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| Public Act 098-0978
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| SB3324 Enrolled | LRB098 18518 RPM 53655 b |
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AN ACT concerning regulation.
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Be it enacted by the People of the State of Illinois,
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represented in the General Assembly:
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Section 5. The Illinois Insurance Code is amended by |
changing Sections 121-2.08, 412, 445, 445.1, and 445.4 as |
follows:
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(215 ILCS 5/121-2.08) (from Ch. 73, par. 733-2.08)
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Sec. 121-2.08.
Transactions in this State involving |
contracts of
insurance independently procured directly from an |
unauthorized insurer by issued to one or more industrial |
insureds. |
(a) As used in this Section: |
"Exempt commercial purchaser" means exempt commercial |
purchaser as the term is defined in subsection (1) of Section |
445 of this Code. |
"Home state" means home state as the term is defined in |
subsection (1) of Section 445 of this Code. |
"Industrial For purposes of this
Section "industrial |
insured" means is an insured:
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(i) that (a) which procures the insurance of any risk |
or risks of the kinds specified in Classes 2 and 3 of |
Section 4 of this Code other than life
and annuity |
contracts by use of the services of a full-time full time |
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employee who is a qualified risk manager acting
as an |
insurance manager or buyer or the services of a regularly |
and
continuously retained qualified insurance consultant |
who is a qualified risk manager;
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(ii) that procures the insurance directly from an |
unauthorized insurer without the services of an |
intermediary insurance producer (b) whose aggregate annual |
premiums for insurance on all risks, except for
life and |
accident and health insurance, total at
least $100,000; and
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(iii) that is an exempt commercial purchaser whose home |
state is Illinois (c) which either (i) has at least 25 full |
time employees, (ii) has
gross assets in excess of |
$3,000,000, or (iii) has annual gross revenues in
excess of |
$5,000,000.
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"Insurance producer" means insurance producer as the term |
is defined in Section 500-10 of this Code. |
"Qualified risk manager" means qualified risk manager as |
the term is defined in subsection (1) of Section 445 of this |
Code. |
"Unauthorized insurer" means unauthorized insurer as the |
term is defined in subsection (1) of Section 445 of this Code. |
(b) For contracts of insurance effective January 1, 2015 or |
later, within 90 days after the effective date of each contract |
of insurance issued under this Section, the insured shall file |
a report with the Director by submitting the report to the |
Surplus Line Association of Illinois in writing or in a |
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computer readable format and provide information as designated |
by the Surplus Line Association of Illinois. The information in |
the report shall be substantially similar to that required for |
surplus line submissions as described in subsection (5) of |
Section 445 of this Code. Where applicable, the report shall |
satisfy, with respect to the subject insurance, the reporting |
requirement of Section 12 of the Fire Investigation Act. |
(c) For contracts of insurance effective January 1, 2015 or |
later, within 30 days after filing the report, the insured |
shall pay to the Director for the use and benefit of the State |
a sum equal to the gross premium of the contract of insurance |
multiplied by the surplus line tax rate, as described in |
paragraph (3) of subsection (a) of Section 445 of this Code, |
and shall pay the fire marshal tax that would otherwise be due |
annually in March for insurance subject to tax under Section 12 |
of the Fire Investigation Act. For contracts of insurance |
effective January 1, 2015 or later, within 30 days after filing |
the report, the insured shall pay to the Surplus Line |
Association of Illinois a countersigning fee that shall be |
assessed at the same rate charged to members pursuant to |
subsection (4) of Section 445.1 of this Code. |
(d) For contracts of insurance effective January 1, 2015 or |
later, the insured shall withhold the amount of the taxes and |
countersignature fee from the amount of premium charged by and |
otherwise payable to the insurer for the insurance. If the |
insured fails to withhold the tax and countersignature fee from |
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the premium, then the insured shall be liable for the amounts |
thereof and shall pay the amounts as prescribed in subsection |
(c) of this Section. |
(Source: P.A. 90-794, eff. 8-14-98.)
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(215 ILCS 5/412) (from Ch. 73, par. 1024)
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Sec. 412. Refunds; penalties; collection.
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(1)(a) Whenever it appears to
the satisfaction of the |
Director that because of some mistake of fact,
error in |
calculation, or erroneous interpretation of a statute of this
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or any other state, any authorized company, surplus line |
producer, or industrial insured has paid to him, pursuant to
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any provision of law, taxes, fees, or other charges
in excess |
of the
amount legally chargeable against it, during the 6 year |
period
immediately preceding the discovery of such |
overpayment, he shall have
power to refund to such company, |
surplus line producer, or industrial insured the amount of the |
excess or excesses by
applying the amount or amounts thereof |
toward
the payment of taxes, fees, or other charges already |
due, or which may
thereafter become due from that company until |
such excess or excesses have been
fully
refunded, or upon a |
written request from the authorized company, surplus line |
producer, or industrial insured, the
Director shall provide a |
cash refund within
120 days after receipt of the written |
request if all necessary information has
been filed with the |
Department in order for it to perform an audit of the
tax |
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report for the transaction or period or annual return for the |
year in which the overpayment occurred or within 120 days
after |
the date the Department receives all the necessary information |
to perform
such audit. The Director shall not provide a cash |
refund if there are
insufficient funds in the Insurance Premium |
Tax Refund Fund to provide a cash
refund, if the amount of the |
overpayment is less than $100, or if the amount of
the |
overpayment can be fully offset against the taxpayer's |
estimated liability
for the year following the year of the cash |
refund request. Any cash refund
shall be paid from the |
Insurance Premium Tax Refund Fund, a special fund hereby
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created in the
State treasury.
