for approval shall be as set forth

23 under Section 141 of this Code.

24 (g) Unless specifically required by the Director, the

25 provisions of this Section shall not apply to arrangements

26 between a managing general agent not underwriting any risks

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1 located in Illinois and a foreign insurer domiciled in an NAIC

2 accredited state that has adopted legislation substantially

3 similar to the NAIC Managing General Agents Model Act. "NAIC

4 accredited state" means a state or territory of the United

5 States having an insurance regulatory agency that maintains an

6 accredited status granted by the National Association of

7 Insurance Commissioners.

8 (h) If the Director determines that a managing general

9 agent has not materially complied with this Section or any

10 regulation or order promulgated hereunder, after notice and

11 opportunity to be heard, the Director may order a penalty in an

12 amount not exceeding $100,000 for each separate violation and

13 may order the revocation or suspension of the producer's

14 license. If it is found that because of the material

15 noncompliance the insurer has suffered any loss or damage, the

16 Director may maintain a civil action brought by or on behalf of

17 the insurer and its policyholders and creditors for recovery

18 of compensatory damages for the benefit of the insurer and its

19 policyholders and creditors or other appropriate relief. This

20 subsection (h) shall not be construed to prevent any other

21 person from taking civil action against a managing general

22 agent.

23 (i) If an Order of Rehabilitation or Liquidation is

24 entered under Article XIII and the receiver appointed under

25 that Order determines that the managing general agent or any

26 other person has not materially complied with this Section or

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1 any regulation or Order promulgated hereunder and the insurer

2 suffered any loss or damage therefrom, the receiver may

3 maintain a civil action for recovery of damages or other

4 appropriate sanctions for the benefit of the insurer.

5 Any decision, determination, or order of the Director

6 under this subsection shall be subject to judicial review

7 under the Administrative Review Law.

8 Nothing contained in this subsection shall affect the

9 right of the Director to impose any other penalties provided

10 for in this Code.

11 Nothing contained in this subsection is intended to or

12 shall in any manner limit or restrict the rights of

13 policyholders, claimants, and auditors.

14 (j) A domestic company shall not during any calendar year

15 write, through a managing general agent or managing general

16 agents, premiums in an amount equal to or greater than its

17 capital and surplus as of the preceding December 31st unless

18 the domestic company requests in writing the Director's

19 permission to do so and the Director has either approved the

20 request or has not disapproved the request within 45 days

21 after the Director received the request.

22 No domestic company with less than $5,000,000 of capital

23 and surplus may write any business through a managing general

24 agent unless the domestic company requests in writing the

25 Director's permission to do so and the Director has either

26 approved the request or has not disapproved the request within

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1 45 days after the Director received the request.

2 (Source: P.A. 93-32, eff. 7-1-03.)

3 (215 ILCS 5/144) (from Ch. 73, par. 756)

4 Sec. 144. Limitation of risk.

5 (1) No company authorized to transact any of the kind of

6 business enumerated in Classes 2 and 3 of Section 4 in this

7 State may expose itself to any loss on any one risk or hazard

8 to an amount exceeding 10% of its admitted assets in excess of

9 its liabilities excluding, in the case of a stock company, its

10 capital stock liability. No portion of any such risk or hazard

11 which has been reinsured in a domestic or an approved foreign

12 or non-domestic~~alien~~ company, in accordance with this Code,

13 shall be included in determining the limitation of risk

14 prescribed herein.

15 (2) Any company transacting the kind of business

16 enumerated in clause (g) of Class 2 of Section 4 may expose

17 itself to a risk or hazard in excess of the amount prescribed

18 in subsection (1) if it is protected in excess of that amount

19 by the following:

20 (a) The co-suretyship of such a company similarly

21 authorized; or

22 (b) By deposit with it in pledge or conveyance to it in

23 trust for its protection of property; or

24 (c) By conveyance or mortgage for its protection; or

25 (d) In case a suretyship obligation was made on behalf

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1 or on account of a fiduciary holding property in a trust

2 capacity, by deposit or other disposition of a portion of

3 the property so held in trust that no future sale,

4 mortgage, pledge or other disposition can be made thereof

5 without the consent of such company except by a judgment

6 or order of a court of competent jurisdiction.

7 (3) A company designated in subsection (2) may also

8 execute transportation or warehouse bonds for United States

9 Internal Revenue taxes to an amount equal to 50% of its capital

10 and surplus. When the penalty of the suretyship obligation

11 exceeds the amount of a judgment described therein as appealed

12 from and thereby secured, or exceeds the amount of the subject

13 matter in controversy or of the estate in the custody of the

14 fiduciary for the performance of whose duties it is

15 conditioned, the bond may be executed if the actual amount of

16 the judgment or the subject matter in controversy or estate

17 not subject to supervision or control of the surety is not in

18 excess of such limitation. When the penalty of the suretyship

19 obligation executed for the performance of a contract exceeds

20 the contract price, the latter shall be taken as the basis for

21 estimating the limit of risk within the meaning of this

22 Section.

23 (4) Whenever the ratio of the annual premium volume in

24 proportion to the policyholder surplus of any company

25 transacting the kinds of business authorized in Class 2 and

26 Class 3 of Section 4 when reviewed in conjunction with the

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1 kinds and nature of risks insured, the financial condition of

2 the company and its ownership including but not limited to the

3 liquidity of assets, relationship of surplus to liabilities

4 and adequacy of outstanding loss reserves, creates a condition

5 such that the further assumption of risks might be hazardous

6 to policyholders, creditors or the general public, then the

7 Director may order such company to take one or more of the

8 following steps:

9 (a) to reduce the loss exposure by reinsurance;

10 (b) to reduce the volume of new business being

11 accepted;

12 (c) to suspend the writing of new business for a

13 period not to exceed 3 months;

14 (d) to increase and maintain the company's surplus by

15 a contribution to surplus which will raise the surplus for

16 such a period of time and by such an amount as the Director

17 may deem necessary and essential; or

18 (e) to reduce general or acquisition expenses by

19 specified methods.

20 (f) (Blank).

21 (5) The provisions of this Section do not apply to

22 domestic, foreign, and non-domestic~~alien~~ Lloyds.

23 The company may, within 10 days after receipt of an Order

24 of the Director under this Section, request that the Director

25 hold a hearing to determine whether the Order of the Director

26 should be modified in any way. A request for a hearing by a

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1 company under this Section stays any Order of the Director

2 entered under this Section until such time as the Director has

3 entered an Order pursuant to the hearing.

4 (Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)

5 (215 ILCS 5/144.1) (from Ch. 73, par. 756.1)

6 Sec. 144.1. Insurance Sales by Insolvent or Impaired

7 Companies Prohibited.) (1) Unless allowed by the Director, no

8 foreign or non-domestic ~~alien~~company officer, director,

9 trustee, agent, or employee of such company may renew, issue

10 or deliver or cause to be renewed, issued or delivered, any

11 policy, contract or certificate of insurance in this State,

12 nor may any domestic company, officer, director, trustee,

13 agent or employee of such company renew, issue or deliver or

14 cause to be renewed, issued or delivered, any policy, contract

15 or certificate of insurance, for which a premium is charged or

16 collected, when the company writing such insurance is

17 insolvent or impaired and the fact of such insolvency or

18 impairment is known to the company officer, director, trustee,

19 agent or employee of such company. A company is impaired when

20 its assets are less than its capital, minimum required surplus

21 and all liabilities.

22 However, the existence of an impairment does not prevent

23 the issuance or renewal of a policy when an insured or owner

24 exercises an option granted to him under an existing policy to

25 obtain new, renewed or converted insurance coverage.

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1 (2) Any company officer, director, trustee, agent, or

2 employee of such company violating this Section shall be

3 guilty of a Class A misdemeanor.

4 (Source: P.A. 82-498.)

5 (215 ILCS 5/146) (from Ch. 73, par. 758)

6 Sec. 146. Withdrawal of deposits.

7 (1) The Director shall at any time upon request release to

8 a company any portion of its deposit which is not required as a

9 compliance with the conditions of this Code.

10 (2) When all of the business of a company has been

11 reinsured in accordance with this Code and the assets thereof

12 by contract assigned to another company, the Director may

13 deliver to the reinsured company or to its assigns under the

14 contract of reinsurance after one year from the effective date

15 of such reinsurance contract, all the securities deposited by

16 the reinsured company upon compliance with the following

17 conditions:

18 (a) The reinsuring company under the reinsurance contract

19 has assumed all liabilities of every kind due and to become due

20 which the deposit of the reinsured company was made to secure

21 or adequate provision has been made therefor;

22 (b) The said reinsuring company shall have and maintain a

23 deposit in this State or with the department or official

24 charged with the duty of supervising the business of insurance

25 in the state where it is incorporated or, ifa non-domestic ~~an~~

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1 ~~alien~~ company, where it is entered, in securities authorized

2 by this Code as lawful investments of the company and in an

3 amount and value not less than the deposit formerly required

4 of the reinsured company by this Code; and

5 (c) The deposit of the said reinsuring company shall be

6 such that it will subsist for the security of all the

7 obligations of the reinsuring company.

8 (Source: Laws 1937, p. 696.)

9 (215 ILCS 5/148) (from Ch. 73, par. 760)

10 Sec. 148. Contents of advertisements as to financial

11 condition.

12 (1) No company authorized to do business in this State

13 shall cause to be inserted in any newspaper, periodical,

14 magazine or other publication, any advertisement purporting to

15 set forth in figures its financial standing unless the figures

16 exhibited in such advertisement correspond to the figures

17 contained in the next preceding verified statement made to the

18 Director and unless there is set forth either

19 (a) the total amount of the capital actually paid in, the

20 total value of the admitted assets owned, the total amount of

21 the liabilities, including therein the reserves required by

22 law and the amount of the net surplus of assets over

23 liabilities actually available for the payment of losses and

24 claims and held for the protection of policyholders; or

25 (b) the capital paid in or the surplus, separately or

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1 combined.

2 (2) No non-domestic ~~alien~~ company authorized to do

3 business in this State shall cause to be inserted in any

4 newspaper, periodical or magazine any advertisement purporting

5 to set forth in figures its financial standing, unless the

6 figures exhibited in such advertisement correspond to the

7 figures contained in the next preceding verified statement

8 made to the Director by the United States Branch of such

9 company and unless there is set forth the total amount of the

10 capital and assets held by its United States Branch, the total

11 amount of its liabilities, including therein the reserves

12 required by law and the total amount of the net surplus of

13 assets over all liabilities actually available for the payment

14 of losses and claims and held for the protection of its

15 policyholders in the United States; provided that any life

16 company organized under the laws of the Dominion of Canada or

17 any province thereof may use in its advertising a statement of

18 its total business and condition in all countries if such

19 statement is accompanied by a statement showing the amount of

20 its total assets and total liabilities in the United States,

21 corresponding to the figures contained in the next preceding

22 statement of such company filed with the Director.

23 (3) Any company violating any provision of this section,

24 and any officer or director thereof knowingly participating in

25 or abetting such violation, shall be guilty of a business

26 offense and shall be required to pay a penalty of not less than

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1 five hundred dollars nor more than one thousand dollars, to be

2 recovered in the name of the People of the State of Illinois by

3 the State's Attorney of the county in which the violation

4 occurs and the penalty so recovered shall be paid into the

5 county treasury.

6 (Source: P.A. 77-2699.)

7 (215 ILCS 5/154.5) (from Ch. 73, par. 766.5)

8 Sec. 154.5. Improper Claims Practices) It is an improper

9 claims practice for any domestic, foreign ornon-domestic

10 ~~alien~~company transacting business in this State to commit any

11 of the acts contained in Section 154.6 if:

12 (a) it is committed knowingly in violation of this Act or

13 any rules promulgated hereunder; or

14 (b) It has been committed with such frequency to indicate

15 a persistent tendency to engage in that type of conduct.

16 (Source: P.A. 80-926.)

17 (215 ILCS 5/156) (from Ch. 73, par. 768)

18 Sec. 156. Merger and consolidation permitted.

19 (a) Upon complying with the provisions of this article,

20 any domestic company, except a Lloyds, is hereby authorized

21 and empowered to merge or consolidate with any domestic

22 company or with any foreign or non-domestic ~~alien~~company,

23 except a Lloyds if the surviving company meets the

24 requirements for authorization to engage in the insurance

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1 business in this state and, if such merger or consolidation is

2 authorized by the laws of the state or country under which such

3 foreign or non-domestic ~~alien~~company is incorporated or

4 organized.

5 (b) The Director may permit the formation of a domestic

6 stock company that is established for the sole purpose of

7 merging or consolidating with an existing stock company

8 simultaneously with the effectiveness of a division authorized

9 by this Code. Upon request of the dividing company, the

10 Director may waive the requirements of Section 131.8 of this

11 Code. Each domestic stock company formed under this subsection

12 shall be deemed to exist before a merger and division under

13 this Section becomes effective, but solely for the purpose of

14 being a party to such merger and division. The Director shall

15 not require that such domestic stock company be licensed to

16 transact insurance business in this state before such merger

17 and division. All insurance policies, annuities, or

18 reinsurance agreements allocated to such domestic stock

19 company shall become the obligation of the domestic stock

20 company that survives the merger simultaneously with the

21 effectiveness of the merger and division. The plan of merger

22 or consolidation shall be deemed to have been authorized and

23 approved by such domestic stock company if the dividing

24 company authorized and approved such plan. The certificate of

25 merger shall state that it was approved by the domestic stock

26 company formed under this subsection.

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1 (Source: P.A. 100-1118, eff. 11-27-18.)

2 (215 ILCS 5/156.1) (from Ch. 73, par. 768.1)

3 Sec. 156.1. Acquisition by exchange of stock permitted.

4 Any domestic stock insurance company may adopt a plan of

5 exchange of the outstanding stock of its stockholders for the

6 consideration herein designated to be paid or provided by a

7 corporation which acquires such stock, in the manner provided

8 in this Article.

9 The plan of exchange may provide that the acquiring

10 corporation, as consideration for the stock of the domestic

11 corporation, (1) transfer shares of its stock, or (2) transfer

12 other securities issued by it, or (3) pay cash therefor, or (4)

13 pay or provide other consideration, or (5) pay or provide any

14 combination of the foregoing types of consideration.

15 "Acquiring corporation", as used in this Article, means

16 any stock insurance corporation incorporated under this Code

17 or under prior laws of this State relating to the

18 incorporation of domestic insurance corporations; any stock

19 corporation incorporated under the "Business Corporation Act

20 of 1983" or under prior laws of this State authorizing the

21 establishment of business corporations; and any foreign or

22 non-domestic ~~alien~~stock corporation qualified to do business

23 in Illinois and registered by the corporation department; and

24 any foreign or non-domestic ~~alien~~stock insurance company

25 authorized to do business in Illinois.

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1 (Source: P.A. 83-1362.)

2 (215 ILCS 5/157) (from Ch. 73, par. 769)

3 Sec. 157. Powers of company not enlarged.

4 Nothing in this article contained shall be construed to

5 authorize any company to engage in any kind of insurance

6 business not authorized by its articles of incorporation nor

7 to authorize any foreign or non-domestic ~~alien~~company to

8 engage in any kind of insurance business in this State not

9 covered by its certificate of authority to do business in this

10 State.

11 (Source: Laws 1937, p. 696.)

12 (215 ILCS 5/161) (from Ch. 73, par. 773)

13 Sec. 161. Approval and execution of agreement or plan of

14 exchange by foreign or non-domestic ~~alien~~company.

15 In the event that a foreign or non-domestic ~~alien~~ company

16 is a party to the agreement of merger or consolidation or plan

17 of exchange, the agreement or plan shall be executed by the

18 proper officers of such foreign or non-domestic ~~alien~~ company

19 when they are duly authorized thereto by such action on the

20 part of the directors, shareholders, members, or policyholders

21 of such foreign or non-domestic ~~alien~~company as may be

22 required by the laws of the domiciliary state or country of

23 such foreign or non-domestic ~~alien~~ company.

24 (Source: Laws 1967, p. 2406.)

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1 (215 ILCS 5/162) (from Ch. 73, par. 774)

2 Sec. 162. Certificate of Merger or Consolidation or Plan

3 of Exchange and Certificate of Approval.

4 (1) Upon the execution of an agreement of merger or

5 consolidation or plan of exchange, there shall be delivered to

6 the Director:

7 (a) two duplicate originals of the agreement or plan;

8 (b) affidavits of officers of each of the companies

9 setting forth the facts necessary to show that all

10 requirements of law with respect to notices to persons

11 entitled to vote have been complied with;

12 (c) certificates of the secretaries or assistant

13 secretaries or corresponding officers of each of the

14 companies, in case of a merger or consolidation, or of the

15 company to be acquired in case of a plan of exchange,

16 certifying to the number of shares, if any, outstanding,

17 the number of shares voted for and against such agreement

18 or plan, and further in the case of a merger or

19 consolidation (1) the number of policyholders represented

20 at the meeting at which the agreement was considered, and

21 (2) the number of votes cast by policyholders for and

22 against such agreement or (3) in the case of a fraternal

23 benefit society, the number of delegates of the supreme

24 legislative or governing body, and the number of votes

25 cast by the delegates for and against the agreement;

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1 (d) the certificates required by Section 171;

2 (e) if the surviving or new company is a domestic

3 company and any foreign ornon-domestic ~~alien~~ company is a

4 party to the merger or consolidation and the laws of the

5 state or country under which such foreign or non-domestic

6 ~~alien~~company is incorporated require approval of the

7 merger or consolidation by an official of such state or

8 country, a certificate of approval of such official; and

9 (f) in case of consolidation where the new company is

10 a foreign or non-domestic~~alien~~ company, an instrument

11 appointing the Director and his or her successor or

12 successors in office, the attorney of such company for

13 service of process, containing the same provisions and

14 having the same effect as the instrument required of a

15 foreign or non-domestic ~~alien~~company in order to be

16 admitted to transact business in this State.

17 In addition, the Director shall be provided, in

18 substantially the same form, the information required under

19 Article VIII 1/2 of this Code.

20 (2) In case the surviving or new company is a domestic

21 company, if the Director finds that:

22 (a) the agreement of merger or consolidation is in

23 accordance with the provisions of this Article and not

24 inconsistent with the laws and the Constitutions of this

25 State and the United States;

26 (b) the surviving or new company has complied with all

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1 applicable provisions of this Code;

2 (c) no reasonable objection exists to such merger or

3 consolidation; and

4 (d) the standards established under Article VIII 1/2

5 are satisfied;

6 he or she shall approve the agreement. The provisions of any

7 law with reference to age limits and medical examination shall

8 be inoperative in so far as agreements of merger or

9 consolidation are concerned. If the agreement of merger or

10 consolidation be approved by the Director, he or she shall

11 file the affidavits and certificates and one of the duplicate

12 originals of the agreement in his or her office, endorse upon

13 the other duplicate original his or her approval thereof, and

14 deliver it, together with a certificate of merger or

15 consolidation, as the case may be, to the surviving or new

16 company. In the case of a consolidation, the Director shall

17 also issue a certificate of authority to the new company.

18 (3) In case the surviving or new company is a foreign or

19 non-domestic ~~alien~~company, if the Director finds that:

20 (a) the agreement of merger or consolidation is in

21 accordance with the provisions of this Article and not

22 inconsistent with the laws and the Constitutions of this

23 State and the United States;

24 (b) the agreement of merger or consolidation provides

25 for the assumption by the new or surviving company of all

26 the liabilities and obligations of the companies parties

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1 to the merger or consolidation and otherwise affords

2 proper protection for creditors and policyholders and that

3 such provisions are not inconsistent with the laws of the

4 state or country of incorporation of such new or surviving

5 company;

6 (c) the surviving or new company has complied with all

7 applicable provisions of this Code;

8 (d) no reasonable objection exists to such merger or

9 consolidation; and

10 (e) the standards established under Article VIII 1/2

11 are satisfied;

12 he or she shall approve the agreement. If the agreement be

13 approved by the Director, he or she shall file the affidavits

14 and certificates and one of the duplicate originals of the

15 agreement in his or her office, endorse upon the other

16 duplicate original his or her approval thereof, and deliver

17 it, together with a certificate of approval of the merger or

18 consolidation, as the case may be, to the surviving or new

19 company.

20 (4) In the case of a plan of exchange, if the Director

21 finds that the parties to the exchange have established that:

22 (a) the plan, if effective, will not tend adversely to

23 affect the financial stability or management of any

24 domestic company which is a party thereto or the general

25 capacity or intention to continue the safe and prudent

26 transaction of the insurance business of such domestic

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1 company or companies;

2 (b) the interests of the policyholders and

3 shareholders of each domestic insurance company which is a

4 party to the plan are protected;

5 (c) the competence, experience and integrity of those

6 persons who would control the operation of the domestic

7 company are such as to be in the best interests of the

8 policyholders of such company to permit such exchange;

9 (d) the terms and conditions of the plan are fair and

10 reasonable; and

11 (e) the standards established under Article VIII 1/2

12 are satisfied;

13 he or she shall approve the plan of exchange. If the plan of

14 exchange be approved by the Director, he or she shall file the

15 affidavits and certificates and one of the duplicate originals

16 of the plan of exchange in his or her office, endorse upon the

17 other duplicate original his or her approval thereof, and

18 deliver it, together with a certificate of approval of the

19 plan of exchange to the domestic company.

20 (5) If the Director refuses to approve the agreement of

21 merger or consolidation, or plan of exchange, notice of such

22 refusal, assigning the reasons therefor, shall be given in

23 writing by the Director to each of the companies party

24 thereto, within 60 days from the date of the delivery of such

25 agreements or plan to him or her, and he or she shall grant any

26 of such companies a hearing upon request. The hearing shall be

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1 held within 30 days of the Director's receipt of request for

2 hearing. All persons to whom it is proposed to issue

3 securities in such agreements or exchange shall have a right

4 to appear. Within 30 days after the close of the hearing the

5 Director shall approve or disapprove or place conditions

6 precedent upon his or her approval of the merger or

7 consolidation or plan by issuing a written order stating his

8 or her determination and the reasons therefor.

9 (Source: P.A. 90-381, eff. 8-14-97.)

10 (215 ILCS 5/163) (from Ch. 73, par. 775)

11 Sec. 163. Date merger or consolidation or plan of exchange

12 effected.

13 (1) If the surviving or new company is a domestic company,

14 the merger or consolidation is effected upon the issuance of

15 the certificate of merger or the certificate of consolidation,

16 as the case may be.

17 (2) If the surviving or new company is a foreign or

18 non-domestic ~~alien~~company and the Director has issued a

19 certificate of approval of the merger or consolidation, the

20 date upon which the merger or consolidation is effected shall

21 be determined by the laws of the state or country of

22 incorporation or organization of the surviving or new company.

23 However, the merger or consolidation shall in no event become

24 effective in this State until a certificate of merger or

25 consolidation, as the case may be, or other evidence that the

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1 merger or consolidation is effected is issued by the proper

2 official of the state or country of incorporation or

3 organization of the surviving or new company and is filed with

4 and approved by the Director.

5 (3) Notice of adoption of the plan and the approval

6 thereof by the Director shall be delivered or mailed to each

7 shareholder of record of the domestic insurance company to be

8 acquired who was entitled to vote thereon and an affidavit of

9 the secretary or assistant secretary of such company or of an

10 officer of the company's transfer agent that such notice was

11 given shall be filed with the Director. The plan shall become

12 effective 10 days after receipt of the affidavit by the

13 Director. A plan of exchange may be abandoned pursuant to any

14 provisions for abandonment contained therein at any time,

15 provided that notice of such abandonment shall be delivered or

16 mailed to each such stockholder and filed with the Director

17 prior to the termination of such 10 day period.

18 (Source: Laws 1967, p. 2406.)

19 (215 ILCS 5/164) (from Ch. 73, par. 776)

20 Sec. 164. Removal of property of domestic, merged or

21 consolidated company from this State.

22 (1) If the surviving or new company shall be a foreign or

23 non-domestic ~~alien~~company, no property of the domestic merged

24 or consolidated company shall be removed from this State by

25 reason of such merger or consolidation, prior to, nor shall

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1 title to such property vest in the surviving or new company

2 until, the merger or consolidation shall become effective in

3 this State as provided in section 163.

4 (2) Any director or officer of any domestic company

5 removing or permitting the removal of any property of company

6 from this State in violation of this section, shall be guilty

7 of a Class A misdemeanor.

8 (Source: P.A. 77-2699.)

9 (215 ILCS 5/166) (from Ch. 73, par. 778)

10 Sec. 166. Effect of merger or consolidation.

11 (1) If the surviving or new company is a domestic company,

12 when such merger or consolidation has been effected

13 (a) the several companies parties to the agreement of

14 merger or consolidation shall be a single company, which, in

15 the case of a merger, shall be that company designated in the

16 agreement of merger as the surviving company, and in the case

17 of a consolidation, shall be the new company provided for in

18 the agreement of consolidation;

19 (b) the separate existence of all of the companies parties

20 to the agreement of merger or consolidation, except the

21 surviving company in the case of a merger, shall cease;

22 (c) such surviving or new company shall have all of the

23 rights, privileges, immunities and powers and shall be subject

24 to all of the duties and liabilities granted or imposed by this

25 Code;

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1 (d) such surviving or new company shall thereupon and

2 thereafter possess all the rights, privileges, immunities,

3 powers and franchises of a public as well as of a private

4 nature, of each of the companies so merged or consolidated;

5 and all property, real, personal and mixed, and all debts due

6 on whatever account, including subscriptions to shares,

7 assessments payable from members or policyholders, and all

8 other choses in action and all and every other interest of, or

9 belonging to or due to, each of the companies so merged or

10 consolidated shall be deemed to be transferred to and vested

11 in such surviving or new company without further act or deed;

12 and the title to any real estate, or any interest therein,

13 under the laws of this State vested in any of such companies

14 shall not revert or be in any way impaired by reason of such

15 merger or consolidation;

16 (e) such surviving or new company shall thenceforth be

17 responsible and liable for all the liabilities and obligations

18 of each of the companies so merged or consolidated; any claim

19 existing or action or proceeding pending by or against any of

20 such companies may be prosecuted to judgment as if such merger

21 or consolidation had not taken place, or such surviving or new

22 company may be substituted in its place; neither the rights of

23 creditors nor any liens upon the property of any of such

24 companies shall be impaired by such merger or consolidation,

25 but such liens shall be limited to the property upon which they

26 were liens immediately prior to the time of such merger or

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1 consolidation, unless otherwise provided in the agreement of

2 merger or consolidation; and

3 (f) in case of a merger, the articles of incorporation of

4 the surviving company shall be supplanted and superseded to

5 the extent, if any, that any provision or provisions of such

6 articles shall be restated in the agreement of merger as

7 provided in section 158, and such articles of incorporation,

8 shall be deemed to be thereby and to that extent amended; in

9 case of a consolidation, the statements set forth in the

10 agreement of consolidation as provided in section 158 shall be

11 deemed to be articles of incorporation of the new company

12 formed by such consolidation.

13 (2) If the surviving or new company is a foreign or

14 non-domestic ~~alien~~company, when such merger or consolidation

15 has become effective in this State

16 (a) the effect of the merger or consolidation shall be

17 determined by the law of the state of incorporation or

18 organization of such company;

19 (b) the separate existence of all domestic companies

20 parties to the plan of merger or consolidation shall cease;

21 (c) all property, real, personal, and mixed, and all debts

22 due on whatever account including subscriptions to shares,

23 assessments payable from members or policyholders and all

24 other choses in action and all and every other interest of or

25 belonging to and due to each of the companies so merged or

26 consolidated shall be taken and deemed to be transferred to

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1 and vested in such surviving or new company without further

2 act or deed, and the title to any real estate, or any interest

3 therein, shall not revert or be in any way impaired by reason

4 of such merger or consolidation.

5 (3) In the event of a merger or consolidation under this

6 article, the surviving company or the consolidated company

7 shall be considered as having the age of the oldest company

8 which is a party to such merger or consolidation for the

9 purpose of complying with requirements of the laws relating to

10 age of company.

11 (Source: Laws 1937, p. 696.)

12 (215 ILCS 5/169) (from Ch. 73, par. 781)

13 Sec. 169. Rights of dissenting shareholders and

14 policyholders of foreign or non-domestic ~~alien~~ company.

15 The rights of any dissenting shareholder, member or

16 policyholder of any foreign ornon-domestic ~~alien~~ company

17 party to a merger or consolidation, shall be those afforded to

18 such shareholder, member, or policyholder by the laws of the

19 domiciliary state or country of such foreign or non-domestic

20 ~~alien~~ company.

21 (Source: Laws 1937, p. 696.)

22 (215 ILCS 5/170) (from Ch. 73, par. 782)

23 Sec. 170. Transfer of deposits.

24 (1) If the surviving or new company shall be a foreign or

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1 non-domestic ~~alien~~company and the laws of the state or

2 country under which such surviving or new company is

3 incorporated or organized shall require the maintenance with

4 any official of such State or country of a deposit of the legal

5 reserve on any policies, then the Director is authorized to

6 deliver to the proper custodian of such deposits of such state

7 or country any deposits theretofore made with the Director

8 pertaining to policies of any of the merged or consolidated

9 companies. If the surviving or new company shall be a domestic

10 company into which has been merged or consolidated a foreign

11 or non-domestic~~alien~~ company incorporated or organized in a

12 state or country the laws of which require the maintenance

13 with an official of a deposit of the legal reserve on any

14 policies, then the Director is hereby authorized to receive

15 from such official any deposit theretofore made with such

16 official pertaining to the policies of any of the merged or

17 consolidated companies.

18 (2) Any surviving or new company shall, within 60 days

19 after the transfer of such deposit, notify the holder of every

20 policy secured by such transferred deposit, that the transfer

21 has been made. The president or vice-president and secretary

22 or assistant secretary of such company, or the executive

23 officers corresponding thereto, shall within 30 days

24 thereafter, file with the Director an affidavit of the fact

25 that due notice to policyholders, as provided for herein, has

26 been given. If a surviving or new company shall be a foreign or

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1 non-domestic ~~alien~~company, the Director shall require from

2 such company, before transferring any deposit to any official

3 of the state or country under the laws of which such foreign or

4 non-domestic ~~alien~~company is incorporated or organized, a

5 written agreement that notice of such transfer will be given

6 to policyholders and that an affidavit with regard to such

7 notice will be furnished to the Director as in this section

8 provided.

9 (3) In the event any deposit is to be maintained in this

10 State by reason of this section, the amount thereof from time

11 to time for each such policy shall be at least equal to the

12 amount which would be required in the state where such deposit

13 was theretofore maintained under the provisions of the law of

14 such state in effect on the date the merger or consolidation

15 was effected. The deposits so maintained in this State shall

16 consist of securities of the kinds authorized for investment

17 by Article VIII of this Code.

18 (Source: Laws 1959, p. 1431.)

19 (215 ILCS 5/173.1) (from Ch. 73, par. 785.1)

20 (Text of Section before amendment by P.A. 102-578)

21 Sec. 173.1. Credit allowed a domestic ceding insurer.

22 (1) Except as otherwise provided under Article VIII 1/2 of

23 this Code and related provisions of the Illinois

24 Administrative Code, credit for reinsurance shall be allowed a

25 domestic ceding insurer as either an admitted asset or a

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1 deduction from liability on account of reinsurance ceded only

2 when the reinsurer meets the requirements of paragraph (A) or

3 (B) or (B-5) or (C) or (C-5) or (D) of this subsection (1).

4 Credit shall be allowed under paragraph (A), (B), or (B-5) of

5 this subsection (1) only as respects cessions of those kinds

6 or classes of business in which the assuming insurer is

7 licensed or otherwise permitted to write or assume in its

8 state of domicile, or in the case of a U.S. branch ofa

9 non-domestic ~~an alien~~assuming insurer, in the state through

10 which it is entered and licensed to transact insurance or

11 reinsurance. Credit shall be allowed under paragraph (B-5) or

12 (C) of this subsection (1) only if the applicable requirements

13 of paragraph (E) of this subsection (1) have been satisfied.

14 (A) Credit shall be allowed when the reinsurance is

15 ceded to an assuming insurer that is authorized in this

16 State to transact the types of insurance ceded and has at

17 least $5,000,000 in capital and surplus.

18 (B) Credit shall be allowed when the reinsurance is

19 ceded to an assuming insurer that is accredited as a

20 reinsurer in this State. An accredited reinsurer is one

21 that:

22 (1) files with the Director evidence of its

23 submission to this State's jurisdiction;

24 (2) submits to this State's authority to examine

25 its books and records;

26 (3) is licensed to transact insurance or

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1 reinsurance in at least one state, or in the case of a

2 U.S. branch of a non-domestic ~~an alien~~ assuming

3 insurer is entered through and licensed to transact

4 insurance or reinsurance in at least one state;

5 (4) files annually with the Director a copy of its

6 annual statement filed with the insurance department

7 of its state of domicile and a copy of its most recent

8 audited financial statement; and

9 (5) maintains a surplus as regards policyholders

10 in an amount that is not less than $20,000,000 and

11 whose accreditation has been approved by the Director.

12 (B-5)(1) Credit shall be allowed when the reinsurance

13 is ceded to an assuming insurer that is domiciled in, or in

14 the case of a U.S. branch of a non-domestic ~~an alien~~

15 assuming insurer is entered through, a state that employs

16 standards regarding credit for reinsurance substantially

17 similar to those applicable under this Code and the

18 assuming insurer or U.S. branch of a non-domestic ~~an alien~~

19 assuming insurer:

20 (a) maintains a surplus as regards policyholders

21 in an amount not less than $20,000,000; and

22 (b) submits to the authority of this State to

23 examine its books and records.

24 (2) The requirement of item (a) of subparagraph (1) of

25 paragraph (B-5) of this subsection (1) does not apply to

26 reinsurance ceded and assumed pursuant to pooling

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1 arrangements among insurers in the same holding company

2 system.

3 (C)(1) Credit shall be allowed when the reinsurance

4 is ceded to an assuming insurer that maintains a trust

5 fund in a qualified United States financial institution,

6 as defined in paragraph (B) of subsection (3) of this

7 Section, for the payment of the valid claims of its United

8 States policyholders and ceding insurers, their assigns

9 and successors in interest. The assuming insurer shall

10 report to the Director information substantially the same

11 as that required to be reported on the NAIC annual and

12 quarterly financial statement by authorized insurers and

13 any other financial information that the Director deems

14 necessary to determine the financial condition of the

15 assuming insurer and the sufficiency of the trust fund.

16 The assuming insurer shall provide or make the information

17 available to the ceding insurer. The assuming insurer may

18 decline to release trade secrets or commercially sensitive

19 information that would qualify as exempt from disclosure

20 under the Freedom of Information Act. The Director shall

21 also make the information publicly available, subject only

22 to such reasonable objections as might be raised to a

23 request pursuant to the Freedom of Information Act, as

24 determined by the Director. The assuming insurer shall

25 submit to examination of its books and records by the

26 Director and bear the expense of examination.

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1 (2)(a) Credit for reinsurance shall not be granted

2 under this subsection unless the form of the trust and any

3 amendments to the trust have been approved by:

4 (i) the regulatory official of the state where the

5 trust is domiciled; or

6 (ii) the regulatory official of another state who,

7 pursuant to the terms of the trust instrument, has

8 accepted principal regulatory oversight of the trust.

9 (b) The form of the trust and any trust amendments

10 also shall be filed with the regulatory official of every

11 state in which the ceding insurer beneficiaries of the

12 trust are domiciled. The trust instrument shall provide

13 that contested claims shall be valid and enforceable upon

14 the final order of any court of competent jurisdiction in

15 the United States. The trust shall vest legal title to its

16 assets in its trustees for the benefit of the assuming

17 insurer's United States policyholders and ceding insurees

18 and their assigns and successors in interest. The trust

19 and the assuming insurer shall be subject to examination

20 as determined by the Director.

21 (c) The trust shall remain in effect for as long as the

22 assuming insurer has outstanding obligations due under the

23 reinsurance agreements subject to the trust. No later than

24 February 28 of each year the trustee of the trust shall

25 report to the Director in writing the balance of the trust

26 and a list of the trust's investments at the preceding

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1 year-end and shall certify the date of termination of the

2 trust, if so planned, or certify that the trust will not

3 expire prior to the next following December 31.

4 No later than February 28 of each year, the assuming

5 insurer's chief executive officer or chief financial

6 officer shall certify to the Director that the trust fund

7 contains funds in an amount not less than the assuming

8 insurer's liabilities (as reported to the assuming insurer

9 by its cedent) attributable to reinsurance ceded by U.S.

10 ceding insurers, and in addition, a trusteed surplus of no

11 less than $20,000,000. In the event that item (a-5) of

12 subparagraph (3) of this paragraph (C) applies to the

13 trust, the assuming insurer's chief executive officer or

14 chief financial officer shall then certify to the Director

15 that the trust fund contains funds in an amount not less

16 than the assuming insurer's liabilities (as reported to

17 the assuming insurer by its cedent) attributable to

18 reinsurance ceded by U.S. ceding insurers and, in

19 addition, a reduced trusteed surplus of not less than the

20 amount that has been authorized by the regulatory

21 authority having principal regulatory oversight of the

22 trust.

23 (d) No later than February 28 of each year, an

24 assuming insurer that maintains a trust fund in accordance

25 with this paragraph (C) shall provide or make available,

26 if requested by a beneficiary under the trust fund, the

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1 following information to the assuming insurer's U.S.

2 ceding insurers or their assigns and successors in

3 interest:

4 (i) a copy of the form of the trust agreement and

5 any trust amendments to the trust agreement pertaining

6 to the trust fund;

7 (ii) a copy of the annual and quarterly financial

8 information, and its most recent audited financial

9 statement provided to the Director by the assuming

10 insurer, including any exhibits and schedules thereto;

11 (iii) any financial information provided to the

12 Director by the assuming insurer that the Director has

13 deemed necessary to determine the financial condition

14 of the assuming insurer and the sufficiency of the

15 trust fund;

16 (iv) a copy of any annual and quarterly financial

17 information provided to the Director by the trustee of

18 the trust fund maintained by the assuming insurer,

19 including any exhibits and schedules thereto;

20 (v) a copy of the information required to be

21 reported by the trustee of the trust to the Director

22 under the provisions of this paragraph (C); and

23 (vi) a written certification that the trust fund

24 consists of funds in trust in an amount not less than

25 the assuming insurer's liabilities attributable to

26 reinsurance liabilities (as reported to the assuming

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1 insurer by its cedent) attributable to reinsurance

2 ceded by U.S. ceding insurers and, in addition, a

3 trusteed surplus of not less than $20,000,000.

4 (3) The following requirements apply to the following

5 categories of assuming insurer:

6 (a) The trust fund for a single assuming insurer

7 shall consist of funds in trust in an amount not less

8 than the assuming insurer's liabilities attributable

9 to reinsurance ceded by U.S. ceding insurers, and in

10 addition, the assuming insurer shall maintain a

11 trusteed surplus of not less than $20,000,000, except

12 as provided in item (a-5) of this subparagraph (3).

13 (a-5) At any time after the assuming insurer has

14 permanently discontinued underwriting new business

15 secured by the trust for at least 3 full years, the

16 Director with principal regulatory oversight of the

17 trust may authorize a reduction in the required

18 trusteed surplus, but only after a finding, based on

19 an assessment of the risk, that the new required

20 surplus level is adequate for the protection of U.S.

21 ceding insurers, policyholders, and claimants in light

22 of reasonably foreseeable adverse loss development.

23 The risk assessment may involve an actuarial review,

24 including an independent analysis of reserves and cash

25 flows, and shall consider all material risk factors,

26 including, when applicable, the lines of business

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1 involved, the stability of the incurred loss

2 estimates, and the effect of the surplus requirements

3 on the assuming insurer's liquidity or solvency. The

4 minimum required trusteed surplus may not be reduced

5 to an amount less than 30% of the assuming insurer's

6 liabilities attributable to reinsurance ceded by U.S.

7 ceding insurers covered by the trust.

8 (b)(i) In the case of a group including

9 incorporated and individual unincorporated

10 underwriters:

11 (I) for reinsurance ceded under reinsurance

12 agreements with an inception, amendment, or

13 renewal date on or after January 1, 1993, the

14 trust shall consist of a trusteed account in an

15 amount not less than the respective underwriters'

16 several liabilities attributable to business ceded

17 by U.S. domiciled ceding insurers to any member of

18 the group;

19 (II) for reinsurance ceded under reinsurance

20 agreements with an inception date on or before

21 December 31, 1992 and not amended or renewed after

22 that date, notwithstanding the other provisions of

23 this Act, the trust shall consist of a trusteed

24 account in an amount not less than the group's

25 several insurance and reinsurance liabilities

26 attributable to business written in the United

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1 States; and

2 (III) in addition to these trusts, the group

3 shall maintain in trust a trusteed surplus of

4 which not less than $100,000,000 shall be held

5 jointly for the benefit of the U.S. domiciled

6 ceding insurers of any member of the group for all

7 years of account.

8 (ii) The incorporated members of the group shall

9 not be engaged in any business other than underwriting

10 as a member of the group and shall be subject to the

11 same level of solvency regulation and control by the

12 group's domiciliary regulator as are the

13 unincorporated members.

14 (iii) Within 90 days after its financial

15 statements are due to be filed with the group's

16 domiciliary regulator, the group shall provide to the

17 Director an annual certification by the group's

18 domiciliary regulator of the solvency of each

19 underwriter member, or if a certification is

20 unavailable, financial statements prepared by

21 independent public accountants of each underwriter

22 member of the group.

23 (c) In the case of a group of incorporated

24 insurers under common administration, the group shall:

25 (i) have continuously transacted an insurance

26 business outside the United States for at least 3

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1 years immediately before making application for

2 accreditation;

3 (ii) maintain aggregate policyholders' surplus

4 of not less than $10,000,000,000;

5 (iii) maintain a trust in an amount not less

6 than the group's several liabilities attributable

7 to business ceded by United States domiciled

8 ceding insurers to any member of the group

9 pursuant to reinsurance contracts issued in the

10 name of the group;

11 (iv) in addition, maintain a joint trusteed

12 surplus of which not less than $100,000,000 shall

13 be held jointly for the benefit of the United

14 States ceding insurers of any member of the group

15 as additional security for these liabilities; and

16 (v) within 90 days after its financial

17 statements are due to be filed with the group's

18 domiciliary regulator, make available to the

19 Director an annual certification of each

20 underwriter member's solvency by the member's

21 domiciliary regulator and financial statements of

22 each underwriter member of the group prepared by

23 its independent public accountant.

24 (C-5) Credit shall be allowed when the reinsurance is

25 ceded to an assuming insurer that has been certified by

26 the Director as a reinsurer in this State and secures its

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1 obligations in accordance with the requirements of this

2 paragraph (C-5).

3 (1) In order to be eligible for certification, the

4 assuming insurer shall meet the following

5 requirements:

6 (a) the assuming insurer must be domiciled and

7 licensed to transact insurance or reinsurance in a

8 qualified jurisdiction, as determined by the

9 Director pursuant to subparagraph (3) of this

10 paragraph (C-5);

11 (b) the assuming insurer must maintain minimum

12 capital and surplus, or its equivalent, in an

13 amount not less than $250,000,000 or such greater

14 amount as determined by the Director pursuant to

15 regulation; this requirement may also be satisfied

16 by an association, including incorporated and

17 individual unincorporated underwriters, having

18 minimum capital and surplus equivalents (net of

19 liabilities) of at least $250,000,000 and a

20 central fund containing a balance of at least

21 $250,000,000;

22 (c) the assuming insurer must maintain

23 financial strength ratings from 2 or more rating

24 agencies deemed acceptable by the Director; these

25 ratings shall be based on interactive

26 communication between the rating agency and the

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1 assuming insurer and shall not be based solely on

2 publicly available information; each certified

3 reinsurer shall be rated on a legal entity basis,

4 with due consideration being given to the group

5 rating where appropriate, except that an

6 association, including incorporated and individual

7 unincorporated underwriters, that has been

8 approved to do business as a single certified

9 reinsurer may be evaluated on the basis of its

10 group rating; these financial strength ratings

11 shall be one factor used by the Director in

12 determining the rating that is assigned to the

13 assuming insurer; acceptable rating agencies

14 include the following:

15 (i) Standard & Poor's;

16 (ii) Moody's Investors Service;

17 (iii) Fitch Ratings;

18 (iv) A.M. Best Company; or

19 (v) any other nationally recognized

20 statistical rating organization;

21 (d) the assuming insurer must agree to submit

22 to the jurisdiction of this State, appoint the

23 Director as its agent for service of process in

24 this State, and agree to provide security for 100%

25 of the assuming insurer's liabilities attributable

26 to reinsurance ceded by U.S. ceding insurers if it

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1 resists enforcement of a final U.S. judgment; and

2 (e) the assuming insurer must agree to meet

3 applicable information filing requirements as

4 determined by the Director, both with respect to

5 an initial application for certification and on an

6 ongoing basis.

7 (2) An association, including incorporated and

8 individual unincorporated underwriters, may be a

9 certified reinsurer. In order to be eligible for

10 certification, in addition to satisfying the

11 requirements of subparagraph (1) of this paragraph

12 (C-5):

13 (a) the association shall satisfy its minimum

14 capital and surplus requirements through the

15 capital and surplus equivalents (net of

16 liabilities) of the association and its members,

17 which shall include a joint central fund that may

18 be applied to any unsatisfied obligation of the

19 association or any of its members, in the amounts

20 specified in item (b) of subparagraph (1) of this

21 paragraph (C-5);

22 (b) the incorporated members of the

23 association shall not be engaged in any business

24 other than underwriting as a member of the

25 association and shall be subject to the same level

26 of regulation and solvency control by the

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1 association's domiciliary regulator as are the

2 unincorporated members; and

3 (c) within 90 days after its financial

4 statements are due to be filed with the

5 association's domiciliary regulator, the

6 association shall provide to the Director an

7 annual certification by the association's

8 domiciliary regulator of the solvency of each

9 underwriter member; or if a certification is

10 unavailable, financial statements, prepared by

11 independent public accountants, of each

12 underwriter member of the association.

13 (3) The Director shall create and publish a list

14 of qualified jurisdictions, under which an assuming

15 insurer licensed and domiciled in such jurisdiction is

16 eligible to be considered for certification by the

17 Director as a certified reinsurer.

18 (a) In order to determine whether the

19 domiciliary jurisdiction of a non-U.S. assuming

20 insurer is eligible to be recognized as a

21 qualified jurisdiction, the Director shall

22 evaluate the appropriateness and effectiveness of

23 the reinsurance supervisory system of the

24 jurisdiction, both initially and on an ongoing

25 basis, and consider the rights, benefits, and

26 extent of reciprocal recognition afforded by the

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1 non-U.S. jurisdiction to reinsurers licensed and

2 domiciled in the U.S. A qualified jurisdiction

3 must agree in writing to share information and

4 cooperate with the Director with respect to all

5 certified reinsurers domiciled within that

6 jurisdiction. A jurisdiction may not be recognized

7 as a qualified jurisdiction if the Director has

8 determined that the jurisdiction does not

9 adequately and promptly enforce final U.S.

10 judgments and arbitration awards. The costs and

11 expenses associated with the Director's review and

12 evaluation of the domiciliary jurisdictions of

13 non-U.S. assuming insurers shall be borne by the

14 certified reinsurer or reinsurers domiciled in

15 such jurisdiction.

16 (b) Additional factors to be considered in

17 determining whether to recognize a qualified

18 jurisdiction include, but are not limited to, the

19 following:

20 (i) the framework under which the assuming

21 insurer is regulated;

22 (ii) the structure and authority of the

23 domiciliary regulator with regard to solvency

24 regulation requirements and financial

25 surveillance;

26 (iii) the substance of financial and

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1 operating standards for assuming insurers in

2 the domiciliary jurisdiction;

3 (iv) the form and substance of financial

4 reports required to be filed or made publicly

5 available by reinsurers in the domiciliary

6 jurisdiction and the accounting principles

7 used;

8 (v) the domiciliary regulator's

9 willingness to cooperate with U.S. regulators

10 in general and the Director in particular;

11 (vi) the history of performance by

12 assuming insurers in the domiciliary

13 jurisdiction;

14 (vii) any documented evidence of

15 substantial problems with the enforcement of

16 final U.S. judgments in the domiciliary

17 jurisdiction; and

18 (viii) any relevant international

19 standards or guidance with respect to mutual

20 recognition of reinsurance supervision adopted

21 by the International Association of Insurance

22 Supervisors or its successor organization.

23 (c) If, upon conducting an evaluation under

24 this paragraph with respect to the reinsurance

25 supervisory system of any non-U.S. assuming

26 insurer, the Director determines that the

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1 jurisdiction qualifies to be recognized as a

2 qualified jurisdiction, the Director shall publish

3 notice and evidence of such recognition in an

4 appropriate manner. The Director may establish a

5 procedure to withdraw recognition of those

6 jurisdictions that are no longer qualified.

7 (d) The Director shall consider the list of

8 qualified jurisdictions through the NAIC committee

9 process in determining qualified jurisdictions. If

10 the Director approves a jurisdiction as qualified

11 that does not appear on the list of qualified

12 jurisdictions, then the Director shall provide

13 thoroughly documented justification in accordance

14 with criteria to be developed under regulations.

15 (e) U.S. jurisdictions that meet the

16 requirement for accreditation under the NAIC

17 financial standards and accreditation program

18 shall be recognized as qualified jurisdictions.

19 (f) If a certified reinsurer's domiciliary

20 jurisdiction ceases to be a qualified

21 jurisdiction, then the Director may suspend the

22 reinsurer's certification indefinitely, in lieu of

23 revocation.

24 (4) If an applicant for certification has been

25 certified as a reinsurer in an NAIC accredited

26 jurisdiction, then the Director may defer to that

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1 jurisdiction's certification and to the rating

2 assigned by that jurisdiction if the assuming insurer

3 submits a properly executed Form CR-1 and such

4 additional information as the Director requires. Such

5 assuming insurer shall be considered to be a certified

6 reinsurer in this State but only upon the Director's

7 assignment of an Illinois rating, which shall be made

8 based on the requirements of subparagraph (5) of this

9 paragraph (C-5). The following shall apply:

10 (a) Any change in the certified reinsurer's

11 status or rating in the other jurisdiction shall

12 apply automatically in Illinois as of the date it

13 takes effect in the other jurisdiction. The

14 certified reinsurer shall notify the Director of

15 any change in its status or rating within 10 days

16 after receiving notice of the change.

17 (b) The Director may withdraw recognition of

18 the other jurisdiction's rating at any time and

19 assign a new rating in accordance with

20 subparagraph (5) of this paragraph (C-5).

21 (c) The Director may withdraw recognition of

22 the other jurisdiction's certification at any time

23 with written notice to the certified reinsurer.

24 Unless the Director suspends or revokes the

25 certified reinsurer's certification in accordance

26 with item (c) of subparagraph (9) of this

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1 paragraph (C-5), the certified reinsurer's

2 certification shall remain in good standing in

3 Illinois for a period of 3 months, which shall be

4 extended if additional time is necessary to

5 consider the assuming insurer's application for

6 certification in Illinois.

7 (5) The Director shall assign a rating to each

8 certified reinsurer pursuant to rules adopted by the

9 Department. Factors that shall be considered as part

10 of the evaluation process include the following:

11 (a) The certified reinsurer's financial

12 strength rating from an acceptable rating agency.

13 Financial strength ratings shall be classified

14 according to the following ratings categories:

15 (i) Ratings Category "Secure - 1"

16 corresponds to the highest level of rating

17 given by a rating agency, including, but not

18 limited to, A.M. Best Company rating A++;

19 Standard & Poor's rating AAA; Moody's

20 Investors Service rating Aaa; and Fitch

21 Ratings rating AAA.

22 (ii) Ratings Category "Secure - 2"

23 corresponds to the second-highest level of

24 rating or group of ratings given by a rating

25 agency, including, but not limited to, A.M.

26 Best Company rating A+; Standard & Poor's

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1 rating AA+, AA, or AA-; Moody's Investors

2 Service ratings Aa1, Aa2, or Aa3; and Fitch

3 Ratings ratings AA+, AA, or AA-.

4 (iii) Ratings Category "Secure - 3"

5 corresponds to the third-highest level of

6 rating or group of ratings given by a rating

7 agency, including, but not limited to, A.M.

8 Best Company rating A; Standard & Poor's

9 ratings A+ or A; Moody's Investors Service

10 ratings A1 or A2; and Fitch Ratings ratings A+

11 or A.

12 (iv) Ratings Category "Secure - 4"

13 corresponds to the fourth-highest level of

14 rating or group of ratings given by a rating

15 agency, including, but not limited to, A.M.

16 Best Company rating A-; Standard & Poor's

17 rating A-; Moody's Investors Service rating

18 A3; and Fitch Ratings rating A-.

19 (v) Ratings Category "Secure - 5"

20 corresponds to the fifth-highest level of

21 rating or group of ratings given by a rating

22 agency, including, but not limited to, A.M.

23 Best Company ratings B++ or B+; Standard &

24 Poor's ratings BBB+, BBB, or BBB-; Moody's

25 Investors Service ratings Baa1, Baa2, or Baa3;

26 and Fitch Ratings ratings BBB+, BBB, or BBB-.

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1 (vi) Ratings Category "Vulnerable - 6"

2 corresponds to a level of rating given by a

3 rating agency, other than those described in

4 subitems (i) through (v) of this item (a),

5 including, but not limited to, A.M. Best

6 Company rating B, B-, C++, C+, C, C-, D, E, or

7 F; Standard & Poor's ratings BB+, BB, BB-, B+,

8 B, B-, CCC, CC, C, D, or R; Moody's Investors

9 Service ratings Ba1, Ba2, Ba3, B1, B2, B3,

10 Caa, Ca, or C; and Fitch Ratings ratings BB+,

11 BB, BB-, B+, B, B-, CCC+, CCC, CCC-, or D.

12 A failure to obtain or maintain at least 2

13 financial strength ratings from acceptable rating

14 agencies shall result in loss of eligibility for

15 certification.

16 (b) The business practices of the certified

17 reinsurer in dealing with its ceding insurers,

18 including its record of compliance with

19 reinsurance contractual terms and obligations.

20 (c) For certified reinsurers domiciled in the

21 U.S., a review of the most recent applicable NAIC

22 Annual Statement Blank, either Schedule F (for

23 property and casualty reinsurers) or Schedule S

24 (for life and health reinsurers).

25 (d) For certified reinsurers not domiciled in

26 the U.S., a review annually of Form CR-F (for

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1 property and casualty reinsurers) or Form CR-S

2 (for life and health reinsurers).

3 (e) The reputation of the certified reinsurer

4 for prompt payment of claims under reinsurance

5 agreements, based on an analysis of ceding

6 insurers' Schedule F reporting of overdue

7 reinsurance recoverables, including the proportion

8 of obligations that are more than 90 days past due

9 or are in dispute, with specific attention given

10 to obligations payable to companies that are in

11 administrative supervision or receivership.

12 (f) Regulatory actions against the certified

13 reinsurer.

14 (g) The report of the independent auditor on

15 the financial statements of the insurance

16 enterprise, on the basis described in item (h) of

17 this subparagraph (5).

18 (h) For certified reinsurers not domiciled in

19 the U.S., audited financial statements (audited

20 Generally Accepted Accounting Principles (U.S.

21 GAAP) basis statement if available, audited

22 International Financial Reporting Standards (IFRS)

23 basis statements are allowed but must include an

24 audited footnote reconciling equity and net income

25 to U.S. GAAP basis or, with the permission of the

26 Director, audited IFRS basis statements with

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1 reconciliation to U.S. GAAP basis certified by an

2 officer of the company), regulatory filings, and

3 actuarial opinion (as filed with the non-U.S.

4 jurisdiction supervisor). Upon the initial

5 application for certification, the Director shall

6 consider the audited financial statements filed

7 with its non-U.S. jurisdiction supervisor for the

8 3 years immediately preceding the date of the

9 initial application for certification.

10 (i) The liquidation priority of obligations to

11 a ceding insurer in the certified reinsurer's

12 domiciliary jurisdiction in the context of an

13 insolvency proceeding.

14 (j) A certified reinsurer's participation in

15 any solvent scheme of arrangement, or similar

16 procedure, that involves U.S. ceding insurers. The

17 Director shall receive prior notice from a

18 certified reinsurer that proposes participation by

19 the certified reinsurer in a solvent scheme of

20 arrangement.

21 The maximum rating that a certified reinsurer may

22 be assigned shall correspond to its financial strength

23 rating, which shall be determined according to

24 subitems (i) through (vi) of item (a) of this

25 subparagraph (5). The Director shall use the lowest

26 financial strength rating received from an acceptable

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1 rating agency in establishing the maximum rating of a

2 certified reinsurer.

3 (6) Based on the analysis conducted under item (e)

4 of subparagraph (5) of this paragraph (C-5) of a

5 certified reinsurer's reputation for prompt payment of

6 claims, the Director may make appropriate adjustments

7 in the security the certified reinsurer is required to

8 post to protect its liabilities to U.S. ceding

9 insurers, provided that the Director shall, at a

10 minimum, increase the security the certified reinsurer

11 is required to post by one rating level under item (a)

12 of subparagraph (8) of this paragraph (C-5) if the

13 Director finds that:

14 (a) more than 15% of the certified reinsurer's

15 ceding insurance clients have overdue reinsurance

16 recoverables on paid losses of 90 days or more

17 that are not in dispute and that exceed $100,000

18 for each cedent; or

19 (b) the aggregate amount of reinsurance

20 recoverables on paid losses that are not in

21 dispute that are overdue by 90 days or more

22 exceeds $50,000,000.

23 (7) The Director shall post notice on the

24 Department's website promptly upon receipt of any

25 application for certification, including instructions

26 on how members of the public may respond to the

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1 application. The Director may not take final action on

2 the application until at least 30 days after posting

3 the notice required by this subparagraph. The Director

4 shall publish a list of all certified reinsurers and

5 their ratings.

6 (8) A certified reinsurer shall secure obligations

7 assumed from U.S. ceding insurers under this

8 subsection (1) at a level consistent with its rating.

9 (a) The amount of security required in order

10 for full credit to be allowed shall correspond

11 with the applicable ratings category:

12 Secure - 1: 0%.

13 Secure - 2: 10%.

14 Secure - 3: 20%.

15 Secure - 4: 50%.

16 Secure - 5: 75%.

17 Vulnerable - 6: 100%.

18 (b) Nothing in this subparagraph (8) shall

19 prohibit the parties to a reinsurance agreement

20 from agreeing to provisions establishing security

21 requirements that exceed the minimum security

22 requirements established for certified reinsurers

23 under this Section.

24 (c) In order for a domestic ceding insurer to

25 qualify for full financial statement credit for

26 reinsurance ceded to a certified reinsurer, the

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1 certified reinsurer shall maintain security in a

2 form acceptable to the Director and consistent

3 with the provisions of subsection (2) of this

4 Section, or in a multibeneficiary trust in

5 accordance with paragraph (C) of this subsection

6 (1), except as otherwise provided in this

7 subparagraph (8).

8 (d) If a certified reinsurer maintains a trust

9 to fully secure its obligations subject to

10 paragraph (C) of this subsection (1), and chooses

11 to secure its obligations incurred as a certified

12 reinsurer in the form of a multibeneficiary trust,

13 then the certified reinsurer shall maintain

14 separate trust accounts for its obligations

15 incurred under reinsurance agreements issued or

16 renewed as a certified reinsurer with reduced

17 security as permitted by this subsection or

18 comparable laws of other U.S. jurisdictions and

19 for its obligations subject to paragraph (C) of

20 this subsection (1). It shall be a condition to

21 the grant of certification under this paragraph

22 (C-5) that the certified reinsurer shall have

23 bound itself, by the language of the trust and

24 agreement with the Director with principal

25 regulatory oversight of each such trust account,

26 to fund, upon termination of any such trust

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1 account, out of the remaining surplus of such

2 trust any deficiency of any other such trust

3 account. The certified reinsurer shall also

4 provide or make available, if requested by a

5 beneficiary under a trust, all the information

6 that is required to be provided under the

7 requirements of item (d) of subparagraph (2) of

8 paragraph (C) of this subsection (1) to the

9 certified reinsurer's U.S. ceding insurers or

10 their assigns and successors in interest. The

11 assuming insurer may decline to release trade

12 secrets or commercially sensitive information that

13 would qualify as exempt from disclosure under the

14 Freedom of Information Act.

15 (e) The minimum trusteed surplus requirements

16 provided in paragraph (C) of this subsection (1)

17 are not applicable with respect to a

18 multibeneficiary trust maintained by a certified

19 reinsurer for the purpose of securing obligations

20 incurred under this subsection, except that such

21 trust shall maintain a minimum trusteed surplus of

22 $10,000,000.

23 (f) With respect to obligations incurred by a

24 certified reinsurer under this subsection (1), if

25 the security is insufficient, then the Director

26 may reduce the allowable credit by an amount

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1 proportionate to the deficiency and may impose

2 further reductions in allowable credit upon

3 finding that there is a material risk that the

4 certified reinsurer's obligations will not be paid

5 in full when due.

6 (9)(a) In the case of a downgrade by a rating

7 agency or other disqualifying circumstance, the

8 Director shall by written notice assign a new rating

9 to the certified reinsurer in accordance with the

10 requirements of subparagraph (5) of this paragraph

11 (C-5).

12 (b) If the rating of a certified reinsurer is

13 upgraded by the Director, then the certified reinsurer

14 may meet the security requirements applicable to its

15 new rating on a prospective basis, but the Director

16 shall require the certified reinsurer to post security

17 under the previously applicable security requirements

18 as to all contracts in force on or before the effective

19 date of the upgraded rating. If the rating of a

20 certified reinsurer is downgraded by the Director,

21 then the Director shall require the certified

22 reinsurer to meet the security requirements applicable

23 to its new rating for all business it has assumed as a

24 certified reinsurer.

25 (c) The Director may suspend, revoke, or otherwise

26 modify a certified reinsurer's certification at any

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1 time if the certified reinsurer fails to meet its

2 obligations or security requirements under this

3 Section or if other financial or operating results of

4 the certified reinsurer, or documented significant

5 delays in payment by the certified reinsurer, lead the

6 Director to reconsider the certified reinsurer's

7 ability or willingness to meet its contractual

8 obligations. In seeking to suspend, revoke, or

9 otherwise modify a certified reinsurer's

10 certification, the Director shall follow the

11 procedures provided in paragraph (G) of this

12 subsection (1).

13 (d) For purposes of this subsection (1), a

14 certified reinsurer whose certification has been

15 terminated for any reason shall be treated as a

16 certified reinsurer required to secure 100% of its

17 obligations.

18 (i) As used in this item (d), the term

19 "terminated" refers to revocation, suspension,

20 voluntary surrender and inactive status.

21 (ii) If the Director continues to assign a

22 higher rating as permitted by other provisions of

23 this Section, then this requirement does not apply

24 to a certified reinsurer in inactive status or to

25 a reinsurer whose certification has been

26 suspended.

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1 (e) Upon revocation of the certification of a

2 certified reinsurer by the Director, the assuming

3 insurer shall be required to post security in

4 accordance with subsection (2) of this Section in

5 order for the ceding insurer to continue to take

6 credit for reinsurance ceded to the assuming insurer.

7 If funds continue to be held in trust, then the

8 Director may allow additional credit equal to the

9 ceding insurer's pro rata share of the funds,

10 discounted to reflect the risk of uncollectibility and

11 anticipated expenses of trust administration.

12 (f) Notwithstanding the change of a certified

13 reinsurer's rating or revocation of its certification,

14 a domestic insurer that has ceded reinsurance to that

15 certified reinsurer may not be denied credit for

16 reinsurance for a period of 3 months for all

17 reinsurance ceded to that certified reinsurer, unless

18 the reinsurance is found by the Director to be at high

19 risk of uncollectibility.

20 (10) A certified reinsurer that ceases to assume

21 new business in this State may request to maintain its

22 certification in inactive status in order to continue

23 to qualify for a reduction in security for its

24 in-force business. An inactive certified reinsurer

25 shall continue to comply with all applicable

26 requirements of this subsection (1), and the Director

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1 shall assign a rating that takes into account, if

2 relevant, the reasons why the reinsurer is not

3 assuming new business.

4 (11) Credit for reinsurance under this paragraph

5 (C-5) shall apply only to reinsurance contracts

6 entered into or renewed on or after the effective date

7 of the certification of the assuming insurer.

8 (12) The Director shall comply with all reporting

9 and notification requirements that may be established

10 by the NAIC with respect to certified reinsurers and

11 qualified jurisdictions.

12 (D) Credit shall be allowed when the reinsurance is

13 ceded to an assuming insurer not meeting the requirements

14 of paragraph (A), (B), or (C) of this subsection (1) but

15 only with respect to the insurance of risks located in

16 jurisdictions where that reinsurance is required by

17 applicable law or regulation of that jurisdiction.

