Bill Text: IL SB0762 | 2023-2024 | 103rd General Assembly | Enrolled

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Bill Title: Amends the Illinois Insurance Code. Changes the definition of "insolvent company" to include any company which has assumed or has been allocated a policy obligation through an approved insurance business transfer plan. Provides that the fee for filing an insurance business transfer plan is $25,000. Creates the Insurance Business Transfers Article of the Illinois Insurance Code and provides that the Article may be cited as the Insurance Business Transfers Law. Sets forth provisions concerning notice requirements, application procedure, application to a court for approval of a plan, approval and denial of insurance business transfer plans, and fees and costs. Provides that the Department of Insurance may adopt rules that are consistent with the provisions. Provides that the portion of the application for an insurance business transfer that would otherwise be confidential, including any documents, materials, communications, or other information submitted to the Director of Insurance in contemplation of an application, shall not lose such confidentiality. Provides that insurers consent to the jurisdiction of the Director with regard to ongoing oversight of operations, management, and solvency relating to the transferred business. Provides that the Director may direct the applicant to retain parties to assist Department personnel. Defines terms. Effective immediately, except specified provisions take effect January 1, 2025.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2023-06-09 - Public Act . . . . . . . . . 103-0075 [SB0762 Detail]

Download: Illinois-2023-SB0762-Enrolled.html



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1 AN ACT concerning regulation.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Illinois Insurance Code is amended by
5changing Sections 408 and 534.4 and by adding Article XLVII as
6follows:
7 (215 ILCS 5/408) (from Ch. 73, par. 1020)
8 Sec. 408. Fees and charges.
9 (1) The Director shall charge, collect and give proper
10acquittances for the payment of the following fees and
11charges:
12 (a) For filing all documents submitted for the
13 incorporation or organization or certification of a
14 domestic company, except for a fraternal benefit society,
15 $2,000.
16 (b) For filing all documents submitted for the
17 incorporation or organization of a fraternal benefit
18 society, $500.
19 (c) For filing amendments to articles of incorporation
20 and amendments to declaration of organization, except for
21 a fraternal benefit society, a mutual benefit association,
22 a burial society or a farm mutual, $200.
23 (d) For filing amendments to articles of incorporation

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1 of a fraternal benefit society, a mutual benefit
2 association or a burial society, $100.
3 (e) For filing amendments to articles of incorporation
4 of a farm mutual, $50.
5 (f) For filing bylaws or amendments thereto, $50.
6 (g) For filing agreement of merger or consolidation:
7 (i) for a domestic company, except for a fraternal
8 benefit society, a mutual benefit association, a
9 burial society, or a farm mutual, $2,000.
10 (ii) for a foreign or alien company, except for a
11 fraternal benefit society, $600.
12 (iii) for a fraternal benefit society, a mutual
13 benefit association, a burial society, or a farm
14 mutual, $200.
15 (h) For filing agreements of reinsurance by a domestic
16 company, $200.
17 (i) For filing all documents submitted by a foreign or
18 alien company to be admitted to transact business or
19 accredited as a reinsurer in this State, except for a
20 fraternal benefit society, $5,000.
21 (j) For filing all documents submitted by a foreign or
22 alien fraternal benefit society to be admitted to transact
23 business in this State, $500.
24 (k) For filing declaration of withdrawal of a foreign
25 or alien company, $50.
26 (l) For filing annual statement by a domestic company,

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1 except a fraternal benefit society, a mutual benefit
2 association, a burial society, or a farm mutual, $200.
3 (m) For filing annual statement by a domestic
4 fraternal benefit society, $100.
5 (n) For filing annual statement by a farm mutual, a
6 mutual benefit association, or a burial society, $50.
7 (o) For issuing a certificate of authority or renewal
8 thereof except to a foreign fraternal benefit society,
9 $400.
10 (p) For issuing a certificate of authority or renewal
11 thereof to a foreign fraternal benefit society, $200.
12 (q) For issuing an amended certificate of authority,
13 $50.
14 (r) For each certified copy of certificate of
15 authority, $20.
16 (s) For each certificate of deposit, or valuation, or
17 compliance or surety certificate, $20.
18 (t) For copies of papers or records per page, $1.
19 (u) For each certification to copies of papers or
20 records, $10.
21 (v) For multiple copies of documents or certificates
22 listed in subparagraphs (r), (s), and (u) of paragraph (1)
23 of this Section, $10 for the first copy of a certificate of
24 any type and $5 for each additional copy of the same
25 certificate requested at the same time, unless, pursuant
26 to paragraph (2) of this Section, the Director finds these

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1 additional fees excessive.
2 (w) For issuing a permit to sell shares or increase
3 paid-up capital:
4 (i) in connection with a public stock offering,
5 $300;
6 (ii) in any other case, $100.
7 (x) For issuing any other certificate required or
8 permissible under the law, $50.
9 (y) For filing a plan of exchange of the stock of a
10 domestic stock insurance company, a plan of
11 demutualization of a domestic mutual company, or a plan of
12 reorganization under Article XII, $2,000.
13 (z) For filing a statement of acquisition of a
14 domestic company as defined in Section 131.4 of this Code,
15 $2,000.
16 (aa) For filing an agreement to purchase the business
17 of an organization authorized under the Dental Service
18 Plan Act or the Voluntary Health Services Plans Act or of a
19 health maintenance organization or a limited health
20 service organization, $2,000.
21 (bb) For filing a statement of acquisition of a
22 foreign or alien insurance company as defined in Section
23 131.12a of this Code, $1,000.
24 (cc) For filing a registration statement as required
25 in Sections 131.13 and 131.14, the notification as
26 required by Sections 131.16, 131.20a, or 141.4, or an