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(b) Beginning January 1, 2000 and thereafter, the |
Department shall deposit
a percentage of the amounts collected |
under Sections 409, 444, and 444.1 of
this
Code into the |
Insurance Premium Tax Refund Fund. The percentage deposited |
into
the Insurance Premium Tax Refund Fund shall be the annual |
percentage. The
annual
percentage shall be calculated as a |
fraction, the numerator of which shall be
the amount of cash |
refunds approved by the Director for payment and paid during
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the preceding calendar year as a result of overpayment of tax |
liability under
Sections 121-2.08, 409, 444, and 444.1, and 445 |
of this Code and the denominator of which shall
be the amounts |
collected pursuant to Sections 121-2.08, 409, 444, and 444.1, |
and 445 of this Code
during the preceding calendar year. |
However, if there were no cash refunds
paid in a preceding |
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calendar year, the Department shall deposit 5% of the
amount |
collected in that preceding calendar year pursuant to Sections |
121-2.08, 409, 444,
and 444.1, and 445 of this Code into the |
Insurance Premium Tax Refund Fund instead of an
amount |
calculated by using the annual percentage.
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(c) Beginning July 1, 1999, moneys in the Insurance Premium |
Tax Refund
Fund
shall be expended exclusively for the purpose |
of paying cash refunds resulting
from overpayment of tax |
liability under Sections 121-2.08, 409, 444, and 444.1, and 445 |
of this
Code
as
determined by the Director pursuant to |
subsection 1(a) of this Section. Cash
refunds made in |
accordance with this Section may be made from the Insurance
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Premium Tax Refund Fund only to the extent that amounts have |
been deposited and
retained in the Insurance Premium Tax Refund |
Fund.
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(d) This Section shall constitute an irrevocable and |
continuing
appropriation from the Insurance Premium Tax Refund |
Fund for the purpose of
paying cash refunds pursuant to the |
provisions of this Section.
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(2)(a) When any insurance company or any surplus line |
producer fails to
file any tax return required under Sections |
408.1, 409, 444, and 444.1 and 445 of
this Code or Section 12 |
of the Fire Investigation Act on the date
prescribed, including |
any extensions, there shall be added as a penalty
$400 or 10% |
of the amount of such tax, whichever is
greater, for each month
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or part of a month of failure to file, the entire penalty not |
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to exceed
$2,000 or 50% of the tax due, whichever is greater.
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(b) When any industrial insured or surplus line producer |
fails to file any tax return or report required under Sections |
121-2.08 and 445 of this Code or Section 12 of the Fire |
Investigation Act on the date prescribed, including any |
extensions, there shall be added: |
(i) as a late fee, if the return or report is received |
at least one day but not more than 7 days after the |
prescribed due date, $400 or 10% of the tax due, whichever |
is greater, the entire fee not to exceed $1,000; |
(ii) as a late fee, if the return or report is received |
at least 8 days but not more than 14 days after the |
prescribed due date, $400 or 10% of the tax due, whichever |
is greater, the entire fee not to exceed $1,500; |
(iii) as a late fee, if the return or report is |
received at least 15 days but not more than 21 days after |
the prescribed due date, $400 or 10% of the tax due, |
whichever is greater, the entire fee not to exceed $2,000; |
or |
(iv) as a penalty, if the return or report is received |
more than 21 days after the prescribed due date, $400 or |
10% of the tax due, whichever is greater, for each month or |
part of a month of failure to file, the entire penalty not |
to exceed $2,000 or 50% of the tax due, whichever is |
greater. |
A tax return or report shall be deemed received as of the |
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date mailed as evidenced by a postmark, proof of mailing on a |
recognized United States Postal Service form or a form |
acceptable to the United States Postal Service or other |
commercial mail delivery service, or other evidence acceptable |
to the Director.
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(3)(a) When any insurance company or any surplus line |
producer
fails to pay the full amount due under the provisions |
of this Section,
Sections 408.1, 409, 444, or 444.1 or 445 of |
this Code, or Section 12 of the
Fire Investigation Act, there |
shall be added to the amount due as a penalty
an amount equal |
to 10% of the deficiency.