18 (E) If the assuming insurer is not licensed to

19 transact insurance in this State or an accredited or

20 certified reinsurer in this State, the credit permitted by

21 paragraphs (B-5) and (C) of this subsection (1) shall not

22 be allowed unless the assuming insurer agrees in the

23 reinsurance agreements:

24 (1) that in the event of the failure of the

25 assuming insurer to perform its obligations under the

26 terms of the reinsurance agreement, the assuming

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1 insurer, at the request of the ceding insurer, shall

2 submit to the jurisdiction of any court of competent

3 jurisdiction in any state of the United States, will

4 comply with all requirements necessary to give the

5 court jurisdiction, and will abide by the final

6 decision of the court or of any appellate court in the

7 event of an appeal; and

8 (2) to designate the Director or a designated

9 attorney as its true and lawful attorney upon whom may

10 be served any lawful process in any action, suit, or

11 proceeding instituted by or on behalf of the ceding

12 company.

13 This provision is not intended to conflict with or

14 override the obligation of the parties to a reinsurance

15 agreement to arbitrate their disputes, if an obligation to

16 arbitrate is created in the agreement.

17 (F) If the assuming insurer does not meet the

18 requirements of paragraph (A) or (B) of this subsection

19 (1), the credit permitted by paragraph (C) of this

20 subsection (1) shall not be allowed unless the assuming

21 insurer agrees in the trust agreements to the following

22 conditions:

23 (1) Notwithstanding any other provisions in the

24 trust instrument, if the trust fund is inadequate

25 because it contains an amount less than the amount

26 required by subparagraph (3) of paragraph (C) of this

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1 subsection (1) or if the grantor of the trust has been

2 declared insolvent or placed into receivership,

3 rehabilitation, liquidation, or similar proceedings

4 under the laws of its state or country of domicile, the

5 trustee shall comply with an order of the state

6 official with regulatory oversight over the trust or

7 with an order of a court of competent jurisdiction

8 directing the trustee to transfer to the state

9 official with regulatory oversight all of the assets

10 of the trust fund.

11 (2) The assets shall be distributed by and claims

12 shall be filed with and valued by the state official

13 with regulatory oversight in accordance with the laws

14 of the state in which the trust is domiciled that are

15 applicable to the liquidation of domestic insurance

16 companies.

17 (3) If the state official with regulatory

18 oversight determines that the assets of the trust fund

19 or any part thereof are not necessary to satisfy the

20 claims of the U.S. ceding insurers of the grantor of

21 the trust, the assets or part thereof shall be

22 returned by the state official with regulatory

23 oversight to the trustee for distribution in

24 accordance with the trust agreement.

25 (4) The grantor shall waive any rights otherwise

26 available to it under U.S. law that are inconsistent

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1 with the provision.

2 (G) If an accredited or certified reinsurer ceases to

3 meet the requirements for accreditation or certification,

4 then the Director may suspend or revoke the reinsurer's

5 accreditation or certification.

6 (1) The Director must give the reinsurer notice

7 and opportunity for hearing. The suspension or

8 revocation may not take effect until after the

9 Director's order on hearing, unless:

10 (a) the reinsurer waives its right to hearing;

11 (b) the Director's order is based on

12 regulatory action by the reinsurer's domiciliary

13 jurisdiction or the voluntary surrender or

14 termination of the reinsurer's eligibility to

15 transact insurance or reinsurance business in its

16 domiciliary jurisdiction or in the primary

17 certifying state of the reinsurer under

18 subparagraph (4) of paragraph (C-5) of this

19 subsection (1); or

20 (c) the Director finds that an emergency

21 requires immediate action and a court of competent

22 jurisdiction has not stayed the Director's action.

23 (2) While a reinsurer's accreditation or

24 certification is suspended, no reinsurance contract

25 issued or renewed after the effective date of the

26 suspension qualifies for credit except to the extent

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1 that the reinsurer's obligations under the contract

2 are secured in accordance with subsection (2) of this

3 Section. If a reinsurer's accreditation or

4 certification is revoked, no credit for reinsurance

5 may be granted after the effective date of the

6 revocation, except to the extent that the reinsurer's

7 obligations under the contract are secured in

8 accordance with subsection (2) of this Section.

9 (H) The following provisions shall apply concerning

10 concentration of risk:

11 (1) A ceding insurer shall take steps to manage

12 its reinsurance recoverable proportionate to its own

13 book of business. A domestic ceding insurer shall

14 notify the Director within 30 days after reinsurance

15 recoverables from any single assuming insurer, or

16 group of affiliated assuming insurers, exceeds 50% of

17 the domestic ceding insurer's last reported surplus to

18 policyholders, or after it is determined that

19 reinsurance recoverables from any single assuming

20 insurer, or group of affiliated assuming insurers, is

21 likely to exceed this limit. The notification shall

22 demonstrate that the exposure is safely managed by the

23 domestic ceding insurer.

24 (2) A ceding insurer shall take steps to diversify

25 its reinsurance program. A domestic ceding insurer

26 shall notify the Director within 30 days after ceding

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1 to any single assuming insurer, or group of affiliated

2 assuming insurers, more than 20% of the ceding

3 insurer's gross written premium in the prior calendar

4 year, or after it has determined that the reinsurance

5 ceded to any single assuming insurer, or group of

6 affiliated assuming insurers, is likely to exceed this

7 limit. The notification shall demonstrate that the

8 exposure is safely managed by the domestic ceding

9 insurer.

10 (2) Credit for the reinsurance ceded by a domestic insurer

11 to an assuming insurer not meeting the requirements of

12 subsection (1) of this Section shall be allowed in an amount

13 not exceeding the assets or liabilities carried by the ceding

14 insurer. The credit shall not exceed the amount of funds held

15 by or held in trust for the ceding insurer under a reinsurance

16 contract with the assuming insurer as security for the payment

17 of obligations thereunder, if the security is held in the

18 United States subject to withdrawal solely by, and under the

19 exclusive control of, the ceding insurer; or, in the case of a

20 trust, held in a qualified United States financial

21 institution, as defined in paragraph (B) of subsection (3) of

22 this Section. This security may be in the form of:

23 (A) Cash.

24 (B) Securities listed by the Securities Valuation

25 Office of the National Association of Insurance

26 Commissioners, including those deemed exempt from filing

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1 as defined by the Purposes and Procedures Manual of the

2 Securities Valuation Office that conform to the

3 requirements of Article VIII of this Code that are not

4 issued by an affiliate of either the assuming or ceding

5 company.

6 (C) Clean, irrevocable, unconditional, letters of

7 credit issued or confirmed by a qualified United States

8 financial institution, as defined in paragraph (A) of

9 subsection (3) of this Section. The letters of credit

10 shall be effective no later than December 31 of the year

11 for which filing is being made, and in the possession of,

12 or in trust for, the ceding company on or before the filing

13 date of its annual statement. Letters of credit meeting

14 applicable standards of issuer acceptability as of the

15 dates of their issuance (or confirmation) shall,

16 notwithstanding the issuing (or confirming) institution's

17 subsequent failure to meet applicable standards of issuer

18 acceptability, continue to be acceptable as security until

19 their expiration, extension, renewal, modification, or

20 amendment, whichever first occurs.

21 (D) Any other form of security acceptable to the

22 Director.

23 (3)(A) For purposes of paragraph (C) of subsection (2) of

24 this Section, a "qualified United States financial

25 institution" means an institution that:

26 (1) is organized or, in the case of a U.S. office of a

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1 foreign banking organization, licensed under the laws of

2 the United States or any state thereof;

3 (2) is regulated, supervised, and examined by U.S.

4 federal or state authorities having regulatory authority

5 over banks and trust companies;

6 (3) has been designated by either the Director or the

7 Securities Valuation Office of the National Association of

8 Insurance Commissioners as meeting such standards of

9 financial condition and standing as are considered

10 necessary and appropriate to regulate the quality of

11 financial institutions whose letters of credit will be

12 acceptable to the Director; and

13 (4) is not affiliated with the assuming company.

14 (B) A "qualified United States financial institution"

15 means, for purposes of those provisions of this law specifying

16 those institutions that are eligible to act as a fiduciary of a

17 trust, an institution that:

18 (1) is organized or, in the case of the U.S. branch or

19 agency office of a foreign banking organization, licensed

20 under the laws of the United States or any state thereof

21 and has been granted authority to operate with fiduciary

22 powers;

23 (2) is regulated, supervised, and examined by federal

24 or state authorities having regulatory authority over

25 banks and trust companies; and

26 (3) is not affiliated with the assuming company,

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1 however, if the subject of the reinsurance contract is

2 insurance written pursuant to Section 155.51 of this Code,

3 the financial institution may be affiliated with the

4 assuming company with the prior approval of the Director.

5 (C) Except as set forth in subparagraph (11) of paragraph

6 (C-5) of subsection (1) of this Section as to cessions by

7 certified reinsurers, this amendatory Act of the 100th General

8 Assembly shall apply to all cessions after the effective date

9 of this amendatory Act of the 100th General Assembly under

10 reinsurance agreements that have an inception, anniversary, or

11 renewal date not less than 6 months after the effective date of

12 this amendatory Act of the 100th General Assembly.

13 (D) The Department shall adopt rules implementing the

14 provisions of this Article.

15 (Source: P.A. 100-1118, eff. 11-27-18.)

16 (Text of Section after amendment by P.A. 102-578)

17 Sec. 173.1. Credit allowed a domestic ceding insurer.

18 (1) Except as otherwise provided under Article VIII 1/2 of

19 this Code and related provisions of the Illinois

20 Administrative Code, credit for reinsurance shall be allowed a

21 domestic ceding insurer as either an admitted asset or a

22 deduction from liability on account of reinsurance ceded only

23 when the reinsurer meets the requirements of paragraph (A),

24 (B), (B-5), (C), (C-5), (C-10), or (D) of this subsection (1).

25 Credit shall be allowed under paragraph (A), (B), or (B-5) of

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1 this subsection (1) only as respects cessions of those kinds

2 or classes of business in which the assuming insurer is

3 licensed or otherwise permitted to write or assume in its

4 state of domicile, or in the case of a U.S. branch ofa

5 non-domestic ~~an alien~~assuming insurer, in the state through

6 which it is entered and licensed to transact insurance or

7 reinsurance. Credit shall be allowed under paragraph (B-5) or

8 (C) of this subsection (1) only if the applicable requirements

9 of paragraph (E) of this subsection (1) have been satisfied.

10 (A) Credit shall be allowed when the reinsurance is

11 ceded to an assuming insurer that is authorized in this

12 State to transact the types of insurance ceded and has at

13 least $5,000,000 in capital and surplus.

14 (B) Credit shall be allowed when the reinsurance is

15 ceded to an assuming insurer that is accredited as a

16 reinsurer in this State. An accredited reinsurer is one

17 that:

18 (1) files with the Director evidence of its

19 submission to this State's jurisdiction;

20 (2) submits to this State's authority to examine

21 its books and records;

22 (3) is licensed to transact insurance or

23 reinsurance in at least one state, or in the case of a

24 U.S. branch of a non-domestic ~~an alien~~ assuming

25 insurer is entered through and licensed to transact

26 insurance or reinsurance in at least one state;

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1 (4) files annually with the Director a copy of its

2 annual statement filed with the insurance department

3 of its state of domicile and a copy of its most recent

4 audited financial statement; and

5 (5) maintains a surplus as regards policyholders

6 in an amount that is not less than $20,000,000 and

7 whose accreditation has been approved by the Director.

8 (B-5)(1) Credit shall be allowed when the reinsurance

9 is ceded to an assuming insurer that is domiciled in, or in

10 the case of a U.S. branch of a non-domestic ~~an alien~~

11 assuming insurer is entered through, a state that employs

12 standards regarding credit for reinsurance substantially

13 similar to those applicable under this Code and the

14 assuming insurer or U.S. branch of a non-domestic ~~an alien~~

15 assuming insurer:

16 (a) maintains a surplus as regards policyholders

17 in an amount not less than $20,000,000; and

18 (b) submits to the authority of this State to

19 examine its books and records.

20 (2) The requirement of item (a) of subparagraph (1) of

21 paragraph (B-5) of this subsection (1) does not apply to

22 reinsurance ceded and assumed pursuant to pooling

23 arrangements among insurers in the same holding company

24 system.

25 (C)(1) Credit shall be allowed when the reinsurance

26 is ceded to an assuming insurer that maintains a trust

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1 fund in a qualified United States financial institution,

2 as defined in paragraph (B) of subsection (3) of this

3 Section, for the payment of the valid claims of its United

4 States policyholders and ceding insurers, their assigns

5 and successors in interest. The assuming insurer shall

6 report to the Director information substantially the same

7 as that required to be reported on the NAIC annual and

8 quarterly financial statement by authorized insurers and

9 any other financial information that the Director deems

10 necessary to determine the financial condition of the

11 assuming insurer and the sufficiency of the trust fund.

12 The assuming insurer shall provide or make the information

13 available to the ceding insurer. The assuming insurer may

14 decline to release trade secrets or commercially sensitive

15 information that would qualify as exempt from disclosure

16 under the Freedom of Information Act. The Director shall

17 also make the information publicly available, subject only

18 to such reasonable objections as might be raised to a

19 request pursuant to the Freedom of Information Act, as

20 determined by the Director. The assuming insurer shall

21 submit to examination of its books and records by the

22 Director and bear the expense of examination.

23 (2)(a) Credit for reinsurance shall not be granted

24 under this subsection unless the form of the trust and any

25 amendments to the trust have been approved by:

26 (i) the regulatory official of the state where the

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1 trust is domiciled; or

2 (ii) the regulatory official of another state who,

3 pursuant to the terms of the trust instrument, has

4 accepted principal regulatory oversight of the trust.

5 (b) The form of the trust and any trust amendments

6 also shall be filed with the regulatory official of every

7 state in which the ceding insurer beneficiaries of the

8 trust are domiciled. The trust instrument shall provide

9 that contested claims shall be valid and enforceable upon

10 the final order of any court of competent jurisdiction in

11 the United States. The trust shall vest legal title to its

12 assets in its trustees for the benefit of the assuming

13 insurer's United States policyholders and ceding insurees

14 and their assigns and successors in interest. The trust

15 and the assuming insurer shall be subject to examination

16 as determined by the Director.

17 (c) The trust shall remain in effect for as long as the

18 assuming insurer has outstanding obligations due under the

19 reinsurance agreements subject to the trust. No later than

20 February 28 of each year the trustee of the trust shall

21 report to the Director in writing the balance of the trust

22 and a list of the trust's investments at the preceding

23 year-end and shall certify the date of termination of the

24 trust, if so planned, or certify that the trust will not

25 expire prior to the next following December 31.

26 No later than February 28 of each year, the assuming

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1 insurer's chief executive officer or chief financial

2 officer shall certify to the Director that the trust fund

3 contains funds in an amount not less than the assuming

4 insurer's liabilities (as reported to the assuming insurer

5 by its cedent) attributable to reinsurance ceded by U.S.

6 ceding insurers, and in addition, a trusteed surplus of no

7 less than $20,000,000. In the event that item (a-5) of

8 subparagraph (3) of this paragraph (C) applies to the

9 trust, the assuming insurer's chief executive officer or

10 chief financial officer shall then certify to the Director

11 that the trust fund contains funds in an amount not less

12 than the assuming insurer's liabilities (as reported to

13 the assuming insurer by its cedent) attributable to

14 reinsurance ceded by U.S. ceding insurers and, in

15 addition, a reduced trusteed surplus of not less than the

16 amount that has been authorized by the regulatory

17 authority having principal regulatory oversight of the

18 trust.

19 (d) No later than February 28 of each year, an

20 assuming insurer that maintains a trust fund in accordance

21 with this paragraph (C) shall provide or make available,

22 if requested by a beneficiary under the trust fund, the

23 following information to the assuming insurer's U.S.

24 ceding insurers or their assigns and successors in

25 interest:

26 (i) a copy of the form of the trust agreement and

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1 any trust amendments to the trust agreement pertaining

2 to the trust fund;

3 (ii) a copy of the annual and quarterly financial

4 information, and its most recent audited financial

5 statement provided to the Director by the assuming

6 insurer, including any exhibits and schedules thereto;

7 (iii) any financial information provided to the

8 Director by the assuming insurer that the Director has

9 deemed necessary to determine the financial condition

10 of the assuming insurer and the sufficiency of the

11 trust fund;

12 (iv) a copy of any annual and quarterly financial

13 information provided to the Director by the trustee of

14 the trust fund maintained by the assuming insurer,

15 including any exhibits and schedules thereto;

16 (v) a copy of the information required to be

17 reported by the trustee of the trust to the Director

18 under the provisions of this paragraph (C); and

19 (vi) a written certification that the trust fund

20 consists of funds in trust in an amount not less than

21 the assuming insurer's liabilities attributable to

22 reinsurance liabilities (as reported to the assuming

23 insurer by its cedent) attributable to reinsurance

24 ceded by U.S. ceding insurers and, in addition, a

25 trusteed surplus of not less than $20,000,000.

26 (3) The following requirements apply to the following

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1 categories of assuming insurer:

2 (a) The trust fund for a single assuming insurer

3 shall consist of funds in trust in an amount not less

4 than the assuming insurer's liabilities attributable

5 to reinsurance ceded by U.S. ceding insurers, and in

6 addition, the assuming insurer shall maintain a

7 trusteed surplus of not less than $20,000,000, except

8 as provided in item (a-5) of this subparagraph (3).

9 (a-5) At any time after the assuming insurer has

10 permanently discontinued underwriting new business

11 secured by the trust for at least 3 full years, the

12 Director with principal regulatory oversight of the

13 trust may authorize a reduction in the required

14 trusteed surplus, but only after a finding, based on

15 an assessment of the risk, that the new required

16 surplus level is adequate for the protection of U.S.

17 ceding insurers, policyholders, and claimants in light

18 of reasonably foreseeable adverse loss development.

19 The risk assessment may involve an actuarial review,

20 including an independent analysis of reserves and cash

21 flows, and shall consider all material risk factors,

22 including, when applicable, the lines of business

23 involved, the stability of the incurred loss

24 estimates, and the effect of the surplus requirements

25 on the assuming insurer's liquidity or solvency. The

26 minimum required trusteed surplus may not be reduced

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1 to an amount less than 30% of the assuming insurer's

2 liabilities attributable to reinsurance ceded by U.S.

3 ceding insurers covered by the trust.

4 (b)(i) In the case of a group including

5 incorporated and individual unincorporated

6 underwriters:

7 (I) for reinsurance ceded under reinsurance

8 agreements with an inception, amendment, or

9 renewal date on or after January 1, 1993, the

10 trust shall consist of a trusteed account in an

11 amount not less than the respective underwriters'

12 several liabilities attributable to business ceded

13 by U.S. domiciled ceding insurers to any member of

14 the group;

15 (II) for reinsurance ceded under reinsurance

16 agreements with an inception date on or before

17 December 31, 1992 and not amended or renewed after

18 that date, notwithstanding the other provisions of

19 this Act, the trust shall consist of a trusteed

20 account in an amount not less than the group's

21 several insurance and reinsurance liabilities

22 attributable to business written in the United

23 States; and

24 (III) in addition to these trusts, the group

25 shall maintain in trust a trusteed surplus of

26 which not less than $100,000,000 shall be held

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1 jointly for the benefit of the U.S. domiciled

2 ceding insurers of any member of the group for all

3 years of account.

4 (ii) The incorporated members of the group shall

5 not be engaged in any business other than underwriting

6 as a member of the group and shall be subject to the

7 same level of solvency regulation and control by the

8 group's domiciliary regulator as are the

9 unincorporated members.

10 (iii) Within 90 days after its financial

11 statements are due to be filed with the group's

12 domiciliary regulator, the group shall provide to the

13 Director an annual certification by the group's

14 domiciliary regulator of the solvency of each

15 underwriter member, or if a certification is

16 unavailable, financial statements prepared by

17 independent public accountants of each underwriter

18 member of the group.

19 (c) In the case of a group of incorporated

20 insurers under common administration, the group shall:

21 (i) have continuously transacted an insurance

22 business outside the United States for at least 3

23 years immediately before making application for

24 accreditation;

25 (ii) maintain aggregate policyholders' surplus

26 of not less than $10,000,000,000;

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1 (iii) maintain a trust in an amount not less

2 than the group's several liabilities attributable

3 to business ceded by United States domiciled

4 ceding insurers to any member of the group

5 pursuant to reinsurance contracts issued in the

6 name of the group;

7 (iv) in addition, maintain a joint trusteed

8 surplus of which not less than $100,000,000 shall

9 be held jointly for the benefit of the United

10 States ceding insurers of any member of the group

11 as additional security for these liabilities; and

12 (v) within 90 days after its financial

13 statements are due to be filed with the group's

14 domiciliary regulator, make available to the

15 Director an annual certification of each

16 underwriter member's solvency by the member's

17 domiciliary regulator and financial statements of

18 each underwriter member of the group prepared by

19 its independent public accountant.

20 (C-5) Credit shall be allowed when the reinsurance is

21 ceded to an assuming insurer that has been certified by

22 the Director as a reinsurer in this State and secures its

23 obligations in accordance with the requirements of this

24 paragraph (C-5).

25 (1) In order to be eligible for certification, the

26 assuming insurer shall meet the following

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1 requirements:

2 (a) the assuming insurer must be domiciled and

3 licensed to transact insurance or reinsurance in a

4 qualified jurisdiction, as determined by the

5 Director pursuant to subparagraph (3) of this

6 paragraph (C-5);

7 (b) the assuming insurer must maintain minimum

8 capital and surplus, or its equivalent, in an

9 amount not less than $250,000,000 or such greater

10 amount as determined by the Director pursuant to

11 regulation; this requirement may also be satisfied

12 by an association, including incorporated and

13 individual unincorporated underwriters, having

14 minimum capital and surplus equivalents (net of

15 liabilities) of at least $250,000,000 and a

16 central fund containing a balance of at least

17 $250,000,000;

18 (c) the assuming insurer must maintain

19 financial strength ratings from 2 or more rating

20 agencies deemed acceptable by the Director; these

21 ratings shall be based on interactive

22 communication between the rating agency and the

23 assuming insurer and shall not be based solely on

24 publicly available information; each certified

25 reinsurer shall be rated on a legal entity basis,

26 with due consideration being given to the group

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1 rating where appropriate, except that an

2 association, including incorporated and individual

3 unincorporated underwriters, that has been

4 approved to do business as a single certified

5 reinsurer may be evaluated on the basis of its

6 group rating; these financial strength ratings

7 shall be one factor used by the Director in

8 determining the rating that is assigned to the

9 assuming insurer; acceptable rating agencies

10 include the following:

11 (i) Standard & Poor's;

12 (ii) Moody's Investors Service;

13 (iii) Fitch Ratings;

14 (iv) A.M. Best Company; or

15 (v) any other nationally recognized

16 statistical rating organization;

17 (d) the assuming insurer must agree to submit

18 to the jurisdiction of this State, appoint the

19 Director as its agent for service of process in

20 this State, and agree to provide security for 100%

21 of the assuming insurer's liabilities attributable

22 to reinsurance ceded by U.S. ceding insurers if it

23 resists enforcement of a final U.S. judgment; and

24 (e) the assuming insurer must agree to meet

25 applicable information filing requirements as

26 determined by the Director, both with respect to

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1 an initial application for certification and on an

2 ongoing basis.

3 (2) An association, including incorporated and

4 individual unincorporated underwriters, may be a

5 certified reinsurer. In order to be eligible for

6 certification, in addition to satisfying the

7 requirements of subparagraph (1) of this paragraph

8 (C-5):

9 (a) the association shall satisfy its minimum

10 capital and surplus requirements through the

11 capital and surplus equivalents (net of

12 liabilities) of the association and its members,

13 which shall include a joint central fund that may

14 be applied to any unsatisfied obligation of the

15 association or any of its members, in the amounts

16 specified in item (b) of subparagraph (1) of this

17 paragraph (C-5);

18 (b) the incorporated members of the

19 association shall not be engaged in any business

20 other than underwriting as a member of the

21 association and shall be subject to the same level

22 of regulation and solvency control by the

23 association's domiciliary regulator as are the

24 unincorporated members; and

25 (c) within 90 days after its financial

26 statements are due to be filed with the

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1 association's domiciliary regulator, the

2 association shall provide to the Director an

3 annual certification by the association's

4 domiciliary regulator of the solvency of each

5 underwriter member; or if a certification is

6 unavailable, financial statements, prepared by

7 independent public accountants, of each

8 underwriter member of the association.

9 (3) The Director shall create and publish a list

10 of qualified jurisdictions, under which an assuming

11 insurer licensed and domiciled in such jurisdiction is

12 eligible to be considered for certification by the

13 Director as a certified reinsurer.

14 (a) In order to determine whether the

15 domiciliary jurisdiction of a non-U.S. assuming

16 insurer is eligible to be recognized as a

17 qualified jurisdiction, the Director shall

18 evaluate the appropriateness and effectiveness of

19 the reinsurance supervisory system of the

20 jurisdiction, both initially and on an ongoing

21 basis, and consider the rights, benefits, and

22 extent of reciprocal recognition afforded by the

23 non-U.S. jurisdiction to reinsurers licensed and

24 domiciled in the U.S. A qualified jurisdiction

25 must agree in writing to share information and

26 cooperate with the Director with respect to all

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1 certified reinsurers domiciled within that

2 jurisdiction. A jurisdiction may not be recognized

3 as a qualified jurisdiction if the Director has

4 determined that the jurisdiction does not

5 adequately and promptly enforce final U.S.

6 judgments and arbitration awards. The costs and

7 expenses associated with the Director's review and

8 evaluation of the domiciliary jurisdictions of

9 non-U.S. assuming insurers shall be borne by the

10 certified reinsurer or reinsurers domiciled in

11 such jurisdiction.

12 (b) Additional factors to be considered in

13 determining whether to recognize a qualified

14 jurisdiction include, but are not limited to, the

15 following:

16 (i) the framework under which the assuming

17 insurer is regulated;

18 (ii) the structure and authority of the

19 domiciliary regulator with regard to solvency

20 regulation requirements and financial

21 surveillance;

22 (iii) the substance of financial and

23 operating standards for assuming insurers in

24 the domiciliary jurisdiction;

25 (iv) the form and substance of financial

26 reports required to be filed or made publicly

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1 available by reinsurers in the domiciliary

2 jurisdiction and the accounting principles

3 used;

4 (v) the domiciliary regulator's

5 willingness to cooperate with U.S. regulators

6 in general and the Director in particular;

7 (vi) the history of performance by

8 assuming insurers in the domiciliary

9 jurisdiction;

10 (vii) any documented evidence of

11 substantial problems with the enforcement of

12 final U.S. judgments in the domiciliary

13 jurisdiction; and

14 (viii) any relevant international

15 standards or guidance with respect to mutual

16 recognition of reinsurance supervision adopted

17 by the International Association of Insurance

18 Supervisors or its successor organization.

19 (c) If, upon conducting an evaluation under

20 this paragraph with respect to the reinsurance

21 supervisory system of any non-U.S. assuming

22 insurer, the Director determines that the

23 jurisdiction qualifies to be recognized as a

24 qualified jurisdiction, the Director shall publish

25 notice and evidence of such recognition in an

26 appropriate manner. The Director may establish a

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1 procedure to withdraw recognition of those

2 jurisdictions that are no longer qualified.

3 (d) The Director shall consider the list of

4 qualified jurisdictions through the NAIC committee

5 process in determining qualified jurisdictions. If

6 the Director approves a jurisdiction as qualified

7 that does not appear on the list of qualified

8 jurisdictions, then the Director shall provide

9 thoroughly documented justification in accordance

10 with criteria to be developed under regulations.

11 (e) U.S. jurisdictions that meet the

12 requirement for accreditation under the NAIC

13 financial standards and accreditation program

14 shall be recognized as qualified jurisdictions.

15 (f) If a certified reinsurer's domiciliary

16 jurisdiction ceases to be a qualified

17 jurisdiction, then the Director may suspend the

18 reinsurer's certification indefinitely, in lieu of

19 revocation.

20 (4) If an applicant for certification has been

21 certified as a reinsurer in an NAIC accredited

22 jurisdiction, then the Director may defer to that

23 jurisdiction's certification and to the rating

24 assigned by that jurisdiction if the assuming insurer

25 submits a properly executed Form CR-1 and such

26 additional information as the Director requires. Such

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1 assuming insurer shall be considered to be a certified

2 reinsurer in this State but only upon the Director's

3 assignment of an Illinois rating, which shall be made

4 based on the requirements of subparagraph (5) of this

5 paragraph (C-5). The following shall apply:

6 (a) Any change in the certified reinsurer's

7 status or rating in the other jurisdiction shall

8 apply automatically in Illinois as of the date it

9 takes effect in the other jurisdiction. The

10 certified reinsurer shall notify the Director of

11 any change in its status or rating within 10 days

12 after receiving notice of the change.

13 (b) The Director may withdraw recognition of

14 the other jurisdiction's rating at any time and

15 assign a new rating in accordance with

16 subparagraph (5) of this paragraph (C-5).

17 (c) The Director may withdraw recognition of

18 the other jurisdiction's certification at any time

19 with written notice to the certified reinsurer.

20 Unless the Director suspends or revokes the

21 certified reinsurer's certification in accordance

22 with item (c) of subparagraph (9) of this

23 paragraph (C-5), the certified reinsurer's

24 certification shall remain in good standing in

25 Illinois for a period of 3 months, which shall be

26 extended if additional time is necessary to

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1 consider the assuming insurer's application for

2 certification in Illinois.

3 (5) The Director shall assign a rating to each

4 certified reinsurer pursuant to rules adopted by the

5 Department. Factors that shall be considered as part

6 of the evaluation process include the following:

7 (a) The certified reinsurer's financial

8 strength rating from an acceptable rating agency.

9 Financial strength ratings shall be classified

10 according to the following ratings categories:

11 (i) Ratings Category "Secure - 1"

12 corresponds to the highest level of rating

13 given by a rating agency, including, but not

14 limited to, A.M. Best Company rating A++;

15 Standard & Poor's rating AAA; Moody's

16 Investors Service rating Aaa; and Fitch

17 Ratings rating AAA.

18 (ii) Ratings Category "Secure - 2"

19 corresponds to the second-highest level of

20 rating or group of ratings given by a rating

21 agency, including, but not limited to, A.M.

22 Best Company rating A+; Standard & Poor's

23 rating AA+, AA, or AA-; Moody's Investors

24 Service ratings Aa1, Aa2, or Aa3; and Fitch

25 Ratings ratings AA+, AA, or AA-.

26 (iii) Ratings Category "Secure - 3"

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1 corresponds to the third-highest level of

2 rating or group of ratings given by a rating

3 agency, including, but not limited to, A.M.

4 Best Company rating A; Standard & Poor's

5 ratings A+ or A; Moody's Investors Service

6 ratings A1 or A2; and Fitch Ratings ratings A+

7 or A.

8 (iv) Ratings Category "Secure - 4"

9 corresponds to the fourth-highest level of

10 rating or group of ratings given by a rating

11 agency, including, but not limited to, A.M.

12 Best Company rating A-; Standard & Poor's

13 rating A-; Moody's Investors Service rating

14 A3; and Fitch Ratings rating A-.

15 (v) Ratings Category "Secure - 5"

16 corresponds to the fifth-highest level of

17 rating or group of ratings given by a rating

18 agency, including, but not limited to, A.M.

19 Best Company ratings B++ or B+; Standard &

20 Poor's ratings BBB+, BBB, or BBB-; Moody's

21 Investors Service ratings Baa1, Baa2, or Baa3;

22 and Fitch Ratings ratings BBB+, BBB, or BBB-.

23 (vi) Ratings Category "Vulnerable - 6"

24 corresponds to a level of rating given by a

25 rating agency, other than those described in

26 subitems (i) through (v) of this item (a),

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1 including, but not limited to, A.M. Best

2 Company rating B, B-, C++, C+, C, C-, D, E, or

3 F; Standard & Poor's ratings BB+, BB, BB-, B+,

4 B, B-, CCC, CC, C, D, or R; Moody's Investors

5 Service ratings Ba1, Ba2, Ba3, B1, B2, B3,

6 Caa, Ca, or C; and Fitch Ratings ratings BB+,

7 BB, BB-, B+, B, B-, CCC+, CCC, CCC-, or D.

8 A failure to obtain or maintain at least 2

9 financial strength ratings from acceptable rating

10 agencies shall result in loss of eligibility for

11 certification.

12 (b) The business practices of the certified

13 reinsurer in dealing with its ceding insurers,

14 including its record of compliance with

15 reinsurance contractual terms and obligations.

16 (c) For certified reinsurers domiciled in the

17 U.S., a review of the most recent applicable NAIC

18 Annual Statement Blank, either Schedule F (for

19 property and casualty reinsurers) or Schedule S

20 (for life and health reinsurers).

21 (d) For certified reinsurers not domiciled in

22 the U.S., a review annually of Form CR-F (for

23 property and casualty reinsurers) or Form CR-S

24 (for life and health reinsurers).

25 (e) The reputation of the certified reinsurer

26 for prompt payment of claims under reinsurance

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1 agreements, based on an analysis of ceding

2 insurers' Schedule F reporting of overdue

3 reinsurance recoverables, including the proportion

4 of obligations that are more than 90 days past due

5 or are in dispute, with specific attention given

6 to obligations payable to companies that are in

7 administrative supervision or receivership.

8 (f) Regulatory actions against the certified

9 reinsurer.

10 (g) The report of the independent auditor on

11 the financial statements of the insurance

12 enterprise, on the basis described in item (h) of

13 this subparagraph (5).

14 (h) For certified reinsurers not domiciled in

15 the U.S., audited financial statements (audited

16 Generally Accepted Accounting Principles (U.S.

17 GAAP) basis statement if available, audited

18 International Financial Reporting Standards (IFRS)

19 basis statements are allowed but must include an

20 audited footnote reconciling equity and net income

21 to U.S. GAAP basis or, with the permission of the

22 Director, audited IFRS basis statements with

23 reconciliation to U.S. GAAP basis certified by an

24 officer of the company), regulatory filings, and

25 actuarial opinion (as filed with the non-U.S.

26 jurisdiction supervisor). Upon the initial

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1 application for certification, the Director shall

2 consider the audited financial statements filed

3 with its non-U.S. jurisdiction supervisor for the

4 3 years immediately preceding the date of the

5 initial application for certification.

6 (i) The liquidation priority of obligations to

7 a ceding insurer in the certified reinsurer's

8 domiciliary jurisdiction in the context of an

9 insolvency proceeding.

10 (j) A certified reinsurer's participation in

11 any solvent scheme of arrangement, or similar

12 procedure, that involves U.S. ceding insurers. The

13 Director shall receive prior notice from a

14 certified reinsurer that proposes participation by

15 the certified reinsurer in a solvent scheme of

16 arrangement.

17 The maximum rating that a certified reinsurer may

18 be assigned shall correspond to its financial strength

19 rating, which shall be determined according to

20 subitems (i) through (vi) of item (a) of this

21 subparagraph (5). The Director shall use the lowest

22 financial strength rating received from an acceptable

23 rating agency in establishing the maximum rating of a

24 certified reinsurer.

25 (6) Based on the analysis conducted under item (e)

26 of subparagraph (5) of this paragraph (C-5) of a

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1 certified reinsurer's reputation for prompt payment of

2 claims, the Director may make appropriate adjustments

3 in the security the certified reinsurer is required to

4 post to protect its liabilities to U.S. ceding

5 insurers, provided that the Director shall, at a

6 minimum, increase the security the certified reinsurer

7 is required to post by one rating level under item (a)

8 of subparagraph (8) of this paragraph (C-5) if the

9 Director finds that:

10 (a) more than 15% of the certified reinsurer's

11 ceding insurance clients have overdue reinsurance

12 recoverables on paid losses of 90 days or more

13 that are not in dispute and that exceed $100,000

14 for each cedent; or

15 (b) the aggregate amount of reinsurance

16 recoverables on paid losses that are not in

17 dispute that are overdue by 90 days or more

18 exceeds $50,000,000.

19 (7) The Director shall post notice on the

20 Department's website promptly upon receipt of any

21 application for certification, including instructions

22 on how members of the public may respond to the

23 application. The Director may not take final action on

24 the application until at least 30 days after posting

25 the notice required by this subparagraph. The Director

26 shall publish a list of all certified reinsurers and

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1 their ratings.

2 (8) A certified reinsurer shall secure obligations

3 assumed from U.S. ceding insurers under this

4 subsection (1) at a level consistent with its rating.

5 (a) The amount of security required in order

6 for full credit to be allowed shall correspond

7 with the applicable ratings category:

8 Secure - 1: 0%.

9 Secure - 2: 10%.

10 Secure - 3: 20%.

11 Secure - 4: 50%.

12 Secure - 5: 75%.

13 Vulnerable - 6: 100%.

14 (b) Nothing in this subparagraph (8) shall

15 prohibit the parties to a reinsurance agreement

16 from agreeing to provisions establishing security

17 requirements that exceed the minimum security

18 requirements established for certified reinsurers

19 under this Section.

20 (c) In order for a domestic ceding insurer to

21 qualify for full financial statement credit for

22 reinsurance ceded to a certified reinsurer, the

23 certified reinsurer shall maintain security in a

24 form acceptable to the Director and consistent

25 with the provisions of subsection (2) of this

26 Section, or in a multibeneficiary trust in

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1 accordance with paragraph (C) of this subsection

2 (1), except as otherwise provided in this

3 subparagraph (8).

4 (d) If a certified reinsurer maintains a trust

5 to fully secure its obligations subject to

6 paragraph (C) of this subsection (1), and chooses

7 to secure its obligations incurred as a certified

8 reinsurer in the form of a multibeneficiary trust,

9 then the certified reinsurer shall maintain

10 separate trust accounts for its obligations

11 incurred under reinsurance agreements issued or

12 renewed as a certified reinsurer with reduced

13 security as permitted by this subsection or

14 comparable laws of other U.S. jurisdictions and

15 for its obligations subject to paragraph (C) of

16 this subsection (1). It shall be a condition to

17 the grant of certification under this paragraph

18 (C-5) that the certified reinsurer shall have

19 bound itself, by the language of the trust and

20 agreement with the Director with principal

21 regulatory oversight of each such trust account,

22 to fund, upon termination of any such trust

23 account, out of the remaining surplus of such

24 trust any deficiency of any other such trust

25 account. The certified reinsurer shall also

26 provide or make available, if requested by a

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1 beneficiary under a trust, all the information

2 that is required to be provided under the

3 requirements of item (d) of subparagraph (2) of

4 paragraph (C) of this subsection (1) to the

5 certified reinsurer's U.S. ceding insurers or

6 their assigns and successors in interest. The

7 assuming insurer may decline to release trade

8 secrets or commercially sensitive information that

9 would qualify as exempt from disclosure under the

10 Freedom of Information Act.

11 (e) The minimum trusteed surplus requirements

12 provided in paragraph (C) of this subsection (1)

13 are not applicable with respect to a

14 multibeneficiary trust maintained by a certified

15 reinsurer for the purpose of securing obligations

16 incurred under this subsection, except that such

17 trust shall maintain a minimum trusteed surplus of

18 $10,000,000.

19 (f) With respect to obligations incurred by a

20 certified reinsurer under this subsection (1), if

21 the security is insufficient, then the Director

22 may reduce the allowable credit by an amount

23 proportionate to the deficiency and may impose

24 further reductions in allowable credit upon

25 finding that there is a material risk that the

26 certified reinsurer's obligations will not be paid

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1 in full when due.

2 (9)(a) In the case of a downgrade by a rating

3 agency or other disqualifying circumstance, the

4 Director shall by written notice assign a new rating

5 to the certified reinsurer in accordance with the

6 requirements of subparagraph (5) of this paragraph

7 (C-5).

8 (b) If the rating of a certified reinsurer is

9 upgraded by the Director, then the certified reinsurer

10 may meet the security requirements applicable to its

11 new rating on a prospective basis, but the Director

12 shall require the certified reinsurer to post security

13 under the previously applicable security requirements

14 as to all contracts in force on or before the effective

15 date of the upgraded rating. If the rating of a

16 certified reinsurer is downgraded by the Director,

17 then the Director shall require the certified

18 reinsurer to meet the security requirements applicable

19 to its new rating for all business it has assumed as a

20 certified reinsurer.

21 (c) The Director may suspend, revoke, or otherwise

22 modify a certified reinsurer's certification at any

23 time if the certified reinsurer fails to meet its

24 obligations or security requirements under this

25 Section or if other financial or operating results of

26 the certified reinsurer, or documented significant

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1 delays in payment by the certified reinsurer, lead the

2 Director to reconsider the certified reinsurer's

3 ability or willingness to meet its contractual

4 obligations. In seeking to suspend, revoke, or

5 otherwise modify a certified reinsurer's

6 certification, the Director shall follow the

7 procedures provided in paragraph (G) of this

8 subsection (1).

9 (d) For purposes of this subsection (1), a

10 certified reinsurer whose certification has been

11 terminated for any reason shall be treated as a

12 certified reinsurer required to secure 100% of its

13 obligations.

14 (i) As used in this item (d), the term

15 "terminated" refers to revocation, suspension,

16 voluntary surrender and inactive status.

17 (ii) If the Director continues to assign a

18 higher rating as permitted by other provisions of

19 this Section, then this requirement does not apply

20 to a certified reinsurer in inactive status or to

21 a reinsurer whose certification has been

22 suspended.

23 (e) Upon revocation of the certification of a

24 certified reinsurer by the Director, the assuming

25 insurer shall be required to post security in

26 accordance with subsection (2) of this Section in

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1 order for the ceding insurer to continue to take

2 credit for reinsurance ceded to the assuming insurer.

3 If funds continue to be held in trust, then the

4 Director may allow additional credit equal to the

5 ceding insurer's pro rata share of the funds,

6 discounted to reflect the risk of uncollectibility and

7 anticipated expenses of trust administration.

8 (f) Notwithstanding the change of a certified

9 reinsurer's rating or revocation of its certification,

10 a domestic insurer that has ceded reinsurance to that

11 certified reinsurer may not be denied credit for

12 reinsurance for a period of 3 months for all

13 reinsurance ceded to that certified reinsurer, unless

14 the reinsurance is found by the Director to be at high

15 risk of uncollectibility.

16 (10) A certified reinsurer that ceases to assume

17 new business in this State may request to maintain its

18 certification in inactive status in order to continue

19 to qualify for a reduction in security for its

20 in-force business. An inactive certified reinsurer

21 shall continue to comply with all applicable

22 requirements of this subsection (1), and the Director

23 shall assign a rating that takes into account, if

24 relevant, the reasons why the reinsurer is not

25 assuming new business.

26 (11) Credit for reinsurance under this paragraph

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1 (C-5) shall apply only to reinsurance contracts

2 entered into or renewed on or after the effective date

3 of the certification of the assuming insurer.

4 (12) The Director shall comply with all reporting

5 and notification requirements that may be established

6 by the NAIC with respect to certified reinsurers and

7 qualified jurisdictions.

8 (C-10)(1) Credit shall be allowed when the reinsurance

9 is ceded to an assuming insurer meeting each of the

10 conditions set forth in this subparagraph.

11 (a) The assuming insurer must have its head office

12 in or be domiciled in, as applicable, and be licensed

13 in a reciprocal jurisdiction. As used in this

14 paragraph (C-10), "reciprocal jurisdiction" means a

15 jurisdiction that meets one of the following:

16 (i) a non-U.S. jurisdiction that is subject to

17 an in-force covered agreement with the United

18 States, each within its legal authority, or, in

19 the case of a covered agreement between the United

20 States and European Union, is a member state of

21 the European Union; as used in this subitem,

22 "covered agreement" means an agreement entered

23 into pursuant to the Dodd-Frank Wall Street Reform

24 and Consumer Protection Act (31 U.S.C. 313 and

25 314) that is currently in effect or in a period of

26 provisional application and addresses the

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1 elimination, under specified conditions, of

2 collateral requirements as a condition for

3 entering into any reinsurance agreement with a

4 ceding insurer domiciled in this State or for

5 allowing the ceding insurer to recognize credit

6 for reinsurance;

7 (ii) a U.S. jurisdiction that meets the

8 requirements for accreditation under the NAIC

9 financial standards and accreditation program; or

10 (iii) a qualified jurisdiction, as determined

11 by the Director pursuant to subparagraph (3) of

12 paragraph (C-5) of subsection (1) of this Section,

13 that is not otherwise described in subitem (i) or

14 (ii) of this item and that meets certain

15 additional requirements, consistent with the terms

16 and conditions of in-force covered agreements, as

17 specified by the Department by rule.

18 (b) The assuming insurer must have and maintain,

19 on an ongoing basis, minimum capital and surplus, or

20 its equivalent, calculated according to the

21 methodology of its domiciliary jurisdiction, in an

22 amount to be set forth by rule. If the assuming insurer

23 is an association, including incorporated and

24 individual unincorporated underwriters, it must have

25 and maintain, on an ongoing basis, minimum capital and

26 surplus equivalents (net of liabilities) calculated

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1 according to the methodology applicable in its

2 domiciliary jurisdiction and a central fund containing

3 a balance in amounts to be set forth by rule.

4 (c) The assuming insurer must have and maintain,

5 on an ongoing basis, a minimum solvency or capital

6 ratio, as applicable, that will be set forth by rule.

7 If the assuming insurer is an association, including

8 incorporated and individual unincorporated

9 underwriters, it must have and maintain, on an ongoing

10 basis, a minimum solvency or capital ratio in the

11 reciprocal jurisdiction where the assuming insurer has

12 its head office or is domiciled, as applicable, and is

13 also licensed.

14 (d) The assuming insurer must provide adequate

15 assurance to the Director, in a form specified by the

16 Department by rule, as follows:

17 (i) the assuming insurer must provide prompt

18 written notice and explanation to the Director if

19 it falls below the minimum requirements set forth

20 in items (b) or (c) of this subparagraph or if any

21 regulatory action is taken against it for serious

22 noncompliance with applicable law;

23 (ii) the assuming insurer must consent in

24 writing to the jurisdiction of the courts of this

25 State and to the appointment of the Director as

26 agent for service of process; the Director may

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1 require that consent for service of process be

2 provided to the Director and included in each

3 reinsurance agreement; nothing in this subitem

4 (ii) shall limit or in any way alter the capacity

5 of parties to a reinsurance agreement to agree to

6 alternative dispute resolution mechanisms, except

7 to the extent such agreements are unenforceable

8 under applicable insolvency or delinquency laws;

9 (iii) the assuming insurer must consent in

10 writing to pay all final judgments obtained by a

11 ceding insurer or its legal successor, whenever

12 enforcement is sought, that have been declared

13 enforceable in the jurisdiction where the judgment

14 was obtained;

15 (iv) each reinsurance agreement must include a

16 provision requiring the assuming insurer to

17 provide security in an amount equal to 100% of the

18 assuming insurer's liabilities attributable to

19 reinsurance ceded pursuant to that agreement if

20 the assuming insurer resists enforcement of a

21 final judgment that is enforceable under the law

22 of the jurisdiction in which it was obtained or a

23 properly enforceable arbitration award, whether

24 obtained by the ceding insurer or by its legal

25 successor on behalf of its resolution estate; and

26 (v) the assuming insurer must confirm that it

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1 is not presently participating in any solvent

2 scheme of arrangement which involves this State's

3 ceding insurers and agree to notify the ceding

4 insurer and the Director and to provide security

5 in an amount equal to 100% of the assuming

6 insurer's liabilities to the ceding insurer if the

7 assuming insurer enters into such a solvent scheme

8 of arrangement; the security shall be in a form

9 consistent with the provisions of paragraph (C-5)

10 of subsection (1) and subsection (2) and as

11 specified by the Department by rule.

12 (e) If requested by the Director, the assuming

13 insurer or its legal successor must provide, on behalf

14 of itself and any legal predecessors, certain

15 documentation to the Director, as specified by the

16 Department by rule.

17 (f) The assuming insurer must maintain a practice

18 of prompt payment of claims under reinsurance

19 agreements pursuant to criteria set forth by rule.

20 (g) The assuming insurer's supervisory authority

21 must confirm to the Director on an annual basis, as of

22 the preceding December 31 or at the annual date

23 otherwise statutorily reported to the reciprocal

24 jurisdiction, that the assuming insurer complied with

25 the requirements set forth in items (b) and (c) of this

26 subparagraph.

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1 (h) Nothing in this subparagraph precludes an

2 assuming insurer from providing the Director with

3 information on a voluntary basis.

4 (2) The Director shall timely create and publish a

5 list of reciprocal jurisdictions.

6 (a) The Director's list shall include any

7 reciprocal jurisdiction as defined under subitems (i)

8 and (ii) of item (a) of subparagraph (1) of this

9 paragraph, and shall consider any other reciprocal

10 jurisdiction included on the list of reciprocal

11 jurisdictions published through the NAIC committee

12 process. The Director may approve a jurisdiction that

13 does not appear on the NAIC list of reciprocal

14 jurisdictions in accordance with criteria to be

15 developed by rules adopted by the Department.

16 (b) The Director may remove a jurisdiction from

17 the list of reciprocal jurisdictions upon a

18 determination that the jurisdiction no longer meets

19 the requirements of a reciprocal jurisdiction in

20 accordance with a process set forth in rules adopted

21 by the Department, except that the Director shall not

22 remove from the list a reciprocal jurisdiction as

23 defined under subitems (i) and (ii) of item (a) of

24 subparagraph (1) of this paragraph. If otherwise

25 allowed pursuant to this Section, credit for

26 reinsurance ceded to an assuming insurer that has its

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1 home office or is domiciled in that jurisdiction shall

2 be allowed upon removal of a reciprocal jurisdiction

3 from this list.

4 (3) The Director shall timely create and publish a

5 list of assuming insurers that have satisfied the

6 conditions set forth in this paragraph and to which

7 cessions shall be granted credit in accordance with this

8 paragraph. The Director may add an assuming insurer to the

9 list if a NAIC-accredited jurisdiction has added the

10 assuming insurer to a list of assuming insurers or if,

11 upon initial eligibility, the assuming insurer submits the

12 information to the Director as required under item (d) of

13 subparagraph (1) of this paragraph and complies with any

14 additional requirements that the Department may impose by

15 rule except to the extent that they conflict with an

16 applicable covered agreement.

17 (4) If the Director determines that an assuming

18 insurer no longer meets one or more of the requirements

19 under this paragraph, the Director may revoke or suspend

20 the eligibility of the assuming insurer for recognition

21 under this paragraph in accordance with procedures set

22 forth by rule.

23 (a) While an assuming insurer's eligibility is

24 suspended, no reinsurance agreement issued, amended,

25 or renewed after the effective date of the suspension

26 qualifies for credit except to the extent that the

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1 assuming insurer's obligations under the contract are

2 secured in accordance with subsection (2).

3 (b) If an assuming insurer's eligibility is

4 revoked, no credit for reinsurance may be granted

5 after the effective date of the revocation with

6 respect to any reinsurance agreements entered into by

7 the assuming insurer, including reinsurance agreements

8 entered into before the date of revocation, except to

9 the extent that the assuming insurer's obligations

10 under the contract are secured in a form acceptable to

11 the Director and consistent with the provisions of

12 subsection (2).

13 (5) If subject to a legal process of rehabilitation,

14 liquidation, or conservation, as applicable, the ceding

15 insurer or its representative may seek and, if determined

16 appropriate by the court in which the proceedings are

17 pending, may obtain an order requiring that the assuming

18 insurer post security for all outstanding ceded

19 liabilities.

20 (6) Nothing in this paragraph shall limit or in any

21 way alter the capacity of parties to a reinsurance

22 agreement to agree on requirements for security or other

23 terms in that reinsurance agreement except as expressly

24 prohibited by this Section or other applicable law or

25 regulation.

26 (7) Credit may be taken under this paragraph only for

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1 reinsurance agreements entered into, amended, or renewed

2 on or after the effective date of this amendatory Act of

3 the 102nd General Assembly and only with respect to losses

4 incurred and reserves reported on or after the later of:

5 (i) the date on which the assuming insurer has met

6 all eligibility requirements pursuant to subparagraph

7 (1) of this paragraph; and

8 (ii) the effective date of the new reinsurance

9 agreement, amendment, or renewal.

10 This subparagraph does not alter or impair a ceding

11 insurer's right to take credit for reinsurance, to the

12 extent that credit is not available under this paragraph,

13 as long as the reinsurance qualifies for credit under any

14 other applicable provision of this Section.

15 (8) Nothing in this paragraph shall authorize an

16 assuming insurer to withdraw or reduce the security

17 provided under any reinsurance agreement except as

18 permitted by the terms of the agreement.

19 (9) Nothing in this paragraph shall limit or in any

20 way alter the capacity of parties to any reinsurance

21 agreement to renegotiate the agreement.

22 (D) Credit shall be allowed when the reinsurance is

23 ceded to an assuming insurer not meeting the requirements

24 of paragraph (A), (B), (B-5), (C), (C-5), or (C-10) of

25 this subsection (1) but only with respect to the insurance

26 of risks located in jurisdictions where that reinsurance

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1 is required by applicable law or regulation of that

2 jurisdiction.

3 (E) If the assuming insurer is not licensed to

4 transact insurance in this State or an accredited or

5 certified reinsurer in this State, the credit permitted by

6 paragraphs (B-5) and (C) of this subsection (1) shall not

7 be allowed unless the assuming insurer agrees in the

8 reinsurance agreements:

9 (1) that in the event of the failure of the

10 assuming insurer to perform its obligations under the

11 terms of the reinsurance agreement, the assuming

12 insurer, at the request of the ceding insurer, shall

13 submit to the jurisdiction of any court of competent

14 jurisdiction in any state of the United States, will

15 comply with all requirements necessary to give the

16 court jurisdiction, and will abide by the final

17 decision of the court or of any appellate court in the

18 event of an appeal; and

19 (2) to designate the Director or a designated

20 attorney as its true and lawful attorney upon whom may

21 be served any lawful process in any action, suit, or

22 proceeding instituted by or on behalf of the ceding

23 company.

24 This provision is not intended to conflict with or

25 override the obligation of the parties to a reinsurance

26 agreement to arbitrate their disputes, if an obligation to

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1 arbitrate is created in the agreement.

2 (F) If the assuming insurer does not meet the

3 requirements of paragraph (A), (B), (B-5), or (C-10) of

4 this subsection (1), the credit permitted by paragraph (C)

5 or (C-5) of this subsection (1) shall not be allowed

6 unless the assuming insurer agrees in the trust agreements

7 to the following conditions:

8 (1) Notwithstanding any other provisions in the

9 trust instrument, if the trust fund is inadequate

10 because it contains an amount less than the amount

11 required by subparagraph (3) of paragraph (C) of this

12 subsection (1) or if the grantor of the trust has been

13 declared insolvent or placed into receivership,

14 rehabilitation, liquidation, or similar proceedings

15 under the laws of its state or country of domicile, the

16 trustee shall comply with an order of the state

17 official with regulatory oversight over the trust or

18 with an order of a court of competent jurisdiction

19 directing the trustee to transfer to the state

20 official with regulatory oversight all of the assets

21 of the trust fund.

22 (2) The assets shall be distributed by and claims

23 shall be filed with and valued by the state official

24 with regulatory oversight in accordance with the laws

25 of the state in which the trust is domiciled that are

26 applicable to the liquidation of domestic insurance

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1 companies.

2 (3) If the state official with regulatory

3 oversight determines that the assets of the trust fund

4 or any part thereof are not necessary to satisfy the

5 claims of the U.S. ceding insurers of the grantor of

6 the trust, the assets or part thereof shall be

7 returned by the state official with regulatory

8 oversight to the trustee for distribution in

9 accordance with the trust agreement.

10 (4) The grantor shall waive any rights otherwise

11 available to it under U.S. law that are inconsistent

12 with the provision.

13 (G) If an accredited or certified reinsurer ceases to

14 meet the requirements for accreditation or certification,

15 then the Director may suspend or revoke the reinsurer's

16 accreditation or certification.

17 (1) The Director must give the reinsurer notice

18 and opportunity for hearing. The suspension or

19 revocation may not take effect until after the

20 Director's order on hearing, unless:

21 (a) the reinsurer waives its right to hearing;

22 (b) the Director's order is based on

23 regulatory action by the reinsurer's domiciliary

24 jurisdiction or the voluntary surrender or

25 termination of the reinsurer's eligibility to

26 transact insurance or reinsurance business in its

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1 domiciliary jurisdiction or in the primary

2 certifying state of the reinsurer under

3 subparagraph (4) of paragraph (C-5) of this

4 subsection (1); or

5 (c) the Director finds that an emergency

6 requires immediate action and a court of competent

7 jurisdiction has not stayed the Director's action.

8 (2) While a reinsurer's accreditation or

9 certification is suspended, no reinsurance contract

10 issued or renewed after the effective date of the

11 suspension qualifies for credit except to the extent

12 that the reinsurer's obligations under the contract

13 are secured in accordance with subsection (2) of this

14 Section. If a reinsurer's accreditation or

15 certification is revoked, no credit for reinsurance

16 may be granted after the effective date of the

17 revocation, except to the extent that the reinsurer's

18 obligations under the contract are secured in

19 accordance with subsection (2) of this Section.

20 (H) The following provisions shall apply concerning

21 concentration of risk:

22 (1) A ceding insurer shall take steps to manage

23 its reinsurance recoverable proportionate to its own

24 book of business. A domestic ceding insurer shall

25 notify the Director within 30 days after reinsurance

26 recoverables from any single assuming insurer, or

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1 group of affiliated assuming insurers, exceeds 50% of

2 the domestic ceding insurer's last reported surplus to

3 policyholders, or after it is determined that

4 reinsurance recoverables from any single assuming

5 insurer, or group of affiliated assuming insurers, is

6 likely to exceed this limit. The notification shall

7 demonstrate that the exposure is safely managed by the

8 domestic ceding insurer.

9 (2) A ceding insurer shall take steps to diversify

10 its reinsurance program. A domestic ceding insurer

11 shall notify the Director within 30 days after ceding

12 to any single assuming insurer, or group of affiliated

13 assuming insurers, more than 20% of the ceding

14 insurer's gross written premium in the prior calendar

15 year, or after it has determined that the reinsurance

16 ceded to any single assuming insurer, or group of

17 affiliated assuming insurers, is likely to exceed this

18 limit. The notification shall demonstrate that the

19 exposure is safely managed by the domestic ceding

20 insurer.

21 (2) Credit for the reinsurance ceded by a domestic insurer

22 to an assuming insurer not meeting the requirements of

23 subsection (1) of this Section shall be allowed in an amount

24 not exceeding the assets or liabilities carried by the ceding

25 insurer. The credit shall not exceed the amount of funds held

26 by or held in trust for the ceding insurer under a reinsurance

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1 contract with the assuming insurer as security for the payment

2 of obligations thereunder, if the security is held in the

3 United States subject to withdrawal solely by, and under the

4 exclusive control of, the ceding insurer; or, in the case of a

5 trust, held in a qualified United States financial

6 institution, as defined in paragraph (B) of subsection (3) of

7 this Section. This security may be in the form of:

8 (A) Cash.

9 (B) Securities listed by the Securities Valuation

10 Office of the National Association of Insurance

11 Commissioners, including those deemed exempt from filing

12 as defined by the Purposes and Procedures Manual of the

13 Securities Valuation Office that conform to the

14 requirements of Article VIII of this Code that are not

15 issued by an affiliate of either the assuming or ceding

16 company.

17 (C) Clean, irrevocable, unconditional, letters of

18 credit issued or confirmed by a qualified United States

19 financial institution, as defined in paragraph (A) of

20 subsection (3) of this Section. The letters of credit

21 shall be effective no later than December 31 of the year

22 for which filing is being made, and in the possession of,

23 or in trust for, the ceding company on or before the filing

24 date of its annual statement. Letters of credit meeting

25 applicable standards of issuer acceptability as of the

26 dates of their issuance (or confirmation) shall,

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1 notwithstanding the issuing (or confirming) institution's

2 subsequent failure to meet applicable standards of issuer

3 acceptability, continue to be acceptable as security until

4 their expiration, extension, renewal, modification, or

5 amendment, whichever first occurs.

6 (D) Any other form of security acceptable to the

7 Director.

8 (3)(A) For purposes of paragraph (C) of subsection (2) of

9 this Section, a "qualified United States financial

10 institution" means an institution that:

11 (1) is organized or, in the case of a U.S. office of a

12 foreign banking organization, licensed under the laws of

13 the United States or any state thereof;

14 (2) is regulated, supervised, and examined by U.S.

15 federal or state authorities having regulatory authority

16 over banks and trust companies;

17 (3) has been designated by either the Director or the

18 Securities Valuation Office of the National Association of

19 Insurance Commissioners as meeting such standards of

20 financial condition and standing as are considered

21 necessary and appropriate to regulate the quality of

22 financial institutions whose letters of credit will be

23 acceptable to the Director; and

24 (4) is not affiliated with the assuming company.

25 (B) A "qualified United States financial institution"

26 means, for purposes of those provisions of this law specifying

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1 those institutions that are eligible to act as a fiduciary of a

2 trust, an institution that:

3 (1) is organized or, in the case of the U.S. branch or

4 agency office of a foreign banking organization, licensed

5 under the laws of the United States or any state thereof

6 and has been granted authority to operate with fiduciary

7 powers;

8 (2) is regulated, supervised, and examined by federal

9 or state authorities having regulatory authority over

10 banks and trust companies; and

11 (3) is not affiliated with the assuming company,

12 however, if the subject of the reinsurance contract is

13 insurance written pursuant to Section 155.51 of this Code,

14 the financial institution may be affiliated with the

15 assuming company with the prior approval of the Director.

16 (C) Except as set forth in subparagraph (11) of paragraph

17 (C-5) of subsection (1) of this Section as to cessions by

18 certified reinsurers, this amendatory Act of the 100th General

19 Assembly shall apply to all cessions after the effective date

20 of this amendatory Act of the 100th General Assembly under

21 reinsurance agreements that have an inception, anniversary, or

22 renewal date not less than 6 months after the effective date of

23 this amendatory Act of the 100th General Assembly.

24 (D) The Department shall adopt rules implementing the

25 provisions of this Article.

26 (Source: P.A. 102-578, eff. 7-1-22 (See Section 5 of P.A.

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1 102-672 for effective date of P.A. 102-578).)

2 (215 ILCS 5/179A-5)

3 Sec. 179A-5. Purpose. This Article is adopted to provide a

4 basis for the creation of protected cells by a domestic

5 insurer as one means of accessing alternative sources of

6 capital and achieving the benefits of insurance

7 securitization. Investors in fully funded insurance

8 securitization transactions provide funds that are available

9 to pay the insurer's insurance obligations or to repay the

10 investors or both. The creation of protected cells is intended

11 to be a means to achieve more efficiencies in conducting

12 insurance securitizations.

13 Under the terms of the typical debt instrument underlying

14 an insurance securitization transaction, prepaid principal is

15 repaid to the investor on a specified maturity date with

16 interest, unless a trigger event occurs. The insurance

17 securitization proceeds secure both the protected cell

18 company's insurance obligations if a trigger event occurs, as

19 well as the protected cell company's obligation to repay the

20 insurance securitization investors if a trigger event does not

21 occur. Insurance securitization transactions have been

22 performed throughnon-domestic ~~alien~~companies in order to

23 utilize efficiencies available to non-domestic ~~alien~~ companies

24 that are not currently available to domestic companies. This

25 Article is adopted in order to create more efficiency in

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1 conducting insurance securitization, to allow domestic

2 companies easier access to alternative sources of capital, and

3 to promote the benefits of insurance securitization generally.

4 (Source: P.A. 91-278, eff. 7-23-99; 92-74, eff. 7-12-01.)

5 (215 ILCS 5/179E-5)

6 Sec. 179E-5. Purpose. This Article is adopted to provide

7 for the creation of Special Purpose Reinsurance Vehicles

8 ("SPRV") exclusively to facilitate the securitization of one

9 or more ceding insurers' risk as a means of accessing

10 alternative sources of capital and achieving the benefits of

11 securitization. Investors in fully funded insurance

12 securitization transactions provide funds that are available

13 to the SPRV to secure the aggregate limit under an SPRV

14 contract that provides coverage against the occurrence of a

15 triggering event. The creation of SPRVs is intended to achieve

16 greater efficiencies in conducting insurance securitizations,

17 to diversify and broaden insurers' access to sources of risk

18 bearing capital, and to make insurance securitization

19 generally available on reasonable terms to as many U.S.

20 insurers as possible.

21 Under the terms of the typical securities underlying an

22 insurance securitization transaction, proceeds from the

23 issuance of securities are repaid to the investor on a

24 specified maturity date with interest or dividends unless a

25 triggering event occurs. The insurance securitization proceeds

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1 are available to pay the SPRV's obligations to the ceding

2 insurer if the triggering event occurs, as well as being

3 available to satisfy the SPRV's obligation to repay the

4 insurance securitization investors if a triggering event does

5 not occur. Insurance securitization transactions have been

6 performed by non-domestic ~~alien~~companies to utilize

7 efficiencies available to thosenon-domestic ~~alien~~ companies

8 that are not currently available to domestic companies. This

9 Article is adopted to allow more efficiency in conducting

10 insurance securitizations, to allow ceding insurers easier

11 access to alternative sources of risk bearing capital, and to

12 promote the benefits of insurance securitization to U.S.