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1 agreement or transaction required by Sections 124.2(2),
2 141, 141a, or 141.1, $200.
3 (dd) For filing an application for licensing of:
4 (i) a religious or charitable risk pooling trust
5 or a workers' compensation pool, $1,000;
6 (ii) a workers' compensation service company,
7 $500;
8 (iii) a self-insured automobile fleet, $200; or
9 (iv) a renewal of or amendment of any license
10 issued pursuant to (i), (ii), or (iii) above, $100.
11 (ee) For filing articles of incorporation for a
12 syndicate to engage in the business of insurance through
13 the Illinois Insurance Exchange, $2,000.
14 (ff) For filing amended articles of incorporation for
15 a syndicate engaged in the business of insurance through
16 the Illinois Insurance Exchange, $100.
17 (gg) For filing articles of incorporation for a
18 limited syndicate to join with other subscribers or
19 limited syndicates to do business through the Illinois
20 Insurance Exchange, $1,000.
21 (hh) For filing amended articles of incorporation for
22 a limited syndicate to do business through the Illinois
23 Insurance Exchange, $100.
24 (ii) For a permit to solicit subscriptions to a
25 syndicate or limited syndicate, $100.
26 (jj) For the filing of each form as required in

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1 Section 143 of this Code, $50 per form. Informational and
2 advertising filings shall be $25 per filing. The fee for
3 advisory and rating organizations shall be $200 per form.
4 (i) For the purposes of the form filing fee,
5 filings made on insert page basis will be considered
6 one form at the time of its original submission.
7 Changes made to a form subsequent to its approval
8 shall be considered a new filing.
9 (ii) Only one fee shall be charged for a form,
10 regardless of the number of other forms or policies
11 with which it will be used.
12 (iii) Fees charged for a policy filed as it will be
13 issued regardless of the number of forms comprising
14 that policy shall not exceed $1,500. For advisory or
15 rating organizations, fees charged for a policy filed
16 as it will be issued regardless of the number of forms
17 comprising that policy shall not exceed $2,500.
18 (iv) The Director may by rule exempt forms from
19 such fees.
20 (kk) For filing an application for licensing of a
21 reinsurance intermediary, $500.
22 (ll) For filing an application for renewal of a
23 license of a reinsurance intermediary, $200.
24 (mm) For filing a plan of division of a domestic stock
25 company under Article IIB, $10,000.
26 (nn) For filing all documents submitted by a foreign

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1 or alien company to be a certified reinsurer in this
2 State, except for a fraternal benefit society, $1,000.
3 (oo) For filing a renewal by a foreign or alien
4 company to be a certified reinsurer in this State, except
5 for a fraternal benefit society, $400.
6 (pp) For filing all documents submitted by a reinsurer
7 domiciled in a reciprocal jurisdiction, $1,000.
8 (qq) For filing a renewal by a reinsurer domiciled in
9 a reciprocal jurisdiction, $400.
10 (rr) For registering a captive management company or
11 renewal thereof, $50.
12 (ss) For filing an insurance business transfer plan
13 under Article XLVII, $25,000.
14 (2) When printed copies or numerous copies of the same
15paper or records are furnished or certified, the Director may
16reduce such fees for copies if he finds them excessive. He may,
17when he considers it in the public interest, furnish without
18charge to state insurance departments and persons other than
19companies, copies or certified copies of reports of
20examinations and of other papers and records.
21 (3) The expenses incurred in any performance examination
22authorized by law shall be paid by the company or person being
23examined. The charge shall be reasonably related to the cost
24of the examination including but not limited to compensation
25of examiners, electronic data processing costs, supervision
26and preparation of an examination report and lodging and

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1travel expenses. All lodging and travel expenses shall be in
2accord with the applicable travel regulations as published by
3the Department of Central Management Services and approved by
4the Governor's Travel Control Board, except that out-of-state
5lodging and travel expenses related to examinations authorized
6under Section 132 shall be in accordance with travel rates
7prescribed under paragraph 301-7.2 of the Federal Travel
8Regulations, 41 C.F.R. 301-7.2, for reimbursement of
9subsistence expenses incurred during official travel. All
10lodging and travel expenses may be reimbursed directly upon
11authorization of the Director. With the exception of the
12direct reimbursements authorized by the Director, all
13performance examination charges collected by the Department
14shall be paid to the Insurance Producer Administration Fund,
15however, the electronic data processing costs incurred by the
16Department in the performance of any examination shall be
17billed directly to the company being examined for payment to
18the Technology Management Revolving Fund.
19 (4) At the time of any service of process on the Director
20as attorney for such service, the Director shall charge and
21collect the sum of $40, which may be recovered as taxable costs
22by the party to the suit or action causing such service to be
23made if he prevails in such suit or action.
24 (5) (a) The costs incurred by the Department of Insurance
25in conducting any hearing authorized by law shall be assessed
26against the parties to the hearing in such proportion as the

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1Director of Insurance may determine upon consideration of all
2relevant circumstances including: (1) the nature of the
3hearing; (2) whether the hearing was instigated by, or for the
4benefit of a particular party or parties; (3) whether there is
5a successful party on the merits of the proceeding; and (4) the
6relative levels of participation by the parties.
7 (b) For purposes of this subsection (5) costs incurred
8shall mean the hearing officer fees, court reporter fees, and
9travel expenses of Department of Insurance officers and
10employees; provided however, that costs incurred shall not
11include hearing officer fees or court reporter fees unless the
12Department has retained the services of independent
13contractors or outside experts to perform such functions.
14 (c) The Director shall make the assessment of costs
15incurred as part of the final order or decision arising out of
16the proceeding; provided, however, that such order or decision
17shall include findings and conclusions in support of the
18assessment of costs. This subsection (5) shall not be
19construed as permitting the payment of travel expenses unless
20calculated in accordance with the applicable travel
21regulations of the Department of Central Management Services,
22as approved by the Governor's Travel Control Board. The
23Director as part of such order or decision shall require all
24assessments for hearing officer fees and court reporter fees,
25if any, to be paid directly to the hearing officer or court
26reporter by the party(s) assessed for such costs. The

