Bill Text: IL SB3451 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Creates the Insurance Industry Innovation Act. Directs the Department of Insurance to establish the Innovation Division within the Department. Provides a mechanism through which covered entities may submit a petition to the Department to request to enter into an enforceable compliance agreement containing a modification or waiver of Department rule with respect to a covered entity or an insurance innovation the covered entity offers or intends to offer. Provides the specific factors and procedures the Department shall use in determining whether or not to approve a petition. Provides requirements concerning an enforceable compliance agreement. Provides that the Department shall submit an annual report to the General Assembly regarding the aggregate impact of enforceable compliance agreements. Provides that the Department shall establish the cost of each petition. Provides that the Director may adopt rules to implement the Act. Repeals the Act on January 1, 2024. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Failed) 2019-01-09 - Session Sine Die [SB3451 Detail]

Download: Illinois-2017-SB3451-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 SB3451 Introduced 2/16/2018, by Sen. Antonio Muñoz SYNOPSIS AS INTRODUCED:
New Act
Creates the Insurance Industry Innovation Act. Creates the Innovation Division in the Department of Insurance. Provides that a covered entity may submit a petition to the Department to request to enter into an enforceable compliance agreement. Provides that the Director of Insurance shall complete a review of the petition and notify the covered entity of the Department's determination. Provides the specific factors the Department shall use in determining whether or not to approve a petition. Provides the specific requirements of an enforceable compliance agreement. Provides that the Department shall submit an annual report to the General Assembly beginning July 1, 2019 regarding the aggregate impact of enforceable compliance agreements. Provides that the Department shall establish the cost of each petition. Provides that the Director may adopt rules as necessary to implement the Act. Provides that the Act shall be repealed on January 1, 2024. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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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 1. Short title. This Act may be cited as the
Insurance Industry Innovation Act.
Section 5. Definitions. In this Act:
"Covered entity" means an entity that offers or intends to
offer an insurance innovation by submitting a petition to the
Department of Insurance.
"Department" means the Department of Insurance.
"Director" means the Director of Insurance.
"Enforceable compliance agreement" means a contractual
agreement described in subsection (a) of Section 20.
"Innovation Division" means the Innovation Division in the
Department of Insurance.
"Insurance innovation" means an innovative service or
product that is or may be subject to regulation by the
Department of Insurance.
Section 10. Innovation Division. The Department shall
establish an Innovation Division to promote insurance product
innovations and to assist a covered person whose petition has
been approved under Section 20.

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Section 15. Petition to the Department.
(a) A covered entity may submit a petition to the
Department through the Innovation Division, in such form and in
such manner as the Innovation Division may require, to request
to enter into an enforceable compliance agreement containing a
modification or waiver of Department rule or State law under
which the Department has rulemaking authority with respect to
the covered entity or an insurance innovation the covered
entity offers or intends to offer.
(b) A petition submitted under this Section shall:
(1) include an alternative compliance strategy that
proposes a method to achieve the public policy goals of the
Department rule or State law; and
(2) demonstrate that under the alternative compliance
strategy, the insurance innovation:
(A) would serve the public interest;
(B) improves access to insurance products or
services; and
(C) does not present systemic risk to the State and
promotes consumer protection.
(c) One or more covered entities that offers or intends to
offer similar innovations may jointly submit a petition under
this Section.
(d) No later than 30 days after receiving a petition, the
Department shall publish the petition on the Department's

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website and provide a 60-day period for public notice and
comment.
The Department may waive the notice and comment period if
the Department determines that the covered entity submitting
the petition is similarly situated to another covered entity
that has been granted approval of an identical petition
pursuant to this Section.
The Department shall maintain the confidentiality of any
non-publicly available data or information in any petition
submitted under this Section. The Department shall give
reasonable consideration to maintaining the confidentiality of
data or information identified by the covered person in the
petition submitted under this Section as non-publicly
available data or information.
Section 20. Department determination of petition.
(a) No later than 30 days after the end of the comment
period pursuant to subsection (d) of Section 15 or, if the
comment period was waived, not later than 60 days after receipt
of a petition under Section 15, the Director shall complete a
review of the petition and notify the covered entity, in
writing, of the Department's determination of the petition.
(b) If the covered entity submitting the petition
demonstrates to the Department that the alternative compliance
strategy meets the requirements of paragraph (2) in subsection
(b) of Section 15, the Department may approve the petition. If