13 insurers.

14 (Source: P.A. 92-124, eff. 7-20-01.)

15 (215 ILCS 5/Art. XII heading)

16 ARTICLE XII. DOMESTICATION OF

17 FOREIGN AND NON-DOMESTIC ~~ALIEN~~ COMPANIES

18 (215 ILCS 5/180) (from Ch. 73, par. 792)

19 Sec. 180. Companies that may domesticate.

20 (1) Any domestic, foreign, or non-domestic ~~alien~~ stock

21 company, mutual company, assessment legal reserve company,

22 reciprocal, or fraternal benefit society, authorized or which

23 may be authorized to do business in this State, may reorganize

24 under the laws of this State (including a reorganization as a

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1 captive insurance company under the laws of this State), by

2 complying with the provisions of this Article.

3 (2) As used in this Article: "reorganize" means

4 reorganize, reincorporate, or domesticate as an Illinois

5 insurer; "reorganization" means reorganization,

6 reincorporation, or domestication as an Illinois insurer;

7 "reorganized company" means any company that has availed

8 itself of the provisions of this Article, and the

9 reorganization of which has been effected as in this Article

10 provided; and "similar domestic company" means, in the case of

11 an application for reorganization as a domestic captive

12 insurance company, a domestic captive insurance company

13 organized under Article VIIC.

14 (Source: P.A. 87-1216.)

15 (215 ILCS 5/185.1) (from Ch. 73, par. 797.1)

16 Sec. 185.1. Effect of Reorganization.

17 When the reorganization has been effected:

18 (a) The articles of reorganization shall be the articles

19 of incorporation of the reorganized company and said company

20 shall continue in existence as, and thereafter be, a company

21 of this State.

22 (b) The reorganized company shall make its reports in

23 accordance with the laws of this State and shall be subject to

24 the exclusive regulation and supervision by the Department of

25 Insurance of this State and shall be subject to regulation and

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1 supervision by the Insurance Departments of other states and

2 countries as a foreign ornon-domestic ~~alien~~ company.

3 (c) The reorganized company shall have all of the rights,

4 privileges, immunities and powers and shall be subject to all

5 of the duties and liabilities granted or imposed by this Code

6 (except in the case of a domestic captive insurance company,

7 which shall have all of the rights, privileges, immunities and

8 powers and shall be subject to all of the duties and

9 liabilities granted or imposed by Article VIIC of this Code).

10 (d) The reorganized company shall thereupon and thereafter

11 possess all the rights, privileges, immunities, powers and

12 franchises of a public as well as a private nature,

13 theretofore possessed by the company so reorganized. Without

14 limiting the generality of the foregoing, (i) the agency

15 appointments, licenses, certificates of authority and rates

16 which are in existence at the time of the reorganization of

17 such reorganized company takes effect shall continue in full

18 force and effect; (ii) all property, real, personal and mixed,

19 and all debts due on whatever account, including subscriptions

20 to shares, assessments payable from members or policyholders,

21 and all other choses in action, and all and every other

22 interest of, or belonging to or due to the company so

23 reorganized, shall be deemed to be transferred to and vested

24 in the reorganized company without further act or deed; and

25 (iii) the title to any real estate or any interest therein

26 theretofore vested in the company so reorganized, shall not

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1 revert or be in any way impaired by reason of such

2 reorganization.

3 (e) The reorganized company shall thenceforth be

4 responsible and liable for all the liabilities and obligations

5 of the company so reorganized. Any claim existing, or action

6 or proceeding pending by or against the company so

7 reorganized, may be prosecuted to judgment as if such

8 reorganization had not taken place, or such reorganized

9 company may be substituted in its place. Neither the rights of

10 creditors nor any liens upon the property of the company so

11 reorganized, shall be impaired by such reorganization, but

12 such liens shall be limited to the property upon which they

13 were liens immediately prior to the reorganization, unless

14 otherwise provided in the articles of reorganization.

15 (Source: P.A. 85-131.)

16 (215 ILCS 5/188) (from Ch. 73, par. 800)

17 Sec. 188. Grounds for rehabilitation and liquidation of a

18 domestic company or an unauthorized foreign ornon-domestic

19 ~~alien~~company. Whenever any domestic company or any

20 unauthorized foreign or non-domestic ~~alien~~ company:

21 1. is insolvent;

22 2. has failed or refused to submit its books, papers,

23 accounts, records or affairs to the reasonable inspection

24 or examination of the Director or his actuaries,

25 supervisors, deputies, or examiners;

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1 3. has concealed, removed, altered, destroyed or

2 failed to establish and maintain books, records,

3 documents, accounts, vouchers and other pertinent material

4 adequate for the determination of its financial condition

5 by examination under Sections 132 through 132.7 or has

6 failed to properly administer claims and to maintain

7 claims records which are adequate for the determination of

8 its outstanding claims liability;

9 4. has failed or refused to observe an order of the

10 Director to make good within the time prescribed by law

11 any deficiency, whenever its capital and minimum required

12 surplus, if a stock company, or its required surplus, if a

13 company other than stock, has become impaired;

14 5. has, by articles of consolidation, contract of

15 reinsurance or otherwise, transferred or attempted to

16 transfer its entire property or business not in conformity

17 with this Code, or entered into any transaction the effect

18 of which is to merge substantially its entire property or

19 business in any other company without having first

20 obtained the written approval of the Director under this

21 Code;

22 6. is found to be in such condition that its further

23 transaction of business would be hazardous to its

24 policyholders, or to its creditors, or to the public;

25 7. has violated its charter or any law of this State or

26 has exceeded or is exceeding its corporate powers;

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1 8. has an officer who has refused upon reasonable

2 demand to be examined under oath touching its affairs;

3 9. is found to be in such condition that it could not

4 meet the requirements for organization and authorization

5 as required by law, except as to the amount of the original

6 surplus required of a stock company in Section 13, and

7 except as to the amount of the surplus required of a mutual

8 company in excess of the minimum surplus required by this

9 Code to be maintained, or either an authorized control

10 level event or a mandatory control level event as set

11 forth in Article IIA exists;

12 10. has ceased for the period of one year to transact

13 insurance business;

14 11. has commenced, or has attempted to commence, any

15 voluntary liquidation or dissolution proceeding, or any

16 proceeding to procure the appointment of a receiver,

17 liquidator, rehabilitator, sequestrator, or a similar

18 officer for itself;

19 12. is a party, whether plaintiff or defendant in any

20 proceeding in which an application is made for the

21 appointment of a receiver, custodian, liquidator,

22 rehabilitator, sequestrator, or similar officer for such

23 company or its property, or a receiver, custodian,

24 liquidator, rehabilitator, sequestrator or similar

25 officer, for such company or its property is appointed by

26 any court, or such appointment is imminent;

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1 13. consents by a majority of its directors,

2 stockholders or members;

3 14. has not organized and obtained a certificate

4 authorizing it to commence the transaction of its business

5 within the period of time prescribed by the sections of

6 this Code under which it is or proposes to be organized; or

7 15. has failed or refused to pay any valid final

8 judgment within 30 days after the rendition thereof, or

9 whenever it appears to the Director that any person has

10 committed a violation of Article VIII 1/2 with the result

11 described in Section 131.26,

12 sufficient grounds shall be deemed to exist for the

13 commencement of rehabilitation or liquidation proceedings.

14 With respect to a domestic company, the Director must

15 report, and with respect to an unauthorized foreign or

16 non-domestic ~~alien~~company, the Director may report any such

17 case to the Attorney General of this State whose duty it shall

18 be to apply forthwith by complaint on relation of the Director

19 in the name of the People of the State of Illinois, as

20 plaintiff, to the Circuit Court of Cook County, the Circuit

21 Court of Sangamon County, or the circuit court of the county in

22 which such company has, or last had its principal office, for

23 an order to rehabilitate or liquidate the defendant company as

24 provided in this Article, and for such other relief as the

25 nature of the case and the interests of its policyholders,

26 creditors, members, stockholders or the public may require.

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1 When, upon investigation, the Director finds that a

2 company is engaged in any aspect of the business of insurance

3 on behalf of or in association with any domestic insurance

4 company, against which a receivership proceeding has been or

5 is being filed under this Article, in a manner that appears to

6 be detrimental to policyholders, creditors, members,

7 shareholders, or the public, the Director may report such case

8 to the Attorney General of this State, whose duty it is to

9 apply forthwith by complaint on relation of the Director in

10 the name of the People of the State of Illinois, as plaintiff,

11 to the court in which the receivership proceeding is pending

12 for an order to appoint the Director as receiver to assume

13 control of the assets and operation of the company pending a

14 complete investigation and determination of the rights of the

15 policyholders, creditors, members, shareholders, and the

16 general public.

17 (Source: P.A. 92-140, eff. 7-24-01.)

18 (215 ILCS 5/188.1) (from Ch. 73, par. 800.1)

19 Sec. 188.1. Provisions for conservation of assets of a

20 domestic, foreign, ornon-domestic ~~alien~~ company.

21 (1) Upon the filing by the Director of a verified

22 complaint alleging (a) that with respect to a domestic,

23 foreign, or non-domestic ~~alien~~company, whether authorized or

24 unauthorized, a condition exists that would justify a court

25 order for proceedings under Section 188, and (b) that the

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1 interests of creditors, policyholders or the public will

2 probably be endangered by delay, then the circuit court of

3 Sangamon or Cook County or the circuit court of the county in

4 which such company has or last had its principal office shall

5 enter forthwith without a hearing or prior notice an order

6 directing the director to take possession and control of the

7 property, business, books, records, and accounts of the

8 company, and of the premises occupied by it for the

9 transaction of its business, or such part of each as the

10 complaint shall specify, and enjoining the company and its

11 officers, directors, agents, servants, and employees from

12 disposition of its property and from transaction of its

13 business except with the concurrence of the Director until the

14 further order of the court. Copies of the verified complaint

15 and the seizure order shall be served upon the company.

16 (2) The order shall continue in force and effect for such

17 time as the court deems necessary for the Director to

18 ascertain the condition and situation of the company. On

19 motion of either party or on its own motion, the court may from

20 time to time hold such hearings as it deems desirable, and may

21 extend, shorten, or modify the terms of, the seizure order. So

22 far as the court deems it possible, the parties shall be given

23 adequate notice of such hearings. As soon as practicable, the

24 court shall vacate the seizure order or terminate the

25 conservation proceedings of the company, either when the

26 Director has failed to institute proceedings under Section 188

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1 having a reasonable opportunity to do so, or upon an order of

2 the court pursuant to such proceedings.

3 (3) Entry of a seizure order under this section shall not

4 constitute an anticipatory breach of any contract of the

5 company.

6 (4) The court may hold all hearings in conservation

7 proceedings privately in chambers, and shall do so on request

8 of any officer of the company proceeded against.

9 (5) In conservation proceedings and judicial reviews

10 thereof, all records of the company, other documents, and all

11 insurance department files and court records and papers, so

12 far as they pertain to and are a part of the record of the

13 conservation proceedings, shall be and remain confidential

14 except as is necessary to obtain compliance therewith, unless

15 and until the court, after hearing arguments in chambers from

16 the Director and the company, shall decide otherwise, or

17 unless the company requests that the matter be made public.

18 (6) Any person having possession of and refusing to

19 deliver any of the property, business, books, records or

20 accounts of a company against which a seizure order has been

21 issued shall be guilty of a Class A misdemeanor.

22 (Source: P.A. 89-206, eff. 7-21-95.)

23 (215 ILCS 5/197) (from Ch. 73, par. 809)

24 Sec. 197. Rights, powers, and duties ancillary to

25 domiciliary proceeding.

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1 The rights, powers, and duties of the Director as

2 conservator, rehabilitator, or liquidator, with reference to

3 the assets of a foreign or non-domestic~~alien~~ company, whether

4 authorized or unauthorized, shall be ancillary to the rights,

5 powers and duties imposed upon any receiver or other person,

6 if any, in charge of the property, business and affairs of such

7 company in its domiciliary state or country.

8 (Source: P.A. 86-1154; 86-1156.)

9 (215 ILCS 5/201) (from Ch. 73, par. 813)

10 Sec. 201. Who may apply for appointment of receiver or

11 liquidator.) No order or judgment enjoining, restraining or

12 interfering with the prosecution of the business of any

13 company, or for the appointment of a temporary or permanent

14 receiver, rehabilitator or liquidator of a domestic company,

15 or receiver or conservator of a foreign or non-domestic ~~alien~~

16 company, shall be made or granted otherwise than upon the

17 complaint of the Director represented by the Attorney General

18 as provided in this article, except in an action by a judgment

19 creditor or in proceedings supplementary thereto after notice

20 that a final judgment has been entered and that the judgment

21 creditor intends to file a complaint praying for any of the

22 relief in this section mentioned, has been served upon the

23 Director at least 30 days prior to the filing of such complaint

24 by such judgment creditor.

25 (Source: P.A. 84-546.)

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1 (215 ILCS 5/223) (from Ch. 73, par. 835)

2 Sec. 223. Director to value policies - Legal standard of

3 valuation.

4 (1) For policies and contracts issued prior to the

5 operative date of the Valuation Manual, the Director shall

6 annually value, or cause to be valued, the reserve liabilities

7 (hereinafter called reserves) for all outstanding life

8 insurance policies and annuity and pure endowment contracts of

9 every life insurance company doing business in this State,

10 except that in the case ofa non-domestic ~~an alien~~ company,

11 such valuation shall be limited to its United States business.

12 In calculating such reserves, he may use group methods and

13 approximate averages for fractions of a year or otherwise. In

14 lieu of the valuation of the reserves herein required of any

15 foreign or non-domestic ~~alien~~company, he may accept any

16 valuation made, or caused to be made, by the insurance

17 supervisory official of any state or other jurisdiction when

18 such valuation complies with the minimum standard provided in

19 this Section.

20 The provisions set forth in this subsection (1) and in

21 subsections (2), (3), (4), (5), (6), and (7) of this Section

22 shall apply to all policies and contracts, as appropriate,

23 subject to this Section issued prior to the operative date of

24 the Valuation Manual. The provisions set forth in subsections

25 (8) and (9) of this Section shall not apply to any such

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1 policies and contracts.

2 For policies and contracts issued on or after the

3 operative date of the Valuation Manual, the Director shall

4 annually value, or cause to be valued, the reserve liabilities

5 (reserves) for all outstanding life insurance contracts,

6 annuity and pure endowment contracts, accident and health

7 contracts, and deposit-type contracts of every company issued

8 on or after the operative date of the Valuation Manual. In lieu

9 of the valuation of the reserves required of a foreign or

10 non-domestic ~~alien~~ company, the Director may accept a

11 valuation made, or caused to be made, by the insurance

12 supervisory official of any state or other jurisdiction when

13 the valuation complies with the minimum standard provided in

14 this Section.

15 The provisions set forth in subsections (8) and (9) of

16 this Section shall apply to all policies and contracts issued

17 on or after the operative date of the Valuation Manual.

18 Any such company which adopts at any time a standard of

19 valuation producing greater aggregate reserves than those

20 calculated according to the minimum standard provided under

21 this Section may adopt a lower standard of valuation, with the

22 approval of the Director, but not lower than the minimum

23 herein provided, however, that, for the purposes of this

24 subsection, the holding of additional reserves previously

25 determined by the appointed actuary to be necessary to render

26 the opinion required by subsection (1a) shall not be deemed to

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1 be the adoption of a higher standard of valuation. In the

2 valuation of policies the Director shall give no consideration

3 to, nor make any deduction because of, the existence or the

4 possession by the company of

5 (a) policy liens created by any agreement given or

6 assented to by any assured subsequent to July 1, 1937, for

7 which liens such assured has not received cash or other

8 consideration equal in value to the amount of such liens,

9 or

10 (b) policy liens created by any agreement entered into

11 in violation of Section 232 unless the agreement imposing

12 or creating such liens has been approved by a Court in a

13 proceeding under Article XIII, or in the case of a foreign

14 or non-domestic ~~alien~~ company has been approved by a court

15 in a rehabilitation or liquidation proceeding or by the

16 insurance official of its domiciliary state or country, in

17 accordance with the laws thereof.

18 (1a) This subsection shall become operative at the end of

19 the first full calendar year following the effective date of

20 this amendatory Act of 1991.

21 (A) General.

22 (1) Prior to the operative date of the Valuation

23 Manual, every life insurance company doing business in

24 this State shall annually submit the opinion of a

25 qualified actuary as to whether the reserves and

26 related actuarial items held in support of the

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1 policies and contracts specified by the Director by

2 regulation are computed appropriately, are based on

3 assumptions that satisfy contractual provisions, are

4 consistent with prior reported amounts and comply with

5 applicable laws of this State. The Director by

6 regulation shall define the specifics of this opinion

7 and add any other items deemed to be necessary to its

8 scope.

9 (2) The opinion shall be submitted with the annual

10 statement reflecting the valuation of reserve

11 liabilities for each year ending on or after December

12 31, 1992.

13 (3) The opinion shall apply to all business in

14 force including individual and group health insurance

15 plans, in form and substance acceptable to the

16 Director as specified by regulation.

17 (4) The opinion shall be based on standards

18 adopted from time to time by the Actuarial Standards

19 Board and on additional standards as the Director may

20 by regulation prescribe.

21 (5) In the case of an opinion required to be

22 submitted by a foreign or non-domestic~~alien~~ company,

23 the Director may accept the opinion filed by that

24 company with the insurance supervisory official of

25 another state if the Director determines that the

26 opinion reasonably meets the requirements applicable

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1 to a company domiciled in this State.

2 (6) For the purpose of this Section, "qualified

3 actuary" means a member in good standing of the

4 American Academy of Actuaries who meets the

5 requirements set forth in its regulations.

6 (7) Except in cases of fraud or willful

7 misconduct, the qualified actuary shall not be liable

8 for damages to any person (other than the insurance

9 company and the Director) for any act, error,

10 omission, decision or conduct with respect to the

11 actuary's opinion.

12 (8) Disciplinary action by the Director against

13 the company or the qualified actuary shall be defined

14 in regulations by the Director.

15 (9) A memorandum, in form and substance acceptable

16 to the Director as specified by regulation, shall be

17 prepared to support each actuarial opinion.

18 (10) If the insurance company fails to provide a

19 supporting memorandum at the request of the Director

20 within a period specified by regulation or the

21 Director determines that the supporting memorandum

22 provided by the insurance company fails to meet the

23 standards prescribed by the regulations or is

24 otherwise unacceptable to the Director, the Director

25 may engage a qualified actuary at the expense of the

26 company to review the opinion and the basis for the

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1 opinion and prepare the supporting memorandum as is

2 required by the Director.

3 (11) Any memorandum in support of the opinion, and

4 any other material provided by the company to the

5 Director in connection therewith, shall be kept

6 confidential by the Director and shall not be made

7 public and shall not be subject to subpoena, other

8 than for the purpose of defending an action seeking

9 damages from any person by reason of any action

10 required by this Section or by regulations promulgated

11 hereunder; provided, however, that the memorandum or

12 other material may otherwise be released by the

13 Director (a) with the written consent of the company

14 or (b) to the American Academy of Actuaries upon

15 request stating that the memorandum or other material

16 is required for the purpose of professional

17 disciplinary proceedings and setting forth procedures

18 satisfactory to the Director for preserving the

19 confidentiality of the memorandum or other material.

20 Once any portion of the confidential memorandum is

21 cited by the company in its marketing or is cited

22 before any governmental agency other than a state

23 insurance department or is released by the company to

24 the news media, all portions of the confidential

25 memorandum shall be no longer confidential.

26 (B) Actuarial analysis of reserves and assets

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1 supporting those reserves.

2 (1) Every life insurance company, except as

3 exempted by or under regulation, shall also annually

4 include in the opinion required by paragraph (A)(1) of

5 this subsection (1a), an opinion of the same qualified

6 actuary as to whether the reserves and related

7 actuarial items held in support of the policies and

8 contracts specified by the Director by regulation,

9 when considered in light of the assets held by the

10 company with respect to the reserves and related

11 actuarial items including, but not limited to, the

12 investment earnings on the assets and the

13 considerations anticipated to be received and retained

14 under the policies and contracts, make adequate

15 provision for the company's obligations under the

16 policies and contracts including, but not limited to,

17 the benefits under and expenses associated with the

18 policies and contracts.

19 (2) The Director may provide by regulation for a

20 transition period for establishing any higher reserves

21 which the qualified actuary may deem necessary in

22 order to render the opinion required by this Section.

23 (1b) Actuarial Opinion of Reserves after the Operative

24 Date of the Valuation Manual.

25 (A) General.

26 (1) Every company with outstanding life insurance

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1 contracts, accident and health insurance contracts, or

2 deposit-type contracts in this State and subject to

3 regulation by the Director shall annually submit the

4 opinion of the appointed actuary as to whether the

5 reserves and related actuarial items held in support

6 of the policies and contracts are computed

7 appropriately, are based on assumptions that satisfy

8 contractual provisions, are consistent with prior

9 reported amounts, and comply with applicable laws of

10 this State. The Valuation Manual shall prescribe the

11 specifics of this opinion, including any items deemed

12 to be necessary to its scope.

13 (2) The opinion shall be submitted with the annual

14 statement reflecting the valuation of such reserve

15 liabilities for each year ending on or after the

16 operative date of the Valuation Manual.

17 (3) The opinion shall apply to all policies and

18 contracts subject to paragraph (B) of this subsection

19 (1b), plus other actuarial liabilities as may be

20 specified in the Valuation Manual.

21 (4) The opinion shall be based on standards

22 adopted from time to time by the Actuarial Standards

23 Board or its successor and on additional standards as

24 may be prescribed in the Valuation Manual.

25 (5) In the case of an opinion required to be

26 submitted by a foreign or non-domestic ~~alien~~ company,

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1 the Director may accept the opinion filed by that

2 company with the insurance supervisory official of

3 another state if the Director determines that the

4 opinion reasonably meets the requirements applicable

5 to a company domiciled in this State.

6 (6) Except in cases of fraud or willful

7 misconduct, the appointed actuary shall not be liable

8 for damages to any person (other than the insurance

9 company and the Director) for any act, error,

10 omission, decision, or conduct with respect to the

11 appointed actuary's opinion.

12 (7) Disciplinary action by the Director against

13 the company or the appointed actuary shall be defined

14 by the Director by rule.

15 (8) A memorandum, in a form and substance as

16 specified in the Valuation Manual and acceptable to

17 the Director, shall be prepared to support each

18 actuarial opinion.

19 (9) If the insurance company fails to provide a

20 supporting memorandum at the request of the Director

21 within a period specified in the Valuation Manual or

22 the Director determines that the supporting memorandum

23 provided by the insurance company fails to meet the

24 standards prescribed by the Valuation Manual or is

25 otherwise unacceptable to the Director, the Director

26 may engage a qualified actuary at the expense of the

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1 company to review the opinion and the basis for the

2 opinion and prepare the supporting memorandum as is

3 required by the Director.

4 (B) Every company with outstanding life insurance

5 contracts, accident and health insurance contracts, or

6 deposit-type contracts in this State and subject to

7 regulation by the Director, except as exempted in the

8 Valuation Manual, shall also annually include in the

9 opinion required by subparagraph (1) of paragraph (A) of

10 this subsection (1b), an opinion of the same appointed

11 actuary as to whether the reserves and related actuarial

12 items held in support of the policies and contracts

13 specified in the Valuation Manual, when considered in

14 light of the assets held by the company with respect to the

15 reserves and related actuarial items, including, but not

16 limited to, the investment earnings on the assets and the

17 considerations anticipated to be received and retained

18 under the policies and contracts, make adequate provision

19 for the company's obligations under the policies and

20 contracts, including, but not limited to, the benefits

21 under and expenses associated with the policies and

22 contracts.

23 (2) This subsection shall apply to only those policies and

24 contracts issued prior to the operative date of Section 229.2

25 (the Standard Non-forfeiture Law).

26 (a) Except as otherwise in this Article provided, the

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1 legal minimum standard for valuation of contracts issued

2 before January 1, 1908, shall be the Actuaries or Combined

3 Experience Table of Mortality with interest at 4% per

4 annum and for valuation of contracts issued on or after

5 that date shall be the American Experience Table of

6 Mortality with either Craig's or Buttolph's Extension for

7 ages under 10 and with interest at 3 1/2% per annum. The

8 legal minimum standard for the valuation of group

9 insurance policies under which premium rates are not

10 guaranteed for a period in excess of 5 years shall be the

11 American Men Ultimate Table of Mortality with interest at

12 3 1/2% per annum. Any life company may, at its option,

13 value its insurance contracts issued on or after January

14 1, 1938, in accordance with their terms on the basis of the

15 American Men Ultimate Table of Mortality with interest not

16 higher than 3 1/2% per annum.

17 (b) Policies issued prior to January 1, 1908, may

18 continue to be valued according to a method producing

19 reserves not less than those produced by the full

20 preliminary term method. Policies issued on and after

21 January 1, 1908, may be valued according to a method

22 producing reserves not less than those produced by the

23 modified preliminary term method hereinafter described in

24 paragraph (c). Policies issued on and after January 1,

25 1938, may be valued either according to a method producing

26 reserves not less than those produced by such modified

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1 preliminary term method or by the select and ultimate

2 method on the basis that the rate of mortality during the

3 first 5 years after the issuance of such contracts

4 respectively shall be calculated according to the

5 following percentages of rates shown by the American

6 Experience Table of Mortality:

7 (i) first insurance year 50% thereof;

8 (ii) second insurance year 65% thereof;

9 (iii) third insurance year 75% thereof;

10 (iv) fourth insurance year 85% thereof;

11 (v) fifth insurance year 95% thereof.

12 (c) If the premium charged for the first policy year

13 under a limited payment life preliminary term policy

14 providing for the payment of all premiums thereon in less

15 than 20 years from the date of the policy or under an

16 endowment preliminary term policy, exceeds that charged

17 for the first policy year under 20 payment life

18 preliminary term policies of the same company, the reserve

19 thereon at the end of any year, including the first, shall

20 not be less than the reserve on a 20 payment life

21 preliminary term policy issued in the same year at the

22 same age, together with an amount which shall be

23 equivalent to the accumulation of a net level premium

24 sufficient to provide for a pure endowment at the end of

25 the premium payment period, equal to the difference

26 between the value at the end of such period of such a 20

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1 payment life preliminary term policy and the full net

2 level premium reserve at such time of such a limited

3 payment life or endowment policy. The premium payment

4 period is the period during which premiums are

5 concurrently payable under such 20 payment life

6 preliminary term policy and such limited payment life or

7 endowment policy.

8 (d) The legal minimum standard for the valuations of

9 annuities issued on and after January 1, 1938, shall be

10 the American Annuitant's Table with interest not higher

11 than 3 3/4% per annum, and all annuities issued before

12 that date shall be valued on a basis not lower than that

13 used for the annual statement of the year 1937; but

14 annuities deferred 10 or more years and written in

15 connection with life insurance shall be valued on the same

16 basis as that used in computing the consideration or

17 premiums therefor, or upon any higher standard at the

18 option of the company.

19 (e) The Director may vary the standards of interest

20 and mortality as to contracts issued in countries other

21 than the United States and may vary standards of mortality

22 in particular cases of invalid lives and other extra

23 hazards.

24 (f) The legal minimum standard for valuation of waiver

25 of premium disability benefits or waiver of premium and

26 income disability benefits issued on and after January 1,

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1 1938, shall be the Class (3) Disability Table (1926)

2 modified to conform to the contractual waiting period,

3 with interest at not more than 3 1/2% per annum; but in no

4 event shall the values be less than those produced by the

5 basis used in computing premiums for such benefits. The

6 legal minimum standard for the valuation of such benefits

7 issued prior to January 1, 1938, shall be such as to place

8 an adequate value, as determined by sound insurance

9 practices, on the liabilities thereunder and shall be such

10 that the value of the benefits under each and every policy

11 shall in no case be less than the value placed upon the

12 future premiums.

13 (g) The legal minimum standard for the valuation of

14 industrial policies issued on or after January 1, 1938,

15 shall be the American Experience Table of Mortality or the

16 Standard Industrial Mortality Table or the Substandard

17 Industrial Mortality Table with interest at 3 1/2% per

18 annum by the net level premium method, or in accordance

19 with their terms by the modified preliminary term method

20 hereinabove described.

21 (h) Reserves for all such policies and contracts may

22 be calculated, at the option of the company, according to

23 any standards which produce greater aggregate reserves for

24 all such policies and contracts than the minimum reserves

25 required by this subsection.

26 (3) This subsection shall apply to only those policies and

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1 contracts issued on or after January 1, 1948 or such earlier

2 operative date of Section 229.2 (the Standard Non-forfeiture

3 Law) as shall have been elected by the insurance company

4 issuing such policies or contracts.

5 (a) Except as otherwise provided in subsections (4),

6 (6), and (7), the minimum standard for the valuation of

7 all such policies and contracts shall be the Commissioners

8 Reserve valuation method defined in paragraphs (b) and (f)

9 of this subsection and in subsection 5, 3 1/2% interest

10 for such policies issued prior to September 8, 1977, 5

11 1/2% interest for single premium life insurance policies

12 and 4 1/2% interest for all other such policies issued on

13 or after September 8, 1977, and the following tables:

14 (i) The Commissioners 1941 Standard Ordinary

15 Mortality Table for all Ordinary policies of life

16 insurance issued on the standard basis, excluding any

17 disability and accidental death benefits in such

18 policies, for such policies issued prior to the

19 operative date of subsection (4a) of Section 229.2

20 (Standard Non-forfeiture Law); and the Commissioners

21 1958 Standard Ordinary Mortality Table for such

22 policies issued on or after such operative date but

23 prior to the operative date of subsection (4c) of

24 Section 229.2 provided that for any category of such

25 policies issued on female risks all modified net

26 premiums and present values referred to in this

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1 Section may, prior to September 8, 1977, be calculated

2 according to an age not more than 3 years younger than

3 the actual age of the insured and, after September 8,

4 1977, calculated according to an age not more than 6

5 years younger than the actual age of the insured; and

6 for such policies issued on or after the operative

7 date of subsection (4c) of Section 229.2, (i) the

8 Commissioners 1980 Standard Ordinary Mortality Table,

9 or (ii) at the election of the company for any one or

10 more specified plans of life insurance, the

11 Commissioners 1980 Standard Ordinary Mortality Table

12 with Ten-Year Select Mortality Factors, or (iii) any

13 ordinary mortality table adopted after 1980 by the

14 NAIC and approved by regulations promulgated by the

15 Director for use in determining the minimum standard

16 of valuation for such policies.

17 (ii) For all Industrial Life Insurance policies

18 issued on the standard basis, excluding any disability

19 and accidental death benefits in such policies--the

20 1941 Standard Industrial Mortality Table for such

21 policies issued prior to the operative date of

22 subsection 4 (b) of Section 229.2 (Standard

23 Non-forfeiture Law); and for such policies issued on

24 or after such operative date the Commissioners 1961

25 Standard Industrial Mortality Table or any industrial

26 mortality table adopted after 1980 by the NAIC and

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1 approved by regulations promulgated by the Director

2 for use in determining the minimum standard of

3 valuation for such policies.

4 (iii) For Individual Annuity and Pure Endowment

5 contracts, excluding any disability and accidental

6 death benefits in such policies--the 1937 Standard

7 Annuity Mortality Table--or, at the option of the

8 company, the Annuity Mortality Table for 1949,

9 Ultimate, or any modification of either of these

10 tables approved by the Director.

11 (iv) For Group Annuity and Pure Endowment

12 contracts, excluding any disability and accidental

13 death benefits in such policies--the Group Annuity

14 Mortality Table for 1951, any modification of such

15 table approved by the Director, or, at the option of

16 the company, any of the tables or modifications of

17 tables specified for Individual Annuity and Pure

18 Endowment contracts.

19 (v) For Total and Permanent Disability Benefits in

20 or supplementary to Ordinary policies or contracts for

21 policies or contracts issued on or after January 1,

22 1966, the tables of Period 2 disablement rates and the

23 1930 to 1950 termination rates of the 1952 Disability

24 Study of the Society of Actuaries, with due regard to

25 the type of benefit, or any tables of disablement

26 rates and termination rates adopted after 1980 by the

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1 NAIC and approved by regulations promulgated by the

2 Director for use in determining the minimum standard

3 of valuation for such policies; for policies or

4 contracts issued on or after January 1, 1961, and

5 prior to January 1, 1966, either such tables or, at the

6 option of the company, the Class (3) Disability Table

7 (1926); and for policies issued prior to January 1,

8 1961, the Class (3) Disability Table (1926). Any such

9 table shall, for active lives, be combined with a

10 mortality table permitted for calculating the reserves

11 for life insurance policies.

12 (vi) For Accidental Death benefits in or

13 supplementary to policies--for policies issued on or

14 after January 1, 1966, the 1959 Accidental Death

15 Benefits Table or any accidental death benefits table

16 adopted after 1980 by the NAIC and approved by

17 regulations promulgated by the Director for use in

18 determining the minimum standard of valuation for such

19 policies; for policies issued on or after January 1,

20 1961, and prior to January 1, 1966, any of such tables

21 or, at the option of the company, the Inter-Company

22 Double Indemnity Mortality Table; and for policies

23 issued prior to January 1, 1961, the Inter-Company

24 Double Indemnity Mortality Table. Either table shall

25 be combined with a mortality table permitted for

26 calculating the reserves for life insurance policies.

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1 (vii) For Group Life Insurance, life insurance

2 issued on the substandard basis and other special

3 benefits--such tables as may be approved by the

4 Director.

5 (b) Except as otherwise provided in paragraph (f) of

6 subsection (3), subsection (5), and subsection (7)

7 reserves according to the Commissioners reserve valuation

8 method, for the life insurance and endowment benefits of

9 policies providing for a uniform amount of insurance and

10 requiring the payment of uniform premiums shall be the

11 excess, if any, of the present value, at the date of

12 valuation, of such future guaranteed benefits provided for

13 by such policies, over the then present value of any

14 future modified net premiums therefor. The modified net

15 premiums for any such policy shall be such uniform

16 percentage of the respective contract premiums for such

17 benefits that the present value, at the date of issue of

18 the policy, of all such modified net premiums shall be

19 equal to the sum of the then present value of such benefits

20 provided for by the policy and the excess of (A) over (B),

21 as follows:

22 (A) A net level annual premium equal to the

23 present value, at the date of issue, of such benefits

24 provided for after the first policy year, divided by

25 the present value, at the date of issue, of an annuity

26 of one per annum payable on the first and each

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1 subsequent anniversary of such policy on which a

2 premium falls due; provided, however, that such net

3 level annual premium shall not exceed the net level

4 annual premium on the 19 year premium whole life plan

5 for insurance of the same amount at an age one year

6 higher than the age at issue of such policy.

7 (B) A net one year term premium for such benefits

8 provided for in the first policy year.

9 For any life insurance policy issued on or after

10 January 1, 1987, for which the contract premium in the

11 first policy year exceeds that of the second year with no

12 comparable additional benefit being provided in that first

13 year, which policy provides an endowment benefit or a cash

14 surrender value or a combination thereof in an amount

15 greater than such excess premium, the reserve according to

16 the Commissioners reserve valuation method as of any

17 policy anniversary occurring on or before the assumed

18 ending date, defined herein as the first policy

19 anniversary on which the sum of any endowment benefit and

20 any cash surrender value then available is greater than

21 such excess premium, shall, except as otherwise provided

22 in paragraph (f) of subsection (3), be the greater of the

23 reserve as of such policy anniversary calculated as

24 described in the preceding part of this paragraph (b) and

25 the reserve as of such policy anniversary calculated as

26 described in the preceding part of this paragraph (b) with

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1 (i) the value defined in subpart A of the preceding part of

2 this paragraph (b) being reduced by 15% of the amount of

3 such excess first year premium, (ii) all present values of

4 benefits and premiums being determined without reference

5 to premiums or benefits provided for by the policy after

6 the assumed ending date, (iii) the policy being assumed to

7 mature on such date as an endowment, and (iv) the cash

8 surrender value provided on such date being considered as

9 an endowment benefit. In making the above comparison, the

10 mortality and interest bases stated in paragraph (a) of

11 subsection (3) and in subsection (6) shall be used.

12 Reserves according to the Commissioners reserve

13 valuation method for (i) life insurance policies providing

14 for a varying amount of insurance or requiring the payment

15 of varying premiums, (ii) group annuity and pure endowment

16 contracts purchased under a retirement plan or plan of

17 deferred compensation, established or maintained by an

18 employer (including a partnership or sole proprietorship)

19 or by an employee organization, or by both, other than a

20 plan providing individual retirement accounts or

21 individual retirement annuities under Section 408 of the

22 Internal Revenue Code, as now or hereafter amended, (iii)

23 disability and accidental death benefits in all policies

24 and contracts, and (iv) all other benefits, except life

25 insurance and endowment benefits in life insurance

26 policies and benefits provided by all other annuity and

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1 pure endowment contracts, shall be calculated by a method

2 consistent with the principles of this paragraph (b),

3 except that any extra premiums charged because of

4 impairments or special hazards shall be disregarded in the

5 determination of modified net premiums.

6 (c) In no event shall a company's aggregate reserves

7 for all life insurance policies, excluding disability and

8 accidental death benefits be less than the aggregate

9 reserves calculated in accordance with the methods set

10 forth in paragraphs (b), (f), and (g) of subsection (3)

11 and in subsection (5) and the mortality table or tables

12 and rate or rates of interest used in calculating

13 non-forfeiture benefits for such policies.

14 (d) In no event shall the aggregate reserves for all

15 policies, contracts, and benefits be less than the

16 aggregate reserves determined by the appointed actuary to

17 be necessary to render the opinion required by subsection

18 (1a).

19 (e) Reserves for any category of policies, contracts

20 or benefits as established by the Director, may be

21 calculated, at the option of the company, according to any

22 standards which produce greater aggregate reserves for

23 such category than those calculated according to the

24 minimum standard herein provided, but the rate or rates of

25 interest used for policies and contracts, other than

26 annuity and pure endowment contracts, shall not be higher

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1 than the corresponding rate or rates of interest used in

2 calculating any nonforfeiture benefits provided for

3 therein.

4 (f) If in any contract year the gross premium charged

5 by any life insurance company on any policy or contract is

6 less than the valuation net premium for the policy or

7 contract calculated by the method used in calculating the

8 reserve thereon but using the minimum valuation standards

9 of mortality and rate of interest, the minimum reserve

10 required for such policy or contract shall be the greater

11 of either the reserve calculated according to the

12 mortality table, rate of interest, and method actually

13 used for such policy or contract, or the reserve

14 calculated by the method actually used for such policy or

15 contract but using the minimum standards of mortality and

16 rate of interest and replacing the valuation net premium

17 by the actual gross premium in each contract year for

18 which the valuation net premium exceeds the actual gross

19 premium. The minimum valuation standards of mortality and

20 rate of interest referred to in this paragraph (f) are

21 those standards stated in subsection (6) and paragraph (a)

22 of subsection (3).

23 For any life insurance policy issued on or after

24 January 1, 1987, for which the gross premium in the first

25 policy year exceeds that of the second year with no

26 comparable additional benefit provided in that first year,

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1 which policy provides an endowment benefit or a cash

2 surrender value or a combination thereof in an amount

3 greater than such excess premium, the foregoing provisions

4 of this paragraph (f) shall be applied as if the method

5 actually used in calculating the reserve for such policy

6 were the method described in paragraph (b) of subsection

7 (3), ignoring the second paragraph of said paragraph (b).

8 The minimum reserve at each policy anniversary of such a

9 policy shall be the greater of the minimum reserve

10 calculated in accordance with paragraph (b) of subsection

11 (3), including the second paragraph of said paragraph (b),

12 and the minimum reserve calculated in accordance with this

13 paragraph (f).

14 (g) In the case of any plan of life insurance which

15 provides for future premium determination, the amounts of

16 which are to be determined by the insurance company based

17 on then estimates of future experience, or in the case of

18 any plan of life insurance or annuity which is of such a

19 nature that the minimum reserves cannot be determined by

20 the methods described in paragraphs (b) and (f) of

21 subsection (3) and subsection (5), the reserves which are

22 held under any such plan shall:

23 (i) be appropriate in relation to the benefits and

24 the pattern of premiums for that plan, and

25 (ii) be computed by a method which is consistent

26 with the principles of this Standard Valuation Law, as

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1 determined by regulations promulgated by the Director.

2 (4) Except as provided in subsection (6), the minimum

3 standard of valuation for individual annuity and pure

4 endowment contracts issued on or after the operative date of

5 this subsection, as defined herein, and for all annuities and

6 pure endowments purchased on or after such operative date

7 under group annuity and pure endowment contracts shall be the

8 Commissioners Reserve valuation methods defined in paragraph

9 (b) of subsection (3) and subsection (5) and the following

10 tables and interest rates:

11 (a) For individual single premium immediate annuity

12 contracts, excluding any disability and accidental death

13 benefits in such contracts, the 1971 Individual Annuity

14 Mortality Table, any individual annuity mortality table

15 adopted after 1980 by the NAIC and approved by regulations

16 promulgated by the Director for use in determining the

17 minimum standard of valuation for such contracts, or any

18 modification of those tables approved by the Director, and

19 7 1/2% interest.

20 (b) For individual and pure endowment contracts other

21 than single premium annuity contracts, excluding any

22 disability and accidental death benefits in such

23 contracts, the 1971 Individual Annuity Mortality Table,

24 any individual annuity mortality table adopted after 1980

25 by the NAIC and approved by regulations promulgated by the

26 Director for use in determining the minimum standard of

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1 valuation for such contracts, or any modification of those

2 tables approved by the Director, and 5 1/2% interest for

3 single premium deferred annuity and pure endowment

4 contracts and 4 1/2% interest for all other such

5 individual annuity and pure endowment contracts.

6 (c) For all annuities and pure endowments purchased

7 under group annuity and pure endowment contracts,

8 excluding any disability and accidental death benefits

9 purchased under such contracts, the 1971 Group Annuity

10 Mortality Table, any group annuity mortality table adopted

11 after 1980 by the NAIC and approved by regulations

12 promulgated by the Director for use in determining the

13 minimum standard of valuation for such annuities and pure

14 endowments, or any modification of those tables approved

15 by the Director, and 7 1/2% interest.

16 After September 8, 1977, any company may file with the

17 Director a written notice of its election to comply with the

18 provisions of this subsection after a specified date before

19 January 1, 1979, which shall be the operative date of this

20 subsection for such company; provided, a company may elect a

21 different operative date for individual annuity and pure

22 endowment contracts from that elected for group annuity and

23 pure endowment contracts. If a company makes no election, the

24 operative date of this subsection for such company shall be

25 January 1, 1979.

26 (5) This subsection shall apply to all annuity and pure

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1 endowment contracts other than group annuity and pure

2 endowment contracts purchased under a retirement plan or plan

3 of deferred compensation, established or maintained by an

4 employer (including a partnership or sole proprietorship) or

5 by an employee organization, or by both, other than a plan

6 providing individual retirement accounts or individual

7 retirement annuities under Section 408 of the Internal Revenue

8 Code, as now or hereafter amended.

9 Reserves according to the Commissioners annuity reserve

10 method for benefits under annuity or pure endowment contracts,

11 excluding any disability and accidental death benefits in such

12 contracts, shall be the greatest of the respective excesses of

13 the present values, at the date of valuation, of the future

14 guaranteed benefits, including guaranteed nonforfeiture

15 benefits, provided for by such contracts at the end of each

16 respective contract year, over the present value, at the date

17 of valuation, of any future valuation considerations derived

18 from future gross considerations, required by the terms of

19 such contract, that become payable prior to the end of such

20 respective contract year. The future guaranteed benefits shall

21 be determined by using the mortality table, if any, and the

22 interest rate, or rates, specified in such contracts for

23 determining guaranteed benefits. The valuation considerations

24 are the portions of the respective gross considerations

25 applied under the terms of such contracts to determine

26 nonforfeiture values.

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1 (6)(a) Applicability of this subsection. The interest

2 rates used in determining the minimum standard for the

3 valuation of

4 (A) all life insurance policies issued in a particular

5 calendar year, on or after the operative date of

6 subsection (4c) of Section 229.2 (Standard Nonforfeiture

7 Law),

8 (B) all individual annuity and pure endowment

9 contracts issued in a particular calendar year ending on

10 or after December 31, 1983,

11 (C) all annuities and pure endowments purchased in a

12 particular calendar year ending on or after December 31,

13 1983, under group annuity and pure endowment contracts,

14 and

15 (D) the net increase in a particular calendar year

16 ending after December 31, 1983, in amounts held under

17 guaranteed interest contracts

18 shall be the calendar year statutory valuation interest rates,

19 as defined in this subsection.

20 (b) Calendar Year Statutory Valuation Interest Rates.

21 (i) The calendar year statutory valuation interest

22 rates shall be determined according to the following

23 formulae, rounding "I" to the nearest .25%.

24 (A) For life insurance,

25 I = .03 + W (R1 - .03) + W/2 (R2 - .09).

26 (B) For single premium immediate annuities and

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1 annuity benefits involving life contingencies

2 arising from other annuities with cash settlement

3 options and from guaranteed interest contracts

4 with cash settlement options,

5 I = .03 + W (R - .03) or with prior

6 approval of the Director I = .03 + W (Rq -

7 .03).

8 For the purposes of this subparagraph (i), "I"

9 equals the calendar year statutory valuation interest

10 rate, "R" is the reference interest rate defined in

11 this subsection, "R1" is the lesser of R and .09, "R2"

12 is the greater of R and .09, "Rq" is the quarterly

13 reference interest rate defined in this subsection,

14 and "W" is the weighting factor defined in this

15 subsection.

16 (C) For other annuities with cash settlement

17 options and guaranteed interest contracts with

18 cash settlement options, valued on an issue year

19 basis, except as stated in (B), the formula for

20 life insurance stated in (A) applies to annuities

21 and guaranteed interest contracts with guarantee

22 durations in excess of 10 years, and the formula

23 for single premium immediate annuities stated in

24 (B) above applies to annuities and guaranteed

25 interest contracts with guarantee durations of 10

26 years or less.

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1 (D) For other annuities with no cash

2 settlement options and for guaranteed interest

3 contracts with no cash settlement options, the

4 formula for single premium immediate annuities

5 stated in (B) applies.

6 (E) For other annuities with cash settlement

7 options and guaranteed interest contracts with

8 cash settlement options, valued on a change in

9 fund basis, the formula for single premium

10 immediate annuities stated in (B) applies.

11 (ii) If the calendar year statutory valuation

12 interest rate for any life insurance policy issued in

13 any calendar year determined without reference to this

14 subparagraph differs from the corresponding actual

15 rate for similar policies issued in the immediately

16 preceding calendar year by less than .5%, the calendar

17 year statutory valuation interest rate for such life

18 insurance policy shall be the corresponding actual

19 rate for the immediately preceding calendar year. For

20 purposes of applying this subparagraph, the calendar

21 year statutory valuation interest rate for life

22 insurance policies issued in a calendar year shall be

23 determined for 1980, using the reference interest rate

24 defined for 1979, and shall be determined for each

25 subsequent calendar year regardless of when subsection

26 (4c) of Section 229.2 (Standard Nonforfeiture Law)

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1 becomes operative.

2 (c) Weighting Factors.

3 (i) The weighting factors referred to in the

4 formulae stated in paragraph (b) are given in the

5 following tables.

6 (A) Weighting Factors for Life Insurance.

7	`Guarantee`	`Weighting`
8	`Duration`	`Factors`
9	`(Years)`
10	`10 or less`	`.50`
11	`More than 10, but not more than 20`	`.45`
12	`More than 20`	`.35`

13 For life insurance, the guarantee duration is

14 the maximum number of years the life insurance can

15 remain in force on a basis guaranteed in the

16 policy or under options to convert to plans of

17 life insurance with premium rates or nonforfeiture

18 values or both which are guaranteed in the

19 original policy.

20 (B) The weighting factor for single premium

21 immediate annuities and for annuity benefits

22 involving life contingencies arising from other

23 annuities with cash settlement options and

24 guaranteed interest contracts with cash settlement

25 options is .80.

26 (C) The weighting factors for other annuities

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1 and for guaranteed interest contracts, except as

2 stated in (B) of this subparagraph (i), shall be

3 as specified in tables (1), (2), and (3) of this

4 subpart (C), according to the rules and

5 definitions in (4), (5) and (6) of this subpart

6 (C).

7 (1) For annuities and guaranteed interest

8 contracts valued on an issue year basis.

9	`Guarantee`	`Weighting Factor`
10	`Duration`	`for Plan Type`
11	`(Years)`	`A` `B` `C`
12	`5 or less`.....................................	`.80` `.60 .50`
13	`More than 5, but not`
14	`more than 10`..................................	`.75` `.60 .50`
15	`More than 10, but not`
16	`more than 20`..................................	`.65` `.50 .45`
17	`More than 20`..................................	`.45` `.35 .35`

18 (2) For annuities and guaranteed interest

19 contracts valued on a change in fund basis,

20 the factors shown in (1) for Plan Types A, B

21 and C are increased by .15, .25 and .05,

22 respectively.

23 (3) For annuities and guaranteed interest

24 contracts valued on an issue year basis, other

25 than those with no cash settlement options,

26 which do not guarantee interest on

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1 considerations received more than one year

2 after issue or purchase, and for annuities and

3 guaranteed interest contracts valued on a

4 change in fund basis which do not guarantee

5 interest rates on considerations received more

6 than 12 months beyond the valuation date, the

7 factors shown in (1), or derived in (2), for

8 Plan Types A, B and C are increased by .05.

9 (4) For other annuities with cash

10 settlement options and guaranteed interest

11 contracts with cash settlement options, the

12 guarantee duration is the number of years for

13 which the contract guarantees interest rates

14 in excess of the calendar year statutory

15 valuation interest rate for life insurance

16 policies with guarantee durations in excess of

17 20 years. For other annuities with no cash

18 settlement options, and for guaranteed

19 interest contracts with no cash settlement

20 options, the guarantee duration is the number

21 of years from the date of issue or date of

22 purchase to the date annuity benefits are

23 scheduled to commence.

24 (5) The plan types used in the above

25 tables are defined as follows.

26 Plan Type A is a plan under which the

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1 policyholder may not withdraw funds, or may

2 withdraw funds at any time but only (a) with

3 an adjustment to reflect changes in interest

4 rates or asset values since receipt of the

5 funds by the insurance company, (b) without

6 such an adjustment but in installments over 5

7 years or more, or (c) as an immediate life

8 annuity.

9 Plan Type B is a plan under which the

10 policyholder may not withdraw funds before

11 expiration of the interest rate guarantee, or

12 may withdraw funds before such expiration but

13 only (a) with an adjustment to reflect changes

14 in interest rates or asset values since

15 receipt of the funds by the insurance company,

16 or (b) without such adjustment but in

17 installments over 5 years or more. At the end

18 of the interest rate guarantee, funds may be

19 withdrawn without such adjustment in a single

20 sum or installments over less than 5 years.

21 Plan Type C is a plan under which the

22 policyholder may withdraw funds before

23 expiration of the interest rate guarantee in a

24 single sum or installments over less than 5

25 years either (a) without adjustment to reflect

26 changes in interest rates or asset values

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1 since receipt of the funds by the insurance

2 company, or (b) subject only to a fixed

3 surrender charge stipulated in the contract as

4 a percentage of the fund.

5 (6) A company may elect to value

6 guaranteed interest contracts with cash

7 settlement options and annuities with cash

8 settlement options on either an issue year

9 basis or on a change in fund basis. Guaranteed

10 interest contracts with no cash settlement

11 options and other annuities with no cash

12 settlement options shall be valued on an issue

13 year basis. As used in this Section, "issue

14 year basis of valuation" refers to a valuation

15 basis under which the interest rate used to

16 determine the minimum valuation standard for

17 the entire duration of the annuity or

18 guaranteed interest contract is the calendar

19 year valuation interest rate for the year of

20 issue or year of purchase of the annuity or

21 guaranteed interest contract. "Change in fund

22 basis of valuation", as used in this Section,

23 refers to a valuation basis under which the

24 interest rate used to determine the minimum

25 valuation standard applicable to each change

26 in the fund held under the annuity or

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1 guaranteed interest contract is the calendar

2 year valuation interest rate for the year of

3 the change in the fund.

4 (d) Reference Interest Rate. The reference interest

5 rate referred to in paragraph (b) of this subsection is

6 defined as follows.

7 (A) For all life insurance, the reference interest

8 rate is the lesser of the average over a period of 36

9 months, and the average over a period of 12 months,

10 with both periods ending on June 30, or with prior

11 approval of the Director ending on December 31, of the

12 calendar year next preceding the year of issue, of

13 Moody's Corporate Bond Yield Average - Monthly Average

14 Corporates, as published by Moody's Investors Service,

15 Inc.

16 (B) For single premium immediate annuities and for

17 annuity benefits involving life contingencies arising

18 from other annuities with cash settlement options and

19 guaranteed interest contracts with cash settlement

20 options, the reference interest rate is the average

21 over a period of 12 months, ending on June 30, or with

22 prior approval of the Director ending on December 31,

23 of the calendar year of issue or year of purchase, of

24 Moody's Corporate Bond Yield Average - Monthly Average

25 Corporates, as published by Moody's Investors Service,

26 Inc.

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1 (C) For annuities with cash settlement options and

2 guaranteed interest contracts with cash settlement

3 options, valued on a year of issue basis, except those

4 described in (B), with guarantee durations in excess

5 of 10 years, the reference interest rate is the lesser

6 of the average over a period of 36 months and the

7 average over a period of 12 months, ending on June 30,

8 or with prior approval of the Director ending on

9 December 31, of the calendar year of issue or

10 purchase, of Moody's Corporate Bond Yield

11 Average-Monthly Average Corporates, as published by

12 Moody's Investors Service, Inc.

13 (D) For other annuities with cash settlement

14 options and guaranteed interest contracts with cash

15 settlement options, valued on a year of issue basis,

16 except those described in (B), with guarantee

17 durations of 10 years or less, the reference interest

18 rate is the average over a period of 12 months, ending

19 on June 30, or with prior approval of the Director

20 ending on December 31, of the calendar year of issue or

21 purchase, of Moody's Corporate Bond Yield

22 Average-Monthly Average Corporates, as published by

23 Moody's Investors Service, Inc.

24 (E) For annuities with no cash settlement options

25 and for guaranteed interest contracts with no cash

26 settlement options, the reference interest rate is the

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1 average over a period of 12 months, ending on June 30,

2 or with prior approval of the Director ending on

3 December 31, of the calendar year of issue or

4 purchase, of Moody's Corporate Bond Yield

5 Average-Monthly Average Corporates, as published by

6 Moody's Investors Service, Inc.

7 (F) For annuities with cash settlement options and

8 guaranteed interest contracts with cash settlement

9 options, valued on a change in fund basis, except

10 those described in (B), the reference interest rate is

11 the average over a period of 12 months, ending on June

12 30, or with prior approval of the Director ending on

13 December 31, of the calendar year of the change in the

14 fund, of Moody's Corporate Bond Yield Average-Monthly

15 Average Corporates, as published by Moody's Investors

16 Service, Inc.

17 (G) For annuities valued by a formula based on Rq,

18 the quarterly reference interest rate is, with the

19 prior approval of the Director, the average within

20 each of the 4 consecutive calendar year quarters

21 ending on March 31, June 30, September 30 and December

22 31 of the calendar year of issue or year of purchase of

23 Moody's Corporate Bond Yield Average-Monthly Average

24 Corporates, as published by Moody's Investors Service,

25 Inc.

26 (e) Alternative Method for Determining Reference

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1 Interest Rates. In the event that the Moody's Corporate

2 Bond Yield Average-Monthly Average Corporates is no longer

3 published by Moody's Investors Services, Inc., or in the

4 event that the NAIC determines that Moody's Corporate Bond

5 Yield Average-Monthly Average Corporates as published by

6 Moody's Investors Service, Inc. is no longer appropriate

7 for the determination of the reference interest rate, then

8 an alternative method for determination of the reference

9 interest rate, which is adopted by the NAIC and approved

10 by regulations promulgated by the Director, may be

11 substituted.

12 (7) Minimum Standards for Accident and Health (Disability,

13 Accident and Sickness) Insurance Contracts. The Director shall

14 promulgate a regulation containing the minimum standards

15 applicable to the valuation of health (disability, sickness

16 and accident) plans which are issued prior to the operative

17 date of the Valuation Manual. For accident and health

18 (disability, accident and sickness) insurance contracts issued

19 on or after the operative date of the Valuation Manual, the

20 standard prescribed in the Valuation Manual is the minimum

21 standard of valuation required under subsection (1).

22 (8) Valuation Manual for Policies Issued On or After the

23 Operative Date of the Valuation Manual.

24 (a) For policies issued on or after the operative date

25 of the Valuation Manual, the standard prescribed in the

26 Valuation Manual is the minimum standard of valuation

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1 required under subsection (1), except as provided under

2 paragraphs (e) or (g) of this subsection (8).

3 (b) The operative date of the Valuation Manual is

4 January 1 of the first calendar year following the first

5 July 1 when all of the following have occurred:

6 (i) The Valuation Manual has been adopted by the

7 NAIC by an affirmative vote of at least 42 members, or

8 three-fourths of the members voting, whichever is

9 greater.

10 (ii) The Standard Valuation Law, as amended by the

11 NAIC in 2009, or legislation including substantially

12 similar terms and provisions, has been enacted by

13 states representing greater than 75% of the direct

14 premiums written as reported in the following annual

15 statements submitted for 2008: life, accident and

16 health annual statements; health annual statements; or

17 fraternal annual statements.

18 (iii) The Standard Valuation Law, as amended by

19 the NAIC in 2009, or legislation including

20 substantially similar terms and provisions, has been

21 enacted by at least 42 of the following 55

22 jurisdictions: the 50 states of the United States,

23 American Samoa, the American Virgin Islands, the

24 District of Columbia, Guam, and Puerto Rico.

25 (c) Unless a change in the Valuation Manual specifies

26 a later effective date, changes to the Valuation Manual

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1 shall be effective on January 1 following the date when

2 the change to the Valuation Manual has been adopted by the

3 NAIC by an affirmative vote representing:

4 (i) at least three-fourths of the members of the

5 NAIC voting, but not less than a majority of the total

6 membership; and

7 (ii) members of the NAIC representing

8 jurisdictions totaling greater than 75% of the direct

9 premiums written as reported in the following annual

10 statements most recently available prior to the vote

11 in subparagraph (i) of this paragraph (c): life,

12 accident and health annual statements; health annual

13 statements; or fraternal annual statements.

14 (d) The Valuation Manual must specify all of the

15 following:

16 (i) Minimum valuation standards for and

17 definitions of the policies or contracts subject to

18 subsection (1). Such minimum valuation standards shall

19 be:

20 (A) the Commissioners reserve valuation method

21 for life insurance contracts, other than annuity

22 contracts, subject to subsection (1);

23 (B) the Commissioners annuity reserve

24 valuation method for annuity contracts subject to

25 subsection (1); and

26 (C) minimum reserves for all other policies or

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1 contracts subject to subsection (1).

2 (ii) Which policies or contracts or types of

3 policies or contracts are subject to the requirements

4 of a principle-based valuation in paragraph (a) of

5 subsection (9) and the minimum valuation standards

6 consistent with those requirements.

7 (iii) For policies and contracts subject to a

8 principle-based valuation under subsection (9):

9 (A) Requirements for the format of reports to

10 the Director under subparagraph (iii) of paragraph

11 (b) of subsection (9), and which shall include

12 information necessary to determine if the

13 valuation is appropriate and in compliance with

14 this Section.

15 (B) Assumptions shall be prescribed for risks

16 over which the company does not have significant

17 control or influence.

18 (C) Procedures for corporate governance and

19 oversight of the actuarial function, and a process

20 for appropriate waiver or modification of such

21 procedures.

22 (iv) For policies not subject to a principle-based

23 valuation under subsection (9), the minimum valuation

24 standard shall either:

25 (A) be consistent with the minimum standard of

26 valuation prior to the operative date of the

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1 Valuation Manual; or

2 (B) develop reserves that quantify the

3 benefits and guarantees and the funding associated

4 with the contracts and their risks at a level of

5 conservatism that reflects conditions that include

6 unfavorable events that have a reasonable

7 probability of occurring.

8 (v) Other requirements, including, but not limited

9 to, those relating to reserve methods, models for

10 measuring risk, generation of economic scenarios,

11 assumptions, margins, use of company experience, risk

12 measurement, disclosure, certifications, reports,

13 actuarial opinions and memorandums, transition rules,

14 and internal controls.

15 (vi) The data and form of the data required under

16 subsection (10) of this Section, with whom the data

17 must be submitted, and may specify other requirements,

18 including data analyses and the reporting of analyses.

19 (e) In the absence of a specific valuation requirement

20 or if a specific valuation requirement in the Valuation

21 Manual is not, in the opinion of the Director, in

22 compliance with this Section, then the company shall, with

23 respect to such requirements, comply with minimum

24 valuation standards prescribed by the Director by rule.

25 (f) The Director may engage a qualified actuary, at

26 the expense of the company, to perform an actuarial

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1 examination of the company and opine on the

2 appropriateness of any reserve assumption or method used

3 by the company, or to review and opine on a company's

4 compliance with any requirement set forth in this Section.

5 The Director may rely upon the opinion regarding

6 provisions contained within this Section of a qualified

7 actuary engaged by the Director of another state,

8 district, or territory of the United States. As used in

9 this paragraph, "engage" includes employment and

10 contracting.

11 (g) The Director may require a company to change any

12 assumption or method that in the opinion of the Director

13 is necessary in order to comply with the requirements of

14 the Valuation Manual or this Section; and the company

15 shall adjust the reserves as required by the Director. The

16 Director may take other disciplinary action as permitted

17 pursuant to law.

18 (9) Requirements of a Principle-Based Valuation.

19 (a) A company must establish reserves using a

20 principle-based valuation that meets the following

21 conditions for policies or contracts as specified in the

22 Valuation Manual:

23 (i) Quantify the benefits and guarantees, and the

24 funding, associated with the contracts and their risks

25 at a level of conservatism that reflects conditions

26 that include unfavorable events that have a reasonable

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1 probability of occurring during the lifetime of the

2 contracts. For policies or contracts with significant

3 tail risk, reflect conditions appropriately adverse to

4 quantify the tail risk.

5 (ii) Incorporate assumptions, risk analysis

6 methods, and financial models and management

7 techniques that are consistent with, but not

8 necessarily identical to, those utilized within the

9 company's overall risk assessment process, while

10 recognizing potential differences in financial

11 reporting structures and any prescribed assumptions or

12 methods.

13 (iii) Incorporate assumptions that are derived in

14 one of the following manners:

15 (A) The assumption is prescribed in the

16 Valuation Manual.

17 (B) For assumptions that are not prescribed,

18 the assumptions shall:

19 (1) be established utilizing the company's

20 available experience, to the extent it is

21 relevant and statistically credible; or

22 (2) to the extent that company data is not

23 available, relevant, or statistically

24 credible, be established utilizing other

25 relevant, statistically credible experience.

26 (iv) Provide margins for uncertainty, including

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1 adverse deviation and estimation error, such that the

2 greater the uncertainty, the larger the margin and

3 resulting reserve.

4 (b) A company using a principle-based valuation for

5 one or more policies or contracts subject to this

6 subsection as specified in the Valuation Manual shall:

7 (i) Establish procedures for corporate governance

8 and oversight of the actuarial valuation function

9 consistent with those described in the Valuation

10 Manual.

11 (ii) Provide to the Director and the board of

12 directors an annual certification of the effectiveness

13 of the internal controls with respect to the

14 principle-based valuation. Such controls shall be

15 designed to ensure that all material risks inherent in

16 the liabilities and associated assets subject to such

17 valuation are included in the valuation, and that

18 valuations are made in accordance with the Valuation

19 Manual. The certification shall be based on the

20 controls in place as of the end of the preceding

21 calendar year.

22 (iii) Develop and file with the Director upon

23 request a principle-based valuation report that

24 complies with standards prescribed in the Valuation

25 Manual.

26 (c) A principle-based valuation may include a

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1 prescribed formulaic reserve component.

2 (10) Experience Reporting for Policies In Force On or

3 After the Operative Date of the Valuation Manual. A company

4 shall submit mortality, morbidity, policyholder behavior, or

5 expense experience and other data as prescribed in the

6 Valuation Manual.

7 (11) Confidentiality.

8 (a) For the purposes of this subsection (11),

9 "confidential information" means any of the following:

10 (i) A memorandum in support of an opinion

11 submitted under subsection (1) of this Section and any

12 other documents, materials, and other information,

13 including, but not limited to, all working papers, and

14 copies thereof, created, produced or obtained by or

15 disclosed to the Director or any other person in

16 connection with the memorandum.