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(a-5) When any industrial insured or surplus line producer |
fails to pay the full amount due under the provisions of this |
Section, Sections 121-2.08 or 445 of this Code, or Section 12 |
of the Fire Investigation Act on the date prescribed, there |
shall be added: |
(i) as a late fee, if the payment is received at least |
one day but not more than 7 days after the prescribed due |
date, 10% of the tax due, the entire fee not to exceed |
$1,000; |
(ii) as a late fee, if the payment is received at least |
8 days but not more than 14 days after the prescribed due |
date, 10% of the tax due, the entire fee not to exceed |
$1,500; |
(iii) as a late fee, if the payment is received at |
least 15 days but not more than 21 days after the |
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prescribed due date, 10% of the tax due, the entire fee not |
to exceed $2,000; or |
(iv) as a penalty, if the return or report is received |
more than 21 days after the prescribed due date, 10% of the |
tax due. |
A tax payment shall be deemed received as of the date |
mailed as evidenced by a postmark, proof of mailing on a |
recognized United States Postal Service form or a form |
acceptable to the United States Postal Service or other |
commercial mail delivery service, or other evidence acceptable |
to the Director.
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(b) If such failure to pay is determined by the Director to |
be wilful,
after a hearing under Sections 402 and 403, there |
shall be added to the tax
as a penalty an amount equal to the |
greater of 50% of the
deficiency or 10%
of the amount due and |
unpaid for each month or part of a month that the
deficiency |
remains unpaid commencing with the date that the amount becomes
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due. Such amount shall be in lieu of any determined under |
paragraph (a) or (a-5).
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(4) Any insurance company, industrial insured, or any |
surplus line producer that which
fails to pay the full amount |
due under this Section or Sections 121-2.08, 408.1, 409,
444, |
444.1, or 445 of this Code, or Section 12 of the Fire |
Investigation
Act is liable, in addition to the tax and any |
late fees and penalties, for interest
on such deficiency at the |
rate of 12% per annum, or at such higher adjusted
rates as are |
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or may be established under subsection (b) of Section 6621
of |
the Internal Revenue Code, from the date that payment of any |
such tax
was due, determined without regard to any extensions, |
to the date of payment
of such amount.
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(5) The Director, through the Attorney
General, may |
institute an action in the name of the People of the State
of |
Illinois, in any court of competent jurisdiction, for the |
recovery of
the amount of such taxes, fees, and penalties due, |
and prosecute the same to
final judgment, and take such steps |
as are necessary to collect the same.
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(6) In the event that the certificate of authority of a |
foreign or
alien company is revoked for any cause or the |
company withdraws from
this State prior to the renewal date of |
the certificate of authority as
provided in Section 114, the |
company may recover the amount of any such
tax paid in advance. |
Except as provided in this subsection, no
revocation or |
withdrawal excuses payment of or constitutes grounds for
the |
recovery of any taxes or penalties imposed by this Code.
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(7) When an insurance company or domestic affiliated group |
fails to pay
the full amount of any fee of $200 or more due |
under
Section 408 of this Code, there shall be added to the |
amount due as
a penalty the greater of $100 or an amount equal |
to 10%
of the deficiency for
each month or part of
a month that |
the deficiency remains unpaid.
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(8) The Department shall have a lien for the taxes, fees, |
charges, fines, penalties, interest, other charges, or any |
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portion thereof, imposed or assessed pursuant to this Code, |
upon all the real and personal property of any company or |
person to whom the assessment or final order has been issued or |
whenever a tax return is filed without payment of the tax or |
penalty shown therein to be due, including all such property of |
the company or person acquired after receipt of the assessment, |
issuance of the order, or filing of the return. The company or |
person is liable for the filing fee incurred by the Department |
for filing the lien and the filing fee incurred by the |
Department to file the release of that lien. The filing fees |
shall be paid to the Department in addition to payment of the |
tax, fee, charge, fine, penalty, interest, other charges, or |
any portion thereof, included in the amount of the lien. |
However, where the lien arises because of the issuance of a |
final order of the Director or tax assessment by the |
Department, the lien shall not attach and the notice referred |
to in this Section shall not be filed until all administrative |
proceedings or proceedings in court for review of the final |
order or assessment have terminated or the time for the taking |
thereof has expired without such proceedings being instituted. |
Upon the granting of Department review after a lien has |
attached, the lien shall remain in full force except to the |
extent to which the final assessment may be reduced by a |
revised final assessment following the rehearing or review. The |
lien created by the issuance of a final assessment shall |
terminate, unless a notice of lien is filed, within 3 years |
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after the date all proceedings in court for the review of the |
final assessment have terminated or the time for the taking |
thereof has expired without such proceedings being instituted, |
or (in the case of a revised final assessment issued pursuant |
to a rehearing or review by the Department) within 3 years |