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1assessments for travel expenses of Department officers and
2employees shall be reimbursable to the Director of Insurance
3for deposit to the fund out of which those expenses had been
4paid.
5 (d) The provisions of this subsection (5) shall apply in
6the case of any hearing conducted by the Director of Insurance
7not otherwise specifically provided for by law.
8 (6) The Director shall charge and collect an annual
9financial regulation fee from every domestic company for
10examination and analysis of its financial condition and to
11fund the internal costs and expenses of the Interstate
12Insurance Receivership Commission as may be allocated to the
13State of Illinois and companies doing an insurance business in
14this State pursuant to Article X of the Interstate Insurance
15Receivership Compact. The fee shall be the greater fixed
16amount based upon the combination of nationwide direct premium
17income and nationwide reinsurance assumed premium income or
18upon admitted assets calculated under this subsection as
19follows:
20 (a) Combination of nationwide direct premium income
21 and nationwide reinsurance assumed premium.
22 (i) $150, if the premium is less than $500,000 and
23 there is no reinsurance assumed premium;
24 (ii) $750, if the premium is $500,000 or more, but
25 less than $5,000,000 and there is no reinsurance
26 assumed premium; or if the premium is less than

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1 $5,000,000 and the reinsurance assumed premium is less
2 than $10,000,000;
3 (iii) $3,750, if the premium is less than
4 $5,000,000 and the reinsurance assumed premium is
5 $10,000,000 or more;
6 (iv) $7,500, if the premium is $5,000,000 or more,
7 but less than $10,000,000;
8 (v) $18,000, if the premium is $10,000,000 or
9 more, but less than $25,000,000;
10 (vi) $22,500, if the premium is $25,000,000 or
11 more, but less than $50,000,000;
12 (vii) $30,000, if the premium is $50,000,000 or
13 more, but less than $100,000,000;
14 (viii) $37,500, if the premium is $100,000,000 or
15 more.
16 (b) Admitted assets.
17 (i) $150, if admitted assets are less than
18 $1,000,000;
19 (ii) $750, if admitted assets are $1,000,000 or
20 more, but less than $5,000,000;
21 (iii) $3,750, if admitted assets are $5,000,000 or
22 more, but less than $25,000,000;
23 (iv) $7,500, if admitted assets are $25,000,000 or
24 more, but less than $50,000,000;
25 (v) $18,000, if admitted assets are $50,000,000 or
26 more, but less than $100,000,000;

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1 (vi) $22,500, if admitted assets are $100,000,000
2 or more, but less than $500,000,000;
3 (vii) $30,000, if admitted assets are $500,000,000
4 or more, but less than $1,000,000,000;
5 (viii) $37,500, if admitted assets are
6 $1,000,000,000 or more.
7 (c) The sum of financial regulation fees charged to
8 the domestic companies of the same affiliated group shall
9 not exceed $250,000 in the aggregate in any single year
10 and shall be billed by the Director to the member company
11 designated by the group.
12 (7) The Director shall charge and collect an annual
13financial regulation fee from every foreign or alien company,
14except fraternal benefit societies, for the examination and
15analysis of its financial condition and to fund the internal
16costs and expenses of the Interstate Insurance Receivership
17Commission as may be allocated to the State of Illinois and
18companies doing an insurance business in this State pursuant
19to Article X of the Interstate Insurance Receivership Compact.
20The fee shall be a fixed amount based upon Illinois direct
21premium income and nationwide reinsurance assumed premium
22income in accordance with the following schedule:
23 (a) $150, if the premium is less than $500,000 and
24 there is no reinsurance assumed premium;
25 (b) $750, if the premium is $500,000 or more, but less
26 than $5,000,000 and there is no reinsurance assumed

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1 premium; or if the premium is less than $5,000,000 and the
2 reinsurance assumed premium is less than $10,000,000;
3 (c) $3,750, if the premium is less than $5,000,000 and
4 the reinsurance assumed premium is $10,000,000 or more;
5 (d) $7,500, if the premium is $5,000,000 or more, but
6 less than $10,000,000;
7 (e) $18,000, if the premium is $10,000,000 or more,
8 but less than $25,000,000;
9 (f) $22,500, if the premium is $25,000,000 or more,
10 but less than $50,000,000;
11 (g) $30,000, if the premium is $50,000,000 or more,
12 but less than $100,000,000;
13 (h) $37,500, if the premium is $100,000,000 or more.
14 The sum of financial regulation fees under this subsection
15(7) charged to the foreign or alien companies within the same
16affiliated group shall not exceed $250,000 in the aggregate in
17any single year and shall be billed by the Director to the
18member company designated by the group.
19 (8) Beginning January 1, 1992, the financial regulation
20fees imposed under subsections (6) and (7) of this Section
21shall be paid by each company or domestic affiliated group
22annually. After January 1, 1994, the fee shall be billed by
23Department invoice based upon the company's premium income or
24admitted assets as shown in its annual statement for the
25preceding calendar year. The invoice is due upon receipt and
26must be paid no later than June 30 of each calendar year. All