17 (ii) All documents, materials, and other

18 information, including, but not limited to, all

19 working papers, and copies thereof, created, produced,

20 or obtained by or disclosed to the Director or any

21 other person in the course of an examination made

22 under paragraph (f) of subsection (8) of this Section.

23 (iii) Any reports, documents, materials, and other

24 information developed by a company in support of, or

25 in connection with, an annual certification by the

26 company under subparagraph (ii) of paragraph (b) of

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1 subsection (9) of this Section evaluating the

2 effectiveness of the company's internal controls with

3 respect to a principle-based valuation and any other

4 documents, materials, and other information,

5 including, but not limited to, all working papers, and

6 copies thereof, created, produced, or obtained by or

7 disclosed to the Director or any other person in

8 connection with such reports, documents, materials,

9 and other information.

10 (iv) Any principle-based valuation report

11 developed under subparagraph (iii) of paragraph (b) of

12 subsection (9) of this Section and any other

13 documents, materials and other information, including,

14 but not limited to, all working papers, and copies

15 thereof, created, produced or obtained by or disclosed

16 to the Director or any other person in connection with

17 such report.

18 (v) Any documents, materials, data, and other

19 information submitted by a company under subsection

20 (10) of this Section (collectively, "experience data")

21 and any other documents, materials, data, and other

22 information, including, but not limited to, all

23 working papers, and copies thereof, created or

24 produced in connection with such experience data, in

25 each case that include any potentially

26 company-identifying or personally identifiable

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1 information, that is provided to or obtained by the

2 Director (together with any experience data, the

3 "experience materials") and any other documents,

4 materials, data and other information, including, but

5 not limited to, all working papers and copies thereof,

6 created, produced, or obtained by or disclosed to the

7 Director or any other person in connection with such

8 experience materials.

9 (b) Privilege for and Confidentiality of Confidential

10 Information.

11 (i) Except as provided in this subsection (11), a

12 company's confidential information is confidential by

13 law and privileged, and shall not be subject to the

14 Freedom of Information Act, subpoena, or discovery or

15 admissible as evidence in any private civil action;

16 however, the Director is authorized to use the

17 confidential information in the furtherance of any

18 regulatory or legal action brought against the company

19 as a part of the Director's official duties.

20 (ii) Neither the Director nor any person who

21 received confidential information while acting under

22 the authority of the Director shall be permitted or

23 required to testify in any private civil action

24 concerning any confidential information.

25 (iii) In order to assist in the performance of the

26 Director's duties, the Director may share confidential

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1 information (A) with other state, federal, and

2 international regulatory agencies and with the NAIC

3 and its affiliates and subsidiaries and (B) in the

4 case of confidential information specified in

5 subparagraphs (i) and (iv) of paragraph (a) of

6 subsection (11) only, with the Actuarial Board for

7 Counseling and Discipline or its successor upon

8 request stating that the confidential information is

9 required for the purpose of professional disciplinary

10 proceedings and with state, federal, and international

11 law enforcement officials; in the case of (A) and (B),

12 provided that such recipient agrees and has the legal

13 authority to agree, to maintain the confidentiality

14 and privileged status of such documents, materials,

15 data, and other information in the same manner and to

16 the same extent as required for the Director.

17 (iv) The Director may receive documents,

18 materials, data, and other information, including

19 otherwise confidential and privileged documents,

20 materials, data, or information, from the NAIC and its

21 affiliates and subsidiaries, from regulatory or law

22 enforcement officials of other foreign or domestic

23 jurisdictions, and from the Actuarial Board for

24 Counseling and Discipline or its successor and shall

25 maintain as confidential or privileged any document,

26 material, data, or other information received with

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1 notice or the understanding that it is confidential or

2 privileged under the laws of the jurisdiction that is

3 the source of the document, material, or other

4 information.

5 (v) The Director may enter into agreements

6 governing the sharing and use of information

7 consistent with paragraph (b) of this subsection (11).

8 (vi) No waiver of any applicable privilege or

9 claim of confidentiality in the confidential

10 information shall occur as a result of disclosure to

11 the Director under this subsection (11) or as a result

12 of sharing as authorized in subparagraph (iii) of

13 paragraph (b) of this subsection (11).

14 (vii) A privilege established under the law of any

15 state or jurisdiction that is substantially similar to

16 the privilege established under paragraph (b) of this

17 subsection (11) shall be available and enforced in any

18 proceeding in and in any court of this State.

19 (viii) In this subsection (11), "regulatory

20 agency", "law enforcement agency", and "NAIC" include,

21 but are not limited to, their employees, agents,

22 consultants, and contractors.

23 (c) Notwithstanding paragraph (b) of this subsection

24 (11), any confidential information specified in

25 subparagraphs (i) and (iv) of paragraph (a) of this

26 subsection (11):

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1 (i) may be subject to subpoena for the purpose of

2 defending an action seeking damages from the appointed

3 actuary submitting the related memorandum in support

4 of an opinion submitted under subsection (1) of this

5 Section or principle-based valuation report developed

6 under subparagraph (iii) of paragraph (b) of

7 subsection (9) of this Section by reason of an action

8 required by this Section or by regulations promulgated

9 under this Section;

10 (ii) may otherwise be released by the Director

11 with the written consent of the company; and

12 (iii) once any portion of a memorandum in support

13 of an opinion submitted under subsection (1) of this

14 Section or a principle-based valuation report

15 developed under subparagraph (iii) of paragraph (b) of

16 subsection (9) of this Section is cited by the company

17 in its marketing or is publicly volunteered to or

18 before a governmental agency other than a state

19 insurance department or is released by the company to

20 the news media, all portions of such memorandum or

21 report shall no longer be confidential.

22 (12) Exemptions.

23 (a) The Director may exempt specific product forms or

24 product lines of a domestic company that is licensed and

25 doing business only in Illinois from the requirements of

26 subsection (8) of this Section, provided that:

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1 (i) the Director has issued an exemption in

2 writing to the company and has not subsequently

3 revoked the exemption in writing; and

4 (ii) the company computes reserves using

5 assumptions and methods used prior to the operative

6 date of the Valuation Manual in addition to any

7 requirements established by the Director and adopted

8 by rule.

9 (b) For any company granted an exemption under this

10 subsection, subsections (1), (2), (3), (4), (5), (6), and

11 (7) shall be applicable. With respect to any company

12 applying this exemption, any reference to subsection (8)

13 found in subsections (1), (2), (3), (4), (5), (6), and (7)

14 shall not be applicable.

15 (13) Definitions. For the purposes of this Section, the

16 following definitions shall apply beginning on the operative

17 date of the Valuation Manual:

18 "Accident and health insurance" means contracts that

19 incorporate morbidity risk and provide protection against

20 economic loss resulting from accident, sickness, or medical

21 conditions and as may be specified in the Valuation Manual.

22 "Appointed actuary" means a qualified actuary who is

23 appointed in accordance with the Valuation Manual to prepare

24 the actuarial opinion required in paragraph (b) of subsection

25 (1) of this Section.

26 "Company" means an entity that (a) has written, issued, or

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1 reinsured life insurance contracts, accident and health

2 insurance contracts, or deposit-type contracts in this State

3 and has at least one such policy in force or on claim or (b)

4 has written, issued, or reinsured life insurance contracts,

5 accident and health insurance contracts, or deposit-type

6 contracts in any state and is required to hold a certificate of

7 authority to write life insurance, accident and health

8 insurance, or deposit-type contracts in this State.

9 "Deposit-type contract" means contracts that do not

10 incorporate mortality or morbidity risks and as may be

11 specified in the Valuation Manual.

12 "Life insurance" means contracts that incorporate

13 mortality risk, including annuity and pure endowment

14 contracts, and as may be specified in the Valuation Manual.

15 "NAIC" means the National Association of Insurance

16 Commissioners.

17 "Policyholder behavior" means any action a policyholder,

18 contract holder, or any other person with the right to elect

19 options, such as a certificate holder, may take under a policy

20 or contract subject to this Section including, but not limited

21 to, lapse, withdrawal, transfer, deposit, premium payment,

22 loan, annuitization, or benefit elections prescribed by the

23 policy or contract, but excluding events of mortality or

24 morbidity that result in benefits prescribed in their

25 essential aspects by the terms of the policy or contract.

26 "Principle-based valuation" means a reserve valuation that

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1 uses one or more methods or one or more assumptions determined

2 by the insurer and is required to comply with subsection (9) of

3 this Section as specified in the Valuation Manual.

4 "Qualified actuary" means an individual who is qualified

5 to sign the applicable statement of actuarial opinion in

6 accordance with the American Academy of Actuaries

7 qualification standards for actuaries signing such statements

8 and who meets the requirements specified in the Valuation

9 Manual.

10 "Tail risk" means a risk that occurs either where the

11 frequency of low probability events is higher than expected

12 under a normal probability distribution or where there are

13 observed events of very significant size or magnitude.

14 "Valuation Manual" means the manual of valuation

15 instructions adopted by the NAIC as specified in this Section

16 or as subsequently amended.

17 (Source: P.A. 99-162, eff. 1-1-16.)

18 (215 ILCS 5/241) (from Ch. 73, par. 853)

19 Sec. 241. Trust settlements.

20 Any domestic life company shall have the power to hold the

21 proceeds of any policy issued by it under a trust or other

22 agreement upon such terms and restrictions as to revocation by

23 the policyholder and control by beneficiaries, and with such

24 exemptions from the claims of creditors of beneficiaries other

25 than the policyholder as shall have been agreed to in writing

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1 by such company and the policyholder. Upon maturity of a

2 policy in the event the policyholder has made no such

3 agreement, the company shall have power to hold the proceeds

4 of the policy under an agreement with the beneficiaries. Such

5 company shall not be required to segregate funds so held but

6 may hold them as part of its general company assets. A foreign

7 or non-domestic~~alien~~ company, when authorized by its charter

8 or the laws of its domicile, may exercise any such powers in

9 this State.

10 (Source: Laws 1937, p. 696.)

11 (215 ILCS 5/292.1) (from Ch. 73, par. 904.1)

12 (Section scheduled to be repealed on January 1, 2027)

13 Sec. 292.1. Amendments to Laws.

14 (a) A domestic society may amend its laws in accordance

15 with the provisions thereof by action of its supreme governing

16 body at any regular or special meeting thereof or, if its laws

17 so provide, by referendum. Such referendum may be held in

18 accordance with the provisions of its laws by the vote of the

19 voting members of the society, by the vote of delegates or

20 representatives of voting members or by the vote of local

21 lodges. A society may provide for voting by mail. No amendment

22 submitted for adoption by referendum shall be adopted unless,

23 within 6 months from the date of submission thereof, a

24 majority of the members voting shall have signified their

25 consent to such amendment by one of the methods herein

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1 specified.

2 (b) No amendment to the laws of any domestic society shall

3 take effect unless approved by the Director, who shall approve

4 such amendment if the Director finds that it has been duly

5 adopted and is not inconsistent with any requirement of the

6 laws of this State or with the character, objects and purposes

7 of the society. Unless the Director shall disapprove any such

8 amendment within 60 days after the filing of same, such

9 amendment shall be considered approved. The approval or

10 disapproval of the Director shall be in writing and mailed to

11 the society. In case the Director disapproves such amendment,

12 the reasons therefor shall be stated in such written notice.

13 (c) Within 90 days from the approval thereof by the

14 Director, all such amendments, or a synopsis thereof, shall be

15 furnished to all members of the society either by mail or by

16 publication in full in the official publication of the

17 society. The affidavit of any officer of the society or of

18 anyone authorized by it to mail any amendments or synopsis

19 thereof, stating facts which show that same have been duly

20 addressed and mailed, shall be prima facie evidence that such

21 amendments, or a synopsis thereof, have been furnished the

22 addressee.

23 (d) Every foreign or non-domestic ~~alien~~ society authorized

24 to do business in this State shall file with the Director a

25 certified copy of all amendments of, or additions to, its laws

26 within 90 days after the enactment of same.

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1 (e) Printed copies of the laws as amended, certified by

2 the secretary or corresponding officer of the society, shall

3 be prima facie evidence of the legal adoption thereof.

4 (Source: P.A. 84-303.)

5 (215 ILCS 5/302.1) (from Ch. 73, par. 914.1)

6 (Section scheduled to be repealed on January 1, 2027)

7 Sec. 302.1. Investments and admitted assets. A domestic

8 society shall invest its funds only in such investments as are

9 authorized by the laws of this State for the investment of

10 assets of life insurers and subject to the limitations

11 thereon. Any foreign or non-domestic ~~alien~~ society permitted

12 or seeking to do business in this State which invests its funds

13 in accordance with the laws of the state, district, territory,

14 country or province in which it is incorporated shall be held

15 to meet the requirements of this Section for the investment of

16 funds. Admitted assets in addition to investments authorized

17 by this Section and Article VIII and Article VIII 1/2 of this

18 Code shall be in accordance with Section 3.1 of this Code.

19 (Source: P.A. 84-303.)

20 (215 ILCS 5/308.1) (from Ch. 73, par. 920.1)

21 (Section scheduled to be repealed on January 1, 2027)

22 Sec. 308.1. Examination of societies - adverse

23 publications.

24 (a) The Director, or any person he or she may appoint, may

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1 examine any domestic, foreign ornon-domestic ~~alien~~ society

2 transacting or applying for admission to transact business in

3 this State in the same manner as authorized for examination of

4 domestic, foreign or non-domestic ~~alien~~ insurance companies.

5 Requirements of notice and an opportunity to respond before

6 findings are made public as provided in the laws regulating

7 insurance companies shall also be applicable to the

8 examination of societies.

9 (b) The expense of each examination and of each valuation,

10 including compensation and actual expense of examiners, shall

11 be paid by the society examined or whose certificates are

12 valued, upon statements furnished by the Director.

13 (Source: P.A. 84-303.)

14 (215 ILCS 5/309.1) (from Ch. 73, par. 921.1)

15 (Section scheduled to be repealed on January 1, 2027)

16 Sec. 309.1. Foreign or non-domestic ~~alien~~ society -

17 admission. No foreign or non-domestic ~~alien~~society shall

18 transact business in this State without a certificate of

19 authority issued by the Director in accordance with Article VI

20 of this Code. Any such society desiring admission to this

21 State shall comply substantially with the requirements and

22 limitations of this amendatory Act applicable to domestic

23 societies.

24 (Source: P.A. 84-303.)

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1 (215 ILCS 5/310.1) (from Ch. 73, par. 922.1)

2 (Section scheduled to be repealed on January 1, 2027)

3 Sec. 310.1. Suspension, revocation or refusal to renew

4 certificate of authority.

5 (a) Domestic Societies. When, upon investigation, the

6 Director is satisfied that any domestic society transacting

7 business under this amendatory Act has exceeded its powers or

8 has failed to comply with any provisions of this amendatory

9 Act or is conducting business fraudulently or in a way

10 hazardous to its members, creditors or the public or is not

11 carrying out its contracts in good faith, the Director shall

12 notify the society of his or her findings, stating in writing

13 the grounds of his or her dissatisfaction, and, after

14 reasonable notice, require the society on a date named to show

15 cause why its certificate of authority should not be revoked

16 or suspended or why such society should not be fined as

17 hereinafter provided or why the Director should not proceed

18 against the society under Article XIII of this Code. If, on the

19 date named in said notice, such objections have not been

20 removed to the satisfaction of the Director or if the society

21 does not present good and sufficient reasons why its authority

22 to transact business in this State should not at that time be

23 revoked or suspended or why such society should not be fined as

24 hereinafter provided, the Director may revoke the authority of

25 the society to continue business in this State and proceed

26 against the society under Article XIII of this Code or suspend

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1 such certificate of authority for any period of time up to, but

2 not to exceed, 2 years; or may by order require such society to

3 pay to the people of the State of Illinois a penalty in a sum

4 not exceeding $10,000, and, upon the failure of such society

5 to pay such penalty within 20 days after the mailing of such

6 order, postage prepaid, registered and addressed to the last

7 known place of business of such society, unless such order is

8 stayed by an order of a court of competent jurisdiction, the

9 Director may revoke or suspend the license of such society for

10 any period of time up to, but not exceeding, a period of 2

11 years.

12 (b) Foreign or non-domestic ~~alien~~ societies. The Director

13 shall suspend, revoke or refuse to renew certificates of

14 authority in accordance with Article VI of this Code.

15 (Source: P.A. 93-32, eff. 7-1-03.)

16 (215 ILCS 5/357.29) (from Ch. 73, par. 969.29)

17 Sec. 357.29. Any policy of a foreign or non-domestic ~~alien~~

18 company, when delivered or issued for delivery to any person

19 in this State, may contain any provision which is not less

20 favorable to the insured or the beneficiary than the

21 provisions of this article and which is prescribed or required

22 by the law of the state under which the company is organized.

23 Any policy of a domestic company may, when issued for

24 delivery in any other state or country, contain any provision

25 permitted or required by the laws of such other state or

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1 country.

2 (Source: Laws 1967, p. 1735.)

3 (215 ILCS 5/370) (from Ch. 73, par. 982)

4 Sec. 370. Policies issued in violation of article-Penalty.

5 (1) Any company, or any officer or agent thereof, issuing

6 or delivering to any person in this State any policy in wilful

7 violation of the provision of this article shall be guilty of a

8 petty offense.

9 (2) The Director may revoke the license of any foreign or

10 non-domestic ~~alien~~company, or of the agent thereof wilfully

11 violating any provision of this article or suspend such

12 license for any period of time up to, but not to exceed, two

13 years; or may by order require such insurance company or agent

14 to pay to the people of the State of Illinois a penalty in a

15 sum not exceeding $1,000, and upon the failure of such

16 insurance company or agent to pay such penalty within twenty

17 days after the mailing of such order, postage prepaid,

18 registered, and addressed to the last known place of business

19 of such insurance company or agent, unless such order is

20 stayed by an order of a court of competent jurisdiction, the

21 Director of Insurance may revoke or suspend the license of

22 such insurance company or agent for any period of time up to,

23 but not exceeding a period of, two years.

24 (Source: P.A. 93-32, eff. 7-1-03.)

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1 (215 ILCS 5/404) (from Ch. 73, par. 1016)

2 Sec. 404. Office of Director; a public office; destruction

3 or disposal of records, papers, documents, and memoranda.

4 (1)(a) The office of the Director shall be a public office

5 and the records, books, and papers thereof on file therein,

6 except those records or documents containing or disclosing any

7 analysis, opinion, calculation, ratio, recommendation, advice,

8 viewpoint, or estimation by any Department staff regarding the

9 financial or market condition of an insurer not otherwise made

10 part of the public record by the Director, shall be accessible

11 to the inspection of the public, except as the Director, for

12 good reason, may decide otherwise, or except as may be

13 otherwise provided in this Code or as otherwise provided in

14 Section 7 of the Freedom of Information Act.

15 (b) Except where another provision of this Code expressly

16 prohibits a disclosure of confidential information to the

17 specific officials or organizations described in this

18 subsection, the Director may disclose or share any

19 confidential records or information in his custody and control

20 with any insurance regulatory officials of any state or

21 country, with the law enforcement officials of this State, any

22 other state, or the federal government, or with the National

23 Association of Insurance Commissioners, upon the written

24 agreement of the official or organization receiving the

25 information to hold the information or records confidential

26 and in a manner consistent with this Code.

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1 (c) The Director shall maintain as confidential any

2 records or information received from the National Association

3 of Insurance Commissioners or insurance regulatory officials

4 of other states which is confidential in that other

5 jurisdiction.

6 (2) Upon the filing of the examination to which they

7 relate, the Director is authorized to destroy or otherwise

8 dispose of all working papers relative to any company which

9 has been examined at any time prior to that last examination by

10 the Department, so that in such circumstances only current

11 working papers of that last examination may be retained by the

12 Department.

13 (3) Five years after the conclusion of the transactions to

14 which they relate, the Director is authorized to destroy or

15 otherwise dispose of all books, records, papers, memoranda and

16 correspondence directly related to consumer complaints or

17 inquiries.

18 (4) Two years after the conclusion of the transactions to

19 which they relate, the Director is authorized to destroy or

20 otherwise dispose of all books, records, papers, memoranda,

21 and correspondence directly related to all void, obsolete, or

22 superseded rate filings and schedules required to be filed by

23 statute; and all individual company rating experience data and

24 all records, papers, documents and memoranda in the possession

25 of the Director relating thereto.

26 (5) Five years after the conclusion of the transactions to

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1 which they relate, the Director is authorized to destroy or

2 otherwise dispose of all examination reports of companies made

3 by the insurance supervisory officials of states other than

4 Illinois; applications, requisitions, and requests for

5 licenses; all records of hearings; and all similar records,

6 papers, documents, and memoranda in the possession of the

7 Director.

8 (6) Ten years after the conclusion of the transactions to

9 which they relate, the Director is authorized to destroy or

10 otherwise dispose of all official correspondence of foreign

11 and non-domestic ~~alien~~companies, all foreign companies' and

12 non-domestic ~~alien~~ companies' annual statements, valuation

13 reports, tax reports, and all similar records, papers,

14 documents and memoranda in the possession of the Director.

15 (7) Whenever any records, papers, documents or memoranda

16 are destroyed or otherwise disposed of pursuant to the

17 provisions of this section, the Director shall execute and

18 file in a separate, permanent office file a certificate

19 listing and setting forth by summary description the records,

20 papers, documents or memoranda so destroyed or otherwise

21 disposed of, and the Director may, in his discretion, preserve

22 copies of any such records, papers, documents or memoranda by

23 means of microfilming or photographing the same.

24 (8) This Section shall apply to records, papers,

25 documents, and memoranda presently in the possession of the

26 Director as well as to records, papers, documents, and

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1 memoranda hereafter coming into his possession.

2 (Source: P.A. 97-1004, eff. 8-17-12.)

3 (215 ILCS 5/408) (from Ch. 73, par. 1020)

4 Sec. 408. Fees and charges.

5 (1) The Director shall charge, collect and give proper

6 acquittances for the payment of the following fees and

7 charges:

8 (a) For filing all documents submitted for the

9 incorporation or organization or certification of a

10 domestic company, except for a fraternal benefit society,

11 $2,000.

12 (b) For filing all documents submitted for the

13 incorporation or organization of a fraternal benefit

14 society, $500.

15 (c) For filing amendments to articles of incorporation

16 and amendments to declaration of organization, except for

17 a fraternal benefit society, a mutual benefit association,

18 a burial society or a farm mutual, $200.

19 (d) For filing amendments to articles of incorporation

20 of a fraternal benefit society, a mutual benefit

21 association or a burial society, $100.

22 (e) For filing amendments to articles of incorporation

23 of a farm mutual, $50.

24 (f) For filing bylaws or amendments thereto, $50.

25 (g) For filing agreement of merger or consolidation:

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1 (i) for a domestic company, except for a fraternal

2 benefit society, a mutual benefit association, a

3 burial society, or a farm mutual, $2,000.

4 (ii) for a foreign or non-domestic~~alien~~ company,

5 except for a fraternal benefit society, $600.

6 (iii) for a fraternal benefit society, a mutual

7 benefit association, a burial society, or a farm

8 mutual, $200.

9 (h) For filing agreements of reinsurance by a domestic

10 company, $200.

11 (i) For filing all documents submitted by a foreign or

12 non-domestic ~~alien~~company to be admitted to transact

13 business or accredited as a reinsurer in this State,

14 except for a fraternal benefit society, $5,000.

15 (j) For filing all documents submitted by a foreign or

16 non-domestic ~~alien~~fraternal benefit society to be

17 admitted to transact business in this State, $500.

18 (k) For filing declaration of withdrawal of a foreign

19 or non-domestic~~alien~~ company, $50.

20 (l) For filing annual statement by a domestic company,

21 except a fraternal benefit society, a mutual benefit

22 association, a burial society, or a farm mutual, $200.

23 (m) For filing annual statement by a domestic

24 fraternal benefit society, $100.

25 (n) For filing annual statement by a farm mutual, a

26 mutual benefit association, or a burial society, $50.

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1 (o) For issuing a certificate of authority or renewal

2 thereof except to a foreign fraternal benefit society,

3 $400.

4 (p) For issuing a certificate of authority or renewal

5 thereof to a foreign fraternal benefit society, $200.

6 (q) For issuing an amended certificate of authority,

7 $50.

8 (r) For each certified copy of certificate of

9 authority, $20.

10 (s) For each certificate of deposit, or valuation, or

11 compliance or surety certificate, $20.

12 (t) For copies of papers or records per page, $1.

13 (u) For each certification to copies of papers or

14 records, $10.

15 (v) For multiple copies of documents or certificates

16 listed in subparagraphs (r), (s), and (u) of paragraph (1)

17 of this Section, $10 for the first copy of a certificate of

18 any type and $5 for each additional copy of the same

19 certificate requested at the same time, unless, pursuant

20 to paragraph (2) of this Section, the Director finds these

21 additional fees excessive.

22 (w) For issuing a permit to sell shares or increase

23 paid-up capital:

24 (i) in connection with a public stock offering,

25 $300;

26 (ii) in any other case, $100.

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1 (x) For issuing any other certificate required or

2 permissible under the law, $50.

3 (y) For filing a plan of exchange of the stock of a

4 domestic stock insurance company, a plan of

5 demutualization of a domestic mutual company, or a plan of

6 reorganization under Article XII, $2,000.

7 (z) For filing a statement of acquisition of a

8 domestic company as defined in Section 131.4 of this Code,

9 $2,000.

10 (aa) For filing an agreement to purchase the business

11 of an organization authorized under the Dental Service

12 Plan Act or the Voluntary Health Services Plans Act or of a

13 health maintenance organization or a limited health

14 service organization, $2,000.

15 (bb) For filing a statement of acquisition of a

16 foreign or non-domestic ~~alien~~insurance company as defined

17 in Section 131.12a of this Code, $1,000.

18 (cc) For filing a registration statement as required

19 in Sections 131.13 and 131.14, the notification as

20 required by Sections 131.16, 131.20a, or 141.4, or an

21 agreement or transaction required by Sections 124.2(2),

22 141, 141a, or 141.1, $200.

23 (dd) For filing an application for licensing of:

24 (i) a religious or charitable risk pooling trust

25 or a workers' compensation pool, $1,000;

26 (ii) a workers' compensation service company,

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1 $500;

2 (iii) a self-insured automobile fleet, $200; or

3 (iv) a renewal of or amendment of any license

4 issued pursuant to (i), (ii), or (iii) above, $100.

5 (ee) For filing articles of incorporation for a

6 syndicate to engage in the business of insurance through

7 the Illinois Insurance Exchange, $2,000.

8 (ff) For filing amended articles of incorporation for

9 a syndicate engaged in the business of insurance through

10 the Illinois Insurance Exchange, $100.

11 (gg) For filing articles of incorporation for a

12 limited syndicate to join with other subscribers or

13 limited syndicates to do business through the Illinois

14 Insurance Exchange, $1,000.

15 (hh) For filing amended articles of incorporation for

16 a limited syndicate to do business through the Illinois

17 Insurance Exchange, $100.

18 (ii) For a permit to solicit subscriptions to a

19 syndicate or limited syndicate, $100.

20 (jj) For the filing of each form as required in

21 Section 143 of this Code, $50 per form. The fee for

22 advisory and rating organizations shall be $200 per form.

23 (i) For the purposes of the form filing fee,

24 filings made on insert page basis will be considered

25 one form at the time of its original submission.

26 Changes made to a form subsequent to its approval

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1 shall be considered a new filing.

2 (ii) Only one fee shall be charged for a form,

3 regardless of the number of other forms or policies

4 with which it will be used.

5 (iii) Fees charged for a policy filed as it will be

6 issued regardless of the number of forms comprising

7 that policy shall not exceed $1,500. For advisory or

8 rating organizations, fees charged for a policy filed

9 as it will be issued regardless of the number of forms

10 comprising that policy shall not exceed $2,500.

11 (iv) The Director may by rule exempt forms from

12 such fees.

13 (kk) For filing an application for licensing of a

14 reinsurance intermediary, $500.

15 (ll) For filing an application for renewal of a

16 license of a reinsurance intermediary, $200.

17 (2) When printed copies or numerous copies of the same

18 paper or records are furnished or certified, the Director may

19 reduce such fees for copies if he finds them excessive. He may,

20 when he considers it in the public interest, furnish without

21 charge to state insurance departments and persons other than

22 companies, copies or certified copies of reports of

23 examinations and of other papers and records.

24 (3) The expenses incurred in any performance examination

25 authorized by law shall be paid by the company or person being

26 examined. The charge shall be reasonably related to the cost

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1 of the examination including but not limited to compensation

2 of examiners, electronic data processing costs, supervision

3 and preparation of an examination report and lodging and

4 travel expenses. All lodging and travel expenses shall be in

5 accord with the applicable travel regulations as published by

6 the Department of Central Management Services and approved by

7 the Governor's Travel Control Board, except that out-of-state

8 lodging and travel expenses related to examinations authorized

9 under Section 132 shall be in accordance with travel rates

10 prescribed under paragraph 301-7.2 of the Federal Travel

11 Regulations, 41 C.F.R. 301-7.2, for reimbursement of

12 subsistence expenses incurred during official travel. All

13 lodging and travel expenses may be reimbursed directly upon

14 authorization of the Director. With the exception of the

15 direct reimbursements authorized by the Director, all

16 performance examination charges collected by the Department

17 shall be paid to the Insurance Producer Administration Fund,

18 however, the electronic data processing costs incurred by the

19 Department in the performance of any examination shall be

20 billed directly to the company being examined for payment to

21 the Technology Management Revolving Fund.

22 (4) At the time of any service of process on the Director

23 as attorney for such service, the Director shall charge and

24 collect the sum of $20, which may be recovered as taxable costs

25 by the party to the suit or action causing such service to be

26 made if he prevails in such suit or action.

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1 (5) (a) The costs incurred by the Department of Insurance

2 in conducting any hearing authorized by law shall be assessed

3 against the parties to the hearing in such proportion as the

4 Director of Insurance may determine upon consideration of all

5 relevant circumstances including: (1) the nature of the

6 hearing; (2) whether the hearing was instigated by, or for the

7 benefit of a particular party or parties; (3) whether there is

8 a successful party on the merits of the proceeding; and (4) the

9 relative levels of participation by the parties.

10 (b) For purposes of this subsection (5) costs incurred

11 shall mean the hearing officer fees, court reporter fees, and

12 travel expenses of Department of Insurance officers and

13 employees; provided however, that costs incurred shall not

14 include hearing officer fees or court reporter fees unless the

15 Department has retained the services of independent

16 contractors or outside experts to perform such functions.

17 (c) The Director shall make the assessment of costs

18 incurred as part of the final order or decision arising out of

19 the proceeding; provided, however, that such order or decision

20 shall include findings and conclusions in support of the

21 assessment of costs. This subsection (5) shall not be

22 construed as permitting the payment of travel expenses unless

23 calculated in accordance with the applicable travel

24 regulations of the Department of Central Management Services,

25 as approved by the Governor's Travel Control Board. The

26 Director as part of such order or decision shall require all

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1 assessments for hearing officer fees and court reporter fees,

2 if any, to be paid directly to the hearing officer or court

3 reporter by the party(s) assessed for such costs. The

4 assessments for travel expenses of Department officers and

5 employees shall be reimbursable to the Director of Insurance

6 for deposit to the fund out of which those expenses had been

7 paid.

8 (d) The provisions of this subsection (5) shall apply in

9 the case of any hearing conducted by the Director of Insurance

10 not otherwise specifically provided for by law.

11 (6) The Director shall charge and collect an annual

12 financial regulation fee from every domestic company for

13 examination and analysis of its financial condition and to

14 fund the internal costs and expenses of the Interstate

15 Insurance Receivership Commission as may be allocated to the

16 State of Illinois and companies doing an insurance business in

17 this State pursuant to Article X of the Interstate Insurance

18 Receivership Compact. The fee shall be the greater fixed

19 amount based upon the combination of nationwide direct premium

20 income and nationwide reinsurance assumed premium income or

21 upon admitted assets calculated under this subsection as

22 follows:

23 (a) Combination of nationwide direct premium income

24 and nationwide reinsurance assumed premium.

25 (i) $150, if the premium is less than $500,000 and

26 there is no reinsurance assumed premium;

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1 (ii) $750, if the premium is $500,000 or more, but

2 less than $5,000,000 and there is no reinsurance

3 assumed premium; or if the premium is less than

4 $5,000,000 and the reinsurance assumed premium is less

5 than $10,000,000;

6 (iii) $3,750, if the premium is less than

7 $5,000,000 and the reinsurance assumed premium is

8 $10,000,000 or more;

9 (iv) $7,500, if the premium is $5,000,000 or more,

10 but less than $10,000,000;

11 (v) $18,000, if the premium is $10,000,000 or

12 more, but less than $25,000,000;

13 (vi) $22,500, if the premium is $25,000,000 or

14 more, but less than $50,000,000;

15 (vii) $30,000, if the premium is $50,000,000 or

16 more, but less than $100,000,000;

17 (viii) $37,500, if the premium is $100,000,000 or

18 more.

19 (b) Admitted assets.

20 (i) $150, if admitted assets are less than

21 $1,000,000;

22 (ii) $750, if admitted assets are $1,000,000 or

23 more, but less than $5,000,000;

24 (iii) $3,750, if admitted assets are $5,000,000 or

25 more, but less than $25,000,000;

26 (iv) $7,500, if admitted assets are $25,000,000 or

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1 more, but less than $50,000,000;

2 (v) $18,000, if admitted assets are $50,000,000 or

3 more, but less than $100,000,000;

4 (vi) $22,500, if admitted assets are $100,000,000

5 or more, but less than $500,000,000;

6 (vii) $30,000, if admitted assets are $500,000,000

7 or more, but less than $1,000,000,000;

8 (viii) $37,500, if admitted assets are

9 $1,000,000,000 or more.

10 (c) The sum of financial regulation fees charged to

11 the domestic companies of the same affiliated group shall

12 not exceed $250,000 in the aggregate in any single year

13 and shall be billed by the Director to the member company

14 designated by the group.

15 (7) The Director shall charge and collect an annual

16 financial regulation fee from every foreign ornon-domestic

17 ~~alien~~company, except fraternal benefit societies, for the

18 examination and analysis of its financial condition and to

19 fund the internal costs and expenses of the Interstate

20 Insurance Receivership Commission as may be allocated to the

21 State of Illinois and companies doing an insurance business in

22 this State pursuant to Article X of the Interstate Insurance

23 Receivership Compact. The fee shall be a fixed amount based

24 upon Illinois direct premium income and nationwide reinsurance

25 assumed premium income in accordance with the following

26 schedule:

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1 (a) $150, if the premium is less than $500,000 and

2 there is no reinsurance assumed premium;

3 (b) $750, if the premium is $500,000 or more, but less

4 than $5,000,000 and there is no reinsurance assumed

5 premium; or if the premium is less than $5,000,000 and the

6 reinsurance assumed premium is less than $10,000,000;

7 (c) $3,750, if the premium is less than $5,000,000 and

8 the reinsurance assumed premium is $10,000,000 or more;

9 (d) $7,500, if the premium is $5,000,000 or more, but

10 less than $10,000,000;

11 (e) $18,000, if the premium is $10,000,000 or more,

12 but less than $25,000,000;

13 (f) $22,500, if the premium is $25,000,000 or more,

14 but less than $50,000,000;

15 (g) $30,000, if the premium is $50,000,000 or more,

16 but less than $100,000,000;

17 (h) $37,500, if the premium is $100,000,000 or more.

18 The sum of financial regulation fees under this subsection

19 (7) charged to the foreign ornon-domestic ~~alien~~ companies

20 within the same affiliated group shall not exceed $250,000 in

21 the aggregate in any single year and shall be billed by the

22 Director to the member company designated by the group.

23 (8) Beginning January 1, 1992, the financial regulation

24 fees imposed under subsections (6) and (7) of this Section

25 shall be paid by each company or domestic affiliated group

26 annually. After January 1, 1994, the fee shall be billed by

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1 Department invoice based upon the company's premium income or

2 admitted assets as shown in its annual statement for the

3 preceding calendar year. The invoice is due upon receipt and

4 must be paid no later than June 30 of each calendar year. All

5 financial regulation fees collected by the Department shall be

6 paid to the Insurance Financial Regulation Fund. The

7 Department may not collect financial examiner per diem charges

8 from companies subject to subsections (6) and (7) of this

9 Section undergoing financial examination after June 30, 1992.

10 (9) In addition to the financial regulation fee required

11 by this Section, a company undergoing any financial

12 examination authorized by law shall pay the following costs

13 and expenses incurred by the Department: electronic data

14 processing costs, the expenses authorized under Section 131.21

15 and subsection (d) of Section 132.4 of this Code, and lodging

16 and travel expenses.

17 Electronic data processing costs incurred by the

18 Department in the performance of any examination shall be

19 billed directly to the company undergoing examination for

20 payment to the Technology Management Revolving Fund. Except

21 for direct reimbursements authorized by the Director or direct

22 payments made under Section 131.21 or subsection (d) of

23 Section 132.4 of this Code, all financial regulation fees and

24 all financial examination charges collected by the Department

25 shall be paid to the Insurance Financial Regulation Fund.

26 All lodging and travel expenses shall be in accordance

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1 with applicable travel regulations published by the Department

2 of Central Management Services and approved by the Governor's

3 Travel Control Board, except that out-of-state lodging and

4 travel expenses related to examinations authorized under

5 Sections 132.1 through 132.7 shall be in accordance with

6 travel rates prescribed under paragraph 301-7.2 of the Federal

7 Travel Regulations, 41 C.F.R. 301-7.2, for reimbursement of

8 subsistence expenses incurred during official travel. All

9 lodging and travel expenses may be reimbursed directly upon

10 the authorization of the Director.

11 In the case of an organization or person not subject to the

12 financial regulation fee, the expenses incurred in any

13 financial examination authorized by law shall be paid by the

14 organization or person being examined. The charge shall be

15 reasonably related to the cost of the examination including,

16 but not limited to, compensation of examiners and other costs

17 described in this subsection.

18 (10) Any company, person, or entity failing to make any

19 payment of $150 or more as required under this Section shall be

20 subject to the penalty and interest provisions provided for in

21 subsections (4) and (7) of Section 412.

22 (11) Unless otherwise specified, all of the fees collected

23 under this Section shall be paid into the Insurance Financial

24 Regulation Fund.

25 (12) For purposes of this Section:

26 (a) "Domestic company" means a company as defined in

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1 Section 2 of this Code which is incorporated or organized

2 under the laws of this State, and in addition includes a

3 not-for-profit corporation authorized under the Dental

4 Service Plan Act or the Voluntary Health Services Plans

5 Act, a health maintenance organization, and a limited

6 health service organization.

7 (b) "Foreign company" means a company as defined in

8 Section 2 of this Code which is incorporated or organized

9 under the laws of any state of the United States other than

10 this State and in addition includes a health maintenance

11 organization and a limited health service organization

12 which is incorporated or organized under the laws of any

13 state of the United States other than this State.

14 (c) "Non-domestic ~~Alien~~ company" means a company as

15 defined in Section 2 of this Code which is incorporated or

16 organized under the laws of any country other than the

17 United States.

18 (d) "Fraternal benefit society" means a corporation,

19 society, order, lodge or voluntary association as defined

20 in Section 282.1 of this Code.

21 (e) "Mutual benefit association" means a company,

22 association or corporation authorized by the Director to

23 do business in this State under the provisions of Article

24 XVIII of this Code.

25 (f) "Burial society" means a person, firm,

26 corporation, society or association of individuals

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1 authorized by the Director to do business in this State

2 under the provisions of Article XIX of this Code.

3 (g) "Farm mutual" means a district, county and

4 township mutual insurance company authorized by the

5 Director to do business in this State under the provisions

6 of the Farm Mutual Insurance Company Act of 1986.

7 (Source: P.A. 100-23, eff. 7-6-17.)

8 (215 ILCS 5/412) (from Ch. 73, par. 1024)

9 Sec. 412. Refunds; penalties; collection.

10 (1)(a) Whenever it appears to the satisfaction of the

11 Director that because of some mistake of fact, error in

12 calculation, or erroneous interpretation of a statute of this

13 or any other state, any authorized company, surplus line

14 producer, or industrial insured has paid to him, pursuant to

15 any provision of law, taxes, fees, or other charges in excess

16 of the amount legally chargeable against it, during the 6 year

17 period immediately preceding the discovery of such

18 overpayment, he shall have power to refund to such company,

19 surplus line producer, or industrial insured the amount of the

20 excess or excesses by applying the amount or amounts thereof

21 toward the payment of taxes, fees, or other charges already

22 due, or which may thereafter become due from that company

23 until such excess or excesses have been fully refunded, or

24 upon a written request from the authorized company, surplus

25 line producer, or industrial insured, the Director shall

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1 provide a cash refund within 120 days after receipt of the

2 written request if all necessary information has been filed

3 with the Department in order for it to perform an audit of the

4 tax report for the transaction or period or annual return for

5 the year in which the overpayment occurred or within 120 days

6 after the date the Department receives all the necessary

7 information to perform such audit. The Director shall not

8 provide a cash refund if there are insufficient funds in the

9 Insurance Premium Tax Refund Fund to provide a cash refund, if

10 the amount of the overpayment is less than $100, or if the

11 amount of the overpayment can be fully offset against the

12 taxpayer's estimated liability for the year following the year

13 of the cash refund request. Any cash refund shall be paid from

14 the Insurance Premium Tax Refund Fund, a special fund hereby

15 created in the State treasury.

16 (b) Beginning January 1, 2000 and thereafter, the

17 Department shall deposit a percentage of the amounts collected

18 under Sections 409, 444, and 444.1 of this Code into the

19 Insurance Premium Tax Refund Fund. The percentage deposited

20 into the Insurance Premium Tax Refund Fund shall be the annual

21 percentage. The annual percentage shall be calculated as a

22 fraction, the numerator of which shall be the amount of cash

23 refunds approved by the Director for payment and paid during

24 the preceding calendar year as a result of overpayment of tax

25 liability under Sections 121-2.08, 409, 444, 444.1, and 445 of

26 this Code and the denominator of which shall be the amounts

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1 collected pursuant to Sections 121-2.08, 409, 444, 444.1, and

2 445 of this Code during the preceding calendar year. However,

3 if there were no cash refunds paid in a preceding calendar

4 year, the Department shall deposit 5% of the amount collected

5 in that preceding calendar year pursuant to Sections 121-2.08,

6 409, 444, 444.1, and 445 of this Code into the Insurance

7 Premium Tax Refund Fund instead of an amount calculated by

8 using the annual percentage.

9 (c) Beginning July 1, 1999, moneys in the Insurance

10 Premium Tax Refund Fund shall be expended exclusively for the

11 purpose of paying cash refunds resulting from overpayment of

12 tax liability under Sections 121-2.08, 409, 444, 444.1, and

13 445 of this Code as determined by the Director pursuant to

14 subsection 1(a) of this Section. Cash refunds made in

15 accordance with this Section may be made from the Insurance

16 Premium Tax Refund Fund only to the extent that amounts have

17 been deposited and retained in the Insurance Premium Tax

18 Refund Fund.

19 (d) This Section shall constitute an irrevocable and

20 continuing appropriation from the Insurance Premium Tax Refund

21 Fund for the purpose of paying cash refunds pursuant to the

22 provisions of this Section.

23 (2)(a) When any insurance company fails to file any tax

24 return required under Sections 408.1, 409, 444, and 444.1 of

25 this Code or Section 12 of the Fire Investigation Act on the

26 date prescribed, including any extensions, there shall be

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1 added as a penalty $400 or 10% of the amount of such tax,

2 whichever is greater, for each month or part of a month of

3 failure to file, the entire penalty not to exceed $2,000 or 50%

4 of the tax due, whichever is greater.

5 (b) When any industrial insured or surplus line producer

6 fails to file any tax return or report required under Sections

7 121-2.08 and 445 of this Code or Section 12 of the Fire

8 Investigation Act on the date prescribed, including any

9 extensions, there shall be added:

10 (i) as a late fee, if the return or report is received

11 at least one day but not more than 7 days after the

12 prescribed due date, $400 or 10% of the tax due, whichever

13 is greater, the entire fee not to exceed $1,000;

14 (ii) as a late fee, if the return or report is received

15 at least 8 days but not more than 14 days after the

16 prescribed due date, $400 or 10% of the tax due, whichever

17 is greater, the entire fee not to exceed $1,500;

18 (iii) as a late fee, if the return or report is

19 received at least 15 days but not more than 21 days after

20 the prescribed due date, $400 or 10% of the tax due,

21 whichever is greater, the entire fee not to exceed $2,000;

22 or

23 (iv) as a penalty, if the return or report is received

24 more than 21 days after the prescribed due date, $400 or

25 10% of the tax due, whichever is greater, for each month or

26 part of a month of failure to file, the entire penalty not

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1 to exceed $2,000 or 50% of the tax due, whichever is

2 greater.

3 A tax return or report shall be deemed received as of the

4 date mailed as evidenced by a postmark, proof of mailing on a

5 recognized United States Postal Service form or a form

6 acceptable to the United States Postal Service or other

7 commercial mail delivery service, or other evidence acceptable

8 to the Director.

9 (3)(a) When any insurance company fails to pay the full

10 amount due under the provisions of this Section, Sections

11 408.1, 409, 444, or 444.1 of this Code, or Section 12 of the

12 Fire Investigation Act, there shall be added to the amount due

13 as a penalty an amount equal to 10% of the deficiency.

14 (a-5) When any industrial insured or surplus line producer

15 fails to pay the full amount due under the provisions of this

16 Section, Sections 121-2.08 or 445 of this Code, or Section 12

17 of the Fire Investigation Act on the date prescribed, there

18 shall be added:

19 (i) as a late fee, if the payment is received at least

20 one day but not more than 7 days after the prescribed due

21 date, 10% of the tax due, the entire fee not to exceed

22 $1,000;

23 (ii) as a late fee, if the payment is received at least

24 8 days but not more than 14 days after the prescribed due

25 date, 10% of the tax due, the entire fee not to exceed

26 $1,500;

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1 (iii) as a late fee, if the payment is received at

2 least 15 days but not more than 21 days after the

3 prescribed due date, 10% of the tax due, the entire fee not

4 to exceed $2,000; or

5 (iv) as a penalty, if the return or report is received

6 more than 21 days after the prescribed due date, 10% of the

7 tax due.

8 A tax payment shall be deemed received as of the date

9 mailed as evidenced by a postmark, proof of mailing on a

10 recognized United States Postal Service form or a form

11 acceptable to the United States Postal Service or other

12 commercial mail delivery service, or other evidence acceptable

13 to the Director.

14 (b) If such failure to pay is determined by the Director to

15 be wilful, after a hearing under Sections 402 and 403, there

16 shall be added to the tax as a penalty an amount equal to the

17 greater of 50% of the deficiency or 10% of the amount due and

18 unpaid for each month or part of a month that the deficiency

19 remains unpaid commencing with the date that the amount

20 becomes due. Such amount shall be in lieu of any determined

21 under paragraph (a) or (a-5).

22 (4) Any insurance company, industrial insured, or surplus

23 line producer that fails to pay the full amount due under this

24 Section or Sections 121-2.08, 408.1, 409, 444, 444.1, or 445

25 of this Code, or Section 12 of the Fire Investigation Act is

26 liable, in addition to the tax and any late fees and penalties,

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1 for interest on such deficiency at the rate of 12% per annum,

2 or at such higher adjusted rates as are or may be established

3 under subsection (b) of Section 6621 of the Internal Revenue

4 Code, from the date that payment of any such tax was due,

5 determined without regard to any extensions, to the date of

6 payment of such amount.

7 (5) The Director, through the Attorney General, may

8 institute an action in the name of the People of the State of

9 Illinois, in any court of competent jurisdiction, for the

10 recovery of the amount of such taxes, fees, and penalties due,

11 and prosecute the same to final judgment, and take such steps

12 as are necessary to collect the same.

13 (6) In the event that the certificate of authority of a

14 foreign or non-domestic~~alien~~ company is revoked for any cause

15 or the company withdraws from this State prior to the renewal

16 date of the certificate of authority as provided in Section

17 114, the company may recover the amount of any such tax paid in

18 advance. Except as provided in this subsection, no revocation

19 or withdrawal excuses payment of or constitutes grounds for

20 the recovery of any taxes or penalties imposed by this Code.

21 (7) When an insurance company or domestic affiliated group

22 fails to pay the full amount of any fee of $200 or more due

23 under Section 408 of this Code, there shall be added to the

24 amount due as a penalty the greater of $100 or an amount equal

25 to 10% of the deficiency for each month or part of a month that

26 the deficiency remains unpaid.

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1 (8) The Department shall have a lien for the taxes, fees,

2 charges, fines, penalties, interest, other charges, or any

3 portion thereof, imposed or assessed pursuant to this Code,

4 upon all the real and personal property of any company or

5 person to whom the assessment or final order has been issued or

6 whenever a tax return is filed without payment of the tax or

7 penalty shown therein to be due, including all such property

8 of the company or person acquired after receipt of the

9 assessment, issuance of the order, or filing of the return.

10 The company or person is liable for the filing fee incurred by

11 the Department for filing the lien and the filing fee incurred

12 by the Department to file the release of that lien. The filing

13 fees shall be paid to the Department in addition to payment of

14 the tax, fee, charge, fine, penalty, interest, other charges,

15 or any portion thereof, included in the amount of the lien.

16 However, where the lien arises because of the issuance of a

17 final order of the Director or tax assessment by the

18 Department, the lien shall not attach and the notice referred

19 to in this Section shall not be filed until all administrative

20 proceedings or proceedings in court for review of the final

21 order or assessment have terminated or the time for the taking

22 thereof has expired without such proceedings being instituted.

23 Upon the granting of Department review after a lien has

24 attached, the lien shall remain in full force except to the

25 extent to which the final assessment may be reduced by a

26 revised final assessment following the rehearing or review.

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1 The lien created by the issuance of a final assessment shall

2 terminate, unless a notice of lien is filed, within 3 years

3 after the date all proceedings in court for the review of the

4 final assessment have terminated or the time for the taking

5 thereof has expired without such proceedings being instituted,

6 or (in the case of a revised final assessment issued pursuant

7 to a rehearing or review by the Department) within 3 years

8 after the date all proceedings in court for the review of such

9 revised final assessment have terminated or the time for the

10 taking thereof has expired without such proceedings being

11 instituted. Where the lien results from the filing of a tax

12 return without payment of the tax or penalty shown therein to

13 be due, the lien shall terminate, unless a notice of lien is

14 filed, within 3 years after the date when the return is filed

15 with the Department.

16 The time limitation period on the Department's right to

17 file a notice of lien shall not run during any period of time

18 in which the order of any court has the effect of enjoining or

19 restraining the Department from filing such notice of lien. If

20 the Department finds that a company or person is about to

21 depart from the State, to conceal himself or his property, or

22 to do any other act tending to prejudice or to render wholly or

23 partly ineffectual proceedings to collect the amount due and

24 owing to the Department unless such proceedings are brought

25 without delay, or if the Department finds that the collection

26 of the amount due from any company or person will be

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1 jeopardized by delay, the Department shall give the company or

2 person notice of such findings and shall make demand for

3 immediate return and payment of the amount, whereupon the

4 amount shall become immediately due and payable. If the

5 company or person, within 5 days after the notice (or within

6 such extension of time as the Department may grant), does not

7 comply with the notice or show to the Department that the

8 findings in the notice are erroneous, the Department may file

9 a notice of jeopardy assessment lien in the office of the

10 recorder of the county in which any property of the company or

11 person may be located and shall notify the company or person of

12 the filing. The jeopardy assessment lien shall have the same

13 scope and effect as the statutory lien provided for in this

14 Section. If the company or person believes that the company or

15 person does not owe some or all of the tax for which the

16 jeopardy assessment lien against the company or person has

17 been filed, or that no jeopardy to the revenue in fact exists,

18 the company or person may protest within 20 days after being

19 notified by the Department of the filing of the jeopardy

20 assessment lien and request a hearing, whereupon the

21 Department shall hold a hearing in conformity with the

22 provisions of this Code and, pursuant thereto, shall notify

23 the company or person of its findings as to whether or not the

24 jeopardy assessment lien will be released. If not, and if the

25 company or person is aggrieved by this decision, the company

26 or person may file an action for judicial review of the final

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1 determination of the Department in accordance with the

2 Administrative Review Law. If, pursuant to such hearing (or

3 after an independent determination of the facts by the

4 Department without a hearing), the Department determines that

5 some or all of the amount due covered by the jeopardy

6 assessment lien is not owed by the company or person, or that

7 no jeopardy to the revenue exists, or if on judicial review the

8 final judgment of the court is that the company or person does

9 not owe some or all of the amount due covered by the jeopardy

10 assessment lien against them, or that no jeopardy to the

11 revenue exists, the Department shall release its jeopardy

12 assessment lien to the extent of such finding of nonliability

13 for the amount, or to the extent of such finding of no jeopardy

14 to the revenue. The Department shall also release its jeopardy

15 assessment lien against the company or person whenever the

16 amount due and owing covered by the lien, plus any interest

17 which may be due, are paid and the company or person has paid

18 the Department in cash or by guaranteed remittance an amount

19 representing the filing fee for the lien and the filing fee for

20 the release of that lien. The Department shall file that

21 release of lien with the recorder of the county where that lien

22 was filed.

23 Nothing in this Section shall be construed to give the

24 Department a preference over the rights of any bona fide

25 purchaser, holder of a security interest, mechanics

26 lienholder, mortgagee, or judgment lien creditor arising prior

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1 to the filing of a regular notice of lien or a notice of

2 jeopardy assessment lien in the office of the recorder in the

3 county in which the property subject to the lien is located.

4 For purposes of this Section, "bona fide" shall not include

5 any mortgage of real or personal property or any other credit

6 transaction that results in the mortgagee or the holder of the

7 security acting as trustee for unsecured creditors of the

8 company or person mentioned in the notice of lien who executed

9 such chattel or real property mortgage or the document

10 evidencing such credit transaction. The lien shall be inferior

11 to the lien of general taxes, special assessments, and special

12 taxes levied by any political subdivision of this State. In

13 case title to land to be affected by the notice of lien or

14 notice of jeopardy assessment lien is registered under the

15 provisions of the Registered Titles (Torrens) Act, such notice

16 shall be filed in the office of the Registrar of Titles of the

17 county within which the property subject to the lien is

18 situated and shall be entered upon the register of titles as a

19 memorial or charge upon each folium of the register of titles

20 affected by such notice, and the Department shall not have a

21 preference over the rights of any bona fide purchaser,

22 mortgagee, judgment creditor, or other lienholder arising

23 prior to the registration of such notice. The regular lien or

24 jeopardy assessment lien shall not be effective against any

25 purchaser with respect to any item in a retailer's stock in

26 trade purchased from the retailer in the usual course of the

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1 retailer's business.

2 (Source: P.A. 98-158, eff. 8-2-13; 98-978, eff. 1-1-15.)

3 (215 ILCS 5/413) (from Ch. 73, par. 1025)

4 Sec. 413. Privilege Tax Payable on Admission of Foreign or

5 Non-domestic ~~Alien~~ Company.

6 (1) Every foreign or non-domestic ~~alien~~ company applying

7 for a certificate of authority to transact business in this

8 State shall pay to the Director a tax for the privilege of

9 transacting business in this State in accordance with Section

10 409.

11 (2) If during all or any part of the 3 year period next

12 preceding the date of application for a certificate of

13 authority the company had a certificate of authority to

14 transact business in this State, or if it survives or was

15 formed by a merger, consolidation, reorganization or

16 reincorporation, and one or more of the parties thereto was a

17 foreign or non-domestic~~alien~~ company authorized to transact

18 business in this State during all or any part of such 3 year

19 period, then the tax shall be determined in accordance with

20 Section 409 on the basis of the last entire calendar year

21 during which the company or any one of the foreign or

22 non-domestic ~~alien~~companies parties to the merger,

23 consolidation, reorganization or reincorporation was

24 authorized to transact business in this State, or if none was

25 authorized during any entire calendar year, then on the basis

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1 of the last partial calendar year during which any of such

2 companies were authorized to transact business in this State.

3 (Source: P.A. 77-2087.)

4 (215 ILCS 5/415) (from Ch. 73, par. 1027)

5 Sec. 415. No taxes to be imposed by political

6 subdivisions. The fees, charges and taxes provided for by

7 this Article shall be in lieu of all license fees or privilege

8 or occupation taxes or other fees levied or assessed by any

9 municipality, county or other political subdivision of this

10 State, and no municipality, county or other political

11 subdivision of this State shall impose any license fee or

12 privilege or occupation tax or fee upon any domestic, foreign

13 or non-domestic ~~alien~~company, or upon any of its agents, for

14 the privilege of doing an insurance business therein, except

15 the tax authorized by Division 10 of Article 11 of the Illinois

16 Municipal Code, as heretofore and hereafter amended. This

17 Section shall not be construed to prohibit the levy and

18 collection of:

19 (a) State, county or municipal taxes upon the real and

20 personal property of such a company, including the tax

21 imposed by Section 414 of this Code, and

22 (b) taxes for the purpose of maintaining the Office of

23 the State Fire Marshal and paying the expenses incident

24 thereto.

25 (Source: P.A. 91-357, eff. 7-29-99.)

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1 (215 ILCS 5/444) (from Ch. 73, par. 1056)

2 Sec. 444. Retaliation.

3 (1) Whenever the existing or future laws of any other

4 state or country shall require of companies incorporated or

5 organized under the laws of this State as a condition

6 precedent to their doing business in such other state or

7 country, compliance with laws, rules, regulations, and

8 prohibitions more onerous or burdensome than the rules and

9 regulations imposed by this State on foreign ornon-domestic

10 ~~alien~~companies, or shall require any deposit of securities or

11 other obligations in such state or country, for the protection

12 of policyholders or otherwise or require of such companies or

13 agents thereof or brokers the payment of penalties, fees,

14 charges, or taxes greater than the penalties, fees, charges,

15 or taxes required in the aggregate for like purposes by this

16 Code or any other law of this State, of foreign or non-domestic

17 ~~alien~~companies, agents thereof or brokers, then such laws,

18 rules, regulations, and prohibitions of said other state or

19 country shall apply to companies incorporated or organized

20 under the laws of such state or country doing business in this

21 State, and all such companies, agents thereof, or brokers

22 doing business in this State, shall be required to make

23 deposits, pay penalties, fees, charges, and taxes, in amounts

24 equal to those required in the aggregate for like purposes of

25 Illinois companies doing business in such state or country,

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1 agents thereof or brokers. Whenever any other state or country

2 shall refuse to permit any insurance company incorporated or

3 organized under the laws of this State to transact business

4 according to its usual plan in such other state or country, the

5 director may, if satisfied that such company of this State is

6 solvent, properly managed, and can operate legally under the

7 laws of such other state or country, forthwith suspend or

8 cancel the license of every insurance company doing business

9 in this State which is incorporated or organized under the

10 laws of such other state or country to the extent that it

11 insures in this State against any of the risks or hazards which

12 are sought to be insured against by the company of this State

13 in such other state or country.

14 (2) The provisions of this Section shall not apply to

15 residual market or special purpose assessments or guaranty

16 fund or guaranty association assessments, both under the laws

17 of this State and under the laws of any other state or country,

18 and any tax offset or credit for any such assessment shall, for

19 purposes of this Section, be treated as a tax paid both under

20 the laws of this State and under the laws of any other state or

21 country.

22 (3) The terms "penalties", "fees", "charges", and "taxes"

23 in subsection (1) of this Section shall include: the

24 penalties, fees, charges, and taxes collected on a cash basis

25 under State law and referenced within Article XXV exclusive of

26 any items referenced by subsection (2) of this Section, but

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1 including any tax offset allowed under Section 531.13 of this

2 Code; the aggregate Illinois corporate income taxes paid under

3 Sections 601 and 803 of the Illinois Income Tax Act during the

4 calendar year for which the retaliatory tax calculation is

5 being made, less the recapture of any Illinois corporate

6 income tax cash refunds to the extent that the amount of tax

7 refunded was reported as part of the Illinois basis in the

8 calculation of the retaliatory tax for a prior tax year,

9 provided that such recaptured refund shall not exceed the

10 amount necessary for equivalence of the Illinois basis with

11 the state of incorporation basis in such tax year, and after

12 any tax offset allowed under Section 531.13 of this Code;

13 income or personal property taxes imposed by other states or

14 countries; penalties, fees, charges, and taxes of other states

15 or countries imposed for purposes like those of the penalties,

16 fees, charges, and taxes specified in Article XXV of this Code

17 exclusive of any item referenced in subsection (2) of this

18 Section; and any penalties, fees, charges, and taxes required

19 as a franchise, privilege, or licensing tax for conducting the

20 business of insurance whether calculated as a percentage of

21 income, gross receipts, premium, or otherwise.

22 (4) Nothing contained in this Section or Section 409 or

23 Section 444.1 is intended to authorize or expand any power of

24 local governmental units or municipalities to impose taxes,

25 fees, or charges.

26 (5) This Section is subject to the provisions of Section

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1 10 of the New Markets Development Program Act.

2 (Source: P.A. 98-1169, eff. 1-9-15.)

3 (215 ILCS 5/444.1) (from Ch. 73, par. 1056.1)

4 Sec. 444.1. Payment of retaliatory taxes.

5 (1) Every foreign or non-domestic ~~alien~~company doing

6 insurance business in this State shall pay the Director the

7 retaliatory tax determined in accordance with Section 444.

8 (2) (a) All companies subject to the provisions of this

9 Section shall make an annual return for the preceding calendar

10 year on or before March 15 setting forth such information on

11 such forms as the Director may reasonably require. Payments of

12 quarterly installments of the taxpayer's total estimated

13 retaliatory tax for the current calendar year shall be due on

14 or before April 15, June 15, September 15, and December 15 of

15 such year, except that all companies transacting insurance

16 business in this State whose annual tax for the immediately

17 preceding calendar year was less than $5,000 shall make only

18 an annual return. Failure of a company to make the annual

19 payment, or to make the quarterly payments, if required, of at

20 least one-fourth of either (i) the total tax paid during the

21 previous calendar year or (ii) 80% of the actual tax for the

22 current calendar year shall subject it to the penalty

23 provisions set forth in Section 412 of this Code.

24 (b) Notwithstanding the foregoing provisions of paragraph

25 (a) of this subsection, the retaliatory tax liability of

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1 companies under Section 444 of this Code for the calendar year

2 ended December 31, 1997 shall be determined in accordance with

3 this amendatory Act of 1998 and shall include in the aggregate

4 comparative tax burden for the State of Illinois, any tax

5 offset allowed under Section 531.13 of this Code and any

6 income taxes paid for the year 1997 under subsections (a)

7 through (d) of Section 201 of the Illinois Income Tax Act after

8 any tax offset allowed under Section 531.13 of this Code.

9 (i) Any annual retaliatory tax returns and payments

10 made for the year ended December 31, 1997 and any

11 quarterly installments of the taxpayer's total estimated

12 1998 retaliatory tax liability paid prior to the effective

13 date of this Amendatory Act of 1998 that do not include the

14 items specified by subsection (1) of this Section shall be

15 amended and restated, at the taxpayer's election, on forms

16 prepared by the Director so as to provide for the

17 inclusion of such items. An amended and restated return

18 for the year ended December 31, 1997 filed under this

19 subparagraph shall treat any payment of estimated

20 privilege taxes under Section 409 as in effect prior to

21 October 23, 1997 as a payment of estimated retaliatory

22 taxes for the year ended December 31, 1997.

23 (ii) Any overpayment resulting from such amended

24 return and restated tax liability shall be allowed as a

25 credit against any subsequent privilege or retaliatory tax

26 obligations of the taxpayer.

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1 (iii) In the year 1999 and thereafter all companies

2 shall make annual and quarterly installments of their

3 estimated tax as provided by paragraph (a) of this

4 subsection.

5 (3) Any tax payment made under this Section and any tax

6 returns prepared in compliance with Section 410 shall give

7 full consideration to the impact of any future reduction in or

8 elimination of a taxpayer's liability under Section 409,

9 whether such reduction or elimination is due to an operation

10 of law or an Act of the General Assembly.

11 (4) Any foreign or non-domestic ~~alien~~ taxpayer who makes,

12 under protest, a tax payment required by Section 409 shall, at

13 the time of payment, file a retaliatory tax return sufficient

14 to disclose the full amount of retaliatory taxes which would

15 be due and owing for the tax period in question if the protest

16 were upheld. Notwithstanding the provisions of the State

17 Officers and Employees Money Disposition Act or any other laws

18 of this State, the protested payment, to the extent of the

19 retaliatory tax so disclosed, shall be deposited directly in

20 the General Revenue Fund; and the balance of the payment, if

21 any, shall be deposited in a protest account pursuant to the

22 provisions of the aforesaid Act, as now or hereafter amended.