after the date all proceedings in court for the review of such |
revised final assessment have terminated or the time for the |
taking thereof has expired without such proceedings being |
instituted. Where the lien results from the filing of a tax |
return without payment of the tax or penalty shown therein to |
be due, the lien shall terminate, unless a notice of lien is |
filed, within 3 years after the date when the return is filed |
with the Department. |
The time limitation period on the Department's right to |
file a notice of lien shall not run during any period of time |
in which the order of any court has the effect of enjoining or |
restraining the Department from filing such notice of lien. If |
the Department finds that a company or person is about to |
depart from the State, to conceal himself or his property, or |
to do any other act tending to prejudice or to render wholly or |
partly ineffectual proceedings to collect the amount due and |
owing to the Department unless such proceedings are brought |
without delay, or if the Department finds that the collection |
of the amount due from any company or person will be |
jeopardized by delay, the Department shall give the company or |
person notice of such findings and shall make demand for |
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immediate return and payment of the amount, whereupon the |
amount shall become immediately due and payable. If the company |
or person, within 5 days after the notice (or within such |
extension of time as the Department may grant), does not comply |
with the notice or show to the Department that the findings in |
the notice are erroneous, the Department may file a notice of |
jeopardy assessment lien in the office of the recorder of the |
county in which any property of the company or person may be |
located and shall notify the company or person of the filing. |
The jeopardy assessment lien shall have the same scope and |
effect as the statutory lien provided for in this Section. If |
the company or person believes that the company or person does |
not owe some or all of the tax for which the jeopardy |
assessment lien against the company or person has been filed, |
or that no jeopardy to the revenue in fact exists, the company |
or person may protest within 20 days after being notified by |
the Department of the filing of the jeopardy assessment lien |
and request a hearing, whereupon the Department shall hold a |
hearing in conformity with the provisions of this Code and, |
pursuant thereto, shall notify the company or person of its |
findings as to whether or not the jeopardy assessment lien will |
be released. If not, and if the company or person is aggrieved |
by this decision, the company or person may file an action for |
judicial review of the final determination of the Department in |
accordance with the Administrative Review Law. If, pursuant to |
such hearing (or after an independent determination of the |
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facts by the Department without a hearing), the Department |
determines that some or all of the amount due covered by the |
jeopardy assessment lien is not owed by the company or person, |
or that no jeopardy to the revenue exists, or if on judicial |
review the final judgment of the court is that the company or |
person does not owe some or all of the amount due covered by |
the jeopardy assessment lien against them, or that no jeopardy |
to the revenue exists, the Department shall release its |
jeopardy assessment lien to the extent of such finding of |
nonliability for the amount, or to the extent of such finding |
of no jeopardy to the revenue. The Department shall also |
release its jeopardy assessment lien against the company or |
person whenever the amount due and owing covered by the lien, |
plus any interest which may be due, are paid and the company or |
person has paid the Department in cash or by guaranteed |
remittance an amount representing the filing fee for the lien |
and the filing fee for the release of that lien. The Department |
shall file that release of lien with the recorder of the county |
where that lien was filed. |
Nothing in this Section shall be construed to give the |
Department a preference over the rights of any bona fide |
purchaser, holder of a security interest, mechanics |
lienholder, mortgagee, or judgment lien creditor arising prior |
to the filing of a regular notice of lien or a notice of |
jeopardy assessment lien in the office of the recorder in the |
county in which the property subject to the lien is located. |
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For purposes of this Section, "bona fide" shall not include any |
mortgage of real or personal property or any other credit |
transaction that results in the mortgagee or the holder of the |
security acting as trustee for unsecured creditors of the |
company or person mentioned in the notice of lien who executed |
such chattel or real property mortgage or the document |
evidencing such credit transaction. The lien shall be inferior |
to the lien of general taxes, special assessments, and special |
taxes levied by any political subdivision of this State. In |
case title to land to be affected by the notice of lien or |
notice of jeopardy assessment lien is registered under the |
provisions of the Registered Titles (Torrens) Act, such notice |
shall be filed in the office of the Registrar of Titles of the |
county within which the property subject to the lien is |
situated and shall be entered upon the register of titles as a |
memorial or charge upon each folium of the register of titles |
affected by such notice, and the Department shall not have a |
preference over the rights of any bona fide purchaser, |
mortgagee, judgment creditor, or other lienholder arising |
prior to the registration of such notice. The regular lien or |
jeopardy assessment lien shall not be effective against any |
purchaser with respect to any item in a retailer's stock in |
trade purchased from the retailer in the usual course of the |
retailer's business. |
(Source: P.A. 98-158, eff. 8-2-13.)
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(215 ILCS 5/445) (from Ch. 73, par. 1057)
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Sec. 445. Surplus line.