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1financial regulation fees collected by the Department shall be
2paid to the Insurance Financial Regulation Fund. The
3Department may not collect financial examiner per diem charges
4from companies subject to subsections (6) and (7) of this
5Section undergoing financial examination after June 30, 1992.
6 (9) In addition to the financial regulation fee required
7by this Section, a company undergoing any financial
8examination authorized by law shall pay the following costs
9and expenses incurred by the Department: electronic data
10processing costs, the expenses authorized under Section 131.21
11and subsection (d) of Section 132.4 of this Code, and lodging
12and travel expenses.
13 Electronic data processing costs incurred by the
14Department in the performance of any examination shall be
15billed directly to the company undergoing examination for
16payment to the Technology Management Revolving Fund. Except
17for direct reimbursements authorized by the Director or direct
18payments made under Section 131.21 or subsection (d) of
19Section 132.4 of this Code, all financial regulation fees and
20all financial examination charges collected by the Department
21shall be paid to the Insurance Financial Regulation Fund.
22 All lodging and travel expenses shall be in accordance
23with applicable travel regulations published by the Department
24of Central Management Services and approved by the Governor's
25Travel Control Board, except that out-of-state lodging and
26travel expenses related to examinations authorized under

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1Sections 132.1 through 132.7 shall be in accordance with
2travel rates prescribed under paragraph 301-7.2 of the Federal
3Travel Regulations, 41 C.F.R. 301-7.2, for reimbursement of
4subsistence expenses incurred during official travel. All
5lodging and travel expenses may be reimbursed directly upon
6the authorization of the Director.
7 In the case of an organization or person not subject to the
8financial regulation fee, the expenses incurred in any
9financial examination authorized by law shall be paid by the
10organization or person being examined. The charge shall be
11reasonably related to the cost of the examination including,
12but not limited to, compensation of examiners and other costs
13described in this subsection.
14 (10) Any company, person, or entity failing to make any
15payment of $150 or more as required under this Section shall be
16subject to the penalty and interest provisions provided for in
17subsections (4) and (7) of Section 412.
18 (11) Unless otherwise specified, all of the fees collected
19under this Section shall be paid into the Insurance Financial
20Regulation Fund.
21 (12) For purposes of this Section:
22 (a) "Domestic company" means a company as defined in
23 Section 2 of this Code which is incorporated or organized
24 under the laws of this State, and in addition includes a
25 not-for-profit corporation authorized under the Dental
26 Service Plan Act or the Voluntary Health Services Plans

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1 Act, a health maintenance organization, and a limited
2 health service organization.
3 (b) "Foreign company" means a company as defined in
4 Section 2 of this Code which is incorporated or organized
5 under the laws of any state of the United States other than
6 this State and in addition includes a health maintenance
7 organization and a limited health service organization
8 which is incorporated or organized under the laws of any
9 state of the United States other than this State.
10 (c) "Alien company" means a company as defined in
11 Section 2 of this Code which is incorporated or organized
12 under the laws of any country other than the United
13 States.
14 (d) "Fraternal benefit society" means a corporation,
15 society, order, lodge or voluntary association as defined
16 in Section 282.1 of this Code.
17 (e) "Mutual benefit association" means a company,
18 association or corporation authorized by the Director to
19 do business in this State under the provisions of Article
20 XVIII of this Code.
21 (f) "Burial society" means a person, firm,
22 corporation, society or association of individuals
23 authorized by the Director to do business in this State
24 under the provisions of Article XIX of this Code.
25 (g) "Farm mutual" means a district, county and
26 township mutual insurance company authorized by the

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1 Director to do business in this State under the provisions
2 of the Farm Mutual Insurance Company Act of 1986.
3(Source: P.A. 102-775, eff. 5-13-22.)
4 (215 ILCS 5/534.4) (from Ch. 73, par. 1065.84-4)
5 Sec. 534.4. "Insolvent company" means a company organized
6as a stock company, mutual company, reciprocal or Lloyds (a)
7which holds a certificate of authority to transact insurance
8in this State either at the time the policy was issued or when
9the insured event occurred, or any company which has assumed
10or has been allocated such policy obligation through merger,
11division, insurance business transfer, consolidation, or
12reinsurance, whether or not such assuming company held a
13certificate of authority to transact insurance in this State
14at the time such policy was issued or when the insured event
15occurred; and (b) against which a final Order of Liquidation
16with a finding of insolvency to which there is no further right
17of appeal has been entered by a court of competent
18jurisdiction in the company's State of domicile after the
19effective date of this Article.
20(Source: P.A. 100-1190, eff. 4-5-19.)
21 (215 ILCS 5/Art. XLVII heading new)
22
ARTICLE XLVII. INSURANCE BUSINESS TRANSFERS
23 (215 ILCS 5/1701 new)

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1 Sec. 1701. Short title. This Article may be cited as the
2Insurance Business Transfer Law.
3 (215 ILCS 5/1703 new)
4 Sec. 1703. Purpose and intent. The purpose of this Article
5is to provide a mechanism for insurers to transfer or assume
6blocks of insurance business in an efficient and
7cost-effective manner that provides needed legal finality for
8such transfers in order to provide for improved operational
9and capital efficiency for insurance companies, while
10protecting the interests of the policyholders, reinsurers, and
11claimants of the subject business. This new process is
12intended to stimulate the economy by attracting segments of
13the insurance industry to this State, make this State an
14attractive home jurisdiction for insurance companies,
15encourage economic growth and increased investment in the
16financial services sector, and increase the availability of
17quality insurance industry jobs in this State. These purposes
18are accomplished by providing a basis and procedures for the
19transfer and statutory novation of policies from a
20transferring insurer to an assuming insurer by way of an
21insurance business transfer without the affirmative consent of
22policyholders or reinsureds, but with consideration of their
23interests. This Article establishes the requirements for
24notice and disclosure and standards and procedures for the
25approval of the transfer and novation by a court pursuant to an