23 (5) The failure of a company to make the annual payment or

24 to make the quarterly payments, if required, of at least

25 one-fourth of either (i) the total tax paid during the

26 preceding calendar year or (ii) 80% of the actual tax for the

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1 current calendar year shall subject it to the penalty

2 provisions set forth in Section 412 of this Code.

3 (6) This Section is subject to the provisions of Section

4 10 of the New Markets Development Program Act.

5 (Source: P.A. 95-1024, eff. 12-31-08.)

6 (215 ILCS 5/445) (from Ch. 73, par. 1057)

7 Sec. 445. Surplus line.

8 (1) Definitions. For the purposes of this Section:

9 "Affiliate" means, with respect to an insured, any entity

10 that controls, is controlled by, or is under common control

11 with the insured. For the purpose of this definition, an

12 entity has control over another entity if:

13 (A) the entity directly or indirectly or acting

14 through one or more other persons owns, controls, or has

15 the power to vote 25% or more of any class of voting

16 securities of the other entity; or

17 (B) the entity controls in any manner the election of

18 a majority of the directors or trustees of the other

19 entity.

20 "Affiliated group" means any group of entities that are

21 all affiliated.

22 "Authorized insurer" means an insurer that holds a

23 certificate of authority issued by the Director but, for the

24 purposes of this Section, does not include a domestic surplus

25 line insurer as defined in Section 445a or any residual market

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1 mechanism.

2 "Exempt commercial purchaser" means any person purchasing

3 commercial insurance that, at the time of placement, meets the

4 following requirements:

5 (A) The person employs or retains a qualified risk

6 manager to negotiate insurance coverage.

7 (B) The person has paid aggregate nationwide

8 commercial property and casualty insurance premiums in

9 excess of $100,000 in the immediately preceding 12 months.

10 (C) The person meets at least one of the following

11 criteria:

12 (I) The person possesses a net worth in excess of

13 $20,000,000, as such amount is adjusted pursuant to

14 the provision in this definition concerning percentage

15 change.

16 (II) The person generates annual revenues in

17 excess of $50,000,000, as such amount is adjusted

18 pursuant to the provision in this definition

19 concerning percentage change.

20 (III) The person employs more than 500 full-time

21 or full-time equivalent employees per individual

22 insured or is a member of an affiliated group

23 employing more than 1,000 employees in the aggregate.

24 (IV) The person is a not-for-profit organization

25 or public entity generating annual budgeted

26 expenditures of at least $30,000,000, as such amount

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1 is adjusted pursuant to the provision in this

2 definition concerning percentage change.

3 (V) The person is a municipality with a population

4 in excess of 50,000 persons.

5 Effective on January 1, 2015 and each fifth January 1

6 occurring thereafter, the amounts in subitems (I), (II), and

7 (IV) of item (C) of this definition shall be adjusted to

8 reflect the percentage change for such 5-year period in the

9 Consumer Price Index for All Urban Consumers published by the

10 Bureau of Labor Statistics of the Department of Labor.

11 "Home state" means the following:

12 (A) With respect to an insured, except as provided in

13 item (B) of this definition:

14 (I) the state in which an insured maintains its

15 principal place of business or, in the case of an

16 individual, the individual's principal residence; or

17 (II) if 100% of the insured risk is located out of

18 the state referred to in subitem (I), the state to

19 which the greatest percentage of the insured's taxable

20 premium for that insurance contract is allocated.

21 (B) If more than one insured from an affiliated group

22 are named insureds on a single surplus line insurance

23 contract, then "home state" means the home state, as

24 determined pursuant to item (A) of this definition, of the

25 member of the affiliated group that has the largest

26 percentage of premium attributed to it under such

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1 insurance contract.

2 If more than one insured from a group that is not

3 affiliated are named insureds on a single surplus line

4 insurance contract, then:

5 (I) if individual group members pay 100% of the

6 premium for the insurance from their own funds, "home

7 state" means the home state, as determined pursuant to

8 item (A) of this definition, of each individual group

9 member; each individual group member's coverage under

10 the surplus line insurance contract shall be treated

11 as a separate surplus line contract for the purposes

12 of this Section;

13 (II) otherwise, "home state" means the home state,

14 as determined pursuant to item (A) of this definition,

15 of the group.

16 Nothing in this definition shall be construed to alter the

17 terms of the surplus line insurance contract.

18 "Master policy" means a surplus line insurance contract

19 with a single set of general contractual terms that are

20 designed to apply on a group basis to multiple insureds who may

21 or may not be affiliated and who may be added to or removed

22 from the contract throughout the course of the contract

23 period. A master policy may include certain provisions that

24 vary for each insured depending on the insured's

25 characteristics and the coverage sought.

26 "Multi-State risk" means a risk with insured exposures in

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1 more than one State.

2 "NAIC" means the National Association of Insurance

3 Commissioners or any successor entity.

4 "Personal lines insurance" means insurance as defined in

5 subsection (a), (b), or (c) of Section 143.13 of this Code.

6 "Premium" means any amount designated as premium on the

7 declarations page or elsewhere in a policy and on any

8 endorsement, but does not include taxes, the Surplus Line

9 Association of Illinois recording fee, or any other fee.

10 "Program business" means a clearly defined group of

11 insurance contracts procured by a licensed surplus line

12 producer from an unauthorized insurer, under a single

13 agreement between the producer and insurer, for insureds with

14 the same or similar characteristics and containing the same or

15 similar contract terms.

16 "Qualified risk manager" means, with respect to a

17 policyholder of commercial insurance, a person who meets all

18 of the following requirements:

19 (A) The person is an employee of, or third-party

20 consultant retained by, the commercial policyholder.

21 (B) The person provides skilled services in loss

22 prevention, loss reduction, or risk and insurance coverage

23 analysis, and purchase of insurance.

24 (C) With regard to the person:

25 (I) the person has:

26 (a) a bachelor's degree or higher from an

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1 accredited college or university in risk

2 management, business administration, finance,

3 economics, or any other field determined by the

4 Director or his designee to demonstrate minimum

5 competence in risk management; and

6 (b) the following:

7 (i) three years of experience in risk

8 financing, claims administration, loss

9 prevention, risk and insurance analysis, or

10 purchasing commercial lines of insurance; or

11 (ii) alternatively has:

12 (AA) a designation as a Chartered

13 Property and Casualty Underwriter (in this

14 subparagraph (ii) referred to as "CPCU")

15 issued by the American Institute for

16 CPCU/Insurance Institute of America;

17 (BB) a designation as an Associate in

18 Risk Management (ARM) issued by the

19 American Institute for CPCU/Insurance

20 Institute of America;

21 (CC) a designation as Certified Risk

22 Manager (CRM) issued by the National

23 Alliance for Insurance Education &

24 Research;

25 (DD) a designation as a RIMS Fellow

26 (RF) issued by the Global Risk Management

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1 Institute; or

2 (EE) any other designation,

3 certification, or license determined by

4 the Director or his designee to

5 demonstrate minimum competency in risk

6 management;

7 (II) the person has:

8 (a) at least 7 years of experience in risk

9 financing, claims administration, loss prevention,

10 risk and insurance coverage analysis, or

11 purchasing commercial lines of insurance; and

12 (b) has any one of the designations specified

13 in subparagraph (ii) of paragraph (b);

14 (III) the person has at least 10 years of

15 experience in risk financing, claims administration,

16 loss prevention, risk and insurance coverage analysis,

17 or purchasing commercial lines of insurance; or

18 (IV) the person has a graduate degree from an

19 accredited college or university in risk management,

20 business administration, finance, economics, or any

21 other field determined by the Director or his or her

22 designee to demonstrate minimum competence in risk

23 management.

24 "Residual market mechanism" means an association,

25 organization, or other entity described in Article XXXIII of

26 this Code or Section 7-501 of the Illinois Vehicle Code or any

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1 similar association, organization, or other entity.

2 "State" means any state of the United States, the District

3 of Columbia, the Commonwealth of Puerto Rico, Guam, the

4 Northern Mariana Islands, the Virgin Islands, and American

5 Samoa.

6 "Surplus line insurance" means insurance on a risk:

7 (A) of the kinds specified in Classes 2 and 3 of

8 Section 4 of this Code; and

9 (B) that is procured from an unauthorized insurer

10 after the insurance producer representing the insured or

11 the surplus line producer is unable, after diligent

12 effort, to procure the insurance from authorized insurers;

13 and

14 (C) where Illinois is the home state of the insured,

15 for policies effective, renewed or extended on July 21,

16 2011 or later and for multiyear policies upon the policy

17 anniversary that falls on or after July 21, 2011; and

18 (D) that is located in Illinois, for policies

19 effective prior to July 21, 2011.

20 "Taxable premium" means a premium for any risk that is

21 located in or attributed to any state.

22 "Unauthorized insurer" means an insurer that does not hold

23 a valid certificate of authority issued by the Director but,

24 for the purposes of this Section, shall also include a

25 domestic surplus line insurer as defined in Section 445a.

26 (1.5) Procuring surplus line insurance; surplus line

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1 insurer requirements.

2 (a) License required. Insurance producers may procure

3 surplus line insurance only if licensed as a surplus line

4 producer under this Section.

5 (b) Domestic and foreign insurer eligibility. Licensed

6 surplus line producers may procure surplus line insurance

7 from an unauthorized insurer domiciled in any state only

8 if the insurer:

9 (i) is permitted in its domiciliary jurisdiction

10 to write the type of insurance involved; and

11 (ii) has, based upon information available to the

12 surplus line producer, a policyholders surplus of not

13 less than $15,000,000 determined in accordance with

14 the laws of its domiciliary jurisdiction; and

15 (iii) has standards of solvency and management

16 that are adequate for the protection of policyholders.

17 Where an unauthorized insurer does not meet the

18 standards set forth in (ii) and (iii) above, a surplus

19 line producer may, if necessary, procure insurance from

20 that insurer only if prior written warning of such fact or

21 condition is given to the insured by the insurance

22 producer or surplus line producer.

23 (c) Non-domestic ~~Alien~~ insurer eligibility. Licensed

24 surplus line producers may procure surplus line insurance

25 from an unauthorized insurer not domiciled in any state

26 only if the insurer meets the standards for unauthorized

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1 insurers domiciled in any state in paragraph (b) of this

2 subsection (1.5) or is listed on the Quarterly Listing of

3 Alien Insurers maintained by the International Insurers

4 Department of the NAIC at the time of procurement. The

5 Director shall make the Quarterly Listing of Alien

6 Insurers available to surplus line producers without

7 charge.

8 (d) Prohibited transactions. Insurance producers shall

9 not procure from an unauthorized insurer an insurance

10 policy:

11 (i) that is designed to satisfy the proof of

12 financial responsibility and insurance requirements in

13 any Illinois law where the law requires that the proof

14 of insurance is issued by an authorized insurer or

15 residual market mechanism;

16 (ii) that covers the risk of accidental injury to

17 employees arising out of and in the course of

18 employment according to the provisions of the Workers'

19 Compensation Act; or

20 (iii) that insures any Illinois personal lines

21 risk that is eligible for residual market mechanism

22 coverage, unless the insured or prospective insured

23 requests limits of liability greater than the limits

24 provided by the residual market mechanism. In the

25 course of making a diligent effort to procure

26 insurance from authorized insurers, an insurance

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1 producer shall not be required to submit a risk to a

2 residual market mechanism when the risk is not

3 eligible for coverage or exceeds the limits available

4 in the residual market mechanism.

5 Where there is an insurance policy issued by an

6 authorized insurer or residual market mechanism insuring a

7 risk described in item (i), (ii), or (iii) above, nothing

8 in this paragraph shall be construed to prohibit a surplus

9 line producer from procuring from an unauthorized insurer

10 a policy insuring the risk on an excess or umbrella basis

11 where the excess or umbrella policy is written over one or

12 more underlying policies.

13 (e) Exempt commercial purchaser diligent effort.

14 Licensed surplus line producers may procure surplus line

15 insurance from an unauthorized insurer for an exempt

16 commercial purchaser without making the required diligent

17 effort to procure the insurance from authorized insurers

18 if:

19 (i) the producer has disclosed to the exempt

20 commercial purchaser that such insurance may or may

21 not be available from authorized insurers that may

22 provide greater protection with more regulatory

23 oversight; and

24 (ii) the exempt commercial purchaser has

25 subsequently in writing requested the producer to

26 procure such insurance from an unauthorized insurer.

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1 (f) Commercial wholesale transaction diligent effort.

2 A licensed surplus line producer may procure a surplus

3 line insurance contract, other than a personal lines

4 insurance contract, from an unauthorized insurer without

5 making the required diligent effort to procure the

6 insurance from authorized insurers if the risk was

7 referred to the surplus line producer by an

8 Illinois-licensed insurance producer who is not affiliated

9 with the surplus line producer.

10 (g) Master policy diligent effort. For a master policy

11 insurance contract, a licensed surplus line producer may

12 make the required diligent effort to procure the insurance

13 from authorized insurers annually for the master policy

14 rather than individually for each insured that is added

15 during the policy period. The diligent effort shall

16 include all variable provisions of the master policy.

17 (h) Program business diligent effort. For program

18 business, a licensed surplus line producer may make the

19 required diligent effort to procure the insurance from

20 authorized insurers annually for the program rather than

21 individually for each contract. The diligent effort shall

22 include all variable provisions of the master policy.

23 (2) Surplus line producer; license. Any licensed producer

24 who is a resident of this State, or any nonresident who

25 qualifies under Section 500-40, may be licensed as a surplus

26 line producer upon payment of an annual license fee of $400.

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1 A surplus line producer so licensed shall keep a separate

2 account of the business transacted thereunder for 7 years from

3 the policy effective date which shall be open at all times to

4 the inspection of the Director or his representative.

5 No later than July 21, 2012, the State of Illinois shall

6 participate in the national insurance producer database of the

7 NAIC, or any other equivalent uniform national database, for

8 the licensure of surplus line producers and the renewal of

9 such licenses.

10 (3) Taxes and reports.

11 (a) Surplus line tax and penalty for late payment. The

12 surplus line tax rate for a surplus line insurance policy

13 or contract is determined as follows:

14 (i) 3% for policies or contracts with an effective

15 date prior to July 1, 2003;

16 (ii) 3.5% for policies or contracts with an

17 effective date of July 1, 2003 or later.

18 A surplus line producer shall file with the Director

19 on or before February 1 and August 1 of each year a report

20 in the form prescribed by the Director on all surplus line

21 insurance procured from unauthorized insurers and

22 submitted to the Surplus Line Association of Illinois

23 during the preceding 6 month period ending December 31 or

24 June 30 respectively, and on the filing of such report

25 shall pay to the Director for the use and benefit of the

26 State a sum equal to the surplus line tax rate multiplied

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1 by the gross taxable premiums less returned taxable

2 premiums upon all surplus line insurance submitted to the

3 Surplus Line Association of Illinois during the preceding

4 6 months.

5 Any surplus line producer who fails to pay the full

6 amount due under this subsection is liable, in addition to

7 the amount due, for such late fee, penalty, and interest

8 charges as are provided for under Section 412 of this

9 Code. The Director, through the Attorney General, may

10 institute an action in the name of the People of the State

11 of Illinois, in any court of competent jurisdiction, for

12 the recovery of the amount of such taxes, late fees,

13 interest, and penalties due, and prosecute the same to

14 final judgment, and take such steps as are necessary to

15 collect the same.

16 (b) Fire Marshal Tax. Each surplus line producer shall

17 file with the Director on or before February 1 of each year

18 a report in the form prescribed by the Director on all fire

19 insurance procured from unauthorized insurers and

20 submitted to the Surplus Line Association of Illinois

21 during the previous year that is subject to tax under

22 Section 12 of the Fire Investigation Act and shall pay to

23 the Director the fire marshal tax required thereunder.

24 (c) Taxes and fees charged to insured. The taxes

25 imposed under this subsection and the recording fees

26 charged by the Surplus Line Association of Illinois may be

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1 charged to and collected from surplus line insureds.

2 (4) (Blank).

3 (5) Submission of documents to Surplus Line Association of

4 Illinois. A surplus line producer shall submit every insurance

5 contract and premium-bearing endorsement issued under his or

6 her license to the Surplus Line Association of Illinois for

7 recording. The submission and recording may be effected

8 through electronic means. The submission shall set forth:

9 (a) the name of the insured;

10 (b) the description and location of the insured

11 property or risk;

12 (c) (blank);

13 (d) the gross premiums charged or returned;

14 (e) the name of the unauthorized insurer from whom

15 coverage has been procured;

16 (f) the kind or kinds of insurance procured; and

17 (g) amount of premium subject to tax required by

18 Section 12 of the Fire Investigation Act.

19 Proposals, endorsements, and other documents which are

20 incidental to the insurance but which do not affect the

21 premium charged are exempted from the submission and recording

22 requirements.

23 The submission of insuring contracts to the Surplus Line

24 Association of Illinois constitutes a certification by the

25 surplus line producer or by the insurance producer who

26 presented the risk to the surplus line producer for placement

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1 as a surplus line risk that after diligent effort, where

2 required, the required insurance could not be procured from

3 authorized insurers and that such procurement was otherwise in

4 accordance with the surplus line law.

5 (6) Evidence of recording required. It shall be unlawful

6 for an insurance producer to deliver any unauthorized insurer

7 contract or premium-bearing endorsement unless it contains

8 evidence of recording by the Surplus Line Association of

9 Illinois.

10 (7) Inspection of records. A surplus line producer shall

11 maintain separate records of the business transacted under his

12 or her license for 7 years from the policy effective date,

13 including complete copies of surplus line insurance contracts

14 maintained on paper or by electronic means, which records

15 shall be open at all times for inspection by the Director and

16 by the Surplus Line Association of Illinois.

17 (8) Violations and penalties. The Director may suspend or

18 revoke or refuse to renew a surplus line producer license for

19 any violation of this Code. In addition to or in lieu of

20 suspension or revocation, the Director may subject a surplus

21 line producer to a civil penalty of up to $2,000 for each cause

22 for suspension or revocation. Such penalty is enforceable

23 under subsection (5) of Section 403A of this Code.

24 Whenever it appears to the satisfaction of the Director

25 that a surplus line producer has made a documented good faith

26 determination of the home state for a surplus line insurance

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1 contract and has paid the surplus line taxes to a state other

2 than Illinois, and the Director determines that the producer's

3 good faith determination was incorrect and the home state is

4 Illinois, the surplus line producer may, at the discretion of

5 the Director, be required to submit the contract to the

6 Surplus Line Association of Illinois and pay applicable taxes

7 and recording fees, but there shall be no penalty, interest,

8 or late fee assessed.

9 (9) Director may declare insurer ineligible. If the

10 Director determines that the further assumption of risks might

11 be hazardous to the policyholders of an unauthorized insurer,

12 the Director may order the Surplus Line Association of

13 Illinois not to accept and record insurance contracts

14 evidencing insurance in such insurer and order surplus line

15 producers to cease procuring insurance from such insurer.

16 (10) Service of process upon Director. Insurance contracts

17 delivered under this Section from unauthorized insurers, other

18 than domestic surplus line insurers as defined in Section

19 445a, shall contain a provision designating the Director and

20 his successors in office the true and lawful attorney of the

21 insurer upon whom may be served all lawful process in any

22 action, suit or proceeding arising out of such insurance.

23 Service of process made upon the Director to be valid

24 hereunder must state the name of the insured, the name of the

25 unauthorized insurer and identify the contract of insurance.

26 The Director at his option is authorized to forward a copy of

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1 the process to the Surplus Line Association of Illinois for

2 delivery to the unauthorized insurer or the Director may

3 deliver the process to the unauthorized insurer by other means

4 which he considers to be reasonably prompt and certain.

5 (10.5) Required notice to policyholder. Insurance

6 contracts delivered under this Section from unauthorized

7 insurers, other than domestic surplus line insurers as defined

8 in Section 445a, shall have stamped or imprinted on the first

9 page thereof in not less than 12-pt. bold face type the

10 following legend: "Notice to Policyholder: This contract is

11 issued, pursuant to Section 445 of the Illinois Insurance

12 Code, by a company not authorized and licensed to transact

13 business in Illinois and as such is not covered by the Illinois

14 Insurance Guaranty Fund." Insurance contracts delivered under

15 this Section from domestic surplus line insurers as defined in

16 Section 445a shall have stamped or imprinted on the first page

17 thereof in not less than 12-pt. bold face type the following

18 legend: "Notice to Policyholder: This contract is issued by a

19 domestic surplus line insurer, as defined in Section 445a of

20 the Illinois Insurance Code, pursuant to Section 445, and as

21 such is not covered by the Illinois Insurance Guaranty Fund."

22 (11) Marine, aviation, and transportation. The Illinois

23 Surplus Line law does not apply to insurance of property and

24 operations of railroads or aircraft engaged in interstate or

25 foreign commerce, insurance of vessels, crafts or hulls,

26 cargoes, marine builder's risks, marine protection and

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1 indemnity, or other risks including strikes and war risks

2 insured under ocean or wet marine forms of policies.

3 (12) Applicability of Illinois Insurance Code. Surplus

4 line insurance procured under this Section, including

5 insurance procured from a domestic surplus line insurer, is

6 not subject to the provisions of the Illinois Insurance Code

7 other than Sections 123, 123.1, 401, 401.1, 402, 403, 403A,

8 408, 412, 445, 445a, 445.1, 445.2, 445.3, 445.4, and all of the

9 provisions of Article XXXI to the extent that the provisions

10 of Article XXXI are not inconsistent with the terms of this

11 Act.

12 (Source: P.A. 102-224, eff. 1-1-22.)

13 (215 ILCS 5/448) (from Ch. 73, par. 1060)

14 Sec. 448. Certain powers reserved to General Assembly.

15 The General Assembly shall at all times have power to

16 prescribe such regulations, provisions, and limitations as it

17 may deem advisable, which regulations, provisions, and

18 limitations shall be binding upon any and all companies,

19 domestic, foreign or non-domestic ~~alien~~, subject to the

20 provisions of this Code, and the General Assembly shall have

21 power to amend, repeal, or modify this Code at pleasure.

22 (Source: Laws 1937, p. 696.)

23 (215 ILCS 5/451) (from Ch. 73, par. 1063)

24 Sec. 451. Companies not subject to Code.This Code shall

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1 not apply to companies now or hereafter organized or

2 transacting business under the Title Insurance Act, or Act

3 amendatory thereof, supplementary thereto, or in replacement

4 thereof; nor to corporations now or hereafter organized and

5 transacting business under "An Act to provide for the

6 incorporation and regulation of nonprofit hospital service

7 corporations" approved July 6, 1935, or Act amendatory thereof

8 or supplementary thereto; nor shall any part of this Code

9 other than Articles X, XI, XIII, and XXIV apply to companies

10 now or hereafter organized or transacting business under an

11 Act entitled, "An Act relating to local mutual district,

12 county and township insurance companies," approved March 13,

13 1936, or Act amendatory thereof or supplementary thereto. No

14 domestic company shall be organized under this Code, nor shall

15 any foreign or non-domestic ~~alien~~ company receive a

16 certificate of authority under this Code, to transact the

17 business of title insurance. The changes made to this Section

18 by Public Act 96-334 are a statement and clarification of

19 existing law.

20 (Source: P.A. 96-334, eff. 1-1-10; 96-1000, eff. 7-2-10.)

21 (215 ILCS 5/531.09) (from Ch. 73, par. 1065.80-9)

22 Sec. 531.09. Assessments.

23 (1) For the purpose of providing the funds necessary to

24 carry out the powers and duties of the Association, the board

25 of directors shall assess the member insurers, separately for

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1 each account, at such times and for such amounts as the board

2 finds necessary. Assessments shall be due not less than 30

3 days after written notice to the member insurers and shall

4 accrue interest from the due date at such adjusted rate as is

5 established under Section 6621 of Chapter 26 of the United

6 States Code and such interest shall be compounded daily.

7 (2) There shall be 2 classes of assessments, as follows:

8 (a) Class A assessments shall be made for the purpose

9 of meeting administrative costs and other general expenses

10 and examinations conducted under the authority of the

11 Director under subsection (5) of Section 531.12.

12 (b) Class B assessments shall be made to the extent

13 necessary to carry out the powers and duties of the

14 Association under Section 531.08 with regard to an

15 impaired or insolvent domestic insurer or insolvent

16 foreign or non-domestic ~~alien~~ insurers.

17 (3)(a) The amount of any Class A assessment shall be

18 determined at the discretion of the board of directors and

19 such assessments shall be authorized and called on a non-pro

20 rata basis. The amount of any Class B assessment, except for

21 assessments related to long-term care insurance, shall be

22 allocated for assessment purposes among the accounts and

23 subaccounts pursuant to an allocation formula which may be

24 based on the premiums or reserves of the impaired or insolvent

25 insurer or any other standard deemed by the board in its sole

26 discretion as being fair and reasonable under the

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1 circumstances.

2 (b) Class B assessments against member insurers for each

3 account and subaccount shall be in the proportion that the

4 premiums received on business in this State by each assessed

5 member insurer on policies or contracts covered by each

6 account or subaccount for the three most recent calendar years

7 for which information is available preceding the year in which

8 the member insurer became impaired or insolvent, as the case

9 may be, bears to such premiums received on business in this

10 State for such calendar years by all assessed member insurers.

11 (b-5) The amount of the Class B assessment for long-term

12 care insurance written by the impaired or insolvent insurer

13 shall be allocated according to a methodology included in the

14 plan of operation and approved by the Director. The

15 methodology shall provide for 50% of the assessment to be

16 allocated to accident and health member insurers and 50% to be

17 allocated to life and annuity member insurers.

18 (c) Assessments for funds to meet the requirements of the

19 Association with respect to an impaired or insolvent insurer

20 shall not be made until necessary to implement the purposes of

21 this Article. Classification of assessments under subsection

22 (2) and computations of assessments under this subsection

23 shall be made with a reasonable degree of accuracy,

24 recognizing that exact determinations may not always be

25 possible.

26 (4) The Association may abate or defer, in whole or in

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1 part, the assessment of a member insurer if, in the opinion of

2 the board, payment of the assessment would endanger the

3 ability of the member insurer to fulfill its contractual

4 obligations. In the event an assessment against a member

5 insurer is abated or deferred in whole or in part the amount by

6 which the assessment is abated or deferred may be assessed

7 against the other member insurers in a manner consistent with

8 the basis for assessments set forth in this Section. Once the

9 conditions that caused a deferral have been removed or

10 rectified, the member insurer shall pay all assessments that

11 were deferred pursuant to a repayment plan approved by the

12 Association.

13 (5) (a) Subject to the provisions of this paragraph, the

14 total of all assessments authorized by the Association with

15 respect to a member insurer for each subaccount of the life

16 insurance and annuity account and for the health account shall

17 not in one calendar year exceed 2% of that member insurer's

18 average annual premiums received in this State on the policies

19 and contracts covered by the subaccount or account during the

20 3 calendar years preceding the year in which the member

21 insurer became an impaired or insolvent insurer.

22 If 2 or more assessments are authorized in one calendar

23 year with respect to member insurers that become impaired or

24 insolvent in different calendar years, the average annual

25 premiums for purposes of the aggregate assessment percentage

26 limitation referenced in subparagraph (a) of this paragraph

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1 shall be equal and limited to the higher of the 3-year average

2 annual premiums for the applicable subaccount or account as

3 calculated pursuant to this Section.

4 If the maximum assessment, together with the other assets

5 of the Association in an account, does not provide in one year

6 in either account an amount sufficient to carry out the

7 responsibilities of the Association, the necessary additional

8 funds shall be assessed as soon thereafter as permitted by

9 this Article.

10 (b) The board may provide in the plan of operation a method

11 of allocating funds among claims, whether relating to one or

12 more impaired or insolvent insurers, when the maximum

13 assessment will be insufficient to cover anticipated claims.

14 (c) If the maximum assessment for a subaccount of the life

15 insurance and annuity account in one year does not provide an

16 amount sufficient to carry out the responsibilities of the

17 Association, then pursuant to paragraph (b) of subsection (3),

18 the board shall assess the other subaccounts of the life

19 insurance and annuity account for the necessary additional

20 amount, subject to the maximum stated in paragraph (a) of this

21 subsection.

22 (6) The board may, by an equitable method as established

23 in the plan of operation, refund to member insurers, in

24 proportion to the contribution of each member insurer to that

25 account, the amount by which the assets of the account exceed

26 the amount the board finds is necessary to carry out during the

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1 coming year the obligations of the Association with regard to

2 that account, including assets accruing from net realized

3 gains and income from investments. A reasonable amount may be

4 retained in any account to provide funds for the continuing

5 expenses of the Association and for future losses.

6 (7) An assessment is deemed to occur on the date upon which

7 the board votes such assessment. The board may defer calling

8 the payment of the assessment or may call for payment in one or

9 more installments.

10 (8) It is proper for any member insurer, in determining

11 its premium rates and policy owner dividends as to any kind of

12 insurance or health maintenance organization business within

13 the scope of this Article, to consider the amount reasonably

14 necessary to meet its assessment obligations under this

15 Article.

16 (9) The Association must issue to each member insurer

17 paying a Class B assessment under this Article a certificate

18 of contribution, in a form acceptable to the Director, for the

19 amount of the assessment so paid. All outstanding certificates

20 are of equal dignity and priority without reference to amounts

21 or dates of issue. A certificate of contribution may be shown

22 by the member insurer in its financial statement as an asset in

23 such form and for such amount, if any, and period of time as

24 the Director may approve, provided the member insurer shall in

25 any event at its option have the right to show a certificate of

26 contribution as an admitted asset at percentages of the

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1 original face amount for calendar years as follows:

2 100% for the calendar year after the year of issuance;

3 80% for the second calendar year after the year of

4 issuance;

5 60% for the third calendar year after the year of

6 issuance;

7 40% for the fourth calendar year after the year of

8 issuance;

9 20% for the fifth calendar year after the year of

10 issuance.

11 (10) The Association may request information of member

12 insurers in order to aid in the exercise of its power under

13 this Section and member insurers shall promptly comply with a

14 request.

15 (Source: P.A. 100-687, eff. 8-3-18.)

16 (215 ILCS 5/531.11) (from Ch. 73, par. 1065.80-11)

17 Sec. 531.11. Duties and powers of the Director. In

18 addition to the duties and powers enumerated elsewhere in this

19 Article:

20 (1) The Director must do all of the following:

21 (a) Upon request of the board of directors,

22 provide the Association with a statement of the

23 premiums in the appropriate accounts for each member

24 insurer.

25 (b) Notify the board of directors of the existence

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1 of an impaired or insolvent insurer not later than 3

2 days after a determination of impairment or insolvency

3 is made or when the Director receives notice of

4 impairment or insolvency.

5 (c) Give notice to an impaired insurer as required

6 by Sections 34 or 60. Notice to the impaired insurer

7 shall constitute notice to its shareholders, if any.

8 (d) In any liquidation or rehabilitation

9 proceeding involving a domestic member insurer, be

10 appointed as the liquidator or rehabilitator. If a

11 foreign or non-domestic ~~alien~~ member insurer is

12 subject to a liquidation proceeding in its domiciliary

13 jurisdiction or state of entry, the Director shall be

14 appointed conservator.

15 (2) The Director may suspend or revoke, after notice

16 and hearing, the certificate of authority to transact

17 business in this State of any member insurer which fails

18 to pay an assessment when due or fails to comply with the

19 plan of operation. As an alternative the Director may levy

20 a forfeiture on any member insurer which fails to pay an

21 assessment when due. Such forfeiture may not exceed 5% of

22 the unpaid assessment per month, but no forfeiture may be

23 less than $100 per month.

24 (3) Any action of the board of directors or the

25 Association may be appealed to the Director by any member

26 insurer or any other person adversely affected by such

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1 action if such appeal is taken within 30 days of the action

2 being appealed. Any final action or order of the Director

3 is subject to judicial review in a court of competent

4 jurisdiction.

5 (4) The liquidator, rehabilitator, or conservator of

6 any impaired insurer may notify all interested persons of

7 the effect of this Article.

8 (Source: P.A. 100-687, eff. 8-3-18.)

9 (215 ILCS 5/534.5) (from Ch. 73, par. 1065.84-5)

10 Sec. 534.5. Member company. "Member Company" means any

11 insurance company organized as a stock company, mutual

12 company, reciprocal or Lloyds, which holds a certificate of

13 authority to transact any kind of insurance in this State to

14 which this Article applies, and which is either:

15 (a) a domestic insurance company formed before or after

16 the effective date of this Article; or

17 (b) a foreign or non-domestic ~~alien~~ insurance company.

18 An insurance company shall cease to be a member company

19 effective on the day following the termination or expiration

20 of its license to transact the kinds of insurance to which this

21 Article applies; provided, however, that the insurance company

22 shall remain liable as a member company for any and all

23 obligations, including obligations for assessments levied

24 before the termination or expiration of the insurance

25 company's license and assessments levied after the termination

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1 or expiration, based on any insolvency as to which the

2 determination of insolvency by a court of competent

3 jurisdiction occurs before the termination or expiration of

4 the insurance company's license.

5 (Source: P.A. 89-97, eff. 7-7-95.)

6 (215 ILCS 5/543.1) (from Ch. 73, par. 1065.93-1)

7 Sec. 543.1. The Director shall serve a copy of the

8 complaint seeking an Order of Liquidation with a finding of

9 insolvency against a domestic member company on the Fund at

10 the same time that such complaint is filed with the circuit

11 court or shall forward to the Fund notice of the filing of such

12 a complaint against a foreign ornon-domestic ~~alien~~ member

13 company promptly upon receipt thereof. The Director also shall

14 serve on the Fund a copy of an Order of Liquidation with a

15 finding of insolvency against a domestic member company

16 immediately after it is entered by the circuit court or shall

17 forward to the Fund a copy of such order against a foreign or

18 non-domestic ~~alien~~member company promptly upon receipt

19 thereof.

20 (Source: P.A. 85-576.)

21 (215 ILCS 5/1103) (from Ch. 73, par. 1065.803)

22 Sec. 1103. Name. The corporate name of any trust organized

23 under this Article shall not be the same as or deceptively

24 similar to the name of any domestic insurance company or of any

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1 foreign or non-domestic ~~alien~~insurance company authorized to

2 transact business in this State.

3 (Source: P.A. 84-1431.)

4 Section 95. The Reinsurance Intermediary Act is amended by

5 changing Section 5 as follows:

6 (215 ILCS 100/5) (from Ch. 73, par. 1605)

7 Sec. 5. Definitions.

8 "Actuary" means a person who is a member in good standing

9 of the American Academy of Actuaries.

10 "Controlling person" means any person, firm, association,

11 or corporation that directly or indirectly has the power to

12 direct or cause to be directed the management, control, or

13 activities of the reinsurance intermediary.

14 "Director" means the Director of the Department of

15 Insurance.

16 "Insurer" means any person, firm, association, or

17 corporation duly licensed in this State under the applicable

18 provisions of law as an insurer.

19 "Licensed producer" means an agent, broker, or reinsurance

20 intermediary licensed under the applicable provision of the

21 insurance law.

22 "Reinsurance intermediary" means an intermediary broker or

23 a manager.

24 "Intermediary broker" means any person, other than an

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1 officer or employee of the ceding insurer, firm, association,

2 or corporation, who solicits, negotiates, or places

3 reinsurance cessions or retrocessions on behalf of a ceding

4 insurer without the authority or power to bind reinsurance on

5 behalf of the insurer.

6 "Intermediary manager" means any person, firm,

7 association, or corporation that has authority to bind or

8 manages all or part of the assumed reinsurance business of a

9 reinsurer (including the management of a separate division,

10 department, or underwriting office) and acts as an agent for

11 the reinsurer. However, the following persons shall not be

12 considered an intermediary manager, with respect to the

13 reinsurer, for the purposes of this Act:

14 (1) An employee of the reinsurer.

15 (2) A U.S. Manager of the United States branch of a

16 non-domestic ~~an alien~~ reinsurer.

17 (3) An underwriting manager that, under a contract,

18 manages all the reinsurance operations of the reinsurer,

19 is under common control with the reinsurer, subject to

20 Article VIII 1/2 of the Illinois Insurance Code, and whose

21 compensation is not based on the volume of premiums

22 written.

23 (4) The manager of a group, association, pool, or

24 organization of insurers that engage in joint underwriting

25 or joint reinsurance and who are subject to examinations

26 by the insurance regulatory authority of the state in

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1 which the manager's principal business office is located.

2 "Reinsurer" means any person, firm, association, or

3 corporation duly licensed in this State under the applicable

4 provisions of law as an insurer with the authority to assume

5 reinsurance.

6 "To be in violation" means that the reinsurance

7 intermediary, insurer, or reinsurer for whom the reinsurance

8 intermediary was acting failed to substantially comply with

9 the provisions of this Act.

10 "Qualified United States financial institution" means an

11 institution that:

12 (1) is organized or (in the case of a U.S. office of a

13 foreign banking organization) licensed under the laws of

14 the United States or any state thereof;

15 (2) is regulated, supervised, and examined by federal

16 or state authorities having regulatory authority over

17 banks and trust companies; and

18 (3) has been determined by either the Director or the

19 Securities Valuation Office of the National Association of

20 Insurance Commissioners to meet the standards of financial

21 condition and standing as are considered necessary and

22 appropriate to regulate the quality of financial

23 institutions whose letters of credit will be acceptable to

24 the Director.

25 (Source: P.A. 87-108.)

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1 Section 100. The Comprehensive Health Insurance Plan Act

2 is amended by changing Section 7 as follows:

3 (215 ILCS 105/7) (from Ch. 73, par. 1307)

4 Sec. 7. Eligibility.

5 a. Except as provided in subsection (e) of this Section or

6 in Section 15 of this Act, any person who is either a citizen

7 of the United States or a noncitizen ~~an alien~~ lawfully

8 admitted for permanent residence and who has been for a period

9 of at least 180 days and continues to be a resident of this

10 State shall be eligible for Plan coverage under this Section

11 if evidence is provided of:

12 (1) A notice of rejection or refusal to issue

13 substantially similar individual health insurance coverage

14 for health reasons by a health insurance issuer;

15 (2) A refusal by a health insurance issuer to issue

16 individual health insurance coverage except at a rate

17 exceeding the applicable Plan rate for which the person is

18 responsible; or

19 (3) The absence of available health insurance coverage

20 for a person under 19 years of age.

21 A rejection or refusal by a group health plan or health

22 insurance issuer offering only stop-loss or excess of loss

23 insurance or contracts, agreements, or other arrangements for

24 reinsurance coverage with respect to the applicant shall not

25 be sufficient evidence under this subsection.

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1 b. The Board shall promulgate a list of medical or health

2 conditions for which a person who is either a citizen of the

3 United States or a noncitizen ~~an alien~~ lawfully admitted for

4 permanent residence and a resident of this State would be

5 eligible for Plan coverage without applying for health

6 insurance coverage pursuant to subsection a. of this Section.

7 Persons who can demonstrate the existence or history of any

8 medical or health conditions on the list promulgated by the

9 Board shall not be required to provide the evidence specified

10 in subsection a. of this Section. The list shall be effective

11 on the first day of the operation of the Plan and may be

12 amended from time to time as appropriate.

13 c. Family members of the same household who each are

14 covered persons are eligible for optional family coverage

15 under the Plan.

16 d. For persons qualifying for coverage in accordance with

17 Section 7 of this Act, the Board shall, if it determines that

18 such appropriations as are made pursuant to Section 12 of this

19 Act are insufficient to allow the Board to accept all of the

20 eligible persons which it projects will apply for enrollment

21 under the Plan, limit or close enrollment to ensure that the

22 Plan is not over-subscribed and that it has sufficient

23 resources to meet its obligations to existing enrollees. The

24 Board shall not limit or close enrollment for federally

25 eligible individuals.

26 e. A person shall not be eligible for coverage under the

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1 Plan if:

2 (1) He or she has or obtains other coverage under a

3 group health plan or health insurance coverage

4 substantially similar to or better than a Plan policy as

5 an insured or covered dependent or would be eligible to

6 have that coverage if he or she elected to obtain it.

7 Persons otherwise eligible for Plan coverage may, however,

8 solely for the purpose of having coverage for a

9 pre-existing condition, maintain other coverage only while

10 satisfying any pre-existing condition waiting period under

11 a Plan policy or a subsequent replacement policy of a Plan

12 policy.

13 (1.1) His or her prior coverage under a group health

14 plan or health insurance coverage, provided or arranged by

15 an employer of more than 10 employees was discontinued for

16 any reason without the entire group or plan being

17 discontinued and not replaced, provided he or she remains

18 an employee, or dependent thereof, of the same employer.

19 (2) He or she is a recipient of or is approved to

20 receive medical assistance, except that a person may

21 continue to receive medical assistance through the medical

22 assistance no grant program, but only while satisfying the

23 requirements for a preexisting condition under Section 8,

24 subsection f. of this Act. Payment of premiums pursuant to

25 this Act shall be allocable to the person's spenddown for

26 purposes of the medical assistance no grant program, but

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1 that person shall not be eligible for any Plan benefits

2 while that person remains eligible for medical assistance.

3 If the person continues to receive or be approved to

4 receive medical assistance through the medical assistance

5 no grant program at or after the time that requirements

6 for a preexisting condition are satisfied, the person

7 shall not be eligible for coverage under the Plan. In that

8 circumstance, coverage under the Plan shall terminate as

9 of the expiration of the preexisting condition limitation

10 period. Under all other circumstances, coverage under the

11 Plan shall automatically terminate as of the effective

12 date of any medical assistance.

13 (3) Except as provided in Section 15, the person has

14 previously participated in the Plan and voluntarily

15 terminated Plan coverage, unless 12 months have elapsed

16 since the person's latest voluntary termination of

17 coverage.

18 (4) The person fails to pay the required premium under

19 the covered person's terms of enrollment and

20 participation, in which event the liability of the Plan

21 shall be limited to benefits incurred under the Plan for

22 the time period for which premiums had been paid and the

23 covered person remained eligible for Plan coverage.

24 (5) The Plan has paid a total of $5,000,000 in

25 benefits on behalf of the covered person.

26 (6) The person is a resident of a public institution.

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1 (7) The person's premium is paid for or reimbursed

2 under any government sponsored program or by any

3 government agency or health care provider, except as an

4 otherwise qualifying full-time employee, or dependent of

5 such employee, of a government agency or health care

6 provider or, except when a person's premium is paid by the

7 U.S. Treasury Department pursuant to the federal Trade Act

8 of 2002.

9 (8) The person has or later receives other benefits or

10 funds from any settlement, judgement, or award resulting

11 from any accident or injury, regardless of the date of the

12 accident or injury, or any other circumstances creating a

13 legal liability for damages due that person by a third

14 party, whether the settlement, judgment, or award is in

15 the form of a contract, agreement, or trust on behalf of a

16 minor or otherwise and whether the settlement, judgment,

17 or award is payable to the person, his or her dependent,

18 estate, personal representative, or guardian in a lump sum

19 or over time, so long as there continues to be benefits or

20 assets remaining from those sources in an amount in excess

21 of $300,000.

22 (9) Within the 5 years prior to the date a person's

23 Plan application is received by the Board, the person's

24 coverage under any health care benefit program as defined

25 in 18 U.S.C. 24, including any public or private plan or

26 contract under which any medical benefit, item, or service

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1 is provided, was terminated as a result of any act or

2 practice that constitutes fraud under State or federal law

3 or as a result of an intentional misrepresentation of

4 material fact; or if that person knowingly and willfully

5 obtained or attempted to obtain, or fraudulently aided or

6 attempted to aid any other person in obtaining, any

7 coverage or benefits under the Plan to which that person

8 was not entitled.

9 f. The Board or the administrator shall require

10 verification of residency and may require any additional

11 information or documentation, or statements under oath, when

12 necessary to determine residency upon initial application and

13 for the entire term of the policy.

14 g. Coverage shall cease (i) on the date a person is no

15 longer a resident of Illinois, (ii) on the date a person

16 requests coverage to end, (iii) upon the death of the covered

17 person, (iv) on the date State law requires cancellation of

18 the policy, or (v) at the Plan's option, 30 days after the Plan

19 makes any inquiry concerning a person's eligibility or place

20 of residence to which the person does not reply.

21 h. Except under the conditions set forth in subsection g

22 of this Section, the coverage of any person who ceases to meet

23 the eligibility requirements of this Section shall be

24 terminated at the end of the current policy period for which

25 the necessary premiums have been paid.

26 (Source: P.A. 96-938, eff. 6-24-10; 97-661, eff. 1-13-12.)

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1 Section 105. The Religious and Charitable Risk Pooling

2 Trust Act is amended by changing Section 15 as follows:

3 (215 ILCS 150/15) (from Ch. 148, par. 215)

4 Sec. 15. Ineligible beneficiaries. A beneficiary is

5 ineligible (1) if it is not exempt from taxation under

6 paragraph (3) of subsection (c) of Section 501 of the Internal

7 Revenue Code of 1954 as amended, or an affiliate of a

8 corporation exempt from taxation under paragraph (3) of

9 subsection (c) of Section 501 of the Internal Revenue Code, as

10 amended, and exempt from taxation under paragraph (2) of

11 subsection (c) of Section 501 of the Internal Revenue Code of

12 1954, as amended, or tax exempt as a unit of local government

13 or as a hospital owned and operated by a unit of local

14 government; (2) if a corporation, it is not incorporated as a

15 not-for-profit corporation; or (3) if a foreign or

16 non-domestic ~~alien~~ corporation, it no longer has a Certificate

17 of Authority issued by the Secretary of State.

18 (Source: P.A. 92-99, eff. 7-20-01.)

19 Section 110. The Title Insurance Act is amended by

20 changing Sections 11 and 15.1 as follows:

21 (215 ILCS 155/11) (from Ch. 73, par. 1411)

22 Sec. 11. Statutory premium reserve.

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1 (a) A domestic title insurance company shall establish and

2 maintain a statutory premium reserve computed in accordance

3 with this Section. The reserve shall be reported as a

4 liability of the title insurance company in its financial

5 statements. The statutory premium reserve shall be maintained

6 by the title insurance company for the protection of holders

7 of title insurance policies. Except as provided in this

8 Section, assets equal in value to the statutory premium

9 reserve are not subject to distribution among creditors or

10 stockholders of the title insurance company until all claims

11 of policyholders or claims under reinsurance contracts have

12 been paid in full and discharged, lawfully reinsured, or

13 otherwise assumed by another title insurance company

14 authorized to do business under this Act.

15 (b) A foreign or non-domestic ~~alien~~ title insurance

16 company authorized to do business under this Act shall

17 maintain at least the same reserves on title insurance

18 policies issued on properties located in this State as are

19 required of domestic title insurance companies.

20 (c) The statutory premium reserve shall consist of:

21 (1) the amount of the statutory premium reserve on

22 January 1, 1990; and

23 (2) a sum equal to 12 1/2 cents for each $1,000 of net

24 retained liability under each title insurance policy on a

25 single risk written on properties located in this State

26 after January 1, 1990.

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1 (d) Amounts placed in the statutory premium reserve in any

2 year in accordance with this Section shall be deducted in

3 determining the net profit of the title insurance company for

4 that year.

5 (e) A title insurance company shall release from the

6 statutory premium reserve a sum equal to 10% of the amount

7 added to the reserve during a calendar year on July 1 of each

8 of the 5 years following the year in which the sum was added,

9 and shall release from the statutory premium reserve a sum

10 equal to 3 1/3% of the amount added to the reserve during that

11 year on each succeeding July 1 until the entire amount for that

12 year has been released. The amount of the statutory premium

13 reserve or similar premium reserve maintained before January

14 1, 1990, shall be released in accordance with the law in effect

15 before January 1, 1990.

16 (f) This reserve is independent of the deposit

17 requirements of Section 4 of this Act.

18 (Source: P.A. 94-893, eff. 6-20-06.)

19 (215 ILCS 155/15.1)

20 Sec. 15.1. No taxes to be imposed by political

21 subdivisions. The fees, charges, and taxes provided for by

22 this Act shall be in lieu of all license fees or privilege or

23 occupation taxes or other fees levied or assessed by any

24 municipality, county, or other political subdivision of this

25 State. No municipality, county, or other political subdivision

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1 of this State shall impose any license fee or privilege or

2 occupation tax or fee upon any domestic, foreign, or

3 non-domestic ~~alien~~company, or upon any of its agents, for the

4 privilege of doing insurance business therein. This Section

5 shall not be construed to prohibit the levy and collection of

6 State, county, or municipal taxes upon the real and personal

7 property of the company, including the tax imposed by

8 subsections (c) and (d) of Section 201 of the Illinois Income

9 Tax Act. This Section 15.1 is declared to be a denial and

10 limitation of the powers of home rule units pursuant to

11 paragraph (g) of Section 6 of Article VII of the Illinois

12 Constitution of 1970.

13 (Source: P.A. 90-317, eff. 8-1-97.)

14 Section 115. The Viatical Settlements Act of 2009 is

15 amended by changing Sections 5 and 30 as follows:

16 (215 ILCS 159/5)

17 Sec. 5. Definitions.

18 "Accredited investor" means an accredited investor as

19 defined in Rule 501(a) promulgated under the Securities Act of

20 1933 (15 U.S.C. 77 et seq.), as amended.

21 "Advertising" means any written, electronic, or printed

22 communication or any communication by means of recorded

23 telephone messages or transmitted on radio, television, the

24 Internet, or similar communications media, including film

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1 strips, digital picture slides, motion pictures, and videos

2 published, disseminated, circulated, or placed before the

3 public in this State, for the purpose of creating an interest

4 in or inducing a person to sell, assign, devise, bequest, or

5 transfer the death benefit or ownership of a policy pursuant

6 to a viatical settlement contract.

7 "Non-domestic ~~Alien~~ licensee" means a licensee

8 incorporated or organized under the laws of any country other

9 than the United States.

10 "Business of viatical settlements" means any activity

11 involved in, but not limited to, the offering, soliciting,

12 negotiating, procuring, effectuating, purchasing, investing,

13 financing, monitoring, tracking, underwriting, selling,

14 transferring, assigning, pledging, or hypothecating or in any

15 other manner acquiring an interest in a life insurance policy

16 by means of a viatical settlement contract or other agreement.

17 "Chronically ill" means having been certified within the

18 preceding 12-month period by a licensed health professional

19 as:

20 (1) being unable to perform, without substantial

21 assistance from another individual and for at least 90

22 days due to a loss of functional capacity, at least 2

23 activities of daily living, including, but not limited to,

24 eating, toileting, transferring, bathing, dressing, or

25 continence;

26 (2) requiring substantial supervision to protect the

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1 individual from threats to health and safety due to severe

2 cognitive impairment; or

3 (3) having a level of disability similar to that

4 described in paragraph (1) as determined by the Secretary

5 of Health and Human Services.

6 "Controlling person" means any person, firm, association,

7 or corporation that directly or indirectly has the power to

8 direct or cause to be directed the management, control, or

9 activities of the viatical settlement provider.

10 "Director" means the Director of the Division of Insurance

11 of the Department of Financial and Professional Regulation.

12 "Division" means the Division of Insurance of the

13 Department of Financial and Professional Regulation.

14 "Escrow agent" means an independent third-party person

15 who, pursuant to a written agreement signed by the viatical

16 settlement provider and viator, provides escrow services

17 related to the acquisition of a life insurance policy pursuant

18 to a viatical settlement contract. "Escrow agent" does not

19 include any person associated or affiliated with or under the

20 control of a licensee.

21 "Financial institution" means a financial institution as

22 defined by the Financial Institutions Insurance Sales Law in

23 Article XLIV of the Illinois Insurance Code.

24 "Financing entity" means an underwriter, placement agent,

25 lender, purchaser of securities, purchaser of a policy or

26 certificate from a viatical settlement provider, credit

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1 enhancer, or an entity that has a direct ownership in a policy

2 that is the subject of a viatical settlement contract, and to

3 which both of the following apply:

4 (1) its principal activity related to the transaction

5 is providing funds to effect the viatical settlement or

6 purchase of one or more viaticated policies; and

7 (2) it has an agreement in writing with one or more

8 licensed viatical settlement providers to finance the

9 acquisition of viatical settlement contracts.

10 "Financing entity" does not include an investor that is not an

11 accredited investor.

12 "Financing transaction" means a transaction in which a

13 viatical settlement provider obtains financing from a

14 financing entity, including, without limitation, any secured

15 or unsecured financing, securitization transaction, or

16 securities offering that either is registered or exempt from

17 registration under federal and State securities law.

18 "Foreign licensee" means any viatical settlement provider

19 incorporated or organized under the laws of any state of the

20 United States other than this State.

21 "Insurance producer" means an insurance producer as

22 defined by Section 10 of Article XXXI of the Illinois

23 Insurance Code.

24 "Licensee" means a viatical settlement provider or

25 viatical settlement broker.

26 "Life expectancy provider" means a person who determines

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1 or holds himself or herself out as determining life

2 expectancies or mortality ratings used to determine life

3 expectancies on behalf of or in connection with any of the

4 following:

5 (1) A viatical settlement provider, viatical

6 settlement broker, or person engaged in the business of

7 viatical settlements.

8 (2) A viatical investment as defined by Section 2.33

9 of the Illinois Securities Law of 1953 or a viatical

10 settlement contract.

11 "NAIC" means the National Association of Insurance

12 Commissioners.

13 "Person" means an individual or a legal entity, including,

14 without limitation, a partnership, limited liability company,

15 limited liability partnership, association, trust, business

16 trust, or corporation.

17 "Policy" means an individual or group policy, group

18 certificate, contract, or arrangement of insurance of the

19 class defined by subsection (a) of Section 4 of the Illinois

20 Insurance Code owned by a resident of this State, regardless

21 of whether delivered or issued for delivery in this State.

22 "Qualified institutional buyer" means a qualified

23 institutional buyer as defined in Rule 144 promulgated under

24 the Securities Act of 1933, as amended.

25 "Related provider trust" means a titling trust or other

26 trust established by a licensed viatical settlement provider

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1 or a financing entity for the sole purpose of holding the

2 ownership or beneficial interest in purchased policies in

3 connection with a financing transaction. The trust shall have

4 a written agreement with the licensed viatical settlement

5 provider under which the licensed viatical settlement provider

6 is responsible for ensuring compliance with all statutory and

7 regulatory requirements and under which the trust agrees to

8 make all records and files related to viatical settlement

9 transactions available to the Director as if those records and

10 files were maintained directly by the licensed viatical

11 settlement provider.

12 "Special purpose entity" means a corporation, partnership,

13 trust, limited liability company, or other similar entity

14 formed only to provide, directly or indirectly, access to

15 institutional capital markets (i) for a financing entity or

16 licensed viatical settlement provider; or (ii) in connection

17 with a transaction in which the securities in the special

18 purposes entity are acquired by the viator or by qualified

19 institutional buyers or the securities pay a fixed rate of

20 return commensurate with established asset-backed

21 institutional capital markets.

22 "Stranger-originated life insurance" or "STOLI" means an

23 act, practice, or arrangement to initiate a life insurance

24 policy for the benefit of a third-party investor who, at the

25 time of policy origination, has no insurable interest in the

26 insured. STOLI practices include, but are not limited to,

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1 cases in which life insurance is purchased with resources or

2 guarantees from or through a person or entity who, at the time

3 of policy inception, could not lawfully initiate the policy

4 himself or itself and where, at the time of policy inception,

5 there is an arrangement or agreement, whether verbal or

6 written, to directly or indirectly transfer the ownership of

7 the policy or policy benefits to a third party. Trusts created

8 to give the appearance of an insurable interest and used to

9 initiate policies for investors violate insurance interest

10 laws and the prohibition against wagering on life. STOLI

11 arrangements do not include lawful viatical settlement

12 contracts as permitted by this Act.

13 "Terminally ill" means certified by a physician as having

14 an illness or physical condition that reasonably is expected

15 to result in death in 24 months or less.

16 "Viatical settlement broker" means a licensed insurance

17 producer who has been issued a license pursuant to paragraph

18 (1) or (2) of subsection (a) of Section 500-35 of the Illinois

19 Insurance Code who, working exclusively on behalf of a viator

20 and for a fee, commission, or other valuable consideration,

21 offers, solicits, promotes, or attempts to negotiate viatical

22 settlement contracts between a viator and one or more viatical

23 settlement providers or one or more viatical settlement

24 brokers. "Viatical settlement broker" does not include an

25 attorney, certified public accountant, or a financial planner

26 accredited by a nationally recognized accreditation agency,

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1 who is retained to represent the viator and whose compensation

2 is not paid directly or indirectly by the viatical settlement

3 provider or purchaser.

4 "Viatical settlement contract" means any of the following:

5 (1) A written agreement between a viator and a

6 viatical settlement provider establishing the terms under

7 which compensation or anything of value is or will be

8 paid, which compensation or value is less than the

9 expected death benefits of the policy, in return for the

10 viator's present or future assignment, transfer, sale,

11 devise, or bequest of the death benefit or ownership of

12 any portion of the insurance policy.

13 (2) A written agreement for a loan or other lending

14 transaction, secured primarily by an individual life

15 insurance policy or an individual certificate of a group

16 life insurance policy.

17 (3) The transfer for compensation or value of

18 ownership of a beneficial interest in a trust or other

19 entity that owns such policy, if the trust or other entity

20 was formed or availed of for the principal purpose of

21 acquiring one or more life insurance contracts and the

22 life insurance contract insures the life of a person

23 residing in this State.

24 (4) A premium finance loan made for a life insurance

25 policy by a lender to a viator on, before, or after the

26 date of issuance of the policy in either of the following

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1 situations:

2 (A) The viator or the insured receives a guarantee

3 of the viatical settlement value of the policy.

4 (B) The viator or the insured agrees to sell the

5 policy or any portion of the policy's death benefit on

6 any date before or after issuance of the policy.

7 "Viatical settlement contract" does not include any of the

8 following acts, practices, or arrangements listed below in

9 subparagraphs (a) through (i) of this definition of "viatical

10 settlement contract", unless part of a plan, scheme, device,

11 or artifice to avoid application of this Act; provided,

12 however, that the list of excluded items contained in

13 subparagraphs (a) through (i) is not intended to be an

14 exhaustive list and that an act, practice, or arrangement that

15 is not described below in subparagraphs (a) through (i) does

16 not necessarily constitute a viatical settlement contract:

17 (a) A policy loan or accelerated death benefit made by

18 the insurer pursuant to the policy's terms;

19 (b) Loan proceeds that are used solely to pay: (i)

20 premiums for the policy and (ii) the costs of the loan,

21 including, without limitation, interest, arrangement fees,

22 utilization fees and similar fees, closing costs, legal

23 fees and expenses, trustee fees and expenses, and third

24 party collateral provider fees and expenses, including

25 fees payable to letter of credit issuers;

26 (c) A loan made by a bank or other financial

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1 institution in which the lender takes an interest in a

2 life insurance policy solely to secure repayment of a loan

3 or, if there is a default on the loan and the policy is

4 transferred, the transfer of such a policy by the lender,

5 provided that neither the default itself nor the transfer

6 of the policy in connection with the default is pursuant

7 to an agreement or understanding with any other person for

8 the purpose of evading regulation under this Act;

9 (d) A loan made by a lender that does not violate

10 Article XXXIIa of the Illinois Insurance Code, provided

11 that the premium finance loan is not described in this

12 Act;

13 (e) An agreement in which all the parties (i) are

14 closely related to the insured by blood or law or (ii) have

15 a lawful substantial economic interest in the continued

16 life, health, and bodily safety of the person insured, or

17 trusts established primarily for the benefit of such

18 parties;

19 (f) Any designation, consent, or agreement by an

20 insured who is an employee of an employer in connection

21 with the purchase by the employer, or trust established by

22 the employer, of life insurance on the life of the

23 employee;

24 (g) A bona fide business succession planning

25 arrangement: (i) between one or more shareholders in a

26 corporation or between a corporation and one or more of

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1 its shareholders or one or more trusts established by its

2 shareholders; (ii) between one or more partners in a

3 partnership or between a partnership and one or more of

4 its partners or one or more trusts established by its

5 partners; or (iii) between one or more members in a

6 limited liability company or between a limited liability

7 company and one or more of its members or one or more

8 trusts established by its members;

9 (h) An agreement entered into by a service recipient,

10 or a trust established by the service recipient, and a

11 service provider, or a trust established by the service

12 provider, who performs significant services for the

13 service recipient's trade or business; or

14 (i) Any other contract, transaction, or arrangement

15 exempted from the definition of viatical settlement

16 contract by the Director based on the Director's

17 determination that the contract, transaction, or

18 arrangement is not of the type intended to be regulated by

19 this Act.

20 "Viatical settlement investment agent" means a person who

21 is an appointed or contracted agent of a licensed viatical

22 settlement provider who solicits or arranges the funding for

23 the purchase of a viatical settlement by a viatical settlement

24 purchaser and who is acting on behalf of a viatical settlement

25 provider. A viatical settlement investment agent is deemed to

26 represent the viatical settlement provider of whom the

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1 viatical settlement investment agent is an appointed or

2 contracted agent.

3 "Viatical settlement provider" means a person, other than

4 a viator, who enters into or effectuates a viatical settlement

5 contract with a viator. "Viatical settlement provider" does

6 not include:

7 (1) a bank, savings bank, savings and loan

8 association, credit union, or other financial institution

9 that takes an assignment of a policy as collateral for a

10 loan;

11 (2) a financial institution or premium finance company

12 making premium finance loans and exempted by the Director

13 from the licensing requirement under the premium finance

14 laws where the institution or company takes an assignment

15 of a life insurance policy solely as collateral for a

16 premium finance loan;

17 (3) the issuer of the life insurance policy;

18 (4) an authorized or eligible insurer that provides

19 stop loss coverage or financial guaranty insurance to a

20 viatical settlement provider, purchaser, financing entity,

21 special purpose entity, or related provider trust;

22 (5) An individual person who enters into or

23 effectuates no more than one viatical settlement contract

24 in a calendar year for the transfer of policies for any

25 value less than the expected death benefit;

26 (6) a financing entity;

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1 (7) a special purpose entity;

2 (8) a related provider trust;

3 (9) a viatical settlement purchaser; or

4 (10) any other person that the Director determines is

5 consistent with the definition of viatical settlement

6 provider.

7 "Viatical settlement purchaser" means a person who

8 provides a sum of money as consideration for a life insurance

9 policy or an interest in the death benefits of a life insurance

10 policy, or a person who owns or acquires or is entitled to a

11 beneficial interest in a trust that owns a viatical settlement

12 contract or is the beneficiary of a life insurance policy, in

13 each case where such policy has been or will be the subject of

14 a viatical settlement contract, for the purpose of deriving an

15 economic benefit. "Viatical settlement purchaser" does not

16 include: (i) a licensee under this Act; (ii) an accredited

17 investor or qualified institutional buyer; (iii) a financing

18 entity; (iv) a special purpose entity; or (v) a related

19 provider trust.

20 "Viaticated policy" means a life insurance policy that has

21 been acquired by a viatical settlement provider pursuant to a

22 viatical settlement contract.

23 "Viator" means the owner of a life insurance policy or a

24 certificate holder under a group policy who enters or seeks to

25 enter into a viatical settlement contract. For the purposes of

26 this Act, a viator is not limited to an owner of a life

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1 insurance policy or a certificate holder under a group policy

2 insuring the life of an individual with a terminal or chronic

3 illness or condition, except where specifically addressed.

4 "Viator" does not include:

5 (1) a licensee;

6 (2) a qualified institutional buyer;

7 (3) a financing entity;

8 (4) a special purpose entity; or

9 (5) a related provider trust.

10 (Source: P.A. 100-863, eff. 8-14-18.)

11 (215 ILCS 159/30)

12 Sec. 30. Examination or investigation.

13 (a) The Director may when and as often as the Director

14 deems it reasonably necessary to protect the interests of the

15 public, examine the business affairs of any licensee.

16 In scheduling and determining the nature, scope, and

17 frequency of the examinations, the Director shall consider

18 such matters as consumer complaints, results of financial

19 statement analyses and ratios, changes in management or

20 ownership, actuarial opinions, report of independent certified

21 public accountants, and other relevant criteria as determined

22 by the Director.

23 (b) For purposes of completing an examination of a

24 licensee under this Act, the Director may examine or

25 investigate any person, or the business of any person, in so

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1 far as the examination or investigation is, in the sole

2 discretion of the Director, necessary or material to the

3 examination.

4 (c) In lieu of an examination under this Act of any foreign

5 licensee or non-domestic ~~alien~~ licensee licensed in this

6 State, the Director may, at the Director's discretion, accept

7 an examination report on the licensee as prepared by the chief

8 insurance regulatory official for the licensee's state of

9 domicile or port-of-entry state.

10 (d) As far as practical, the examination of a foreign

11 licensee or non-domestic ~~alien~~ licensee shall be made in

12 cooperation with the insurance supervisory officials of other

13 states in which the licensee transacts business.