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the petition is approved, the Department shall enter into an
enforceable compliance agreement with the covered entity in
accordance with the requirements of Section 25.
(c) The Department shall not approve a petition for a
waiver of Department rule or State law concerning:
(1) assets, deposits, investments, capital, surplus,
or other solvency requirements applicable to insurance
companies;
(2) required participation in an assigned risk plan,
market, or guaranty fund;
(3) a law or regulation required for the Department to
maintain its accreditation by the National Association of
Insurance Commissioners, unless the law or regulation
permits variances, waivers, or no action letters; or
(4) application of any taxes or fees.
(d) If the covered entity submitting the petition fails to
demonstrate to the Department that the alternative compliance
strategy meets the requirements of paragraph (2) of subsection
(b) of Section 15, the Department shall deny the petition. If
the Department denies a petition, the Director shall provide
the covered entity with a written notice explaining the reason
for denying the petition.
Section 25. Enforceable compliance agreement.
(a) If the Department approves a petition under Section 15,
the covered entity shall enter into an enforceable compliance

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agreement with the Department.
(b) Any compliance agreement entered into by the Department
and a covered entity shall, at a minimum, include:
(1) the terms under which the covered entity may
develop or offer the approved insurance innovation to the
public and any requirements of the covered entity and the
Department with respect to the insurance innovation;
(2) procedures for modifying the terms of the
agreement;
(3) consequences for failure to comply with the terms
of the agreement;
(4) a compliance examination process that occurs at
least annually;
(5) a termination date for the agreement that is at
least one year after the date on which the agreement is
entered into;
(6) procedures for extending the termination date;
(7) procedures for judicial review; and
(8) procedures for maintaining the confidentiality of
any information disclosed to the Department in making the
agreement.
(c) If a covered entity and the Department enter into an
enforceable compliance agreement, another agency may not
commence an enforcement action against the covered entity with
respect to the insurance innovation that is the subject of the
enforceable compliance agreement.

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(d) Notwithstanding subsection (c), the State may commence
an enforcement action against a covered entity with respect to
an insurance innovation that is the subject of an enforceable
compliance agreement if, in an action brought by the State in a
court of competent jurisdiction, the court determines that the
Department's action was arbitrary and capricious and the
insurance innovation has substantially harmed consumers within
the State.
(e) A covered entity may elect to arbitrate an action
initiated by another person relating to a financial innovation
that is the subject of the enforceable compliance agreement.
Section 30. Report to the General Assembly. No later than
July 1, 2019 and every July 1 thereafter, the Department shall
submit to the General Assembly a report on the aggregate impact
of enforceable compliance agreements entered into under this
Act that shall include:
(1) the number and characteristics of the agreements;
(2) the most innovative and least burdensome tools that
the Innovation Division has implemented for achieving
regulatory ends;
(3) the existing State laws, rules, or practices that
the Department identifies as the most burdensome to
innovation in developing or providing insurance products
and services, that adversely affect competition in the
insurance industry, or that restrict improvements for

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consumers of insurance products or services; and
(4) recommendations for reducing, consolidating, or
eliminating regulations.
Section 35. Funding. The Department, by rule, shall
establish the cost of each application for petition.
Section 40. Rulemaking authority. The Director may adopt
reasonable rules as necessary to implement the purposes and
provisions of this Act.
Section 45. Repeal. This Act is repealed on January 1,
2024.
Section 99. Effective date. This Act takes effect upon
becoming law.