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1insurance business transfer plan. This Article does not limit
2or restrict other means of effecting a transfer or novation.
3 (215 ILCS 5/1705 new)
4 Sec. 1705. Definitions. As used in this Article:
5 "Affiliate" means a person that directly or indirectly,
6through one or more intermediaries, controls, is controlled
7by, or is under common control with the person specified.
8 "Applicant" means a transferring insurer or reinsurer
9applying under this Article.
10 "Assuming insurer" means an insurer domiciled in Illinois
11and authorized to transact the type of business described in
12clause (c) of Class 1, clauses (b) through (l) of Class 2, or
13Class 3 of Section 4 that seeks to assume policies from a
14transferring insurer pursuant to this Article.
15 "Court" means the circuit court of Sangamon County or Cook
16County.
17 "Department" means the Department of Insurance.
18 "Director" means the Director of Insurance.
19 "Implementation order" means an order issued by a court
20under this Article.
21 "Insurance business transfer" means a transfer and
22novation that, once approved pursuant to this Article,
23transfers insurance obligations or risks, or both, of existing
24or in-force contracts of insurance or reinsurance from a
25transferring insurer to an assuming insurer, and effects a

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1novation of the transferred contracts of insurance or
2reinsurance with the result that the assuming insurer becomes
3directly liable to the policyholders of the transferring
4insurer and the transferring insurer's insurance obligations
5or risks, or both, under the contracts are extinguished.
6 "Insurance business transfer plan" means the plan
7submitted to the Department to accomplish the transfer and
8novation pursuant to an insurance business transfer, including
9any associated transfer of assets and rights from or on behalf
10of the transferring insurer to the assuming insurer. An
11"insurance business transfer plan" is limited to the types of
12insurance described in clause (c) of Class 1, clauses (b)
13through (l) of Class 2, or Class 3 of Section 4.
14 "Independent expert" means the impartial person procured
15to assist the Director and the court in connection with their
16review of a proposed transaction. The independent expert
17shall:
18 (i) have no current or past, direct or indirect,
19 financial interest in either the assuming insurer or
20 transferring insurer or any of their respective
21 affiliates,
22 (ii) have not been employed by or acted as an officer,
23 director, consultant, or other independent contractor for
24 either the assuming insurer or transferring insurer or any
25 of their respective affiliates within the past 12 months,
26 (iii) not currently be appointed by the Director to

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1 assist in any capacity in any proceeding initiated under
2 Article XIII, and
3 (iv) receive no compensation in connection with the
4 transaction governed by this Article other than a fee
5 based on a fixed or hourly basis that is not contingent on
6 the approval or consummation of an insurance business
7 transfer.
8 "Insurer" means an insurance, surety, or reinsurance
9company, corporation, partnership, association, society,
10order, individual, or aggregation of individuals engaging in
11or proposing or attempting to engage in insurance or surety
12business, including the exchanging of reciprocal or
13inter-insurance contracts between individuals, partnerships,
14and corporations.
15 "Policy" means a policy, certificate of insurance, or a
16contract of reinsurance pursuant to which an insurer agrees to
17assume an obligation or risk, or both, of the policyholder or
18to make payments on behalf of, or to, the policyholder or its
19beneficiaries, and includes property and casualty insurance.
20"Policy" does not include any policy, contract, or certificate
21of life, accident, or health insurance, including those
22defined in clause (a) or (b) of Class 1 or clause (a) of Class
232 of Section 4.
24 "Policyholder" means an insured or a reinsured under a
25policy that is part of the subject business.
26 "State guaranty association" means the Illinois Insurance

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1Guaranty Fund, the Illinois Life and Health Guaranty
2Association, or any similar organization in another state.
3 "Subject business" means the policy or policies that are
4the subject of the insurance business transfer plan.
5 "Transfer and novation" means the transfer of insurance
6obligations or risks, or both, of existing or in-force
7policies from a transferring insurer to an assuming insurer
8that is intended to effect a novation of the transferred
9policies with the result that the assuming insurer becomes
10directly liable to the policyholders of the transferring
11insurer on the transferred policies and the transferring
12insurer's obligations or risks, or both, under the transferred
13policies are extinguished.
14 "Transferring insurer" means an insurer or reinsurer that
15transfers and novates or seeks to transfer and novate
16obligations or risks, or both, under one or more policies to an
17assuming insurer pursuant to an insurance business transfer
18plan.
19 (215 ILCS 5/1710 new)
20 Sec. 1710. Court authority. Notwithstanding any other
21provision of law, a court may issue any order, process, or
22judgment that is necessary or appropriate to carry out the
23provisions of this Article. No provision of this Article shall
24be construed to preclude a court from, on its own motion,
25taking any action or making any determination necessary or

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1appropriate to enforce or implement court orders or rules or
2to prevent an abuse of power.
3 (215 ILCS 5/1715 new)
4 Sec. 1715. Notice requirements.
5 (a) Whenever notice is required to be given by an
6applicant under this Article, except as otherwise permitted by
7a court or the Director, the applicant shall within 15 days
8after the event triggering the requirement transmit the
9notice:
10 (1) to the chief insurance regulator in each
11 jurisdiction:
12 (A) in which the applicant holds or has ever held a
13 certificate of authority; and
14 (B) in which policies that are part of the subject
15 business were issued or policyholders currently
16 reside;
17 (2) to the National Conference of Insurance Guaranty
18 Funds, the National Organization of Life and Health
19 Insurance Guaranty Associations, and all state insurance
20 guaranty associations for the states:
21 (A) in which the applicant holds or has ever held a
22 certificate of authority; and
23 (B) in which policies that are part of the subject
24 business were issued or policyholders currently
25 reside;