14 (e) Licensees shall for 5 years retain copies of:

15 (1) all proposed, offered, or executed contracts,

16 purchase agreements, underwriting documents, policy forms,

17 and applications from the date of the proposal, offer, or

18 execution of the contract or purchase agreement, whichever

19 is later;

20 (2) all checks, drafts, or other evidence and

21 documentation related to the payment, transfer, deposit,

22 or release of funds from the date of the transaction;

23 (3) all other records and documents in any format

24 related to the requirements of this Act, including a

25 record of complaints received against the licensee and

26 agents representing the licensee and a list of all life

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1 expectancy providers that have provider services to the

2 licensee.

3 This subsection (e) does not relieve a person of the

4 obligation to produce records required by this subsection to

5 the Director after the retention period has expired if the

6 person has retained the documents.

7 Records required to be retained by this subsection (e)

8 must be legible and complete and may be retained in paper,

9 photograph, microprocessor, magnetic, mechanical, or

10 electronic media, or by any process that accurately reproduces

11 or forms a durable medium for the reproduction of a record.

12 (f) Upon determining that an examination should be

13 conducted, the Director shall appoint one or more examiners to

14 perform the examination and instruct them as to the scope of

15 the examination. The Director may employ any guidelines or

16 procedures for purposes of this subsection (f) that the

17 Director deems appropriate.

18 Every licensee or person, including all officers,

19 partners, members, directors, employees, controlling persons,

20 and agents of any licensee or person, from whom information is

21 sought shall provide to the examiners timely, convenient, and

22 free access at all reasonable hours at the licensee's or

23 person's offices to all books, records, accounts, papers,

24 documents, assets, and computer or other recordings relating

25 to the property, assets, business, and affairs of the licensee

26 being examined. The officers, directors, employees, and agents

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1 of the licensee or person shall facilitate the examination and

2 aid in the examination so far as it is in their power to do so.

3 The refusal of a licensee by its officers, directors,

4 employees, or agents to submit to examination or to comply

5 with any reasonable written request of the Director shall be

6 grounds for revocation, denial of issuance, or non-renewal of

7 any license or authority held by the licensee to engage in the

8 viatical settlement business or other business subject to the

9 Director's jurisdiction.

10 The Director shall have the power to issue subpoenas, to

11 administer oaths, and to examine under oath any person as to

12 any matter pertinent to the examination. Upon the failure or

13 refusal of a person to obey a subpoena, the Director may

14 petition a court of competent jurisdiction, and upon proper

15 showing, the court may enter an order compelling the witness

16 to appear and testify or produce documentary evidence. Failure

17 to obey the court order shall be punishable as contempt of

18 court. Subpoenas may be enforced pursuant to Section 403 of

19 the Illinois Insurance Code.

20 When making an examination under this Act, the Director

21 may retain attorneys, appraisers, independent actuaries,

22 independent certified public accountants, or other

23 professionals and specialists as examiners, the reasonable

24 cost of which shall be borne by the licensee that is the

25 subject of the examination.

26 (g) Nothing contained in this Act limits the Director's

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1 authority to terminate or suspend an examination in order to

2 pursue other legal or regulatory action pursuant to the

3 insurance laws of this State. Findings of fact and conclusions

4 made pursuant to any examination shall be prima facie evidence

5 in any legal or regulatory action.

6 (h) Nothing contained in this Act shall be construed to

7 limit the Director's authority to use and, if appropriate, to

8 make public any final or preliminary examination report, any

9 examiner or licensee workpapers or other documents, or any

10 other information discovered or developed during the course of

11 any examination in the furtherance of any legal or regulatory

12 action that the Director may, in the Director's discretion,

13 deem appropriate.

14 (i) No later than 60 days following completion of the

15 examination, the examiner in charge shall file with the

16 Director a verified written report of examination under oath.

17 Upon receipt of the verified report, the Director shall

18 transmit the report to the licensee examined.

19 (j) Examination reports shall be comprised only of facts

20 appearing upon the books, records, or other documents of the

21 licensee, its agents, or other persons examined, or as

22 ascertained from the testimony of its officers or agents or

23 other persons examined concerning its affairs and the

24 conclusions and recommendations that the examiners find

25 reasonably warranted from the facts.

26 (k) The licensee may request a hearing within 10 days

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1 after receipt of the examination report by giving the Director

2 written notice of that request, together with a statement of

3 its objections. The Director then must conduct a hearing in

4 conjunction with Sections 402 and 403 of the Illinois

5 Insurance Code. The Director must issue a written order based

6 upon the examination report and upon the hearing within 90

7 days after the report is filed or within 90 days after the

8 hearing. After the hearing, the Director may make such order

9 or orders as may be reasonably necessary to correct,

10 eliminate, or remedy unlawful conduct.

11 (l) If the Director determines that regulatory action is

12 appropriate as a result of an examination, the Director may

13 initiate any proceedings or actions provided by law.

14 (m) Names and individual identification data for all

15 viators in the possession and control of the Director shall be

16 considered private and confidential and shall not be disclosed

17 by the Director unless required by law.

18 Except as otherwise provided in this Act, all examination

19 reports, working papers, recorded information, documents, and

20 copies thereof produced by, obtained by or disclosed to the

21 Director or any other person in the course of an examination

22 made under this Act or the law of another state or jurisdiction

23 that is substantially similar to this Act, or in the course of

24 analysis or investigation by the Director of the financial

25 condition or market conduct of a licensee are (i) confidential

26 by law and privileged, (ii) not subject to the Freedom of

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1 Information Act, (iii) not subject to subpoena, and (iv) not

2 subject to discovery or admissible in evidence in any private

3 civil action.

4 The Director is authorized to use the documents,

5 materials, or other information in the furtherance of any

6 regulatory or legal action brought as part of the Director's

7 official duties.

8 Documents, materials, or other information, including, but

9 not limited to, all working papers and copies thereof, in the

10 possession or control of the NAIC and its affiliates and

11 subsidiaries are:

12 (1) confidential by law and privileged;

13 (2) not subject to subpoena; and

14 (3) not subject to discovery or admissible in evidence

15 in any private civil action if they are:

16 (A) created, produced or obtained by, or disclosed

17 to the NAIC and its affiliates and subsidiaries in the

18 course of assisting an examination made under this Act

19 or assisting the Director or the chief insurance

20 regulatory official in another state in the analysis

21 or investigation of the financial condition or market

22 conduct of a licensee; or

23 (B) disclosed under this subsection (m) by the

24 Director or disclosed under a comparable provision in

25 law of another state by that state's chief insurance

26 regulatory official to the NAIC and its affiliates and

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1 subsidiaries.

2 Neither the Director nor any person that received the

3 documents, material, or other information while acting under

4 the authority of the Director, including the NAIC and its

5 affiliates and subsidiaries, shall be permitted to testify in

6 any private civil action concerning any confidential

7 documents, materials, or information subject to this

8 subsection (m).

9 (n) In order to assist in the performance of the

10 Director's duties, the Director may:

11 (1) share documents, materials, or other information,

12 including the confidential and privileged documents,

13 materials, or information subject to subsection (m) of

14 this Section, with other state, federal, and international

15 regulatory agencies, with the NAIC and its affiliates and

16 subsidiaries, and with state, federal, and international

17 law enforcement authorities, provided that the recipient

18 agrees to maintain the confidentiality and privileged

19 status of the document, material, communication, or other

20 information;

21 (2) receive documents, materials, communications, or

22 information, including otherwise confidential and

23 privileged documents, materials, or information, from the

24 NAIC and its affiliates and subsidiaries and from

25 regulatory and law enforcement officials of other foreign

26 or domestic jurisdictions, and shall maintain as

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1 confidential or privileged any document, material, or

2 information received with notice or the understanding that

3 it is confidential or privileged under the laws of the

4 jurisdiction that is the source of the document, material,

5 or information; and

6 (3) enter into agreements governing sharing and use of

7 information consistent with this Section.

8 (o) No waiver of any applicable privilege or claim of

9 confidentiality in the documents, materials, or information

10 shall occur as a result of disclosure to the Director under

11 this Section or as a result of sharing as authorized in

12 subsection (n) of this Section.

13 (p) A privilege established under the law of any state or

14 jurisdiction that is substantially similar to the privilege

15 established under this Section shall be available and enforced

16 in any proceeding in, and in any court of, this State.

17 (q) Nothing contained in this Act prevents or prohibits

18 the Director from disclosing the content of an examination

19 report, preliminary examination report or results, or any

20 matter relating to those reports or results, to the chief

21 insurance regulatory official of any other state or country,

22 or to law enforcement officials of this or any other state or

23 agency of the federal government at any time or to the NAIC, if

24 the agency or office receiving the report or matters relating

25 to it agrees in writing to hold it confidential and in a manner

26 consistent with this Act.

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1 (r) The expenses incurred in conducting an examination

2 shall be paid by the licensee.

3 (s) No cause of action shall arise nor shall any liability

4 be imposed against the Director, the Director's authorized

5 representatives, or any examiner appointed by the Director for

6 any statements made or conduct performed in good faith while

7 carrying out the provisions of this Act.

8 No cause of action shall arise, nor shall any liability be

9 imposed against any person for the act of communicating or

10 delivering information or data to the Director or the

11 Director's authorized representative or examiner pursuant to

12 an examination made under this Section, if the act of

13 communication or delivery was performed in good faith and

14 without fraudulent intent or the intent to deceive. This

15 subsection (s) does not abrogate or modify in any way any

16 common law or statutory privilege or immunity heretofore

17 enjoyed by any person identified in this subsection (s).

18 A person identified in this subsection (s) shall be

19 entitled to an award of attorney's fees and costs if he or she

20 is the prevailing party in a civil cause of action for libel,

21 slander, or any other relevant tort arising out of activities

22 in carrying out the provisions of this Section and the party

23 bringing the action was not substantially justified in doing

24 so. For purposes of this Section, a proceeding is

25 "substantially justified" if it had a reasonable basis in law

26 or fact at the time that it was initiated.

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1 (t) The Director may investigate suspected viatical

2 settlement fraud and persons engaged in the business of

3 viatical settlements.

4 (Source: P.A. 96-736, eff. 7-1-10.)

5 Section 120. The Hearing Instrument Consumer Protection

6 Act is amended by changing Section 8 as follows:

7 (225 ILCS 50/8) (from Ch. 111, par. 7408)

8 (Section scheduled to be repealed on January 1, 2026)

9 Sec. 8. Applicant qualifications; examination.

10 (a) In order to protect persons who are deaf or hard of

11 hearing, the Department shall authorize or shall conduct an

12 appropriate examination, which may be the International

13 Hearing Society's licensure examination, for persons who

14 dispense, test, select, recommend, fit, or service hearing

15 instruments. The frequency of holding these examinations shall

16 be determined by the Department by rule. Those who

17 successfully pass such an examination shall be issued a

18 license as a hearing instrument dispenser, which shall be

19 effective for a 2-year period.

20 (b) Applicants shall be:

21 (1) at least 18 years of age;

22 (2) of good moral character;

23 (3) the holder of an associate's degree or the

24 equivalent;

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1 (4) free of contagious or infectious disease; and

2 (5) a citizen or person who has the status as a legal

3 noncitizen ~~alien~~.

4 Felony convictions of the applicant and findings against

5 the applicant involving matters set forth in Sections 17 and

6 18 shall be considered in determining moral character, but

7 such a conviction or finding shall not make an applicant

8 ineligible to register for examination.

9 (c) Prior to engaging in the practice of fitting,

10 dispensing, or servicing hearing instruments, an applicant

11 shall demonstrate, by means of written and practical

12 examinations, that such person is qualified to practice the

13 testing, selecting, recommending, fitting, selling, or

14 servicing of hearing instruments as defined in this Act. An

15 applicant must obtain a license within 12 months after passing

16 either the written or practical examination, whichever is

17 passed first, or must take and pass those examinations again

18 in order to be eligible to receive a license.

19 The Department shall, by rule, determine the conditions

20 under which an individual is examined.

21 (d) Proof of having met the minimum requirements of

22 continuing education as determined by the Board shall be

23 required of all license renewals. Pursuant to rule, the

24 continuing education requirements may, upon petition to the

25 Board, be waived in whole or in part if the hearing instrument

26 dispenser can demonstrate that he or she served in the Coast

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1 Guard or Armed Forces, had an extreme hardship, or obtained

2 his or her license by examination or endorsement within the

3 preceding renewal period.

4 (e) Persons applying for an initial license must

5 demonstrate having earned, at a minimum, an associate degree

6 or its equivalent from an accredited institution of higher

7 education that is recognized by the U.S. Department of

8 Education or that meets the U.S. Department of Education

9 equivalency as determined through a National Association of

10 Credential Evaluation Services (NACES) member, and meet the

11 other requirements of this Section. In addition, the applicant

12 must demonstrate the successful completion of (1) 12 semester

13 hours or 18 quarter hours of academic undergraduate course

14 work in an accredited institution consisting of 3 semester

15 hours of anatomy and physiology of the hearing mechanism, 3

16 semester hours of hearing science, 3 semester hours of

17 introduction to audiology, and 3 semester hours of aural

18 rehabilitation, or the quarter hour equivalent or (2) an

19 equivalent program as determined by the Department that is

20 consistent with the scope of practice of a hearing instrument

21 dispenser as defined in Section 3 of this Act. Persons

22 licensed before January 1, 2003 who have a valid license on

23 that date may have their license renewed without meeting the

24 requirements of this subsection.

25 (Source: P.A. 98-827, eff. 1-1-15; 99-204, eff. 7-30-15;

26 99-847, eff. 8-19-16.)

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1 Section 125. The Appraisal Management Company Registration

2 Act is amended by changing Section 10 as follows:

3 (225 ILCS 459/10)

4 Sec. 10. Definitions. In this Act:

5 "Address of record" means the principal address recorded

6 by the Department in the applicant's or registrant's

7 application file or registration file maintained by the

8 Department's registration maintenance unit.

9 "Applicant" means a person or entity who applies to the

10 Department for a registration under this Act.

11 "Appraisal" means (noun) the act or process of developing

12 an opinion of value; an opinion of value (adjective) of or

13 pertaining to appraising and related functions.

14 "Appraisal firm" means an appraisal entity that is 100%

15 owned and controlled by a person or persons licensed in

16 Illinois as a certified general real estate appraiser or a

17 certified residential real estate appraiser. An appraisal firm

18 does not include an appraisal management company.

19 "Appraisal management company" means any corporation,

20 limited liability company, partnership, sole proprietorship,

21 subsidiary, unit, or other business entity that directly or

22 indirectly: (1) provides appraisal management services to

23 creditors or secondary mortgage market participants, including

24 affiliates; (2) provides appraisal management services in

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1 connection with valuing the consumer's principal dwelling as

2 security for a consumer credit transaction (including consumer

3 credit transactions incorporated into securitizations); and

4 (3) any appraisal management company that, within a given

5 12-month period, oversees an appraiser panel of 16 or more

6 State-certified appraisers in Illinois or 25 or more

7 State-certified or State-licensed appraisers in 2 or more

8 jurisdictions. "Appraisal management company" includes a

9 hybrid entity.

10 "Appraisal management company national registry fee" means

11 the fee implemented pursuant to Title XI of the federal

12 Financial Institutions Reform, Recovery, and Enforcement Act

13 of 1989 for an appraiser management company's national

14 registry.

15 "Appraisal management services" means one or more of the

16 following:

17 (1) recruiting, selecting, and retaining appraisers;

18 (2) contracting with State-certified or State-licensed

19 appraisers to perform appraisal assignments;

20 (3) managing the process of having an appraisal

21 performed, including providing administrative services

22 such as receiving appraisal orders and appraisal reports;

23 submitting completed appraisal reports to creditors and

24 secondary market participants; collecting compensation

25 from creditors, underwriters, or secondary market

26 participants for services provided; or paying appraisers

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1 for services performed; or

2 (4) reviewing and verifying the work of appraisers.

3 "Appraiser panel" means a network, list, or roster of

4 licensed or certified appraisers approved by the appraisal

5 management company or by the end-user client to perform

6 appraisals as independent contractors for the appraisal

7 management company. "Appraiser panel" includes both appraisers

8 accepted by an appraisal management company for consideration

9 for future appraisal assignments and appraisers engaged by an

10 appraisal management company to perform one or more

11 appraisals. For the purposes of determining the size of an

12 appraiser panel, only independent contractors of hybrid

13 entities shall be counted towards the appraiser panel.

14 "Appraiser panel fee" means the amount collected from a

15 registrant that, where applicable, includes an appraisal

16 management company's national registry fee.

17 "Appraisal report" means a written appraisal by an

18 appraiser to a client.

19 "Appraisal practice service" means valuation services

20 performed by an individual acting as an appraiser, including,

21 but not limited to, appraisal or appraisal review.

22 "Appraisal subcommittee" means the appraisal subcommittee

23 of the Federal Financial Institutions Examination Council as

24 established by Title XI.

25 "Appraiser" means a person who performs real estate or

26 real property appraisals.

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1 "Assignment result" means an appraiser's opinions and

2 conclusions developed specific to an assignment.

3 "Audit" includes, but is not limited to, an annual or

4 special audit, visit, or review necessary under this Act or

5 required by the Secretary or the Secretary's authorized

6 representative in carrying out the duties and responsibilities

7 under this Act.

8 "Client" means the party or parties who engage an

9 appraiser by employment or contract in a specific appraisal

10 assignment.

11 "Controlling person" means:

12 (1) an owner, officer, or director of an entity

13 seeking to offer appraisal management services;

14 (2) an individual employed, appointed, or authorized

15 by an appraisal management company who has the authority

16 to:

17 (A) enter into a contractual relationship with a

18 client for the performance of an appraisal management

19 service or appraisal practice service; and

20 (B) enter into an agreement with an appraiser for

21 the performance of a real estate appraisal activity;

22 (3) an individual who possesses, directly or

23 indirectly, the power to direct or cause the direction of

24 the management or policies of an appraisal management

25 company; or

26 (4) an individual who will act as the sole compliance

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1 officer with regard to this Act and any rules adopted

2 under this Act.

3 "Covered transaction" means a consumer credit transaction

4 secured by a consumer's principal dwelling.

5 "Department" means the Department of Financial and

6 Professional Regulation.

7 "Email address of record" means the designated email

8 address recorded by the Department in the applicant's

9 application file or the registrant's registration file

10 maintained by the Department's registration maintenance unit.

11 "Entity" means a corporation, a limited liability company,

12 partnership, a sole proprietorship, or other entity providing

13 services or holding itself out to provide services as an

14 appraisal management company or an appraisal management

15 service.

16 "End-user client" means any person who utilizes or engages

17 the services of an appraiser through an appraisal management

18 company.

19 "Federally regulated appraisal management company" means

20 an appraisal management company that is owned and controlled

21 by an insured depository institution, as defined in 12 U.S.C.

22 1813, or an insured credit union, as defined in 12 U.S.C. 1752,

23 and regulated by the Office of the Comptroller of the

24 Currency, the Federal Reserve Board, the National Credit Union

25 Association, or the Federal Deposit Insurance Corporation.

26 "Financial institution" means any bank, savings bank,

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1 savings and loan association, credit union, mortgage broker,

2 mortgage banker, registrant under the Consumer Installment

3 Loan Act or the Sales Finance Agency Act, or a corporate

4 fiduciary, subsidiary, affiliate, parent company, or holding

5 company of any registrant, or any institution involved in real

6 estate financing that is regulated by State or federal law.

7 "Foreign appraisal management company" means any appraisal

8 management company organized under the laws of any other state

9 of the United States, the District of Columbia, or any other

10 jurisdiction of the United States.

11 "Hybrid entity" means an appraisal management company that

12 hires an appraiser as an employee to perform an appraisal and

13 engages an independent contractor to perform an appraisal.

14 "Multi-state licensing system" means a web-based platform

15 that allows an applicant to submit the application or

16 registration renewal to the Department online.

17 "Person" means individuals, entities, sole

18 proprietorships, corporations, limited liability companies,

19 and non-domestic ~~alien~~, foreign, or domestic partnerships,

20 except that when the context otherwise requires, the term may

21 refer to a single individual or other described entity.

22 "Principal dwelling" means a residential structure that

23 contains one to 4 units, whether or not that structure is

24 attached to real property. "Principal dwelling" includes an

25 individual condominium unit, cooperative unit, manufactured

26 home, mobile home, and trailer, if it is used as a residence.

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1 "Principal office" means the actual, physical business

2 address, which shall not be a post office box or a virtual

3 business address, of a registrant, at which (i) the Department

4 may contact the registrant and (ii) records required under

5 this Act are maintained.

6 "Qualified to transact business in this State" means being

7 in compliance with the requirements of the Business

8 Corporation Act of 1983.

9 "Quality control review" means a review of an appraisal

10 report for compliance and completeness, including grammatical,

11 typographical, or other similar errors, unrelated to

12 developing an opinion of value.

13 "Real estate" means an identified parcel or tract of land,

14 including any improvements.

15 "Real estate related financial transaction" means any

16 transaction involving:

17 (1) the sale, lease, purchase, investment in, or

18 exchange of real property, including interests in property

19 or the financing thereof;

20 (2) the refinancing of real property or interests in

21 real property; and

22 (3) the use of real property or interest in property

23 as security for a loan or investment, including mortgage

24 backed securities.

25 "Real property" means the interests, benefits, and rights

26 inherent in the ownership of real estate.

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1 "Secretary" means the Secretary of Financial and

2 Professional Regulation.

3 "USPAP" means the Uniform Standards of Professional

4 Appraisal Practice as adopted by the Appraisal Standards Board

5 under Title XI.

6 "Valuation" means any estimate of the value of real

7 property in connection with a creditor's decision to provide

8 credit, including those values developed under a policy of a

9 government sponsored enterprise or by an automated valuation

10 model or other methodology or mechanism.

11 "Written notice" means a communication transmitted by mail

12 or by electronic means that can be verified between an

13 appraisal management company and a licensed or certified real

14 estate appraiser.

15 (Source: P.A. 102-20, eff. 1-1-22; 102-687, eff. 12-17-21.)

16 Section 130. The Illinois Public Aid Code is amended by

17 changing Section 5-3 as follows:

18 (305 ILCS 5/5-3) (from Ch. 23, par. 5-3)

19 Sec. 5-3. Residence.) Any person who has established his

20 residence in this State and lives therein, including any

21 person who is a migrant worker, may qualify for medical

22 assistance. A person who, while temporarily in this State,

23 suffers injury or illness endangering his life and health and

24 necessitating emergency care, may also qualify.

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1 Temporary absence from the State shall not disqualify a

2 person from maintaining his eligibility under this Article.

3 As used in this Section, "migrant worker" means any person

4 residing temporarily and employed in Illinois who moves

5 seasonally from one place to another for the purpose of

6 employment in agricultural activities, including the planting,

7 raising or harvesting of any agricultural or horticultural

8 commodities and the handling, packing or processing of such

9 commodities on the farm where produced or at the point of first

10 processing, in animal husbandry, or in other activities

11 connected with the care of animals. Dependents of such person

12 shall be considered eligible if they are living with the

13 person during his or her temporary residence and employment in

14 Illinois.

15 In order to be eligible for medical assistance under this

16 section, each migrant worker shall show proof of citizenship

17 or legal noncitizen ~~alien~~ status.

18 (Source: P.A. 81-746.)

19 Section 135. The Housing Development and Construction Act

20 is amended by changing Section 5 as follows:

21 (310 ILCS 20/5) (from Ch. 67 1/2, par. 57)

22 Sec. 5. Any grants paid hereunder to a housing authority

23 shall be deposited in a separate fund and, subject to the

24 approval of the Department of Commerce and Economic

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1 Opportunity, may be used for any or all of the following

2 purposes as the needs of the community may require: the

3 acquisition of land by purchase, gift or condemnation and the

4 improvement thereof, the purchase and installation of

5 temporary housing facilities, the construction of housing

6 units for rent or sale to veterans, the families of deceased

7 servicemen, and for persons and families who by reason of

8 overcrowded housing conditions or displacement by eviction,

9 fires or other calamities, or slum clearance or other private

10 or public project involving relocation, are in urgent need of

11 safe and sanitary housing, the making of grants in connection

12 with the sale or lease of real property as provided in the

13 following paragraph of this section, and for any and all

14 purposes authorized by the "Housing Authorities Act," approved

15 March 19, 1934, as amended, including administrative expenses

16 of the housing authorities in relation to the aforesaid

17 objectives, to the extent and for the purposes authorized and

18 approved by the Department of Commerce and Economic

19 Opportunity. Each housing authority is vested with power to

20 exercise the right of eminent domain for the purposes

21 authorized by this Act. Condemnation proceedings instituted by

22 any such authority shall be in all respects in the manner

23 provided for the exercise of the right of eminent domain under

24 the Eminent Domain Act.

25 In addition to the foregoing, and for the purpose of

26 facilitating the development and construction of housing,

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1 housing authorities may, with the approval of the Department

2 of Commerce and Economic Opportunity, enter into contracts and

3 agreements for the sale or lease of real property acquired by

4 the Authority through the use of the grant hereunder, and may

5 sell or lease such property to (1) housing corporations

6 operating under "An Act in relation to housing," approved July

7 12, 1933, as amended; (2) neighborhood redevelopment

8 corporations operating under the "Neighborhood Redevelopment

9 Corporation Law," approved July 9, 1941; (3) insurance

10 companies operating under Article VIII of the Illinois

11 Insurance Code; (4) non-profit corporations organized for the

12 purpose of constructing, managing and operating housing

13 projects and the improvement of housing conditions, including

14 the sale or rental of housing units to persons in need thereof;

15 or (5) to any other individual, association or corporation,

16 including bona fide housing cooperatives, desiring to engage

17 in a development or redevelopment project. The term

18 "corporation" as used in this section, means a corporation

19 organized under the laws of this or any other state of the

20 United States, or of any country, which may legally make

21 investments in this State of the character herein prescribed,

22 including foreign and non-domestic ~~alien~~ insurance companies

23 as defined in Section 2 of the "Illinois Insurance Code." No

24 sale or lease shall be made hereunder to any of the aforesaid

25 corporations, associations or individuals unless a plan

26 approved by the Authority has been presented by the purchaser

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1 or lessee for the development or redevelopment of such

2 property, together with a bond, with satisfactory sureties, of

3 not less than 10% of the cost of such development or

4 redevelopment, conditioned upon the completion of such

5 development or redevelopment; provided that the requirement of

6 the bond may be waived by the Department of Commerce and

7 Economic Opportunity if it is satisfied of the financial

8 ability of the purchaser or lessee to complete such

9 development or redevelopment in accordance with the presented

10 plan. To further assure that the real property so sold or

11 leased shall be used in accordance with the plan, the

12 Department of Commerce and Economic Opportunity may require

13 the purchaser or lessee to execute in writing such

14 undertakings as the Department deems necessary to obligate

15 such purchaser or lessee (1) to use the property for the

16 purposes presented in the plan; (2) to commence and complete

17 the building of the improvements designated in the plan within

18 the periods of time that the Department of Commerce and

19 Economic Opportunity fixes as reasonable, and (3) to comply

20 with such other conditions as are necessary to carry out the

21 purposes of this Act. Any such property may be sold pursuant to

22 this section for any legal consideration in an amount to be

23 approved by the Department of Commerce and Economic

24 Opportunity. Subject to the approval of the Department of

25 Commerce and Economic Opportunity, a housing authority may pay

26 to any non-profit corporation of the character described in

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1 this section from grants made available from state funds, such

2 sum of money which, when added to the value of the land so sold

3 or leased to such non-profit corporation and the value of

4 other assets of such non-profit corporation available for use

5 in the project, will enable such non-profit corporation to

6 obtain Federal Housing Administration insured construction

7 mortgages. Any such authority may also sell, transfer, convey

8 or assign to any such non-profit corporation any personal

9 property, including building materials and supplies, as it

10 deems necessary to facilitate the completion of the

11 development or redevelopment by such non-profit corporation.

12 If the area of operation of a housing authority includes a

13 city, village or incorporated town having a population in

14 excess of 500,000, as determined by the last preceding Federal

15 Census, no real property or interest in real property shall be

16 acquired in such municipality by the housing authority until

17 such time as the housing authority has advised the governing

18 body of such municipality of the description of the real

19 property, or interest therein, proposed to be acquired, and

20 the governing body of the municipality has approved the

21 acquisition thereof by the housing authority.

22 (Source: P.A. 94-793, eff. 5-19-06; 94-1055, eff. 1-1-07.)

23 Section 140. The Urban Renewal Consolidation Act of 1961

24 is amended by changing Section 18 as follows:

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1 (315 ILCS 30/18) (from Ch. 67 1/2, par. 91.118)

2 Sec. 18. The Department may at such times as it deems

3 expedient transfer and sell the fee simple title, or such

4 lesser estate as the Department may have acquired, or as may

5 theretofore have been acquired by a land clearance commission,

6 to all or any part of the real property within the area of a

7 redevelopment project not disposed of in accordance with

8 Sections 15, 16, and 17 hereof to (1) Neighborhood

9 Redevelopment Corporations operating under the "Neighborhood

10 Redevelopment Corporation Law," approved July 9, 1941, as

11 amended, (2) Insurance Companies operating under Section 125a

12 of the "Illinois Insurance Code," approved June 29, 1937, as

13 amended, (3) any individual, association, or corporation,

14 organized under the laws of this State or of any other State or

15 country, which may legally make such investments in this

16 State, including foreign and non-domestic ~~alien~~ insurance

17 companies, as defined in Section 2 of said "Illinois Insurance

18 Code", or (4) bodies politic and corporate, public

19 corporations, or any private interest empowered by law to

20 acquire, develop and use such real property for such uses,

21 public or private, as are in accordance with an approved plan;

22 provided, however, that any sale of real property to a housing

23 authority shall be made only in accordance with the provisions

24 of Sections 16 and 17 hereof. To assure that the real property

25 so sold is used in accordance with the approved plan referred

26 to in Section 19 hereof, the Department shall inquire into and

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1 satisfy itself concerning the financial ability of the

2 purchaser to complete the redevelopment in accordance with the

3 approved plan and shall require the purchaser to execute in

4 writing such undertakings as the Department may deem necessary

5 to obligate the purchaser: (1) to use the land for the purposes

6 designated in the approved plan, (2) to commence and complete

7 the building of the improvements within the periods of time

8 which the Department fixes as reasonable, and (3) to comply

9 with such other conditions as are necessary to carry out the

10 purposes of this Act. Any such area may be sold either as an

11 entirety or in such parcels as the Department shall deem

12 expedient. It shall not be necessary that title be acquired to

13 all real property within the area of a redevelopment project

14 before the sale of a part thereof may be made as provided

15 herein. Any real property sold pursuant to the foregoing

16 provisions of this Section shall be sold at its use value

17 (which may be less than its acquisition cost), which

18 represents the value at which the Department determines such

19 land should be made available in order that it may be developed

20 or redeveloped for the purposes specified in the approved

21 plan.

22 Any real property lying within the area of the

23 redevelopment project which has not been sold by the

24 Department within five years after the Department has acquired

25 title to all the real property within the area of that

26 redevelopment project, shall be forthwith sold by the

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1 Department at public sale for cash to the highest bidder

2 obligating himself in the manner set forth in the preceding

3 paragraph of this Section to redevelop the property in

4 accordance with the approved plan. Notice of such sale and of

5 the place where the approved plan may be inspected shall be

6 published once in a newspaper having a general circulation in

7 the municipality in which the real property is situated at

8 least twenty (20) days prior to the date of such public sale,

9 and shall contain a description of the real property to be

10 sold.

11 The Department may reject the bids received if, in the

12 opinion of the Department, the highest bid does not equal or

13 exceed the use value (as hereinabove defined) of the land to be

14 sold. At the expiration of six (6) months from the date of

15 rejecting bids, the Department shall again advertise for sale

16 any real property then remaining unsold. Each publication

17 shall be subject to the same requirements and conditions as

18 the original publication.

19 (Source: P.A. 83-333.)

20 Section 145. The Service Member Employment and

21 Reemployment Rights Act is amended by changing Section 1-10 as

22 follows:

23 (330 ILCS 61/1-10)

24 Sec. 1-10. Definitions. As used in this Act:

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1 "Accrue" means to accumulate in regular or increasing

2 amounts over time subject to customary allocation of cost.

3 "Active duty" means any full-time military service

4 regardless of length or voluntariness including, but not

5 limited to, annual training, full-time National Guard duty,

6 and State active duty. "Active duty" does not include any form

7 of inactive duty service such as drill duty or muster duty.

8 "Active duty", unless provided otherwise, includes active duty

9 without pay.

10 "Active service" means all forms of active and inactive

11 duty regardless of voluntariness including, but not limited

12 to, annual training, active duty for training, initial active

13 duty training, overseas training duty, full-time National

14 Guard duty, active duty other than training, State active

15 duty, mobilizations, and muster duty. "Active service", unless

16 provided otherwise, includes active service without pay.

17 "Active service" includes:

18 (1) Reserve component voluntary active service means

19 service under one of the following authorities:

20 (A) any duty under 32 U.S.C. 502(f)(1)(B);

21 (B) active guard reserve duty, operational

22 support, or additional duty under 10 U.S.C. 12301(d)

23 or 32 U.S.C. 502(f)(1)(B);

24 (C) funeral honors under 10 U.S.C. 12503 or 32

25 U.S.C. 115;

26 (D) duty at the National Guard Bureau under 10

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1 U.S.C. 12402;

2 (E) unsatisfactory participation under 10 U.S.C.

3 10148 or 10 U.S.C. 12303;

4 (F) discipline under 10 U.S.C. 802(d);

5 (G) extended active duty under 10 U.S.C. 12311;

6 and

7 (H) reserve program administrator under 10 U.S.C.

8 10211.

9 (2) Reserve component involuntary active service

10 includes, but is not limited to, service under one of the

11 following authorities:

12 (A) annual training or drill requirements under 10

13 U.S.C. 10147, 10 U.S.C. 12301(b) or 32 U.S.C. 502(a).

14 (B) additional training duty or other duty under

15 32 U.S.C. 502(f)(1)(A);

16 (C) pre-planned or pre-programmed combatant

17 commander support under 10 U.S.C. 12304b;

18 (D) mobilization under 10 U.S.C. 12301(a) or 10

19 U.S.C. 12302;

20 (E) presidential reserve call-up under 10 U.S.C.

21 12304;

22 (F) emergencies and natural disasters under 10

23 U.S.C. 12304a or 14 U.S.C. 712;

24 (G) muster duty under 10 U.S.C. 12319;

25 (H) retiree recall under 10 U.S.C. 688;

26 (I) captive status under 10 U.S.C. 12301(g);

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1 (J) insurrection under 10 U.S.C. 331, 10 U.S.C.

2 332, or 10 U.S.C. 12406;

3 (K) pending line of duty determination for

4 response to sexual assault under 10 U.S.C. 12323; and

5 (L) initial active duty for training under 10

6 U.S.C. 671.

7 Reserve component active service not listed in paragraph

8 (1) or (2) shall be considered involuntary active service

9 under paragraph (2).

10 "Active service without pay" means active service

11 performed under any authority in which base pay is not

12 received regardless of other allowances.

13 "Annual training" means any active duty performed under

14 Section 10147 or 12301(b) of Title 10 of the United States Code

15 or under Section 502(a) of Title 32 of the United States Code.

16 "Base pay" means the main component of military pay,

17 whether active or inactive, based on rank and time in service.

18 It does not include the addition of conditional funds for

19 specific purposes such as allowances, incentive and special

20 pay. Base pay, also known as basic pay, can be determined by

21 referencing the appropriate military pay chart covering the

22 time period in question located on the federal Defense Finance

23 and Accounting Services website or as reflected on a federal

24 Military Leave and Earnings Statement.

25 "Benefits" includes, but is not limited to, the terms,

26 conditions, or privileges of employment, including any

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1 advantage, profit, privilege, gain, status, account, or

2 interest, including wages or salary for work performed, that

3 accrues by reason of an employment contract or agreement or an

4 employer policy, plan, or practice and includes rights and

5 benefits under a pension plan, a health plan, an employee

6 stock ownership plan, insurance coverage and awards, bonuses,

7 severance pay, supplemental unemployment benefits, vacations,

8 and the opportunity to select work hours or location of

9 employment.

10 "Differential compensation" means pay due when the

11 employee's daily rate of compensation for military service is

12 less than his or her daily rate of compensation as a public

13 employee.

14 "Employee" means anyone employed by an employer.

15 "Employee" includes any person who is a citizen, national, or

16 permanent resident noncitizen ~~alien~~ of the United States

17 employed in a workplace that the State has legal authority to

18 regulate business and employment. "Employee" does not include

19 an independent contractor.

20 "Employer" means any person, institution, organization, or

21 other entity that pays salary or wages for work performed or

22 that has control over employment opportunities, including:

23 (1) a person, institution, organization, or other

24 entity to whom the employer has delegated the performance

25 of employment-related responsibilities;

26 (2) an employer of a public employee;

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1 (3) any successor in interest to a person,

2 institution, organization, or other entity referred to

3 under this definition; and

4 (4) a person, institution, organization, or other

5 entity that has been denied initial employment in

6 violation of Section 5-15.

7 "Inactive duty" means inactive duty training, including

8 drills, consisting of regularly scheduled unit training

9 assemblies, additional training assemblies, periods of

10 appropriate duty or equivalent training, and any special

11 additional duties authorized for reserve component personnel

12 by appropriate military authority. "Inactive duty" does not

13 include active duty.

14 "Military leave" means a furlough or leave of absence

15 while performing active service. It cannot be substituted for

16 accrued vacation, annual, or similar leave with pay except at

17 the sole discretion of the service member employee. It is not a

18 benefit of employment that is requested but a legal

19 requirement upon receiving notice of pending military service.

20 "Military service" means:

21 (1) Service in the Armed Forces of the United States,

22 the National Guard of any state or territory regardless of

23 status, and the State Guard as defined in the State Guard

24 Act. "Military service", whether active or reserve,

25 includes service under the authority of U.S.C. Titles 10,

26 14, or 32, or State active duty.

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1 (2) Service in a federally recognized auxiliary of the

2 United States Armed Forces when performing official duties

3 in support of military or civilian authorities as a result

4 of an emergency.

5 (3) A period for which an employee is absent from a

6 position of employment for the purpose of medical or

7 dental treatment for a condition, illness, or injury

8 sustained or aggravated during a period of active service

9 in which treatment is paid by the United States Department

10 of Defense Military Health System.

11 "Public employee" means any person classified as a

12 full-time employee of the State of Illinois, a unit of local

13 government, a public institution of higher education as

14 defined in Section 1 of the Board of Higher Education Act, or a

15 school district, other than an independent contractor.

16 "Reserve component" means the reserve components of

17 Illinois and the United States Armed Forces regardless of

18 status.

19 "Service member" means any person who is a member of a

20 military service.

21 "State active duty" means full-time State-funded military

22 duty under the command and control of the Governor and subject

23 to the Military Code of Illinois.

24 "Unit of local government" means any city, village, town,

25 county, or special district.

26 (Source: P.A. 100-1101, eff. 1-1-19.)

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1 Section 150. The Firearm Owners Identification Card Act is

2 amended by changing Sections 4 and 8 as follows:

3 (430 ILCS 65/4) (from Ch. 38, par. 83-4)

4 Sec. 4. Application for Firearm Owner's Identification

5 Cards.

6 (a) Each applicant for a Firearm Owner's Identification

7 Card must:

8 (1) Submit an application as made available by the

9 Illinois State Police; and

10 (2) Submit evidence to the Illinois State Police that:

11 (i) This subparagraph (i) applies through the

12 180th day following July 12, 2019 (the effective date

13 of Public Act 101-80) ~~this amendatory Act of the 101st~~

14 ~~General Assembly~~. He or she is 21 years of age or over,

15 or if he or she is under 21 years of age that he or she

16 has the written consent of his or her parent or legal

17 guardian to possess and acquire firearms and firearm

18 ammunition and that he or she has never been convicted

19 of a misdemeanor other than a traffic offense or

20 adjudged delinquent, provided, however, that such

21 parent or legal guardian is not an individual

22 prohibited from having a Firearm Owner's

23 Identification Card and files an affidavit with the

24 Department as prescribed by the Department stating

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1 that he or she is not an individual prohibited from

2 having a Card;

3 (i-5) This subparagraph (i-5) applies on and after

4 the 181st day following July 12, 2019 (the effective

5 date of Public Act 101-80) ~~this amendatory Act of the~~

6 ~~101st General Assembly~~. He or she is 21 years of age or

7 over, or if he or she is under 21 years of age that he

8 or she has never been convicted of a misdemeanor other

9 than a traffic offense or adjudged delinquent and is

10 an active duty member of the United States Armed

11 Forces or has the written consent of his or her parent

12 or legal guardian to possess and acquire firearms and

13 firearm ammunition, provided, however, that such

14 parent or legal guardian is not an individual

15 prohibited from having a Firearm Owner's

16 Identification Card and files an affidavit with the

17 Illinois State Police ~~Department~~ as prescribed by the

18 Illinois State Police ~~Department~~stating that he or

19 she is not an individual prohibited from having a Card

20 or the active duty member of the United States Armed

21 Forces under 21 years of age annually submits proof to

22 the Illinois State Police, in a manner prescribed by

23 the Illinois State Police ~~Department~~;

24 (ii) He or she has not been convicted of a felony

25 under the laws of this or any other jurisdiction;

26 (iii) He or she is not addicted to narcotics;

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1 (iv) He or she has not been a patient in a mental

2 health facility within the past 5 years or, if he or

3 she has been a patient in a mental health facility more

4 than 5 years ago submit the certification required

5 under subsection (u) of Section 8 of this Act;

6 (v) He or she is not a person with an intellectual

7 disability;

8 (vi) He or she is not a noncitizen ~~an alien~~ who is

9 unlawfully present in the United States under the laws

10 of the United States;

11 (vii) He or she is not subject to an existing order

12 of protection prohibiting him or her from possessing a

13 firearm;

14 (viii) He or she has not been convicted within the

15 past 5 years of battery, assault, aggravated assault,

16 violation of an order of protection, or a

17 substantially similar offense in another jurisdiction,

18 in which a firearm was used or possessed;

19 (ix) He or she has not been convicted of domestic

20 battery, aggravated domestic battery, or a

21 substantially similar offense in another jurisdiction

22 committed before, on or after January 1, 2012 (the

23 effective date of Public Act 97-158). If the applicant

24 knowingly and intelligently waives the right to have

25 an offense described in this clause (ix) tried by a

26 jury, and by guilty plea or otherwise, results in a

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1 conviction for an offense in which a domestic

2 relationship is not a required element of the offense

3 but in which a determination of the applicability of

4 18 U.S.C. 922(g)(9) is made under Section 112A-11.1 of

5 the Code of Criminal Procedure of 1963, an entry by the

6 court of a judgment of conviction for that offense

7 shall be grounds for denying the issuance of a Firearm

8 Owner's Identification Card under this Section;

9 (x) (Blank);

10 (xi) He or she is not a person ~~an alien~~ who has

11 been admitted to the United States under a

12 non-immigrant visa (as that term is defined in Section

13 101(a)(26) of the Immigration and Nationality Act (8

14 U.S.C. 1101(a)(26))), or that he or she isa

15 noncitizen ~~an alien~~ who has been lawfully admitted to

16 the United States under a non-immigrant visa if that

17 person ~~alien~~ is:

18 (1) admitted to the United States for lawful

19 hunting or sporting purposes;

20 (2) an official representative of a foreign

21 government who is:

22 (A) accredited to the United States

23 Government or the Government's mission to an

24 international organization having its

25 headquarters in the United States; or

26 (B) en route to or from another country to

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1 which that noncitizen ~~alien~~is accredited;

2 (3) an official of a foreign government or

3 distinguished foreign visitor who has been so

4 designated by the Department of State;

5 (4) a foreign law enforcement officer of a

6 friendly foreign government entering the United

7 States on official business; or

8 (5) one who has received a waiver from the

9 Attorney General of the United States pursuant to

10 18 U.S.C. 922(y)(3);

11 (xii) He or she is not a minor subject to a

12 petition filed under Section 5-520 of the Juvenile

13 Court Act of 1987 alleging that the minor is a

14 delinquent minor for the commission of an offense that

15 if committed by an adult would be a felony;

16 (xiii) He or she is not an adult who had been

17 adjudicated a delinquent minor under the Juvenile

18 Court Act of 1987 for the commission of an offense that

19 if committed by an adult would be a felony;

20 (xiv) He or she is a resident of the State of

21 Illinois;

22 (xv) He or she has not been adjudicated as a person

23 with a mental disability;

24 (xvi) He or she has not been involuntarily

25 admitted into a mental health facility; and

26 (xvii) He or she is not a person with a

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1 developmental disability; and

2 (3) Upon request by the Illinois State Police, sign a

3 release on a form prescribed by the Illinois State Police

4 waiving any right to confidentiality and requesting the

5 disclosure to the Illinois State Police of limited mental

6 health institution admission information from another

7 state, the District of Columbia, any other territory of

8 the United States, or a foreign nation concerning the

9 applicant for the sole purpose of determining whether the

10 applicant is or was a patient in a mental health

11 institution and disqualified because of that status from

12 receiving a Firearm Owner's Identification Card. No mental

13 health care or treatment records may be requested. The

14 information received shall be destroyed within one year of

15 receipt.

16 (a-5) Each applicant for a Firearm Owner's Identification

17 Card who is over the age of 18 shall furnish to the Illinois

18 State Police either his or her Illinois driver's license

19 number or Illinois Identification Card number, except as

20 provided in subsection (a-10).

21 (a-10) Each applicant for a Firearm Owner's Identification

22 Card, who is employed as a law enforcement officer, an armed

23 security officer in Illinois, or by the United States Military

24 permanently assigned in Illinois and who is not an Illinois

25 resident, shall furnish to the Illinois State Police his or

26 her driver's license number or state identification card

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1 number from his or her state of residence. The Illinois State

2 Police may adopt rules to enforce the provisions of this

3 subsection (a-10).

4 (a-15) If an applicant applying for a Firearm Owner's

5 Identification Card moves from the residence address named in

6 the application, he or she shall immediately notify in a form

7 and manner prescribed by the Illinois State Police of that

8 change of address.

9 (a-20) Each applicant for a Firearm Owner's Identification

10 Card shall furnish to the Illinois State Police his or her

11 photograph. An applicant who is 21 years of age or older

12 seeking a religious exemption to the photograph requirement

13 must furnish with the application an approved copy of United

14 States Department of the Treasury Internal Revenue Service

15 Form 4029. In lieu of a photograph, an applicant regardless of

16 age seeking a religious exemption to the photograph

17 requirement shall submit fingerprints on a form and manner

18 prescribed by the Illinois State Police ~~Department~~ with his or

19 her application.

20 (a-25) Beginning January 1, 2023, each applicant for the

21 issuance of a Firearm Owner's Identification Card may include

22 a full set of his or her fingerprints in electronic format to

23 the Illinois State Police, unless the applicant has previously

24 provided a full set of his or her fingerprints to the Illinois

25 State Police under this Act or the Firearm Concealed Carry

26 Act.

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1 The fingerprints must be transmitted through a live scan

2 fingerprint vendor licensed by the Department of Financial and

3 Professional Regulation. The fingerprints shall be checked

4 against the fingerprint records now and hereafter filed in the

5 Illinois State Police and Federal Bureau of Investigation

6 criminal history records databases, including all available

7 State and local criminal history record information files.

8 The Illinois State Police shall charge applicants a

9 one-time fee for conducting the criminal history record check,

10 which shall be deposited into the State Police Services Fund

11 and shall not exceed the actual cost of the State and national

12 criminal history record check.

13 (a-26) The Illinois State Police shall research, explore,

14 and report to the General Assembly by January 1, 2022 on the

15 feasibility of permitting voluntarily submitted fingerprints

16 obtained for purposes other than Firearm Owner's

17 Identification Card enforcement that are contained in the

18 Illinois State Police database for purposes of this Act.

19 (b) Each application form shall include the following

20 statement printed in bold type: "Warning: Entering false

21 information on an application for a Firearm Owner's

22 Identification Card is punishable as a Class 2 felony in

23 accordance with subsection (d-5) of Section 14 of the Firearm

24 Owners Identification Card Act.".

25 (c) Upon such written consent, pursuant to Section 4,

26 paragraph (a)(2)(i), the parent or legal guardian giving the

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1 consent shall be liable for any damages resulting from the

2 applicant's use of firearms or firearm ammunition.

3 (Source: P.A. 101-80, eff. 7-12-19; 102-237, eff. 1-1-22;

4 102-538, eff. 8-20-21; revised 10-12-21.)

5 (430 ILCS 65/8) (from Ch. 38, par. 83-8)

6 Sec. 8. Grounds for denial and revocation. The Illinois

7 State Police has authority to deny an application for or to

8 revoke and seize a Firearm Owner's Identification Card

9 previously issued under this Act only if the Illinois State

10 Police ~~Department~~finds that the applicant or the person to

11 whom such card was issued is or was at the time of issuance:

12 (a) A person under 21 years of age who has been

13 convicted of a misdemeanor other than a traffic offense or

14 adjudged delinquent;

15 (b) This subsection (b) applies through the 180th day

16 following July 12, 2019 (the effective date of Public Act

17 101-80) ~~this amendatory Act of the 101st General Assembly~~.

18 A person under 21 years of age who does not have the

19 written consent of his parent or guardian to acquire and

20 possess firearms and firearm ammunition, or whose parent

21 or guardian has revoked such written consent, or where

22 such parent or guardian does not qualify to have a Firearm

23 Owner's Identification Card;

24 (b-5) This subsection (b-5) applies on and after the

25 181st day following July 12, 2019 (the effective date of

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1 Public Act 101-80) ~~this amendatory Act of the 101st~~

2 ~~General Assembly~~. A person under 21 years of age who is not

3 an active duty member of the United States Armed Forces

4 and does not have the written consent of his or her parent

5 or guardian to acquire and possess firearms and firearm

6 ammunition, or whose parent or guardian has revoked such

7 written consent, or where such parent or guardian does not

8 qualify to have a Firearm Owner's Identification Card;

9 (c) A person convicted of a felony under the laws of

10 this or any other jurisdiction;

11 (d) A person addicted to narcotics;

12 (e) A person who has been a patient of a mental health

13 facility within the past 5 years or a person who has been a

14 patient in a mental health facility more than 5 years ago

15 who has not received the certification required under

16 subsection (u) of this Section. An active law enforcement

17 officer employed by a unit of government or a Department

18 of Corrections employee authorized to possess firearms who

19 is denied, revoked, or has his or her Firearm Owner's

20 Identification Card seized under this subsection (e) may

21 obtain relief as described in subsection (c-5) of Section

22 10 of this Act if the officer or employee did not act in a

23 manner threatening to the officer or employee, another

24 person, or the public as determined by the treating

25 clinical psychologist or physician, and the officer or

26 employee seeks mental health treatment;

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1 (f) A person whose mental condition is of such a

2 nature that it poses a clear and present danger to the

3 applicant, any other person or persons,or the community;

4 (g) A person who has an intellectual disability;

5 (h) A person who intentionally makes a false statement

6 in the Firearm Owner's Identification Card application;

7 (i) A noncitizen ~~An alien~~who is unlawfully present in

8 the United States under the laws of the United States;

9 (i-5) A person ~~An alien~~ who has been admitted to the

10 United States under a non-immigrant visa (as that term is

11 defined in Section 101(a)(26) of the Immigration and

12 Nationality Act (8 U.S.C. 1101(a)(26))), except that this

13 subsection (i-5) does not apply to any noncitizen ~~alien~~

14 who has been lawfully admitted to the United States under

15 a non-immigrant visa if that person ~~alien~~ is:

16 (1) admitted to the United States for lawful

17 hunting or sporting purposes;

18 (2) an official representative of a foreign

19 government who is:

20 (A) accredited to the United States Government

21 or the Government's mission to an international

22 organization having its headquarters in the United

23 States; or

24 (B) en route to or from another country to

25 which that noncitizen ~~alien~~is accredited;

26 (3) an official of a foreign government or

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1 distinguished foreign visitor who has been so

2 designated by the Department of State;

3 (4) a foreign law enforcement officer of a

4 friendly foreign government entering the United States

5 on official business; or

6 (5) one who has received a waiver from the

7 Attorney General of the United States pursuant to 18

8 U.S.C. 922(y)(3);

9 (j) (Blank);

10 (k) A person who has been convicted within the past 5

11 years of battery, assault, aggravated assault, violation

12 of an order of protection, or a substantially similar

13 offense in another jurisdiction, in which a firearm was

14 used or possessed;

15 (l) A person who has been convicted of domestic

16 battery, aggravated domestic battery, or a substantially

17 similar offense in another jurisdiction committed before,

18 on or after January 1, 2012 (the effective date of Public

19 Act 97-158). If the applicant or person who has been

20 previously issued a Firearm Owner's Identification Card

21 under this Act knowingly and intelligently waives the

22 right to have an offense described in this paragraph (l)

23 tried by a jury, and by guilty plea or otherwise, results

24 in a conviction for an offense in which a domestic

25 relationship is not a required element of the offense but

26 in which a determination of the applicability of 18 U.S.C.

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1 922(g)(9) is made under Section 112A-11.1 of the Code of

2 Criminal Procedure of 1963, an entry by the court of a

3 judgment of conviction for that offense shall be grounds

4 for denying an application for and for revoking and

5 seizing a Firearm Owner's Identification Card previously

6 issued to the person under this Act;

7 (m) (Blank);

8 (n) A person who is prohibited from acquiring or

9 possessing firearms or firearm ammunition by any Illinois

10 State statute or by federal law;

11 (o) A minor subject to a petition filed under Section

12 5-520 of the Juvenile Court Act of 1987 alleging that the

13 minor is a delinquent minor for the commission of an

14 offense that if committed by an adult would be a felony;

15 (p) An adult who had been adjudicated a delinquent

16 minor under the Juvenile Court Act of 1987 for the

17 commission of an offense that if committed by an adult

18 would be a felony;

19 (q) A person who is not a resident of the State of

20 Illinois, except as provided in subsection (a-10) of

21 Section 4;

22 (r) A person who has been adjudicated as a person with

23 a mental disability;

24 (s) A person who has been found to have a

25 developmental disability;

26 (t) A person involuntarily admitted into a mental

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1 health facility; or

2 (u) A person who has had his or her Firearm Owner's

3 Identification Card revoked or denied under subsection (e)

4 of this Section or item (iv) of paragraph (2) of

5 subsection (a) of Section 4 of this Act because he or she

6 was a patient in a mental health facility as provided in

7 subsection (e) of this Section, shall not be permitted to

8 obtain a Firearm Owner's Identification Card, after the

9 5-year period has lapsed, unless he or she has received a

10 mental health evaluation by a physician, clinical

11 psychologist, or qualified examiner as those terms are

12 defined in the Mental Health and Developmental

13 Disabilities Code, and has received a certification that

14 he or she is not a clear and present danger to himself,

15 herself, or others. The physician, clinical psychologist,

16 or qualified examiner making the certification and his or

17 her employer shall not be held criminally, civilly, or

18 professionally liable for making or not making the

19 certification required under this subsection, except for

20 willful or wanton misconduct. This subsection does not

21 apply to a person whose firearm possession rights have

22 been restored through administrative or judicial action

23 under Section 10 or 11 of this Act.

24 Upon revocation of a person's Firearm Owner's

25 Identification Card, the Illinois State Police shall provide

26 notice to the person and the person shall comply with Section

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1 9.5 of this Act.

2 (Source: P.A. 101-80, eff. 7-12-19; 102-538, eff. 8-20-21;

3 102-645, eff. 1-1-22; revised 10-14-21.)

4 Section 155. The Criminal Code of 2012 is amended by

5 changing Section 17-6.5 as follows:

6 (720 ILCS 5/17-6.5)

7 Sec. 17-6.5. Persons under deportation order;

8 ineligibility for benefits.

9 (a) An individual against whom a United States Immigration

10 Judge has issued an order of deportation which has been

11 affirmed by the Board of Immigration Review, as well as an

12 individual who appeals such an order pending appeal, under

13 paragraph 19 of Section 241(a) of the Immigration and

14 Nationality Act relating to persecution of others on account

15 of race, religion, national origin or political opinion under

16 the direction of or in association with the Nazi government of

17 Germany or its allies, shall be ineligible for the following

18 benefits authorized by State law:

19 (1) The homestead exemptions and homestead improvement

20 exemption under Sections 15-170, 15-175, 15-176, and

21 15-180 of the Property Tax Code.

22 (2) Grants under the Senior Citizens and Persons with

23 Disabilities Property Tax Relief Act.

24 (3) The double income tax exemption conferred upon

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1 persons 65 years of age or older by Section 204 of the

2 Illinois Income Tax Act.

3 (4) Grants provided by the Department on Aging.

4 (5) Reductions in vehicle registration fees under

5 Section 3-806.3 of the Illinois Vehicle Code.

6 (6) Free fishing and reduced fishing license fees

7 under Sections 20-5 and 20-40 of the Fish and Aquatic Life

8 Code.

9 (7) Tuition free courses for senior citizens under the

10 Senior Citizen Courses Act.

11 (8) Any benefits under the Illinois Public Aid Code.

12 (b) If a person has been found by a court to have knowingly

13 received benefits in violation of subsection (a) and:

14 (1) the total monetary value of the benefits received

15 is less than $150, the person is guilty of a Class A

16 misdemeanor; a second or subsequent violation is a Class 4

17 felony;

18 (2) the total monetary value of the benefits received

19 is $150 or more but less than $1,000, the person is guilty

20 of a Class 4 felony; a second or subsequent violation is a

21 Class 3 felony;

22 (3) the total monetary value of the benefits received

23 is $1,000 or more but less than $5,000, the person is

24 guilty of a Class 3 felony; a second or subsequent

25 violation is a Class 2 felony;

26 (4) the total monetary value of the benefits received

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1 is $5,000 or more but less than $10,000, the person is

2 guilty of a Class 2 felony; a second or subsequent

3 violation is a Class 1 felony; or

4 (5) the total monetary value of the benefits received

5 is $10,000 or more, the person is guilty of a Class 1

6 felony.

7 (c) For purposes of determining the classification of an

8 offense under this Section, all of the monetary value of the

9 benefits received as a result of the unlawful act, practice,

10 or course of conduct may be accumulated.

11 (d) Any grants awarded to persons described in subsection

12 (a) may be recovered by the State of Illinois in a civil action

13 commenced by the Attorney General in the circuit court of

14 Sangamon County or the State's Attorney of the county of

15 residence of the person described in subsection (a).

16 (e) An individual described in subsection (a) who has been

17 deported shall be restored to any benefits which that

18 individual has been denied under State law pursuant to

19 subsection (a) if (i) the Attorney General of the United

20 States has issued an order cancelling deportation and has

21 adjusted the status of the individual to that of a noncitizen

22 ~~an alien~~lawfully admitted for permanent residence in the

23 United States or (ii) the country to which the individual has

24 been deported adjudicates or exonerates the individual in a

25 judicial or administrative proceeding as not being guilty of

26 the persecution of others on account of race, religion,

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1 national origin, or political opinion under the direction of

2 or in association with the Nazi government of Germany or its

3 allies.

4 (Source: P.A. 99-143, eff. 7-27-15.)

5 Section 160. The Prevention of Cigarette and Electronic

6 Cigarette Sales to Persons under 21 Years of Age Act is amended

7 by changing Section 2 as follows:

8 (720 ILCS 678/2)

9 Sec. 2. Definitions. For the purpose of this Act:

10 "Cigarette", when used in this Act, means any roll for

11 smoking made wholly or in part of tobacco irrespective of size

12 or shape and whether or not the tobacco is flavored,

13 adulterated, or mixed with any other ingredient, and the

14 wrapper or cover of which is made of paper or any other

15 substance or material except whole leaf tobacco.

16 "Clear and conspicuous statement" means the statement is

17 of sufficient type size to be clearly readable by the

18 recipient of the communication.

19 "Consumer" means an individual who acquires or seeks to

20 acquire cigarettes or electronic cigarettes for personal use.

21 "Delivery sale" means any sale of cigarettes or electronic

22 cigarettes to a consumer if:

23 (a) the consumer submits the order for such sale by

24 means of a telephone or other method of voice

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1 transmission, the mails, or the Internet or other online

2 service, or the seller is otherwise not in the physical

3 presence of the buyer when the request for purchase or

4 order is made; or

5 (b) the cigarettes or electronic cigarettes are

6 delivered by use of a common carrier, private delivery

7 service, or the mails, or the seller is not in the physical

8 presence of the buyer when the buyer obtains possession of

9 the cigarettes or electronic cigarettes.

10 "Delivery service" means any person (other than a person

11 that makes a delivery sale) who delivers to the consumer the

12 cigarettes or electronic cigarettes sold in a delivery sale.

13 "Department" means the Department of Revenue.

14 "Electronic cigarette" means:

15 (1) any device that employs a battery or other

16 mechanism to heat a solution or substance to produce a

17 vapor or aerosol intended for inhalation;

18 (2) any cartridge or container of a solution or

19 substance intended to be used with or in the device or to

20 refill the device; or

21 (3) any solution or substance, whether or not it

22 contains nicotine, intended for use in the device.

23 "Electronic cigarette" includes, but is not limited to,

24 any electronic nicotine delivery system, electronic cigar,

25 electronic cigarillo, electronic pipe, electronic hookah, vape

26 pen, or similar product or device, and any component, part, or

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1 accessory of a device used during the operation of the device,

2 even if the part or accessory was sold separately. "Electronic

3 cigarette" does not include: cigarettes, as defined in Section

4 1 of the Cigarette Tax Act; any product approved by the United

5 States Food and Drug Administration for sale as a tobacco

6 cessation product, a tobacco dependence product, or for other

7 medical purposes that is marketed and sold solely for that

8 approved purpose; any asthma inhaler prescribed by a physician

9 for that condition that is marketed and sold solely for that

10 approved purpose; any device that meets the definition of

11 cannabis paraphernalia under Section 1-10 of the Cannabis

12 Regulation and Tax Act; or any cannabis product sold by a

13 dispensing organization pursuant to the Cannabis Regulation

14 and Tax Act or the Compassionate Use of Medical Cannabis

15 Program Act.

16 "Government-issued identification" means a State driver's

17 license, State identification card, passport, a military

18 identification or an official naturalization or immigration

19 document, such as a ~~an alien~~ registration recipient card

20 (commonly known as a "green card") or an immigrant visa.

21 "Mails" or "mailing" mean the shipment of cigarettes or

22 electronic cigarettes through the United States Postal

23 Service.

24 "Out-of-state sale" means a sale of cigarettes or

25 electronic cigarettes to a consumer located outside of this

26 State where the consumer submits the order for such sale by

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1 means of a telephonic or other method of voice transmission,

2 the mails or any other delivery service, facsimile

3 transmission, or the Internet or other online service and

4 where the cigarettes or electronic cigarettes are delivered by

5 use of the mails or other delivery service.

6 "Person" means any individual, corporation, partnership,

7 limited liability company, association, or other organization

8 that engages in any for-profit or not-for-profit activities.

9 "Shipping package" means a container in which packs or

10 cartons of cigarettes or electronic cigarettes are shipped in

11 connection with a delivery sale.

12 "Shipping documents" means bills of lading, air bills, or

13 any other documents used to evidence the undertaking by a

14 delivery service to deliver letters, packages, or other

15 containers.

16 (Source: P.A. 102-575, eff. 1-1-22.)

17 Section 165. The Code of Criminal Procedure of 1963 is

18 amended by changing Section 113-8 as follows:

19 (725 ILCS 5/113-8)

20 Sec. 113-8. Advisement concerning status as a noncitizen

21 ~~an alien~~.

22 (a) Before the acceptance of a plea of guilty, guilty but

23 mentally ill, or nolo contendere to a misdemeanor or felony

24 offense, the court shall give the following advisement to the

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1 defendant in open court:

2 "If you are not a citizen of the United States, you are

3 hereby advised that conviction of the offense for which you

4 have been charged may have the consequence of deportation,

5 exclusion from admission to the United States, or denial of

6 naturalization under the laws of the United States.".

7 (b) If the defendant is arraigned on or after the

8 effective date of this amendatory Act of the 101st General

9 Assembly, and the court fails to advise the defendant as

10 required by subsection (a) of this Section, and the defendant

11 shows that conviction of the offense to which the defendant

12 pleaded guilty, guilty but mentally ill, or nolo contendere

13 may have the consequence for the defendant of deportation,

14 exclusion from admission to the United States, or denial of

15 naturalization under the laws of the United States, the court,

16 upon the defendant's motion, shall vacate the judgment and

17 permit the defendant to withdraw the plea of guilty, guilty

18 but mentally ill, or nolo contendere and enter a plea of not

19 guilty. The motion shall be filed within 2 years of the date of

20 the defendant's conviction.

21 (Source: P.A. 101-409, eff. 1-1-20.)

22 Section 170. The Unified Code of Corrections is amended by

23 changing Sections 3-2-2 and 5-5-3 as follows:

24 (730 ILCS 5/3-2-2) (from Ch. 38, par. 1003-2-2)

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1 Sec. 3-2-2. Powers and duties of the Department.

