(215 ILCS 5/123B‑2) (from Ch. 73, par. 735B‑2)
(Section scheduled to be repealed on January 1, 2017)
Sec. 123B‑2. Definitions. As used in this Article:
(1) "Director" means the Director of the Department of Insurance.
(2) "Completed operations liability" means liability arising out of the installation, maintenance, or repair of any product at a site which is not owned or controlled by:
(a) any person who performs that work; or
(b) any person who hires an independent contractor to
| perform that work; but shall include liability for activities which are completed or abandoned before the date of the occurrence giving rise to the liability. | |
(3) "Domicile", for purposes of determining the state in which a purchasing group is domiciled, means:
(a) for a corporation, the state in which the |
| purchasing group is incorporated; and | |
(b) for an unincorporated entity, the state of its |
| principal place of business. | |
(4) "Hazardous financial condition" means that, based on its present or reasonably anticipated financial condition, a risk retention group, although not yet financially impaired or insolvent, is unlikely to be able:
(a) to meet obligations to policyholders with respect |
| to known claims and reasonably anticipated claims; or | |
(b) to pay other obligations in the normal course of |
| |
(5) "Insurance" means primary insurance, excess insurance, reinsurance, surplus lines insurance, and any other arrangement for shifting and distributing risk which is determined to be insurance under the laws of Illinois.
(6) "Liability" means:
(a) legal liability for damages (including costs of |
| defense, legal costs and fees, and other claims expenses) because of injuries to other persons, damage to their property, or other damage or loss to such other persons resulting from or arising out of: | |
(i) any business (whether for profit or not for |
| profit), trade, product, services (including professional services), premises, or operations; or | |
(ii) any activity of any state or local |
| government, or any agency or political subdivision thereof; but | |
(b) does not include personal risk liability and an |
| employer's liability with respect to its employees other than legal liability under the Federal Employers' Liability Act (45 U.S.C. 51 et seq.). | |
(7) "Personal risk liability" means liability for damage because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities referred to in paragraph (a) of subsection (6) of this Section;
(8) "Plan of operation or a feasibility study" means an analysis which presents the expected activities and results of a risk retention group including, at a minimum:
(a) information sufficient to verify that its members |
| are engaged in businesses or activities similar or related with respect to the liability to which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises or operations; | |
(b) for each state in which it intends to operate, |
| the coverages, deductibles, coverage limits, rates, and rating classification systems for each line of insurance the group intends to offer; | |
(c) historical and expected loss experience of the |
| proposed members and national experience of similar exposures to the extent this experience is reasonably available; | |
(d) pro forma financial statements and projections;
(e) appropriate opinions by a qualified, independent |
| casualty actuary, including a determination of minimum premium or participation levels required to commence operations and to prevent a hazardous financial condition; | |
(f) identification of management, underwriting and |
| claims procedures, marketing methods, managerial oversight methods, investment policies and reinsurance agreements; and | |
(g) such other matters as may be prescribed by the |
| commissioner of the state in which the group is chartered for liability insurance companies authorized by the insurance laws of such state. | |
(9) "Product liability" means liability for damages because of any personal injury, death, emotional harm, consequential economic damage, or property damage (including damages resulting from the loss of use of property) arising out of the manufacture, design, importation, distribution, packaging, labeling, lease, or sale of a product, but does not include the liability of any person for those damages if the product involved was in the possession of such a person when the incident giving rise to the claim occurred.
(10) "Purchasing group" means any group which:
(a) has as one of its purposes the purchase of |
| liability insurance on a group basis; | |
(b) purchases such insurance only for its group |
| members and only to cover their similar or related liability exposure, as described in paragraph (c) of this subsection (10); | |
(c) is composed of members whose businesses or |
| activities are similar or related with respect to the liability to which members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and | |
(d) is domiciled in any State.