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(1) Definitions. For the purposes of this Section:
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"Affiliate" means, with respect to an insured, any entity |
that controls, is controlled by, or is under common control |
with the insured. For the purpose of this definition, an entity |
has control over another entity if: |
(A) the entity directly or indirectly or acting through |
one or more other persons owns, controls, or has the power |
to vote 25% or more of any class of voting securities of |
the other entity; or |
(B) the entity controls in any manner the election of a |
majority of the directors or trustees of the other entity. |
"Affiliated group" means any group of entities that are all |
affiliated. |
"Authorized insurer" means an insurer that holds a |
certificate of
authority
issued by the Director but, for the |
purposes of this Section, does not
include a
domestic surplus |
line insurer as defined in Section 445a or any
residual market
|
mechanism. |
"Exempt commercial purchaser" means any person purchasing |
commercial insurance that, at the time of placement, meets the |
following requirements: |
(A) The person employs or retains a qualified risk |
manager to negotiate insurance coverage. |
(B) The person has paid aggregate nationwide |
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commercial property and casualty insurance premiums in |
excess of $100,000 in the immediately preceding 12 months. |
(C) The person meets at least one of the following |
criteria: |
(I) The person possesses a net worth in excess of |
$20,000,000, as such amount is adjusted pursuant to the |
provision in this definition concerning percentage |
change. |
(II) The person generates annual revenues in |
excess of $50,000,000, as such amount is adjusted |
pursuant to the provision in this definition |
concerning percentage change. |
(III) The person employs more than 500 full-time or |
full-time equivalent employees per individual insured |
or is a member of an affiliated group employing more |
than 1,000 employees in the aggregate. |
(IV) The person is a not-for-profit organization |
or public entity generating annual budgeted |
expenditures of at least $30,000,000, as such amount is |
adjusted pursuant to the provision in this definition |
concerning percentage change. |
(V) The person is a municipality with a population |
in excess of 50,000 persons. |
Effective on January 1, 2015 and each fifth January 1 |
occurring thereafter, the amounts in subitems (I), (II), and |
(IV) of item (C) of this definition shall be adjusted to |
|
reflect the percentage change for such 5-year period in the |
Consumer Price Index for All Urban Consumers published by the |
Bureau of Labor Statistics of the Department of Labor. |
"Home state" means the following: |
(A) With respect to an insured, except as provided in |
item (B) of this definition: |
(I) the state in which an insured maintains its |
principal place of business or, in the case of an |
individual, the individual's principal residence; or |
(II) if 100% of the insured risk is located out of |
the state referred to in subitem (I), the state to |
which the greatest percentage of the insured's taxable |
premium for that insurance contract is allocated. |
(B) If more than one insured from an affiliated group |
are named insureds on a single surplus line insurance |
contract, then "home state" means the home state, as |
determined pursuant to item (A) of this definition, of the |
member of the affiliated group that has the largest |
percentage of premium attributed to it under such insurance |
contract. |
If more than one insured from a group that is not |
affiliated are named insureds on a single surplus line |
insurance contract, then: |
(I) if individual group members pay 100% of the |
premium for the insurance from their own funds, "home |
state" means the home state, as determined pursuant to |
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item (A) of this definition, of each individual group |
member; each individual group member's coverage under |
the surplus line insurance contract shall be treated as |
a separate surplus line contract for the purposes of |
this Section; |
(II) otherwise, "home state" means the home state, |
as determined pursuant to item (A) of this definition, |
of the group. |
Nothing in this definition shall be construed to alter the |
terms of the surplus line insurance contract. |
"Multi-State risk" means a risk with insured exposures in |
more than one State. |
"NAIC" means the National Association of Insurance |
Commissioners or any successor entity. |
"Qualified risk manager" means, with respect to a |
policyholder of commercial insurance, a person who meets all of |
the following requirements: |
(A) The person is an employee of, or third-party |
consultant retained by, the commercial policyholder. |
(B) The person provides skilled services in loss |
prevention, loss reduction, or risk and insurance coverage |
analysis, and purchase of insurance. |
(C) With regard to the person: |
(I) the person has: |
(a) a bachelor's degree or higher from an |
accredited college or university in risk |
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management, business administration, finance, |
economics, or any other field determined by the |
Director or his designee to demonstrate minimum |
competence in risk management; and |
(b) the following: |
(i) three years of experience in risk |
financing, claims administration, loss |
prevention, risk and insurance analysis, or |
purchasing commercial lines of insurance; or |
(ii) alternatively has: |
(AA) a designation as a Chartered |
Property and Casualty Underwriter (in this |
subparagraph (ii) referred to as "CPCU") |
issued by the American Institute for |
CPCU/Insurance Institute of America; |
(BB) a designation as an Associate in |
Risk Management (ARM) issued by the |
American Institute for CPCU/Insurance |
Institute of America; |
(CC) a designation as Certified Risk |
Manager (CRM) issued by the National |
Alliance for Insurance Education & |
Research; |
(DD) a designation as a RIMS Fellow |
(RF) issued by the Global Risk Management |
Institute; or |
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(EE) any other designation, |
certification, or license determined by |
the Director or his designee to |
demonstrate minimum competency in risk |
management; |
(II) the person has: |
(a) at least 7 years of experience in risk |
financing, claims administration, loss prevention, |
risk and insurance coverage analysis, or |
purchasing commercial lines of insurance; and |
(b) has any one of the designations specified |
in subparagraph (ii) of paragraph (b); |
(III) the person has at least 10 years of |
experience in risk financing, claims administration, |
loss prevention, risk and insurance coverage analysis, |
or purchasing commercial lines of insurance; or |
(IV) the person has a graduate degree from an |
accredited college or university in risk management, |
business administration, finance, economics, or any |
other field determined by the Director or his or her |
designee to demonstrate minimum competence in risk |
management. |
"Residual market mechanism" means an association, |
organization, or other
entity described in Article XXXIII of |
this Code or Section 7-501 of the
Illinois Vehicle Code or any |
similar association, organization, or other
entity. |
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"State" means any state of the United States, the District |
of Columbia, the Commonwealth of Puerto Rico, Guam, the |
Northern Mariana Islands, the Virgin Islands, and American |
Samoa. |
"Surplus line insurance" means insurance on a risk: |
(A) of the kinds specified in Classes 2 and 3 of |
Section 4 of this Code; and |
(B) that is procured from an unauthorized insurer after |
the insurance producer representing the insured or the |
surplus line producer is unable, after diligent effort, to |
procure the insurance from authorized insurers; and |
(C) where Illinois is the home state of the insured, |
for policies effective, renewed or extended on July 21, |
2011 or later and for multiyear policies upon the policy |
anniversary that falls on or after July 21, 2011; and |
(D) that is located in Illinois, for policies effective |
prior to July 21, 2011. |
"Unauthorized insurer" means an insurer that does not hold |
a valid
certificate of authority issued by the Director but, |
for the purposes of this
Section, shall also include a domestic |
surplus line insurer as defined in
Section 445a.