2 (1) In addition to the powers, duties, and

3 responsibilities which are otherwise provided by law, the

4 Department shall have the following powers:

5 (a) To accept persons committed to it by the courts of

6 this State for care, custody, treatment, and

7 rehabilitation, and to accept federal prisoners and

8 noncitizens ~~aliens~~ over whom the Office of the Federal

9 Detention Trustee is authorized to exercise the federal

10 detention function for limited purposes and periods of

11 time.

12 (b) To develop and maintain reception and evaluation

13 units for purposes of analyzing the custody and

14 rehabilitation needs of persons committed to it and to

15 assign such persons to institutions and programs under its

16 control or transfer them to other appropriate agencies. In

17 consultation with the Department of Alcoholism and

18 Substance Abuse (now the Department of Human Services),

19 the Department of Corrections shall develop a master plan

20 for the screening and evaluation of persons committed to

21 its custody who have alcohol or drug abuse problems, and

22 for making appropriate treatment available to such

23 persons; the Department shall report to the General

24 Assembly on such plan not later than April 1, 1987. The

25 maintenance and implementation of such plan shall be

26 contingent upon the availability of funds.

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1 (b-1) To create and implement, on January 1, 2002, a

2 pilot program to establish the effectiveness of

3 pupillometer technology (the measurement of the pupil's

4 reaction to light) as an alternative to a urine test for

5 purposes of screening and evaluating persons committed to

6 its custody who have alcohol or drug problems. The pilot

7 program shall require the pupillometer technology to be

8 used in at least one Department of Corrections facility.

9 The Director may expand the pilot program to include an

10 additional facility or facilities as he or she deems

11 appropriate. A minimum of 4,000 tests shall be included in

12 the pilot program. The Department must report to the

13 General Assembly on the effectiveness of the program by

14 January 1, 2003.

15 (b-5) To develop, in consultation with the Illinois

16 State Police, a program for tracking and evaluating each

17 inmate from commitment through release for recording his

18 or her gang affiliations, activities, or ranks.

19 (c) To maintain and administer all State correctional

20 institutions and facilities under its control and to

21 establish new ones as needed. Pursuant to its power to

22 establish new institutions and facilities, the Department

23 may, with the written approval of the Governor, authorize

24 the Department of Central Management Services to enter

25 into an agreement of the type described in subsection (d)

26 of Section 405-300 of the Department of Central Management

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1 Services Law. The Department shall designate those

2 institutions which shall constitute the State Penitentiary

3 System. The Department of Juvenile Justice shall maintain

4 and administer all State youth centers pursuant to

5 subsection (d) of Section 3-2.5-20.

6 Pursuant to its power to establish new institutions

7 and facilities, the Department may authorize the

8 Department of Central Management Services to accept bids

9 from counties and municipalities for the construction,

10 remodeling, or conversion of a structure to be leased to

11 the Department of Corrections for the purposes of its

12 serving as a correctional institution or facility. Such

13 construction, remodeling,or conversion may be financed

14 with revenue bonds issued pursuant to the Industrial

15 Building Revenue Bond Act by the municipality or county.

16 The lease specified in a bid shall be for a term of not

17 less than the time needed to retire any revenue bonds used

18 to finance the project, but not to exceed 40 years. The

19 lease may grant to the State the option to purchase the

20 structure outright.

21 Upon receipt of the bids, the Department may certify

22 one or more of the bids and shall submit any such bids to

23 the General Assembly for approval. Upon approval of a bid

24 by a constitutional majority of both houses of the General

25 Assembly, pursuant to joint resolution, the Department of

26 Central Management Services may enter into an agreement

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1 with the county or municipality pursuant to such bid.

2 (c-5) To build and maintain regional juvenile

3 detention centers and to charge a per diem to the counties

4 as established by the Department to defray the costs of

5 housing each minor in a center. In this subsection (c-5),

6 "juvenile detention center" means a facility to house

7 minors during pendency of trial who have been transferred

8 from proceedings under the Juvenile Court Act of 1987 to

9 prosecutions under the criminal laws of this State in

10 accordance with Section 5-805 of the Juvenile Court Act of

11 1987, whether the transfer was by operation of law or

12 permissive under that Section. The Department shall

13 designate the counties to be served by each regional

14 juvenile detention center.

15 (d) To develop and maintain programs of control,

16 rehabilitation,and employment of committed persons within

17 its institutions.

18 (d-5) To provide a pre-release job preparation program

19 for inmates at Illinois adult correctional centers.

20 (d-10) To provide educational and visitation

21 opportunities to committed persons within its institutions

22 through temporary access to content-controlled tablets

23 that may be provided as a privilege to committed persons

24 to induce or reward compliance.

25 (e) To establish a system of supervision and guidance

26 of committed persons in the community.

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1 (f) To establish in cooperation with the Department of

2 Transportation to supply a sufficient number of prisoners

3 for use by the Department of Transportation to clean up

4 the trash and garbage along State, county, township, or

5 municipal highways as designated by the Department of

6 Transportation. The Department of Corrections, at the

7 request of the Department of Transportation, shall furnish

8 such prisoners at least annually for a period to be agreed

9 upon between the Director of Corrections and the Secretary

10 of Transportation. The prisoners used on this program

11 shall be selected by the Director of Corrections on

12 whatever basis he deems proper in consideration of their

13 term, behavior and earned eligibility to participate in

14 such program - where they will be outside of the prison

15 facility but still in the custody of the Department of

16 Corrections. Prisoners convicted of first degree murder,

17 or a Class X felony, or armed violence, or aggravated

18 kidnapping, or criminal sexual assault, aggravated

19 criminal sexual abuse or a subsequent conviction for

20 criminal sexual abuse, or forcible detention, or arson, or

21 a prisoner adjudged a Habitual Criminal shall not be

22 eligible for selection to participate in such program. The

23 prisoners shall remain as prisoners in the custody of the

24 Department of Corrections and such Department shall

25 furnish whatever security is necessary. The Department of

26 Transportation shall furnish trucks and equipment for the

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1 highway cleanup program and personnel to supervise and

2 direct the program. Neither the Department of Corrections

3 nor the Department of Transportation shall replace any

4 regular employee with a prisoner.

5 (g) To maintain records of persons committed to it and

6 to establish programs of research, statistics, and

7 planning.

8 (h) To investigate the grievances of any person

9 committed to the Department and to inquire into any

10 alleged misconduct by employees or committed persons; and

11 for these purposes it may issue subpoenas and compel the

12 attendance of witnesses and the production of writings and

13 papers, and may examine under oath any witnesses who may

14 appear before it; to also investigate alleged violations

15 of a parolee's or releasee's conditions of parole or

16 release; and for this purpose it may issue subpoenas and

17 compel the attendance of witnesses and the production of

18 documents only if there is reason to believe that such

19 procedures would provide evidence that such violations

20 have occurred.

21 If any person fails to obey a subpoena issued under

22 this subsection, the Director may apply to any circuit

23 court to secure compliance with the subpoena. The failure

24 to comply with the order of the court issued in response

25 thereto shall be punishable as contempt of court.

26 (i) To appoint and remove the chief administrative

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1 officers, and administer programs of training and

2 development of personnel of the Department. Personnel

3 assigned by the Department to be responsible for the

4 custody and control of committed persons or to investigate

5 the alleged misconduct of committed persons or employees

6 or alleged violations of a parolee's or releasee's

7 conditions of parole shall be conservators of the peace

8 for those purposes, and shall have the full power of peace

9 officers outside of the facilities of the Department in

10 the protection, arrest, retaking,and reconfining of

11 committed persons or where the exercise of such power is

12 necessary to the investigation of such misconduct or

13 violations. This subsection shall not apply to persons

14 committed to the Department of Juvenile Justice under the

15 Juvenile Court Act of 1987 on aftercare release.

16 (j) To cooperate with other departments and agencies

17 and with local communities for the development of

18 standards and programs for better correctional services in

19 this State.

20 (k) To administer all moneys and properties of the

21 Department.

22 (l) To report annually to the Governor on the

23 committed persons, institutions, and programs of the

24 Department.

25 (l-5) (Blank).

26 (m) To make all rules and regulations and exercise all

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1 powers and duties vested by law in the Department.

2 (n) To establish rules and regulations for

3 administering a system of sentence credits, established in

4 accordance with Section 3-6-3, subject to review by the

5 Prisoner Review Board.

6 (o) To administer the distribution of funds from the

7 State Treasury to reimburse counties where State penal

8 institutions are located for the payment of assistant

9 state's attorneys' salaries under Section 4-2001 of the

10 Counties Code.

11 (p) To exchange information with the Department of

12 Human Services and the Department of Healthcare and Family

13 Services for the purpose of verifying living arrangements

14 and for other purposes directly connected with the

15 administration of this Code and the Illinois Public Aid

16 Code.

17 (q) To establish a diversion program.

18 The program shall provide a structured environment for

19 selected technical parole or mandatory supervised release

20 violators and committed persons who have violated the

21 rules governing their conduct while in work release. This

22 program shall not apply to those persons who have

23 committed a new offense while serving on parole or

24 mandatory supervised release or while committed to work

25 release.

26 Elements of the program shall include, but shall not

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1 be limited to, the following:

2 (1) The staff of a diversion facility shall

3 provide supervision in accordance with required

4 objectives set by the facility.

5 (2) Participants shall be required to maintain

6 employment.

7 (3) Each participant shall pay for room and board

8 at the facility on a sliding-scale basis according to

9 the participant's income.

10 (4) Each participant shall:

11 (A) provide restitution to victims in

12 accordance with any court order;

13 (B) provide financial support to his

14 dependents; and

15 (C) make appropriate payments toward any other

16 court-ordered obligations.

17 (5) Each participant shall complete community

18 service in addition to employment.

19 (6) Participants shall take part in such

20 counseling, educational,and other programs as the

21 Department may deem appropriate.

22 (7) Participants shall submit to drug and alcohol

23 screening.

24 (8) The Department shall promulgate rules

25 governing the administration of the program.

26 (r) To enter into intergovernmental cooperation

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1 agreements under which persons in the custody of the

2 Department may participate in a county impact

3 incarceration program established under Section 3-6038 or

4 3-15003.5 of the Counties Code.

5 (r-5) (Blank).

6 (r-10) To systematically and routinely identify with

7 respect to each streetgang active within the correctional

8 system: (1) each active gang; (2) every existing

9 inter-gang affiliation or alliance; and (3) the current

10 leaders in each gang. The Department shall promptly

11 segregate leaders from inmates who belong to their gangs

12 and allied gangs. "Segregate" means no physical contact

13 and, to the extent possible under the conditions and space

14 available at the correctional facility, prohibition of

15 visual and sound communication. For the purposes of this

16 paragraph (r-10), "leaders" means persons who:

17 (i) are members of a criminal streetgang;

18 (ii) with respect to other individuals within the

19 streetgang, occupy a position of organizer,

20 supervisor, or other position of management or

21 leadership; and

22 (iii) are actively and personally engaged in

23 directing, ordering, authorizing, or requesting

24 commission of criminal acts by others, which are

25 punishable as a felony, in furtherance of streetgang

26 related activity both within and outside of the

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1 Department of Corrections.

2 "Streetgang", "gang", and "streetgang related" have the

3 meanings ascribed to them in Section 10 of the Illinois

4 Streetgang Terrorism Omnibus Prevention Act.

5 (s) To operate a super-maximum security institution,

6 in order to manage and supervise inmates who are

7 disruptive or dangerous and provide for the safety and

8 security of the staff and the other inmates.

9 (t) To monitor any unprivileged conversation or any

10 unprivileged communication, whether in person or by mail,

11 telephone, or other means, between an inmate who, before

12 commitment to the Department, was a member of an organized

13 gang and any other person without the need to show cause or

14 satisfy any other requirement of law before beginning the

15 monitoring, except as constitutionally required. The

16 monitoring may be by video, voice, or other method of

17 recording or by any other means. As used in this

18 subdivision (1)(t), "organized gang" has the meaning

19 ascribed to it in Section 10 of the Illinois Streetgang

20 Terrorism Omnibus Prevention Act.

21 As used in this subdivision (1)(t), "unprivileged

22 conversation" or "unprivileged communication" means a

23 conversation or communication that is not protected by any

24 privilege recognized by law or by decision, rule, or order

25 of the Illinois Supreme Court.

26 (u) To establish a Women's and Children's Pre-release

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1 Community Supervision Program for the purpose of providing

2 housing and services to eligible female inmates, as

3 determined by the Department, and their newborn and young

4 children.

5 (u-5) To issue an order, whenever a person committed

6 to the Department absconds or absents himself or herself,

7 without authority to do so, from any facility or program

8 to which he or she is assigned. The order shall be

9 certified by the Director, the Supervisor of the

10 Apprehension Unit, or any person duly designated by the

11 Director, with the seal of the Department affixed. The

12 order shall be directed to all sheriffs, coroners, and

13 police officers, or to any particular person named in the

14 order. Any order issued pursuant to this subdivision

15 (1)(u-5) shall be sufficient warrant for the officer or

16 person named in the order to arrest and deliver the

17 committed person to the proper correctional officials and

18 shall be executed the same as criminal process.

19 (u-6) To appoint a point of contact person who shall

20 receive suggestions, complaints, or other requests to the

21 Department from visitors to Department institutions or

22 facilities and from other members of the public.

23 (v) To do all other acts necessary to carry out the

24 provisions of this Chapter.

25 (2) The Department of Corrections shall by January 1,

26 1998, consider building and operating a correctional facility

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1 within 100 miles of a county of over 2,000,000 inhabitants,

2 especially a facility designed to house juvenile participants

3 in the impact incarceration program.

4 (3) When the Department lets bids for contracts for

5 medical services to be provided to persons committed to

6 Department facilities by a health maintenance organization,

7 medical service corporation, or other health care provider,

8 the bid may only be let to a health care provider that has

9 obtained an irrevocable letter of credit or performance bond

10 issued by a company whose bonds have an investment grade or

11 higher rating by a bond rating organization.

12 (4) When the Department lets bids for contracts for food

13 or commissary services to be provided to Department

14 facilities, the bid may only be let to a food or commissary

15 services provider that has obtained an irrevocable letter of

16 credit or performance bond issued by a company whose bonds

17 have an investment grade or higher rating by a bond rating

18 organization.

19 (5) On and after the date 6 months after August 16, 2013

20 (the effective date of Public Act 98-488), as provided in the

21 Executive Order 1 (2012) Implementation Act, all of the

22 powers, duties, rights, and responsibilities related to State

23 healthcare purchasing under this Code that were transferred

24 from the Department of Corrections to the Department of

25 Healthcare and Family Services by Executive Order 3 (2005) are

26 transferred back to the Department of Corrections; however,

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1 powers, duties, rights, and responsibilities related to State

2 healthcare purchasing under this Code that were exercised by

3 the Department of Corrections before the effective date of

4 Executive Order 3 (2005) but that pertain to individuals

5 resident in facilities operated by the Department of Juvenile

6 Justice are transferred to the Department of Juvenile Justice.

7 (Source: P.A. 101-235, eff. 1-1-20; 102-350, eff. 8-13-21;

8 102-535, eff. 1-1-22; 102-538, eff. 8-20-21; revised

9 10-15-21.)

10 (730 ILCS 5/5-5-3)

11 Sec. 5-5-3. Disposition.

12 (a) (Blank).

13 (b) (Blank).

14 (c) (1) (Blank).

15 (2) A period of probation, a term of periodic imprisonment

16 or conditional discharge shall not be imposed for the

17 following offenses. The court shall sentence the offender to

18 not less than the minimum term of imprisonment set forth in

19 this Code for the following offenses, and may order a fine or

20 restitution or both in conjunction with such term of

21 imprisonment:

22 (A) First degree murder where the death penalty is not

23 imposed.

24 (B) Attempted first degree murder.

25 (C) A Class X felony.

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1 (D) A violation of Section 401.1 or 407 of the

2 Illinois Controlled Substances Act, or a violation of

3 subdivision (c)(1.5) of Section 401 of that Act which

4 relates to more than 5 grams of a substance containing

5 fentanyl or an analog thereof.

6 (D-5) A violation of subdivision (c)(1) of Section 401

7 of the Illinois Controlled Substances Act which relates to

8 3 or more grams of a substance containing heroin or an

9 analog thereof.

10 (E) (Blank).

11 (F) A Class 1 or greater felony if the offender had

12 been convicted of a Class 1 or greater felony, including

13 any state or federal conviction for an offense that

14 contained, at the time it was committed, the same elements

15 as an offense now (the date of the offense committed after

16 the prior Class 1 or greater felony) classified as a Class

17 1 or greater felony, within 10 years of the date on which

18 the offender committed the offense for which he or she is

19 being sentenced, except as otherwise provided in Section

20 40-10 of the Substance Use Disorder Act.

21 (F-3) A Class 2 or greater felony sex offense or

22 felony firearm offense if the offender had been convicted

23 of a Class 2 or greater felony, including any state or

24 federal conviction for an offense that contained, at the

25 time it was committed, the same elements as an offense now

26 (the date of the offense committed after the prior Class 2

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1 or greater felony) classified as a Class 2 or greater

2 felony, within 10 years of the date on which the offender

3 committed the offense for which he or she is being

4 sentenced, except as otherwise provided in Section 40-10

5 of the Substance Use Disorder Act.

6 (F-5) A violation of Section 24-1, 24-1.1, or 24-1.6

7 of the Criminal Code of 1961 or the Criminal Code of 2012

8 for which imprisonment is prescribed in those Sections.

9 (G) Residential burglary, except as otherwise provided

10 in Section 40-10 of the Substance Use Disorder Act.

11 (H) Criminal sexual assault.

12 (I) Aggravated battery of a senior citizen as

13 described in Section 12-4.6 or subdivision (a)(4) of

14 Section 12-3.05 of the Criminal Code of 1961 or the

15 Criminal Code of 2012.

16 (J) A forcible felony if the offense was related to

17 the activities of an organized gang.

18 Before July 1, 1994, for the purposes of this

19 paragraph, "organized gang" means an association of 5 or

20 more persons, with an established hierarchy, that

21 encourages members of the association to perpetrate crimes

22 or provides support to the members of the association who

23 do commit crimes.

24 Beginning July 1, 1994, for the purposes of this

25 paragraph, "organized gang" has the meaning ascribed to it

26 in Section 10 of the Illinois Streetgang Terrorism Omnibus

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1 Prevention Act.

2 (K) Vehicular hijacking.

3 (L) A second or subsequent conviction for the offense

4 of hate crime when the underlying offense upon which the

5 hate crime is based is felony aggravated assault or felony

6 mob action.

7 (M) A second or subsequent conviction for the offense

8 of institutional vandalism if the damage to the property

9 exceeds $300.

10 (N) A Class 3 felony violation of paragraph (1) of

11 subsection (a) of Section 2 of the Firearm Owners

12 Identification Card Act.

13 (O) A violation of Section 12-6.1 or 12-6.5 of the

14 Criminal Code of 1961 or the Criminal Code of 2012.

15 (P) A violation of paragraph (1), (2), (3), (4), (5),

16 or (7) of subsection (a) of Section 11-20.1 of the

17 Criminal Code of 1961 or the Criminal Code of 2012.

18 (P-5) A violation of paragraph (6) of subsection (a)

19 of Section 11-20.1 of the Criminal Code of 1961 or the

20 Criminal Code of 2012 if the victim is a household or

21 family member of the defendant.

22 (Q) A violation of subsection (b) or (b-5) of Section

23 20-1, Section 20-1.2, or Section 20-1.3 of the Criminal

24 Code of 1961 or the Criminal Code of 2012.

25 (R) A violation of Section 24-3A of the Criminal Code

26 of 1961 or the Criminal Code of 2012.

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1 (S) (Blank).

2 (T) (Blank).

3 (U) A second or subsequent violation of Section 6-303

4 of the Illinois Vehicle Code committed while his or her

5 driver's license, permit, or privilege was revoked because

6 of a violation of Section 9-3 of the Criminal Code of 1961

7 or the Criminal Code of 2012, relating to the offense of

8 reckless homicide, or a similar provision of a law of

9 another state.

10 (V) A violation of paragraph (4) of subsection (c) of

11 Section 11-20.1B or paragraph (4) of subsection (c) of

12 Section 11-20.3 of the Criminal Code of 1961, or paragraph

13 (6) of subsection (a) of Section 11-20.1 of the Criminal

14 Code of 2012 when the victim is under 13 years of age and

15 the defendant has previously been convicted under the laws

16 of this State or any other state of the offense of child

17 pornography, aggravated child pornography, aggravated

18 criminal sexual abuse, aggravated criminal sexual assault,

19 predatory criminal sexual assault of a child, or any of

20 the offenses formerly known as rape, deviate sexual

21 assault, indecent liberties with a child, or aggravated

22 indecent liberties with a child where the victim was under

23 the age of 18 years or an offense that is substantially

24 equivalent to those offenses.

25 (W) A violation of Section 24-3.5 of the Criminal Code

26 of 1961 or the Criminal Code of 2012.

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1 (X) A violation of subsection (a) of Section 31-1a of

2 the Criminal Code of 1961 or the Criminal Code of 2012.

3 (Y) A conviction for unlawful possession of a firearm

4 by a street gang member when the firearm was loaded or

5 contained firearm ammunition.

6 (Z) A Class 1 felony committed while he or she was

7 serving a term of probation or conditional discharge for a

8 felony.

9 (AA) Theft of property exceeding $500,000 and not

10 exceeding $1,000,000 in value.

11 (BB) Laundering of criminally derived property of a

12 value exceeding $500,000.

13 (CC) Knowingly selling, offering for sale, holding for

14 sale, or using 2,000 or more counterfeit items or

15 counterfeit items having a retail value in the aggregate

16 of $500,000 or more.

17 (DD) A conviction for aggravated assault under

18 paragraph (6) of subsection (c) of Section 12-2 of the

19 Criminal Code of 1961 or the Criminal Code of 2012 if the

20 firearm is aimed toward the person against whom the

21 firearm is being used.

22 (EE) A conviction for a violation of paragraph (2) of

23 subsection (a) of Section 24-3B of the Criminal Code of

24 2012.

25 (3) (Blank).

26 (4) A minimum term of imprisonment of not less than 10

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1 consecutive days or 30 days of community service shall be

2 imposed for a violation of paragraph (c) of Section 6-303 of

3 the Illinois Vehicle Code.

4 (4.1) (Blank).

5 (4.2) Except as provided in paragraphs (4.3) and (4.8) of

6 this subsection (c), a minimum of 100 hours of community

7 service shall be imposed for a second violation of Section

8 6-303 of the Illinois Vehicle Code.

9 (4.3) A minimum term of imprisonment of 30 days or 300

10 hours of community service, as determined by the court, shall

11 be imposed for a second violation of subsection (c) of Section

12 6-303 of the Illinois Vehicle Code.

13 (4.4) Except as provided in paragraphs (4.5), (4.6), and

14 (4.9) of this subsection (c), a minimum term of imprisonment

15 of 30 days or 300 hours of community service, as determined by

16 the court, shall be imposed for a third or subsequent

17 violation of Section 6-303 of the Illinois Vehicle Code. The

18 court may give credit toward the fulfillment of community

19 service hours for participation in activities and treatment as

20 determined by court services.

21 (4.5) A minimum term of imprisonment of 30 days shall be

22 imposed for a third violation of subsection (c) of Section

23 6-303 of the Illinois Vehicle Code.

24 (4.6) Except as provided in paragraph (4.10) of this

25 subsection (c), a minimum term of imprisonment of 180 days

26 shall be imposed for a fourth or subsequent violation of

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1 subsection (c) of Section 6-303 of the Illinois Vehicle Code.

2 (4.7) A minimum term of imprisonment of not less than 30

3 consecutive days, or 300 hours of community service, shall be

4 imposed for a violation of subsection (a-5) of Section 6-303

5 of the Illinois Vehicle Code, as provided in subsection (b-5)

6 of that Section.

7 (4.8) A mandatory prison sentence shall be imposed for a

8 second violation of subsection (a-5) of Section 6-303 of the

9 Illinois Vehicle Code, as provided in subsection (c-5) of that

10 Section. The person's driving privileges shall be revoked for

11 a period of not less than 5 years from the date of his or her

12 release from prison.

13 (4.9) A mandatory prison sentence of not less than 4 and

14 not more than 15 years shall be imposed for a third violation

15 of subsection (a-5) of Section 6-303 of the Illinois Vehicle

16 Code, as provided in subsection (d-2.5) of that Section. The

17 person's driving privileges shall be revoked for the remainder

18 of his or her life.

19 (4.10) A mandatory prison sentence for a Class 1 felony

20 shall be imposed, and the person shall be eligible for an

21 extended term sentence, for a fourth or subsequent violation

22 of subsection (a-5) of Section 6-303 of the Illinois Vehicle

23 Code, as provided in subsection (d-3.5) of that Section. The

24 person's driving privileges shall be revoked for the remainder

25 of his or her life.

26 (5) The court may sentence a corporation or unincorporated

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1 association convicted of any offense to:

2 (A) a period of conditional discharge;

3 (B) a fine;

4 (C) make restitution to the victim under Section 5-5-6

5 of this Code.

6 (5.1) In addition to any other penalties imposed, and

7 except as provided in paragraph (5.2) or (5.3), a person

8 convicted of violating subsection (c) of Section 11-907 of the

9 Illinois Vehicle Code shall have his or her driver's license,

10 permit, or privileges suspended for at least 90 days but not

11 more than one year, if the violation resulted in damage to the

12 property of another person.

13 (5.2) In addition to any other penalties imposed, and

14 except as provided in paragraph (5.3), a person convicted of

15 violating subsection (c) of Section 11-907 of the Illinois

16 Vehicle Code shall have his or her driver's license, permit,

17 or privileges suspended for at least 180 days but not more than

18 2 years, if the violation resulted in injury to another

19 person.

20 (5.3) In addition to any other penalties imposed, a person

21 convicted of violating subsection (c) of Section 11-907 of the

22 Illinois Vehicle Code shall have his or her driver's license,

23 permit, or privileges suspended for 2 years, if the violation

24 resulted in the death of another person.

25 (5.4) In addition to any other penalties imposed, a person

26 convicted of violating Section 3-707 of the Illinois Vehicle

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1 Code shall have his or her driver's license, permit, or

2 privileges suspended for 3 months and until he or she has paid

3 a reinstatement fee of $100.

4 (5.5) In addition to any other penalties imposed, a person

5 convicted of violating Section 3-707 of the Illinois Vehicle

6 Code during a period in which his or her driver's license,

7 permit, or privileges were suspended for a previous violation

8 of that Section shall have his or her driver's license,

9 permit, or privileges suspended for an additional 6 months

10 after the expiration of the original 3-month suspension and

11 until he or she has paid a reinstatement fee of $100.

12 (6) (Blank).

13 (7) (Blank).

14 (8) (Blank).

15 (9) A defendant convicted of a second or subsequent

16 offense of ritualized abuse of a child may be sentenced to a

17 term of natural life imprisonment.

18 (10) (Blank).

19 (11) The court shall impose a minimum fine of $1,000 for a

20 first offense and $2,000 for a second or subsequent offense

21 upon a person convicted of or placed on supervision for

22 battery when the individual harmed was a sports official or

23 coach at any level of competition and the act causing harm to

24 the sports official or coach occurred within an athletic

25 facility or within the immediate vicinity of the athletic

26 facility at which the sports official or coach was an active

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1 participant of the athletic contest held at the athletic

2 facility. For the purposes of this paragraph (11), "sports

3 official" means a person at an athletic contest who enforces

4 the rules of the contest, such as an umpire or referee;

5 "athletic facility" means an indoor or outdoor playing field

6 or recreational area where sports activities are conducted;

7 and "coach" means a person recognized as a coach by the

8 sanctioning authority that conducted the sporting event.

9 (12) A person may not receive a disposition of court

10 supervision for a violation of Section 5-16 of the Boat

11 Registration and Safety Act if that person has previously

12 received a disposition of court supervision for a violation of

13 that Section.

14 (13) A person convicted of or placed on court supervision

15 for an assault or aggravated assault when the victim and the

16 offender are family or household members as defined in Section

17 103 of the Illinois Domestic Violence Act of 1986 or convicted

18 of domestic battery or aggravated domestic battery may be

19 required to attend a Partner Abuse Intervention Program under

20 protocols set forth by the Illinois Department of Human

21 Services under such terms and conditions imposed by the court.

22 The costs of such classes shall be paid by the offender.

23 (d) In any case in which a sentence originally imposed is

24 vacated, the case shall be remanded to the trial court. The

25 trial court shall hold a hearing under Section 5-4-1 of this

26 Code which may include evidence of the defendant's life, moral

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1 character and occupation during the time since the original

2 sentence was passed. The trial court shall then impose

3 sentence upon the defendant. The trial court may impose any

4 sentence which could have been imposed at the original trial

5 subject to Section 5-5-4 of this Code. If a sentence is vacated

6 on appeal or on collateral attack due to the failure of the

7 trier of fact at trial to determine beyond a reasonable doubt

8 the existence of a fact (other than a prior conviction)

9 necessary to increase the punishment for the offense beyond

10 the statutory maximum otherwise applicable, either the

11 defendant may be re-sentenced to a term within the range

12 otherwise provided or, if the State files notice of its

13 intention to again seek the extended sentence, the defendant

14 shall be afforded a new trial.

15 (e) In cases where prosecution for aggravated criminal

16 sexual abuse under Section 11-1.60 or 12-16 of the Criminal

17 Code of 1961 or the Criminal Code of 2012 results in conviction

18 of a defendant who was a family member of the victim at the

19 time of the commission of the offense, the court shall

20 consider the safety and welfare of the victim and may impose a

21 sentence of probation only where:

22 (1) the court finds (A) or (B) or both are

23 appropriate:

24 (A) the defendant is willing to undergo a court

25 approved counseling program for a minimum duration of

26 2 years; or

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1 (B) the defendant is willing to participate in a

2 court approved plan,including, but not limited to,

3 the defendant's:

4 (i) removal from the household;

5 (ii) restricted contact with the victim;

6 (iii) continued financial support of the

7 family;

8 (iv) restitution for harm done to the victim;

9 and

10 (v) compliance with any other measures that

11 the court may deem appropriate; and

12 (2) the court orders the defendant to pay for the

13 victim's counseling services, to the extent that the court

14 finds, after considering the defendant's income and

15 assets, that the defendant is financially capable of

16 paying for such services, if the victim was under 18 years

17 of age at the time the offense was committed and requires

18 counseling as a result of the offense.

19 Probation may be revoked or modified pursuant to Section

20 5-6-4; except where the court determines at the hearing that

21 the defendant violated a condition of his or her probation

22 restricting contact with the victim or other family members or

23 commits another offense with the victim or other family

24 members, the court shall revoke the defendant's probation and

25 impose a term of imprisonment.

26 For the purposes of this Section, "family member" and

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1 "victim" shall have the meanings ascribed to them in Section

2 11-0.1 of the Criminal Code of 2012.

3 (f) (Blank).

4 (g) Whenever a defendant is convicted of an offense under

5 Sections 11-1.20, 11-1.30, 11-1.40, 11-1.50, 11-1.60, 11-14,

6 11-14.3, 11-14.4 except for an offense that involves keeping a

7 place of juvenile prostitution, 11-15, 11-15.1, 11-16, 11-17,

8 11-18, 11-18.1, 11-19, 11-19.1, 11-19.2, 12-13, 12-14,

9 12-14.1, 12-15, or 12-16 of the Criminal Code of 1961 or the

10 Criminal Code of 2012, the defendant shall undergo medical

11 testing to determine whether the defendant has any sexually

12 transmissible disease, including a test for infection with

13 human immunodeficiency virus (HIV) or any other identified

14 causative agent of acquired immunodeficiency syndrome (AIDS).

15 Any such medical test shall be performed only by appropriately

16 licensed medical practitioners and may include an analysis of

17 any bodily fluids as well as an examination of the defendant's

18 person. Except as otherwise provided by law, the results of

19 such test shall be kept strictly confidential by all medical

20 personnel involved in the testing and must be personally

21 delivered in a sealed envelope to the judge of the court in

22 which the conviction was entered for the judge's inspection in

23 camera. Acting in accordance with the best interests of the

24 victim and the public, the judge shall have the discretion to

25 determine to whom, if anyone, the results of the testing may be

26 revealed. The court shall notify the defendant of the test

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1 results. The court shall also notify the victim if requested

2 by the victim, and if the victim is under the age of 15 and if

3 requested by the victim's parents or legal guardian, the court

4 shall notify the victim's parents or legal guardian of the

5 test results. The court shall provide information on the

6 availability of HIV testing and counseling at Department of

7 Public Health facilities to all parties to whom the results of

8 the testing are revealed and shall direct the State's Attorney

9 to provide the information to the victim when possible. The

10 court shall order that the cost of any such test shall be paid

11 by the county and may be taxed as costs against the convicted

12 defendant.

13 (g-5) When an inmate is tested for an airborne

14 communicable disease, as determined by the Illinois Department

15 of Public Health, including,but not limited to, tuberculosis,

16 the results of the test shall be personally delivered by the

17 warden or his or her designee in a sealed envelope to the judge

18 of the court in which the inmate must appear for the judge's

19 inspection in camera if requested by the judge. Acting in

20 accordance with the best interests of those in the courtroom,

21 the judge shall have the discretion to determine what if any

22 precautions need to be taken to prevent transmission of the

23 disease in the courtroom.

24 (h) Whenever a defendant is convicted of an offense under

25 Section 1 or 2 of the Hypodermic Syringes and Needles Act, the

26 defendant shall undergo medical testing to determine whether

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1 the defendant has been exposed to human immunodeficiency virus

2 (HIV) or any other identified causative agent of acquired

3 immunodeficiency syndrome (AIDS). Except as otherwise provided

4 by law, the results of such test shall be kept strictly

5 confidential by all medical personnel involved in the testing

6 and must be personally delivered in a sealed envelope to the

7 judge of the court in which the conviction was entered for the

8 judge's inspection in camera. Acting in accordance with the

9 best interests of the public, the judge shall have the

10 discretion to determine to whom, if anyone, the results of the

11 testing may be revealed. The court shall notify the defendant

12 of a positive test showing an infection with the human

13 immunodeficiency virus (HIV). The court shall provide

14 information on the availability of HIV testing and counseling

15 at Department of Public Health facilities to all parties to

16 whom the results of the testing are revealed and shall direct

17 the State's Attorney to provide the information to the victim

18 when possible. The court shall order that the cost of any such

19 test shall be paid by the county and may be taxed as costs

20 against the convicted defendant.

21 (i) All fines and penalties imposed under this Section for

22 any violation of Chapters 3, 4, 6, and 11 of the Illinois

23 Vehicle Code, or a similar provision of a local ordinance, and

24 any violation of the Child Passenger Protection Act, or a

25 similar provision of a local ordinance, shall be collected and

26 disbursed by the circuit clerk as provided under the Criminal

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1 and Traffic Assessment Act.

2 (j) In cases when prosecution for any violation of Section

3 11-1.20, 11-1.30, 11-1.40, 11-1.50, 11-1.60, 11-6, 11-8, 11-9,

4 11-11, 11-14, 11-14.3, 11-14.4, 11-15, 11-15.1, 11-16, 11-17,

5 11-17.1, 11-18, 11-18.1, 11-19, 11-19.1, 11-19.2, 11-20.1,

6 11-20.1B, 11-20.3, 11-21, 11-30, 11-40, 12-13, 12-14, 12-14.1,

7 12-15, or 12-16 of the Criminal Code of 1961 or the Criminal

8 Code of 2012, any violation of the Illinois Controlled

9 Substances Act, any violation of the Cannabis Control Act, or

10 any violation of the Methamphetamine Control and Community

11 Protection Act results in conviction, a disposition of court

12 supervision, or an order of probation granted under Section 10

13 of the Cannabis Control Act, Section 410 of the Illinois

14 Controlled Substances Act, or Section 70 of the

15 Methamphetamine Control and Community Protection Act of a

16 defendant, the court shall determine whether the defendant is

17 employed by a facility or center as defined under the Child

18 Care Act of 1969, a public or private elementary or secondary

19 school, or otherwise works with children under 18 years of age

20 on a daily basis. When a defendant is so employed, the court

21 shall order the Clerk of the Court to send a copy of the

22 judgment of conviction or order of supervision or probation to

23 the defendant's employer by certified mail. If the employer of

24 the defendant is a school, the Clerk of the Court shall direct

25 the mailing of a copy of the judgment of conviction or order of

26 supervision or probation to the appropriate regional

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1 superintendent of schools. The regional superintendent of

2 schools shall notify the State Board of Education of any

3 notification under this subsection.

4 (j-5) A defendant at least 17 years of age who is convicted

5 of a felony and who has not been previously convicted of a

6 misdemeanor or felony and who is sentenced to a term of

7 imprisonment in the Illinois Department of Corrections shall

8 as a condition of his or her sentence be required by the court

9 to attend educational courses designed to prepare the

10 defendant for a high school diploma and to work toward a high

11 school diploma or to work toward passing high school

12 equivalency testing or to work toward completing a vocational

13 training program offered by the Department of Corrections. If

14 a defendant fails to complete the educational training

15 required by his or her sentence during the term of

16 incarceration, the Prisoner Review Board shall, as a condition

17 of mandatory supervised release, require the defendant, at his

18 or her own expense, to pursue a course of study toward a high

19 school diploma or passage of high school equivalency testing.

20 The Prisoner Review Board shall revoke the mandatory

21 supervised release of a defendant who wilfully fails to comply

22 with this subsection (j-5) upon his or her release from

23 confinement in a penal institution while serving a mandatory

24 supervised release term; however, the inability of the

25 defendant after making a good faith effort to obtain financial

26 aid or pay for the educational training shall not be deemed a

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1 wilful failure to comply. The Prisoner Review Board shall

2 recommit the defendant whose mandatory supervised release term

3 has been revoked under this subsection (j-5) as provided in

4 Section 3-3-9. This subsection (j-5) does not apply to a

5 defendant who has a high school diploma or has successfully

6 passed high school equivalency testing. This subsection (j-5)

7 does not apply to a defendant who is determined by the court to

8 be a person with a developmental disability or otherwise

9 mentally incapable of completing the educational or vocational

10 program.

11 (k) (Blank).

12 (l) (A) Except as provided in paragraph (C) of subsection

13 (l), whenever a defendant, who isnot a citizen or national of

14 the United States ~~an alien as defined by the Immigration and~~

15 ~~Nationality Act~~, is convicted of any felony or misdemeanor

16 offense, the court after sentencing the defendant may, upon

17 motion of the State's Attorney, hold sentence in abeyance and

18 remand the defendant to the custody of the Attorney General of

19 the United States or his or her designated agent to be deported

20 when:

21 (1) a final order of deportation has been issued

22 against the defendant pursuant to proceedings under the

23 Immigration and Nationality Act, and

24 (2) the deportation of the defendant would not

25 deprecate the seriousness of the defendant's conduct and

26 would not be inconsistent with the ends of justice.

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1 Otherwise, the defendant shall be sentenced as provided in

2 this Chapter V.

3 (B) If the defendant has already been sentenced for a

4 felony or misdemeanor offense, or has been placed on probation

5 under Section 10 of the Cannabis Control Act, Section 410 of

6 the Illinois Controlled Substances Act, or Section 70 of the

7 Methamphetamine Control and Community Protection Act, the

8 court may, upon motion of the State's Attorney to suspend the

9 sentence imposed, commit the defendant to the custody of the

10 Attorney General of the United States or his or her designated

11 agent when:

12 (1) a final order of deportation has been issued

13 against the defendant pursuant to proceedings under the

14 Immigration and Nationality Act, and

15 (2) the deportation of the defendant would not

16 deprecate the seriousness of the defendant's conduct and

17 would not be inconsistent with the ends of justice.

18 (C) This subsection (l) does not apply to offenders who

19 are subject to the provisions of paragraph (2) of subsection

20 (a) of Section 3-6-3.

21 (D) Upon motion of the State's Attorney, if a defendant

22 sentenced under this Section returns to the jurisdiction of

23 the United States, the defendant shall be recommitted to the

24 custody of the county from which he or she was sentenced.

25 Thereafter, the defendant shall be brought before the

26 sentencing court, which may impose any sentence that was

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1 available under Section 5-5-3 at the time of initial

2 sentencing. In addition, the defendant shall not be eligible

3 for additional earned sentence credit as provided under

4 Section 3-6-3.

5 (m) A person convicted of criminal defacement of property

6 under Section 21-1.3 of the Criminal Code of 1961 or the

7 Criminal Code of 2012, in which the property damage exceeds

8 $300 and the property damaged is a school building, shall be

9 ordered to perform community service that may include cleanup,

10 removal, or painting over the defacement.

11 (n) The court may sentence a person convicted of a

12 violation of Section 12-19, 12-21, 16-1.3, or 17-56, or

13 subsection (a) or (b) of Section 12-4.4a, of the Criminal Code

14 of 1961 or the Criminal Code of 2012 (i) to an impact

15 incarceration program if the person is otherwise eligible for

16 that program under Section 5-8-1.1, (ii) to community service,

17 or (iii) if the person has a substance use disorder, as defined

18 in the Substance Use Disorder Act, to a treatment program

19 licensed under that Act.

20 (o) Whenever a person is convicted of a sex offense as

21 defined in Section 2 of the Sex Offender Registration Act, the

22 defendant's driver's license or permit shall be subject to

23 renewal on an annual basis in accordance with the provisions

24 of license renewal established by the Secretary of State.

25 (Source: P.A. 101-81, eff. 7-12-19; 102-168, eff. 7-27-21;

26 102-531, eff. 1-1-22; revised 10-12-21.)

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1 Section 175. The Frauds Act is amended by changing Section

2 12 as follows:

3 (740 ILCS 80/12) (from Ch. 59, par. 12)

4 Sec. 12. When any lands, tenements or hereditaments, or

5 any rents or profits out of the same, shall descend to any

6 heir, or be devised to any devisee, and the personal estate of

7 the ancestor of such heir or devisor of such devisee shall be

8 insufficient to discharge the just demands against such

9 ancestor, or devisor's estate, such heir or devisee shall be

10 liable to the creditor of their ancestor or devisor to the full

11 amount of the lands, tenements or hereditaments, or rents and

12 profits out of the same, as may descend or be devised to the

13 said heir or devisee; and in all cases where any heir or

14 devisee shall be liable to pay the debts of his executor or

15 devisor, in regard of any lands, tenements or hereditaments,

16 or any rent or profit arising out of the same, descending or

17 being devised to him, and shall sell,transfer, ~~alien~~ or make

18 over the same before any action brought, or process sued out

19 against him, such heir at law or devisee shall be answerable

20 for such debts to the value of the said lands, tenements and

21 hereditaments, rents or profits so by him transferred ~~aliened~~

22 or made over; and executions may be taken out upon any judgment

23 so obtained against such heir or devisee, to the value of the

24 said lands, tenements and hereditaments, rents and profits,

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1 out of the same, as if the same were his own proper debts,

2 saving and excepting that the lands and tenements, rents and

3 profits, by him bona fide transferred ~~aliened~~, before the

4 action brought, shall not be liable to such execution.

5 (Source: R.S. 1874, p. 540.)

6 Section 180. The Income Withholding for Support Act is

7 amended by changing Section 20 as follows:

8 (750 ILCS 28/20)

9 Sec. 20. Entry of order for support containing income

10 withholding provisions; income withholding notice.

11 (a) In addition to any content required under other laws,

12 every order for support entered on or after July 1, 1997,

13 shall:

14 (1) Require an income withholding notice to be

15 prepared and served immediately upon any payor of the

16 obligor by the obligee or public office, unless a written

17 agreement is reached between and signed by both parties

18 providing for an alternative arrangement, approved and

19 entered into the record by the court, which ensures

20 payment of support. In that case, the order for support

21 shall provide that an income withholding notice is to be

22 prepared and served only if the obligor becomes delinquent

23 in paying the order for support; and

24 (2) Contain a dollar amount to be paid until payment

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1 in full of any delinquency that accrues after entry of the

2 order for support. The amount for payment of delinquency

3 shall not be less than 20% of the total of the current

4 support amount and the amount to be paid periodically for

5 payment of any arrearage stated in the order for support;

6 and

7 (3) Include the obligor's Social Security Number,

8 which the obligor shall disclose to the court. If the

9 obligor is not a United States citizen, the obligor shall

10 disclose to the court, and the court shall include in the

11 order for support, the obligor's~~alien~~ registration number

12 as a noncitizen, passport number, and home country's

13 social security or national health number, if applicable.

14 (b) At the time the order for support is entered, the Clerk

15 of the Circuit Court shall provide a copy of the order to the

16 obligor and shall make copies available to the obligee and

17 public office.

18 (c) The income withholding notice shall:

19 (1) be in the standard format prescribed by the

20 federal Department of Health and Human Services; and

21 (1.1) state the date of entry of the order for support

22 upon which the income withholding notice is based; and

23 (2) direct any payor to withhold the dollar amount

24 required for current support under the order for support;

25 and

26 (3) direct any payor to withhold the dollar amount

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1 required to be paid periodically under the order for

2 support for payment of the amount of any arrearage stated

3 in the order for support; and

4 (4) direct any payor or labor union or trade union to

5 enroll a child as a beneficiary of a health insurance plan

6 and withhold or cause to be withheld, if applicable, any

7 required premiums; and

8 (5) state the amount of the payor income withholding

9 fee specified under this Section; and

10 (6) state that the amount actually withheld from the

11 obligor's income for support and other purposes, including

12 the payor withholding fee specified under this Section,

13 may not be in excess of the maximum amount permitted under

14 the federal Consumer Credit Protection Act; and

15 (7) in bold face type, the size of which equals the

16 largest type on the notice, state the duties of the payor

17 and the fines and penalties for failure to withhold and

18 pay over income and for discharging, disciplining,

19 refusing to hire, or otherwise penalizing the obligor

20 because of the duty to withhold and pay over income under

21 this Section; and

22 (8) state the rights, remedies, and duties of the

23 obligor under this Section; and

24 (9) include the Social Security number of the obligor;

25 and

26 (10) (blank); and

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1 (11) contain the signature of the obligee or the

2 printed name and telephone number of the authorized

3 representative of the public office, except that the

4 failure to contain the signature of the obligee or the

5 printed name and telephone number of the authorized

6 representative of the public office shall not affect the

7 validity of the income withholding notice; and

8 (12) direct any payor to pay over amounts withheld for

9 payment of support to the State Disbursement Unit.

10 (d) The accrual of a delinquency as a condition for

11 service of an income withholding notice, under the exception

12 to immediate withholding in subsection (a) of this Section,

13 shall apply only to the initial service of an income

14 withholding notice on a payor of the obligor.

15 (e) Notwithstanding the exception to immediate withholding

16 contained in subsection (a) of this Section, if the court

17 finds at the time of any hearing that an arrearage has accrued,

18 the court shall order immediate service of an income

19 withholding notice upon the payor.

20 (f) If the order for support, under the exception to

21 immediate withholding contained in subsection (a) of this

22 Section, provides that an income withholding notice is to be

23 prepared and served only if the obligor becomes delinquent in

24 paying the order for support, the obligor may execute a

25 written waiver of that condition and request immediate service

26 on the payor.

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1 (g) The obligee or public office may serve the income

2 withholding notice on the payor or its superintendent,

3 manager, or other agent by ordinary mail or certified mail

4 return receipt requested, by facsimile transmission or other

5 electronic means, by personal delivery, or by any method

6 provided by law for service of a summons. At the time of

7 service on the payor and as notice that withholding has

8 commenced, the obligee or public office shall serve a copy of

9 the income withholding notice on the obligor by ordinary mail

10 addressed to his or her last known address. A copy of an income

11 withholding notice and proof of service shall be filed with

12 the Clerk of the Circuit Court only when necessary in

13 connection with a petition to contest, modify, suspend,

14 terminate, or correct an income withholding notice, an action

15 to enforce income withholding against a payor, or the

16 resolution of other disputes involving an income withholding

17 notice. The changes made to this subsection by this amendatory

18 Act of the 96th General Assembly apply on and after September

19 1, 2009.

20 (h) At any time after the initial service of an income

21 withholding notice, any other payor of the obligor may be

22 served with the same income withholding notice without further

23 notice to the obligor. A copy of the income withholding notice

24 together with a proof of service on the other payor shall be

25 filed with the Clerk of the Circuit Court.

26 (i) New service of an income withholding notice is not

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1 required in order to resume withholding of income in the case

2 of an obligor with respect to whom an income withholding

3 notice was previously served on the payor if withholding of

4 income was terminated because of an interruption in the

5 obligor's employment of less than 180 days.

6 (Source: P.A. 97-994, eff. 8-17-12; 98-81, eff. 7-15-13.)

7 Section 185. The Property Owned By Aliens Act is amended

8 by changing the title of the Act and Sections 0.01, 7, and 8 as

9 follows:

10 (765 ILCS 60/Act title)

11 An Act concerning the right of noncitizens ~~aliens~~ to

12 acquire and hold real and personal property.

13 (765 ILCS 60/0.01) (from Ch. 6, par. 0.01)

14 Sec. 0.01. Short title. This Act may be cited as the

15 Property Owned By Noncitizens ~~Aliens~~ Act.

16 (Source: P.A. 86-1324.)

17 (765 ILCS 60/7) (from Ch. 6, par. 7)

18 Sec. 7. All noncitizens ~~aliens~~ may acquire, hold, and

19 dispose of real and personal property in the same manner and to

20 the same extent as natural born citizens of the United States,

21 and the personal estate of a noncitizen ~~an alien~~ dying

22 intestate shall be distributed in the same manner as the

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1 estates of natural born citizens, and all persons interested

2 in such estate shall be entitled to proper distributive shares

3 thereof under the laws of this state, whether they are

4 noncitizens~~aliens~~ or not.

5 This amendatory Act of 1992 does not apply to the

6 Agricultural Foreign Investment Disclosure Act.

7 (Source: P.A. 87-1101.)

8 (765 ILCS 60/8) (from Ch. 6, par. 8)

9 Sec. 8. An act in regard to noncitizens ~~aliens~~ and to

10 restrict their right to acquire and hold real and personal

11 estate and to provide for the disposition of the lands now

12 owned by non-resident noncitizens ~~aliens~~, approved June 16,

13 1887, and in force July 1, 1887, and all other acts and parts

14 of acts in conflict with this act, are hereby repealed.

15 (Source: Laws 1897, p. 5.)

16 Section 190. The Property Taxes of Alien Landlords Act is

17 amended by changing the title of the Act and Sections 0.01 and

18 1 as follows:

19 (765 ILCS 725/Act title)

20 An Act to prevent noncitizen ~~alien~~landlords from

21 including the payment of taxes in the rent of farm lands as a

22 part of the rental thereof.

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1 (765 ILCS 725/0.01) (from Ch. 6, par. 8.9)

2 Sec. 0.01. Short title. This Act may be cited as the

3 Property Taxes Of Noncitizen ~~Alien~~ Landlords Act.

4 (Source: P.A. 86-1324.)

5 (765 ILCS 725/1) (from Ch. 6, par. 9)

6 Sec. 1. No contract, agreement or lease in writing or by

7 parol, by which any lands or tenements therein are demised or

8 leased by any noncitizen ~~alien~~or his agents for the purpose of

9 farming, cultivation or the raising of crops thereon, shall

10 contain any provision requiring the tenant or other person for

11 him, to pay taxes on said lands or tenements, or any part

12 thereof, and all such provisions, agreements and leases so

13 made are declared void as to the taxes aforesaid. If any

14 noncitizen ~~alien~~landlord or his agents shall receive in

15 advance or at any other time any sum of money or article of

16 value from any tenant in lieu of such taxes, directly or

17 indirectly, the same may be recovered back by such tenant

18 before any court having jurisdiction of the amount thereof,

19 and all provisions or agreements in writing or otherwise to

20 pay such taxes shall be held in all courts of this state to be

21 void.

22 (Source: P.A. 81-1509.)

23 Section 195. The Illinois Human Rights Act is amended by

24 changing Section 2-101 as follows:

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1 (775 ILCS 5/2-101)

2 Sec. 2-101. Definitions. The following definitions are

3 applicable strictly in the context of this Article.

4 (A) Employee.

5 (1) "Employee" includes:

6 (a) Any individual performing services for

7 remuneration within this State for an employer;

8 (b) An apprentice;

9 (c) An applicant for any apprenticeship.

10 For purposes of subsection (D) of Section 2-102 of

11 this Act, "employee" also includes an unpaid intern. An

12 unpaid intern is a person who performs work for an

13 employer under the following circumstances:

14 (i) the employer is not committed to hiring the

15 person performing the work at the conclusion of the

16 intern's tenure;

17 (ii) the employer and the person performing the

18 work agree that the person is not entitled to wages for

19 the work performed; and

20 (iii) the work performed:

21 (I) supplements training given in an

22 educational environment that may enhance the

23 employability of the intern;

24 (II) provides experience for the benefit of

25 the person performing the work;

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1 (III) does not displace regular employees;

2 (IV) is performed under the close supervision

3 of existing staff; and

4 (V) provides no immediate advantage to the

5 employer providing the training and may

6 occasionally impede the operations of the

7 employer.

8 (2) "Employee" does not include:

9 (a) (Blank);

10 (b) Individuals employed by persons who are not

11 "employers" as defined by this Act;

12 (c) Elected public officials or the members of

13 their immediate personal staffs;

14 (d) Principal administrative officers of the State

15 or of any political subdivision, municipal corporation

16 or other governmental unit or agency;

17 (e) A person in a vocational rehabilitation

18 facility certified under federal law who has been

19 designated an evaluee, trainee, or work activity

20 client.

21 (B) Employer.

22 (1) "Employer" includes:

23 (a) Any person employing one or more employees

24 within Illinois during 20 or more calendar weeks

25 within the calendar year of or preceding the alleged

26 violation;

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1 (b) Any person employing one or more employees

2 when a complainant alleges civil rights violation due

3 to unlawful discrimination based upon his or her

4 physical or mental disability unrelated to ability,

5 pregnancy, or sexual harassment;

6 (c) The State and any political subdivision,

7 municipal corporation or other governmental unit or

8 agency, without regard to the number of employees;

9 (d) Any party to a public contract without regard

10 to the number of employees;

11 (e) A joint apprenticeship or training committee

12 without regard to the number of employees.

13 (2) "Employer" does not include any place of worship,

14 religious corporation, association, educational

15 institution, society, or non-profit nursing institution

16 conducted by and for those who rely upon treatment by

17 prayer through spiritual means in accordance with the

18 tenets of a recognized church or religious denomination

19 with respect to the employment of individuals of a

20 particular religion to perform work connected with the

21 carrying on by such place of worship, corporation,

22 association, educational institution, society or

23 non-profit nursing institution of its activities.

24 (C) Employment Agency. "Employment Agency" includes both

25 public and private employment agencies and any person, labor

26 organization, or labor union having a hiring hall or hiring

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1 office regularly undertaking, with or without compensation, to

2 procure opportunities to work, or to procure, recruit, refer

3 or place employees.

4 (D) Labor Organization. "Labor Organization" includes any

5 organization, labor union, craft union, or any voluntary

6 unincorporated association designed to further the cause of

7 the rights of union labor which is constituted for the

8 purpose, in whole or in part, of collective bargaining or of

9 dealing with employers concerning grievances, terms or

10 conditions of employment, or apprenticeships or applications

11 for apprenticeships, or of other mutual aid or protection in

12 connection with employment, including apprenticeships or

13 applications for apprenticeships.

14 (E) Sexual Harassment. "Sexual harassment" means any

15 unwelcome sexual advances or requests for sexual favors or any

16 conduct of a sexual nature when (1) submission to such conduct

17 is made either explicitly or implicitly a term or condition of

18 an individual's employment, (2) submission to or rejection of

19 such conduct by an individual is used as the basis for

20 employment decisions affecting such individual, or (3) such

21 conduct has the purpose or effect of substantially interfering

22 with an individual's work performance or creating an

23 intimidating, hostile or offensive working environment.

24 For purposes of this definition, the phrase "working

25 environment" is not limited to a physical location an employee

26 is assigned to perform his or her duties.

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1 (E-1) Harassment. "Harassment" means any unwelcome conduct

2 on the basis of an individual's actual or perceived race,

3 color, religion, national origin, ancestry, age, sex, marital

4 status, order of protection status, disability, military

5 status, sexual orientation, pregnancy, unfavorable discharge

6 from military service, citizenship status, or work

7 authorization status that has the purpose or effect of

8 substantially interfering with the individual's work

9 performance or creating an intimidating, hostile, or offensive

10 working environment. For purposes of this definition, the

11 phrase "working environment" is not limited to a physical

12 location an employee is assigned to perform his or her duties.

13 (F) Religion. "Religion" with respect to employers

14 includes all aspects of religious observance and practice, as

15 well as belief, unless an employer demonstrates that he is

16 unable to reasonably accommodate an employee's or prospective

17 employee's religious observance or practice without undue

18 hardship on the conduct of the employer's business.

19 (G) Public Employer. "Public employer" means the State, an

20 agency or department thereof, unit of local government, school

21 district, instrumentality or political subdivision.

22 (H) Public Employee. "Public employee" means an employee

23 of the State, agency or department thereof, unit of local

24 government, school district, instrumentality or political

25 subdivision. "Public employee" does not include public

26 officers or employees of the General Assembly or agencies

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1 thereof.

2 (I) Public Officer. "Public officer" means a person who is

3 elected to office pursuant to the Constitution or a statute or

4 ordinance, or who is appointed to an office which is

5 established, and the qualifications and duties of which are

6 prescribed, by the Constitution or a statute or ordinance, to

7 discharge a public duty for the State, agency or department

8 thereof, unit of local government, school district,

9 instrumentality or political subdivision.

10 (J) Eligible Bidder. "Eligible bidder" means a person who,

11 prior to contract award or prior to bid opening for State

12 contracts for construction or construction-related services,

13 has filed with the Department a properly completed, sworn and

14 currently valid employer report form, pursuant to the

15 Department's regulations. The provisions of this Article

16 relating to eligible bidders apply only to bids on contracts

17 with the State and its departments, agencies, boards, and

18 commissions, and the provisions do not apply to bids on

19 contracts with units of local government or school districts.

20 (K) Citizenship Status. "Citizenship status" means the

21 status of being:

22 (1) a born U.S. citizen;

23 (2) a naturalized U.S. citizen;

24 (3) a U.S. national; or

25 (4) a person born outside the United States and not a

26 U.S. citizen who is not an unauthorizednoncitizen ~~alien~~

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1 and who is protected from discrimination under the

2 provisions of Section 1324b of Title 8 of the United

3 States Code, as now or hereafter amended.

4 (L) Work Authorization Status. "Work authorization status"

5 means the status of being a person born outside of the United

6 States, and not a U.S. citizen, who is authorized by the

7 federal government to work in the United States.

8 (Source: P.A. 101-221, eff. 1-1-20; 101-430, eff. 7-1-20;

9 102-233, eff. 8-2-21; 102-558, eff. 8-20-21.)

10 Section 200. The Resident Alien Course Act is amended by

11 changing the title of the Act and Sections 0.01, 1, 2, and 3 as

12 follows:

13 (815 ILCS 400/Act title)

14 An Act concerning fees charged for courses offered to

15 persons seeking permanent residentnoncitizen ~~alien~~ status

16 under the Immigration Reform and Control Act of 1986.

17 (815 ILCS 400/0.01) (from Ch. 111, par. 8050)

18 Sec. 0.01. Short title. This Act may be cited as the

19 Resident Noncitizen ~~Alien~~ Course Act.

20 (Source: P.A. 86-1324.)

21 (815 ILCS 400/1) (from Ch. 111, par. 8051)

22 Sec. 1. No individual or agency, authorized by the U.S.

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1 Immigration and Naturalization Service to offer a course

2 leading to a certificate of satisfactory pursuit for issuance

3 of permanent resident noncitizen ~~alien~~ status, may charge a

4 fee for such course in excess of $5 per hour per individual up

5 to the first 60 hours of instruction or $500 for up to 12

6 months of instruction from the date of registration. As used

7 in this Section, the term "fee" includes all costs associated

8 with the course, including the costs of instruction and

9 materials.

10 (Source: P.A. 86-831.)

11 (815 ILCS 400/2) (from Ch. 111, par. 8052)

12 Sec. 2. No individual or agency which offers any service

13 or course with the promise of preparing the recipient or

14 enrollee for the English and civics exam of the U.S.

15 Immigration and Naturalization Service for issuance of

16 permanent resident noncitizen ~~alien~~ status may charge a fee

17 for such service or course in excess of $5 per hour per

18 individual up to the first 60 hours of instruction or $500 for

19 up to 12 months of instruction from the date of registration.

20 As used in this Section, the term "fee" includes all costs

21 associated with the service or course, including the costs of

22 instruction and materials.

23 (Source: P.A. 86-831.)

24 (815 ILCS 400/3) (from Ch. 111, par. 8053)

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1 Sec. 3. Any individual or agency offering a course or

2 service described in Section 2 shall include within any

3 literature or print or electronic advertisement for such

4 service or course a statement that such service or course is

5 designed to prepare the recipient or enrollee for the English

6 and civics exam of the U.S. Immigration and Naturalization

7 Service and that the individual or agency offering the service

8 or course does not issue the certificate of satisfactory

9 pursuit required by the U.S. Immigration and Naturalization

10 Service for issuance of permanent resident noncitizen ~~alien~~

11 status.

12 (Source: P.A. 86-831.)

13 Section 205. The Consumer Fraud and Deceptive Business

14 Practices Act is amended by changing Section 2AA as follows:

15 (815 ILCS 505/2AA)

16 Sec. 2AA. Immigration services.

17 (a) "Immigration matter" means any proceeding, filing, or

18 action affecting the nonimmigrant, immigrant or citizenship

19 status of any person that arises under immigration and

20 naturalization law, executive order or presidential

21 proclamation of the United States or any foreign country, or

22 that arises under action of the United States Citizenship and

23 Immigration Services, the United States Department of Labor,

24 or the United States Department of State.

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1 "Immigration assistance service" means any information or

2 action provided or offered to customers or prospective

3 customers related to immigration matters, excluding legal

4 advice, recommending a specific course of legal action, or

5 providing any other assistance that requires legal analysis,

6 legal judgment, or interpretation of the law.

7 "Compensation" means money, property, services, promise of

8 payment, or anything else of value.

9 "Employed by" means that a person is on the payroll of the

10 employer and the employer deducts from the employee's paycheck

11 social security and withholding taxes, or receives

12 compensation from the employer on a commission basis or as an

13 independent contractor.

14 "Reasonable costs" means actual costs or, if actual costs

15 cannot be calculated, reasonably estimated costs of such

16 things as photocopying, telephone calls, document requests,

17 and filing fees for immigration forms, and other nominal costs

18 incidental to assistance in an immigration matter.

19 (a-1) The General Assembly finds and declares that private

20 individuals who assist persons with immigration matters have a

21 significant impact on the ability of their clients to reside

22 and work within the United States and to establish and

23 maintain stable families and business relationships. The

24 General Assembly further finds that that assistance and its

25 impact also have a significant effect on the cultural, social,

26 and economic life of the State of Illinois and thereby

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1 substantially affect the public interest. It is the intent of

2 the General Assembly to establish rules of practice and

3 conduct for those individuals to promote honesty and fair

4 dealing with residents and to preserve public confidence.

5 (a-5) The following persons are exempt from this Section,

6 provided they prove the exemption by a preponderance of the

7 evidence:

8 (1) An attorney licensed to practice law in any state

9 or territory of the United States, or of any foreign

10 country when authorized by the Illinois Supreme Court, to

11 the extent the attorney renders immigration assistance

12 service in the course of his or her practice as an

13 attorney.

14 (2) A legal intern, as described by the rules of the

15 Illinois Supreme Court, employed by and under the direct

16 supervision of a licensed attorney and rendering

17 immigration assistance service in the course of the

18 intern's employment.

19 (3) A not-for-profit organization recognized by the

20 Board of Immigration Appeals under 8 CFR 292.2(a) and

21 employees of those organizations accredited under 8 CFR

22 292.2(d).

23 (4) Any organization employing or desiring to employ a

24 documented or undocumented immigrant or nonimmigrant

25 ~~alien~~, where the organization, its employees or its agents

26 provide advice or assistance in immigration matters to

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1 documented or undocumented immigrant or nonimmigrant~~alien~~

2 employees or potential employees without compensation from

3 the individuals to whom such advice or assistance is

4 provided.

5 Nothing in this Section shall regulate any business to the

6 extent that such regulation is prohibited or preempted by

7 State or federal law.

8 All other persons providing or offering to provide

9 immigration assistance service shall be subject to this

10 Section.

11 (b) Any person who provides or offers to provide

12 immigration assistance service may perform only the following

13 services:

14 (1) Completing a government agency form, requested by

15 the customer and appropriate to the customer's needs, only

16 if the completion of that form does not involve a legal

17 judgment for that particular matter.

18 (2) Transcribing responses to a government agency form

19 which is related to an immigration matter, but not

20 advising a customer as to his or her answers on those

21 forms.