(11) "Risk retention group" means any corporation or other limited liability association:
(a) whose primary activity consists of assuming and |
| spreading all, or any portion, of the liability exposure of its group members; | |
(b) which is organized for the primary purpose of |
| conducting the activity described under paragraph (a) of this subsection (11); | |
(c) which:
(i) is organized and licensed as a liability |
| insurance company and authorized to engage in the business of insurance under the laws of any state; or | |
(ii) before January 1, 1985 was organized or |
| licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, before such date, had certified to the insurance commissioner of at least one state that it satisfied the capitalization requirements of such state, except that any such group shall be considered to be a risk retention group only if it has been engaged in business continuously since such date and only for the purposes of continuing to provide insurance to cover product liability or completed operations liability (as such terms were defined in the Product Liability Risk Retention Act of 1981 before the date of the enactment of the Risk Retention Act of 1986); | |
(d) which does not exclude any person from membership |
| in the group solely to provide for members of such a group a competitive advantage over such a person; | |
(e) which:
(i) has as its owners (directly or indirectly) |
| only persons who comprise the membership of the risk retention group and who are provided insurance by such group; or | |
(ii) has as its sole owner (directly or |
| indirectly) an organization which: | |
(I) has as its members only persons who |
| comprise the membership of the risk retention group; and | |
(II) has as its owners only persons who |
| comprise the membership of the risk retention group and who are provided insurance by such group; | |
(f) whose members are engaged in businesses or |
| activities similar or related with respect to the liability of which such members are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; | |
(g) whose activities do not include the provision of |
| |
(i) liability insurance for assuming and |
| spreading all or any portion of the liability of its group members; and | |
(ii) reinsurance with respect to the liability of |
| any other risk retention group (or any members of such other group) which is engaged in businesses or activities so that such group or member meets the requirement described in paragraph (f) of this subsection (11) for membership in the risk retention group which provides such reinsurance; and | |
(h) the name of which includes the phrase "Risk |
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(12) "State" means any state of the United States or the District of Columbia.
(Source: P.A. 85‑131.) |
(215 ILCS 5/123B‑4) (from Ch. 73, par. 735B‑4)
(Section scheduled to be repealed on January 1, 2017)
Sec. 123B‑4. Risk retention groups not organized in this State. Any risk retention group organized and licensed in a state other than this State and seeking to do business as a risk retention group in this State shall comply with the laws of this State as follows:
A. Notice of operations and designation of the Director as agent.
Before offering insurance in this State, a risk retention group shall submit to the Director on a form approved by the Director:
(1) a statement identifying the state or states in
| which the risk retention group is organized and licensed as a liability insurance company, its date of organization, its principal place of business, and such other information, including information on its membership, as the Director may require to verify that the risk retention group is qualified under subsection (11) of Section 123B‑2 of this Article; | |
(2) a copy of its plan of operations or a |
| feasibility study and revisions of such plan or study submitted to its state of domicile; provided, however, that the provision relating to the submission of a plan of operation or a feasibility study shall not apply with respect to any line or classification of liability insurance which (a) was defined in the Product Liability Risk Retention Act of 1981 before October 27, 1986, and (b) was offered before such date by any risk retention group which had been organized and operating for not less than 3 years before such date; and | |
(3) a statement of registration which designates the |
| Director as its agent for the purpose of receiving service of legal documents or process, together with a filing fee of $200 payable to the Director. | |
B. Financial condition. Any risk retention group doing business in this State shall submit to the Director:
(1) a copy of the group's financial statement |
| submitted to the state in which the risk retention group is organized and licensed, which shall be certified by an independent public accountant and contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or a qualified loss reserve specialist (under criteria established by the National Association of Insurance Commissioners); | |
(2) a copy of each examination of the risk retention |
| group as certified by the public official conducting the examination; | |
(3) upon request by the Director, a copy of any |
| audit performed with respect to the risk retention group; and | |
(4) such information as may be required to verify |
| its continuing qualification as a risk retention group under subsection (11) of Section 123B‑2. | |
