SB 3205

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Full Text of SB3205
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	SB3205 - 104th General Assembly
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			Senate Amendment 001
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		SB3205 Enrolled		LRB104 17519 BAB 30946 b
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 532, 538.7, and 545 as follows:
6    (215 ILCS 5/532)  (from Ch. 73, par. 1065.82)
7    Sec. 532. Purpose.
8    (a) The purpose of this Article is to provide a mechanism
9for the payment of covered claims under certain insurance
10policies, to avoid excessive delay in payment of covered
11claims, to avoid financial loss to claimants or policyholders
12because of the entry of an Order of Liquidation against an
13insolvent company, including through services offered to the
14Director in her or his capacity as receiver under Article XIII
15of this Code that relate to covered claims, to provide a Fund
16to assess among member companies the costs of such protection
17and maintain the continuity and self-sufficient operation of
18the Fund, and to offset the costs associated with maintaining
19the Fund's continuity and self-sufficient operations when
20practical by providing assistance and services to the Director
21in her or his capacity as receiver under Article XIII of this
22Code as described in this Section.
23    (b) The purpose of this Article is also to provide a
		SB3205 Enrolled	- 2 -	LRB104 17519 BAB 30946 b
1mechanism for the Fund to participate in and facilitate the
2process by which the assets of an insolvent company are
3marshaled and distributed pursuant to Article XIII of this
4Code beyond reimbursing the cost of covered claims. This
5subsection (b) is inoperative 5 years after the effective date
6of this amendatory Act of the 104th General Assembly [this ]
7[amendatory Act of the 102nd General Assembly].
8(Source: P.A. 102-396, eff. 8-16-21.)
9    (215 ILCS 5/538.7)  (from Ch. 73, par. 1065.88-7)
10    Sec. 538.7. (a) The Fund may perform such other acts as are
11necessary or proper to effectuate the purposes of this
12Article.
13    (b) The Fund may contract with the Office of Special
14Deputy Receiver or any other person or organizations
15authorized by law to carry out the duties of the Director in
16her or his capacity as a receiver under Article XIII of this
17Code. The power of the Fund to contract with these persons or
18entities includes, but is not limited to, providing consulting
19services and claims administration services that assist with
20these persons or entities in the performance of their
21respective statutory and legal functions provided by law. The
22Fund may only exercise the authority to contract pursuant to
23this subsection upon the board of director's written
24determination that the provisioning of such services will
25advance the purposes set forth in Section 532. Any contract
		SB3205 Enrolled	- 3 -	LRB104 17519 BAB 30946 b
1the Fund may enter into to provide services pursuant to this
2subsection shall be subordinate and subject to the Fund's
3statutory obligations to timely pay covered claims and avoid
4financial loss to claimants or policyholders described in this
5Article.
6    This subsection (b) is inoperative 5 years after the
7effective date of this amendatory Act of the 104th General 
8Assembly [this amendatory Act of the 102nd General Assembly].
9(Source: P.A. 102-396, eff. 8-16-21.)
10    (215 ILCS 5/545)  (from Ch. 73, par. 1065.95)
11    Sec. 545. Effect of paid claims.
12    (a) Every insured or claimant seeking the protection of
13this Article shall cooperate with the Fund to the same extent
14as such person would have been required to cooperate with the
15insolvent company. The Fund shall have all the rights, duties
16and obligations under the policy to the extent of the covered
17claim payment, provided the Fund shall have no cause of action
18against the insured of the insolvent company for any sums it
19has paid out except such causes of action as the insolvent
20company would have had if such sums had been paid by the
21insolvent company and except as provided in subsection (d) of
22this Section. Any person recovering under this Article and any
23insured whose liabilities are satisfied under this Article
24shall be deemed to have assigned the person's or insured's
25rights under the policy to the Fund to the extent of his or her
		SB3205 Enrolled	- 4 -	LRB104 17519 BAB 30946 b
1recovery or satisfaction obtained from the Fund's payments.
2    (b) The Fund and any similar organization in another state
3shall be recognized as claimants in the liquidation of an
4insolvent company for any amounts paid by them on covered
5claims obligations as determined under this Article or similar
6laws in other states and shall receive dividends at the
7priority set forth in paragraph (d) of subsection (1) of
8Section 205 of this Code; provided that if, at the time that
9the liquidator issues a cut-off notice to the Fund in
10anticipation of closing the estate, a reserve has been
11established by the Fund, or any similar organization in
12another state, for the amount of their future administrative
13expenses and loss development associated with unpaid reported
14pending claims, these reserves will be deemed to have been
15paid as of the date of the notice and payment shall be made
16accordingly. The liquidator of an insolvent company shall be
17bound by determinations of covered claim eligibility under the
18Act and by settlements of claims made by the Fund or a similar
19organization in another state on the receipt of certification
20of such payments, to the extent those determinations or
21settlements satisfy obligations of the Fund, but the receiver
22shall not be bound in any way by those determinations or
23settlements to the extent that there remains a claim in the
24estate for amounts in excess of the payments by the Fund. In
25submitting their claim for covered claim payments the Fund and
26any similar organization in another state shall not be subject
		SB3205 Enrolled	- 5 -	LRB104 17519 BAB 30946 b
1to the requirements of Sections 208 and 209 of this Code and
2shall not be affected by the failure of the person receiving a
3covered claim payment to file a proof of claim.
4    (c) The expenses of the Fund and of any similar
5organization in any other state, other than expenses incurred
6in the performance of duties under Section 547 or similar
7duties under the statute governing a similar organization in
8another state, shall be accorded priority over all claims
9against the estate, except as provided for in paragraph (a) of
10subsection (1) of Section 205 of this Code. The liquidator
11shall make prompt reimbursement to the Fund and any similar
12organization for such expense payments.
13    (d) The Fund has the right to recover from the following
14persons the amount of any covered claims (as determined
15without regard to the exemption in paragraph (iv) of
16subsection (b) of Section 534.3) and allocated claims expenses
17which the Fund paid or incurred on behalf of such person in
18satisfaction, in whole or in part, of liability obligations of
19such person to any other person:
20        (i) any insured whose net worth on December 31 of the
21    year next preceding the date the company becomes an
22    insolvent company exceeds $25,000,000; provided that an
23    insured's net worth on such date shall be deemed to
24    include the aggregate net worth of the insured and all of
25    its affiliates as calculated on a consolidated basis.
26        (ii) any insured who is an affiliate of the insolvent
		SB3205 Enrolled	- 6 -	LRB104 17519 BAB 30946 b
1    company.
2    The Fund may also, at its sole discretion and without
3assumption of any ongoing duty to do so, pay any workers
4compensation claims or any other third-party claims or any
5cybersecurity insurance obligations covered by a policy of an
6insolvent company on behalf of a high net worth insured as
7defined in paragraph (iv) of subsection (b) of Section 534.3.
8In that case, the Fund shall recover from the high net worth
9insured under this Section for all amounts paid on its behalf,
10all allocated claim adjusted expenses related to such claims,
11the Fund's attorney's fees, and all court costs in any action
12necessary to collect the full amount to the Fund's
13reimbursement under this Section.
14    (e) Venue in a suit against the Fund arising under this 
15Article shall be in Cook County and Sangamon County. The Fund 
16shall not be required to give any appeal bond in an appeal that 
17relates to a cause of action under this Article.
18(Source: P.A. 103-113, eff. 6-30-23.)
19    Section 99. Effective date. This Act takes effect upon
20becoming law.