|
(1.5) Procuring surplus line insurance; surplus line |
insurer requirements. |
(a) Insurance producers may procure surplus line |
insurance only if licensed
as a surplus line producer under |
this Section. |
|
(b) Licensed surplus line producers may procure |
surplus line
insurance from an unauthorized insurer |
domiciled in the United States only if the insurer:
|
(i) is permitted in its domiciliary jurisdiction |
to write the type of insurance involved; and |
(ii) has, based upon information available to the |
surplus
line producer,
a policyholders surplus of not |
less than $15,000,000
determined in
accordance with |
the laws of its domiciliary jurisdiction;
and
|
(iii) has standards of solvency and management |
that are adequate
for the protection of policyholders.
|
Where an unauthorized insurer does not meet the
|
standards set forth
in (ii) and (iii) above, a surplus line |
producer may, if necessary, procure
insurance from that |
insurer only if prior written warning of
such fact or
|
condition is given to the insured by the insurance producer |
or surplus line
producer.
|
(c) Licensed surplus line producers may procure |
surplus line insurance from an unauthorized insurer |
domiciled outside of the United States only if the insurer |
meets the standards for unauthorized insurers domiciled in |
the United States in paragraph (b) of this subsection (1.5) |
or is listed on the Quarterly Listing of Alien Insurers |
maintained by the International Insurers Department of the |
NAIC. The Director shall make the Quarterly Listing of |
Alien Insurers available to surplus line producers without |
|
charge. |
(d) Insurance producers shall not procure from an
|
unauthorized insurer an insurance policy: |
(i) that is designed to satisfy the
proof of |
financial responsibility and insurance requirements in |
any
Illinois law where the law requires that the proof |
of
insurance is issued by an authorized insurer or |
residual market
mechanism; |
(ii) that covers the risk of accidental injury to |
employees arising
out of and in the course of |
employment according to the provisions of the
Workers' |
Compensation Act; or |
(iii) that insures any Illinois personal lines |
risk, as defined in
subsection (a), (b), or (c) of |
Section 143.13 of this Code, that is eligible
for |
residual market mechanism coverage, unless the insured |
or prospective
insured requests limits of liability |
greater than the limits provided by the
residual market |
mechanism. In the course of making a diligent effort to
|
procure insurance from authorized insurers, an |
insurance producer shall not be
required to submit a |
risk to a residual market mechanism when the risk is |
not
eligible for coverage or exceeds the limits |
available in the residual market
mechanism. |
Where there is an insurance policy issued by an
|
authorized insurer or residual market mechanism
insuring a |
|
risk described in item (i), (ii), or (iii)
above, nothing |
in this paragraph shall be construed
to prohibit a surplus |
line producer from procuring
from an unauthorized insurer a |
policy insuring the
risk on an excess or umbrella basis |
where the excess
or umbrella policy is written over one or |
more
underlying policies.
|
(e) Licensed surplus line producers may procure |
surplus line insurance from an unauthorized insurer for an |
exempt commercial purchaser without making the required |
diligent effort to procure the insurance from authorized |
insurers if: |
(i) the producer has disclosed to the exempt |
commercial purchaser that such insurance may or may not |
be available from authorized insurers that may provide |
greater protection with more regulatory oversight; and |
(ii) the exempt commercial purchaser has |
subsequently in writing requested the producer to |
procure such insurance from an unauthorized insurer. |
(2) Surplus line producer; license. Any licensed producer |
who is a
resident of this State, or any nonresident who |
qualifies under Section
500-40, may be licensed as a surplus |
line producer upon payment of an annual license fee of $400.
|
A surplus line producer so licensed shall keep a separate
|
account of
the business transacted thereunder for 7 years from |
the policy effective date which shall be open at all times to |
the
inspection of the Director or his representative.
|
|
No later than July 21, 2012, the State of Illinois shall |
participate in the national insurance producer database of the |
NAIC, or any other equivalent uniform national database, for |
the licensure of surplus line producers and the renewal of such |
licenses.
|
(3) Taxes and reports.