C. Taxation.
(1) Each risk retention group shall be liable for |
| the payment of premium taxes and taxes on premiums of direct business for risks resident or located within this State, and shall report to the Director the net premiums written for risks resident or located within this State. Such risk retention group shall be subject to taxation, and any applicable fines and penalties related thereto, on the same basis as a foreign admitted insurer. | |
(2) To the extent licensed insurance producers are |
| utilized pursuant to Section 123B‑11, they shall report to the Director the premiums for direct business for risks resident or located within this State which such licensees have placed with or on behalf of a risk retention group not organized in this State. | |
(3) To the extent that licensed insurance producers |
| are utilized pursuant to Section 123B‑11, each such producer shall keep a complete and separate record of all policies procured from each such risk retention group, which record shall be open to examination by the Director, as provided in Section 506.1 of this Code. These records shall, for each policy and each kind of insurance provided thereunder, include the following: | |
(a) the limit of the liability;
(b) the time period covered;
(c) the effective date;
(d) the name of the risk retention group which |
| |
(e) the gross premium charged; and
(f) the amount of return premiums, if any.
D. Compliance With unfair claims practices provisions. Any risk retention group, its agents and representatives shall be subject to the unfair claims practices provisions of Sections 154.5 through 154.8 of this Code.
E. Deceptive, false, or fraudulent practices. Any risk retention group shall comply with the laws of this State regarding deceptive, false, or fraudulent acts or practices. However, if the Director seeks an injunction regarding such conduct, the injunction must be obtained from a court of competent jurisdiction.
F. Examination regarding financial condition. Any risk retention group must submit to an examination by the Director to determine its financial condition if the commissioner of insurance of the jurisdiction in which the group is organized and licensed has not initiated an examination or does not initiate an examination within 60 days after a request by the Director. Any such examination shall be coordinated to avoid unjustified repetition and conducted in an expeditious manner and in accordance with the National Association of Insurance Commissioners' Examiner Handbook.
G. Notice to purchasers. Every application form for insurance from a risk retention group and the front page and declaration page of every policy issued by a risk retention group shall contain in 10 point type the following notice: "NOTICE This policy is issued by your risk retention group. Your risk retention group is not subject to all of the insurance laws and regulations of your state. State insurance insolvency guaranty fund protection is not available for your risk retention group".
H. Prohibited acts regarding solicitation or sale. The following acts by a risk retention group are hereby prohibited:
(1) the solicitation or sale of insurance by a risk |
| retention group to any person who is not eligible for membership in such group; and | |
(2) the solicitation or sale of insurance by, or |
| operation of, a risk retention group that is in a hazardous financial condition or is financially impaired. | |
I. Prohibition on ownership by an insurance company. No risk retention group shall be allowed to do business in this State if an insurance company is directly or indirectly a member or owner of such risk retention group, other than in the case of a risk retention group all of whose members are insurance companies.
J. Prohibited coverage. No risk retention group may offer insurance policy coverage prohibited by Articles IX or XI of this Code or declared unlawful by the Illinois Supreme Court; provided however, a risk retention group organized and licensed in a state other than this State that selects the law of this State to govern the validity, construction, or enforceability of policies issued by it is permitted to provide coverage under policies issued by it for penalties in the nature of compensatory damages including, without limitation, punitive damages and the multiplied portion of multiple damages, so long as coverage of those penalties is not prohibited by the law of the state under which the risk retention group is organized.
K. Delinquency proceedings. A risk retention group not organized in this State and doing business in this State shall comply with a lawful order issued in a voluntary dissolution proceeding or in a conservation, rehabilitation, liquidation, or other delinquency proceeding commenced by the Director or by another state insurance commissioner if there has been a finding of financial impairment after an examination under subsection F of Section 123B‑4 of this Article.
L. Compliance with injunctive relief. A risk retention group shall comply with an injunctive order issued in another state by a court of competent jurisdiction or by a United States District Court based on a finding of financial impairment or hazardous financial condition.
M. Penalties. A risk retention group that violates any provision of this Article will be subject to fines and penalties applicable to licensed insurers generally, including revocation of its license or the right to do business in this State, or both.
N. Operations prior to August 3, 1987. In addition to complying with the requirements of this Section, any risk retention group operating in this State prior to August 3, 1987, shall within 30 days after such effective date comply with the provisions of subsection A of this Section.
(Source: P.A. 93‑32, eff. 7‑1‑03.) |