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1 (3) to reinsurers of the applicant pursuant to the
2 notice provisions of the reinsurance agreements applicable
3 to the policies that are part of the subject business or,
4 where an agreement has no provision for notice, by
5 internationally recognized delivery service;
6 (4) to all policyholders holding policies that are
7 part of the subject business at their last known address
8 as indicated by the records of the applicant or to the
9 address to which premium notices or other policy documents
10 are sent. A notice of transfer shall also be sent to the
11 transferring insurer's agents or brokers of record on the
12 subject business; and
13 (5) by publication in a newspaper of general
14 circulation in the state in which the applicant has its
15 principal place of business and in such other publications
16 that the Director requires.
17 (b) If notice is given in accordance with this Section,
18any orders under this Article shall be conclusive with respect
19to all intended recipients of the notice whether or not they
20receive actual notice.
21 (c) If this Article requires that the applicant provide
22notice but the Director has been named receiver of the
23applicant pursuant to Article XIII, the Director shall provide
24the required notice.
25 (d) Notice under this Section may take the form of
26first-class mail, facsimile, or electronic notice. The court

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1may order that notice take a specific form.
2 (215 ILCS 5/1720 new)
3 Sec. 1720. Application procedure.
4 (a) Before filing an insurance business transfer plan, the
5applicant shall file with the Department a notice of its
6intention to file a plan and shall pay the required fee. Upon
7request, the applicant and the assuming insurer shall provide
8the Department with any information necessary for the
9Department to procure an independent expert that meets the
10requirements of this Article.
11 (b) An insurance business transfer plan shall be filed by
12the applicant with the Director for his or her review and
13approval. The plan may be supplemented by other information
14deemed necessary by the Director, and shall contain the
15following information or an explanation as to why the
16following information is not included:
17 (1) the name, address, and telephone number of the
18 transferring insurer and the assuming insurer and their
19 respective direct and indirect controlling persons, if
20 any;
21 (2) a summary of the insurance business transfer plan;
22 (3) an identification and description of the subject
23 business;
24 (4) the most recent audited financial statements and
25 statutory annual and quarterly reports of the transferring

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1 insurer and the assuming insurer filed with their
2 domiciliary regulator;
3 (5) the most recent actuarial report and opinion that
4 quantify the liabilities associated with the subject
5 business;
6 (6) pro forma financial statements showing the
7 projected statutory balance sheet, results of operation,
8 and cash flows of the assuming insurer for the 3 years
9 following the proposed transfer and novation;
10 (7) officers' certificates of the transferring insurer
11 and the assuming insurer attesting that each has obtained
12 all required internal approvals and authorizations
13 regarding the insurance business transfer plan and
14 completed all necessary and appropriate actions relating
15 thereto;
16 (8) a proposal for plan implementation and
17 administration, including the form of notice to be
18 provided under the insurance business transfer plan to any
19 policyholder whose policy is part of the subject business;
20 (9) a full description as to how notice under the
21 insurance business transfer plan shall be provided;
22 (10) a description of any reinsurance arrangements
23 that would pass to the assuming insurer under the
24 insurance business transfer plan;
25 (11) a description of any guarantees or additional
26 reinsurance that will cover the subject business following

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1 the transfer and novation;
2 (12) a statement describing the assuming insurer's
3 proposed investment policies and any contemplated
4 third-party claims management and administration
5 arrangements;
6 (13) a description of how the transferring and
7 assuming insurers will be licensed for the purpose of
8 preserving state guaranty association coverage;
9 (14) a description of the financial implications of
10 the transaction including solvency, capital adequacy, cash
11 flow, reserves, asset quality, and risk-based capital;
12 (15) an analysis of the assuming insurer's corporate
13 governance structure to ensure that there is proper board
14 management oversight and expertise to manage the subject
15 business;
16 (16) an evaluation of the competency, experience, and
17 integrity of the persons who would control the operation
18 of an involved insurer;
19 (17) a certified statement that the transaction is not
20 being made for improper purposes, including fraud;
21 (18) evidence of approval or nonobjection of the
22 transfer from the chief insurance regulator of the state
23 of the transferring insurer's domicile; and
24 (19) a report from the independent expert that shall
25 provide the following:
26 (A) a statement of the independent expert's

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1 professional qualifications and descriptions of the
2 experience that qualifies him or her as an expert
3 suitable for the engagement;
4 (B) a certified statement from the independent
5 expert that he or she meets the standards for an
6 independent expert under this Article;
7 (C) a description of the scope of the report;
8 (D) a summary of the terms of the insurance
9 business transfer plan to the extent relevant to the
10 report;
11 (E) a listing and summaries of documents, reports,
12 and other material information the independent expert
13 has considered in preparing the report and whether any
14 information requested was not provided;
15 (F) the extent to which the independent expert has
16 relied on information provided by or judgment of
17 others;
18 (G) the people on whom the independent expert has
19 relied and why, in his or her opinion, such reliance is
20 reasonable;
21 (H) the independent expert's opinion of the likely
22 effects of the insurance business transfer plan on
23 policyholders, reinsurers, and claimants,
24 distinguishing between:
25 (i) transferring policyholders, reinsurers,
26 and claimants;