|
(a) Surplus line tax and penalty for late payment. The |
surplus line tax rate for a surplus line insurance policy |
or contract is determined as follows: |
(i) 3% for policies or contracts with an effective |
date prior to July 1, 2003; |
(ii) 3.5% for policies or contracts with an |
effective date of July 1, 2003 or later.
|
A surplus line producer shall file with the Director on |
or
before
February 1 and August 1 of each year a report in |
the form prescribed by the
Director on all surplus line |
insurance procured from unauthorized insurers and |
submitted to the Surplus Line Association of Illinois
|
during the preceding
6 month period ending December 31 or |
June 30
respectively, and on the filing of such report |
shall pay to the Director
for the use and benefit of the |
State a sum equal to the surplus line tax rate multiplied |
by the
gross
premiums less returned premiums upon all |
surplus line insurance submitted to the Surplus Line |
Association of Illinois during the preceding 6 months.
|
Any surplus line producer who fails to pay the full |
|
amount due under this
subsection is liable, in addition to |
the amount due, for such late fee,
penalty, and interest |
charges as are provided for under Section 412 of
this Code. |
The Director, through the
Attorney General, may
institute |
an action in the name of the People of the State of |
Illinois, in
any court of competent jurisdiction, for the |
recovery of the amount of such
taxes, late fees, interest, |
and penalties due, and prosecute the same to final |
judgment, and take
such steps as are necessary to collect |
the same.
|
(b) Fire Marshal Tax.
Each surplus line producer shall |
file with the Director on or before
March 31 of each year a |
report in the form prescribed by the Director on all
fire |
insurance procured from unauthorized insurers and |
submitted to the Surplus Line Association of Illinois |
subject to tax under
Section 12 of the Fire Investigation
|
Act
and shall pay to the Director the fire marshal tax |
required thereunder.
|
(c) Taxes and fees charged to insured. The taxes |
imposed under this
subsection and the countersigning fees |
charged by the Surplus Line
Association of Illinois may be |
charged to and collected from surplus line
insureds.
|
(4) (Blank).
|
(5) Submission of documents to Surplus Line Association of |
Illinois.
A surplus line producer shall submit every insurance |
contract
issued
under his or her license to the Surplus Line |
|
Association of Illinois for
recording and countersignature. |
The submission and countersignature may be
effected through |
electronic means. The submission shall set
forth:
|
(a) the name of the insured;
|
(b) the description and location of the insured |
property or
risk;
|
(c) the amount insured;
|
(d) the gross premiums charged or returned;
|
(e) the name of the unauthorized insurer from whom |
coverage has been procured;
|
(f) the kind or kinds of insurance procured; and
|
(g) amount of premium subject to tax required by |
Section 12 of the Fire
Investigation Act.
|
Proposals, endorsements, and other documents which are
|
incidental to the insurance but which do not affect the premium
|
charged
are exempted from filing and countersignature.
|
The submission of insuring contracts
to the Surplus Line |
Association of
Illinois constitutes a certification by the |
surplus line producer or by the
insurance producer who |
presented the risk to the surplus line producer for
placement |
as a surplus line risk that
after diligent effort the required |
insurance could not be procured from
authorized insurers and |
that
such procurement was otherwise in accordance with the |
surplus line law.
|
(6) Countersignature required. It shall be unlawful for an |
insurance
producer to deliver any unauthorized insurer
|
|
contract unless such
insurance contract is countersigned by the |
Surplus Line Association of
Illinois.
|
(7) Inspection of records. A surplus line producer shall
|
maintain
separate records of the business transacted under his |
or her license for 7 years from the policy effective date,
|
including complete copies of surplus line insurance contracts |
maintained on
paper or by electronic means, which
records shall |
be open at all times for inspection by the Director and by
the |
Surplus Line Association of Illinois.
|
(8) Violations and penalties. The Director may suspend or |
revoke or
refuse to renew a surplus line producer license for |
any violation of this Code.
In addition to or in lieu of |
suspension or revocation, the Director may
subject a surplus |
line producer
to a civil penalty of up to $2,000 for each cause |
for suspension
or
revocation. Such penalty is enforceable under |
subsection (5) of Section
403A of this Code.
|
(9) Director may declare insurer ineligible. If the
|
Director determines
that the further assumption of risks might |
be hazardous to the
policyholders of an unauthorized insurer, |
the Director may
order the
Surplus Line Association of
Illinois |
not to countersign insurance contracts evidencing insurance in
|
such insurer and order surplus line producers to cease
|
procuring insurance
from such insurer.
|
(10) Service of process upon Director. Insurance contracts
|
delivered under this Section from unauthorized insurers, other |
than domestic
surplus line insurers as defined in Section 445a,
|
|
shall contain a
provision designating the
Director and his |
successors in office the true and lawful attorney of the
|
insurer upon whom may be served all lawful process in any
|
action, suit or
proceeding arising out of such insurance.
|
Service of process made upon the Director to be valid hereunder |
must state
the name of the insured, the name of the |
unauthorized insurer
and identify
the contract of insurance. |
The Director at his option is authorized to
forward a copy of |
the process to the Surplus Line Association of Illinois
for |
delivery to the unauthorized insurer or the Director may |
deliver the process to the
unauthorized insurer by other means |
which he considers to be
reasonably
prompt and certain.