22 (3) Translating information on forms to a customer and

23 translating the customer's answers to questions posed on

24 those forms.

25 (4) Securing for the customer supporting documents

26 currently in existence, such as birth and marriage

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1 certificates, which may be needed to be submitted with

2 government agency forms.

3 (5) Translating documents from a foreign language into

4 English.

5 (6) Notarizing signatures on government agency forms,

6 if the person performing the service is a notary public of

7 the State of Illinois.

8 (7) Making referrals, without fee, to attorneys who

9 could undertake legal representation for a person in an

10 immigration matter.

11 (8) Preparing or arranging for the preparation of

12 photographs and fingerprints.

13 (9) Arranging for the performance of medical testing

14 (including X-rays and AIDS tests) and the obtaining of

15 reports of such test results.

16 (10) Conducting English language and civics courses.

17 (11) Other services that the Attorney General

18 determines by rule may be appropriately performed by such

19 persons in light of the purposes of this Section.

20 Fees for a notary public, agency, or any other person who

21 is not an attorney or an accredited representative filling out

22 immigration forms shall be limited to the maximum fees set

23 forth in subsections (a) and (b) of Section 3-104 of the

24 Illinois Notary Public Act (5 ILCS 312/3-104). The maximum fee

25 schedule set forth in subsections (a) and (b) of Section 3-104

26 of the Illinois Notary Public Act shall apply to any person

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1 that provides or offers to provide immigration assistance

2 service performing the services described therein. The

3 Attorney General may promulgate rules establishing maximum

4 fees that may be charged for any services not described in that

5 subsection. The maximum fees must be reasonable in light of

6 the costs of providing those services and the degree of

7 professional skill required to provide the services.

8 No person subject to this Act shall charge fees directly

9 or indirectly for referring an individual to an attorney or

10 for any immigration matter not authorized by this Article,

11 provided that a person may charge a fee for notarizing

12 documents as permitted by the Illinois Notary Public Act.

13 (c) Any person performing such services shall register

14 with the Illinois Attorney General and submit verification of

15 malpractice insurance or of a surety bond.

16 (d) Except as provided otherwise in this subsection,

17 before providing any assistance in an immigration matter a

18 person shall provide the customer with a written contract that

19 includes the following:

20 (1) An explanation of the services to be performed.

21 (2) Identification of all compensation and costs to be

22 charged to the customer for the services to be performed.

23 (3) A statement that documents submitted in support of

24 an application for nonimmigrant, immigrant, or

25 naturalization status may not be retained by the person

26 for any purpose, including payment of compensation or

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1 costs.

2 This subsection does not apply to a not-for-profit

3 organization that provides advice or assistance in immigration

4 matters to clients without charge beyond a reasonable fee to

5 reimburse the organization's or clinic's reasonable costs

6 relating to providing immigration services to that client.

7 (e) Any person who provides or offers immigration

8 assistance service and is not exempted from this Section,

9 shall post signs at his or her place of business, setting forth

10 information in English and in every other language in which

11 the person provides or offers to provide immigration

12 assistance service. Each language shall be on a separate sign.

13 Signs shall be posted in a location where the signs will be

14 visible to customers. Each sign shall be at least 11 inches by

15 17 inches, and shall contain the following:

16 (1) The statement "I AM NOT AN ATTORNEY LICENSED TO

17 PRACTICE LAW AND MAY NOT GIVE LEGAL ADVICE OR ACCEPT FEES

18 FOR LEGAL ADVICE.".

19 (2) The statement "I AM NOT ACCREDITED TO REPRESENT

20 YOU BEFORE THE UNITED STATES IMMIGRATION AND

21 NATURALIZATION SERVICE AND THE IMMIGRATION BOARD OF

22 APPEALS.".

23 (3) The fee schedule.

24 (4) The statement that "You may cancel any contract

25 within 3 working days and get your money back for services

26 not performed.".

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1 (5) Additional information the Attorney General may

2 require by rule.

3 Every person engaged in immigration assistance service who

4 is not an attorney who advertises immigration assistance

5 service in a language other than English, whether by radio,

6 television, signs, pamphlets, newspapers, or other written

7 communication, with the exception of a single desk plaque,

8 shall include in the document, advertisement, stationery,

9 letterhead, business card, or other comparable written

10 material the following notice in English and the language in

11 which the written communication appears. This notice shall be

12 of a conspicuous size, if in writing, and shall state: "I AM

13 NOT AN ATTORNEY LICENSED TO PRACTICE LAW IN ILLINOIS AND MAY

14 NOT GIVE LEGAL ADVICE OR ACCEPT FEES FOR LEGAL ADVICE.". If

15 such advertisement is by radio or television, the statement

16 may be modified but must include substantially the same

17 message.

18 Any person who provides or offers immigration assistance

19 service and is not exempted from this Section shall not, in any

20 document, advertisement, stationery, letterhead, business

21 card, or other comparable written material, literally

22 translate from English into another language terms or titles

23 including, but not limited to, notary public, notary,

24 licensed, attorney, lawyer, or any other term that implies the

25 person is an attorney. To illustrate, the words "notario" and

26 "poder notarial" are prohibited under this provision.

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1 If not subject to penalties under subsection (a) of

2 Section 3-103 of the Illinois Notary Public Act (5 ILCS

3 312/3-103), violations of this subsection shall result in a

4 fine of $1,000. Violations shall not preempt or preclude

5 additional appropriate civil or criminal penalties.

6 (f) The written contract shall be in both English and in

7 the language of the customer.

8 (g) A copy of the contract shall be provided to the

9 customer upon the customer's execution of the contract.

10 (h) A customer has the right to rescind a contract within

11 72 hours after his or her signing of the contract.

12 (i) Any documents identified in paragraph (3) of

13 subsection (c) shall be returned upon demand of the customer.

14 (j) No person engaged in providing immigration services

15 who is not exempted under this Section shall do any of the

16 following:

17 (1) Make any statement that the person can or will

18 obtain special favors from or has special influence with

19 the United States Immigration and Naturalization Service

20 or any other government agency.

21 (2) Retain any compensation for service not performed.

22 (2.5) Accept payment in exchange for providing legal

23 advice or any other assistance that requires legal

24 analysis, legal judgment, or interpretation of the law.

25 (3) Refuse to return documents supplied by, prepared

26 on behalf of, or paid for by the customer upon the request

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1 of the customer. These documents must be returned upon

2 request even if there is a fee dispute between the

3 immigration assistant and the customer.

4 (4) Represent or advertise, in connection with the

5 provision of assistance in immigration matters, other

6 titles of credentials, including but not limited to

7 "notary public" or "immigration consultant," that could

8 cause a customer to believe that the person possesses

9 special professional skills or is authorized to provide

10 advice on an immigration matter; provided that a notary

11 public appointed by the Illinois Secretary of State may

12 use the term "notary public" if the use is accompanied by

13 the statement that the person is not an attorney; the term

14 "notary public" may not be translated to another language;

15 for example "notario" is prohibited.

16 (5) Provide legal advice, recommend a specific course

17 of legal action, or provide any other assistance that

18 requires legal analysis, legal judgment, or interpretation

19 of the law.

20 (6) Make any misrepresentation of false statement,

21 directly or indirectly, to influence, persuade, or induce

22 patronage.

23 (k) (Blank).

24 (l) (Blank).

25 (m) Any person who violates any provision of this Section,

26 or the rules and regulations issued under this Section, shall

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1 be guilty of a Class A misdemeanor for a first offense and a

2 Class 3 felony for a second or subsequent offense committed

3 within 5 years of a previous conviction for the same offense.

4 Upon his own information or upon the complaint of any

5 person, the Attorney General or any State's Attorney, or a

6 municipality with a population of more than 1,000,000, may

7 maintain an action for injunctive relief and also seek a civil

8 penalty not exceeding $50,000 in the circuit court against any

9 person who violates any provision of this Section. These

10 remedies are in addition to, and not in substitution for,

11 other available remedies.

12 If the Attorney General or any State's Attorney or a

13 municipality with a population of more than 1,000,000 fails to

14 bring an action as provided under this Section any person may

15 file a civil action to enforce the provisions of this Article

16 and maintain an action for injunctive relief, for compensatory

17 damages to recover prohibited fees, or for such additional

18 relief as may be appropriate to deter, prevent, or compensate

19 for the violation. In order to deter violations of this

20 Section, courts shall not require a showing of the traditional

21 elements for equitable relief. A prevailing plaintiff may be

22 awarded 3 times the prohibited fees or a minimum of $1,000 in

23 punitive damages, attorney's fees, and costs of bringing an

24 action under this Section. It is the express intention of the

25 General Assembly that remedies for violation of this Section

26 be cumulative.

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1 (n) No unit of local government, including any home rule

2 unit, shall have the authority to regulate immigration

3 assistance services unless such regulations are at least as

4 stringent as those contained in Public Act 87-1211. It is

5 declared to be the law of this State, pursuant to paragraph (i)

6 of Section 6 of Article VII of the Illinois Constitution of

7 1970, that Public Act 87-1211 is a limitation on the authority

8 of a home rule unit to exercise powers concurrently with the

9 State. The limitations of this Section do not apply to a home

10 rule unit that has, prior to January 1, 1993 (the effective

11 date of Public Act 87-1211), adopted an ordinance regulating

12 immigration assistance services.

13 (o) This Section is severable under Section 1.31 of the

14 Statute on Statutes.

15 (p) The Attorney General shall issue rules not

16 inconsistent with this Section for the implementation,

17 administration, and enforcement of this Section. The rules may

18 provide for the following:

19 (1) The content, print size, and print style of the

20 signs required under subsection (e). Print sizes and

21 styles may vary from language to language.

22 (2) Standard forms for use in the administration of

23 this Section.

24 (3) Any additional requirements deemed necessary.

25 (Source: P.A. 99-679, eff. 1-1-17; 100-863, eff. 8-14-18.)

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1 Section 210. The Workers' Compensation Act is amended by

2 changing Sections 1 and 7 as follows:

3 (820 ILCS 305/1) (from Ch. 48, par. 138.1)

4 Sec. 1. This Act may be cited as the Workers' Compensation

5 Act.

6 (a) The term "employer" as used in this Act means:

7 1. The State and each county, city, town, township,

8 incorporated village, school district, body politic, or

9 municipal corporation therein.

10 2. Every person, firm, public or private corporation,

11 including hospitals, public service, eleemosynary, religious

12 or charitable corporations or associations who has any person

13 in service or under any contract for hire, express or implied,

14 oral or written, and who is engaged in any of the enterprises

15 or businesses enumerated in Section 3 of this Act, or who at or

16 prior to the time of the accident to the employee for which

17 compensation under this Act may be claimed, has in the manner

18 provided in this Act elected to become subject to the

19 provisions of this Act, and who has not, prior to such

20 accident, effected a withdrawal of such election in the manner

21 provided in this Act.

22 3. Any one engaging in any business or enterprise referred

23 to in subsections 1 and 2 of Section 3 of this Act who

24 undertakes to do any work enumerated therein, is liable to pay

25 compensation to his own immediate employees in accordance with

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1 the provisions of this Act, and in addition thereto if he

2 directly or indirectly engages any contractor whether

3 principal or sub-contractor to do any such work, he is liable

4 to pay compensation to the employees of any such contractor or

5 sub-contractor unless such contractor or sub-contractor has

6 insured, in any company or association authorized under the

7 laws of this State to insure the liability to pay compensation

8 under this Act, or guaranteed his liability to pay such

9 compensation. With respect to any time limitation on the

10 filing of claims provided by this Act, the timely filing of a

11 claim against a contractor or subcontractor, as the case may

12 be, shall be deemed to be a timely filing with respect to all

13 persons upon whom liability is imposed by this paragraph.

14 In the event any such person pays compensation under this

15 subsection he may recover the amount thereof from the

16 contractor or sub-contractor, if any, and in the event the

17 contractor pays compensation under this subsection he may

18 recover the amount thereof from the sub-contractor, if any.

19 This subsection does not apply in any case where the

20 accident occurs elsewhere than on, in or about the immediate

21 premises on which the principal has contracted that the work

22 be done.

23 4. Where an employer operating under and subject to the

24 provisions of this Act loans an employee to another such

25 employer and such loaned employee sustains a compensable

26 accidental injury in the employment of such borrowing employer

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1 and where such borrowing employer does not provide or pay the

2 benefits or payments due such injured employee, such loaning

3 employer is liable to provide or pay all benefits or payments

4 due such employee under this Act and as to such employee the

5 liability of such loaning and borrowing employers is joint and

6 several, provided that such loaning employer is in the absence

7 of agreement to the contrary entitled to receive from such

8 borrowing employer full reimbursement for all sums paid or

9 incurred pursuant to this paragraph together with reasonable

10 attorneys' fees and expenses in any hearings before the

11 Illinois Workers' Compensation Commission or in any action to

12 secure such reimbursement. Where any benefit is provided or

13 paid by such loaning employer the employee has the duty of

14 rendering reasonable cooperation in any hearings, trials or

15 proceedings in the case, including such proceedings for

16 reimbursement.

17 Where an employee files an Application for Adjustment of

18 Claim with the Illinois Workers' Compensation Commission

19 alleging that his claim is covered by the provisions of the

20 preceding paragraph, and joining both the alleged loaning and

21 borrowing employers, they and each of them, upon written

22 demand by the employee and within 7 days after receipt of such

23 demand, shall have the duty of filing with the Illinois

24 Workers' Compensation Commission a written admission or denial

25 of the allegation that the claim is covered by the provisions

26 of the preceding paragraph and in default of such filing or if

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1 any such denial be ultimately determined not to have been bona

2 fide then the provisions of Paragraph K of Section 19 of this

3 Act shall apply.

4 An employer whose business or enterprise or a substantial

5 part thereof consists of hiring, procuring or furnishing

6 employees to or for other employers operating under and

7 subject to the provisions of this Act for the performance of

8 the work of such other employers and who pays such employees

9 their salary or wages notwithstanding that they are doing the

10 work of such other employers shall be deemed a loaning

11 employer within the meaning and provisions of this Section.

12 (b) The term "employee" as used in this Act means:

13 1. Every person in the service of the State, including

14 members of the General Assembly, members of the Commerce

15 Commission, members of the Illinois Workers' Compensation

16 Commission, and all persons in the service of the University

17 of Illinois, county, including deputy sheriffs and assistant

18 state's attorneys, city, town, township, incorporated village

19 or school district, body politic, or municipal corporation

20 therein, whether by election, under appointment or contract of

21 hire, express or implied, oral or written, including all

22 members of the Illinois National Guard while on active duty in

23 the service of the State, and all probation personnel of the

24 Juvenile Court appointed pursuant to Article VI of the

25 Juvenile Court Act of 1987, and including any official of the

26 State, any county, city, town, township, incorporated village,

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1 school district, body politic or municipal corporation therein

2 except any duly appointed member of a police department in any

3 city whose population exceeds 500,000 according to the last

4 Federal or State census, and except any member of a fire

5 insurance patrol maintained by a board of underwriters in this

6 State. A duly appointed member of a fire department in any

7 city, the population of which exceeds 500,000 according to the

8 last federal or State census, is an employee under this Act

9 only with respect to claims brought under paragraph (c) of

10 Section 8.

11 One employed by a contractor who has contracted with the

12 State, or a county, city, town, township, incorporated

13 village, school district, body politic or municipal

14 corporation therein, through its representatives, is not

15 considered as an employee of the State, county, city, town,

16 township, incorporated village, school district, body politic

17 or municipal corporation which made the contract.

18 2. Every person in the service of another under any

19 contract of hire, express or implied, oral or written,

20 including persons whose employment is outside of the State of

21 Illinois where the contract of hire is made within the State of

22 Illinois, persons whose employment results in fatal or

23 non-fatal injuries within the State of Illinois where the

24 contract of hire is made outside of the State of Illinois, and

25 persons whose employment is principally localized within the

26 State of Illinois, regardless of the place of the accident or

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1 the place where the contract of hire was made, and including

2 noncitizens ~~aliens~~, and minors who, for the purpose of this

3 Act are considered the same and have the same power to

4 contract, receive payments and give quittances therefor, as

5 adult employees.

6 3. Every sole proprietor and every partner of a business

7 may elect to be covered by this Act.

8 An employee or his dependents under this Act who shall

9 have a cause of action by reason of any injury, disablement or

10 death arising out of and in the course of his employment may

11 elect to pursue his remedy in the State where injured or

12 disabled, or in the State where the contract of hire is made,

13 or in the State where the employment is principally localized.

14 However, any employer may elect to provide and pay

15 compensation to any employee other than those engaged in the

16 usual course of the trade, business, profession or occupation

17 of the employer by complying with Sections 2 and 4 of this Act.

18 Employees are not included within the provisions of this Act

19 when excluded by the laws of the United States relating to

20 liability of employers to their employees for personal

21 injuries where such laws are held to be exclusive.

22 The term "employee" does not include persons performing

23 services as real estate broker, broker-salesman, or salesman

24 when such persons are paid by commission only.

25 (c) "Commission" means the Industrial Commission created

26 by Section 5 of "The Civil Administrative Code of Illinois",

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1 approved March 7, 1917, as amended, or the Illinois Workers'

2 Compensation Commission created by Section 13 of this Act.

3 (d) To obtain compensation under this Act, an employee

4 bears the burden of showing, by a preponderance of the

5 evidence, that he or she has sustained accidental injuries

6 arising out of and in the course of the employment.

7 (Source: P.A. 97-18, eff. 6-28-11; 97-268, eff. 8-8-11;

8 97-813, eff. 7-13-12.)

9 (820 ILCS 305/7) (from Ch. 48, par. 138.7)

10 Sec. 7. The amount of compensation which shall be paid for

11 an accidental injury to the employee resulting in death is:

12 (a) If the employee leaves surviving a widow, widower,

13 child or children, the applicable weekly compensation rate

14 computed in accordance with subparagraph 2 of paragraph (b) of

15 Section 8, shall be payable during the life of the widow or

16 widower and if any surviving child or children shall not be

17 physically or mentally incapacitated then until the death of

18 the widow or widower or until the youngest child shall reach

19 the age of 18, whichever shall come later; provided that if

20 such child or children shall be enrolled as a full time student

21 in any accredited educational institution, the payments shall

22 continue until such child has attained the age of 25. In the

23 event any surviving child or children shall be physically or

24 mentally incapacitated, the payments shall continue for the

25 duration of such incapacity.

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1 The term "child" means a child whom the deceased employee

2 left surviving, including a posthumous child, a child legally

3 adopted, a child whom the deceased employee was legally

4 obligated to support or a child to whom the deceased employee

5 stood in loco parentis. The term "children" means the plural

6 of "child".

7 The term "physically or mentally incapacitated child or

8 children" means a child or children incapable of engaging in

9 regular and substantial gainful employment.

10 In the event of the remarriage of a widow or widower, where

11 the decedent did not leave surviving any child or children

12 who, at the time of such remarriage, are entitled to

13 compensation benefits under this Act, the surviving spouse

14 shall be paid a lump sum equal to 2 years compensation benefits

15 and all further rights of such widow or widower shall be

16 extinguished.

17 If the employee leaves surviving any child or children

18 under 18 years of age who at the time of death shall be

19 entitled to compensation under this paragraph (a) of this

20 Section, the weekly compensation payments herein provided for

21 such child or children shall in any event continue for a period

22 of not less than 6 years.

23 Any beneficiary entitled to compensation under this

24 paragraph (a) of this Section shall receive from the special

25 fund provided in paragraph (f) of this Section, in addition to

26 the compensation herein provided, supplemental benefits in

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1 accordance with paragraph (g) of Section 8.

2 (b) If no compensation is payable under paragraph (a) of

3 this Section and the employee leaves surviving a parent or

4 parents who at the time of the accident were totally dependent

5 upon the earnings of the employee then weekly payments equal

6 to the compensation rate payable in the case where the

7 employee leaves surviving a widow or widower, shall be paid to

8 such parent or parents for the duration of their lives, and in

9 the event of the death of either, for the life of the survivor.

10 (c) If no compensation is payable under paragraphs (a) or

11 (b) of this Section and the employee leaves surviving any

12 child or children who are not entitled to compensation under

13 the foregoing paragraph (a) but who at the time of the accident

14 were nevertheless in any manner dependent upon the earnings of

15 the employee, or leaves surviving a parent or parents who at

16 the time of the accident were partially dependent upon the

17 earnings of the employee, then there shall be paid to such

18 dependent or dependents for a period of 8 years weekly

19 compensation payments at such proportion of the applicable

20 rate if the employee had left surviving a widow or widower as

21 such dependency bears to total dependency. In the event of the

22 death of any such beneficiary the share of such beneficiary

23 shall be divided equally among the surviving beneficiaries and

24 in the event of the death of the last such beneficiary all the

25 rights under this paragraph shall be extinguished.

26 (d) If no compensation is payable under paragraphs (a),

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1 (b) or (c) of this Section and the employee leaves surviving

2 any grandparent, grandparents, grandchild or grandchildren or

3 collateral heirs dependent upon the employee's earnings to the

4 extent of 50% or more of total dependency, then there shall be

5 paid to such dependent or dependents for a period of 5 years

6 weekly compensation payments at such proportion of the

7 applicable rate if the employee had left surviving a widow or

8 widower as such dependency bears to total dependency. In the

9 event of the death of any such beneficiary the share of such

10 beneficiary shall be divided equally among the surviving

11 beneficiaries and in the event of the death of the last such

12 beneficiary all rights hereunder shall be extinguished.

13 (e) The compensation to be paid for accidental injury

14 which results in death, as provided in this Section, shall be

15 paid to the persons who form the basis for determining the

16 amount of compensation to be paid by the employer, the

17 respective shares to be in the proportion of their respective

18 dependency at the time of the accident on the earnings of the

19 deceased. The Commission or an Arbitrator thereof may, in its

20 or his discretion, order or award the payment to the parent or

21 grandparent of a child for the latter's support the amount of

22 compensation which but for such order or award would have been

23 paid to such child as its share of the compensation payable,

24 which order or award may be modified from time to time by the

25 Commission in its discretion with respect to the person to

26 whom shall be paid the amount of the order or award remaining

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1 unpaid at the time of the modification.

2 The payments of compensation by the employer in accordance

3 with the order or award of the Commission discharges such

4 employer from all further obligation as to such compensation.

5 (f) The sum of $8,000 for burial expenses shall be paid by

6 the employer to the widow or widower, other dependent, next of

7 kin or to the person or persons incurring the expense of

8 burial.

9 In the event the employer failed to provide necessary

10 first aid, medical, surgical or hospital service, he shall pay

11 the cost thereof to the person or persons entitled to

12 compensation under paragraphs (a), (b), (c) or (d) of this

13 Section, or to the person or persons incurring the obligation

14 therefore, or providing the same.

15 On January 15 and July 15, 1981, and on January 15 and July

16 15 of each year thereafter the employer shall within 60 days

17 pay a sum equal to 1/8 of 1% of all compensation payments made

18 by him after July 1, 1980, either under this Act or the

19 Workers' Occupational Diseases Act, whether by lump sum

20 settlement or weekly compensation payments, but not including

21 hospital, surgical or rehabilitation payments, made during the

22 first 6 months and during the second 6 months respectively of

23 the fiscal year next preceding the date of the payments, into a

24 special fund which shall be designated the "Second Injury

25 Fund", of which the State Treasurer is ex-officio custodian,

26 such special fund to be held and disbursed for the purposes

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1 hereinafter stated in paragraphs (f) and (g) of Section 8,

2 either upon the order of the Commission or of a competent

3 court. Said special fund shall be deposited the same as are

4 State funds and any interest accruing thereon shall be added

5 thereto every 6 months. It is subject to audit the same as

6 State funds and accounts and is protected by the General bond

7 given by the State Treasurer. It is considered always

8 appropriated for the purposes of disbursements as provided in

9 Section 8, paragraph (f), of this Act, and shall be paid out

10 and disbursed as therein provided and shall not at any time be

11 appropriated or diverted to any other use or purpose.

12 On January 15, 1991, the employer shall further pay a sum

13 equal to one half of 1% of all compensation payments made by

14 him from January 1, 1990 through June 30, 1990 either under

15 this Act or under the Workers' Occupational Diseases Act,

16 whether by lump sum settlement or weekly compensation

17 payments, but not including hospital, surgical or

18 rehabilitation payments, into an additional Special Fund which

19 shall be designated as the "Rate Adjustment Fund". On March

20 15, 1991, the employer shall pay into the Rate Adjustment Fund

21 a sum equal to one half of 1% of all such compensation payments

22 made from July 1, 1990 through December 31, 1990. Within 60

23 days after July 15, 1991, the employer shall pay into the Rate

24 Adjustment Fund a sum equal to one half of 1% of all such

25 compensation payments made from January 1, 1991 through June

26 30, 1991. Within 60 days after January 15 of 1992 and each

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1 subsequent year through 1996, the employer shall pay into the

2 Rate Adjustment Fund a sum equal to one half of 1% of all such

3 compensation payments made in the last 6 months of the

4 preceding calendar year. Within 60 days after July 15 of 1992

5 and each subsequent year through 1995, the employer shall pay

6 into the Rate Adjustment Fund a sum equal to one half of 1% of

7 all such compensation payments made in the first 6 months of

8 the same calendar year. Within 60 days after January 15 of 1997

9 and each subsequent year through 2005, the employer shall pay

10 into the Rate Adjustment Fund a sum equal to three-fourths of

11 1% of all such compensation payments made in the last 6 months

12 of the preceding calendar year. Within 60 days after July 15 of

13 1996 and each subsequent year through 2004, the employer shall

14 pay into the Rate Adjustment Fund a sum equal to three-fourths

15 of 1% of all such compensation payments made in the first 6

16 months of the same calendar year. Within 60 days after July 15

17 of 2005, the employer shall pay into the Rate Adjustment Fund a

18 sum equal to 1% of such compensation payments made in the first

19 6 months of the same calendar year. Within 60 days after

20 January 15 of 2006 and each subsequent year, the employer

21 shall pay into the Rate Adjustment Fund a sum equal to 1.25% of

22 such compensation payments made in the last 6 months of the

23 preceding calendar year. Within 60 days after July 15 of 2006

24 and each subsequent year, the employer shall pay into the Rate

25 Adjustment Fund a sum equal to 1.25% of such compensation

26 payments made in the first 6 months of the same calendar year.

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1 The administrative costs of collecting assessments from

2 employers for the Rate Adjustment Fund shall be paid from the

3 Rate Adjustment Fund. The cost of an actuarial audit of the

4 Fund shall be paid from the Rate Adjustment Fund. The State

5 Treasurer is ex officio custodian of such Special Fund and the

6 same shall be held and disbursed for the purposes hereinafter

7 stated in paragraphs (f) and (g) of Section 8 upon the order of

8 the Commission or of a competent court. The Rate Adjustment

9 Fund shall be deposited the same as are State funds and any

10 interest accruing thereon shall be added thereto every 6

11 months. It shall be subject to audit the same as State funds

12 and accounts and shall be protected by the general bond given

13 by the State Treasurer. It is considered always appropriated

14 for the purposes of disbursements as provided in paragraphs

15 (f) and (g) of Section 8 of this Act and shall be paid out and

16 disbursed as therein provided and shall not at any time be

17 appropriated or diverted to any other use or purpose. Within 5

18 days after the effective date of this amendatory Act of 1990,

19 the Comptroller and the State Treasurer shall transfer

20 $1,000,000 from the General Revenue Fund to the Rate

21 Adjustment Fund. By February 15, 1991, the Comptroller and the

22 State Treasurer shall transfer $1,000,000 from the Rate

23 Adjustment Fund to the General Revenue Fund. The Comptroller

24 and Treasurer are authorized to make transfers at the request

25 of the Chairman up to a total of $19,000,000 from the Second

26 Injury Fund, the General Revenue Fund, and the Workers'

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1 Compensation Benefit Trust Fund to the Rate Adjustment Fund to

2 the extent that there is insufficient money in the Rate

3 Adjustment Fund to pay claims and obligations. Amounts may be

4 transferred from the General Revenue Fund only if the funds in

5 the Second Injury Fund or the Workers' Compensation Benefit

6 Trust Fund are insufficient to pay claims and obligations of

7 the Rate Adjustment Fund. All amounts transferred from the

8 Second Injury Fund, the General Revenue Fund, and the Workers'

9 Compensation Benefit Trust Fund shall be repaid from the Rate

10 Adjustment Fund within 270 days of a transfer, together with

11 interest at the rate earned by moneys on deposit in the Fund or

12 Funds from which the moneys were transferred.

13 Upon a finding by the Commission, after reasonable notice

14 and hearing, that any employer has willfully and knowingly

15 failed to pay the proper amounts into the Second Injury Fund or

16 the Rate Adjustment Fund required by this Section or if such

17 payments are not made within the time periods prescribed by

18 this Section, the employer shall, in addition to such

19 payments, pay a penalty of 20% of the amount required to be

20 paid or $2,500, whichever is greater, for each year or part

21 thereof of such failure to pay. This penalty shall only apply

22 to obligations of an employer to the Second Injury Fund or the

23 Rate Adjustment Fund accruing after the effective date of this

24 amendatory Act of 1989. All or part of such a penalty may be

25 waived by the Commission for good cause shown.

26 Any obligations of an employer to the Second Injury Fund

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1 and Rate Adjustment Fund accruing prior to the effective date

2 of this amendatory Act of 1989 shall be paid in full by such

3 employer within 5 years of the effective date of this

4 amendatory Act of 1989, with at least one-fifth of such

5 obligation to be paid during each year following the effective

6 date of this amendatory Act of 1989. If the Commission finds,

7 following reasonable notice and hearing, that an employer has

8 failed to make timely payment of any obligation accruing under

9 the preceding sentence, the employer shall, in addition to all

10 other payments required by this Section, be liable for a

11 penalty equal to 20% of the overdue obligation or $2,500,

12 whichever is greater, for each year or part thereof that

13 obligation is overdue. All or part of such a penalty may be

14 waived by the Commission for good cause shown.

15 The Chairman of the Illinois Workers' Compensation

16 Commission shall, annually, furnish to the Director of the

17 Department of Insurance a list of the amounts paid into the

18 Second Injury Fund and the Rate Adjustment Fund by each

19 insurance company on behalf of their insured employers. The

20 Director shall verify to the Chairman that the amounts paid by

21 each insurance company are accurate as best as the Director

22 can determine from the records available to the Director. The

23 Chairman shall verify that the amounts paid by each

24 self-insurer are accurate as best as the Chairman can

25 determine from records available to the Chairman. The Chairman

26 may require each self-insurer to provide information

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1 concerning the total compensation payments made upon which

2 contributions to the Second Injury Fund and the Rate

3 Adjustment Fund are predicated and any additional information

4 establishing that such payments have been made into these

5 funds. Any deficiencies in payments noted by the Director or

6 Chairman shall be subject to the penalty provisions of this

7 Act.

8 The State Treasurer, or his duly authorized

9 representative, shall be named as a party to all proceedings

10 in all cases involving claim for the loss of, or the permanent

11 and complete loss of the use of one eye, one foot, one leg, one

12 arm or one hand.

13 The State Treasurer or his duly authorized agent shall

14 have the same rights as any other party to the proceeding,

15 including the right to petition for review of any award. The

16 reasonable expenses of litigation, such as medical

17 examinations, testimony, and transcript of evidence, incurred

18 by the State Treasurer or his duly authorized representative,

19 shall be borne by the Second Injury Fund.

20 If the award is not paid within 30 days after the date the

21 award has become final, the Commission shall proceed to take

22 judgment thereon in its own name as is provided for other

23 awards by paragraph (g) of Section 19 of this Act and take the

24 necessary steps to collect the award.

25 Any person, corporation or organization who has paid or

26 become liable for the payment of burial expenses of the

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1 deceased employee may in his or its own name institute

2 proceedings before the Commission for the collection thereof.

3 For the purpose of administration, receipts and

4 disbursements, the Special Fund provided for in paragraph (f)

5 of this Section shall be administered jointly with the Special

6 Fund provided for in Section 7, paragraph (f) of the Workers'

7 Occupational Diseases Act.

8 (g) All compensation, except for burial expenses provided

9 in this Section to be paid in case accident results in death,

10 shall be paid in installments equal to the percentage of the

11 average earnings as provided for in Section 8, paragraph (b)

12 of this Act, at the same intervals at which the wages or

13 earnings of the employees were paid. If this is not feasible,

14 then the installments shall be paid weekly. Such compensation

15 may be paid in a lump sum upon petition as provided in Section

16 9 of this Act. However, in addition to the benefits provided by

17 Section 9 of this Act where compensation for death is payable

18 to the deceased's widow, widower or to the deceased's widow,

19 widower and one or more children, and where a partial lump sum

20 is applied for by such beneficiary or beneficiaries within 18

21 months after the deceased's death, the Commission may, in its

22 discretion, grant a partial lump sum of not to exceed 100 weeks

23 of the compensation capitalized at their present value upon

24 the basis of interest calculated at 3% per annum with annual

25 rests, upon a showing that such partial lump sum is for the

26 best interest of such beneficiary or beneficiaries.

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1 (h) In case the injured employee is under 16 years of age

2 at the time of the accident and is illegally employed, the

3 amount of compensation payable under paragraphs (a), (b), (c),

4 (d) and (f) of this Section shall be increased 50%.

5 Nothing herein contained repeals or amends the provisions

6 of the Child Labor Law relating to the employment of minors

7 under the age of 16 years.

8 However, where an employer has on file an employment

9 certificate issued pursuant to the Child Labor Law or work

10 permit issued pursuant to the Federal Fair Labor Standards

11 Act, as amended, or a birth certificate properly and duly

12 issued, such certificate, permit or birth certificate is

13 conclusive evidence as to the age of the injured minor

14 employee for the purposes of this Section only.

15 (i) Whenever the dependents of a deceased employee are

16 noncitizens ~~aliens~~not residing in the United States, Mexico

17 or Canada, the amount of compensation payable is limited to

18 the beneficiaries described in paragraphs (a), (b) and (c) of

19 this Section and is 50% of the compensation provided in

20 paragraphs (a), (b) and (c) of this Section, except as

21 otherwise provided by treaty.

22 In a case where any of the persons who would be entitled to

23 compensation is living at any place outside of the United

24 States, then payment shall be made to the personal

25 representative of the deceased employee. The distribution by

26 such personal representative to the persons entitled shall be

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1 made to such persons and in such manner as the Commission

2 orders.

3 (Source: P.A. 93-721, eff. 1-1-05; 94-277, eff. 7-20-05;

4 94-695, eff. 11-16-05.)

5 Section 215. The Workers' Occupational Diseases Act is

6 amended by changing Section 1 as follows:

7 (820 ILCS 310/1) (from Ch. 48, par. 172.36)

8 Sec. 1. This Act shall be known and may be cited as the

9 "Workers' Occupational Diseases Act".

10 (a) The term "employer" as used in this Act shall be

11 construed to be:

12 1. The State and each county, city, town, township,

13 incorporated village, school district, body politic, or

14 municipal corporation therein.

15 2. Every person, firm, public or private corporation,

16 including hospitals, public service, eleemosynary,

17 religious or charitable corporations or associations, who

18 has any person in service or under any contract for hire,

19 express or implied, oral or written.

20 3. Where an employer operating under and subject to

21 the provisions of this Act loans an employee to another

22 such employer and such loaned employee sustains a

23 compensable occupational disease in the employment of such

24 borrowing employer and where such borrowing employer does

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1 not provide or pay the benefits or payments due such

2 employee, such loaning employer shall be liable to provide

3 or pay all benefits or payments due such employee under

4 this Act and as to such employee the liability of such

5 loaning and borrowing employers shall be joint and

6 several, provided that such loaning employer shall in the

7 absence of agreement to the contrary be entitled to

8 receive from such borrowing employer full reimbursement

9 for all sums paid or incurred pursuant to this paragraph

10 together with reasonable attorneys' fees and expenses in

11 any hearings before the Illinois Workers' Compensation

12 Commission or in any action to secure such reimbursement.

13 Where any benefit is provided or paid by such loaning

14 employer, the employee shall have the duty of rendering

15 reasonable co-operation in any hearings, trials or

16 proceedings in the case, including such proceedings for

17 reimbursement.

18 Where an employee files an Application for Adjustment

19 of Claim with the Illinois Workers' Compensation

20 Commission alleging that his or her claim is covered by

21 the provisions of the preceding paragraph, and joining

22 both the alleged loaning and borrowing employers, they and

23 each of them, upon written demand by the employee and

24 within 7 days after receipt of such demand, shall have the

25 duty of filing with the Illinois Workers' Compensation

26 Commission a written admission or denial of the allegation

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1 that the claim is covered by the provisions of the

2 preceding paragraph and in default of such filing or if

3 any such denial be ultimately determined not to have been

4 bona fide then the provisions of Paragraph K of Section 19

5 of this Act shall apply.

6 An employer whose business or enterprise or a

7 substantial part thereof consists of hiring, procuring or

8 furnishing employees to or for other employers operating

9 under and subject to the provisions of this Act for the

10 performance of the work of such other employers and who

11 pays such employees their salary or wage notwithstanding

12 that they are doing the work of such other employers shall

13 be deemed a loaning employer within the meaning and

14 provisions of this Section.

15 (b) The term "employee" as used in this Act, shall be

16 construed to mean:

17 1. Every person in the service of the State, county,

18 city, town, township, incorporated village or school

19 district, body politic or municipal corporation therein,

20 whether by election, appointment or contract of hire,

21 express or implied, oral or written, including any

22 official of the State, or of any county, city, town,

23 township, incorporated village, school district, body

24 politic or municipal corporation therein and except any

25 duly appointed member of the fire department in any city

26 whose population exceeds 500,000 according to the last

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1 Federal or State census, and except any member of a fire

2 insurance patrol maintained by a board of underwriters in

3 this State. One employed by a contractor who has

4 contracted with the State, or a county, city, town,

5 township, incorporated village, school district, body

6 politic or municipal corporation therein, through its

7 representatives, shall not be considered as an employee of

8 the State, county, city, town, township, incorporated

9 village, school district, body politic or municipal

10 corporation which made the contract.

11 2. Every person in the service of another under any

12 contract of hire, express or implied, oral or written, who

13 contracts an occupational disease while working in the

14 State of Illinois, or who contracts an occupational

15 disease while working outside of the State of Illinois but

16 where the contract of hire is made within the State of

17 Illinois, and any person whose employment is principally

18 localized within the State of Illinois, regardless of the

19 place where the disease was contracted or place where the

20 contract of hire was made, including noncitizens ~~aliens~~,

21 and minors who, for the purpose of this Act, except

22 Section 3 hereof, shall be considered the same and have

23 the same power to contract, receive payments and give

24 quittances therefor, as adult employees. An employee or

25 his or her dependents under this Act who shall have a cause

26 of action by reason of an occupational disease,

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1 disablement or death arising out of and in the course of

2 his or her employment may elect or pursue his or her remedy

3 in the State where the disease was contracted, or in the

4 State where the contract of hire is made, or in the State

5 where the employment is principally localized.

6 (c) "Commission" means the Illinois Workers' Compensation

7 Commission created by the Workers' Compensation Act, approved

8 July 9, 1951, as amended.

9 (d) In this Act the term "Occupational Disease" means a

10 disease arising out of and in the course of the employment or

11 which has become aggravated and rendered disabling as a result

12 of the exposure of the employment. Such aggravation shall

13 arise out of a risk peculiar to or increased by the employment

14 and not common to the general public.

15 A disease shall be deemed to arise out of the employment if

16 there is apparent to the rational mind, upon consideration of

17 all the circumstances, a causal connection between the

18 conditions under which the work is performed and the

19 occupational disease. The disease need not to have been

20 foreseen or expected but after its contraction it must appear

21 to have had its origin or aggravation in a risk connected with

22 the employment and to have flowed from that source as a

23 rational consequence.

24 An employee shall be conclusively deemed to have been

25 exposed to the hazards of an occupational disease when, for

26 any length of time however short, he or she is employed in an

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1 occupation or process in which the hazard of the disease

2 exists; provided however, that in a claim of exposure to

3 atomic radiation, the fact of such exposure must be verified

4 by the records of the central registry of radiation exposure

5 maintained by the Department of Public Health or by some other

6 recognized governmental agency maintaining records of such

7 exposures whenever and to the extent that the records are on

8 file with the Department of Public Health or the agency.

9 Any injury to or disease or death of an employee arising

10 from the administration of a vaccine, including without

11 limitation smallpox vaccine, to prepare for, or as a response

12 to, a threatened or potential bioterrorist incident to the

13 employee as part of a voluntary inoculation program in

14 connection with the person's employment or in connection with

15 any governmental program or recommendation for the inoculation

16 of workers in the employee's occupation, geographical area, or

17 other category that includes the employee is deemed to arise

18 out of and in the course of the employment for all purposes

19 under this Act. This paragraph added by Public Act 93-829 is

20 declarative of existing law and is not a new enactment.

21 The employer liable for the compensation in this Act

22 provided shall be the employer in whose employment the

23 employee was last exposed to the hazard of the occupational

24 disease claimed upon regardless of the length of time of such

25 last exposure, except, in cases of silicosis or asbestosis,

26 the only employer liable shall be the last employer in whose

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1 employment the employee was last exposed during a period of 60

2 days or more after the effective date of this Act, to the

3 hazard of such occupational disease, and, in such cases, an

4 exposure during a period of less than 60 days, after the

5 effective date of this Act, shall not be deemed a last

6 exposure. If a miner who is suffering or suffered from

7 pneumoconiosis was employed for 10 years or more in one or more

8 coal mines there shall, effective July 1, 1973 be a rebuttable

9 presumption that his or her pneumoconiosis arose out of such

10 employment.

11 If a deceased miner was employed for 10 years or more in

12 one or more coal mines and died from a respirable disease there

13 shall, effective July 1, 1973, be a rebuttable presumption

14 that his or her death was due to pneumoconiosis.

15 Any condition or impairment of health of an employee

16 employed as a firefighter, emergency medical technician (EMT),

17 emergency medical technician-intermediate (EMT-I), advanced

18 emergency medical technician (A-EMT), or paramedic which

19 results directly or indirectly from any bloodborne pathogen,

20 lung or respiratory disease or condition, heart or vascular

21 disease or condition, hypertension, tuberculosis, or cancer

22 resulting in any disability (temporary, permanent, total, or

23 partial) to the employee shall be rebuttably presumed to arise

24 out of and in the course of the employee's firefighting, EMT,

25 EMT-I, A-EMT, or paramedic employment and, further, shall be

26 rebuttably presumed to be causally connected to the hazards or

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1 exposures of the employment. This presumption shall also apply

2 to any hernia or hearing loss suffered by an employee employed

3 as a firefighter, EMT, EMT-I, A-EMT, or paramedic. However,

4 this presumption shall not apply to any employee who has been

5 employed as a firefighter, EMT, EMT-I, A-EMT, or paramedic for

6 less than 5 years at the time he or she files an Application

7 for Adjustment of Claim concerning this condition or

8 impairment with the Illinois Workers' Compensation Commission.

9 The rebuttable presumption established under this subsection,

10 however, does not apply to an emergency medical technician

11 (EMT), emergency medical technician-intermediate (EMT-I),

12 advanced emergency medical technician (A-EMT), or paramedic

13 employed by a private employer if the employee spends the

14 preponderance of his or her work time for that employer

15 engaged in medical transfers between medical care facilities

16 or non-emergency medical transfers to or from medical care

17 facilities. The changes made to this subsection by this

18 amendatory Act of the 98th General Assembly shall be narrowly

19 construed. The Finding and Decision of the Illinois Workers'

20 Compensation Commission under only the rebuttable presumption

21 provision of this paragraph shall not be admissible or be

22 deemed res judicata in any disability claim under the Illinois

23 Pension Code arising out of the same medical condition;

24 however, this sentence makes no change to the law set forth in

25 Krohe v. City of Bloomington, 204 Ill.2d 392.

26 The insurance carrier liable shall be the carrier whose

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1 policy was in effect covering the employer liable on the last

2 day of the exposure rendering such employer liable in

3 accordance with the provisions of this Act.

4 (e) "Disablement" means an impairment or partial

5 impairment, temporary or permanent, in the function of the

6 body or any of the members of the body, or the event of

7 becoming disabled from earning full wages at the work in which

8 the employee was engaged when last exposed to the hazards of

9 the occupational disease by the employer from whom he or she

10 claims compensation, or equal wages in other suitable

11 employment; and "disability" means the state of being so

12 incapacitated.

13 (f) No compensation shall be payable for or on account of

14 any occupational disease unless disablement, as herein

15 defined, occurs within two years after the last day of the last

16 exposure to the hazards of the disease, except in cases of

17 occupational disease caused by berylliosis or by the

18 inhalation of silica dust or asbestos dust and, in such cases,

19 within 3 years after the last day of the last exposure to the

20 hazards of such disease and except in the case of occupational

21 disease caused by exposure to radiological materials or

22 equipment, and in such case, within 25 years after the last day

23 of last exposure to the hazards of such disease.

24 (g)(1) In any proceeding before the Commission in which

25 the employee is a COVID-19 first responder or front-line

26 worker as defined in this subsection, if the employee's injury

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1 or occupational disease resulted from exposure to and

2 contraction of COVID-19, the exposure and contraction shall be

3 rebuttably presumed to have arisen out of and in the course of

4 the employee's first responder or front-line worker employment

5 and the injury or occupational disease shall be rebuttably

6 presumed to be causally connected to the hazards or exposures

7 of the employee's first responder or front-line worker

8 employment.

9 (2) The term "COVID-19 first responder or front-line

10 worker" means: all individuals employed as police, fire

11 personnel, emergency medical technicians, or paramedics; all

12 individuals employed and considered as first responders; all

13 workers for health care providers, including nursing homes and

14 rehabilitation facilities and home care workers; corrections

15 officers; and any individuals employed by essential businesses

16 and operations as defined in Executive Order 2020-10 dated

17 March 20, 2020, as long as individuals employed by essential

18 businesses and operations are required by their employment to

19 encounter members of the general public or to work in

20 employment locations of more than 15 employees. For purposes

21 of this subsection only, an employee's home or place of

22 residence is not a place of employment, except for home care

23 workers.

24 (3) The presumption created in this subsection may be

25 rebutted by evidence, including, but not limited to, the

26 following:

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1 (A) the employee was working from his or her home, on

2 leave from his or her employment, or some combination

3 thereof, for a period of 14 or more consecutive days

4 immediately prior to the employee's injury, occupational

5 disease, or period of incapacity resulted from exposure to

6 COVID-19; or

7 (B) the employer was engaging in and applying to the

8 fullest extent possible or enforcing to the best of its

9 ability industry-specific workplace sanitation, social

10 distancing, and health and safety practices based on

11 updated guidance issued by the Centers for Disease Control

12 and Prevention or Illinois Department of Public Health or

13 was using a combination of administrative controls,

14 engineering controls, or personal protective equipment to

15 reduce the transmission of COVID-19 to all employees for

16 at least 14 consecutive days prior to the employee's

17 injury, occupational disease, or period of incapacity

18 resulting from exposure to COVID-19. For purposes of this

19 subsection, "updated" means the guidance in effect at

20 least 14 days prior to the COVID-19 diagnosis. For

21 purposes of this subsection, "personal protective

22 equipment" means industry-specific equipment worn to

23 minimize exposure to hazards that cause illnesses or

24 serious injuries, which may result from contact with

25 biological, chemical, radiological, physical, electrical,

26 mechanical, or other workplace hazards. "Personal

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1 protective equipment" includes, but is not limited to,

2 items such as face coverings, gloves, safety glasses,

3 safety face shields, barriers, shoes, earplugs or muffs,

4 hard hats, respirators, coveralls, vests, and full body

5 suits; or

6 (C) the employee was exposed to COVID-19 by an

7 alternate source.

8 (4) The rebuttable presumption created in this subsection

9 applies to all cases tried after June 5, 2020 (the effective

10 date of Public Act 101-633) and in which the diagnosis of

11 COVID-19 was made on or after March 9, 2020 and on or before

12 June 30, 2021 (including the period between December 31, 2020

13 and the effective date of this amendatory Act of the 101st

14 General Assembly).

15 (5) Under no circumstances shall any COVID-19 case

16 increase or affect any employer's workers' compensation

17 insurance experience rating or modification, but COVID-19

18 costs may be included in determining overall State loss costs.

19 (6) In order for the presumption created in this

20 subsection to apply at trial, for COVID-19 diagnoses occurring

21 on or before June 15, 2020, an employee must provide a

22 confirmed medical diagnosis by a licensed medical practitioner

23 or a positive laboratory test for COVID-19 or for COVID-19

24 antibodies; for COVID-19 diagnoses occurring after June 15,

25 2020, an employee must provide a positive laboratory test for

26 COVID-19 or for COVID-19 antibodies.

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1 (7) The presumption created in this subsection does not

2 apply if the employee's place of employment was solely the

3 employee's home or residence for a period of 14 or more

4 consecutive days immediately prior to the employee's injury,

5 occupational disease, or period of incapacity resulted from

6 exposure to COVID-19.

7 (8) The date of injury or the beginning of the employee's

8 occupational disease or period of disability is either the

9 date that the employee was unable to work due to contraction of

10 COVID-19 or was unable to work due to symptoms that were later

11 diagnosed as COVID-19, whichever came first.

12 (9) An employee who contracts COVID-19, but fails to

13 establish the rebuttable presumption is not precluded from

14 filing for compensation under this Act or under the Workers'

15 Compensation Act.

16 (10) To qualify for temporary total disability benefits

17 under the presumption created in this subsection, the employee

18 must be certified for or recertified for temporary disability.

19 (11) An employer is entitled to a credit against any

20 liability for temporary total disability due to an employee as

21 a result of the employee contracting COVID-19 for (A) any sick

22 leave benefits or extended salary benefits paid to the

23 employee by the employer under Emergency Family Medical Leave

24 Expansion Act, Emergency Paid Sick Leave Act of the Families

25 First Coronavirus Response Act, or any other federal law, or

26 (B) any other credit to which an employer is entitled under the

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1 Workers' Compensation Act.

2 (Source: P.A. 101-633, eff. 6-5-20; 101-653, eff. 2-28-21.)

3 Section 220. The Unemployment Insurance Act is amended by

4 changing Sections 211.4 and 614 as follows:

5 (820 ILCS 405/211.4) (from Ch. 48, par. 321.4)

6 Sec. 211.4. A. Notwithstanding any other provision of this

7 Act, the term "employment" shall include service performed

8 after December 31, 1977, by an individual in agricultural

9 labor as defined in Section 214 when:

10 1. Such service is performed for an employing unit

11 which (a) paid cash wages of $20,000 or more during any

12 calendar quarter in either the current or preceding

13 calendar year to an individual or individuals employed in

14 agricultural labor (not taking into account service in

15 agricultural labor performed before January 1, 1980, by a

16 noncitizen ~~an alien~~referred to in paragraph 2); or (b)

17 employed in agricultural labor (not taking into account

18 service in agricultural labor performed before January 1,

19 1980, by a noncitizen ~~an alien~~ referred to in paragraph 2)

20 10 or more individuals within each of 20 or more calendar

21 weeks (but not necessarily simultaneously and irrespective

22 of whether the same individuals are or were employed in

23 each such week), whether or not such weeks are or were

24 consecutive, within either the current or preceding

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1 calendar year.

2 2. Such service is not performed in agricultural labor

3 if performed before January 1, 1980 or on or after the

4 effective date of this amendatory Act of the 96th General

5 Assembly, by an individual who is a noncitizen ~~an alien~~

6 admitted to the United States to perform service in

7 agricultural labor pursuant to Sections 214(c) and

8 101(a)(15)(H) of the Immigration and Nationality Act.

9 B. For the purposes of this Section, any individual who is

10 a member of a crew furnished by a crew leader to perform

11 service in agricultural labor for any other employing unit

12 shall be treated as performing service in the employ of such

13 crew leader if (1) the leader holds a valid certificate of

14 registration under the Farm Labor Contractor Registration Act

15 of 1963, or substantially all the members of such crew operate

16 or maintain tractors, mechanized harvesting or crop dusting

17 equipment, or any other mechanized equipment, which is

18 provided by the crew leader; and (2) the service of such

19 individual is not in employment for such other employing unit

20 within the meaning of subsections A and C of Section 212, and

21 of Section 213.

22 C. For the purposes of this Section, any individual who is

23 furnished by a crew leader to perform service in agricultural

24 labor for any other employing unit, and who is not treated as

25 performing service in the employ of such crew leader under

26 subsection B, shall be treated as performing service in the

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1 employ of such other employing unit, and such employing unit

2 shall be treated as having paid cash wages to such individual

3 in an amount equal to the amount of cash wages paid to the

4 individual by the crew leader (either on his own behalf or on

5 behalf of such other employing unit) for the service in

6 agricultural labor performed for such other employing unit.

7 D. For the purposes of this Section, the term "crew

8 leader" means an individual who (1) furnishes individuals to

9 perform service in agricultural labor for any other employing

10 unit; (2) pays (either on his own behalf or on behalf of such

11 other employing unit) the individuals so furnished by him for

12 the service in agricultural labor performed by them; and (3)

13 has not entered into a written agreement with such other

14 employing unit under which an individual so furnished by him

15 is designated as performing services in the employ of such

16 other employing unit.

17 (Source: P.A. 96-1208, eff. 1-1-11.)

18 (820 ILCS 405/614) (from Ch. 48, par. 444)

19 Sec. 614. Non-resident noncitizens ~~aliens~~ - ineligibility.

20 A noncitizen ~~An alien~~shall be ineligible for benefits for any

21 week which begins after December 31, 1977, on the basis of

22 wages for services performed by such noncitizen ~~alien~~, unless

23 the noncitizen ~~alien~~was an individual who was lawfully

24 admitted for permanent residence at the time such services

25 were performed or otherwise was permanently residing in the

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1 United States under color of law at the time such services were

2 performed (including a person ~~an alien~~who was lawfully

3 present in the United States as a result of the application of

4 the provisions of Section 212(d) (5) of the Immigration and

5 Nationality Act); provided, that any modifications of the

6 provisions of Section 3304(a) (14) of the Federal Unemployment

7 Tax Act which

8 A. Specify other conditions or another effective date

9 than stated herein for ineligibility for benefits based on

10 wages for services performed by noncitizens ~~aliens~~, and

11 B. Are required to be implemented under this Act as a

12 condition for the Federal approval of this Act requisite

13 to the full tax credit against the tax imposed by the

14 Federal Act for contributions paid by employers pursuant

15 to this Act, shall be applicable under the provisions of

16 this Section.

17 Any data or information required of individuals who claim

18 benefits for the purpose of determining whether benefits are

19 not payable to them pursuant to this Section shall be

20 uniformly required of all individuals who claim benefits.

21 If an individual would otherwise be eligible for benefits,

22 no determination shall be made that such individual is

23 ineligible for benefits pursuant to this Section because of

24 the individual's noncitizen ~~alien~~ status, except upon a

25 preponderance of the evidence.

26 (Source: P.A. 86-3; 87-122.)

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1 Section 995. No acceleration or delay. Where this Act

2 makes changes in a statute that is represented in this Act by

3 text that is not yet or no longer in effect (for example, a

4 Section represented by multiple versions), the use of that

5 text does not accelerate or delay the taking effect of (i) the

6 changes made by this Act or (ii) provisions derived from any

7 other Public Act.

8 Section 999. Effective date. This Act takes effect upon

9 becoming law.

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1 INDEX

2 Statutes amended in order of appearance

3 5 ILCS 312/2-102 from Ch. 102, par. 202-102

4 5 ILCS 805/10

5 20 ILCS 605/605-800 was 20 ILCS 605/46.19a in part

6 20 ILCS 1510/25

7 35 ILCS 5/1501 from Ch. 120, par. 15-1501

8 45 ILCS 160/5

9 45 ILCS 162/10

10 55 ILCS 5/3-12007 from Ch. 34, par. 3-12007

11 65 ILCS 5/11-74.2-14 from Ch. 24, par. 11-74.2-14

12 70 ILCS 2605/11.15 from Ch. 42, par. 331.15

13 110 ILCS 205/9.16 from Ch. 144, par. 189.16

14 110 ILCS 925/3.06 from Ch. 144, par. 1503.06

15 110 ILCS 930/2 from Ch. 144, par. 2302

16 110 ILCS 930/7 from Ch. 144, par. 2307

17 110 ILCS 947/65.50

18 110 ILCS 947/65.110

19 110 ILCS 952/20

20 110 ILCS 975/5 from Ch. 144, par. 2755

21 110 ILCS 975/6.5

22 205 ILCS 635/1-4

23 215 ILCS 5/2 from Ch. 73, par. 614

24 215 ILCS 5/35A-5

25 215 ILCS 5/37 from Ch. 73, par. 649

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1 215 ILCS 5/58 from Ch. 73, par. 670

2 215 ILCS 5/Art. III.5

3 heading

4 215 ILCS 5/60a from Ch. 73, par. 672a

5 215 ILCS 5/60b from Ch. 73, par. 672b

6 215 ILCS 5/60c from Ch. 73, par. 672c

7 215 ILCS 5/60d from Ch. 73, par. 672d

8 215 ILCS 5/60e from Ch. 73, par. 672e

9 215 ILCS 5/60f from Ch. 73, par. 672f

10 215 ILCS 5/60g from Ch. 73, par. 672g

11 215 ILCS 5/60h from Ch. 73, par. 672h

12 215 ILCS 5/60i from Ch. 73, par. 672i

13 215 ILCS 5/60j from Ch. 73, par. 672j

14 215 ILCS 5/63 from Ch. 73, par. 675

15 215 ILCS 5/86 from Ch. 73, par. 698

16 215 ILCS 5/87 from Ch. 73, par. 699

17 215 ILCS 5/88 from Ch. 73, par. 700

18 215 ILCS 5/103 from Ch. 73, par. 715

19 215 ILCS 5/104 from Ch. 73, par. 716

20 215 ILCS 5/105 from Ch. 73, par. 717

21 215 ILCS 5/Art. VI heading

22 215 ILCS 5/108 from Ch. 73, par. 720

23 215 ILCS 5/109 from Ch. 73, par. 721

24 215 ILCS 5/110 from Ch. 73, par. 722

25 215 ILCS 5/111 from Ch. 73, par. 723

26 215 ILCS 5/112 from Ch. 73, par. 724

SB3865

- 692 -

LRB102 24242 RJF 33473 b

1 215 ILCS 5/113 from Ch. 73, par. 725

2 215 ILCS 5/113.1 from Ch. 73, par. 725.1

3 215 ILCS 5/114 from Ch. 73, par. 726

4 215 ILCS 5/115 from Ch. 73, par. 727

5 215 ILCS 5/116 from Ch. 73, par. 728

6 215 ILCS 5/117 from Ch. 73, par. 729

7 215 ILCS 5/118 from Ch. 73, par. 730

8 215 ILCS 5/119 from Ch. 73, par. 731

9 215 ILCS 5/120 from Ch. 73, par. 732

10 215 ILCS 5/123 from Ch. 73, par. 735

11 215 ILCS 5/123.1 from Ch. 73, par. 735.1

12 215 ILCS 5/123.3 from Ch. 73, par. 735.3

13 215 ILCS 5/123C-8 from Ch. 73, par. 735C-8

14 215 ILCS 5/126.1

15 215 ILCS 5/126.12

16 215 ILCS 5/126.25

17 215 ILCS 5/131.13 from Ch. 73, par. 743.13

18 215 ILCS 5/132.3 from Ch. 73, par. 744.3

19 215 ILCS 5/133 from Ch. 73, par. 745

20 215 ILCS 5/136 from Ch. 73, par. 748

21 215 ILCS 5/141a from Ch. 73, par. 753a

22 215 ILCS 5/144 from Ch. 73, par. 756

23 215 ILCS 5/144.1 from Ch. 73, par. 756.1

24 215 ILCS 5/146 from Ch. 73, par. 758

25 215 ILCS 5/148 from Ch. 73, par. 760

26 215 ILCS 5/154.5 from Ch. 73, par. 766.5

SB3865

- 693 -

LRB102 24242 RJF 33473 b

1 215 ILCS 5/156 from Ch. 73, par. 768

2 215 ILCS 5/156.1 from Ch. 73, par. 768.1

3 215 ILCS 5/157 from Ch. 73, par. 769

4 215 ILCS 5/161 from Ch. 73, par. 773

5 215 ILCS 5/162 from Ch. 73, par. 774

6 215 ILCS 5/163 from Ch. 73, par. 775

7 215 ILCS 5/164 from Ch. 73, par. 776

8 215 ILCS 5/166 from Ch. 73, par. 778

9 215 ILCS 5/169 from Ch. 73, par. 781

10 215 ILCS 5/170 from Ch. 73, par. 782

11 215 ILCS 5/173.1 from Ch. 73, par. 785.1

12 215 ILCS 5/179A-5

13 215 ILCS 5/179E-5

14 215 ILCS 5/Art. XII

15 heading

16 215 ILCS 5/180 from Ch. 73, par. 792

17 215 ILCS 5/185.1 from Ch. 73, par. 797.1

18 215 ILCS 5/188 from Ch. 73, par. 800

19 215 ILCS 5/188.1 from Ch. 73, par. 800.1

20 215 ILCS 5/197 from Ch. 73, par. 809

21 215 ILCS 5/201 from Ch. 73, par. 813

22 215 ILCS 5/223 from Ch. 73, par. 835

23 215 ILCS 5/241 from Ch. 73, par. 853

24 215 ILCS 5/292.1 from Ch. 73, par. 904.1

25 215 ILCS 5/302.1 from Ch. 73, par. 914.1

26 215 ILCS 5/308.1 from Ch. 73, par. 920.1

SB3865

- 694 -

LRB102 24242 RJF 33473 b

1 215 ILCS 5/309.1 from Ch. 73, par. 921.1

2 215 ILCS 5/310.1 from Ch. 73, par. 922.1

3 215 ILCS 5/357.29 from Ch. 73, par. 969.29

4 215 ILCS 5/370 from Ch. 73, par. 982

5 215 ILCS 5/404 from Ch. 73, par. 1016

6 215 ILCS 5/408 from Ch. 73, par. 1020

7 215 ILCS 5/412 from Ch. 73, par. 1024

8 215 ILCS 5/413 from Ch. 73, par. 1025

9 215 ILCS 5/415 from Ch. 73, par. 1027

10 215 ILCS 5/444 from Ch. 73, par. 1056

11 215 ILCS 5/444.1 from Ch. 73, par. 1056.1

12 215 ILCS 5/445 from Ch. 73, par. 1057

13 215 ILCS 5/448 from Ch. 73, par. 1060

14 215 ILCS 5/451 from Ch. 73, par. 1063

15 215 ILCS 5/531.09 from Ch. 73, par. 1065.80-9

16 215 ILCS 5/531.11 from Ch. 73, par. 1065.80-11

17 215 ILCS 5/534.5 from Ch. 73, par. 1065.84-5

18 215 ILCS 5/543.1 from Ch. 73, par. 1065.93-1

19 215 ILCS 5/1103 from Ch. 73, par. 1065.803

20 215 ILCS 100/5 from Ch. 73, par. 1605

21 215 ILCS 105/7 from Ch. 73, par. 1307

22 215 ILCS 150/15 from Ch. 148, par. 215

23 215 ILCS 155/11 from Ch. 73, par. 1411

24 215 ILCS 155/15.1

25 215 ILCS 159/5

26 215 ILCS 159/30

SB3865

- 695 -

LRB102 24242 RJF 33473 b

1 225 ILCS 50/8 from Ch. 111, par. 7408

2 225 ILCS 459/10

3 305 ILCS 5/5-3 from Ch. 23, par. 5-3

4 310 ILCS 20/5 from Ch. 67 1/2, par. 57

5 315 ILCS 30/18 from Ch. 67 1/2, par. 91.118

6 330 ILCS 61/1-10

7 430 ILCS 65/4 from Ch. 38, par. 83-4

8 430 ILCS 65/8 from Ch. 38, par. 83-8

9 720 ILCS 5/17-6.5

10 720 ILCS 678/2

11 725 ILCS 5/113-8

12 730 ILCS 5/3-2-2 from Ch. 38, par. 1003-2-2

13 730 ILCS 5/5-5-3

14 740 ILCS 80/12 from Ch. 59, par. 12

15 750 ILCS 28/20

16 765 ILCS 60/Act title

17 765 ILCS 60/0.01 from Ch. 6, par. 0.01

18 765 ILCS 60/7 from Ch. 6, par. 7

19 765 ILCS 60/8 from Ch. 6, par. 8

20 765 ILCS 725/Act title

21 765 ILCS 725/0.01 from Ch. 6, par. 8.9

22 765 ILCS 725/1 from Ch. 6, par. 9

23 775 ILCS 5/2-101

24 815 ILCS 400/Act title

25 815 ILCS 400/0.01 from Ch. 111, par. 8050

26 815 ILCS 400/1 from Ch. 111, par. 8051

SB3865

- 696 -

LRB102 24242 RJF 33473 b