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1 (ii) policyholders, reinsurers, and claimants
2 of the transferring insurer whose policies will
3 not be transferred; and
4 (iii) policyholders, reinsurers, and claimants
5 of the assuming insurer;
6 (I) the facts and circumstances supporting each
7 opinion that the independent expert expresses in the
8 report; and
9 (J) consideration as to whether the security
10 position of policyholders that are affected by the
11 insurance business transfer are materially adversely
12 affected by the transfer, including, but not limited
13 to, state guaranty association coverage.
14 (c) The independent expert's report as required by
15paragraph (19) of subsection (b) shall also include, but not
16be limited to, a review of and report on the following:
17 (1) analysis of the transferring insurer's actuarial
18 review of resources for the subject business to determine
19 the reserve adequacy;
20 (2) analysis of the financial condition of the
21 transferring and assuming insurers and the effect the
22 transfer will have on the financial condition of each
23 company;
24 (3) review of the plans or proposals the assuming
25 insurer has with respect to the administration of the
26 policies subject to the proposed transfer;

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1 (4) whether the proposed transfer has a material,
2 adverse impact on the policyholders, reinsurers, and
3 claimants of the transferring and the assuming insurers;
4 (5) analysis of the assuming insurer's corporate
5 governance structure to ensure that there is proper board
6 and management oversight and expertise to manage the
7 subject business;
8 (6) analysis of whether any policyholder or group of
9 policyholders will lose or gain state guaranty association
10 coverage as a result of the transaction; and
11 (7) any other information that the Director requests
12 in order to review the insurance business transfer.
13 (d) After the receipt of a complete insurance business
14transfer plan, the Director shall review the plan to determine
15if the applicant is authorized to submit it to a court.
16 (e) The Director shall authorize the submission of the
17insurance business transfer plan to a court unless he or she
18finds that the insurance business transfer would have a
19material adverse impact on the interests of policyholders,
20reinsurers, or claimants that are part of the subject
21business.
22 (f) If the Director determines that the insurance business
23transfer would have a material adverse impact on the interests
24of policyholders, reinsurers, or claimants that are part of
25the subject business, he or she shall notify the applicant and
26specify any modifications, supplements, or amendments and any

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1additional information or documentation with respect to the
2plan that must be provided to the Director before he or she
3shall allow the applicant to proceed with the court filing.
4 (g) The applicant shall have 30 days following the date
5the Director notifies him or her of a determination under
6subsection (f) to file an amended insurance business transfer
7plan providing the modifications, supplements, or amendments
8and additional information or documentation as requested by
9the Director. If necessary, the applicant may request in
10writing an extension of time of 30 days. If the applicant does
11not make an amended filing within the time period provided in
12this subsection, including any extension of time granted by
13the Director, the insurance business transfer plan filing
14shall terminate and a subsequent filing by the applicant shall
15be considered a new filing which shall require compliance with
16all provisions of this Article as if the prior filing had never
17been made.
18 (h) When the modification, supplement, amendment, or
19additional information requested in subsection (f) is
20received, the Director shall review the amended plan in
21accordance with subsection (c).
22 (i) If the Director determines that the plan may proceed
23with the court filing, the Director shall confirm that fact in
24writing to the applicant.
25 (215 ILCS 5/1725 new)

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1 Sec. 1725. Application to the court for approval of a
2plan.
3 (a) Within 30 days after notice from the Director that the
4applicant may proceed with the court filing, the applicant
5shall apply to the court for approval of the insurance
6business transfer plan. Upon written request by the applicant,
7the Director may extend the period for filing an application
8with the court for an additional 30 days.
9 (b) The applicant shall inform the court of the reasons
10why he or she petitions the court to find no material adverse
11impact to policyholders, reinsurers, or claimants affected by
12the proposed transfer.
13 (c) The application shall be in the form of a verified
14petition for implementation of the insurance business transfer
15plan in the court. The petition shall include the insurance
16business transfer plan and shall identify any documents and
17witnesses which the applicant intends to present at a hearing
18regarding the petition.
19 (d) The Director shall be a party to the proceedings
20before the court concerning the petition and shall be served
21with copies of all filings. The Director's position in the
22proceeding shall not be limited by his or her initial review of
23the plan. The Director shall have all the rights of a litigant
24under the Illinois Supreme Court Rules and the Code of Civil
25Procedure, including, but not limited to, the right to appeal.
26 (e) Following the filing of the petition, the applicant

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1shall file a motion for a scheduling order setting a hearing on
2the petition.
3 (f) Within 15 days after receipt of the scheduling order,
4the applicant shall cause notice of the hearing to be provided
5in accordance with the notice provisions of Section 1715.
6Following the date of distribution of the notice, there shall
7be a 60-day comment period. The notice and all comments
8received shall be part of the court record.
9 (g) The notice shall be filed with and approved by the
10court before distribution, and the Director shall be given the
11opportunity to review and comment on the sufficiency of the
12notice before court approval. The notice shall state or
13provide:
14 (1) the date and time of the approval hearing;
15 (2) the name, address, and telephone number of the
16 assuming insurer and transferring insurer;
17 (3) that the recipient may comment on or object to the
18 transfer and novation;
19 (4) the procedures and deadline for submitting
20 comments or objections on the plan;
21 (5) a summary of any effect that the transfer and
22 novation will have on the policyholder's rights;
23 (6) a statement that the assuming insurer is
24 authorized to assume the subject business and that court
25 approval of the plan shall extinguish all rights of
26 policyholders under policies that are part of the subject

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1 business against the transferring insurer;
2 (7) a statement regarding whether any policyholder or
3 group of policyholders may or will lose or gain state
4 guaranty association coverage as a result of the transfer
5 and the implication of losing or gaining state guaranty
6 association coverage;
7 (8) that recipients shall not have the opportunity to
8 opt out of or otherwise reject the transfer and novation;
9 (9) contact information for the Department where the
10 policyholder may obtain further information;
11 (10) information on how an electronic copy of the
12 insurance business transfer plan may be accessed. If
13 policyholders are unable to readily access electronic
14 copies, the applicant shall provide hard copies by
15 first-class mail; and
16 (11) any other information that the court may require.
17 (h) Any person, including by their legal representative,
18who considers himself, herself, or itself to be adversely
19affected can present evidence or comments to the court at the
20approval hearing. Any person participating in the approval
21hearing must follow the process established by the court and
22shall bear his or her own costs and attorney's fees.
23 (215 ILCS 5/1730 new)
24 Sec. 1730. Approval; denial; insurance business transfer
25plans.

