Bill Text: IL SB3205 | 2025-2026 | 104th General Assembly | Enrolled

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Bill Title: Amends the Illinois Insurance Guaranty Fund Article of the Illinois Insurance Code. Provides that certain provisions concerning the purpose of the Article and the Illinois Insurance Guaranty Fund's power to contract with the Office of Special Deputy Receiver are inoperative 5 years after the effective date of the amendatory Act (instead of 5 years after the effective date of Public Act 102-396). Provides that venue in a suit against the Fund arising under the Article shall be in Cook County, and the Fund shall not be required to give any appeal bond in an appeal that relates to a cause of action under the Article. Effective immediately.

Sponsorship: Partisan Bill (Democrat 2)

Status: (Passed) 2026-06-26 - Public Act . . . . . . . . . 104-0529 [SB3205 Detail]

Download: Illinois-2025-SB3205-Enrolled.html

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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Sections 532, 538.7, and 545 as follows:
(215 ILCS 5/532) (from Ch. 73, par. 1065.82)
Sec. 532. Purpose.
(a) The purpose of this Article is to provide a mechanism
for the payment of covered claims under certain insurance
policies, to avoid excessive delay in payment of covered
claims, to avoid financial loss to claimants or policyholders
because of the entry of an Order of Liquidation against an
insolvent company, including through services offered to the
Director in her or his capacity as receiver under Article XIII
of this Code that relate to covered claims, to provide a Fund
to assess among member companies the costs of such protection
and maintain the continuity and self-sufficient operation of
the Fund, and to offset the costs associated with maintaining
the Fund's continuity and self-sufficient operations when
practical by providing assistance and services to the Director
in her or his capacity as receiver under Article XIII of this
Code as described in this Section.
(b) The purpose of this Article is also to provide a

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mechanism for the Fund to participate in and facilitate the
process by which the assets of an insolvent company are
marshaled and distributed pursuant to Article XIII of this
Code beyond reimbursing the cost of covered claims. This
subsection (b) is inoperative 5 years after the effective date
of this amendatory Act of the 104th General Assembly this
amendatory Act of the 102nd General Assembly.
(Source: P.A. 102-396, eff. 8-16-21.)
(215 ILCS 5/538.7) (from Ch. 73, par. 1065.88-7)
Sec. 538.7. (a) The Fund may perform such other acts as are
necessary or proper to effectuate the purposes of this
Article.
(b) The Fund may contract with the Office of Special
Deputy Receiver or any other person or organizations
authorized by law to carry out the duties of the Director in
her or his capacity as a receiver under Article XIII of this
Code. The power of the Fund to contract with these persons or
entities includes, but is not limited to, providing consulting
services and claims administration services that assist with
these persons or entities in the performance of their
respective statutory and legal functions provided by law. The
Fund may only exercise the authority to contract pursuant to
this subsection upon the board of director's written
determination that the provisioning of such services will
advance the purposes set forth in Section 532. Any contract

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the Fund may enter into to provide services pursuant to this
subsection shall be subordinate and subject to the Fund's
statutory obligations to timely pay covered claims and avoid
financial loss to claimants or policyholders described in this
Article.
This subsection (b) is inoperative 5 years after the
effective date of this amendatory Act of the 104th General
Assembly this amendatory Act of the 102nd General Assembly.
(Source: P.A. 102-396, eff. 8-16-21.)
(215 ILCS 5/545) (from Ch. 73, par. 1065.95)
Sec. 545. Effect of paid claims.
(a) Every insured or claimant seeking the protection of
this Article shall cooperate with the Fund to the same extent
as such person would have been required to cooperate with the
insolvent company. The Fund shall have all the rights, duties
and obligations under the policy to the extent of the covered
claim payment, provided the Fund shall have no cause of action
against the insured of the insolvent company for any sums it
has paid out except such causes of action as the insolvent
company would have had if such sums had been paid by the
insolvent company and except as provided in subsection (d) of
this Section. Any person recovering under this Article and any
insured whose liabilities are satisfied under this Article
shall be deemed to have assigned the person's or insured's
rights under the policy to the Fund to the extent of his or her

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recovery or satisfaction obtained from the Fund's payments.
(b) The Fund and any similar organization in another state
shall be recognized as claimants in the liquidation of an
insolvent company for any amounts paid by them on covered
claims obligations as determined under this Article or similar
laws in other states and shall receive dividends at the
priority set forth in paragraph (d) of subsection (1) of
Section 205 of this Code; provided that if, at the time that
the liquidator issues a cut-off notice to the Fund in
anticipation of closing the estate, a reserve has been
established by the Fund, or any similar organization in
another state, for the amount of their future administrative
expenses and loss development associated with unpaid reported
pending claims, these reserves will be deemed to have been
paid as of the date of the notice and payment shall be made
accordingly. The liquidator of an insolvent company shall be
bound by determinations of covered claim eligibility under the
Act and by settlements of claims made by the Fund or a similar
organization in another state on the receipt of certification
of such payments, to the extent those determinations or
settlements satisfy obligations of the Fund, but the receiver
shall not be bound in any way by those determinations or
settlements to the extent that there remains a claim in the
estate for amounts in excess of the payments by the Fund. In
submitting their claim for covered claim payments the Fund and
any similar organization in another state shall not be subject

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to the requirements of Sections 208 and 209 of this Code and
shall not be affected by the failure of the person receiving a
covered claim payment to file a proof of claim.
(c) The expenses of the Fund and of any similar
organization in any other state, other than expenses incurred
in the performance of duties under Section 547 or similar
duties under the statute governing a similar organization in
another state, shall be accorded priority over all claims
against the estate, except as provided for in paragraph (a) of
subsection (1) of Section 205 of this Code. The liquidator
shall make prompt reimbursement to the Fund and any similar
organization for such expense payments.
(d) The Fund has the right to recover from the following
persons the amount of any covered claims (as determined
without regard to the exemption in paragraph (iv) of
subsection (b) of Section 534.3) and allocated claims expenses
which the Fund paid or incurred on behalf of such person in
satisfaction, in whole or in part, of liability obligations of
such person to any other person:
(i) any insured whose net worth on December 31 of the
year next preceding the date the company becomes an
insolvent company exceeds $25,000,000; provided that an
insured's net worth on such date shall be deemed to
include the aggregate net worth of the insured and all of
its affiliates as calculated on a consolidated basis.
(ii) any insured who is an affiliate of the insolvent

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company.
The Fund may also, at its sole discretion and without
assumption of any ongoing duty to do so, pay any workers
compensation claims or any other third-party claims or any
cybersecurity insurance obligations covered by a policy of an
insolvent company on behalf of a high net worth insured as
defined in paragraph (iv) of subsection (b) of Section 534.3.
In that case, the Fund shall recover from the high net worth
insured under this Section for all amounts paid on its behalf,
all allocated claim adjusted expenses related to such claims,
the Fund's attorney's fees, and all court costs in any action
necessary to collect the full amount to the Fund's
reimbursement under this Section.
(e) Venue in a suit against the Fund arising under this
Article shall be in Cook County and Sangamon County. The Fund
shall not be required to give any appeal bond in an appeal that
relates to a cause of action under this Article.
(Source: P.A. 103-113, eff. 6-30-23.)
Section 99. Effective date. This Act takes effect upon
becoming law.