|
(10.5) Insurance contracts delivered under this Section |
from unauthorized insurers, other than domestic surplus line |
insurers as defined in Section 445a, shall have stamped or |
imprinted on the first page thereof in not less than 12-pt. |
bold face type the following legend: "Notice to Policyholder: |
This contract is issued, pursuant to Section 445 of the |
Illinois Insurance Code, by a company not authorized and |
licensed to transact business in Illinois and as such is not |
covered by the Illinois Insurance Guaranty Fund." Insurance |
contracts delivered under this Section from domestic surplus |
line insurers as defined in Section 445a shall have stamped or |
imprinted on the first page thereof in not less than 12-pt. |
bold face type the following legend: "Notice to Policyholder: |
This contract is issued by a domestic surplus line insurer, as |
|
defined in Section 445a of the Illinois Insurance Code, |
pursuant to Section 445, and as such is not covered by the |
Illinois Insurance Guaranty Fund."
|
(11) The Illinois Surplus Line law does not apply to |
insurance of
property and operations of railroads or aircraft |
engaged in interstate or
foreign commerce, insurance of |
vessels, crafts or hulls, cargoes, marine
builder's risks, |
marine protection and indemnity, or other risks including
|
strikes and war risks insured under ocean or wet marine forms |
of policies.
|
(12) Surplus line insurance procured under this Section, |
including
insurance procured from a domestic surplus line |
insurer, is not subject
to the provisions of the Illinois |
Insurance Code other than Sections 123,
123.1, 401, 401.1, 402, |
403, 403A, 408, 412, 445, 445.1, 445.2, 445.3,
445.4, and all |
of the provisions of Article XXXI to the extent that the
|
provisions of Article XXXI are not inconsistent with the terms |
of this Act.
|
(Source: P.A. 97-955, eff. 8-14-12.)
|
(215 ILCS 5/445.1) (from Ch. 73, par. 1057.1)
|
Sec. 445.1. Surplus Line Association of Illinois. There is |
hereby created a
non-profit association to be known as the |
Surplus Line Association of
Illinois. All surplus line |
producers shall be and must remain individual
members of the |
Association as a condition of their holding a license as a
|
|
surplus line producer in this State. The Association must |
perform its
functions under the plan of operation established |
and approved under
Section 445.3 and must exercise its powers |
through a board of directors
established under Section 445.2 of |
this Code. The Association shall be
supervised by the Director |
and is subject to the applicable provisions of
the Illinois |
Insurance Code. The Association shall be authorized and have |
the
duty to:
|
(1) receive, record and countersign all surplus line |
insurance
contracts which surplus line producers are required |
to file with the
Association under subsection (5) of Section |
445;
|
(2) prepare monthly reports for the Director on surplus |
line insurance
procured by its members during the preceding |
month in such form and
providing such information as the |
Director may prescribe;
|
(3) prepare and deliver to the Director and, at the |
discretion of the Director, to each licensee and to the |
Director the reports
of surplus line business prescribed in |
subsection (3) of Section 445;
|
(4) assess its members for costs of operations in |
accordance with a
schedule adopted by the Board of Directors of |
the Association and
approved by the Director;
|
(5) employ and retain such persons as are necessary to |
carry out the
duties of the Association;
|
(6) borrow money as necessary to effect the purposes of the |
|
Association;
|
(7) enter contracts as necessary to effect the purposes of |
the Association;
|
(8) perform such other acts as will facilitate and |
encourage compliance
by its members with the surplus line law |
of this State and rules
promulgated thereunder; and
|
(9) provide such other services to its members as are |
incidental or
related to the purposes of the Association. |
Nothing in this Act shall be
construed as giving the |
Association any discretionary authority to enforce
this Act or |
to withhold countersignature of insurance contracts which meet
|
the requirements of subsection (5) of Section 445.
|
(Source: P.A. 83-1300.)
|
(215 ILCS 5/445.4) (from Ch. 73, par. 1057.4)
|
Sec. 445.4. Examination. The Director shall, at such times |
as he deems
necessary, make or cause to be made an examination |
of the Association.
The reasonable cost of any such examination |
shall be paid by the Association
upon presentation to it by the |
Director of a detailed account of such cost.
During the course |
of such examination, the directors, officers, members, agents |
and
employees of the Association may be examined under oath |
regarding the operation
of the Association and shall make |
available all books, records, accounts,
documents and |
agreements pertaining thereto. The Director shall furnish
a |
copy of the examination report to the Association. Within 20 |
|
days after
receipt of the report, the Association may request a |
hearing on the report
or any facts or recommendations therein. |
If the Director finds the Association
or any of its members to |
be in violation of this Act, he may issue an order
requiring |
discontinuance of such violation. The Association shall |
annually provide for an independent financial audit of the |
books and records of the Association by a certified public |
accountant and shall provide a copy of the audit report to the |
Director.
|
(Source: P.A. 83-1300.)
|