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1 (a) After the comment period pursuant to subsection (f) of
2Section 1725 has ended the insurance business transfer plan
3shall be presented by the applicant for approval by the court.
4 (b) At any time before the court issues an order approving
5the insurance business transfer plan, the applicant may
6withdraw the petition without prejudice.
7 (c) If the court finds that the implementation of the
8insurance business transfer plan would not materially
9adversely affect the interests of policyholders, reinsurers,
10or claimants that are part of the subject business, the court
11shall enter a judgment and implementation order. The judgment
12and implementation order shall:
13 (1) order implementation of the insurance business
14 transfer plan;
15 (2) order a statutory novation with respect to all
16 policyholders or reinsureds and their respective policies
17 and reinsurance agreements under the subject business,
18 including the extinguishment of all rights of
19 policyholders under policies that are part of the subject
20 business against the transferring insurer, and providing
21 that the transferring insurer shall have no further
22 rights, obligations, or liabilities with respect to such
23 policies, and that the assuming insurer shall have all
24 such rights, obligations, and liabilities as if it were
25 the original insurer of such policies;
26 (3) release the transferring insurer from all

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1 obligations or liabilities under policies that are part of
2 the subject business;
3 (4) authorize and order the transfer of property or
4 liabilities, including, but not limited to, the ceded
5 reinsurance of transferred policies and contracts on the
6 subject business, notwithstanding any non-assignment
7 provisions in any such reinsurance contracts. The subject
8 business shall vest in and become liabilities of the
9 assuming insurer;
10 (5) order that the applicant provide notice of the
11 transfer and novation in accordance with the notice
12 provisions in Section 1715; and
13 (6) make such other provisions with respect to
14 incidental, consequential, and supplementary matters as
15 are necessary to assure the insurance business transfer
16 plan is fully and effectively carried out.
17 (d) If the court finds that the insurance business
18transfer plan should not be approved, the court by its order
19shall deny the petition.
20 (e) The applicant shall have 30 days following the
21withdrawal or denial of the petition to file an amended
22business transfer plan with the Director in accordance with
23Section 1720.
24 (f) Nothing in this Section in any way affects the right of
25appeal of any party.

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1 (215 ILCS 5/1735 new)
2 Sec. 1735. Rules. The Department may adopt rules that are
3consistent with the provisions of this Article.
4 (215 ILCS 5/1740 new)
5 Sec. 1740. Confidentiality. The portion of the application
6for an insurance business transfer that would otherwise be
7confidential, including any documents, materials,
8communications, or other information submitted to the Director
9in contemplation of such application, shall not lose such
10confidentiality, except (i) the Director may disclose
11confidential information as needed to procure the independent
12expert and ensure that the expert meets the requirements under
13this Article and (ii) if the Director determines that
14disclosure of confidential information is necessary to fully
15and fairly advise policyholders and others entitled to notice
16of the material implications of the insurance business
17transfer plan.
18 (215 ILCS 5/1745 new)
19 Sec. 1745. Department oversight. Insurers engaging in an
20insurance business transfer under this Article consent to the
21jurisdiction of the Director with regard to any aspect of the
22transferred business or business transfer plan, including the
23authority of the Director to conduct financial analysis and
24examinations, regardless of whether the insurer has a

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1certificate of authority or another basis for the Director's
2jurisdiction exists.
3 (215 ILCS 5/1750 new)
4 Sec. 1750. Fees and costs.
5 (a) All expenses incurred by the Director for the
6compensation, costs, and expenses of the independent expert
7and any consultants retained by the independent expert
8incurred in fulfilling the obligations of the independent
9expert under this Article shall be paid by the applicant.
10 (b) The Director may retain the services of any attorneys,
11actuaries, accountants, and other professionals and
12specialists as may be reasonably necessary to assist the
13Director in reviewing the insurance business transfer plan.
14All expenses incurred by the Director in connection with
15proceedings under this Article, including, but not limited to,
16expenses for the services of any attorneys, actuaries,
17accountants, and other professionals and specialists, shall be
18paid by the applicant.
19 (c) The transferring insurer and the assuming insurer
20shall jointly be obligated to pay all debts incurred pursuant
21to this Section. Nothing in this Article shall be construed to
22create any duty for the independent expert to any party other
23than the Department or a court.
24 (d) Failure to pay any of the requisite fees or costs
25within 30 days after demand shall be grounds for the Director

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1to request that a court dismiss the petition for approval of
2the insurance business transfer plan before the filing of an
3implementation order by the court or, if after the filing of an
4implementation order, the Director may suspend or revoke the
5assuming insurer's certificate of authority to transact
6insurance business in this State. The Director may also take
7any other action authorized by law against an insurer who
8fails to pay the requisite fees or costs.
9 Section 99. Effective date. This Act takes effect upon
10becoming law, except that the changes to Section 408 and
11Article XLVII of the Illinois Insurance Code take effect
12January 1, 2025.
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